LIVE FROM THE OFFICE: Friday Night Jam (Lawn Care Biz Q&A)

What's up everybody? Mike. And he's here. It is Friday night. I am at the office. I'm actually probably haven't seen this side of the office. This is where the media team works. So some of their computers are. But Tonight I got 20 or 30 minutes. Wanted to hop in here and do some live Q and A. If you have any questions about your business, feel free to text it to me. So tonight you can only submit a question if you text this group. So it's my. I'll get this directly here and be able to view it. So just text word landscaping at 360-227-6362 and then I'll be able to see your question. So it will not be in the comment section. Tonight is just for the texting group to be able to submit questions. So text the word landscaping to this number and then you'll be able to submit your question that way. So let me just really quickly put in here on the comment section so everyone is aware to submit question text Landscaping to. Oh, there's a bug. Let's go. 360-227-6362. Okay, Jeffrey DeSalvio, if you could text that in the group, that'd be great. I see some other questions coming in here. We are going to be doing the texting group. So text me. If you haven't already joined this group, text Landscaping to this number and then you can join and be able to submit your question. Let me just go ahead and pin this. Everyone can be see this. Actually, can I pin this? No, I can't.

Man. Whatever. Okay, so let me go ahead and open up my inbox. I already have people submitting questions. Boom, boom. All right, here we go.

Okay, let me refresh my inbox here.

Why is.

Why is this not working? Messages. Here we go.

Boom.

7 replies. Okay, here we go. What do you think about using email as a marketing tool? When is it most effective to use? Yeah, so actually we were talking about with one of our franchisees today, they had sent like three emails for what we call one click estimate emails and I think that's too many in a month. They sent three in a month. It's too many. You want to, you want to make sure that when you send an email, the open ratio is as high as possible. And if you have too many emails going out, you're going to reduce your click through ratio. People just are not going to open up the email. So I recommend one sales email and one invoice every month. Right. This is actually the biggest reason why we don't do daily billing is simply due the fact that I don't want to be sending an invoice four or five times a month because I want, when I send a sales email, I want that opened up and I want them clicking on that button to be able to ask for an estimate. So. So I'm willing to give up cash flow just a little bit in order to have that one click estimate email being clicked on. But you can't oversaturate somebody. If you start sending 3, 4, 5 emails a month, just like all of us, it just goes to you just you don't even open it up, you know, you don't even get to get in front of the customer. So I'd recommend only one sales email a month. And then that's the only reason, the main reason why we bill monthly is not because like from a cash flow perspective, I don't want to do it weekly or every single day, but I want it to be when they get an email from me that open it up. And that is how we can prevent having to spend a bunch of money on marketing. Once you've grown the business to the point where you have a lot of people in your database, it's the highest value of your company is your database and is your contacts. And it's only valuable if they actually open up your emails. So, all right, it's Friday evening. Got to keep the energy high. Let me go ahead and again, if you're just joining. Well, I got way too many questions coming in. Okay, here we go.

Do you price snow removal the same way as lawn prices per man hour? We do it usually by the push or we're going to do it by the season, depending on how frequent our snow plowing is. If you have a lot of snow plowing in your area, typically by the season is going to be a lot easier. Get someone on a contract. Otherwise we're going to buy the push. And that push price is going to typically be based upon an hourly rate. And that hourly rate is going to come from the fact that you know your setup is in terms of if you have a skid steer or a truck mounted snowplow, etc. What are the minimum charge you will send your crew out for bed maintenance? I think I want to say it's our minimum MoW price, which is 30 in our local market is $35 or $40 if they just want bed maintenance, like just pulling weeds for example.

So typically we don't do that though. It's just not worth it. To the client for us to do just bed maintenance. Typically our weeding clients are going to be clients that we have for mowing already and they're doing as an add on. So. Okay, next question. Graduating high school this year and going full time next year. Is it worth taking business classes at my community college while going full time? Thanks, Braden from Rhode Island. Yeah, I think it's always a good idea, especially if you're young, like, hey, go get some business classes, especially the community college. You're not gonna be paying an arm and a leg. You might pay $500 or $1,000, get some really good business classes. Absolutely not a bad idea at all. Next question. Do you have separate bank accounts for taxes, payroll and general operations? This kind of comes from the theory of profit. First, having different bank accounts for a bunch of different things. I typically do not simply because my goal is to take as whatever revenues in the business, whatever profit is there, I'm usually going to use it for expansion and growth. And as long as I don't have to take money out from the business and I know that it's going to be cash flow positive consistently, I can keep that number actually relatively low. So in my opinion, cash flow is really important because as long as I know that every single month I'm going to make a positive net, like net profit positive, I don't really need a lot of reserves. I don't need to have a whole bunch of different accounts. That becomes more important when you have lots of seasonality and you have months where you lose money during like the winter months or slower months of the year. And so if you have problems with discipline around spending money, that's when multiple accounts is really important because it'll keep you financially. You know, you kind of lock, kind of lock your hands up to spending money on things that you potentially should not be. So if you have problems spending money when you see money in a bank account, that's when having multiple bank accounts sometimes is helpful for myself, you know, seeing more money in a bank account does not make me want to do anything besides probably buy real estate. So I don't, I don't think that, that that's a problem for myself. But for you, if you feel like, hey, if I see money, I go buy mowers, I go buy trucks, then you probably should have different accounts. Make sure you have tax money set aside, make sure you have operations that have payroll set aside and you don't over over leverage or overextend yourself. Commercial maintenance versus residential. I find my margins are much higher with commercial as we do not bid commercial work cheaply. Thought about veering away from residential moving forward, what's your thoughts? If you can get commercial maintenance at the same margins and profits as you would residential, then I would stick with a commercial and just because I don't have to have as many customers, I don't have to have as much support staff, I don't have the phone ringing as much. Way, way less headache and from a customer service standpoint, but typically your commercial rate is going to be significantly lower than your residential rate and your commercial clients are going to be significantly more price sensitive than a residential customer that's willing to pay a premium price for a premium product. So I don't typically like to go after low margin work and a lot of, lot of commercial maintenance. Not all, but a lot of commercial maintenance. You're running a 5 to 10, 5 to 10% profit margin business and I want to be above 15, ideally above 20% as the business matures. And so I don't want to be in a race to the bottom and I don't want to be in a place where a big, big company or a publicly owned company like, like Brightview can come in and just undercut me dramatically and wipe me out. And that's. They're going to do that for commercial. They're just not going to do that going after residential. At least they have not yet. What is the number one resource to get clients and what is your best way to get commercial clients, sir? Commercials always going to go after property managers in terms of number one way. Hey, look at that. You guys see that? Oh no, you can't hear. Look what's over here. We got all our yard signs. There's like a whole bunch of these. These are on lawn care media, by the way. Oh wow. They have all sorts of stuff here. They have. Sorry, this is the media side of the office. So they got all the different door hangers that are on.

Lawn care media. What else do we got here? Look at all the flyers. We got a bunch of yard signs. Let's go.

Now. Hiring. Here we go. These are all on lawn caremedia.com by the way. But yeah, I think if you're just getting started, I would say your number one place to get going is going to be things like this. Door hangers, yard signs, et cetera. One thing that's really interesting is right now Google cost per click on Google has dramatically dropped the past three months. So if you have quite a bit of money to spend, I would definitely be looking into Google Ads. I'm looking, we're doing some tests in terms of seeing why it is but we've seen a, but a two thirds reduction in cost of cost per click on Google over the past three months. I don't know why because I would think it's back its opposite as people have moved away from Facebook over the past couple of months. But we've seen incredible cost per click on our Google Ads like 50 cents a click. It's great.

Which typically you wouldn't even see that during spring rush. So anyways, how would you value a customer list if you were buying them from an existing business? They are all year round maintenance and have a set price every month. Would, would there be any stipulations you would put on the purchase of a customer list? For example, only paying fully, fully for customers you kept for a certain amount of time? Yeah. So there is a, a video I made on YouTube. Just type in Mike Andy's acquisitions and I actually talk about three or four different ways to price and value a company. Whether you're trying to sell and increase your valuation or if you're trying to buy and how you should be able to determine what you should be paying for that and also some leverage that you can get as a buyer to be able to bring that price down. So definitely check that out. Hey Mike, what percentage of labor revenue should I pay my first employee? I would start with a third, so 33% just because it's so easy for the employees to keep track of and do the math in their head. What is the difference between being bonded versus insurance? Yeah. So bond typically you're going to be, it's going to be somewhat good. The state, every state is a little bit different in terms of if you get like a general contractor's license or if you get a specialty contractor's license. But that bond is basically a way to. It's almost like a kind of like an insurance policy with the state. But usually it's going to be relatively cheap and it's a way to be for this, for you to be able to tell customers hey, I am bonded with the state. Which means like Dave's given my stamp of approval in terms of my, my licensing and everything that I'm doing. And usually you have like a $6,000 or $12,000 bond and you're going to pay usually between 2 and $300. It depends completely on the state per year. 2 or $300 per year in order to be bonded with the state depending on if you're A general contractor and exactly what you're doing. Yeah. All right, let me just refresh my inbox here. One second. Oh, goodness. Too many questions. Okay, so if you are listening to this right now, by the way, you just got to text me. Let me put this number up, because there's so many of you in here. Boom. I did not think on a Friday night there'd be this many people. If you want to submit a question, just text this number here. Or text landscape. Text Landscaping to 360-227-6326 or 6 2, and I'll get to them there. And if I have some time, I'll get to the what comment section here. But. Okay, next one is, I have one employee and do about 100,000 in revenue. What steps would you recommend I take to scale to 200 to 300,000 while having fun, while having time for family? I'm in Worcester, Ohio. Thanks. Great. Yeah, so I think to get to 200,000 or 300,000, you just need to keep rinsing and repeating. It's all about a sales game. To get to 200 to 300,000 revenue, you're going to need another truck. You're going to need another two employees to get to that level. And In Ohio, your $100,000 with you and one employee is pretty good. Where, like, in my market, I would want to see 100 to $120,000 in revenue per person, which means as the owner, I would. I would expect myself to make over six figures. That being said, I, as a solo operator locally might charge 80, 90, $100 per hour, and you're probably around, what, 50 to 60. So. But just keep in mind that you're going to scale from 100,000 to 300,000 is completely predicated on your ability to sell and as well as while you're selling, doing the work, because you'll need to be able to do that.

Cool. All right, keep going through here. Hey, Mike, have you hired people with work visa? I want to try that route next year. We have not. I do feel like it is somewhat of a vulnerability because you just don't. You can't control it. Like, you cannot control how many visas you get. You can't control the timing of it. You can't control the politics or what the government's going to do around the HDB program. And so, personally, I don't want to have that vulnerability. I'd rather pay a little bit more and hire people that are local and that are legal. So that way I can have a dependable workforce, which is, I know is not easy. I know it's extremely difficult right now to find people, but I would say, like, if you have capital right now, I know it seems extremely counterintuitive, but I would recommend hiring people right now. And we hired three people this past week at our local shop. And literally in the ad we are like, the title I think they put in everything I think is either entitled to. The first line said, like, if have you been laid off from a construction or landscaping position? And if you are, we're hiring right now, we're going to give you hours during the winter. And so if you have some capital and to be able to do that without, you know, losing a ton of money over the winter, I would recommend doing that because there's people laying, getting laid off. And if you do snow contracts, like, it's a big reason why one of these, you know, we do snow even though it might snow once or twice a year. I want to keep my crew busy during the winter so I can pick them. You know, like we have just now pick up brand new employees, keep them busy throughout the winter, and then be able to keep them as we head into spring rush when it's going to be next year is going to be the hardest, bar none, spring to find employees. At this conference that we're doing in January, we're going to talk a lot about hiring. Not just methods like finding new applicants and things, but like, okay, once I get someone in, how do we actually make this where the people stay longer? Hiring people from Gen Z is a completely different ball game than it was five to 10 years ago. It is totally different. 2020 and 2021 has changed the game of how employees think and that you have to adapt. Right? The old mentality that I used to have and many of us as owners have had, it will not work. In the next couple years of hiring, it will not work. You have to completely change your mentality and, and completely change your thought process. You will not find, like this is, this is. The general thesis is like, you cannot depend on the one out of a hundred employees that are going to be wanting to work with you, 12, 14 hours a day, six days a week, one out of a hundred, maybe you'll find them and good luck. But you're not going to be able to scale a business trying to find one out of a hundred employees that are willing to work that those kind of hours and grind in the heat and the rain when they have the alternative now of a paying job that's almost as much if not the same as what we're offering. And they're going to be in an air conditioned factory with an Amazon fulfillment center doing this all day long and they get decent wages and they're, you know, and outside in the elements. So we're competing with that now and we've got to get creative. So we're going to be talking a lot about this conference is something we're trying to figure out. But next, mark my words, this coming spring will be the hardest to find employees we have ever had in this industry ever. Way worse than this year. Don't think it's going to get any better because of unemployment benefits not being here this spring. That is so wrong. It's going to be the worst ever. So you've got to start planning now the same way a lot of us are planning like buying trucks and equipment right now because of labor shortages. You need to be thinking the same thing when it comes to employees. It's going to be the worst spring ever. If you're looking for employees, and I don't say that out of fear like I'm just saying I believe that and I'm putting my money where my mouth is. We just hired three people as we are stopping our mowing season in a couple weeks locally. So.

Next question. In light of your recent video about upgrading your lawnmower, is it wise for a solo operator to buy new lawnmowers to handle all the lawns it would take to max out your schedule? Yeah, if you're wanting to stay small, a solo operator, you want to make sure you're ultra efficient, even if that's at the expense of upfront capital. So your return on investment might be lower because for example, if you're a solo operator and you upgrade your equipment, you might only use that piece of equipment for, let's say 15 hours a week. It's not like you have multiple crews that you can juggle it around and make it most efficient in terms of, of asset utilization. So that's a downside. However, if you don't want to go get employees to increased asset utilization, I. E. More trucks and more, more crews, then you better make sure that you're ultra efficient and that you know you do have the best equipment, you do have equipment that's dependable or at least have a backup that is so you never go down again. Getting a really good dealer relationship. This is why it's so important. I don't care what brand you have, get a good dealer relationship. Because if you're a good Dealer relationship and your equipment goes down, they'll probably loan you another like similar model for the day. So don't stress too much about that. I think people will buy like two or three mowers when they're solo, just in case one of them pops a tire. It's like, look, if you have a good dealer, they're just going to let you use it while they fix the tire. You don't want to have downtime. I get that. But usually a dealer is going to work with you pretty well or a good dealer should. So. Okay, more questions. Well, some of these questions are really, really big. Give me one second here. Let me get down to where we're at again. If you gotta text the texting number, text your question there. Okay, here we go. Are you worried about the economy dropping in the housing market dropping? Is it still a good time to grow in terms of your lawn care business? It is a great time to grow because in my opinion, a lot of people started their lawn care business in 2020 after they got laid off. And right now as the, as the labor market is heating up, they're going to go get a job because A their industry, their old industry is opening back up and it's extremely busy. B, because now their wages that they can earn are, have increased to the point where mowing lawns for $20 a cut is no longer going to make more money than what they could do making a 9 to 5. And so I feel like there's a big opportunity actually this winter. I think a lot of people are going to go out of business in this industry that started in 20 and 2021.

Hi Mike, we provide, we need to provide off road.

Machinery, gas usage only. Do you keep track of your off road gas usage and how. Okay, got it. So this is a question probably in relation to keeping track of your fuel in order for getting the tax write off. So there is a tax credit that you're able to get based upon off road.

Fuel. So if you use fuel and it's off road, that is your mowers, your weed whackers, your blowers, theoretically you're not. You don't have to pay a certain tax on that and you're able to get a deduction. Honestly, unless you are doing millions and millions of dollars in revenue, the question is like the time it takes just to track that is even worth the thousand dollars you're going to save a year or maybe 1500 if you're doing millions and millions of dollars in revenue. Because again, it just, you're just getting a small tax off of your fuel consumption and most of your fuel consumption goes towards trucks road. Right. So unless you're using big mowers off road.

I don't see the benefit even if I'm going because like just if I, if I have to pay my accountant for a couple hours to figure it out or I spend my time doing it for a few hours a year, I, I just don't see the benefit of it. But again, if you have massive amounts of off road, like you'd be doing like 60, 72 inch mowers going back and forth, doing acres all day long and a big chunk of your fuel consumption is off road. Maybe that makes sense. Hey, look at that. You can see my reflection. That window is messed up. See all those marks? Those are not like surface. You can't wipe those off. The previous tenant to this building, I don't know, there's something weird with that. But anyways, in case you just hopped on, this is the back room, this is the media room. You kind of see here, these are Stephen and Zach, work and everything, producing the films and everything. Some of the equipment back there. But anyways, Questions, Back to my questions. When.

When you have acquired business in the past, do you go looking for them by putting out ads or do you call local competitors or do they just know to call the goat? Honestly, this is when it's really important to have good relationships with local, local competition, right? You know, take some people out to lunch, give them some jobs, give some referrals to some of your competitors for work that you don't do, or if you're really behind, just give someone else some work, right? Because what goes around comes, they'll see you as a safe person to talk to. And when they want to let their business go, they typically don't want to advertise it to everybody else that they're going out of business. So what they'll do is they will come to you if they, if you've built that relationship up. That's why I think it's not just the right thing to do as a human being, but also from a business standpoint, a really good idea to keep good relationships with your competition. I'm going to talk a little bit about our team on Monday because we're having a team meeting. But like our local shop, we never talk about our competition. Like, I just think it's hilarious how people look at their competition all the time when like there's just no shortage of work. But more importantly, it's like why would I compare myself against Bob's lawn care and whatever lawn care landscaping company around me at the end of the day, if you can keep good relationships with them and they end up going out of business, they're going to come to you first and you're gonna get the best deal if you start advertising it. They don't like to because it's embarrassing sometimes to them as well as they, they don't have to go through the headache of like putting on the market, putting all their financial statements. They're going out of business, typically not looking good, very good financial statements. So you save them that hassle by having good relationships and then them turning to you first. I got a text. Sean Spencer, text me. It's hilarious. Okay.

Let'S see here. How do you move up on Google listing? We were on top of the list a few months ago and now we're 10th. We try to stay busy on Google and Facebook. Yeah. Try to keep your listing updated with photos. Most important is gonna be your Google my business page, keeping that updated, making sure your service areas are correct, hours are correct, your links to your website are correct as well as Google reviews. That's the number one way. Mike, you should give me a call. Okay. I think I know who that is. This is a really long question. After 18 years in business, we have decided to change our business model. With our inability to hire workers to operate our mowing crew this year we have decided to cut back from five days per week mowing to three days next year and focus more time on our more profitable work like fertilization and weed control, mulch core aeration, overseeding landscape installs and sod installation. We had four guys this year and now is myself and one other. We have been trapped with weekly recurring mowing and can't get to the work that really drives the needle. We wanted to cater to the customers that sign up for multiple services with us and if there's availability in our schedule, we would offer offer one off landscape installs and sod installation to the general public. What are your thoughts on reducing our mowing service, especially the customers that do not sign up for other services?

Man, I would not recommend that personally. What I would recommend instead of that is raise your prices to the point where maybe you lose half those mowing customers, but the ones you keep are so massively profitable that you can go afford to pay someone a higher wage and get them to come work for you. Because you're basically. When you let customers just leave, you're basically leaving opportunity on the Table. Like maybe right now they don't get landscaping from you, now they don't get core aeration from you. But what's to say they aren't going to in three years? And so what's to say they're not going to ask you for a $15,000 hardscape install that you can make a bunch of money on next week? So I, I, I'm a, I'm not a huge fan of this. If you want to stay larger, like, it seems like you don't want to grow small, like go small and like it doesn't sound like you want to be just you and one other employee. If that is your, you want that, then obviously raise your prices and restrict services like you're thinking. But if you want to stay larger and keep growing your business, I would say, hey, just double your, like double, but like 30, increase your prices at least for mowing, then be able to afford more to pay those people that are mowing the lawns. Right. So look at our local shop. Month to date for November. Makes you pull it up. One second. I actually show you guys this. One second. This is pretty cool. Oh man. Now I can't because it's got people's names on here. Give me one second. Let me see if there's any way I can block this off. Give me one second. I'm just looking inside of our P4P software. One second.

Let's see if there's any way I can share this with you without showing people's names.

Man, I can't really. Let me see if I can move this over.

Ah, no, sorry. I was going to show you our P4P software.

Man. Here. Let me see. Actually, I can do this. One second. I'm going to cut off the bottom of this page and I'm just going to show you. Here we go.

Let's see. Here, let me share the screen. You're going to see the average amount that our guys have been making in November. The average. Share this. Just let me just make sure that I'm not sharing anyone's names. Give me one second.

I think this will work. Just make sure.

You pull this out. Give me a second. Sorry, I just, I just got to make sure that when I do this that no one's names are shown on the.

Why is this not working?

Ah, cancel.

Sorry, it's frozen up my screen now. Give me one second, guys. I want to show you guys what, what we're making on average in terms of P4P at the local shop and show you this And I should be able to, but it's not letting me cancel. Okay, I'm gonna hop back into this. This might, you might drop me for a second, but.

Okay, we're back. Okay, cool. So I'm going to share my screen. Boom. Chrome P4P. Okay, so this is inside the software we have for P4P. You can see here the average per hour is 2377. So boom. And so the, like a 2377 is what we charging on using P4P a year. Two, probably two, three years ago, that average would have been like 21 or 20. And so you've got to keep raising your price to the point where you keep employees wanting to come. I'm very confident that the, the average landscaping company in our area cannot pay their employees 24 an hour because they don't have P4P. And so it's not to say that we are better. Just a matter of you've got to make sure that you can pay employees what they need to stay there. Some of our highest paid employees in November made above $30 an hour mowing lawns. They weren't even doing projects this month. So it's a matter of you've got to make sure you have economics to keep employees. And so if you're trying to think about cutting out mowing, what I would ask myself first is do you want to cut out mowing or do you want to raise the price on mowing to the point where it weeds out other customers, the lowest paying customers. And then you keep the customers that want to pay that premium price and therefore are able to pay people more to work and do the mowing. So.

As we raise prices because we're giving a percentage of labor revenue to the employees on P4P, as we raise price to the customer, the employees are also getting a quote, unquote raise. They're getting more money. And so that's why P4P works really well is as you raise your price and your costs are going up, the employees also make more money. So if they produce a good service and we're able to keep more customers when we raise prices, it's a good thing for them. So it's a win win for everybody. It's like, hey, we've got to raise prices to cover costs because of inflation. By raising our prices, you all are going to get more money. So they actually want us to raise prices because they'll make more money. And that's why over the past couple years, the average has gone up like three or four dollars. An hour.

So that is my two cents. Okay, more questions here with regard to Pay for performance. P4P. Do you have multiple person crews? If so, how does P4P work when some folks work harder than others? It's a great question. We talk a lot about landscapebusinesscourse.com.

And the bottom line is this is exactly why you need P2P. Because typically what happens is you've got a crew of, let's say two people. One person does 99, 80% of the work on a project, the other person does 20% and just like bums along. And this person makes literally like $2 per hour less than the person who's just kicking butt all day. So what P4P does in this scenario is the person who's working really hard is going to self police this person and let you know that this person is being lazy because they don't want to work with a lazy person. The most demoralizing thing for an A player is to work with C players. All right? What you want is you want to be where if there's someone who is slacking off and slowing everyone down, they don't want to work with them and that person will get pushed out of the organization. And so yes, you might have a little bit more churn because you find people, they, they work for a week and no one wants to work with them, but you're going to retain the all Stars because they can make more money. All right, so it's not a perfect system, but at the end of the day, by having two people that are unequally in terms of skill, this person must match this person. They've got to like work harder, they've got to learn skills better, they've got to learn from this high performer, otherwise there's no one's going to want to work with them. And I'd much rather have a self police system than one that I have to micromanage and always be breathing down everyone's neck. So. All right, guys, I really appreciate you. Thank you for everyone that has joined the texting group. And that's how the questions were submitted tonight. So maybe if you just got on, make sure you text the word landscaping to this number here and then occasionally I'll hop on here and do just a live video using just the questions from there. I appreciate all of you so much. Everyone that's joined lawn care, bookkeeper.com really appreciate you guys. As well as lawn care web design, Lawn care media and landscapebusinesscourse.com so so many of you have supported us so much. And this back area with the media side is where they will be editing new versions of zero Turn. We have our first zero Turn episode that we are going to be shooting out in Seattle, Tacoma next Friday. And then we have a series of five more episodes coming up in Texas at the end of November. So zero Turns be really, really cool. And all the all the those of you supported lawn care web design.com and lawn care bookkeeper.com and lawn caremedia.com and landscape businesscourse.com that's what this is going towards is allowing these guys to get out and keep some really good content for you guys and learn from a lot of other people in the community. So thank you all so much for being here. Have a great rest of your weekend. Thanks for hanging out this Friday night.