"I Can't Find Employees!" is a BAD excuse... Here is Proof!

Hey everyone, It's Mike Andes, landscapebusinesscourse.com today I'm at the whiteboard. I'm going to be showing a bunch of numbers, but I want to just preface this by saying it's a little bit of tough love, but I want to make this for the whole industry. And if you want to share this with another landscaper, I'd really appreciate it. Over the past year, we have absolutely had a massive labor shortage in the United States and really throughout the world when it comes to entry level employees. As the economy come roaring back after the pandemic that we're competing against the restaurants, the fast food industry, travel and leisure for these laborers that can actually grow our businesses. And so for the past 12 months, I've dealt with a lot of people say I can't grow my business, I can't keep getting more customers simply due to the fact that I can't find the workers. And they say, well, I got all these leads and I could grow my business, I could get all these jobs, but I can't because I can't find good employees. And I'm going to prove to you today and show you why the math doesn't work out. And in my opinion, where that is no longer a good excuse. If you're gonna allow that to be the excuse as to why you don't grow your business, why you're not successful, why you can't get more work accomplished, is because there's no employees. I don't feel like that's a valid excuse anymore. When things like the pandemic happen, we can say that this is a valid excuse because it's unforeseen. We didn't know it was happening. Well, guess what, it's been a year where this has been like this and I don't think this is gonna get magically better in the next couple months. This is gonna be a long term issue that has defined people that want to work outside are willing to work hard and sweat for the money that they make every day. It's just so appealing to be able to make YouTube videos or to be streaming on Twitch or playing their Xbox all day and trying to make a little bit of money that way, or just collecting an unemployment check. So these are the things we must keep in mind. And at the end of the day, a lot of entry level employees are coming for a paycheck. We talk about a whole lot of things in terms of culture and help them get to the next place in their career and offering much more intangible benefits but for most people, just attracting them to your business is gonna come in the form of what are the wages. And today I'm gonna talk to you about if your mindset has been, oh, I can't grow, I can't take on more work because I can't find employees. I don't feel like that's a good excuse anymore. I think it was good for the past six to 12 months. But I think we need, as owners, as leaders, look, we see the issue, we have. What is the solution? I'm going to talk to you about that today and I'm going to be tying in the fact that raising your prices is probably the thing you're going to need to do to be able to afford the higher wages and attract great employees. But I'm going to break down the numbers because I don't want you just to trust me. And I've talked about raising wages. I've talked about these things before. But now I'm going to show you the numbers behind the logic and what I've talked about in the past. So we're going to use an example. You're going to mow 12 lawns per day at $40 each. That means you're gonna have $480 in revenue from that crew or from that employee that is mowing lawn. Let's just say a solo operator, a solo crew, one person crew, does 12 lawns per day, each $40. This is very doable. I'm not stretching the truth or anything like that. $480 in revenue. Now this person needs to work 10 hours per day and we're working overtime because we don't have enough employees. We have to work overtime. We're working 50 hours a week, which is 10 hours of overtime. So for the whole week, $15 per hour is going to mean that we ought to pay $75 in overtime. 10 hours worth of overtime at $15 an hour. So $825, what we're going to have to pay this employee. Okay, now this is the thing that I want you to think about. If you raise your prices, the value that you now extract in additional dollars from your customers can go towards hiring a better employee. If your excuse have been, I can't find employees. Let me ask you this question. If you raised your wages, your base pay from 50, $15 to $18, would you be able to attract good employees? If you raised your base pay from $15 to $20 per hour, would it attract better employees? So let's dive into this. So now we're going to assume that we do two things. We're going to raise our prices and we're going to hire another employee. First of all, we're going to raise our prices by $5 per lawn. I talked about this last week about these blind price increases where you just straight across the board, raise everyone, let's say under $50 per cut, by $5 per cut. Everyone above $50 per cut. You raise just a blind price increase in the middle of the year. Not waiting for next year, not waiting until next spring, not waiting until the stars align or when you feel warm and fuzzy, or when you're okay with dropping some customers, but dropping them now because why? You're working overtime. You're working overtime. You're turning away work, you're late to estimates. You're losing potentially good customers at the expense of just trying to service all your other ones. And your excuse is, well, we're already working 50 hours a week. I can't afford to pay anybody else more, so I'm gonna have to just keep paying $15 an hour. No, raise your prices. Let your customer pay for the higher wages that are going to attract a great employee. Raise them by $5. If you do that, your 12 lawns per day are now going to be $45 each. And you're going to generate $540 in revenue, which is an increase in $60 worth of additional revenue. Okay, now let's take that $60 and actually give it to the employee that we're now gonna pay $18 per hour. We're gonna raise their wage by $3 per hour, from $15 an hour to $18 an hour. And we're gonna attract a good employee now because now we're not competing with McDonald's and taco time because they're at 12, 13, 14. We're not gonna be at 15 anymore. We're at 18. A significant jump depending on your market. That might actually be a livable wage, depending where you live in. But per day now we're gonna add $24 in cost to the business. Why? Because we have $3 more per hour. We're gonna now work eight hours in the day, not 10 because we have another employee. So we don't have to work overtime. We don't have to work 10 hours a day. We can work eight because we have an additional employee to get the work done without going overtime hours. So now per day, it's gonna be an extra $24 in cost to the business. But look it, we raised the prices by five bucks. We had $60 in additional revenue collected and our extra cost is only $24. Realistically, I could actually raise the wage here by $6 per hour. Let me see. Actually, I could actually do $7 per hour. I could raise this by 7. If I raise the wage, the base wage, by $7 per hour, that would mean that my extra cost per day would be $56. And guess what? I'd still be net positive $60. I'd still be gaining $4 per day extra. If I raised the wages, raised the prices, I should say, and then raise the base pay by $7 per hour. You have to remember this is something I told our franchisees in our last call. If you are a premium service and you're a brand and people know about you and you have a great website and you have a great uniform and a great truck, you are not selling any a commodity like a hamburger. Like at McDonald's. If they raised their prices by $1 per hamburger, they would lose massive amounts of customers. If a chromebook, that's usually $99 went all of a sudden to 399, they would lose all their customers. Whereas an Apple product with your iPhone, if they went from $800 to $1000 for the iPhone, guess what? People are still going to line up and buy it. People are still going to line up and buy tons of them and millions of them. Regardless of they break their iPhone, they're gonna buy another one. They're not gonna complain. Why? Because Apple is focused on brand, not on price, but on brand and generating the fact that people want to buy their products no matter what the price because they're less price sensitive. And if you're having a great brand and a great value proposition in the form of professional service, you have a less price sensitive customer and they will not leave you over $5 per cut. And everyone, the reason you don't raise your cost per cut by $5 is you think you're gonna lose a bunch of customers.

95% of your customers will stay with you and you'll lose a couple that you wish you already would have got rid of. The ones that complain that question, your invoices wouldn't pay on time. Those are the ones you're gonna get rid of anyways by raising your prices. So I encourage you, raise your prices, raise the wages, the base pay to your employee so you can get a better quality candidate and actually grow your business. The net result of all of this is that your wages went up great. The employee wins. They're now getting $18 per hour instead of $15 per hour. And we can actually go up even further than 18 because of our price increase. We now have higher profits for the business. Again, better for the employee, better for the business. And at the end of the day, I actually think it's better for the customer. Why? Because the quality of the applicant goes up. Now they're getting a more professional person on their property. Now you have to remember, everyone's like, well, you raising the price, that means you're a scrooge and you are greedy and you're trying to make money. And okay, listen, let's just first off say that everyone's trying to make money, but let's also realize that by raising the price to the customer, it's actually better for them. Why? Because you need to have a sustainable business and you need to be able to. And you working 80 hours a week is not sustainable. You working out in the field from 7am till 8pm every single day is not sustainable. And eventually you will either keel over and die or B, they're gonna have to find a new service provider every year because people keep going out of business. You staying in business and remaining profitable is the best thing for the customer. You charging sustainable, healthy profit margins on the work you do is good for the customer. Why? Because they don't have to keep finding new contractors, new landscapers, new lawn care guys every single year because they keep going out of business, stay in business. And that's good for the customer. Because now, two years later, after you installed the bushes, they know you're gonna be around and you're gonna be able to warranty and service them down the road on the project and the work that was installed. So I highly encourage you. No longer do I believe that this is a valid excuse to say, oh, I cannot find any employees. Everyone wants to work, stay at home and collect their unemployment checks. I know that's true. We've had difficulties finding people. But I promise you, your customers, if you have an existing business, are much less price sensitive than you think. And if you've built a great business, if you've been to bargain hunting and trying to beat everyone else's prices, yeah, raising prices, you're probably gonna lose more customers. But if you have a good brand, if you have a great website, if you have a great brand awareness with your trucks and your uniforms, and you've had great customer service, I can promise you, especially right now when inflation is where it is at, everything is going up in price. Real estate, gas, cars, everything's getting more expensive. I promise you. Two things need to go up. The cost to the customer, as well as the fact that your wages will need to go up in order to attract great talent. I'm Mike Andes, landscapebusinesscourse.com, we'll see you tomorrow.