Starting My Business Over From $0

When I first started my lawn care business, we started adding all sorts of services. We got all sorts of equipment and we had tons of trucks and different types of trucks for different types of services, different trailers for different types of services. And a lot of times people will look at really, really big landscaping companies or home service businesses and say, oh, they have all these services, that's what made them successful. In reality, they took one or two services, scaled to multiple million dollars in annual revenue, and then started adding more services. And when they added those other services, they were adding multiple millions of dollars of revenue to the bottom line. If I was start landscaping business from scratch first, I would offer less services and make more profit. When I first started my landscaping business, we added all sorts of services. We had a tree chipper and then a massive 16 yard dump truck where all the chips would go. And we also had trucks for other services like paver patios and retaining walls. We had certain trailers for the skid loaders and the track loaders and excavators. And we added all this equipment and trucks and different types of trailers to simply make sure that we were able to offer all the services that we were pitching to our customers. Adding more services to business is one of the fastest ways to grow revenue. Because all I have to do is add a new service and immediately I unlock more customers because I can simply do more for existing customers and I can also serve new customers that would otherwise not be able to. A lot of times we look at large home service business owners and we see all the services they offer, and we think it's because they offer all these services that they're successful. If you actually wind back the tape, a lot of these big companies start with one or two services that they really, really well, and they scaled past seven figures and, and then added more services down the road to make sure they filled in the gaps in the year when those core services had seasonality. So when one would get slower, they'd be able to add other services to ensure that revenue stayed consistent. What I find so often the times when it comes to home services is that we actually have a business, $300,000 in annual revenue, but in reality, we have 10 different businesses inside of one entity, all producing $30,000 each. In other words, we have a core aeration business doing 30,000, we have a mowing company doing 30,000. We have a fertilization weed control doing 30,000. We also have a bush trimming division doing 30,000. And we actually have all these different businesses inside of the same entity. And because of this, we have all these different trucks, equipment, and it takes a lot more to train up new employees and maintain the standard of quality that we need across all the different services. Sometimes I've seen businesses where it takes six to 12 months just to get a brand new employee to being profitable. And in the labor market where the average frontline team member might last two or three months, you're never going to be able to make a profit if it takes six to 12 months to train someone up on all the different services that you offer. And it's when I started to take away services, I made more profit. When I started to reduce the number of services that we offered, I was able to train my employees up faster and get them to being profitable and efficient much quicker. I was able to also channel more of my marketing dollars towards fewer services. Therefore, I was able to became a leader in those individual services. And inside of my area, if I could go back and restart my lawn care business from scratch, I would use door hangers instead of paid ads. When I say paid ads, I'm talking about Google, Facebook, Nextdoor, and a host of other online platforms that I was paying. And it's not that they were bad, I probably just stunk at marketing. But ultimately I was just pouring money into a black hole. I never tracked what my cost per lead was. I never tracked what my close ratio was on each platform. I never tracked my customer acquisition cost or how much would I have to spend on that channel to get one paying customer. And if you don't track this number, you don't know it's actually working. And a lot of home service business owners, we just spend money in this black hole and hope that we get customers on the other end instead of actually understanding how much are we spending to get one new customer. And if I was starting from scratch, I'd start on door hangers because door hangers take time to distribute. Whereas paid ads is nice because I can scale it up to spend more money on Google and Facebook. They'll be happy to take my money and show my ad to more people. But when I first got started, I had more time than I had money. And so if you have time, do door hangers, go knock on doors and spend that time getting customers instead of when you're cash poor trying to go spend money on Facebook and Google, you don't have a lot of capital, but you have plenty of time when you're first getting started. If I could rewind the tape, I'd be able to go back, do door hangers. And for literally $5 to $10 per customer of printing costs, I'd be able to get customers. Now there's time. I have to go spend that time getting customers and going from door to door and putting the door hangers on, talking to customers and putting an instant price maybe on the door hangers and giving the quote to customers. But in terms of the actual hard cost of printing only, it'd be like five or ten dollars per customer. And I had plenty of time when I was first starting out. The bottom line is, if you're just getting started or if you're doing over a million dollars in revenue, is tracking what your cost per lead, is tracking your customer acquisition costs across all channels. Actually understand which channel is producing customers for you at the lowest possible price. The goal is to be able to spend $100 and make 10,000 from it. How do you do that? Well, if I can spend $100 and get a paying customer, my customer acquisition cost, and then over the course of three, four, five years, keep the customer, keep servicing their property over and over and over again, upsell them into other services. If I told anyone, if you give me $100, I will give you $10,000 in return, a lot of people would take that deal. And if you knew that was what your marketing was producing, you'd constantly keep investing into marketing and growing the business. If I was starting from zero, I would refuse all pay raise requests. You're like, that is so horrible. The reason I would never have a pay raise request is because I would create a clear pay structure based on performance, where the harder the employee works, the more money they make. If they produce more revenue for the business, they also make more money. About six years ago, I instituted pay for performance at my first Augusta lawn care location. And since that time, I have not one single time had someone request performance for a pay increase. Why? Because they know that they can look at the leaderboard inside of p4psoftware.com and actually see their other coworkers that are making 5, $10 more per hour than they are. And they know that their manager is simply going to say, hey, these are the things that you're not doing that they are. Here's the things that they're doing that you're not doing. Make a meritocracy by which the harder you work, the more money you make. And that's so complicated. They're simply making a percentage of all the labor revenue that they earn for the business. The breaking point for me is when one of my Team members named Brad asked for a pay increase and a raise because he needed it for his family. Brad deserved the raise. He really did. We could not afford it. We were breaking even at best. But yet what was really unfair was the fact there were other people on the team making more than him per hour simply because they had asked for the raise. At other times of the year when we had a little extra money. That makes no sense. It's not fair to the employee, and it's bad for the business because we can't share the numbers of who's making what. Because if anyone knows about the numbers or who's making what, there's going to be a big retaliation. And honestly, if that would have happened, we would have deserved it. Because people were not getting paid based upon how much they were contributing to the business. Their level of effort, dedication, showing up on time, performing, hustling, and doing hard work, that's what should be rewarded, not who works hard in front of the boss, who knows the boss, or who asks for a pay raise at the right time of year.

If I was starting my lawn care business from scratch, I would make sure that hit capacity before buying more trucks. Look, I understand the flex and offers a lot of public validation to buy more trucks and equipment. I understand there's that chip on your shoulder, that desire to prove everyone else wrong that said you couldn't do it, that you wouldn't be able to build a big business. And to prove them wrong, we try to have public perception of big business. We buy more trucks, we hire more people, and we get more equipment that is not required to do the amount of work that's coming in. I once heard a friend say that it was always a good investment. Whenever you have cash sitting around to buy more equipment, it will always pay for itself in the long run. Just buy more equipment when you can afford it, because it'll replace people and you'll be able to make more money. And because of that, I bought three skid steers, I bought tons of trucks, tons of trailers, way more equipment than we ever needed. Because I just thought, oh, it must be a good investment. Eventually it'll pay off. If I have spare cash, I will turn it into metal and I will turn it into things that make me money. And ultimately, that's what led to a lot of years of unprofitability and that equipment sitting around gaining rust, that I ended up having to sell that equipment for pennies on the dollar. If a truck isn't being used for a minimum of 40 hours a week in the field, you do not need another truck. I only buy another truck when I'm above capacity. When my trucks are literally being used every day of the week and I can't grow the business anymore without buying another truck, that's when I buy another truck. The vast majority of businesses that I visit, and in this book, Total Business Turnaround, I visited 30 small businesses in home services that are struggling, and we tried to turn them around. However, the vast majority of them have too many trucks, way too much equipment. And if you in the middle of the day, half the trucks are still sitting there, half the equipment still sitting there, and they're way below the capacity or what revenue they could be producing if everything was actually fully being used. Their asset utilization is extremely low. In other words, the vast majority of their trucks are getting used 15, 20, maybe 25 hours per week instead of 40. And until you have that truck rolling around working out in the field for 40 hours a week, you don't need more trucks and equipment. What really makes me mad is the fact that so much of our profits that we make the entire 10, 11 months of the year gets blown in November and December under the guise of tax savings. And we're pitched this from massive manufacturers and massive equipment providers that are simply telling us, get a section179, you can write this off, and we blow all of our profits on equipment we don't need, only to realize that a year to three years down the road when we're liquidating again for pennies on the dollar. If I was restarting my landscaping business, I would make sure I actually understood scheduling. It kind of makes sense that if we're time to the customer, that we understand how to accurately schedule that time. I'm taking the time of an employee, let's call it a unit of an hour, and I'm adding in materials and supplies and equipment and training to be able to charge a higher price to the customer for that time. If we're selling time, it makes sense that we're able to schedule effectively that time. So what do we do? We use budgeted hours. And I didn't do this for the first few years of business. I didn't just get a job, got accepted, and I'm like, we can get done in a couple weeks and just try to get it fit in. And all of a sudden I'd end up on a Thursday night realizing I have three days left of work left on the week because I didn't know how to schedule. And the reason I didn't know how to schedule is I didn't use budgeted hours. In other words, how long do I think the job is going to take? And then I can accurately predict how far into the future I am booked out using those budget hours, assuming I'm relatively accurate on my estimating. Also, by having budget hours, I compare that to the actual hours the job takes. That gives me my efficiency score. Budget divided by my actual hours or clocked hours. If I'm doing six budget hours worth of work in eight clocked hours, six divided by eight is 0.75. That's a 75% efficiency score. That means that 75% of my day I was actually getting work done. The other 25% of the day I was driving around, I was at a gas station, I was sharpening the blades, I was doing everything besides actually producing revenue. Being able to know accurately what the efficiency score of each team member is is going to allow you to know who your top performers and lowest performers are. Also, when it comes to scheduling, I would always just take whoever accepted the estimate. I'd put them on the schedule first, like, oh, we're booked out three days. If someone accepts the job, I'm going to put them on the fourth day. First come, first serve is a horrible way of scheduling. What I found out is the better way to do it is that when the spring rush comes in, there's leads coming in left and right. There's jobs that are big projects, there's recurring mowing jobs. My job as the scheduler is to figure out which ones are highest priority. And for me, the recurring jobs and the time sensitive jobs are the ones I do need to get on the schedule as soon as possible. But for one time projects and time insensitive jobs, I can book those up months into the future. And ideally, I can schedule those during my off season when I'm not getting as many leads overall. Although the first come, first serve basis seems like the most fair to the customer, it is certainly not the best for the business. And that's what leads to massive ebbs and flows of revenue and having a horrible off season. Speaking of the off season, I would lay people off during the off season if I could do it over again. You're like, you would lay people off. That's horrible. Back in the day, I had massive drops in revenue during the off season of December, January and February. And during those three months, I spent 70 to $100,000 of cash reserves just to keep my crew busy. I was afraid that if I laid them off, they wouldn't come back in the spring and what actually ended up happening is they didn't want to work out in the cold or out in the rain all winter long. And they were happy to get laid off and come back three months later. I just need to offer them a guaranteed start time during those, those off season months. For my industry, lawn care landscaping, it was very easy for them to go get a delivery retail job because that was the holiday season and there was plenty of other people hiring. But instead of laying them off, I tried to keep everyone busy. We started snow services. So I got snow plows and skid steers and massive salting rigs and we did massive commercial projects also. I would just keep the crew busy sometimes. Like we would literally make cookies, take them to property managers. We do free pressure washing for our mowing customers. Why? Because we had nothing to do. We would reorganize the shop and make things all nice looking fine and dandy. And it was costing me 70 to $100,000 every single off season. And this is why I am so passionate of fixing the off season for you and your business. Now, laying off people is just one option to be able to ensure you don't burn 70 to $100,000 in your off season. But that's one of five different tracks and the other four are more offensive. Laying people off is a very defensive measure. But I should have done it. It's better than what I was doing. Keep everyone busy and do unprofitable work. But there's four other ways to be able to deal with the off season. And I'm going to be going over these at Blue Collar Summit. I'd invite you to this three day event. John Taffer from Bar Rescue is going to be there. But on the Friday of the event, the middle day, I'm going to spend the entire day on a workshop. And that workshop is going to solve your off season once and for all. We're going to have five different options. We're going to have templates, we're going to run your numbers and we're going to do actual role playing so you can make sure your off season gets settled once and for all. Go to bluecollarsummit.com, book your tickets for you, your spouse and your manager and we'll see you there. If you've got a home services business, come to Seattle. We'll see you there. At the blue Collar Summit. If I was starting my landscaping business from scratch, I would make sure that I would sell to my warm leads before trying to Sell to cold leads. Now, a lead is simply just a contact. If you look up the contacts inside of your cell phone, these are all just a whole bunch of leads you can sell to these people because you have their contact information. But if I could go back and start my business from scratch, I wouldn't spend a single dollar on marketing without first exhausting my current database with emails, text. I would knock on the door, I would call them, and if you're like, well, I don't want to bother people. I don't want to exhaust my list and constantly contact them, 99% of Home Service business owners will never exhaust their database. And because under the guise of trying to be nice and not contacting our database, we go out and spend thousands of dollars to Google and Facebook and other marketing platforms. And it boggles my mind that we are willing to do cold calls to strangers. We're willing to put up door hangers, we're willing to knock on their doors, we're willing to put up massive banners and billboards and talk to strangers all day long. But the people that already know, like and trust you, that are in your database, that you've done work for in the past, that you've at least done an estimate for to prove that they need the service, we don't even talk to them. They're warm. They've literally raised their hand in the past and said, I need service at some point, or you even done a job for them and collected revenue from them. And yet we never contact them. We never email or text or give promotions. Just yesterday, one of the owners inside of Augusta Nation sent a text blast through copilot to all of their customers in their database. They got 20 leads in a matter of a few minutes. This is the power of being able to sell to warm leads instead of cold leads. If I was just starting my lawn care business, I would forget about big projects and massive commercial projects for at least the first two to three years. Why? I did not have the skill to estimate accurately, price the job, make the contract, or understand what a work order change was halfway through a big project. And there are many projects that were 70, 100, $200,000 in revenue that were great on paper. And once I was halfway through them, I ended up losing my shirt because I didn't know how to price the job. And if you're going up against a massive contractor, someone that's been in the business for 20 years, and you're somehow outbidding them, that might be a good sign that you're about to Lose your shirt because they know how to price the job. They have the manpower, they have the equipment, they have the experience and they price the job in order to win it. And if you're outbidding them, there's a good chance you aren't gonna make no money. Now you might be saying, well, you're saying I shouldn't do big projects, I shouldn't do contracts. No, but you can grow into those large jobs if that's really what you want to do. But one bad job when you're first getting started could make you bankrupt. And there were several times in the first few years of starting Augusta Lawn Care that one big project or contract that I completely miss bid could have almost put the business out of business simply because I got into a project that was way above my head. Now you might be thinking, well, are you saying that big projects and contracts are a bad thing? And I don't believe that there's a lot of money to be made, but you can grow into those large projects once you have the skills, experience and the know how of pricing, scheduling and operating with these type of contracts. Recently we had an owner inside of Augusta Nation that did a six figure project and they got sued. And because of it, it really turned their entire year sour from a profitability perspective because one massive contract sued them over a hundred thousand dollar job. That can really hurt you when you're first getting started. I have some brutal truth that I like to share. Watch this video here for exactly what they are and what every home service industry business owner needs to know.