REAL Profit and Loss Statements from My New Lawn Care Business

Hey, everyone, it's Mike and you're listening to the Landscape Business course podcast. This is a special episode because I'm going to be showing actually the P and L and some of the financial information around our Mount Vernon location for Augusta Lawn Care. So, as I've said before, we recently started a second corporately owned location for Augusta Lawn Care, and we'll do that every couple years simply to make sure that we're staying on the cutting edge of advertising for startup advertising. When you're larger and more established, to have some brand recognition is very different than when you're advertising and getting started. And so this is really our goal here is for Mount Vernon location and future locations that we start from the corporate location that we actually own. Instead of being a franchise, instead of doing that, you know, we want to own them so we can show these financials, show these this information, and either a inspire you to know your numbers when you're just getting started and compare and contrast. I don't know of anyone else that actually shows their P&Ls from their landscaping business on the Internet. So a lot of times we can be kind of an ambiguity in terms of if we're doing good, if we're doing bad, if we're high, if we're low, et cetera. So another reason why we wanted to show these corporately owned locations is to show the potential of what a franchise can do. The Mount Vernon location is treated like a franchise in terms of paying its fees and royalties and pays command center, all of those things. And so, as I've always said in a lot of my podcasts, a P and L tells a story. And so today I'm going to walk you through the story of the first three months in business at the Mount Vernon location. And so as we go through the story, I'll be adding more details and things like that. And I'll try to do this every couple times a year to kind of check in and show you all the new financial information. Couple things to keep in mind in mind about the Mount Vernon location is that is, number one, I know we're not the most efficient with our advertising dollars. And that's because a big objective for us and the reason why we started a second location that's corporately owned, is to test and try to figure out marketing strategies. And so I know for a fact that we put probably 30 to 40% of our money, even probably more like 50% of our money at the Mount Vernon location, into channels that we knew probably weren't gonna work. But we were doing it simply to test out the customer acquisition cost, the click ratios, things like that, and so that we could give that information to our franchisees. So I wanted to make that a note also. A note is that I do not. I do not operate this location. I'm not the owner. Well, I'm the owner, but I'm not the operator. I go down there maybe once a week just to check things out, see if they need any help. But this is completely being driven by a general manager. He's actually my brother who used to be a teacher. And so, you know, Covid and all this stuff happened. And now he is our general manager at the Mount Vernon location. And he gets a percentage of profit from the business in addition to a salary. And so his payroll is about $1,000 a week. And so if you wanted to look at this P and L from a standpoint of being a franchisee or starting your own business, you could think of his salary as your pay that you take off the table and going home. So I just want to make it very clear that this is being ran as if the owner, the general manager in this case, is getting $1,000 per week salary. So keep that in mind with all the numbers. You know, if it looks like we lost money, just remember someone was still taking, you know, 4,000 plus dollars off the table for their living expenses. And the reason we wanted to do this is because I really believe that if a business is starting on the right fundamentals, that the owner can draw a salary if needs be pretty soon, if the business is built correctly and built lean, especially in the marketing in those first few months. So I'm gonna walk you through that. I'll probably add some more details and things like that. But again, remember, a profit and loss statement tells a story. And so I'm gonna go through the last few months at the Mount Vernon location and tell a story of us starting. And a profit and loss statement is like, it's very hard to lie if it's done correctly. Obviously, if someone's cheating or fudging numbers, which I guess if you really think I'm trying to sell franchises by showing this, you would think that I'm manipulating these numbers so, you know, you guess you don't have to trust them if you don't want to. But these are straight from QuickBooks, and these come directly from our bank account and the credit cards that Zeus and Tim have. So currently the location has two employees. One is a general manager and one is an employee. And the general manager is Tim he gets a salary, and then Zeus, he is on P4P. And so if you don't know what P4P is, it's pay for performance. It's where you pay people based upon a percentage of revenue instead of an hourly rate. And so another thing about this location is, do I think we could have grown this much, much faster? Absolutely. A couple reasons why we did not do that. Number one is because we want to prove the concept from a franchisee's perspective, and that is most franchisees do not have $100,000 to kind of burn in their first year. They need it to get profitable within a few months and spend $50,000 or less in terms of getting it to that point. And so do I think we could be doing twice as much revenue as now? Absolutely. Do I think we could have four or five employees? Absolutely. But we didn't know where to just throw money at the situation, build it up. And even though it would be more profitable down the road and all the rest of it and the numbers would look better, I wanted to make this realistic for someone that was starting out as a franchisee. So keep all those things in mind, and I'll relate back to those things, but do keep those things in mind. It's not like we were trying to make this, like, as fast growth as. That's not the reason for this video. The reason for this video is just to give people a template and show you the start of a business, how much we spent, and give you some comparative analysis. All right, so let's jump right into it. This is QuickBooks. I'm just in the reports and for them, profit and loss report. And so you can see we start at the end of March. So we made a whopping $60 in our sales. And then these are all the expenses. So this is kind of like the startup expenses. A lot of people ask, how much does it cost to get up and going as a franchisee? You're looking at something like this. You got a truck and some equipment. You got your initial advertising. Again, most of that was. This is the chunk that was probably wasted the most because we were testing print in the middle. Literally the day we opened is when Washington state went down in lockdown in March. And so I wanted to test if every door, direct mail was going to go up or down. And it hit rock bottom. It was horrible. So a lot of this money was probably wasted and something that we would have usually cut in the budget, probably $1,000 in. But we spent a lot significant to test if this was A trend. And it definitely was during the pandemic. All right, so and if you're watching this in two years, you're like, what's the pandemic is the coronavirus. So anyways, advertising, marketing, $9,000, almost 8,500. You got a little bit of fuel in there, got insurance costs. I think a lot of that was because we paid a whole six month in advance for our premiums. And I wish I had some of these numbers for you in the future. I'll dig deeper. Otherwise this is gonna be an hour long video. But I can break down what we paid in premiums and things like that. In terms of trucks. We got one truck and then all the equipment. This includes blowers and push mowers and all the miscellaneous chainsaws and.

Blade sharpeners. Like just a whole bunch of stuff. Office supplies and software, rent and lease. So we started off in a storage facility. If you haven't seen that video, I just search, I don't know. Storage. Start a start lawn care business in storage facility or storage unit. And that's where we started. And we had to have. Unfortunately our truck was too long to go inside the unit, so we actually had to rent a parking space outside. Plus the 25 by 10 unit, which was not ideal. And that's why our rent was so significant in that month. Including the damage deposit and things they take. Taxes and licenses to get up and running. This includes getting an LLC started, Legal fees and taxes too. Just tax stuff. Part of that would have been buying the truck, the taxes for the truck. All right, tools and supplies and then employee wages and related. You can see that there's $1,000 there because Tim. That was the last week of March. Again, we just started this at the very end of March and Tim got his first weeks of pay and he has $1,000 a month. All right, let's go to the next month.

April. Whoops. April 1st to the end. I know for some people it's gonna be like the worst video in the world. For other people, be really helpful. And I'm doing it for those of you who it'll be helpful for. All right, so April 2020, first month in business again. We're starting from like nothing. And at this point we couldn't do door hangers. We couldn't do. And we never really were able to do door hangers. By the time our our counties got out of lockdown, we were already so busy that we didn't have time to do door hangers. So unfortunately, that's why the advertising Spend was higher too because the only way we could reach any customers is through digital media. We couldn't do door hangers, couldn't knock on doors, social distancing, all of that was going on. And we had competitors who rightfully so, were a little bit freaked out that we were coming into this new area and they were calling on us all the time and I had the police calling me, just making sure we're doing stuff right and all this stuff. So anyways, income $5,000, not really anything major. Again, you know, the first week of April, second week of April, you just get a couple customers and we're just trying to like. You can't really do door hangers. You can't really knock on doors. You're just kind of spending money on ads and hoping some of it come back. The every door direct mail campaign flopped because of what was all going on the news. And people were not paying attention to what was in their mailbox. They were paying attention, was on their phones and on the news. So anyways, advertising $2,000. This is probably what usually we would have spent in March, usually. But we were testing a lot of things because it was the beginning of the pandemic. And we need information and data for the franchisees, fuel expense, insurance, truck and equipment. Probably just polishing some stuff up. Let's see, let's go ahead and click on it and see this was. Oh, this is the 30x mower from Carl's Mower. So that's what that is. So you can see here, if you're in QuickBooks and you run a report like this, you can click on this and get all the information pretty easily. Wages and employee related. And so this stepped up in April and let's see why. So we got some payroll started going.

Command Center, Command center. We paid 485 to command center. So keep in mind that for the Mount Vernon location we have Command center doing full service, which means they get all their email taken care of. Customer service. The Command center runs their P4P. They do just everything in terms of setting up jobs, answering customers, the whole bit. And so the expenses seem higher for wages because we got Command Center. But again, Tim is the general manager. He does estimates, he's out in the field. And then Command center takes everything off his plate in terms of answering email, emails and if they need information from him, they can ask him, but he doesn't have to deal with the emails or putting jobs on the schedule or selling jobs. That's all done by Command Center. So again, that's probably an expense you could definitely decrease. But we're trying to run this as the way we would suggest a franchisee doing it. And that is having command center take as much off your plate so that you as the owner, in this case a general manager, can spend time doing estimates, getting the bids done in an efficient manner and doing the work while you're just getting started.

All right, so we lost $7,000. All right, next month. So again by the end of April we started to get some work. Now because like the pandemic thing, we had a weird time. We didn't have enough recurring jobs set up. And if anyone's in this industry, most of you felt the effects of the virus at the very beginning when projects and one time work and cleanups kind of took a nosedive. But as long as you had recurring revenue, you kind of got through that time just fine. And then it started picking up in May, June, et cetera. So what we're seeing here in April is we did not have any recurring revenue because we just started and no one was accepting projects. So it was a learning experience for sure. And we able to start by the end doing a few door hangers I think and starting to do some stuff that's a little more in person. Cause the restrictions were getting lifted slowly. All right, now let's look at May. So this is now where actually like the pandemic kind of thing was over. We all start kind of operating at a regular pace and normal levels. Alright, so this is in May. Now in May we bought another truck. So $7,500. So you say, oh, you lost 13,000. Well, we bought an entire new truck. We bought a trailer you're gonna see here soon, a dump trailer. So you know, you can see the 7,500 was for the truck. Then you got this rent and lease, the 3300. This is when we moved to our new location which has shop space. So again, you're investing in the business. Right. Total income did not go up a whole lot. Again, that's. Remember that especially with recurring services, if you bill at the end of a month, you have a lagging indicator of revenue. So if you have a really bad month, it's really gonna show up in the next month of profitability because you bill them say May 1st for all the services done in April. So again, April was really weak because again, right in the middle of the virus, not really good for advertising, not good for projects. And we didn't have any recurring mowing set up. And so that was a rough Month and that showed here in May. But we knew what was happening. By the end of May things were really starting to pick up. So we got a second truck and then the last week of May we hired Zeus. And in this month too, Tim had a baby. And so that kind of helped us kind of get Zeus up and running. This is like real talk, you know, like everyone talks about how great their business is but like people have children and people get hurt and people have family situations. You gotta move things around and when it's a small business like this, you really got to move things around. So Zeus stepped in, helped with because Tim was away for a couple days with his baby. That was kind of ushering in of Zeus being a full time employee down there, which he started in June. So that's when you'll see the revenue really pick up. So May 20, 26,000, almost $7,000. Again, pretty, you know, it's what, 40% increase from month over month, but really nothing significant. Spending a significant amount in advertising. Bought a new truck, spent about $3,000 on the rent and then we also had to pay some more money out for the storage units because we exited early. So probably lost $300 doing that. And then obviously Tim's payroll here for the month of May and you can see it's really Nothing more than 4,000 really because it's mostly going towards just the payroll or the salary for Tim. Alright, next month.

So this is now actually like, you know, we got employee going up and running and really this is last month. So here we go. Revenue jumped up to 21,000. Again there's a lagging indicator. This means that May was a really good like that's when stuff started to pick up for us in May is actually when work started to flow. We got Zeus starting June 1st and so really strong month, 22,000 and we only lost 2,900. You can see our wages went up to 6,400 and that's because of having Zeus as an employee now and large truck and equipment. Let's click on this. This was the 5 by 10 dump trailer we got here. We got a whole bunch of other little stuff, painting the P2, the second truck, etc. So quite a bit of stuff there. So significant investment here, advertising decreased. And the reason that is is because we don't intend on trying to grow a whole lot more this year. We're going to, we want to make 2020 a profitable year for this location. Again proving this model to the franchisees. Now if I was like hyper growth And I just wanted to go, grow, grow, grow. We'd continue to pump money into advertising, and we'd easily get this to 50,000amonth in monthly revenue by the end of the year. And that's not the goal here. The goal is to show that it's sustainable growth and we can have a general manager, in this case pull a salary like a franchisee could in the scenario of becoming a franchise owner. So the revenue was $22,000. Advertising was quite a bit less. Credit card processing. You can see fuel insurance, truck. So I think that 130, 50, that's for the trucks, insurance, auto insurance. And that'll go up a little bit because again, we bought the truck right at the beginning of June. So, like it probably reflected from the last month here, got the dump trailer here, so more expenses there, got more tools and supplies, because now we are moving into our shop. So the first week of June 1st is when we actually moved into our new shop. So we spent $3,000 the month before and about another $3,000 in tools and supplies once we got to the new shop, because we had to get everything set up. We had to put in gravel, had to put a culvert in for drainage. And these are all investments into the business. And even with all of those investments, including the trailer and all the rest of it, we only lost three grand. Right. And that's really good because literally, if you take away the trailer and you take away the fact that.

We got the trailer here and what was the other thing here? Oh, yeah, just the shop. About $3,000 in putting the gravel down, putting drainage in, grading it all out. But that's gonna set us up really good because now our rent in the future is going to be $300 a month with no dumping fees. All right, so you'll notice if I go back to previous month, there was dumping fees. Well, now there's no dumping fees because the rent is going to be $300 a month, include all the dumping fees. And then we won't have these big expenses because this was also including a storage container. So we got a 20 by a 20 foot storage container which was $3,000. And we got that delivered to us, and we use that for dry storage. So all the mowers go in there at night, Tools and equipment go in there. And if you haven't watched that video, definitely check it out. 20 foot. Basically a container that goes on a boat across the ocean and a storage container that can also be towed on a semi truck. And so they come when they Deliver it to us. So obviously, wages stepped up. Again, Command center, I think they paid about 2,000. No, let's just open it up and see. $900. So they paid $979 in June for command Center. Again, Command center is doing everything from answering their phone calls, answering their emails, setting them up for jobs like the whole nine yards. And so in my mind, that's an absolute deal. I don't have to deal with anything. I don't have my phone. I don't get emails to my phone anymore. The manager just responds back to the command center if they have questions about specific jobs or, or customers inquiries, things like that. So on a really good path right now. Again, if we look at year to date. Oh, wait, we can go to July. So July, by the way, June is when we actually became profitable, because the first week of June we were spending money on the shop, we bought the new trailer, et cetera. But the second week of June is actually when we became profitable at the Mount Vernon location. It doesn't show up here because of those big expenses in the first week. But if you go to July, you can see that we have a healthy profit so far. It's July 9th as I'm recording this, so I'll just do July 9th. So month to date, you can see we're profitable right now. And so we got sales and we already got a profit here and going well. So let me go to year to date. So this year to date for a report, and you're going to see kind of the whole breakdown. And you can see negative $50,000 is what we have at the Mount Vernon location is negative $50,000. Now, again, that being said, you got to remember that negative $50,000 includes paying the general manager a salary of $1,000 a week. And the reason we're doing this, we're tracking this very closely. Even though we had this pandemic and it really messed us up. And it was a horrible, like the worst time to start a business because you couldn't do cheap advertising in the form of door hangers or knocking on doors, especially when Tim didn't have anything to was no work. Like.

Even all of that stuff, the numbers still work. And that is really. We need someone to have $50,000 and they're going to be able to come in and make by the time they've spent that it'll be profitable. We will be profitable in July. And I actually know that we were profitable after the first week of June, but we had those big expenses. So on our P and L. From a cash basis, it looks like everything was. That's another point I didn't really clarify. I'm looking at a cash basis, right? So like when I take $7500 out for a truck, in this case, I'm actually looking at it from a cash basis in terms of in and out of our bank account. I'm not like some people would take that truck and just amortize it over like five years, for example. I'm not doing this here. I'm looking at like money in the bank, alright? And I'm doing this for simplicity. I know that from an accounting standpoint you should take that asset and you should amortize it right over the five years or seven years or whatever the lifetime expectancy of that piece of equipment or truck is. But this is, I'm doing this because a lot of people ask, like when it comes to the franchise, like how much money do I need? And a lot of times I say if you have 50,000, you're going to be set up really good. The reason I say that is because we're able to take a salary of $1,000 a week. Now if you did not take that, you could have put that into marketing and grown it quite faster. But taking that $1,000 a month, $1,000 a week, sorry, the general manager's taking that, doing all the estimates, doing everything that an owner would do, command centers, doing all the back end emails, phone calls, sending the estimates out, etc. And so negative $50,000 taking, including that salary for the general Manager, you said 36,000 of that was on trucks and two trucks, a trailer, a storage container, a bunch of hand tools, backup mowers and equipment inside of the storage facility. You got $5,000 that we spend on rent and lease. A lot of that has to do with gravel and setting us up for growth to probably half a million or so before we need to move on. And so that was an investment. And then the biggest thing here is your advertising and marketing. And so you can see we spent $16,000. I expect in 2020 to spend $20,000 and for us to gross $200,000 in revenue. And so if you watch my videos before, you know, I expect a 10 to 20x multiple on your advertising dollars in the trailing 12 months. So say for example, we spent.

$16,000 in our first three months. What that means is that 12 months from now, I expect that marketing to produce at least 160 plus thousand dollars in revenue. Alright, so from now, or sorry, from, yeah, from now till next year, I expect us from the marketing that we've done to make a minimum of 160,000 in revenue and we'll easily do 200 in the next six months. So like I expect 2020 to be 200,000 in annual revenue. I expect what that means that instead of 12 months, I'm looking at nine months. Right, because we started March. Technically we really started after that. But anyways, March, let's say nine months. In those nine months we're going to spend $20,000 and get 200,000. I would say that if we actually look at the 20,000 that we spend in 2020 over 12 trailing months, we'll probably do about 260 to $270,000. And that's putting us at about a 12 to 13 times multiple on this money. And if I'm losing, you don't worry about it. Look back and watch the video about recurring revenue and the power of investing in your business. But I'm looking between a 10x and a 20x multiple the next 12 months after spending a dollar in marketing. Alright, so if I spend $1,000 in marketing this month, I expect over the next 12 months for that thousand dollars to earn me 10 to $20,000. And so we expect to spend $20,000.

In 2020 and I expect that to return about 260 to 280,000 in revenue. Again, I think about 7,000 of this. $7,000 of this advertising dollars you would have probably have not spent if you were the owner. We were doing it really just to test some things for the franchisees. And in doing so we learned a lot of stuff during the pandemic. Every door, direct mail was very, very bad at the very beginning. Facebook ads, certain parts of it were doing really good. Then things like Nextdoor and Google local services and Google Ads, those things are transitioning throughout the pandemic. And we're seeing right now what those are doing. And a lot of the reason we have that data is, is because we spent this money. And that's why it's so important for us to do this from a corporate standpoint to know what the numbers are as they're in real time because it changes like literally from one month to the next. We changed our marketing strategy based upon these numbers and our franchisees pushing them in one direction and telling them to avoid other directions in marketing. So I hope that helps somebody. I want to click over real quick to service autopilot. But again, this is kind of what we expect is $50,000 for someone to get involved in the franchise, to have that money, whether it be they've got it in a loan form or they have it in cash, that's going to set you up a really good cushion. Because again, there's 14,000 of this that went to a paid salaried member that would typically be the owner. Like Tim Wood is kind of the owner figure down in Mount Vernon. All right, so that's that. We know that from here on out, we're going to be profitable. And we expect by the end of 2020, after the salary of Tim and all, everything's paid for the net income to be above break. So that's kind of what we expect. And again, that's pretty good. If you were the owner, if you were Tim, if you were the general manager of a location, to be able to take a $50,000 in a salary for the year and your company break even and be on a projection of profitability is really, really important. And again, he pays his franchise fees. He pays for command center everything. Exactly the way that a franchise would grow. And again, I really do believe that if someone spent $16,000 now, they would probably be at 30 to 40% more revenue simply due to the fact that, you know, I'd be telling you, don't spend any more money in this. Spend it over here. But we were doing a lot of testing, all right over in servers, autopilot. This is also the Mount Vernon location. This is inside of our CRM. And so yes, I'm sure someone could steal our addresses. Go for it.

Not too concerned about that. But I appreciate everyone just being honest. I don't have to blur things out and spend my time doing that. In our CRM here we got these are database of customers. And then if we go ahead and add a filter to our recurring jobs.

Service recurring. There it is. Active, paused all of our services. So basically knowing that's recurring, but you can see we have 40, 40 recurring customers. So not a lot. Most of those came in the past few weeks or in June, I should say the past several weeks. Because during the pandemic, we could not get around and do a lot of things in person. And people were pushing services off. They're allowing their glass to get really tall. So June we picked up a lot of these 40 recurring customers. About half of our revenue right now is recurring. We're pretty heavy right now on depending on small projects, which is cleanups, trimming bushes, weeding, et cetera. But again, a lot of that has to do with the pandemic. People letting Their grass grow taller. We're doing overgrown mows cleanups now instead of they should have been a couple months ago. And so that's kind of why that breakdown is that way. I didn't want this video to be super long, so I'll just leave it there for now. If you guys have questions, go ahead and post below. We do have a new franchisee starting new training coming up and that is going to be August 6th, 7th and 8th. So at the time of the recording, it's about a month from now. If you're wanting to join, you definitely need to contact me right away because we try to build your website and get it live before you get here. So definitely you're going to want to contact me right away. I know a few people have already contacted me and you're coming to the next one in October or in December, so that's totally fine. But for those of you who are trying to get in August, definitely let me know. And I'd love to get in the phone and see if you're a good fit. Just go to augustalongcareservices.com franchise and I can see if you'd be a good fit for us. And again, this is just to show you, number one, regardless of whether or not you're going to become a franchisee, just showing what it looks like to start a business. Right. Like, I know for a fact that from now on every month will be profitable. I also know that to get to that point, while taking an owner's salary of $1,000 a week, it took $50,000. And so having that money is really, really useful. Do I think it could have been less if we were more efficient on advertising and the pandemic wasn't around and we already had recurring revenue to lean on? Yeah, absolutely. But this got us up to the point of having two. Two trailers, A truck. Sorry, two trucks, a dump trailer, a storage facility and a shop that's really, really going to allow us to grow and scale. So I think we're in a really good spot for growth. This could be done a lot more efficiently. Yes, absolutely. Did we need two trucks? Not really. We could have done with one and just have. Whoops, sorry, the two. Tim and an employee going in a one truck. Sorry, this is all messing up anyways. Yeah, it could have been done more efficiently in terms of trying to be more profitable. We were trying to grow. We were trying to get to the point where it's doing 20 plus thousand revenue and we expect that to stay pretty constant. 25 to 30,000 in monthly revenue through this year, and again, 200,000 in gross revenue is our goal. And becoming for the entire year, basically paying off all of our equipment, paying off all this stuff you see here. This should be net income of zero at the end of the year. And that would basically mean that we paid everything off. The general manager had a salary throughout the entire period. And again, like an owner would for a franchise, they could do that or invest it back in the business because they want to grow more. But that's kind of the metrics that we're looking at. And so I hope that helps you, whether it be you're interested in a franchise and kind of the numbers behind it, or if you're interested in really just starting a business in the lawn care and landscaping industry, and you're kind of like, wondering, like, hey, how much should I be making? Like, is this too much? Is this too little? Like, why? You know, why did Mike get it for so cheap? His insurance, things like that. But again, this is the most recent month here in June. 22,000 in revenue. That's two employees. Which one of them is the general manager? And he's doing all of the estimates and all the rest of it. I expect this to go about 25,000 in July and for us to be profitable by at least five to $8,000 in the month of July, in addition to the wages being pulled by the general manager. So thank you so much, everyone. Hopefully, that was helpful. Again, if you are interested in becoming a franchisee at Augusta Lawn care, check out augustalawncareservices.com franchise. I'd love to talk with you and see if you'd be a good fit for Augusta Nation. Take care and have a great day.