Q&A - Residential VS Commercial Mowing Service

Hey everyone, this is Mike and you are listening to the landscape Business course podcast you might watch on video on Facebook or YouTube. But today we're going to be taking Q and A. I'm going to be answering questions from the landscape business course Facebook group. But before that I have a very exciting announcement and that is I've accepted a sponsor on the show and the monies that are coming in from the sponsor are going directly into zero turn. So this is this summer I'm visiting six or seven landscaping businesses in, let's see, we're going to Rhode Island, I'm going to Kentucky, I'm going to Iowa, I'm going to Michigan, like going all over the place. And it's gonna be a lot of fun. And so part of the sponsorship is gonna allow me to do that. And so I wanna say thank you to Jobber. If you haven't already. Jobber, if you haven't checked it out or heard about Jobber before, they are what I would recommend for the middle level business. So you've heard me talk about Lawn Pro in the past when you're just getting started and you really low cost solution, then I've talked about Service Autopilot as kind of being like the Cadillac of software. That middle ground is Jobber. All right, so if you are looking for more integrations than Lawn Pro, if you're looking for a little more dependability and speed than Lawn Pro, but yet you're not willing to foot out hundreds of dollars every month for Service autopilot, this might be an option for you. So they're gonna give listeners of this show the first six months at 20% off. So your first six months of using Jobber, you're able to get 20% off by using this link. So write this down. It's getjobber.com, im.

Andys my last name. So getjobber.com, im andys and what it actually says on there is they asked me what I thought about the landscape industry and home service providers and like software. And this is a quote they have on that page. If you look it up, it's a quote from me. It says technology gives the home service provider the opportunity to prove themselves as professionals and not just laborers. The efficiencies gained from effective CRM, billing, routing and technology solutions is what I believe will be the difference between profitability and bankruptcy, entrepreneurial freedom and disorganized anxiety. So go check it out today. A big thank you to our sponsor, getjobber.com IM Andy's and check it out today. So without any further delay, let's go ahead and get some questions. Again, if you have not joined the Facebook group, I don't know what you're waiting on. There are about 800 landscape business owners in the group. And about once a week I ask for questions and that's where these questions are coming in from. Today I ask who had some questions. So I'm gonna get through as many of these as I can today and I'm just gonna find the group right now on Facebook. Check it out. Landscape business course. And while I'm at it, I'm just trying to find the group here. I do wanna say thank you to two groups of people. Number one, for everyone that has been signing up under the course landscapebusinesscourse.com you can sign up there and there's a couple different options. One with software, one without. And then also for those of you who have signed up for the conference, we already are filling up the conference. We have about twice as many people as we did last year have already signed up. So I'm really looking forward to it. It's gonna be a great event in January, so it's not during your busy season. So you're definitely gonna wanna check out landscapebusinesscourse.com conference and attend the conference. It will absolutely change your business. I do believe that it's gonna be 10 times better than it was last year. And it was pretty good last year, so I'm really looking forward to that. So without any further delay, let's go ahead and answer some questions coming directly from the Facebook group. So basically I just asked for questions and I'm gonna read them off and try to answer some of these. So Quin Kampf asked a question. He said, what should weekly monthly annual revenue to number of employees be? Oh, I see what he's saying. So first of all, I haven't seen any of these questions. You're gonna get my hot take on these as I read them. So Quinn asks, what should weekly monthly annual revenue to number of employees be? So basically, what should the revenue per labor, that's usually how I look at it, or per employee, I guess you could look at it be for your business. So I've seen numbers all over the place. It really depends on your business model because revenue is tied to cogs, your cost of goods sold. So if you're doing landscape construction, the revenue is gonna be a lot higher, but you're gonna also have molten soil and bigger trucks and more equipment and lots of other involved in your P and L. Whereas if you're like lawn mowing or maintenance or weeding, like it's mostly labor, it's less revenue, but your profit margin is going to be higher because you don't have all those cogs sitting on the P and L. So as a rule of thumb, I'm just going to say this as a rule of thumb. I've seen about an average, again, I've seen everything from probably like 50 to 200,000 per employee. As a rule of thumb, I would say 80 to $100,000 in revenue is what you're going to see per employee. I'm shooting for a hunt, you know. You know, ideally I want to see a business have $100,000 in revenue per field worker, not including the office staff or the owner. I'm looking for that because if you take out $40,000 of payroll, that's 40%. Now you have 60% to work with. And so I feel like you want to be under 40% in your labor. Again, totally depending on what type of project you do, if you're doing project based work and like landscape construction, hardscaping stuff, you're gonna have a lower percentage of your revenue going towards wages. But then you're also gonna have a bunch of material costs and equipment costs and more overhead for equipment and trucks and stuff like that. So it's a huge spread. It's hard to nail this one down, but for most of the people listening, for the general.

Rule of thumb, I would say 80 to $100,000 in revenue per crew member out in the field. So that would be what I would say. As a rule of thumb, again, I've seen everything from 50 to 150 plus. It's a huge spread like fertilization, weed control.

We're literally talking about landscaping and lawn care. But with in each of those is completely separate things. Like you can have someone doing tree services and then you have someone working on irrigation. Those are completely different industries, really. And so to compare and just say as a rule of thumb for the whole green industry is very difficult. However, I've seen on average a good business doing 80 to 100,000 in revenue per person out in the field working. Kevin Magnuson asks, how do you properly gauge your company's rates versus your competition? We are not looking to have the same rates, but it is useful to know what the ceiling is in our market. So two things. Number one, create really good relationships with other landscapers and break down the barriers that you're gonna like cheat on them or be really honest about everything you're doing so that you actually share bids. I don't see this as a negative thing at all. If you're really concerned that you're gonna share your bid and then they're gonna come undercut you, you have to realize that that means that they're reducing their profit margin. And so that's a sure way. Like cutting your price to be other people's bids is a fast way out of business. A lot of people get concerned about like new businesses or people growing really fast in their market. Look, if a business is not profitable and they're not running their operations well, if they're not efficient, they. The more business they get, the faster they'll go out of business. Because the faster they'll expand, the faster they'll get more employees, the faster they'll get more trucks, and the faster they will go out of business. If they are doing that sort of thing and cutting prices to get projects and things, it's an absolute sure fire way out of business is to be cutting prices. And so number one way to find out your competition prices is to get a good relationship where you all share prices. You talk about them and it's nothing. That's weird. Most. Not most. Some I should say in terms of like. Number like 20%, 30% of the landscape is around this area. I have a relationship enough to where we could go over their bid. I could help them on a job. If we were both bidding on a project, we'd talk about it together, share numbers or whatever. That's the number one, easiest, best way. That takes sometimes years to develop that relationship. It's something that I push really hard for Augusta franchisees as we go forward to develop those relationships and bring down barriers within our industry and realize that we're all trying to do the same thing. And if we can keep the level of professionalism higher, keep the prices higher, it's gonna benefit us all. It's not tearing each other down. It just hurts the whole industry and hurts all of us. So that's the number one thing. Second way, if you're just getting started, this is not if you're established, this is like if you're just getting started. If you're established, you should go make relationships with these other landscaping businesses. And it will take years sometimes to break down the walls of competition and all that. But just stay on it. Just be honest, be positive, Try to when they need help, step in for them. That goes a long ways. Develop those relationships if you're established, if you're just getting started, this is what I did when I was really young and we had no idea how to price anything, literally. I had my friends get two or three other landscaping businesses in our area to give them quotes, and then I had an idea of where those numbers were at. So if you're looking for round numbers, just to know where everyone's at, that's a way to do it. Ask your friends and family to get quotes and compare numbers. Do that only if you're getting started. If you're established, you should have your numbers down. If you don't, don't base it upon other people's numbers anyways. However, you should go develop some relationships with other landscapers, try to help them add value to their businesses, and be able to talk about as a community of landscapers in your market. And to increase the value, increase the prices and everyone will win. So that's my take on that. Kevin Fairburn asks what steps or process is taken when developing and implementing a system in your business? Okay, so steps, let's assume you have an idea for a system in your business.

My strategy is usually just like, go for it.

Unless it's a horrible idea, you should try. And if you create a culture where people are accepting of change, that's easy. If you don't like, if people don't like change in your organization, this is a little bit harder. It might mean you testing it and then bringing it to everyone's attention and talking about it and things like that. For our organization, I've made it pretty clear that we're trying to just test a lot of things out, seeing what works and then implementing those things. And so they see changes all the time. And I come up with an idea. I see it from another landscaper, I see it from people I talk to on the podcast. I see it usually in another business altogether, like tech or something like that, an industry that's forward advancing. And I'm like, that would work in our industry. I get an idea, we implement it. I'd say 30% of them don't work. The other 70% are the core foundation of our business model and like the reason we succeed. So. And that constant repetition of evolving, changing, getting better, constant improvement, you know, looking for improvements from your guys, implementing those things, even if they're not, you're not sure if they're going to work. Showing that that's valued within the organization. But the steps or process for me really is implement and track. Implement and track, implement, track, revise, I'd say is probably the steps I would take. Implement it, track the results and then revise it or can it, right? So you're gonna get started, track the results, and then either can it like it didn't work or B, how do we revise it, change it, make it better? And then you roll with that system. So that can be like the littlest things from like where you put your keys for all of your crews to the routing, the way you do routing. There's a system you put for everything, and it really is for us. Try it out, track the results, see if it's actually better. If it's incrementally changing or making something more efficient or making more profit or getting more leads on your clicking on a newsletter banner or like a certain ad, whatever it is getting really fanatical, tracking it and then deciding, okay, are we gonna can it? Or is it a little bit better? But we can even make it even more better. So that's the kind of. I am very much about fast for someone. If you're in an organization where that's not the case, people don't like change. I would recommend taking a sample size. So, for example, instead of doing newsletters, for example, if you're like, hey, we should do monthly newsletters, because Mike says we should, well, cool. Maybe your organization isn't going to like that. Your office staff isn't going to like a ton of emails coming back and people complaining about being spammed or whatever. Maybe you just do 2 or 300 of your clients or 100 clients, and you send a newsletter to them in the email and see what happens, track it, see the results. Maybe you get a job out of those hundred emails and you realize, oh, it's probably a good idea if I send out 5,000 more of those to everyone else in my customer base. But you can start off with the small sample size and then extrapolate the system from there.

Isaac Kreitz asked, would you tell someone that is starting off to do residential rather than commercial?

I think I would, actually. I don't think I've ever had that question. I've had people ask, is residential better than commercial or commercial better than residential? I always say, like, there's no right or wrong answer. It's about your business model. But I've never had someone say, would you tell someone that is starting off to do residential? And the reason I would say, yes, I would tell someone that's just starting out, not a lot of experience just starting their business. Residential is easier to get started on because if you're gonna make mistakes, you might as well do it on a $30 per week mo instead of a $3,000 per month contract that you have 12 months locked in on and you're losing two grand every single month. So if you're just getting started and you have no experience, I would recommend small residential to get started focusing on just simple services. Don't go for landscape construction when you've never mowed a lawn and never installed sod. Like, focus on the simple, focus on the small. And people that think they are going to lose money when they're doing simple services and small residential and they somehow think that big properties are going to like solve everything for them, they're wrong. Small problems in residential become big problems in commercial. Big wins in residential can lead to big wins in commercial and vice versa. Like, the business model for a commercial company versus a residential company is very, very, very, very, very different. And so it's sometimes very tough for companies to do both. As companies scale, usually they choose one or the other. It's very rare that you see like a 50, 50 mix of commercial and residential in a business that's three plus million dollars. Like very rare. They chose one or the other. There's no right or wrong. Both of them work. But to get started for someone who has no experience, not a lot of business experience, doesn't know their numbers down to a T. Don't go for a massive contract that's $50,000 a year. Like, you're gonna lose your shirt or you luck out and you do really good on it, but then that person doesn't renew next year. And now you're down to like 20 grand in revenue on a couple other projects you picked up. So I wouldn't start off commercial if you have no experience. But if that's the model you want, I would cut your teeth in either A, getting a job for a commercial company. Another business, say, hey, look, I want to work for you guys for two years and learn the trade. Go out to a different county so that you're not gonna be a competitor, figure it out with them and then come back and start your own commercial thing. Or B, start your own residential and then move into commercial. If that's your dream, if that's the model you want. Marcus, love. What kind of ads do you run at this time of year? So this time of year we only run ads twice a year, and that's at the very beginning of spring and then right in the summer months when we're trying to generate projects to keep the lawn mowing guys busy. So those are the two times a year we do ads this time of year. It's all about showing projects. We're much more likely to sell a project right now than we are a mowing customer. Because mowing customers, most of your sales are gonna happen this spring and they're gonna have the highest ROI because you're gonna get them from mowing the entire season instead of just the next few months. So this time of year and we're talking July, August, summer, the ads we're running is more for project based work. Cleanups, we go after like overgrown properties, things like that. Chuck Burchfield asks with fall coming up, tips on finding and hiring a part time end of season guy to run with my full time mowing employee while I run sprinkler blowouts, where to find, what to look for, general tips. So a couple ways you could do this is other lawn care businesses that are just mowing, they're mowing only and they have to let people go in July and August because it gets so hot and.

The amount of mows they have to do every day declines a lot because people cancel and things they'll start letting go of employees this time of year because they don't have project based work. So that's really one of the only reasons we keep project based work like cleanups and things and like small landscape jobs is to keep people busy during the summer so we don't have to lay them off or we'd have to let them go. But there are other businesses that lawn care, mowing only, businesses that will slow down. July, August, you can pick people up during that time or try to pick them up before they go back in September, October to.

The businesses that laid them off in terms of how to find them, that's one option. A secondary option, I would run ads and give them an option for higher pay, seasonal or lower pay, full time guaranteed. So either say, hey, look, I'm willing to pay you 25 bucks an hour, but you're only going to work for two months or you can work for 18 bucks an hour, but you're going to get full time year round work. So give them the option and be willing to pay more per hour to get that seasonal labor. Usually that seasonal labor is looking hard at dollar per hour. They're not so focused on like benefits or other things. They just want like how much money am I going to make? And so if you can raise that and not have to pay them year round, you can afford to pay them a few dollars more per hour. If you're paying someone by the hour because you don't have to pay for them during slow season and try to keep them busy with unprofitable work, et cetera. Amity Morales, which by the way, Amity posted a really cool picture last week on Landscape Business Course Facebook group and she goes out and helps her husband when employees don't show up for work. And everyone liked that picture and I gave it a thumbs up too. Amity asked, what is a red flag in your business? What should we really be paying attention to? Dollars, services, customers, employees, to make sure we are on the right path. So basically I think what you're asking Amity is like kind of like, what are my key performance indicators? What are the things I'm looking at, paying attention to all the time? I'm paying attention to.

Revenue versus labor cost as a percentage on every single person, every single day on the micro. So like for example, Augusta Lawn Care franchisees, when they become franchisees, they have daily reports, weekly reports, monthly reports, and on each of those things they have what we call max metrics. It's named after Max, which is our mascot. But max metrics basically are these key performance indicators. And the big one on a daily basis is revenue generated versus labor cost. Like that's really important. Tracking that, super important. Knowing that number is super important to me. And I want to know per person. Because if I see someone doing really, really, really good and their ratio of revenue to payroll is super high, it means I need to give them a raise. And if I see the opposite, where revenue, the ratio of revenue to payroll is really low, in other words, they're not making much revenue, but their payroll is high. Like the lower that number means that they need to either get a pay cut or they need training or there's something wrong or maybe they just had a hard job that day. But like, if you see a consistent trend, you can really determine a lot. And something I'm really interested in is charting that over time and seeing that graph and, and literally you'll be able to know exactly who to give raises to, exactly who needs a pay cut. Like we literally just had someone leave because I gave him a pay cut based upon those numbers. And so he left a few weeks after that cause he couldn't afford the pay cut. But I was making it based on pure numbers and exactly who was the most efficient and who was making the company most money. And so those are the things that are important. If you're unpaid by performance, like we're switching to, that's not an issue because it's not as Big an issue in terms of trying to keep track of who needs pay raises. Cause it's based on performance. But if you're paying by the hour, that's a really important number to know. And I wouldn't know that number even if you were going paid by performance. I would still wanna know that ratio of revenue compared to labor cost. So that's one of the biggest metrics I look at. I also look at number of recurring customers. I look at obviously revenue every day. And so those are the daily ones I look at like red flag. That's what you asked. Those are the daily ones I'm looking at a lot. And there's obviously monthly ones and like close percentages and lead ratios and things like that that we look at too. Ben Juarez asks, what is the podcast called, Mike? Oh, Kate, cool. Thank you, Alberto, for answering him. All right, Wes Ezel asks, what are some questions you ask during first interviews for crew members, Things that will make them tell the truth about what they are really looking for, how their values line up with yours. So I ask them a lot of times a question that usually that they haven't thought about when they're coming to a landscaping job is laborer. I'm like, so what's your long term goal? What do you want to do with your life? And they always take a second because they're not expecting that question a lot of times. And the reason I'm asking that is cause I want to know what is in their mind. Do they want to own a business one day? Is their goal to go to Antarctica and live there? Is it to work in the lawn care business for the rest of their life? Is it to save up money so they can go to college? Is it to save up money over the summer so they can go back to school? I want to know, number one is an easier question, why do you want to work here? But then more importantly, how does that why do you want to work here align with what do you want in life in general? Like what's your goals? Career wise, family wise? Because if those aren't aligned, I don't really care if they're aligned with my goals or not. I don't care about that. It's like if they're them working in Augusta is not aligned with them and their passions, like and, or like how it fits into the global goal of their business, then that's gonna be an issue there. I'm not gonna be able to keep them very long. So secondly.

It tells you a lot about a person when you ask what their goals are and what they have the plans for the future are. Because if they have none, they're probably not gonna work very well. In our environment, where there's plans, schedules, there's goals, there's metrics, there's accountability, they're probably not gonna work very well. If they give you a blank stare and just say, I just wanna make some money, man, that's probably not someone I'm gonna be interested in. So that's one of the questions I talk about in terms of trying to get them to tell the truth, that they're really looking for values. Yeah. So that's one of the questions I would ask Corey Bigelow, trying to get a few more of these in. How do you detail out mowing jobs, what to trim, what not to do, that you can send new employees onto a job and have the job done to the same standards. Two things. Job notes on every single job. Secondly, videos. Videos are a beautiful thing. We use YouTube, we use WhatsApp to get those videos to the crew so that they can every single time see what that job looks like and what the standards are. Paul west having a hard time with the Washington. Oh, fun. So I think Paul actually I'm going to be seeing on the zero turn as part of the zero turn video series coming up. So let me read the question. Having a hard time with the Washington state mandatory paid sick leave regarding what I believe is employees abusing the law. For instance, today I had an employee show up just to say he was.

For instance, today I had an employee show up just to say he has a headache and can't work. I know this show.

Oh, typo. I know this should be covered in an employee handbook, but I currently don't have one. Not sure how to handle this situation as I can't afford to lose any employees right now. Thank you. So Paul west lives in Washington state. In Washington state this past year we have a mandatory paid sick leave law that went into effect that basically, I think it's every.

40 hours.

Let me just get this right. I think it's every 40 hours. They get an hour's worth of paid sick leave and that paid sick leave can be. Sorry if I'm not saying the numbers exactly right. It's less than that. I think it's like half an hour per 40. But anyways.

Sorry, it's 40 hours per 2000. Yeah, yeah. So basically, if you work full time in Washington state and you work 2,000 hours, it comes out to be 40 hours, like a week's worth of Paid sick leave. So being gone, if you're sick or immediate family members are sick. And there's some other situations, too, but like Paul said, employees can abuse it because they can, like, literally, oh, I'm sick today. I'm gonna take off. I want sick leave for today. So it makes it very hard to depend on people to show up when that's happening. And they can just not show up, claim that they were sick, and you have to pay them. It's mandatory. So there's a way around that, and that is to offer a better program than the state gives. So what you can do is you are allowed, as long as it's more than 40 hours per 2000, you're allowed to make a program as a benefit that benefits your people if it's better than the state program. So what we did is we now give two weeks paid time off. So it's better than the program. We're allowed to do it in substitute of the paid sick leave.

And so it cost us more. It cost us twice as much. However, we're able to regulate the vacation leave. We're able to say, hey, you have to give us two weeks notice in order to take advantage of paid sick leave. Sorry, vacation time, paid time off. So we can regulate it more. It costs us twice as much, but we can regulate it. And people can't just call in sick and we have to pay them. And you can't fire someone because they call in sick. It's against the law. So even if you think they're lying. So.

Yes, an employee handbook can help by requiring a doctor's note and things like that. But if you're not trusting your employee because they're lying about being sick, maybe they shouldn't work for you. However, I would offer. This is what we did. We offered a better program. This actually came as a result of someone on our team suggesting this. When the program came out, they said, hey, why don't we do paid time off? And then you can regulate this for us so people don't just not show up. And I was like, yes, that was a good idea. So it costs us more. Costs almost twice as much as what the state actually regulates. However, we're able to regulate when people take that paid time off. Last question. I'm gonna take. How do I find help? This is Matthew Jenkins. How do I find help? How do I find help that will show up when I need them? This is a very, very broad question. There's lots of times I've mentioned things about hiring where to find people. I think you gotta go out and find them. I think you gotta consistently be interviewing people. Having a benchmark is a valuable thing. Like people that you said, hey, look, we don't have any room on the team, but is it okay if we keep your contact and we will call you when there's the next opening? Having that bench, like three or four people like that is super valuable and also valuable when, you know, spring rush comes and things like that. To have that bench of people, you can tap into that labor force and then they don't, you know, you can let them go. Have a seasonal kind of labor force. But how do you find them? Career fairs? Craigslist, Facebook ads? Indeed. Going out to career fairs at local colleges, at high schools. Going and talking to colleges and high schools.

Trying to get on your local radio station, Putting flyers up around taco trucks. If you're going off the Hispanic market, whatever it is, you gotta get creative. You gotta put banners, you gotta put stuff on your trucks. If that's. If finding hiring people is a big problem for you, you should get as fanatical about it as you do about marketing. So ads, banners, signs, telling everyone about it, putting it on the back of your business card, putting it on your trucks, it's just a way of marketing for laborers, just the same way that you would market for customers. So hopefully that helps everyone out today. And I really do appreciate everyone's questions on the landscape business course group on Facebook. But until next time, everyone, I really look forward to helping you out. Go to landscapebusinesscourse.com Sign up for the course, and definitely sign up for the conference. I'll see you then.