How to Scale Past $1M & Build a Multi-Location Empire

You might remember Will and Larissa Kelly, owners of Military Long Cuts.

I'm Larissa. And I'm Will, and we own Military Long Cuts and landscaping in Aubrey, Texas.

Last we heard from them, they were taking the leap to start a second location.

The minute we got back into the office, Larissa and I were like, what the heck do we do?

But after our coaching, their general manager quit, and they lost their shop space.

Because they moved it into his house.

Over the last year. Very, very tight. Very, very tight. I wouldn't recommend it on anybody. We're sweating. We're back up into a corner.

But by the end of our conversation, we will go over the technique we use at Augusta Lawn Care to start new locations that are profitable from day one.

Dude, that's gold. That's gold. I like that a lot.

My name is Mike Andes. I'm the founder of Augusta Lawn Care, where we have over 150 locations around the world. I also wrote this book on how to turn around a failing business. And a couple years ago, we used these techniques to help Will and Lar from Military Long Cuts turn around their business. But now we want to take it.

To the next level.

We had a general manager that we pulled up from the field, and we actually moved the business to his house.

Starting next week, on Monday, we are going to be running our operation out of a different location. It's going to be at Alex's house, where he's charged us a very reasonable price for rent there. But we have ample parking, a lot of storage over there, which is really going to allow us to create, grow very well at a great cost point.

But at the end of the day, like, you want somebody in charge there that the guys respect and basically look up to. And so, you know, because they are that whole culture, and that wasn't there. And so there was a lot of diversion happening when we promoted this individual, and it just was not good for the culture at all.

But was there warning signs that for someone that's has a general manager that you were like, okay, this is starting to go off the rails a little bit?

I think it really just comes down to, like, being coachable and, like, being, like, having humility? I think that was the core of it. I mean, he was very reliable. He did his job. He was very good at it. In fact, he would even, even try to, like, you know, you know, tell other, like, employees, like, what to do and stuff like that. And we're like, oh, wow. Like, we see leadership abilities, but is he. Are they humble enough to be Coachable to understand when maybe they are wrong, have integrity, be, you know, you know, just, just all like, it's that stuff you can't teach. And so, you know, you can always teach somebody how to mow a lawn and I'll do all that stuff, but just be very, very selective and just know like you're giving those reins to that individual.

If you're getting a location started out from zero, you need someone that can knock on doors, situation, sell, do follow up phone calls and get aggressive with growing the revenue. If you've already built the location and you need someone to maintain profitability, it's actually a very different type of person you're usually looking for. If someone has both of those skills, a lot of time they're an entrepreneur and they'll just be going and starting their own business later on. When I'm looking for a general manager, there's typically three things I'm looking for. The first is that they're seeking self improvement. They listen to books, podcasts, audio books, and they're going to fill in the gaps if they do have skill deficiencies. The second thing is the ability to sell to customers and the team. The ability to knock on doors, do follow up phone calls and get those sales is important. It's also important for them to be able to sell to the team the ability to sell new systems, be able to sell new prospects that are thinking of joining the team. They have to be able to communicate well with the team and with customers. The third thing I'm looking for is time management and organization because I give them a lot of autonomy to make their own schedule and be able to do what they want and, and what they seem fit in the day. They need to be able to manage their time effectively because there's a lot of things they're gonna be juggling in the field and in the office.

Walk me through that first year. Cause usually that's the very difficult part from a cash flow perspective. Once you put $100,000 of cash down on a piece of land and then you gotta do improve it to actually get it usable, you know, whether it be fences or gates or security, et cetera. So walk me through that and then kind of has that improved? Is it still a work in progress? Cause I know a lot of people are wondering like, should I buy a shop space?

Tying up $100,000 on a shop space is a lot. When he left and we lost like our main manager or general manager for the main location, we were kind of scrambling and a little nervous and Scared of like, oh man, how are we going to find a shop space, get another general manager trained, run our like main location and then get the other one like rocking like it was just a lot. And so we were like, all right, let's, let's purchase this location. We've got six trucks, we need somewhere to park it, we want to own it. And, and so then it kind of like eased us into it a little bit of like having both locations run out of the same, same location because then we could see kind of what was going on and stuff like that. We're playing a long term game of like, we're trying to build a similar command center on our end on the office. That's why like even still to today, like, dude, we don't utilize the shop as much as we think we need it to. Like all we needed was a pace, a, a place to park the vehicles. And so we're learning through that. It was a complete tight crunch for cash over the last year. Very, very tight. Very, very tight. I wouldn't recommend it on anybody. We're sweating. We're back up into a corner. We're which, which is kind of nice because the only way out is forward. Right? We have to grow top line to make, you know, sure we're paying the, the bills and all that stuff. But. But yeah, yeah, it's been very, very tight the last year.

Will was lucky enough to be able to get the cash reserves required to.

Go out and buy this land.

However, realize that when you're getting into real estate and you're buying a piece of land or shop space, you're actually getting into a different business called the real estate business. This is not necessarily a bad thing and traditionally real estate is a good investment in the very long term. However, it is putting a massive cash crunch on the business. Where are the cracks in the business.

Now or things that are preventing it from scaling up further?

Yeah, I think we've been doing a really like, good job at like trying to implement systems kind of similar to kind of your model and everything with like. So we're on P4P. We do open book management and things like that. I would say kind of the biggest cracks that we're kind of experiencing. So we're in the process of trying to open up a second location, but we just don't exactly know like how to do it logistically of like structurally setting it up because like we're looking at literally moving like maybe 30, 40 minutes down the road. You get into the kind of sticky water of like, okay, well now do you. Do you have one CRM and just have different branches? Do you have two different emails? Do you have two different credit card accounts, like two different websites? Just all of those like, logistical things of, like, how do you scale that and then duplicate that?

You know, one way to be able to grow using multiple locations and keep your overhead costs down as you begin to scale the business is have a hub and spoke model where you have one centralized office or I call command center, and then you start smaller locations that are satellite to it in other areas. And those satellite locations, they might be 30, 40, 60, 80 minutes drive from your main office. That main office has all the admin office sales, all the training happens there. But then at the satellite locations, you simply might just have a storage facility or a storage locker or some land where you just park the trucks. It doesn't need to be fancy, and it avoids having to buy real estate or rent really expensive commercial space in every single new location and in every market you open.

I think at your current size, like at a million, it's all about just like, you gotta be efficient in the office because like right now, the cash crunch caused by the real estate thing, like, we cannot afford to have a third person. Like, we've gotta be really, really scrappy because we can't be sending more than 15% of revenue on the office. Well, 15% of a million, like, we're hitting that already close because of the mortgage, the utilities, the office rent, and then one or two people in the office, we're already above that.

One way we do this at command center for Augusta Lawn Care is it serves over 150 different spokes and they're the hub, which means the overhead for Command centers around $200,000 per month. However, that's divided between over 150 locations, making it much cheaper than having separate offices for 150 separate businesses.

When you start hitting past like six or seven locations is when command center, like actual make economic sense. Because right now it costs you a lot of money to split these books and, and like, try to have like two different softwares, two different QuickBooks accounts, different general managers. Like, all of this is completely waste. It's only really useful if you're scaling past six or seven locations where you actually start getting economies of scale. Because now you have one shop, one piece of rent, a bunch of employees that show up to command center. Let's say you have four or five employees working there full time doing admin. Well, you have one rent space, you have one shop, you have one place to spend utilities versus if you had had to do six different ones. And so until you start getting that size, it is not worth it. Like it is a money pit to be, to be spending on this. And like even like I'm sure you're learning like the coaching and the systems around the command center is not easy.

I got an email from our tax accountant earlier today saying that we need to like grant her access to some kind of software or something. And I'm not entirely sure what it's for, but obviously like she's been our accountant for like a couple years now. I feel like once a quarter there's always like something that's coming up that doesn't have access or something. You know, in the beginning we were.

Getting so many like late filing fees and things like that, which I had.

To address with her and everything. So much so that like they literally like put a lien on our house because we weren't paying, paying our taxes. Which you know, I had to go out there and talk to our accountant and just straighten everything out and things like that. But these are just a lot of admin things that we deal with as business owners on a day to day basis that we're trying to really kind of hash out so that way everything runs smoothly.

It's easier when you're corporate because you can have the same systems for every single location and you don't have any deviation. But even when you start getting general managers, they're gonna have preferences. And so you gotta determine like up front what, how, how much leeway are you going to allow a general manager to have in terms of hours of operation, in terms of when they do estimates, how many estimates per week did they do today in person estimates? They only do over the phone estimates. These are all little tiny things that start to become massive bottlenecks when you start scaling the location, model and command center.

So in the next 12 to 24 months we should be able to start our third location. That one's going to be completely segregated, which I will like. I was very scared at first completely doing that because it's like, oh, I'm not going to be there if he shows up late, all that stuff. But I think it what I have found when both GMs are running it from the same location, there's like crossing of like hey, can you help me out with this? Or help me out with this? And I'm like guys, stop. Like you need to order, you know, mulch or whatever. It's just like, you know, there's there's a little bit of that, but it helps really be like, hey, it helps the accountability and the ownership.

Like I, I think I've said it before but like scaling Command center is 10 times harder than anything I've done. It's just very difficult even when you do corporately own locations. Cause everyone's gonna have different schedules, different services. The larger location literally is ran like a different business than one's just at 125,000 is like a completely different business. And so it's very tough. What are some of like the, the main bottlenecks you've had in terms of like operations at Command Center?

Honestly like we, we try to branch out a little bit and let the second location do kind of its own thing. But I think we're gonna really keep BO and be like, these are the services we offer, these are the ones we don't. So that way we can get to 10 plus locations way easier. And the office isn't like having to figure out like, you know, all the, all those like weird things, you know, and just really just try to create a simple scalable business that we follow the same model for each one and then we can hopefully scale that much, much quicker.

I'd recommend because you have corporate, you have full control. Because the advantage over franchising is decide now whatever all those things are going to be, like what kind of service are you going to offer, what hours of operation, what is estimated availability hours going to look like, when are in person estimates allowed and just make it standard because that's the hardest thing to do for Command center is the variability. And because you own it, you can just do whatever you want. And I just from like the beginning, like this is the model and no one deviates from it. The challenging part for us is we have to allow flexibility and it literally like probably triples the complexity of everything. But if you can just get really narrow into like these are the services, here's the hours we expect a general manager to be available for estimates. We know it does not change across any location. And if you can solidify those now, it'll make Command center like way easier.

Previously Will was thinking about potentially franchising his business and trying to sell other franchisees the model that he's built.

Our goal is in 2025 to at least franchise in the state of Texas. So that way some of the guys that we're starting to onboard, like I just want to basically teach other people how to build a business that runs without them. So that way they can Take care of their family and not, you know, work for the rest of their life and, you know, do hopefully serve other people as well.

So this is usually a temptation for people when they want to scale a lot of locations because it's less capital intensive. In other words, the franchisees buy the truck and the equipment and. And they're the ones that actually use their money to grow their location.

Yeah. I think before even thinking about franchising, doing three locations is a massive undertaking.

That will prove the systems required.

And then you can kind of from there, I would determine, okay, do I franchise this and deal with a completely different business model, or do I just keep doing this over and over and over again to reach and maximize the impact you're going to have on people?

It takes a lot of franchisees to actually make up the revenue from just one corporately owned location. For example, at Augusta Lawn Care, someone's Gonna pay about $14,000 per year to be part of the franchise. But my very first location was doing, like, 1.7, $1.8 million when I started franchising, which means I need to have over a hundred locations just to make the franchise fees equivalent to what I would make if I just had one more corporately owned location.

Like, that is our bigot. Like, I mean, we know how to build a, like, the second location probably going to do 125,000 this year. Like, we can copy and paste that, you know, like that. That's very simple. So, like, I think for us, how do we. How do we structure the office side so the main location we have as a corporation, as a S corp, and then the second one we started is an llc, completely separate. Like, I don't really understand right now, like, between Elizabeth and I in the office, am I supposed to, like, be billing our, like, other locations, like, for the time that our office is spending on it? And then, like, if so, how do we do that? Like, how do we track every minute of every day? Are they really just, like, sitting there with a timer and, like, doing that? Like, how does that. I don't understand all that.

Yep.

For the first five years at Command center, before we got software, this is.

Exactly what we used. We have a franchise entity. Right. So that's where Command center sits. Think of that as your S corp. Then think of each of your locations as different LLCs underneath the same S Corp.

I usually like to have separate LLCs for every single location. Why? So that way the general manager can feel like they actually have control and they're not just another piece of the machine.

Let me explain.

Usually at the top, I'm going to have the S Corp. Now, this is an actual S Corporation.

This is. It's gonna have articles of incorporation.

I'm gonna have to have minutes with an attorney. Every year it's a little bit more complicated. I'm gonna file one tax return out of this S corp every single year. Okay? So I'm not gonna have to do a tax return for every single one of these LLCs. So underneath the S Corp, then I'm going to have several of these different LLCs. So LLC 1, LLC 2, et cetera. Now, each of these LLCs are going to have several things completely separated from each other. They're first and foremost gonna have a different general manager. That general manager is gonna be responsible ultimately for the success of the location. They're gonna be responsible for sales, admin, and operations for their specific location. Each of these locations are also going to have their own EIN number, that's employer identification number, so they can run payroll separately, and so I can have a separate profit and loss statement for every single one. Now, when it comes to QuickBooks and actually running your profit and loss statements, you can do this two ways. One, have a separate QuickBooks account for every single LLC. Or you can have one QuickBooks account that has what's called locations inside of one QuickBooks account. My goal is to be able to have a separate profit and loss statement so that these general managers actually are literally running the business as if it is their location.

So for the staff that's working in the office, are they getting two separate W2s because they work for two companies?

No, I would do it from the.

S Corp for those.

The employee at command center is going to still get a pay stub from the S Corp. So is all of your employees out in the field?

Now, if we use this model, the admin side of things, or command center is going to be paid out from the S Corp. The question has to be, well, then, how much do we have to pay from every single LLC to be able to refund the cost of the command center?

Charging by the minute, like if you actually make everyone track is a pain in the butt. We had to do it because we had franchise locations. We have to invoice everyone appropriately. But it is, it will be so painful for you because, you know, the money goes the same place. Like, it doesn't really matter. It's more literally just to keep the books organized. So if I was you, I would probably do it as a function of revenue. So for example a location. Location two is 200,000. For example, location one does 800,000. Okay. 80% of cost of admin is going to be added as a journal entry to the first location. 20% is going to be added to the secondary location.

Even though each location is ran separately. Ultimately the S Corp is going to submit one tax return to the IRS and all of those financials will be combined.

Like I'd be careful too, because you're spending so much time in admin right now, which I'm not a huge fan of.

I'd say like 50% of my time is just helping an admin.

If I was you, I'd be trying to get rid of admin off your plate as soon as possible. You got to go into sales. You're good at sales. Admin is not going to be your strength. Like create the systems. Are you in sales at all or are you like mostly admin?

I am acting as a regional manager over both of those. I say that I take a really like low salary. Larissa stepped up and is the general manager for our main location. That's going to do probably about maybe 800,000 this year. So she's running that. I'm helping her with like, you know, upsells and stuff like that, office admin stuff. And then we do have a second general manager we hired for the second location and he's, he's doing all the field ops. I am supporting him in the office.

Slightly as a regional manager. If that's really going to be your title. Your full job, full time job is supporting GMs. And so you basically become a trainer of general managers now instead of trainers of guys out in the field. And so if that's really going to be the role, and I think it's going to be your role more around the $1.5 million marker. So as you grow the second location actually it's making money the third one starting like as soon as you get three locations, your job will be managing the managers. And so you're going to be in this weird spot when you have multiple locations but yet you're still trying to run the office. And so I would really pushing you, like systemize the admin and get out of it as quickly as possible. Because it's like doing admin is not $100 hour task. And you're, you know, as a CEO, once you pass 7 million 7 figures, like you got to start thinking about like what is actually the highest value use of your time and it's just not admin.

In order to take the business though to the next level, beyond 1.5 million, they're going to have to start becoming managers of managers and create strong teams on each of these different pillars of sales, operations, admin, so they're not actually in the business doing any of those tasks. As you first start a business, leadership by example is absolutely effective. Going on just doing the work and putting your head down and showing how it's done. But as you grow the business to a certain size, it starts to become much more a game of delegation and allocation of resources, time, energy and money.

In order to help the business grow.

I just finalized the roles and responsibilities for each member, AKA our general manager and our office manager.

So we are handing off the hiring.

System to both of them and we will support them with that, but they will be fully responsible for that. So this is a huge leap for us. This is going to open up our schedule, free up our time to go and duplicate what we've built at this first location. So kind of feels a little weird. How does it feel for you to know that people are, are going to be doing your job and you're not.

Going to have a job?

It's already weird. It's already weird.

I.

In what way?

I have. Okay, so my dad was also a business owner and he instilled a really great work ethic between me and my siblings, always being a hard worker. And I am not used to this. I'm like, I've delegated before, but that's pretty much all I'm doing. Like, I'm still doing some behind the scene things, but it's more so just making sure everybody else is following through with what they need to do, which is fine. I'm just not used to it.

Up until a million dollars in revenue, you're usually rewarded economically for doing more in the business and doing more work. After a million dollars, if your plan is to go to 5 or 10 or beyond, you're going to be rewarded for doing the right things. And that really takes prioritization and delegation to your team.

Would you recommend if we had $100,000 cash in our position right now, would you recommend pouring that fuel on the second location and just trying to ramp that thing up to like 5, 600,000 in the next like 12, 12 months? Or would you recommend starting a third location 30 minutes away?

I definitely wouldn't. I definitely would not start the third location. I would, I would take. I know you're disappointed. I know it sinks not to be the third. The third is always a Good one. It's a milestone. But I would get the 1251 to 400,000 and then raise prices. And so the reason I say 400,000 is because if you get 400,000 and let's say you're charging $70 an hour, if you just start charging 85 or 90 and do a price increase, you're immediately above 500,000. I know above 500,000 I can make a working GM model very profitable. Under that is just really, really tough. It's very susceptible to that GM leaving. If you do that, you'll go into the third location with a much better cash position. I don't want you starting a third location when the first location is not pumping out or like that second location is not pumping out profit.

Right?

Yeah. No, dude, that. That's gold. That is gold.

I know, it stinks. The third location is a cool one. I remember mine is very cool. I'd do this. I would do this, not do. I would do the storage unit.

I would split out, but I would.

Start marketing in that area a little bit and then just create a route so that this time next year, even if it's midway through the year, just have a benchmark. Hey. When the second location is above 40,000amonth.

In revenue, green light.

We're raising prices and I'm going to start the third location.

Dude, that. That's gold. That's gold. I like that.

This is what we recommend even for our franchisees now that are starting all these secondary third and they're going on now. Their locations is don't like the only reason to do it for us is like if they're worried their territories gonna get purchased out from underneath them and they're willing to a chain. But like if you don't have that pressure, it's like just market inside the area. No, you're not gonna make good money because you're driving so much towards them. And then get a good enough route where you can put a general manager in place. And from day one they have a full schedule, which means if they start selling any jobs, they need an employee and that location will basically break even. And so it's a much more steady way of growth. Instead of you dumping 40 to $50,000, if I said like, yeah, go for the third location, you spend 40 or 50 grand on that location, you bring your cash reserves way down and your second location would not be profitable.

Absolutely. And to take that step further too, for the second location, he's incentivized on top line growth. So why would he not want to expand his territory and get more revenue? Because he's not really thinking about profit. He's thinking about just getting more jobs and getting more revenue. And so that would obviously help him, too. You know, I think he'd be on board for that. Absolutely.

If you want to know exactly why I told Will to focus on his second location instead of starting a third location, watch this video here where I break down the actual budget for starting multiple locations and going from zero all the way to six locations and doing $4 million in annual revenue.