Stop the Bleeding, How I Messed Up BAD & Creating a Sticky Product

Welcome back to the Landscape Business course podcast. Listen while you work edition. Today we got three great segments for you. We're going to be talking about stopping the bleeding in your business. We're going to go over some of the mistakes Mike made while starting the franchise, what he would change if he could go back, and finally creating a sticky product. But as always, you can find all the video versions for these on YouTube under Mike Andes. Let's jump into it and hear about what actionable steps you can take to help save a dying business. It might not be what you think.

Hey, everyone, it's Mike Andes. I'm the founder of Augusta Lawn Care. We have over 90 locations around North America. And today I'm going to be talking about how you can turn a business around that is absolutely failing. Employees are leaving, profits are down and out and negative. And I've learned this over several years in my own businesses, in turning around other companies when I've stepped in as an owner, helping other businesses that are not, I do not have an ownership stake in, but seeing them turn the business around in six weeks. And this is what I'm going to be talking about today. The three steps to making sure you turn around the culture of the business and the profit of the company. And really what it stems down to a lot of times is the people side. Whether I am stepping in and replacing an owner, whether I am consulting with someone and helping one of our franchisees at Augusta Lawn Care do one of these saves. We call it state of emergency, where they have to really flip the business in six weeks. And regardless of what is happening, a lot of times it starts with the people. And a lot of times a state of emergency is called or really a bad time for the business happening when employees are leaving, employees are not performing well. And overall the business is just kind of deteriorating the culture of the company. So there's really three steps, and I want to talk about those today because I feel like a lot of times when someone steps in, you kind of have this mentality like bar rescue or something like that. You just come in and start blowing things up and like we got 24 hours, like, make massive changes. And sometimes that works, sometimes it's necessary. But also I feel like there's sometimes we as entrepreneurs jump the gun on making improvements because I actually don't think improvements need to be made until other things are happening. So let's go through this, the first step in a turnaround and when employees are leaving really quickly and this could happen in a turnaround of a business it could also happen when you have a bunch of employees just leaving all the time and the culture's deteriorating and you can't hold on to and retain any employees. So the first step is stop the bleeding. So if I move, if I step into a company that is losing customers, has really bad customer service, lots of complaints against the business, and they have lawsuits, all I got to stop the bleeding. This is like emergency room. This is like, this is like going into the ER and just like, let's stop the bleeding. You know, put some bandages on, you know, suture it up if you need. Whatever we got to do, like in the immediacy is stop the bleeding. And a lot of times the bleeding comes in the form of employees that are leaving or super inefficient and you need to fire them. So stopping the bleeding is the first step of turning around your business, turning on your culture. And if employees are leaving like crazy, you've got to stop that. You've got to figure out, why are they leaving now this has happened also in businesses that I've owned where just employees are just leaving like crazy. And I had to step back and realize, like, okay, why are they leaving? And in one case, it really came down to massive amounts of stress. Overworked and not so much even the amount of hours they were working, but the, the amount of just feeling overwhelmed with the workload. There was so much to be done. Regardless. If we all pulled an all nighter, it just, it was like drinking from a, like not a faucet. It was drinking like drinking from a fire hose. It was just impossible. The amount of workload that we were expecting them to get done. And that's very demoralizing and it's very stressful. And so to stop the bleeding, you're gonna have to do some very drastic things. And I'm gonna talk more about that one at confere. If you haven't signed up already for conference, check out mikeandys.com summit. It's a great place. If you do landscaping, lawn care, you definitely want to be there. It's conference coming up here in January 2023. Check it out. And that's been a lot more time breaking this D3 steps down, but stopping the bleeding important regardless. If you're trying to save a business, you're stepping in, trying to turn around a company or you're having employees that are leaving, like just leaving, like they're staying for three or four weeks and then they leave, or some of your best employees start leaving. And this I've Had. I've had this happen where they're leaving and it's like, we've got to really be honest with ourselves and ask, why are people leav in this business? Is it overworked? Is the hours, Is it the management? Is it the pay? We've got to figure something out. Do we need to have a better pay structure? Do we need to have better benefits? Do we need to add health benefits? These are all things you might have to do to stop the bleeding. It's not the time to step into the business, like, okay, we're going to change this and we're going to change that. No, you've got to stop people from leaving the company. And if you're stepping into a business that has plenty of people and no one's leaving, but they're all inefficient, guess what stopping the bleeding means? We're going to fire employees, we're going to take care of customers that are complaining. We're going to make wrongs right in the community. So we have a. We protect our reputation and stop the bleeding. Got to do like, emergency surgery, like, get it done fast and just stop the bleeding. All right? Second thing you're going to do is work through the backlog, all right? Typically when you're stepping into a business, work through the backlog. Typically when you're stepping into a business that's failing, there's a backlog of customers that have not been satisfied. There's things have been not done correctly, people haven't been contacted. There's a lot of emails and phone calls. There's a backlog of equipment that should be fixed. There is all sorts of backlog in terms of work that's been pushed off. I've had it too. Where at command center. When we've had a backlog of thousands and thousands of emails, thousands and thousands of calls that we're behind on. And you've got to work through the backlog again before you start making changes. Everyone wants to jump to, like, what's the solution? What's the solution that could be months away before you actually need to address what is the solution? What could we make better in the business? How can we change things? This is the wrong time to do that. It's the wrong time inside of the emergency room to be like, you should really eat better. Like, yes, we know we should be eating better and being healthier, but this person's having a heart attack. Let's get some help here and let's, like, you know, shock them. Let's get their Heart, baby, do CPR like we're in the er. And so stop the bleeding, work through the backlog. Stop trying to make all these changes in the business way too soon. You're going to lead to more employees leaving, more customers leaving, and the bleeding will continue. If you don't first stop that, that bleeding again, can be customers, it can be employees, and it can just be inefficiencies in the business. You got to stop those things first, then work through the backlog. Because if there's been bleeding, if there's been customers leaving, if there's been jobs being pushed off, estimates not being shown up to employees that are inefficient, you're going to have a massive amount of backlog you've got to work through. And that could take days, weeks. And I've seen it take months to work through the backlog that's created when the business is suffering. And again, not all suffering businesses go out of business. It's just a matter of cycles. Employees leave, labor markets get bad. It gets really, really hard to step with inflation and wage infl. That's difficult. So this is a normal part of cycle of business that you're going to have bleeding and all of a sudden that bleed, that wound opens up and just gushing blood. Okay, stop the bleeding, work through the backlog of all the work that's been missed. While we are addressing the gushing wound, all the other things in the body that had to be taken care of that we just, like, ignored. We've got to go fix all those things now. All right, so fix the most important, the bleeding, then work through the backlog. Everything else that was missed, bad debt, collections, all the things that has been missed. All right, now the third part that we all jump to so quickly, finally, number three, and that is improve the systems. And I put this last. All right, this is not something you should jump into first. I think all of us as entrepreneurs like to and type A people like to improve systems, jump in and change stuff. But if you haven't done number one and number two, first, changing the systems, improving the systems, causing more change inside the business is gonna cause customers to leave, it's gonna cause employees to leave. And if you jump into a business that's failing and you immediately raise prices, that's a massive change. That's gonna be a red alert for customers. And I've stepped in a around where it's like, I know the pricing needs to go up, but it's not time to do that because we've been making Customers mad for so long. We got to stop the bleeding of customers leaving. We need to work through the backlog, get back to stability, and then maybe we'll raise the prices down the road. You got to improve the systems regardless of what business you're in. If you have employees leaving and then you stop that, great, then you work through the backlog. Okay, now we got to ask ourselves, why did the bleeding start? What created the wound? We're out of the ER now, and now it's made out of like, let's eat better, let's create good habits for health and for exercise. That is improving the systems that will prevent the bleeding from happening again. And this could be anything from improving your software. Maybe you start doing better accounting, maybe you create a website so that way you can keep track of things better. Maybe you have a better form of just instead of taking notes when someone calls, it's in a CRM. These are all things improving the systems that will prevent the bleeding from happening again. But guess what? As the business grows, chaos ensues. It's like an organism as it's growing, cells start to go kind of a little haywire. That's what cancer really is. Cells start to go a little haywire. And so what you're gonna have is as the business grows, you're gonna have this constant cycle of a wound. Something comes open, it starts bleeding. Then you gotta go through these steps, stop the bleeding, work through backlog created by all the attention being on that wound. And then you gotta improve the systems. How do we make sure that wound doesn't happen again? Once you do that, you go to this next stage, which is most of us go right into, is we start to grow the business. And that's a natural evolution. These four steps happen over and over and over. Because guess what's happened with growth. You're going to have something break. Growth just creates chaos. And so what's going to happen, you're going to go right back up with this eventually. All right? Now, hopefully you don't start bleeding out of the same wound. The same thing doesn't start happening. And maybe you, if someone is going into the er, you know, hopefully they stop the bleeding, they work through the backlog, they improve other parts of the body that got some food in them, get some water after they stop the bleeding, then they improve the system. Okay, we're going to eat better, we're going to be healthier, going to sleep better. But then guess what? Time goes on, and guess what? They might get cancer. A different type of wound A different thing that needs addressed. And they're going to go right back into this because the body's constantly growing, cells are constantly duplicating. And the same thing goes for business. You're growing the company. This cycle will continue. And you've got to be sure that you don't try to skip number one and number two. That's what I constantly see entrepreneurs doing is they immediately like, let's improve the systems. Let's go, we're going to change this and we're going to change that. And it just makes the wound bigger. It's like address the bleeding, gaping, gouging, gouged wound right there. That's your employees are leaving, your customers are leaving. Address those things first and then work through the backlog, improve your systems and then you continue to grow. Faster you grow, the more the cycle is going to happen. And so that's why I always say growth sucks cash and growth creates chaos. Sounds fun, right?

Doesn't that just sound super fun? Growing a business, creating chaos and burning cash, at least that's not the final destination. If you're looking to tame that chaos a little bit in your business, I would check out lawn care bookkeeper.com. get your payroll covered in your bookkeeping covered at an affordable monthly rate. This is the same bookkeepers that run all the books for the Augusta franchises. So they know what they're doing, especially when it comes to the lawn care industry. Check that out today at lawn care bookkeeper.com let's jump back into it and hear what Mike would change if we could go back to the beginning, starting over his franchise.

Here we go. Hey, everyone, it's Mike Andes. I'm the founder of Augusta Lawn Care. We have almost 100 locations around North America. And today I'm actually going to tell you what I think I messed up on in starting Augusta Lawn Care and franchising it about two and a half years ago. Someone commented last week asking, what would you do differently if you were to restart the franchise process again and redo what you've done over the past few years? And so that was a good question. And I want to address that and be open and honest about what I think I failed at and what I did really well at. I think that part, what I did well at part is going to be the long term future of what the results are. And I think I'll let those speak for themselves. But what I could have done better and wish I would have, what I wish I would have known is something I want to talk about. Today, first and foremost, if I could do it all over again, I would realize that I probably made the mistake of overselling the destination. And what I mean by that is I so focused on the destination of building a million dollar business and running it on systems and not having to be there and having a business that can basically run without you, without clearly defining, and this is a few years ago, I've been better about this recently. But about clearly defining the journey to get there is extremely, extremely difficult. I think now I try to make it as clear as possible. It's going to take three to five years of very long hours, not taking much money out of the business, constantly reinvesting back into the company, feeling like you're beat up, trying to find employees and a management team. And it's going to be capitally intensive because you're growing and scaling very quickly over the course of three or five years. You're going to need 10 trucks or so to get past a million. Like that is all very difficult. And so I think when I first started the franchise it was like, look, I know what I what in 10 years someone's location is going to look like. That's a franchise agreements 10 years the term. And so I'm like, I know what it's going to look like in 10 years. And that's what I talked about. But what I probably didn't convey as well as I should have a couple of years ago was just how hard it is to get to that location. Because at the time I was sharing the profit and loss statement from my very first Augusta Lawn Care location that was really profitable. And like literally I show up there, I'm there maybe 30 minutes a week, like maybe 30, 40 minutes a week. And last year, for example, 2021, I took over $300,000 in distributions from the company. And that's after my salary from the business. And I literally showed up there less than an hour a week. And so people saw that and like, oh, that's great, I'll join Augusta. And like that's what I'll have. And what they failed to realize is that it takes like that, that specific last year, 2021, was the eighth or ninth year of that location being in existence. So it takes a long time. And unfortunately, because I didn't clearly be as clear as I should have with the journey of getting there, it causes people to be disillusioned after one, two or three years when it's like, well, I don't have a million dollar business yet and it's not Pumping out a bunch of profit and I'm still constantly pumping back into the business and trying to reinvest and grow and, and so I think that I could have done a better job of that because the destination is great. Building a business that's based upon systems, has high profit margins, has management in place that you don't have to be there every single day. That's absolutely the goal. That is the destination that Augusta Lawn Care lives by. But it takes five plus years to do that. You can grow up the size that you need by three years, but to have a management team in place, have systems all aligned, have scaled back all of the complex services and just focusing on the simplicity of what we talk about at Augusta Lawn Care, that part can take five plus years. And so I think at the very beginning I oversold the destination because I was so confident in getting people there that I forgot about telling them how good, how hard it was going to be to get there. You know, 60, 70 hour work weeks and the financial, physical, mental stress of dealing with employees walking up the job and customers screaming in your face and you working all day long and then having to go home and do estimates. Like there's a lot of hard work that goes into the journey of getting to that destination. The second thing that I think I kind of messed up on was I was the original person of contact for the first 40 to 50 locations. In terms of telling them about August along here, I did zoom calls and it wasn't, I wouldn't call it sales, but it was like answering their questions and making sure it was a good fit for us, a good fit for them. I'd say like 1 in 7 or 1 in 8 people that I'd actually contact at the beginning would actually become franchisees down the road. And so I was doing all that process because we were young, we didn't have much money and like there wasn't enough calls to really make it like a full time job outside of me doing it. I kind of regret that a lot because in doing so I built up a lot of trust with me personally instead of the brand and the systems that actually is the business of Augusta Lawn Care. And I think that those first 40 or 50 people, not all of them, but some of them, had so much trust in myself that as I started to really focus on the higher end parts of the business and had less communication directly one on one with them, that they failed to realize that it's not knowing Mike or talking to me that's going to help them. It's going to be the systems and procedures of the business that they need to just simply walk through the steps that have been put out before them. And so I really wish that I would not have been that bottleneck at the beginning. Obviously I had confidence we were going to grow, but if I have just had more confidence, I guess I would have hired someone from the beginning to take the sales part of the and the onboarding part of the franchise because it created dependency on me personally instead of the brand and the systems that I'm so confident in. And that the brand and the systems that we talk about is what will build a business. Not knowing Mike, not, you know, being a good fan of Mike. And ultimately all of our franchisees from Augusta Lawn Care came from this channel. They came from people watching these videos and they started off as fans. And having a fan relationship is very different than having a business partner relationship. And so that's something that makes this kind of business a little bit difficult because typically if you were interested in a franchise, you would first be attracted the brand or the system or the business model prior to the individual. But this case with Augusta Lawn Care, every single franchisee has come from the content created and their first, they've listened to me for years or they've watched the videos, it's helped them whatever it might be. And then secondarily they're attracted to business model. And so I'm looking forward to the day when people don't even know who I am, don't even have an idea about Mike Andes and they see Augusta Longcare like that works. And that's truly what I believe is the case. But because it was originally started so much, I was the cornerstone of it all. It sometimes distracts owners from the fact that the systems and the business model is the success. Not knowing Mike, not like it doesn't have anything to do with me. The business and the systems will work just fine with or without me. And they'll actually probably do better without me. Constantly changing things. The third thing, again, we're just talking about things that I messed up on, things I wish I would have done better when starting the franchise. And obviously now it does. You know, it's 100 plus locations here pretty soon and probably that will do over $20 million in system wide revenue in 2022, which is great. But one of the things is I also underestimated how much capital it was going to take to get the franchise to profitability. Massive mistake on my end. We only this year will be consistently profitable month to month basis Last year we were basically broke even. However, there were months where six figures plus and when I say loss, I mean like negative, not just like total expenses, like negative six figures in months. And so that is continued the trend this spring when we had to really massively hire a lot at Command Center. We had to make sure we increased wages and benefits in order to compensate for the, the issues with the labor market. And so it takes a lot of money to get a frantic off the ground. And everyone always thinks like, oh, you just like throw up a franchise website and like sell franchises and people are just going to give you royalties. It's not like that. It's very difficult from a legal standpoint, from an accounting standpoint, you spend a lot of money making sure you're registered and licensed in every state. You're insured correctly. We're insured against all sorts of craziness because I don't want an issue with the legal side of the franchisor to affect any of the franchisees. So we are legaled out to the teeth with trademarks and legal and attorneys and everything. It's very, very expensive. And then you have to register in every single state that you have a franchisee. So it's almost like opening up a new business in every single state as you, you, you sell franchises. So it's extremely expensive. Also underestimated the amount of support that is required and the capital that is required to give the support for these franchisees to be successful. And whether that be coaching, whether that be the IT support, whether that be website development that we do for them, whether it be software development, whether it be just the infrastructure of Command center where we answer all our calls and do the admin work. It's a huge, huge expense. I would say like, like when, when there was private equity coming after Augusta Lawn Care late last year. And so when they would look at Augusta Lawn Care, the biggest weakness they would see is Command center because they're like that is going to prevent you from scaling because it's completely dependent on more people. And if you scale by 10x number of locations, you're also going to have to 10x how many people that you hire at Command center because there's more calls, there's more emails and it's not like there's economies of scale because they're just more calls. You need more people. And so most franchises don't do that. They don't get involved in the admin side of the because they, they want to have a model where it's like, hey, here's the business model. And they can sell a thousand, a thousand of them tomorrow. It doesn't really affect their operations. Whereas command center we are running a very, very low, low margin business, which is, you know, answering phones and the back end admin work at a 30 to 40% discount compared to, you know, Jill's office or call boss or Ruby or these other services. So it's very, very low margin. And to get people trained up to be efficient takes weeks, if not months for them to really be efficient and profitable at command center. Allow them to be on the phone, it takes weeks of training. And so it can take a very long time to make someone at command center actually profitable and efficient. And so when you're trying to make someone that takes a long time to be efficient, a long time to be profitable for the business before they even become useful. Like they can actually do things in the business to a high enough quality. When you take that and then you match it with the fact that you're scaling and you got to get a lot of those people, the amount of capital is crazy. And so I began to realize why people had told me and warned me about trying to get involved in the admin side with the franchisees. Now the reason I've stayed committed to it, and I will always stay committed to it, is because I also know that the admin side is what keeps most businesses from growth. What keeps most landscaping and lawn care and home improvement businesses small is the fact that they are always tied to either a no office person and they are the bottom link for everything in the business, or two, they do have an office person, but they are so bound up by the fact that that office person leaves their business would get slashed in half. And that is the case for most small businesses. All the office information, the client information, the data, how to use the CRM, how to answ, the phones, where the keys are at for the office. All of that stuff is locked up in the mind of one person and if they ever left, the business would literally go to shambles. And so with command center, it's great that we have like 40, 50 people doing it and it's, they all know how to do the job. And so there's never that time where it's like it completely goes to nothing. But getting all 40 or 50 of those people to have the information and the expertise and a level of experience required to do the job efficiently, profitably and effectively is very challenging and extremely expensive because it takes so long to train them. But ultimately, I'd rather us Take the burden of training, training office people, then having our franchisees have to always be worried about who's in the office and are they trained up, do they know how to answer the phone and all the rest of it. And if an owner has a spouse that they can really trust, that's usually a good move from the office perspective. But again, what's going to happen when you start a second, third, fourth, sixth, fifth location? They're going to have to build out their own office and it's extremely expensive and it's extremely hard to train people over and over and over and over again. And especially when there's high turn in an office entry level position. The same way that out in the field there's high turn, there's very, there's a lot of churn in call center admin, office receptionist type work because now you're competing with every other company that's hiring online and hiring work from home that's the exact same job. And so that's extremely difficult. Been very expensive. All right. Last thing that I realized over the past few years that I probably made mistakes in is realizing that there's still two things I can never do for an owner. And even though I can have systems in place and give them the marketing material and have a website built for them and have, have the P4P software and have coaching and everything that we do for our franchisees, the thing that I can't do for them. There's really two things that most of it boils down to. First thing is sales. I can't, I can't make them be good at sales. And secondarily is I can't teach someone necessarily how to be a good leader and hire and train and be a good boss and be empathetic but also have standards and be able to attract good talent and then retain good talent and motivate their team, all of that stuff. These are the soft skills that is very difficult. And most of the time where I see the failure in our current franchisees is in these areas that I can't really help them. Like I can't train someone how to have best, a better personality when they're talking to someone and trying to sell a job or selling a contract and what to say in that next moment. Like, you can train somebody but there's certain level of like, I can't do it for you, right? I, I can, I can build a great website for our franchisees and I, I control that and I know can, I can do the data and run it and make sure, it has great SEO and it's fast and mobile, responsive. I have full control of that and that's great. But what I can't do is like how to talk to a custom and take their hand and look them in the eye and be able to, when they have come with an objection, be able to counter it and be able to get past and get to the sale. That's very difficult. And you can do certain amount of training, but there's certain amount of personality that has been ingrained in someone for years. And so sales is usually the thing that our franchisees still will struggle with for the first little while if that is something they're weak in. So if their weakness is in sales, that's something that I can't do for them even if they're getting a bunch of leads. But if they can't manage those leads, well, that's still something I can't do for them. And secondarily is leadership. They get three, four, five, six employees and all of a sudden there's a big churn. They aren't really good at training them or they potentially, they have a personality that kind of pushes away employees or people don't want to stay with them long term. That's again, very hard to do for a franchisee. And so what I've had to realize over the past few years is I needed to make sure I can do everything else in the business besides those two things. For the, for the owner, I need to be able to do their website. I need to make sure that there's their marketing materials, good to go. I make sure that, that everything is oiled on the command center side and answering the phones and the emails and all the rest of it. So can focus on the two things that actually move the needle for their business, and that is selling more jobs and hiring great people. That's ultimately the only two things that will make a business great. And unfortunately, the two things that I don't have 100% control of. Now, do we make materials for sales? Absolutely. Do we have brochures and make sure that the website's optimized and all the rest of yes. When it comes to leadership, do we have hiring material? And whether it be every single form of print, from business card to yard sign to door hanger to flyer, like everything you could think of, we try to do our best. We have a hiring portal, a place where the applicants can fill out their application on their website. Like, we try to do our very best. We get great graphics about the opportunity for an employee to start out in the field, become a general manager and then become an owner using the 3F program, which we call franchise fee forgiveness program. They become a franchisee and they get their fee forgiven after just two years of working. Like, we try our best to do all those things, but ultimately I still cannot hold that piece of paper in front of an applicant and go over the application questions and interview them and get references like, I can't do that for them. So what I've had to learn is I need to make sure I can do as much as possible and then let them focus on those two things that are actually going to move the business forward. So that was a little bit of humble pie with Mike Andy today. Learning about some of the stuff that I wish I would have known a few years ago and have had to learn over the past few years. By no means is Augusta Lawn Care perfect or the franchise perfect. You know, we've been ranked really well by Entrepreneur magazine and stuff like that. But. But those, those are like vanity metrics I really do not care about. Ultimately, the goal of Augusta Lawn Care is to change the level of professionalism in the landscape industry. And part of that, a big piece of that is size and scale and number of locations. No one's gonna care if we stay at a hundred locations. It will not change the industry. It'll not move the needle for the level of professionalism that we are trying to achieve. It will require 5001000 plus locations for us to actually achieve the goals that we have in terms of moving that needle of professionalism and so, and so scale and moving towards that thousand plus location marker is going to be a lot of growing pains. And me figuring things out and me learning. I'm only 26. I got a lot to learn. I don't know everything. I started this franchise when I was what, 24? And I have learned a lot in the past two years and I have a whole, whole lot more to learn. And I've made plenty of mistakes in those few years. And I hope that by having those mistakes in these past couple years, it'll make us only stronger, more resilient, more profitable, and ultimately come up on top. At the end of the day for our franchise and our franchisees, I want to make every single one of our franchisees millionaires. It's literally, I don't have any shame in saying that. I think they would spend the money a whole lot better than the government or where my tax dollars go. I truly believe they'll make better jobs, that they will be better representatives in their community and give back to their community. And so I'm very, very passionate about making them very, very wealthy. And along the way, it's going to be difficult. It's only been, it's been less than three years and I'm still figuring things out. I make plenty of mistakes every single day and I have to apologize, I have to realize I'm doing my absolute best. And I have to realize that in the long run, this will come out on the top, it will be successful, and I still make mistakes. And hopefully some of those things made you feel a little bit better about the mistakes you're probably making in your business too. There you have it.

No matter how big or how small you are, you're always making mistakes. And the key is just to learn from those mistakes, adapt, evolve and persevere. However, if you're looking to avoid some of these mistakes in your business, check out Landscape Business course. It goes through a step by step guide on exactly how to grow your lawn care business to a million dollars in annual revenue, avoiding all the pitfalls and mistakes along the way. So if you're looking for some insider knowledge, I would check that out@landscape businesscourse.com well, let's jump back into it and hear about creating a sticky product. The trick to driving down the attrition in your business and keeping your customers customers longer. Here we go.

Hey everyone, it's Mike Andes. I'm the founder of Augusta Lawn Care. We have over 90 locations around North America and today I'm talking about why you should actually lower your prices and get customers in the door. But then how you can actually improve the stickiness of your service or product so that way you can raise the prices later on, improve your margins, make more profits, but do it in a way that gets customers in the door, makes your product sticky so they don't leave when you raise your prices. So let's get into it. So I have a few different businesses. First and foremost, I have Augusta Lawn Care. So we got lawn care, then we got gym, and then I also have real estate. And all of these different businesses, really I use what I'm talking about today and that is when we are going to raise prices to existing customers but not necessarily raise prices to new customers. And there's really two options to raise prices. The first being that you would raise your prices to new customers. So we raise our prices to new customers. And this one's the most common because it's the least stressful for you as a business owner. Like, hey, If I want to raise prices, I'm just going to raise prices on everyone that I get from now on. What's a little more difficult is to raise prices on your existing customers because, like, man, what if I lose them? I have a relationship with them already. What if I make them mad? What if they leave? What if they retire, return my product, all those sort of things. Now the second option, like I said, is going to be raise prices to existing customers. Okay, so these are the two options. And again, this one is less stress because you can just be like, hey, I'm going to change my rates and from now on my price will be different, very different than having to email or contact your customers. And hey, prices are going up. So I've used several different methods in the gym, real estate and lawn care. And I think that I've really, really edited and modified the way I think about price increases, as, hey, maybe I can't necessarily charge more for new customers, but once I have established a relationship, once I have them set up in my CRM, once they have experienced my product and service, if I do a good job with that experience, they don't want to leave. And so now when I raise my prices a year, in two years into the experience of being a customer with my company, maybe they won't leave because I'm good at enough for them to not go and explore alternatives and go find other competitors, whether it be a different gym, whether it be a renter trying to find different rentals in the local market, or potentially even for lawn care, like, potentially, they could go find another alternative. They could go find a truck, in a truck or a different competitor. Plenty of people mowing lawns, but can I get them in the door, lower my prices to do that, get them in a kind of a discount, but then later on, six months, 12 months, a year down the road, once they're done their lease, once they're done their year contract at a gym, maybe once after the first growing season for launch care, can I raise their prices and keep them from leaving and retain 80, 90, 95% of them at a higher rate and thereby get better margins? So a couple of things we want to kind of consider when we look at that as a potential model. How do we do that? The number one thing we're going to talk about is you must increase stickiness. Stickiness is basically, how do I make sure that a customer, once they become a customer, does not want to leave? My product or service is sticky. It's like if I step in it, it's sticky. It's hard to get out of it. Now you can do this in several different ways. Let's go through them. Number one, if you want to increase the whole goal here is increase sticky. That is operation sticky. That's what we're working on here. If we're going to try to do that in your business, first way that we can do that is just improve customer experience. This could be anywhere from customer service. Could be answering the phone better. It could have a better website, have better uniforms for your crew. This could be for the gym, improving the equipment, equipment for real estate, could be improving the landscaping. It could be improving the service of the customer. This works for any business. And I think this is a great pricing strategy and that is get them in the door and then raise prices down the road. But you can only do that. You'll only be able to retain them if you have a sticky product or service. So how do we increase stickiness? Number one, increase the customer experience, make it better. The second thing that we can do, and this one's a little bit controversial, I actually don't like using this one a whole lot. And that is increasing. Increase the pain of transfer. And there's several ways to do this right? So if we're looking at increasing the pain of transfer, this could be transferring data, for example. It's very hard to change your CRM because you have all your customer data in there and they make it hard to get it out. That's why software is so sticky. Many times when it comes to CRMs is because we don't want to leave like it's a pain in the butt to leave. And if you look at that, think of all of you running your own business. Like to Switch Quick From QuickBooks to Something Else would be a pain in the butt to switch from your CRM, whatever business you're using to a different one. It'd be a pain in the butt. That is pain of transfer. And if you can increase the pain of transfer, you can thereby make your product more sticky because no one wants to leave. So again, a couple of ways you could do that. Have a lot of data inside of your service or product. That could be. If you're a service based business like lawn care, make sure you have a credit card on file. Make sure you have all the job notes in your CRM. Everything's digitalized. They don't have to send payment or an invoice via the mail or a check. They just pay over their credit card and it's automatically done. There's Automations, these are all things that's data that makes your product more sticky. Gym. What do we do to make sure that we have a more sticky product? We make sure that they have a two year or a one year agreement and they can't break it without a $199 penalty. And it's a matter of like, look, we want you to use the gym. We're gonna make this very sticky by making sure you use it. And if you're not here after a couple months, we're gonna give you a call and we're gonna make sure you get in this gym and get healthy. And that's gonna make the product more sticky. Because a contract is a way to make the pain of transfer harder by having a penalty, having an actual cancellation fee is all we're doing to make the product more sticky is increasing the pain of transfer by fee. And so pain of transfer, if you can increase that, it'll make your product or service more sticky. This is why I actually like contracts. You have to realize that sometimes some industries contracts are not necessarily the best thing to be doing. And in lawn care, landscaping, sometimes it works really well. Especially when you have 12 month agreements and you can mow lawns for year round a little harder when if I close the gym down for three or four months out of the year, it'd be hard for me to enforce a contract very well. And that's for most people mowing lawns, it's like, well look, I don't mow your lawn for three or four months. Getting payment for those three or four months is sometimes difficult. Not all the time, but in most markets it is. For example, rent, rent, pain of transfer, no one wants to move, no one wants to move their family and have to get a U haul and take an entire week to move it to a different property and find a different property and do a security damage deposit and make sure that parking is right, it's close to the schools for their kids. No one wants to do that. That's pain of transfer. So I can bank on that and raise prices on a renter down the road in order to maximize my profits if I want to keep them on. Like, hey, we're gonna be putting your lease on and it's gonna be an extra $50 per month going forward. And I can do that because like they're like man, $50, hey, we don't wanna pay that obviously. But the pain of transfer is a greater than $50 per month and that's what you wanna do that is improving the Stickiness. And if I combine the pain of transfer for that lease for that tenant and I also increase the customer experience, I improve the landscaping, clean their house, do a carpet cleaning, I give them some new appliances when.

It makes it even more sticky. And that's all part of keeping a long term customer and being able to raise prices over time and thereby increasing your margins. Now, the third way that you can also use is you can create connections emotionally. Now this is usually used for smaller businesses, owner operators. When you're on the property, if you're a home improvement business, if you are the manager, the property manager of real estate company. If you are in the gym, I'm just using these three examples, but this works for everybody, single business. So if in the gym I'm talking to members, I'm on social media, they know who I am, they see me working out there, I have an emotional connection. They have emotional connections with the community inside the gym. And if you can start creating those emotional connections now, there's something beyond a financial decision that if you raise prices, like, look, I don't want to move to a different gym. I don't want to move away from my Tennessee, from the property that I'm renting. I don't want to move away from this lawn care provider because I have emotional connections. Maybe in the gym, I have community. I have other people I know now inside of the gym and other people I work out with and they, they know my name and they know all about me and they've seen me lose £20. And I have an emotional connection with the tenants. I potentially did some things in their property. I, they met me, they saw what I'm doing in the community and they saw what we're doing to the property to improve it. And now we create an emotional connection. Maybe got to know their family a little bit in your lawn care, in the landscaping business, maybe you checked in on them, maybe you said hello, maybe you talked to them for five minutes in their driveway. Now they have a personal connection with you, especially smaller businesses, smaller companies where the owner's involved more, you can create these emotional connections that make your product more sticky so you can raise prices later on down the road. Now what you have to remember when you look at all of this, you have to remember that clients have a fear, they have a fear of making mistakes, making mistakes when it comes to buying decisions. And this is really what you're banking on when you've created some sort of equity, some sort of relationship with a customer is they do not want to make the mistake of changing gyms and it not working out or the gym not being clean enough, they don't want to switch to another rental property. Like, maybe it's not a good. It's loud. Maybe the street's loud. Maybe they have bad neighbors. They like their neighbors now. Like, man, I don't want to make a wrong decision. Consumers, when it comes to a buying decision are afraid of making mistakes. And you can bank on that by creating a sticky, sticky, sticky product, a service, something people don't want to leave. They're afraid of change, they're afraid of making the wrong buying decision. And they're going to want to go towards safety. And if you've done a good job of making a sticky product and service, the safest route is to stay with you. It's not to go try out a new software, try out a new tenancy, try a new gym, try a new lawn care provider. They already are familiar with you and they're familiar with your standards. So that's what I would focus on if I was in your business. Trying to improve your margins is maybe I get people in the door for a lower price, that's fine. I want to actually focus on scale. And I've talked about this before. You want momentum in your business, get lots of customers, and I don't care what your prices are. But then make sure your product and service is sticky enough. You have a great customer experience. You make sure you have high pain of transfer. It's hard for them to move. They don't. They're really afraid of this fear of making a mistake that is part of increasing the pain of transfer. They got to go get new estimates, they got to meet contractors, get other bids. All of that is a pain. That's pain of transfer. And the third thing is create connections emotionally. That's why you want to connect with them, especially if you're small. Bank on that. If you only have a few customers or you're able to make a meaningful connection with the customers within your business, you can absolutely create something outside of just comparing apples to oranges if they start considering alternatives to your business and to your product and service when you increase prices. So some people will get really, really triggered by this because they think that your profit maximization is so horrible. And rent control, and this is capitalism, everyone's costs are going up. No, I've paid so much more in labor and health benefits and all the rest of it. Now we got to keep increasing our prices. And if you want to improve your margins, get enough customers in the door so that when you raise the price actually is meaningful. So that's why, you know, grow your business, grow, get more customers, and then make a really good product and service, deliver really good quality, make it really sticky. And then when you raise your prices, you'll have a 95, 98% retention and have much, much better margin. And when you increase those prices, you'll make two, three times as much profit.

I hope all that was helpful for you guys. And if you're hungry for more Mike Andes content, head over to mikeandys.com or check us out on YouTube. That's all we got for you today. We'll see you later.