Retire as a Lawn Care Millionaire: Secret to Growing a MASSIVE Business!

Hey, everyone, it's Mike Andes. If you don't know who I am, I'm the founder of Augusta Lawn Care. We have over 70 locations around North America. And today I'm actually sharing a long, long video. So maybe wait for this one or maybe listen to it while you're mowing lawns or doing some landscaping. It's gonna be a great video, I believe, for all of us to listen to. And it's actually a recording of a keynote that I made on last year's conference. So every single year in January, we have a Landscape Summit. And last year we had to have it virtual because of COVID 19 and the restrictions that were in our state. So we had to have it virtually over zoom. So this is a recording of what we played live that evening, the very first evening of the event.

So this IS Landscape Summit 2021, which.

Is about 10, 11 months ago from the time I'm recording this. And in just a few more weeks though, we are having Landscape Summit 2022. So if you're watching this prior to then, I really recommend you come. It's a great event. And if you like this video that's very long and very educational, if you like it, I guarantee you want to make sure you come to this year's event.

I'm going to be really leaning into.

This type of content this coming year. So I think everyone will benefit right.

From someone who's just getting started and.

Really trying to grow all the way up to a larger style business that's doing multiple millions in revenue. I think it's going to be a great event to bring your managers to your spouse to get on the same page, create a marketing plan for 2022. It's going to be great event, so make sure you come. Just go to Landscape Summit. That's Landscape Summit Co, and that will redirect you to the page where you can sign up. It's $299. Every single penny goes into the event.

We don't make any money.

I lose money on this whole thing.

So I really want to make this.

The event that I always wish I had when I started my lawn care business, my landscaping business. And I think it's gonna be awesome.

So please go ahead and sign up.

For that now and without any further delay, let's go ahead and roll this again. This is the Thursday evening, one of the first keynotes of last year's event that was recorded.

It was virtual.

This year is in person. It's gonna be great.

I look forward to seeing you there all Right, let's go ahead and get started. And so for the next 45 minutes to an hour, I wanna talk about Feed the Beast. And really what we're talking about is the importance and value of marketing in a small business. And I think especially for young entrepreneurs, young landscapers, I think a lot of times we're always hearing people like Grant Cardone or people like Gary Vaynerchuk or these people we look up to these kind of celebrity entreprene entrepreneurs and a lot of times think that we need to be investing elsewhere besides our business. Whether it be the stock market or real estate, we're doing these other things. And I think what we sometimes forget is that really a small business is the most, and we're going to give you numbers and everything in just a moment, is literally the best investment vehicle that you can have if the business is being run correctly. So we're going to talk about that a little bit and talk about feeding the Beast in terms of that beast wants to run, that beast wants to go, it wants to really expand and grow the business, the beast. But you've got to feed it. And that comes to marketing. And a lot of times people get scared when I say, oh, you got to spend 5,000, 10,000 in marketing, or like spend 20,000, we spent X amount in marketing, they get freaked out. I want to talk about why it's so important to Feed the Beast and why doing so is actually an incredible roi. If you look at and you compare it to stocks, you compare it to real estate and all the rest of it. So we're gonna jump into that. Before you do that, I want to talk about the seven main levers to improve cash flow and returns in your business. Alright, so seven levers.

That you can really.

Improve your business. And really, throughout this whole weekend, the things that we talk about from an operational and tactile standpoint, most of them are revolving around one of these seven. All right? So number one is price. And so obviously this is a lever that you can pull. Price is, you know, you can increase price by increasing price. You are able to increase your margin, you're able to charge more, therefore you're able to pay your employees more, therefore you're able to buy more equipment, therefore you're able to spend more on marketing. Price is a massive lever. When it came when Covid happened and our gym closed down, when we opened back up, we tripled the price. We tripled the price of our one on one coaching as well as team group training. So basically anything to do with A personal trainer or a group trainer. Literally we 3 times like 3x the price, which is completely counterintuitive to what so many people were doing at the time because they were thinking like oh, because of COVID people don't have a job, people are on employment, people are conserving and saving money. And so it seemed counter intuitive. But what I had to realize is like look, if I can do, let's say for example, right now we're doing training, right? And we were, let's say 50% profitable on all training services. Okay? So if I take this and this is now we're 50% profit. So 50% profit and then the other cost of the trainer, overhead, whatever it might be. Okay, now if I triple the price, literally what I did is simply did this where I have turned.

The same exact type of training, the same type of material, just the way it's presented and literally the price, I've turned this from a 50% margin business to about an 80% margin part of the business simply by increasing the price. One of the biggest levers in your business. Literally I could now sell five times like literally five times as much training. Like in the old days, if I would've sold five times as much training, I would've profited the same amount as I did with this triple in price. So price is a massive lever. Obviously when you raise price, most of that price increase is going directly to your bottom line. So if your Profit margin is 10%, whoops, 10%, that's your profit margin and you increase your prices by 5%, literally you go from 10% to 15% margin and literally you have increased your margin by a factor of 50%. Like literally just by raising your price 5%. So that is literally going from $50 an hour to $55 an hour. Simply by doing that you will increase.

Your profitability by 50%. That is what you call a leverage. Alright? A lever is something that when you pull on it there is a lot of, there's a fulcrum and that means that there's a whole bunch of reaction from the other side. It's like a teeter totter, for example. So if I take a teeter totter, this is the fulcrum, this is the center point of. I'm going way off my notes here, but this is going to help somebody hopefully increase their prices. And that is, this is the fulcrum. This is the point in which the center of the point of the center. Now if I move this fulcrum this direction, so I move it this way. And now when I put this out, the fulcrum is right here.

What happens now is this has become a lever. I like to call this potential action, potential reaction. It's about to happen because literally, I can move this side of the fulcrum. I can move this, say, one foot down. And if I do that, it's literally going to swing this thing up all the way and move it till it's about.

Here. So what that means is that I like to look at levers in the business. That's what we're talking about, the seven levers in your business that you can pull on and make a massive change in your company. These are the seven things that we're talking about. That's what a lever is. Changing Your price by 5% right here literally can increase your margin by 50%, going from 10% to 15%, by the way. That's literally taking average landscaping company into a very profitable company according to industry standards. 10% very average. 15% above very, very good. Okay, so when I say that you raise your prices by 5%, again, not rocket science. We're literally gonna take our $50 per hour. $50 is now going to become $55 per hour. Maybe in the past, we charged a dumping fee of $100. Well, guess what? That's going to 110. Wait, no. 5%.

It's not even.

What do we do here? We messed up. Look at this. I made a mistake. So we're not even raising it from 50 to 55. That's a 10% increase. Literally, we're only moving that to 52.505% increase in price. Literally every single one watching this video could raise their hourly rate by 5%, no problem. Okay, well, if you charge $100 on a dumping fee, we're gonna charge 5% more. You're literally gonna go from 100 to $105. Literally. That's all you're going to do. You're changing your price by 5% a little bit, and it's causing a massive change in your business. Price is one of the biggest levers in your business. And when we change it at the gym, we. We dramatically change the business model to focus more on training. Because I want to focus on that thing that's 80% profitable and not some other thing. That's 10, 15, 20% margin. So, again, price is one of your biggest levers. Again, if you're going to actually raise your prices by 5%, you can't just do it to labor. If you're going to do it, you can do it across the board to dumping fees to product. If you charge a product cost per yard or per plants, that markup, everything going up just 5%, all of your prices up 5% literally can take your business from 10% to 15%, which is a 50% increase in profit. Because if over here I made $100,000 in profit, over here I'm making $150,000 in profit literally by changing my prices 5%, by changing my hourly rate from 50 to 52.505% difference, doing all these other tiny little changes that are so minuscule, that tiny little bit of pressure on this lever makes an incredible difference. You literally gained $50,000. That is incredible. Alright, so price, that's the first one that we want to talk about and we just talked about in terms of the lever. The next thing is volume. Alright, so let me just erase all of this. So maybe right now you have 500 customers, you could become 600 customers. By doing that, you can increase the size of your business. That's a massive lever to be able to improve the return on your business. Number two, I can write it here is volume, sell more units. So if I put this, I'd say increase price here. That's a lever. Here is increase units sold. Now, you could think of that in terms of customers, like number of customers, but I would actually almost think about volume in terms of how many cuts do you have per year? How many times do you service their property? Do you get one or do you get two cleanups? Do you get one in fall and spring or just the fall? Do you get fertilization? Do you get these other services that are ancillary? These are all. The volume game is usually where people focus on to grow their business. And you've heard me talk about this before. We'll talk about it more on Saturday. In terms of people focus on this one usually first, when I don't feel it's the first thing you should do. And that is just adding more services so that you can increase the volume of visits and the volume of services provided to each customer. All right, so if you're mowing lawns, an easy way to increase number of units sold or number of services per year is simply by adding fertilization, simply by adding in weed control, simply by adding in bush trimming, simply by adding in fall cleanups. And all of a sudden you're in a slippery slope to just consistently and constantly adding more and more volume. Now, not a great lever, in my opinion, but definitely something that can be used in your business to increase the leverage of your company. Alright, so if I'm doing a mowing only company, I'm doing $2 million in revenue. And I was approached by this person like, look, we've tapped out, we've raised our prices, we're premium the market. I say, okay, well what if we added, what if we added a fertilization unit? Could we literally have a 50 to 60% profit margin? Because we could instantly do get $500,000 in annual revenue just by emailing all of your existing mowing customers because you have 2,000 of them. Why don't we just email all of them, sell them a new service and increase volume? Maybe not the best thing to do because again, you're adding complexity to the business. But that is absolutely a lever in the business. The third thing, cost of goods sold. So reducing cost of goods sold. So reducing cogs is going to be another lever in the business. So we're gonna talk about cogs and probably I think it's either tomorrow or Saturday, we're going to talk about cogs. Cost of goods sold really is a breakdown of cost of labor. So actually write this down. We'll talk very much more in detail later on in the conference. So don't worry about this too much cost of labor. Then we have cost of materials.

And then if you have any subcontractors or anything like that. So if you add subcontract subcontractors. So we'll talk about this later in the conference. Some of the averages in terms of percentage that you should be finding when it comes to cogs, cost of labor, cost of materials and your subcontractors. Now can you decrease your cogs? Can you decrease your cost of goods sold? So for example, cost of labor, we're going to be talking about P4P. Definitely a great way to reduce your cogs, reduce your cost of labor is by implementing P4P. Better yet, maybe not even in reducing the cost, but increasing the efficiency of that labor that you are spending on cost of materials. Could you go out, could you go to your suppliers? Have you ever thought about trying to haggle with your suppliers? Have you talked about trying to get price discounts? If you order 40 yards of material at a time or 50 yards of material at a time, instead of getting it two or three yards a day, maybe saving $500 a month is worth putting up a bin with ecology blocks and storing that material at your yard, for example. Again, always trying to think about cost of goods sold. How can you Decrease that your subcontractors. Are you actually getting enough bids to make sure they're price competitive? Or maybe you should cut subcontractors out completely because you aren't making enough margin. Or they're costing you so much in labor just to manage those subcontractors and you just cut them out completely out of your business by perhaps maybe adding their service volume or just completely eliminating that part of the business completely and simplifying the business 100%. These are all things you can do to reduce your cogs. Cost of goods sold is your labor, materials and subcontractors. I think I'm always amazed at how people always will think about growth and expansion when literally they are bleeding efficiency when it comes to labor and they are literally bleeding money every single day because of waste in their materials. So we talked about cost of materials as part of cogs. Literally they have plants that are dying in their yard that have sat there from overage from a project. They have literally 10, 20, 30 pallets of pavers that are all leftovers that have been sitting for years and literally have the whole watermark and the whole bit because they've been sitting there for so long they're never gonna get used. And maybe they have a half pallet of this type and a half pallet of this type. Or these are kind of half cut. These were a mess up job. And all of a sudden cost of goods sold starts to increase because of lack of efficiencies and waste in the business. We're gonna talk a lot about simplification and that's a big piece of reducing waste when it comes to cost of materials. All right, number four again we're talking about the levers you have in your business to really increase the returns. Alright, next one is operating expenses. Operating expenses. We're going to talk again a lot more about some of these numbers and different types of operating expenses, et cetera later on in the conference. So you can obviously reduce these is a huge objective. All right, this is a big reason behind why we have Command center at Augusta is to reduce the operating expenses for the franchisees of having an office, Having someone have an office manager, having coffee for everyone, having a toilet, having plumbing, having electric, having Internet at an office. That's one of the biggest killers for a business. And that's why we have Command center for the franchisees. You don't have to be a franchisee to realize that operating expenses can eat up your business. Having too much management, having all these project managers that you want to have because it's cool to call them that they like. The title is literally could be eating in your profit margin simply due to the fact that they are not producing revenue. All right, we're going to talk about later again in the conference. In terms of.

Non revenue producing employees versus revenue producing employees, you want to do everything you possibly can in your business to take out and remove or simplify the roles of the people who are not actually producing revenue for your business. And when I talk about producing revenue, I don't mean selling jobs. I mean actually doing the work that we get paid for. Because until we actually do the work, until we trim the bush, until we install the mulch, until we pull the weeds, until we cut the grass, we don't actually make money. We can sell jobs all day long as an estimator or salesperson, but until the work is done, no revenue is generated. And so one of the biggest killers for operating expenses in this industry is you. Someone get, you know, they have an owner and they're literally trying to like, oh, I'm not. I'm going to work on my business. I'm going to work. I'm not wanting to work in the. I'm not going to work in the field. And they have like two employees. It's ridiculous. One third of their labor force is considered an operating expense. The estimator, yes, it's the owner, but you cost money. And then I see, sometimes they'll have five or six employees, and then they have like an office manager, an estimator, a project manager, and themselves. And literally have four people out of 10 that are completely an operating expense. They do not produce revenue for the business. They literally answer emails, answer phone calls, sell jobs, manage jobs, but don't actually do the labor that is required to make revenue. Very, very important. And something I think is overlooked in our industry, especially as people grow, it's very easy, like, oh, I need a manager for the office, then I need a manager for projects, then I need a manager for mowing. And all of a sudden it's like, look, half of your team is literally not even producing revenue. And we're gonna talk more about ratios in terms of like, why would you have a one to two ratio or a one to one ratio where you're like, for every person in the field, I need someone in the office or I need an estimator or. Or I need someone that's literally just driving around doing quality control. You've heard me talk about quality control and how I think P4P can wipe out that role of quality control. Because with P4P, people are coming and checking every single time by making sure that the crew before them did their work correctly. And so I really believe things like quality control. Having a non revenue producing employee driving a truck, an asset that should be outweighed, mowing lawns, having them drive around all day, usually a higher paid employee, by the way, most experienced, highest paid, and they're driving around not producing revenue. Massive operating expense reducing. That is an absolute lever in your business. Because every single dollar that you can cut off of operating expenses goes directly to the bottom line. Being very efficient in here in the operating expense lever is extremely important. Number five is accounts receivable.

Receivable. So how is this a lever? You can reduce the time it takes to collect on accounts receivable on people that owe you money. So this is the $5,000 project that they sell you. Three thousand and two months later, you're still trying to get the money. Reducing the time that it takes for you to get this money is so important, especially as you grow. I cannot overemphasize the fact of how many companies I've seen that are profitable on paper, but literally every single day are checking their bank account and like don't have enough money. And they're wondering if they can hit payroll because they're running a $400,000 run rate every single year and they have $100,000. I've seen this $400,000 in total gross revenue for the year and almost $100,000 in accounts receivable. You will never be able to grow the business. And literally on paper, that business looked to be about 15% profit. Like it looked good on paper from an accrual accounting standpoint, which takes the money when the job is done. But from the cash standpoint of like money in the bank, we actually received the money. They were like incredibly long period of time to collect on the money and to get the money to them. What can you do to that? What can you do to make sure that your accounts receivable is reduced in time? You can accept credit cards. You can make sure you get at least 50% down before the job starts. You can make sure that literally the moment that someone's card gets stopped or a card gets declined, you don't keep mowing them for two months and then try to send them to collections for an exorbitant amount of money. No, you stop right away. What's that doing? It's making sure that you don't have accounts that literally are three months old. Four months old and then all of a sudden, December around, you're trying to collect money from a mowing job that you did in March. Like that's ludicrous. You're not going to get that money. And we're not a bank. We are not a bank that literally does all these services for someone and then bills them a month later and then lets them go like 3 months without charging them extra, without giving the extra fees. We are not a bank, we are a service based business and we expect to get paid if someone's card declines. If someone doesn't want to pay, you stop doing service for them. Whether that's to be going to do is make sure that you're not doing a bunch of work where cash is outside of the business. So what happens here as you increase the time of accounts receivable? Cash flow is very difficult because you got money coming in here, but then you got money going out at a faster rate. And what's going to happen? This literally over here is accounts receivable. This is cash flow.

And what happens is this starts building up like this is potential. These could become arrows, these could become cash flow into the business. This is your outflow. And what happens is if you continue doing this, where there's a little bit of money coming in but more is going out, eventually your cash flow gets wiped out. Eventually there is no more cash flow and you need to make sure that this account's receivable. How this can get fixed is simply by making sure that more of these arrows, more of your accounts receivable become cash flow faster.

Accepting credit cards, great. Accepting 50% down or more on a project, great. I've seen people that require 100% of projects, even if they're 10, $15,000 to be paid up before you even get started on the job. But at least 50%, because 50% should cover what COGS. Alright. So if 50% can cover your cost of material.