KEYNOTE: Double Your Business DURING the Recession

Hey everyone, it's Mike Andes and you're listening to a special episode of the Landscape Business course podcast. Today is going to be a lengthy error episode and maybe one you just want to listen to while you're working and maybe on the job, maybe just doing office work if you're in quarantine right now. And it's basically a keynote that I had a year and a half ago at Landscape Summit 2019. So not the most recent conference that we had in January, but the one beforehand. And at that conference we had two major themes. One is how to prepare for the next recession. And then two was Culture Team and really building a world class team. So this particular keynote is about an hour long and we talk a lot about preparing for the next economic crisis and what to do during that crisis to make sure you grow and expand your business. Now, I want to clarify, some people are gonna think that me posting this now when we're in this whole coronavirus thing and there is an economic collapse happening. This is definitely not a way of saying I told you so, because a lot of the things I do talk about a year and a half ago, they're happening right now. That's not the motive in this. It's not to say, look, I told you so and I'm smart and all that. That's not the reason why I'm posting this. The reason I'm posting this because a lot of the information I share in this keynote have to do with what to do during the economic crisis, what to do during the next contraction so that you can come on the other side and be growing and be more successful and be. And so that's really why I want to share this episode and why I want to share this keynote. It's about an hour long from 2019 landscape summit. Now, if you are wanting to learn a lot more right now, you have some time on your hands. Things are definitely slowing down for a lot of us. If you are not already, make sure you become a course member, Landscape Business course. And if you are a member, make sure you scroll the very bottom page of the modules. We have an entire all the recordings from Landscape Summit 2020. So I went ahead and upload those all for you so that during this time you can watch those, you can learn from them. And the theme at this most recent Landscape Summit was pay for performance. But this episode that you're listening today, this keynote is from 2019, about a year and a half ago, where we talk about getting ready for the economic recession and then what to do during the recession to make sure you come out stronger on the other side. I hope it's of value to you. And let's go ahead and get started.

All right, Any more questions or can.

We jump into this?

All right, we're going to jump into how to grow your business during this session.

Sorry, I'm sitting down for just a.

Minute, Give myself a break.

It's not a question of if another recession will come. It's only a question of when it will come and whether or not you're ready for it.

All right, it could be this year. I don't care if it's 2020 or 2025, it's going to happen at some point.

And whether or not you're ready to.

Capitalize on that opportunity will be decided.

On how you plan for it during good economic times. So right now, the past several years, I'm going to talk about defense and offense. During good economic times, your defense should be saving money and paying off your loans. Your offense during good economic times is. Is going to be spending dollars on expansion, raising your prices, figuring out your marketing mix. And you know what I mean by that is test out a bunch of different marketing methods, see what works, see what your customer acquisition costs are.

And so that's what you should be.

Doing during good economic times, play defense by keeping your loans low and saving money. That's why this past year, like I said, I could have taken the money out of the company.

I left it in.

Why I wanted to hoard the cash and, and have that available when no.

One else has cash and everything's hit the fan, right? Puts a huge opportunity, turn an economic.

Recession into a huge opportunity if you.

Can do those things by playing defense.

Now, the offense side during good economic times, like I said, is spending the money on expansion, raise your prices. Figuring out your marketing mix is probably the most important. And that is testing a bunch of different things. Try Facebook ads, try Google AdWords, try print marketing, try. Try getting a newsletter out and track all of the different marketing methods so that when recession comes, you know where to spend the dollars. Because when all of a sudden your marketing budget goes from 10,000 a year to 2,000, you better know where to put that $2,000. And you'll only know that if you've tracked your customer acquisition cost on all.

The marketing methods available to you. All right?

During bad economic times or recession, to play defense.

You should focus on repairs and maintenance type work.

Because no one wants new stuff during a recession, all of a sudden, big installations dry up, but people will pay More to get stuff fixed. What I mean by that, I mentioned this on the podcast. During a recession, the auto industry is slammed. New car sales are absolutely put to a halt.

You know, GM almost went down because.

Of it in the last recession. No one's buying new cars. But what happens during a recession is the auto manufacturer or sorry, the auto dealers need to pivot to becoming the repair experts because no longer are people buying new cars, but that means that their old cars are breaking down and they need to be repaired. So either a, they need a pivot to becoming a used car lot or where people can still sell their vehicles, still get a new vehicle, but it's a little bit cheaper, or they need to pivot to repairs and maintenance as in our industry. What that means is you're not going to get a $40,000 install for that new paver patio, but you might be.

Able to get it resealed and pressure washed.

Those recurring, those repairing maintenance type services is what you should be doing.

For defense during bad economic times. In terms of offense, during bad economic times, you should spend your cash reserves on talent acquisition because all of your competition is laying people off. They're all downsizing and all of a sudden the guy that cost $25 an hour and has 20 years of experience in our industry now only costs 15 bucks per hour. But your competition is laying him off because they had over leveraged, had not had enough cash in the bank and had too many loans. And now with those installs gone, they can no longer pay payroll. So they are letting go these great experienced guys that would usually have built those walls. That work does not exist. They're not going to pay them $25 no longer to mow lawns. You can pick up those people from for pennies on the dollar. Great talent acquisition so that when the next wave of economic good times come, you got all the talent in your.

Market at a fraction of the price.

For offense during bad economic times is when you can actually take advantage of cheap or unused marketing. The things that used to cost so much like the front page of your newspaper, all of a sudden is a third of the price because that newspaper cannot sell marketing to anybody because no one is spending money.

When economic hard times come, stuff gets cheaper. If you have money, you can buy it for pennies on the dollar. All of a sudden your suppliers want a discount for bulk orders because they.

Can'T get rid of enough material. And if you have the cash reserves, you can stock up.

Cash reserves during economic times will buy you two to three times as much and it will extend two to three times more if you saved $100,000. And it will get you what $300,000 gets you today in terms of talent acquisition, buying other companies, buying customer databases and materials and equipment, et cetera.

Because all of a sudden your competition is selling that brand new X mark 62 incher that they bought last year for $15,000 and they need to get rid of it to pay off debt and they're willing to give it away for five grand.

And that happened.

All right, so if you're ready for a recession, it's a huge opportunity for you. It is not looked at as a negative thing. Do not allow the negative impressions that are going to hit our industry when the recession happens. In every single disappointment market issue, change comes a huge opportunity. Change is always happening. Every time change happens, there's an opportunity in good economic times, there's opportunity in bad economic times. If you're ready for it, it's a huge opportunity.

You can buy up those companies, your.

Competitors, for pennies on the dollar.

The company that wants right now, they want $380,000. If I wait a couple years, they'll probably be worth 50.

Alright, so if you have the cash on hand, that's why I kept cash.

In our bank account this year and because I know I can buy that guy for 50 grand when everything's hit.

The fan and he can't pay his bills.

All right, let's first focus on what you should do now. When times are good, everything is going fine. What do you need to do to get ready for the recession or the time when. No longer. Everyone's calling you to get work done. Number one, loans. Who here has ever used a loan for your business?

I have.

It's actually a really good thing to do. You want to leverage your business and you want to allow someone else, that is the bank, to pay for your growth.

Now there's a balance though, because if.

You have too much debt when economic times come and they call your line of credit, you are toast.

And that is what's going to happen to a lot of us landscapers.

We have lines of credit right now. We have plenty debt. Money is everywhere. Money is everywhere. The system is completely flush with cash, whether it be investors, banks, private equity, it's everywhere, alright? And so because of that, it's easy to be accessible. All of a sudden though, if you look in the fine print of those line of credit, that bank can call that line of credit at any time. If you over leverage that line of credit and they call it when they are doing bad because that's what's going to happen in a recession. The banks do bad. They all go under like they did in 2008. They're going to call every single line of credit to try to pay their debts off. You better be sure you're not depending on that to bankroll your business, because if you are, and if you're using that to pay payroll, you're going to have to let your best guys go.

And your competitors will suck them up.

So loans are great.

0% interest on equipment, unsecured loans. I get very afraid of unsecured loans on my line of credit that we use for our company. We never ever used our line of credit for Augusta. However, every single year I go back.

And renew it, make it bigger, make it beefier.

I want as much money as possible because if I want to go buy a business or if I see an opportunity in the marketplace, I want to go take advantage of it. I always am updating it. I encourage you, if you do not have a line of credit, you need to go create a relationship with your bank. Because if opportunity comes your way and you don't have enough cash, but that opportunity is going to be meaty and juicy enough to pay for itself within a couple months, you better make sure you get capital.

You want to be liquid, you want.

To be able to have that cash available. I don't care if you're paying 5, 6, 7%. Now, that 5, 6, 7% is assuming that that loan is secured, which means it has collateral.

I don't really care what collateral is.

Used on my loan because if I'm going to put all collateral, all my trucks are collateralized, all my equipment's collateralized. If the bank has to come after those pieces of equipment because we're not making payments, I have bigger problems than that. All right, So I would highly recommend you do secure your line of credit. You can get much, much better at interest rates and higher limits. So on those line of credit, if it's unsecured, you're going to be looking at 10 to 20%. Let's just call it a range. 10 to 20% for an unsecured line of credit. For secured line of credit that has trucks, equipment, anything of asset value, your house, whatever it is, if you put any sort of collateral behind that line of credit, it's going to be like 3 to 7%.

Especially right now, it's not too bad of interest rates.

Alright, highly recommend you get a line of credit because when you need one.

They will not give you one.

This is the funniest thing about banks. When you need a loan and you're not doing good, that's when they don't.

Want to give you one.

When you're doing really good, like right now, everything's good.

That's when you want to go establish the line of credit.

Because when they see all this money coming in and you're making all this money, they want you to be a part of their program and they want to lend to you. But when you're barely making it by and you have mounting debt and your revenue has slipped the past year, all of a sudden they do not want.

To lend to you.

Get your line of credit now.

When everything is looking really good, I.

Highly recommend using a local credit union that's going to be less affected by national and political events that during a recession is going to have to have regulations that require them to call line of credit. Whereas with a local credit lender credit union you can create a relationship with them and many times negotiate during times of economic crisis. All right, I'd highly recommend going for that local line of credit with a.

Credit union that is non profit.

Now when times are good, I would stockpile cash reserves. If you don't need the money personally and you have profit, I'd highly recommend.

You keep it in the business.

The reason for that is because like I said, a dollar now will get you two and three dollars in a few years.

If everything hits the fan, it'll buy you the next acquisition, it'll buy you the next person, the next project manager.

It will buy your next partner if you save the money now, raise prices. Right now. Who here has raised prices in the past year? All right, we should be doing that, if not annually, every other year.

You should be taking all the bottom.

15 to 20% of your customers and raising those prices.

Especially on mowing.

When we lose money on those 15 to 20%, we work way too hard, we work way too long of hours and we've sacrificed too much to be paying other people to do work on their property. All right? It's bad for the industry, it's bad for you, it's bad for your employees.

Stop doing that to yourself.

Cut them out or raise their prices. We just raised our prices. As most of you know from the podcast, we raised it on the bottom 15%. We had one customer cancel. And the reason for that was because we doubled his price from $100amo to like 239.

We didn't want him.

Alright?

During this time of economic prosperity. You should be increasing the value and focusing 100% on the customer experience to generate loyalty. Because when everything goes down, all of your competitors start panicking. They're going to cut their prices and they're going to go after your clients. And if you have not developed a sense of loyalty, you will fall prey to those customers that are price sensitive. And all of a sudden you say, well, I don't have very many of those. They all are flush with cash. Trust me, when their 401k dries up.

They start thinking about price really fast.

But you got to build the relationship now. You've got to create that loyalty now so they'll stick with you even when.

You'Re a little bit more expensive.

So how do you do that?

We're going to talk about customer experience tomorrow evening.

I really encourage you to get lean.

Everything should be about efficiency right now.

Don't wait for everything to hit the fan and you're short on cash to start thinking about where the tools go and the most efficient workflow for your trucks.

This is the time to figure that stuff out.

Figure it out now. Use that efficiency dollars that you're saving now. Put it aside in a stockpile of.

Cash and then you can utilize that down the road.

Don't wait for everything.

Don't to fall apart.

Reduce your fixed expenses. We're not going to go into a deep debate about fixed expenses and variable expenses. Fixed expenses are expenses. I'm just going to be general enough. Fixed expenses are expenses that do not change Regardless of whether or not you sell any work this month. They are fixed expenses.

I'm going to let you fill in the blank. For some people, a variable expense is a fix and vice versa.

But sometimes it might be truck payments. Guess what? If you have a bad month this month and you don't sell anything, that truck payment still has to be paid. Fixed expense.

Rent. Sorry, but your landlord that you have a five year lease is not going to let you skip a payment. That's a fixed expense. Doesn't matter if you have 100,000 in revenue or five bucks. It's a fixed expense. Insurance, whatever it is, that's a fixed expense in your business that regardless of whether or not you spend or make more sales, you still have to pay that money. Reduce that at all costs. Because that fixed dollar amount, that is the floor at which you have to pass to become profitable. You want that floor as low as possible. Variable expenses are things like labor. The more work you sell, the more labor you have to spend on right it's variable. So that's something that you can adjust and change and move based upon how.

Much work you have.

But during recession you want to make sure that you've already put in place where we've reduced fixed expenses. That's why I get really, really worried when people have these $4,000 a month shop leases.

What in the world are you doing? Right.

Do you use that cash on hand.

That you're supposed to be holding on to? For what?

To lower those fixed expenses.

When I say lower fixed expenses, I mean moving a shop, that's different.

Right.

That's smaller or that is cheaper. Right. I mean, try to figure out why your insurance.

Sorry, say it again. You're talking about a truck.

Yeah. That's interesting. That's one way to look at it. Yeah. I would be more inclined to sell the truck and with that money buy a used truck. My fixed expense evaporates.

Right. You're gonna take a loss on it.

Maybe because you bought it new.

Take the loss now when you have money, take the seven, $10,000, go buy a used truck that has now your fixed expenses.

Zilch on that. That also, by the way, is gonna.

Be cheaper on insurance and you're not.

Gonna have to have really high premiums because you don't have a loan on it anymore. Right.

What type of property do you operate off of? Like, what would you say about operating off of a residentially zone, a piece.

Of property that's risky to do the residential thing?

Because someone could, your competitors, they want to really be an idiot. They could just report you.

So it's risky, it's gonna be cheaper for us. And if you're in the course in.

Module six, I talk about it.

And that is look for a commercial land that's blank and empty.

Get a long term lease, like five years and really cheap because just blank.

Land and then you bring in mobile stuff.

And that's kind of what we're trying to do. So we're gonna operate off the residential piece.

Yep.

But the plan is like, we know we gotta get out of there.

Yeah, yeah, yeah.

Anytime something kid.

Yeah, it's just a vulnerability. Like honestly, I've never heard of anyone getting kicked off residential, but someone could report you and be a real idiot.

And you don't want that to happen.

Yeah, yeah, man, seriously.

One of our competitors got kicked off Egg Land.

Oh, I know who you're talking about. Yeah.

Care to elaborate? No, we're not elaborating on this stuff, guys. Yeah.

Say the last part. I can't Hear what you said.

What do you mean by being reported?

Oh, if someone knows you're residentially zoned.

And you're running a commercial business out of it or industrial type business out.

Of it, they will report you to.

The zoning commissioner or like the planning.

Authority typically get approved or not approved.

Yeah, but you won't get approved if you try to do that on a residential property. What he's saying is if you, if you do try to do it and if you're, if your competitor is like, hey, that's in residential area, I'm going to report them and they get you in trouble.

But yeah, if you do get it approved. Yeah. Then you don't run that risk.

But they're not going to approve a landscaping company be ran off of residential property in terms of like a shop.

And like outdoor, like tractors and stuff. If you're running out of your garage.

That'S a different scenario. Totally different. Totally different. Or like a shop on acreage. That's totally a different ball game.

We're talking more about like front against.

A road, something like that. That's very public retail or like. Right. Retail place where customers can come into. That's the defining line for commercial.

Do you ensure you're equipped and stuff like that?

No, it's under, it's under our liability.

And there is a clause under there that I think cover up to like $100,000 if like someone. There's burglary one, there's a fire one.

So there's some.

But I don't insure it, like if it gets broken. No, it's all paid off.

So.

It has to be as a.

Certificate of insurance on our liability policy.

Yeah, I guess it would be insured. It only increases our rate like by like 1 or 2% while it's on there. So that's, that's a cost of having that loan.

Right.

Even though it's zero percent. But yeah, you're right, there's a small incremental cost. We don't have separate insurance policies for them. No liability. Yep.

And there's always. Look in your liability policies. There's always other stuff like the anti.

Terrorism one, the theft one, there's fire, there's all that stuff.

Right.

Cool. Any more questions on that stuff?

All right, so reducing, getting lean, reducing your fixed expenses. All right, so that's all what you should be doing now.

Those are all the things you should be doing now.

During recession.

You want to ensure your dependency on project based work is complemented with strong maintenance component. Because that project based work is discretionary. They do not need that $40,000 patio with a fireplace. But they do need their lawn to be mowed.

They do need the tree that is overhanging their house to be trimmed. They do need their gutters to be cleaned out. So if you have are very high into or very dependent on project based.

Work, that's coming out discretionary income.

Mulching beds suddenly is not important to.

People when they don't have enough money in the bank to make their mortgage.

But if they physically cannot mow their.

Lawn, they will still make sure they may. You have. They will still make sure you mow their lawn for them. All right?

That's why the baby boomers are something that you should be focused on because they physically do not want to be doing the work. Whereas if you're going after professionals and many, many scenarios who get laid off.

Get pay cuts and when they need.

To start losing discretionary income, all of.

A sudden mowing becomes part of discretionary income. Right. That's what keeps me up at night. I run a gym. Discretionary income. It's a gym membership.

That being said, when someone that's paying.

$200 a month for CrossFit right now.

When everything goes down and they still.

Want to stay slightly healthy, they can't afford the 200.

They'll come to my gym for 40 or 50.

So what am I going to do? I'm going to target those individuals that are like CrossFit in my area when.

Everything hits the fan and basically tell them you can't afford 200, but you can't afford 50. Stay healthy and get through this economic time with us.

I know you put your little land to work with the landscape center, but where I'm from, there's no, there's too much competition for that. What I was thinking is starting a farm and using farmland and putting my land to work that way.

Yeah, it's all zoning. Talk to your local zoning people. It's running a fine line when you run it off of ag land. That's why one of our people locally got kicked off. It's just play by the rules, right? Like just do stuff, right? Guys, it's not worth it.

It's not worth it just for yourself.

Not to be able to go to sleep and know you're trying to evade taxes or you're doing something shady with your employees or you're not taking money out of their paychecks for federal stuff. Come on. That's why we get the reputation we do in our industry under the table. Junk no one's paying L and I all this stuff.

And enough said.

All right, so ensuring that you're not so dependent on project based work because that's going to be dried up, ensure that crews are cross trained for maintenance and repairs because all of a sudden that super expensive masonry guy that's building walls, he doesn't have any work to do. So if you're doing irrigation installs, you should make sure that they're cross trained on maintenance, repairs, zero scaping and efficient technology in the sprinkler industry.

If you're doing any irrigation installs, you should start building out a component for maintenance of those irrigate, fixing the braking, fixing the heads, making those heads more efficient. So when the water bill is at 500 bucks and that customer is livid because now they've just got a pay cut and they want to reduce that water bill, you can sell them on changing all the heads out so that.

That $500 bill becomes 300.

If you can save someone money during.

Recession, you're going to make a lot of money.

All right, this goes back into change.

Irrigation technology is changing very quickly.

If you're doing landscape installs right now, I'd highly recommend you start figuring out a maintenance for shrubs, trimming trees, fertilization.

Landscape installs are going to dry up.

If you're doing lawn treatments right now, you're highly reliant on weed control and moss control and grub control and, and you're doing, whether it be granular or spray in the lawn, I'd highly recommend you think about mowing, making sure all of those people that you're doing treatments for are also getting their lawn mowed.

By you because the lawn needs to.

Be mowed, but the weeds can grow during recession. All of a sudden they're okay with.

Weeds when they get a pay cut, but they need the lawn mowed.

The trees that are overhanging their house.

Have to be cut.

Hardscaping. If you're doing hardscaping right now and you're into pavers and all of that good stuff, pressure washing, sealing the pavers, seal coating asphalt is something you should.

Be thinking about because someone's not going.

To put a brand new drive in, but they might do a seal coat.

Of asphalt, that's going to be a.

Third of the price. So if you are all your, all your marketing right now is based around installing the asphalt.

It should now be about sealcoating asphalt.

Maybe just a little bit.

But when it comes to the time.

Of economic crisis, you can capitalize on.

The maintenance and repair side of the business.

During recession. This is something we're going to talk about a lot tomorrow. If you have questions, we can get into it. But as a way to play defense.

In recession, your employees know what's happening. They're always a little bit worried that their jobs are going to get cut. You need to have a really honest discussion with them what's happening in the.

Business and what's happening in the industry because they know that's not going good.

For the business usually.

They know it's tough.

They see it in every newspaper, every headline, every single article they read.

They know what's happening in the economy.

And they know what's happening in our.

Industry because they've talked to other crews who are losing people left and right and they're laying people off. They're worried. You need to get them on your team by figuring out a system. One second.

Give me one second. Make the point.

One second. I would really encourage at a time of recession, that's the one time, and.

We'Ll get in this tomorrow, that an incentive based pay based upon performance and profitability is super attractive to me because.

The business isn't profitable. They're not going to see any more.

Pay increases during the recession. But if you can figure out how.

To make them work a little harder, do a little bit more, get a little bit done faster, be more efficient and squeeze out a profit margin, I'm happy to share it during the recession.

Yeah, just take that's off the table for you on those because I know a lot of companies that did that just to stay afloat.

That'd be a discussion to have with your employees.

I cannot say that I would or would not do it because I didn't live through 2008 in the level of business that I'm at now. I'll get back to you on that.

In a few years.

I will do everything in my power not to make pay cuts.

Everything.

Like I'll do. I'll bankrupt myself almost before I give a pay cut because they're depending on that. And if I pay cut them, then.

It is a fear down the road.

That something else could happen. And I want them to like they're.

An employee because they want security. We're business owners because we do risk and all that garbage.

We're built for it.

They're not.

That's the reason why they're an employee. I want to give them a safe place. And I'll bankrupt myself before I make them feel that pain. Yeah, and when you do that they'll, they'll realize what's going on.

Yeah, like a business model where there's incentives like per lawn in the green industry.

Now the time.

Yeah.

Okay.

So.

Yes, there is. There's lots of people that are doing it, have done it and it is working for them. I do not have an incentive based pay scale. The reason for that is massive multitude of pros and cons that we're going to get into tomorrow.

Paying compensation for your people is the.

Number one thing you should be thinking about when it comes to culture.

Tomorrow. I will say that pay doesn't matter when it comes to culture because it doesn't in one regard, but there has to be a minimum threshold for you to cross.

And when it comes to incentive based pay for now, the way we operate.

For our business.

It doesn't encourage the.

Things I want to be incentivized and that's teamwork and accountability.

More the teamwork aspect. So for instance, we trade jobs on mowing, for example. If I am paying people based upon.

Whether or not they are above or.

Below their budgeted hours for that job.

It is incentivizing someone to cut corners.

Make the extra buck and then the person who comes next week has to pick up the slack because they didn't edge in a certain spot. Now what's going to happen? The guy who came the second time is going to hate the guy who come the first time because he knows exactly what he's doing. I want a team that's working for the why of the business and I got to make sure I'm incentivizing them correctly, making sure they're taking care of compensation wise. I do not want to give perverse.

Incentives that are going to make them.

Start going against each other, where project.

Managers start complaining because they got a.

Worse crew than the other project manager.

And thereby they couldn't get their budgeted.

Hours on the job and thereby they got less money. I want it to be when someone.

Gets back from a job that another.

Crew can still help them unload their truck because they had a long day and it was rough.

I want that over. Oh, let them go.

I'm not getting paid based upon their budgeted hours anyways. So I know I'm giving up efficiencies.

Because an incentive based, incentive based pay.

Program, if you can make it work, is amazing for the profitability of your business. Absolutely incredible. I'm just giving that margin up for the aspect of the team that I want.

I only ask because I don't know if it would be Beneficial to have that, I guess, built into the culture now.

Yeah.

Than just applying it when the recession does.

Yep.

I also come from like the utility industry where.

Some doing pole inspection, like for example, we would get a piece rate versus Right.

Yeah.

And it incentivize, I guess, in a sense those people would put in. Well, I guess bring in more revenue.

Right.

But there was also more quality control in place because of that aspect.

Yeah.

Everything was in a sense built.

Yeah. So I feel that if you're going.

To do a pay performance, it needs to be super, super.

Objective. And it's very difficult to do that without numbers. And the numbers take a long time to compile. Like if you're going to do a really good job of tracking the hours and all of the things that go into it.

If you really start to actually think about who here has a pay performance.

System of some sort.

Okay, cool. And a lot of times the easy way is that is a percentage of profitability.

That's the easy way to do a.

Performance based pay program. You know what the problem with that is? Profit is subjective. Because if I decide as the owner.

To go buy a bunch of equipment that's going to cut into my profitability and all my crew, to their mind.

They'Re going to have to pay for it. And now it's them versus me. And I never want that.

So I would much rather make sure.

That I am tracking how efficient they are, how many yellow slips they get, what they're doing in terms of revenue for the company.

And then at an annual review, talk.

About compensation and make sure they know that you are tracking, you are watching, you are getting reports from their peers. And I promise you a peer review will smoke out a lot of the underperformers.

Cool.

Let's move on from that. A lot more on that tomorrow. Okay. During a recession, in defense, we talked about the pay cut, blah, blah, blah. During a recession, defense, cut out unprofitable customers, focus on route density, and you want to cut out the lowest profit margin divisions or services that you offer. This is during a time of economic recession. You do not want to be doing.

The services that are not making you any money. Yes, that might be mowing.

But if.

You can focus on a way to make more money, more profit doing tree trimming during the recession, that might be.

Something you think about not saying that's.

The thing you should do, but you want to cut out unprofitable areas of your business, things that cost a bunch of money.

Like mowing. Oh, right.

A $15,000 mower. On a $10,000 trailer hooked up to a $20,000 truck when I could get a $5,000 pickup with a shovel and.

A rake and go do cleanups.

Thinking about the fixed cost, driving those down during times of recession.

All right, during recession, the last thing we're going to talk about is offense. What are you doing during recession that is going to be on the offense? You're going to hire up, you're going to get your competitor's best workers who are now getting laid off. The cost of everything goes down. We talked about that.

We talked about how the marketing gets.

Cheaper and you can acquire customers and.

Businesses at pennies on the dollar.

Questions. We're going to do some questions and.

Then we're going to jump right into zero.

Turn the video series.

If you have some questions, that's cool. But could the guys from mastercut stand up?

They're from Oxford, Mississippi.

Josh and I went down there a few months ago and we looked at.

Their business for a few days, helped.

Them out and we filmed a video.

Over the course of two days trying to help them with their business. We're going to watch that video together here after some questions and then tomorrow.

Morning we're going to interview these guys.

I've tried to not talk to them as much as possible the past two.

Days because I want to kind of.

Get it raw from them and get my impressions, what they've changed since we've been there doing that site visit. And so tonight for you, we'll be collecting information on what we said back in September. And then tomorrow you're going to see the changes they made. Pros, cons, what they've done right and.

What they've done wrong. And I'll dissect them like I did that website.

No, I was joking.

You guys are awesome. Thanks, guys.

All right, any questions before we jump into that video? Yeah.

Again, I have not.

I can't say what I would do yet.

Right. Because I haven't lived through 2006.

7, 8. At the extent of business that I'm at now. I was mowing like lawns as a kid during that time, so. But most of us here weren't in business.

Yeah. Was anyone in business during 2008?

Cool.

All right. Did you really lower your prices during that time.

Up?

So many people were going out of business that we were picking stuff up left and right. It was actually, I think, better.

Yeah.

So that's my philosophy, is that so many people are over leveraged right now.

When there's just a little bit of.

Pain in the market.

It's going to wipe so many out.

That the people who still need the work done for the companies that have.

Built their business on a financial model that's sustainable and they'll actually improve.

But I saw more weekend warriors because I need to supplement my income, so I'm going to mow on the weekend.

Yep. So that's.

That's what we saw, too, in our area.

Yep. And that's when value comes into play. Do you want the weekend warrior or do you want to contact me seven days a week? Right. And whether or not you're worth $5 or more per mow, maybe not in recession.

Yeah.

Yes.

That is a very good thing. We got a ton of that. When I was 11, 12 years old, me and my brother in our van, we throw the mowers in the back and go do property preservation. Man, that was good money.

They're horrible. Oh, it's horrible. I will never do it again until, like, I don't know, I have the van or I don't have any business, I don't know.