The CEO Scorecard I Use for My $50M Business!

Hey everyone, my name is Mike Andes. Today we're going to be going over exactly what numbers you need to know in your business in order to run it remotely, in order to have a general manager or just to run it more profitably. I'm the founder of Augusta Lawn Care. We have over 150 locations around the world and do over $50 million in annual revenue. And today we're going over something that we actually is a small piece of something. We recently created Augusta Nation for our multi unit operators that have a lot of general managers and we have our monthly max metrics that we call and we have a lot of detail on internal dashboard for that. However, it's nice to not have to wait an entire month sometimes to know what your numbers are. Tracking them on more of a weekly schedule is recommended, especially if you're remote and you're not actually in the business's operations every day. And that's what's happening if you have a general manager running the location and if you have multiple locations. So today I'm gonna go over the nine different metrics in your business. You gotta know. I like to think of it like a scorecard and I like to think of it as the metrics I need to know before the customer does business with us. The metrics I need to know during when the business is operating with us or when the customer is operating with us as a customer and we're doing the work itself and then afterwards. So kinda like in hindsight, look, get the numbers. You could also look at this kinda like sales, operations and admin. You could also kind of break it down that way because sales I am getting the customer, operations I am fulfilling on what the salesperson sold that is doing the work. And then afterwards I'm looking at the P and L and I'm looking in hindsight at my percentages, et cetera. So if you know these nine numbers, you'll be able to, number one, be able to benchmark where your business is at and whether or not you're improving the business. You'll also be able to monitor the performance of a general manager and know if they're actually doing good. So the first thing I'm looking at is cash on hand. Now, some people would say this is more of an after metric. I like to think of it as a before metric because it's going to be the determining factor of what I can spend on marketing. And if you follow my content for a while, you know that I would much rather spend money on marketing when I'm first Getting started than I would on a brand new truck. Even if I'm trying to be in growth mode, I might go lease a truck or get a loan on it just so I have enough cash on hand to be able to go get customers using marketing. So cash on hand is super important because if I don't have enough cash on hand, I cannot fund growth in the business and I can't fund my customer acquisition cost. I can't go out and do ads. I'm not gonna be able to actually take the business to the next level simply because I don't have enough cash on hand. Now, typically, when it comes to cash on hand, I like to have at least one month of revenue and in the bank. And if you listen to my book, Total business turnaround, I like to have at least one month of revenue in the bank. I've seen people go lower than that when they are in massive growth mode. But just know you're increasing your risk if you start diving below one month of average revenue in the bank. So how I determine that is if last month, the month before, and the month before that. The last three months, I had like 80,000, 90,000 and $100,000 in monthly revenue each of those three months. I take the average of those three, which it was 80, 90, and 100 the last three months. 90,000 would be the average. And that's how much cash on hand I would want in the bank. This is going to cover what's called working capital. These are just average expenses that happen in the business. Credit cards, you know, you have two or three, four weeks where then you pay them off, you have payroll. Just normal operating expenses needed to be covered by this. And I want at least one month of revenue. Yes. Some people are like, you need two or three or four. Great. Yeah. The more you go above one, the less risk you have and the lower you go below one month of revenue in the bank. Cash on hand, you're increasing your risk. So it just really depends on what your risk tolerance is. Now, another measure in terms of a scorecard that I'm gonna look on a weekly basis with my general managers is my customer acquisition cost. So assuming I have enough cash on hand, I can go out and I can acquire customers through advertising, marketing, et cetera. Now, another way of looking at customer acquisition cost is if you actually do go out and buy customers. I was recently in a turnaround with a pool company, and it's very common in the pool industry to buy routes. And so their customer acquisition cost was actually based on actually Acquiring other people's jobs, other people's customers, other people's contact lists. But the vast majority of us, we're not gonna be acquiring businesses. We're gonna go acquire customers for from the likes of Facebook, Google, every door, direct mail, and a host of other ways to be able to attract customers. I need the cash on hand to do this, and I cannot actually go get jobs before acquiring the customer. So if I am measuring my general manager, if it's something that I am tracking on a weekly basis, I need to know based upon how much cash on hand do I have. If I know how much cash on hand I have, and I know what my customer acquisition cost is technically, I know how many. How many customers I can acquire. I know how fast I can grow. If I know how much cash I have on hand and how much it costs me in marketing dollars to go get a new customer. All right, the next thing I need to know on a weekly basis, like, again, yeah, you could do daily, But a lot of times there's so much fluctuation there. And then this is like a nice, happy medium we found between monthly metrics and daily metrics. Because daily it's up and down. Monthly might be too long before you notice a really disturbing trend in the business that could be really bad. So the next thing I'm tracking is number of leads. This is gonna be dependent a lot on seasonality, but it's something that I wanna be tracking because it is a leading indicator of potentially not needing as many employees. Or if it's ramping up the number of leads, it could be a leading indicator of growth. And I need to actually go get more trucks, I need to go get more equipment, and I need to increase my capacity. If my leads are steadily increasing, especially if I compare them against last year. So if In March of 2024 I was getting 90 leads, and in March of 2025, when I look back, I now made 150 leads, there's a really good chance I'm going to increase capacity because I'm getting more leads. So tracking this over the course of time, super helpful. Because conversely, if last week I had 50 leads, this week I had 20 leads, there's a really good chance that my backlog of how much I'm booked out is gonna start shrinking because my number of leads is decreasing very rapidly. Very normal in a lot of home service businesses because of our seasonality. But tracking it is important. Cause otherwise what happens is the only thing people will think about is like, well, do I have work on the Schedule this week and it's like, oh, so far booked out. And all of a sudden a couple months go by and they don't have enough jobs for the week for the crew to actually stay busy. And it's because they missed the fact that the leading indicator of the number of leads coming in 3, 4, 5 weeks before started nose diving. And because of that, missing that and not tracking the number of leads, they missed the fact that their capacity was going to need to decrease. I either need to lay some people off, they're going to have to, or they're going to have to go spend more on marketing in order to be able to get more leads. So these are three things I want to be tracking on a weekly basis. Again, if you have general managers, great. But even if you're just running your own business, a lot of times people are like, well, I know I need to know my numbers. Well, what does that mean? Like, what numbers do I need to know? These are the numbers you need to know. All right, so during now we're actually going to assume that we actually close the job. We actually got customers. I need to know what my close ratio is. So now that we've got leads, I know what is the close ratio? What percentage of the estimates that I send to customers are getting accepted. So this is simply the number of accepted estimates divided by the total number of estimates that were sent. And the number one way you can increase close ratio is not getting more leads. It is simply closing more of the leads that you already have. And so how do you do that? Follow up, having automated follow up, doing follow up phone calls, making sure that customers don't ghost you. Ghosting is when the customer, they ask for the estimate. You send them the quote, you put it all together, you put the time and energy into making it happen, and then you never hear back from them. The status of that estimate stays pending inside of your CRM and you never hear back from them. As a blended average across home services that I've seen inside their CRM, 30 to 40% of estimates that are sent to customers never get a yes or a no. In other words, they never get accepted or declined. They just go into oblivion. That's insane. And a lot of times I would just rather get a no than nothing at all. Think about the time, energy and money you spend on just getting the estimate out. If you're not gonna get an actual yes or a no from a customer, you wasted hundreds of dollars. Likely if you've gone to the customer's house, put together a Proposal had to do some sort of planning or drawing or price estimate, especially if it's project based.

If you're not charging for your estimates, make sure you're granting a yes or no, they owe it to you. So your close ratio, something you wanna be tracking very, very rigorously, at least weekly. Because if this dives quickly, it could be indicative of a poor salesperson, bad follow up processes, or potentially other things that are causing our close ratio to fall. Like we're not getting back to customers fast enough, we're not answering our phone. By the time we answer our phone and collect the estimate information, we're not getting to their house and meeting them for four days. Then after that there's three more days that go by before we actually get get the quote in their inbox. All of a sudden, seven, eight, nine days have gone by from the time they ask for the estimate to the time they actually see it in their inbox. And I want to shorten that time up as much as possible. Inside of Copilot, we actually have a lead response time tracker on every single estimate. So you can see over the course of time as you adjust your systems whether or not you're getting back to customers faster. Because I can guarantee you, guarantee you customers will always want their estimate faster. They will always want a response time faster, they will always want the phone picked up faster. They will never ask you to go slower in any of these processes and steps. So when it comes to close ratio, it's not more leads that you need. Everyone thinks they have a lead problem. When most of us have a close ratio problem, we have a follow up problem. We have a estimate response and lead time response problem. Those are the real issues that affect close ratio. And this is now after the customer has already reached out to us and as an estimate, the next thing I'm looking at, if I'm trying to know my numbers, if I'm trying to make sure that my general manager knows their numbers, is what is your budget hour capacity? In other words, based upon the number of amount of trucks and equipment you have, that's your asset capacity, based upon your labor capacity, that is your number of employees, and then thirdly, your personal capacity, Whether it be for the general manager or for the owner, I need to know what is my budget hour capacity. In other words, how many budgeted hours can I put on the schedule without overloading my trucks, my assets, my labor, my employees, or my personal capacity to where I lose my marbles and go absolutely insane knowing what that is very important. And then Based upon knowing what your budget hour capacity is, realizing that you want to get between 80 and 100% of that budget hour capacity to maximize profit. What that means is I don't want a whole bunch of assets, trucks and equipment sitting around at my shop for four or five days out of the week. I want them being used as much as possible. That is as close to my capacity as possible. I don't want employees that like I have a whole bunch of employees, but some of them work one or two days a week. Because I just don't have enough jobs. I'm nowhere close to my budget hour capacity for labor. And then personal capacity. I don't want to exceed and go way above the amount of budget hours that I can handle, the amount of revenue I can handle personally. Because. Cause if I do that, the business will actually go out of business. Cause I will eventually want to quit. Because personal, physical, spiritual, psychological things will start to break apart if I go way above my budget hour capacity. So what is budget hours? Simply the amount of hours that we expect jobs to take. So if you're doing route based jobs, it might be 0.5 budget hours for every job, or 0.75 budget hours for every job. And then someone's doing 10, 15, 20 jobs in a day. If you're doing project based jobs that are much larger, you might have 100, 150, 200 budget hours on projects. But I need to know what is the capacity, Given the amount of trucks and equipment I have, what is my capacity for how many laborers I have and what is my personal capacity. If I know what those are for each, I'm gonna take the lowest of those three and make sure I get as close to that as possible. Because where you're at in revenue today, and where you could be at in revenue if you were at capacity, but between that is where all of your profit is sitting. What that means is if you're doing $40,000 a month in revenue and you have six trucks, and those six trucks, if operating at full capacity, could be doing 100,000 in monthly revenue. And you're only doing 40,000. What that means is from 40 to 100,000, that extra 60,000 is lost ability. That's where all your profits are sitting. And so I want to know what my budget hour capacity is and then grow between 80 and 100% of of that budget hour capacity. How many budget hours can you complete every single week without overloading yourself personally, without overloading your team to where everyone's working overtime and they want to quit, and they're walking off the job and making sure you're not overloading your trucks and equipment. All right. When it comes to during, we're also looking at the actual work getting done, which is our efficiency score. Efficiency score tracks how efficient we are with the one thing that we sell in our industry, which is labor. The vast majority of home service businesses, our entire goal is to take 25, $30 per hour of labor that we pay an employee. And then we have this black box that we send that through, and that is like systems, procedures, equipment, training. And on the other end, we sell that same hour of time to a customer for $150 an hour. That's the whole basis of home services is taking labor, adding value to it through training, equipment, everything that goes into the systems of a business. And then on the other end, it's now worth four or five times as much to the customer. So I'm looking at my efficiency score, and that's simply my budget hours that were completed divided by the clocked hours in that day, week, month, et cetera. So, for example, if someone works six budget hours, they complete six budget hours of jobs, actual jobs, on the schedule. And in an eight hour day, that would be six divided by eight, that would mean a 75% efficiency score. What that means is that 25% of their day was waste tracking. This is important because if, if our product that we're actually selling is labor, it's a good idea to know if we're efficient at making that labor effective and profitable. The same way if you are making an iPhone or if you were making a desk or you're building this board. I would want to know about the entire manufacturing process to ensure that we reduce waste, that we're not removing this metal here on the side and reducing. Maybe it was this large, and every single time we cut it, we're losing four or five inches of metal. Well, that's waste. I would want to reduce that waste in the manufacturing process. And if we think about labor and we think about home services as our product being labor, we want to look at every single stage of getting it from 20, $25 an hour that we're paying the employee to 100 to $150 that we're charging the customer, that entire process, we want to cut out all the waste. And how we do that is we track efficiency. And how do we track efficiency? Budget hours completed divided by clocked hours. Again, inside of a CRM like copilot, you're gonna have this nailed and then if you use something like P4P software, you're actually able to pay your employees based upon their efficiency score, which I highly recommend. All right, the next thing that we're going to be looking at is the after stage. So we've looked at before we've got a customer, then during what it's really going to come down to our budget hours, our efficiency, whether or not we actually close the job. And now the job is done. Now we're looking. In hindsight, you got to actually collect. You got to collect on the invoices, right? When it comes to efficiency score, you got to realize that you are going to pay people to stand around, do nothing some portion of the day. Our goal is to reduce how much they're standing around doing nothing and getting paid. When it comes to overdue invoices, realize there's going to be some people that are scumbags and they're not going to want to pay you. Our goal is to reduce that as much as possible. You can do so many different things before you even get to sending the invoice after the job is done. To prevent this being an issue, a lot of times, even this order that I put this in, it's not great that you think about collecting after the job is done. I would rather you think about it before the job is even accepted. In terms of having deposit thresholds, which means after a certain amount they are required to give you a deposit. So for us back in the day, before we required credit cards on every single customer, we would require anything over $3,000 to have 50% down. Now, to even reduce the amount of overdue invoices further, we now require credit cards on file for everybody. Now there's still going to be people that will overcharge their credit card, their card gets authorized, and then in a few weeks when you try to charge it, it's now non sufficient funds or invalid billing address or something stupid like that. It's going to happen. Our goal is to minimize it. The same way there's going to be waste in the day when it comes to labor and we're trying to minimize that. We're also trying to minimize the amount of invoices that go unpaid. This is like I've seen people where they're writing off 5 to 7% of their annual revenue simply because they do the work. They invoice the job and they never see the money. And you're like, oh, I usually collect the money eventually. Well, if people are taking three, four, five months to pay you, the Final invoice, the cost of capital right now is somewhere in the realm of 5%, which means if they owe you $800 and they pay you in six months, they really, really only paid you about 750, because the cost of capital, like you should be charging interest. So at copilot, like if you're using copilot and you have an overdue invoice, charge an actual fee, and it will keep stacking on them every month to be able to make sure you actually recoup that cost. And guess what? When they see fees of 1 or 2% or 3% every single month, again, you got to check your state laws to make sure what you're allowed to charge there, because there's certain requirements. But if they see that, they're not going to want to go overdue, they're going to want to pay you as fast as possible if there's actual penalties to not paying their invoices. But allowing you to be the bank where you just hand out free loans to everyone, that is, you do the work, you invoice them, and then never collect, is a recipe for disaster. And no good bank is charging no interest. So if you're going to allow people to overdo invoices, if you're going to allow them to pay with check, if you're going to allow them to be able to do 30 or 60 or 90 days of payment terms, make sure you're getting paid for that, whether it be interest or upfront fees for. For that billing service. Because that's really what you're becoming. You're becoming a bank. All right, Another number we're tracking is the percentage of our revenue that's going to direct labor cost. Okay, so this is like at the end of the week, end of the month, this is going to be usually a little bit of a lagging indicator, leads being a leading indicator of what's about to come. A lot of times when you look back in time, we're going to look at what percentage on our profit and loss statement is actually going towards direct labor. Direct labor is the actual laborers that are doing the work itself. This does not include people that are in sales, in the admin, in the office, or you as the owner. If you as the owner are not doing work out in the field. If you're doing work out in the field, make sure you're paying yourself and attributing it to direct labor. A lot of times the owner's not paying themselves. And so these numbers get massively out of whack and because they're not paying themselves a salary, those like randomly take some money from the company. And so then all of a sudden this number looks really good. Like, oh, it's only 20% of my revenue is going to direct wages. That is the people doing the work out in the field. Yeah, but you're out in the field most of the day and if we had to replace you, we'd have to pay you like 70 or 80 grand a year because you're working like 60 hours a week. And so if you actually figure out what would you have to charge, what would you have to pay someone if they replaced you and then attribute that labor cost to, to either direct expense, actually direct labor out in the field, or if you're overhead, that becomes a different situation. But typically when it comes to home services, if there's a business that has more than 50% of their revenue going to direct labor, I've never seen them be very profitable. So If I'm making $500,000 in annual revenue and more than 250 of that money is going, 250,000 is going to direct labor wages for employees out in the field getting, doing the work. I've never seen that business be more than 5 or 10% profitable if that. Most of the time they're losing money. So I want that under 50%. The businesses that I've seen the most successful get that under 35 to 30% of what their revenue is compared to what their direct labor out in the field is. Now that number is going to change a little bit based on your service. Because if you're offering way more material heavy type of projects and design build big projects where there's lots of materials, this number should be a lot lower. But if you're doing more labor type things where you're not charging a lot of material costs and extra fees, your direct labor is a very, very important piece of your P and L. And knowing what that number is. So I'd be tracking at least on a monthly basis, like what percentage of my revenue goes out the door every single month, every single week to just paying the employees to do the work. Again, this is usually going to correlate pretty closely with your efficiencies score. If people aren't efficient, your direct labor expense is going to go through the roof. Alright, so as your efficiency score goes up, typically the percentage of your revenue goes to direct labor goes down. Very good. All right, last one. This is again the score curve that I'm going to be measuring my general managers. I'm Also going to make sure that every business owner knows these numbers like the back of their hand, at least on a weekly basis. And that is the percentage of admin expense. Again, this is after the business. We're looking back on the P and L and we're saying, okay, what percentage of our revenue went to admin expenses? Now when it comes to admin expenses, I'm thinking about several things. Number one, the cost of a shop space. If you have to get yourself an office and you're spending 2, 3, $4,000 a month, what would that otherwise spend if you didn't have the office space? Well, maybe you could get a storage facility. Maybe you could just get some blank land for 500 bucks. Well, all of a sudden you're paying extra three grand because of admin. You have to have an office person. Getting one office person now requires like an office space. So like the rent, then the utilities, you got Internet, water, sewer, electric, gas. Then you've got to actually pay property taxes. Like we just pay property taxes at my shop. Locally, it's not cheap. Thousands of dollars every single year for just property taxes, even as the renter. Cause on commercial space, that's how it rolls. And the difference between being able to rent, like being able to work out of your house versus actually having a commercial shop space, very, very expensive. So I'm gonna look at percentage of my revenue that's going to admin, that includes my rent space, my rented space, or if you're paying a mortgage, which usually I don't recommend, that's a different business than whatever business you're in is real estate. And so if you're gonna go buy a piece of land or buy a shop space and put hundreds of thousands of dollars down as a down payment, usually your mortgage is gonna be about what you'd spend anyways on rent. And, and secondly, that massive cash up front is usually going to hurt you on your cash on hand, which then has a trickle down effect on how much you can grow. So usually until a business has been in business for at least five or 10 years, I don't recommend buying land for this reason because the admin cost goes through the roof and it depletes your cash on hand because of that down payment. So when I look at admin expense, I'm looking at rent, I'm looking at utilities, I'm looking at office equipment and, and furniture. And then I'm also looking at the actual cost of wages for office people. A lot of times people overlook this. And the reason it looks way lower than it actually is is because they, as the owner, are involved in this. They answer the phone, they check their email, they're doing things on the weekend or the evening, doing admin related tasks, sending out estimates, sending out invoices, running payroll. And they don't take into account the fact that their time is if it was replaced by someone else doing the work, it actually needs to be accounted for in admin expense. And so again, you gotta figure out what would you have to pay yourself to replace yourself. And so if that's 30, $40 an hour, take that into account. Because if you're doing all the admin work, I talked to someone last week and they have about a $1 million business in revenue, but they're in the admin side a lot. And I would imagine that about 25% of their revenue was just going to the cost of their shop space, their utilities, and the wages of their admin staff. Now, on their P and L, it only looked about 15 to 16%, but I know that the owner spending most of their time and they're working 60, 70 hours a week, most of it's spent on admin. And so you've got to take into account the fact that where your time as the owner is being spent is important. For my locations at Augusta, I'm shooting between 8 and 12% of my revenue being spent on admin at Command center. And then I have usually the general manager that spends most of their time out in the field doing work because Command center is able to handle things. But at 8 to 12%, let's add on a few extra percentage points to cover the cost of the admin time that the general manager does have to spend doing admin, I want that under 15, 20%. Like as soon as I see a home service business spending above 20% of their revenue on admin, either A, they're super unprofitable, or B, they're growing extremely fast. But like, if you're doubling year over year, you're gonna have a lot more admin expense because you have a lot more phone calls coming in. New customers take a lot more time to set up, they have more customer complaints, there's more churn at the first few months of getting them set up, et cetera. But these are the nine different things you'll need to know before, during, after the customer's experience to make sure you know your numbers. And then based upon these, you'll be able to track over the course of time whether or not you're succeeding. I don't really care about the actual number I'm caring about where does it go over time? Does my number of leads go up over time or is it going down? Is my efficiency score going up or is it going down? Tracking this is the number one step to getting successful. Whether you are the operator and in the business every single day, or whether you have a general manager that is running the location for you and you need to be able to keep track of them and make sure that the business is staying on the rails. If you want to know more about multiple locations and how to do general managers, watch this video here. I take a budget of $140,000 to turn it into six locations and this will walk you through every single step of that journey.