Showing My Team How Much $$ The Business Made... Open Book Management!

Hey, everyone, it's Mike Andes with Landscape Business course. Today is a midweek motivation meeting that we have with our employees at the beginning of the day out at the Whatcom county location. It is not a mandatory meeting, so usually five to 10 people show up. We do it about 30 minutes before everyone else comes to the office to get their day started. Today we go over the numbers from our August 2020 P&L profit and loss statement. There's a video that you can also watch that actually shows this breakdown that I'm showing them today. I do another video that you can watch and see that same breakdown in the studio. So if you want to see that for some more detail and context, feel free to watch that one. But the day was just kind of a time to share with the employees, give them as much. You know, we do open book management, so they see how much the company is making and all the rest of it. And we just implemented a profit sharing program with the those out in the field as well as the office staff. And so you'll hear some of that mixed in with this as well. So hopefully it's encouraging to you to really open up your book, show your employees your numbers, and realize that a lot of times people are really afraid of the fact that when I make a bunch of money, my employees are gonna be mad and just you can see that there's gonna be months, you're good and bad and you can explain them, they can learn from it. And if they're participating in that profit and they're participating in the growth of the business, you're not usually gonna get a whole lot of kickback. So hopefully this is inspiring to you and you can open up your books and begin to have open book management for your team. So let's go ahead and watch the video.

These were all pre traditional net income at the end of the month of 67, almost 68 grand. It's one of our best months ever in terms of profitability. The big thing to keep in mind is the fact that months don't really show the whole story. Because, for example, I know that this month our payroll right here, it says 60, 60 grand. That will probably be 90 grand this month at least actually be almost 100, probably more, because two things didn't happen last month. Number one, we only had two pay periods instead of three, which happens in September. And then also there's like, this month will be profit sharing, so it'll increase the payroll expenses. Right? So, but overall, like, hey, I'm not complaining. We had a really really good month in terms of net profit at the bottom here. We did buy one trailer, the D4. So our DT4 so that those are just shy of of ten grand the trailer. But other than that there was no other like sunk expenses in terms of assets. So like in June we lost nine grand. But it was because we bought two trucks, a car. You know we're doing bought a bunch of the 30 inch mowers. And so that was a lot of the expense there. Whereas last one was pretty much kind of how we want to keep it where it's like we're not buying a bunch of assets. So nothing major really. Advertising market, we don't do a whole lot besides just like next door Facebook. But I use a little bit of money from the shop here locally to test some stuff out. So we actually ran Snapchat ads last month just to see how it performed. They performed miserably like I thought they were going to because you're targeting like 13 to 20 year olds. But should I say that's their main demographic. But.

It'S good to test it. And we kind of use this location in Mount Vernon to test those things out. Credit card processing, nothing really else out of the ordinary. The office and software, we pay a little bit more because we moved everything here. Got a couple computers that. But really nothing else that's out of the ordinary. Truck. Truck and equipment. So you got take 10,000 out of that. But you'll see this is why it's so important about like going to.

Get stuff fixed. We dramatically decreased our cost at Carl's this past month. Significantly. Let me just zoom out here. So you can see here you got Carl's M.O. and saw these. It charges down here. And then we got. Look at this. What's this actually? Actually.

Is it the gravely? Yeah. See that's why Michael hates zero turns. Right. That $1200 expense is more than what we would spend. Even though they break the small things on the push mowers. This is what we spend on a push mower. This is what we spend on a zero turn. Right. So you're looking at what was wrong with that? I have no idea.

That was the ETT one.

Correct. Did we get it fixed?

No, because we didn't pay to get it fixed. We sold it to him as is.

So let's see what this actually is. Click on it. I don't know what it's for gravel repair. So it can also be too sometimes that if we fix something like a month ago, but they just charged our car like that. Was in the middle of August. But anyways, that's the general premise. You know, you get things like we did buy two trimmers there from Carl's. But in general, these are the kind of expenses we look at when we break something on a push mower or a 30x versus usually hundreds of dollars on a tractor.

Yeah, they're almost 500 bucks a piece if we get a steel attachment on them. And the blowers, they're now almost 600, right? Yeah. And right now you just hope and pray you get one because they're so backed up. We get one. And then what we did for ET2, we gave them the zero turn and we got a 30x mower and a trimmer. So basically we got like 34, $3,500 worth back for it. And we've used that from my second year of business. So that was pretty good. And we didn't have to fix the whee. That was gonna cost us. How much?

800, I think. Just the whole wheel assembly was gonna be like 4 or 500 bucks.

Yeah.

Plus the labor for them to take.

And within the next year we would have had problems with that motor just cause it's getting so old. Right. So that's good though. We really dramatically reduced. Minus this expense. I don't know what that is for.

We really reduced how much we took stuff to Carl's like the month before. We had like twice this list. So Caleb and everyone else has been working on that. You guys have been really helpful in that regard. So then in terms of the profit sharing, June obviously brought us down. But then we had a decent July and a really good August. So then what I do is I take everyone that was in the field, divided that out, and then take out the people who were late, the people who weren't here for the whole quarter. And then that's how you kind of come up with that number. So I feel like that number is going to be pretty consistent. I hope. I feel like it's going to get better as we really focus more on profitability. It's like going forward, we're not hiring a ton of people, we're not buying a bunch of trucks, we're not getting a bunch of more trailers. We're really trying to focus on what we got and just map maximizing the profitability. Raised the prices on projects last month, which is awesome. And then we raised. We're raising the prices on mowing in October. So doing both of those things will really help with the profitability side of things. So that's Kind of the goal now for this shop is really just to focus more on the profitability, not so much growth and getting more trucks and all the rest of that. So any questions about that?

Pino, what about subcontractors?

Yeah, so there was one job we needed help on doing some edging for some boards. So Liberty Construction came in for the day and helped us basically just labor do that. And then irrigation repair. This was. This is actually, we make more than that on a. On a project. I'm sorry, on a contract. And we bring in.

Evergreen to do the irrigation, and then we make a little more than that.

So where was that?

At the festival squares, the irrigation and Liberty Construction was on a project that we did. And we just got a little bit overheads on some of the edging for the wood, some like beams. And so we just called in a contractor to do it. Yeah, we lost on the job a little bit, but like, we just need to make the customer happy. Yeah. So.

Yeah. And so like in. Traditionally, when you look at a profit and loss statement, the two things I look for right away is subcontractors and then tools, supplies, and materials. Because if someone's. They'll brag about or like, they'll say, hey, I have X amount of revenue. But if they're doing landscaping and projects, they're gonna get sucked up with a bunch of tools and supplies, like materials. Like that's like, you don't really make money on those. Like you make some mark, but that's like cost of materials. It just gets. That cost gets passed to the customer, but it's still considered revenue. Right. So like I talked to a guy on the phone the other day. He's doing a million in revenue with only five employees. But like 400, 500,000 of that is just supplies and materials because he does pools. And so the fiberglass pools, every single one is like 15, 20 grand for the in ground insert with transportation. And so it dramatically makes the number, the revenue number look big. Right. And so like, that's why last couple days I shared a little bit of our backend I've done before profitability because it's not enough just to look at the revenue. Like it is a bad number to look at. Right. You look at June versus August, we had one month where we lost money and made just a little bit less revenue. And this month we made a little bit more revenue, but like infinitely more profit. Right. So that's why it's always important to keep the profitability in mind. And when you're growing you're not gonna get these numbers right. So that's why we started doing the profit sharing. That's we took $50,000 for the franchise right now, because now we can focus on profitability instead of, like, buying trucks every month, buying equipment every month, getting new employees every month, it just costs a lot of money. So that's kind of P and L in a small. Any other questions on that?

Cool. I wanted to go over one thing or I had a thought the other day. I shared it with Nick, and I thought I'd share it here. And that is just in general, kind of like.

I was thinking about how, like, when people first start to get their first job, and it's always, like, by the hour. Like, basically every job is by the hour. And I was thinking about, like, just in general, like, when it comes to a career, and where most people try to, like, get is usually go from, like, an hourly position to, like, a salary position per year. And then, you know, your goal really usually is investing and thinking, you know, outside of those time frames. And I think what it really does, it has nothing to do with the dollar amount that you're making. I don't think it has anything to do with that. I think it has to do with a mindset. And I think the problem with an hourly wage is you start thinking in terms of hours. Whereas if you're thinking, like, your payroll, like, okay, I'm gonna pay X amount this year, and you start thinking, like, in bigger chunks of time. And then when you start, like, investing or something, you're thinking about, like, decades, like, and you're not even thinking about, like, what did I make in the past hour? And I think what it reinforces for people is just the mentality of, like, I'm only going to focus on how much money I made today, or, like, the past hour. Like, that's all. Like, that's so transfixed. Like, 15 versus 16. Like, o, go get a different job, I can make a dollar more. It's like, has nothing. When you're in that position, it has to be about what you're getting besides the money. It has to be about, like, what are you learning? Can you grow and figure things out and get skills in that position? And so I always try to push people when they first come here. Like, look, it's not going to be the money here in the next three years that you're going to really be like, oh, I went to Augusta and changed my life because of the money. It's not going to happen. It's not really going to be life changing money that you make here. It's really going to be about what you lear and what you can do to like, we kind of, we want to give you the ability to stand out there and like figure things out in terms of leadership, project management, learning the numbers. And that's what you're going to learn, right? And so instead of thinking about like what did I make in the last hour, like trying to just broaden your horizon, like what did I learn, like what skill set, like what in the past year or two years is like going to be the thing that really down the road makes a big impact on my income. Right? And I think that's the problem with so many people. They spend their 20s, 30s, 40s thinking about dollars per hour. Dollars per hour. Dollars per hour. And they wake up and realize, okay, I've gone from 15 to 20 bucks an hour and it's like not much of a change. When if they would have spent that time investing themselves, educating themselves, trying to improve themselves, get new skills and maybe go work for free, but get skills that become really valuable down the road, I think that'd be really important for our society. And I think that's what most people get trapped in coming out of school. They get forced into a doll because they need to pay their monthly.

Tuition or like their, their bills, right? The loan, education loans they got, the college loans. And it forces them that mentality of okay, I gotta build this month, therefore I gotta work X amount per X amount of hours this week at this rate, per hour. Whereas when you start thinking about investing or down the road, you look at like a billionaire, they don't even think what they, they're making per hour. They lose money some days. Some days, like Elon Musk lost $20 billion the other day. Do you think he really cares? Like he didn't care less, right? And whereas some people like the stress of losing $20 billion, they'd be like, my goodness, I couldn't do that. But take it easy, he's still worth 80 billion. So like, I think it's important just to think. And not even in terms of money, but thinking in terms of like, okay, I'm in an hourly wage position. We try to manipulate it somewhat with P for P, but at the end of the day, it's not like you're making life changing money. It's what skills and knowledge and education can I get in position that set me up in 10 years to do something that is going to make me more money, whether it be investing or Learning about money. Or you get a position where you can either run a business or you can manage someone's business because you know the numbers. Like, that's the value. And so you can come into these meetings. Like, the people who come to the meetings here are the ones who are actually getting the value of this job in my mind, right? Like learning how to move, learning how to do landscaping, learning even how to do bigger projects is not going to be the thing that sets you up 10 years from now. It's going to be the knowledge and the skills and the things that you do, right? Just encourage you on jobs. It's not so much the job that you're trying to, like, get skills from. It's the leadership, it's the communication with the customers, the communication with the office. It's talking about money, it's selling someone on a work change order. Those are the things that actually are giving you value, right? And so I just encourage you to think more long term. Like, what are the skills that are setting me up for the next 40 years? Not what is the 34 cents that I made in the past few minutes, right? In that same few minutes, you could learn a life skill that could set you up with lots of money, opportunity down the road if you just push yourself to get into those situations. So cool. That was my deep thought of the morning. Any comments, concerns, debates, any yogurt?

That should be the next podcast topic.

Yeah, I know. I don't like talking about it because it really makes it look sound bad for hourly employees. And I don't feel it's that way. I feel like some of the most successful people spend in their 30s and 40s literally doing menial jobs, but they're learning incredible skills working for free. Like interns. Some people are like, oh, they're such an intern. They're so, like, not. They don't make any money. Like, there's a reason why they're doing that, because they know that the skills they get from that free position or like five bucks an hour that they're making is going to set them up way better down the road. And so I think interns is. It's not even about the money make or even the skills. It's the mindset. Like, I'm doing. I'm not making any money right now. Like, dollars off the table. I'm just here for the skills. Like, honestly, if you get a business where you can just literally have people in that mindset, they do so much better because they're there for the skills, the learning and the knowledge, not how much am I making dollars per hour. Right. It just forces you into like small thinking and like short term thinking.

You know, I think you should still do an episode on that. Well, because you want to change people's mind. Like, that's, that's why you're telling all of us that, you know, and it's, it's not a bad thing. Like, it's like you're insulting anyone.

Yeah, yeah. Most, most business owners wouldn't want to say that to their people who they're paying by the hour. Like, here, we don't want you to be here for like five years. We want you to go on better. And so, like, my push is like, use your time here, like, figure stuff out, you know?

But that could be for everybody.

Yeah.

Like in any job.

Yeah.

So it's like, yeah, the world would be a better place if we. If that message was that simple. But everyone's just so worried about, like, I need to make this amount of money to survive.

Yeah. And you know that when it comes down to like minimalism, like, how can you reduce your monthly expenses so you don't have to think about that? Like, some people can't go get the job that they would learn a lot more in the next three years. They can't because they have fixed expenses, mortgage and a car payment and loans and all this stuff. They can't go and take a step backwards financially in order to set themselves up for life. You know, that's why, like, when people come out of school with $150,000 in debt, you're like, well, yeah, you have to get a job. Like, you don't have the. If the ability to come like shadow Elon Musk or like be his personal assistant came along. I'm sorry, I'd be out of here. Like, I'd be like, I could care less about the money. I could care less about everything here. I'd be going and doing that because that would be like, once. Like, you don't have any other shot. But you can only do that if you put yourself in a position where you don't have all those fixed expenses. And that's why being free of all those things gives you the flexibility to take opportunity, take a lower pain, not take a hybrid, take a lower paying job in order to get the skills and things that are going to set you up down the road. You know, if anyone here got Elon Musk personal assistant, I'd be like, get out of here. Like, go run for them. Like, it's not even but the problem is people get those opportunities and they like, oh, I can't. Like, I gotta pay my bills. And that's why keeping those as low as possible is like, so freeing. You're able to take those opportunities and run with them.

I would recommend reading, listening to the book Infinite Game by Simon Sinek. If you haven't read it, it's kind of parallels a little bit of like what Nick was saying last meeting about that mindset book. But basically Simon Sinek is like, I'm not thinking about my next quarter earnings or my next great business idea or my next way to beat my compet. I'm thinking of, how will this company be better when I leave? And you can also take a lot of those principles in your personal life. That one really helped change that. I used to think a lot like that. Like Mike's kind of first example, like, okay, I'll get an hour late job and then I'll grind hard and then I'll get a salary and then I'll get a pension and like, I'll like the rat race. But like Infinite Game, it changes how you actually attack each day and realize that there's a bigger plan in the long run. So I would just recommend that book.

I read that book. It's. Yeah, it's basically just saying, like, kind of even taking it a step further, like looking at your entire life, like the next five, 10, like, where are you gonna be at in 20 years? No one thinks about that. Like, you kind of have a vague idea. It's like, I'm gonna be, I'm gonna have a lot of money and I'm gonna be hanging out somewhere. But it's the Infinite Game because, like, like it never ends. So, like, you're just a cog in the machine if you just go through your life like by the motions, just paying the money. But if you focus on adding value to other people's lives or your own life during that, then you're going to be the one that's happy in the end.

Any words of wisdom for us, Isaac?

Absolutely. Awesome. Thanks so much, everyone. Have a great.