The Downfall of a $2M Landscape Business Empire!

Is that legally compliant? I have no idea. I just know you will make more money.

Everybody wants to make more money.

But, you know, I'm looking at the OSHA violations. I'm looking at processes.

It can always be worse.

All the things that have come up in the past 24 months that literally could have sunk them.

Oh, no, you need to shut the door.

I default to violence.

I've actually had a hard hat thrown at me.

We lost eight grand a month property.

So it's gonna be hard to get past that.

We are in business to make money. Yeah.

Maybe nobody will see it, but you could have done better.

We really cut out some bad eggs.

They're and complaining and moaning about everything.

They go back and say was violent to them. Have you ever seen Fight Club?

If we had a gun to our head, we would do it.

That was bad. That was a bad day. I had to make him quit.

All right, I'm miked up and I'm ready to roll. Good.

Morning.

What's up?

How's it going, brother? Good to see you.

This is.

This is the show. Getting the show on the road.

My name is Adam Carter with Southern Landscapes proper. We have approximately a 1.5 million dollar operation kind of stuck at this level. Said a lot of your videos. Growth sucks, Cash. That's kind of where we're at.

Yeah, we just had a morning meeting.

Got them all on the road.

Awesome. Yeah, this one looks good, man. So if everyone shows up right now, how many guys are there?

I think there's 24.

And then if, like, is there usually 16 or so that show up? Is that kind of like the goal? 16, 18, like, rolling right now?

I'll have to ask Derek. He's in charge of the operations. I got a board in here. It shows everybody on it, so I can come in and then see who didn't show up.

Awesome. Well, we can head inside. Come on in, man. This is a great shop space you got, though.

It is. It's big. We only have the front part.

I love it.

This is Jody.

Jody, absolutely. Thanks for letting us.

My name is Jody. Jody Smith, and I'm the owner of Southern Landscapes Property Management. I don't want to be the smartest guy. I want people smarter than me, you know? We want as much help as we can get.

Hi. How you doing, Todd. Todd.

My name is Todd Anduzzi. I'm one of the members of this team to try to help with the efficiency.

He's a kind of a business consultant. We've got with.

Oh, awesome. And you guys Both work at the fire department, right?

Yeah, yeah, we worked. You know, we've both been in the fire service for over 20 years. You get a good group of guys who work together. There's nothing better. And that's what I mean. We have four or five firemen that work for us here. We try to carry over that culture of, you know, when it comes down to it, you have to do the work, but it's attitudes.

I hear 100 hours between the two.

240 hours.

240 hours every two weeks. Well, that's there.

And then plus, wait, you do 240 there every two weeks. So 120 hours a week over there each. Yeah. Dude, are you married? Oh, my word.

One of the benefits of starting a business as a side gig is that you still have your employment and your 9 to 5, and you can make money even if something bad happens to the business. However, as the business grows, many times you'll have to choose between one or the other to be able to focus on the business.

Oh, man. We got a candle. We had a candle.

That's for you.

Let's go.

Yeah.

Fancy, fancy setup. Place is clean. Is it always this clean?

I'm going to say that's Wayne. He's our mechanic.

Hey, Wayne. Good to meet you, man. Nice to meet you. Great work out there. I love the one with the seat tied up.

That's red. He's our sales side. Yeah, sales. Jody and I are in there.

Cool. Hockey.

Oh, yeah.

You.

Oh, you. Where are you from originally?

Well, I'm from Florida. It doesn't really make much sense, but.

I was gonna say this is really the boss's office. This is my wife's office.

So she handles a lot of things.

Cool.

And then she has an assistant. Is that the second office person?

Ramona is up here.

Okay. Oh, wow. This is like the king's room.

Make the ladies happy.

And that's one of my main goals. I want to get my wife out a little bit more because there's weeks where she's like, you know, we're getting pretty light on the bills, the payroll. Once you add all that up, yeah, that's a lot of money. It would be great to have that. That nest egg of a big chunk of money sitting there where she has no worries.

Let me get the two cents on this. So you had a career as a business partner that split up a year ago, and that. That ended poorly.

Yeah.

Not very good.

You felt like you needed to just move on, and so you guys split assets, split customers, everything. So Ramona. How long has she been here?

She's been here, well, since we split.

So, yeah, February 1st is when we officially started this company.

Okay. And she come over with that. Like, was she from there? Oh, okay. But you had to get out. Like, supposedly it was just kind of things that were being done that you didn't agree with.

The main reason for the split, you know, it was a partnership. But the other part, from my understanding, went out and bid jobs and took the down payment and never put it in the books. So after the split, there's these people that are like, hey, are y' all ever gonna come do this work? And blah, blah, blah. I've already paid a hundred thousand dollar down pay payment. There's no history, there's no anything showing it. Come to find out, they had made the checkout to that partner specifically. So, you know, there were good reasons for the split.

And you. You knew all of that stuff and then came in once you split off?

Well, no, I mean, I was with that other company too.

Oh, wow.

Yeah.

Mercy goodness. You took the office version and. All right. All right. I'm tracking. And when you split it, was it based on service area or basically like maintenance and projects?

I would say maintenance and projects.

Okay.

And then just the debt that I had to.

So basically it was really splitting debt and then splitting customers. And then did you get equipment with that kind of.

I would say more debt and equipment than customer.

So of the debt that was there, did you guys split in half?

Well, it was 60. 40. He was 60, I was 40. You know, I took the 40% of what debt we had and he took the 60%.

And what was that? 40%?

100 and something?

Okay, thereabouts. Yeah. Roughly. Roughly 100.

Cool. I've just been chipping it away. Yep. Because I tell Adam, I tell everybody else, when you leave here in the afternoon, you don't have to think about this place. When I leave, she's telling me numbers at home, you know, so. So I want to be able to, hey, let's. Let's get on a plane, me and you, and let's just go somewhere for the weekend. That's what I want to get to.

Like, we have a pretty good thing going and we've got a great group of guys. We've weeded out some of the bad apples we had, but, I mean, we're working our little hearts out. We want to get everything on the right track, get things set up how it needs to be, and that's kind of how this year's been Separating from the old, starting new, having things set up so we can. So we can grow.

When you split off, were you already like in the wings, ready to roll, or was it a matter of you split off and it was like, okay, I can't handle this. I need to bring an operations person in.

Yeah, I think we were already at the capacity that I needed help, like, you know, even like getting Derek on board. Because when we're at the fire station, you know, there's nobody. We have the office ladies, but.

Got it.

They're not managing crews and all that. So that's when we brought Derek on to.

Well, like, the fire department is very chain of command, and we're kind of set up like that. Very military, very chain of command. They have an issue, they need to go straight to Derek, not come to him or me.

So I get the meeting this morning. Who talked?

Derek.

Okay. All right.

Because we're not. We're only here maybe every third day we're here.

Okay. So Derek really is the one holding the fort down. But I would assume usually you can rest over there.

You never know. Some days we come in and you've had a good night's rest.

Other.

Other days.

Yeah, yeah.

You really haven't had any.

You work 2448 through the fire department. The 24 hours that you're there, you know, it's not like you're working. Working for 24 hours. Yes, you are. Sometimes. Sometimes you're not. I think for me, just doing it so long, I'm just used to it because I've been doing the fire department for 27 years. So once you get older and more time, you got family, you got kids, you're going into a burning building, you've got those thoughts. And you, your head of. I'm not young anymore.

How much longer do you both want to be doing that for the pension sake?

I've got another four years. Got it.

Okay.

I don't want to just throw that away.

Yeah, no, totally.

It's a great pension.

Yeah.

But if you help us get this going, we're going to quit next year.

I would like to be the business owner, but not, you know, doing the day to day operations and kind of going out and networking and all that stuff and basically not be tied down to two jobs and retire from the fire department. That's why I want to take it to the next level.

How does that look with Derek and then you. Because like, Derek's operations of maintenance, which is the vast majority of the revenue, but then you are also director of operations.

I mean, Jody and I kind of run everything together. My title is director of operations, but we kind of tag team pretty much everything.

It's a little bit concerning to me just how many people are at the top of this organization in terms of management. I understand a lot of them are part timers, but it could potentially cause a lot of overlapping of roles and confusion of what exactly everyone's responsible for.

So from a sales perspective, who's going out and seeing the projects, going out and seeing contracts, meeting property managers. Who's that? Is that mostly two more firemen?

One does our commercial maintenance sales. Then we've got another guy that does our install projects.

And is that designer full time or just like on a part time basis? When needed?

He's full time, but he's like us. So he's at the fire station.

Okay, got it. Okay, man. It's tough for me to wrap my head around. Okay, all right.

It actually. I don't know if I want to say this or not, but it actually helps better because if I had to hire somebody full time in that position, the pay would be.

Yeah, I mean, that's what a lot of these guys think, is that we're. We're all rich or Jody's rich. And it was like, as we've grown, he's making less money than he was making.

Sometimes when you're growing really fast, it's a wise thing to stop for six or 12 months and just make it more efficient. That is cut out waste and team members, customer services that are not making enough money.

So, I mean, we've talked about that before. Like we could probably drop down a couple crews, keep our most profitable properties, and he can make more money, but the goal is to grow it and increase revenue for everybody. This was a transition we did for a lot of different reasons. But we went from over 300 customers, majority residential, started adding the commercial properties, cut out all the residential. I don't know, it's just a lot easier to maintain warehouses versus a high end property. And we went from over 300 properties to roughly 100 properties. And we're making more money, but it's. It is slower growth. And we talk about it, we were talking about it yesterday.

If you lose one of those, then it's a bigger chunk that you're losing to.

You took your top three customers out of the 1.4. How much is that you'd have?

Mirror Lake, Fairfield?

Half of it.

Yeah. I mean, one of them is 15 grand a month, another one's 10 grand a month. Another one's 8 grand a month.

Okay so, okay right, so more like 40% okay so they're big. That's my bigger concern. That's the, that's what I see what happened with commercial? Commercial. So we just came from a place in Ontario. 67% of his business evaporated in one day.

Dropped about 500,000 in revenue. No sense in having a million dollar business if you spend 950 to get there. Like to me that's not a great business, not very sustainable.

So that's just something to be wary of in terms of just a liability perspective when it comes to commercial.

It happened in October, we lost eight grand a month property and they ended.

Up going with Brightview and then you know.

Right, so you are competing with Brightview.

So my biggest goal which I have numerous but I want to beat Brightview. I mean it's a long shot and we've taken a lot of properties from Brightview and all the big boys so that's the goal. I'd like to stay commercial and you know, compete with them. I know it's going to be hard but it's hard but it's not hard to do just this little bit. Much more better than what they do.

In terms of the commercial. Shenzhen is making 90% of the revenue. How many new leads are coming in every week? Or is it like you're going out and doing the networking and they come in occasionally like once a week, once every two weeks. What's that flow look like?

It's not flowing pretty good and I don't know if it's just that time of year or what but normally this is when we get the commercial properties is January, February is when we try to make a big push to get those. I would say it's not like a regular weekly thing that we get a.

Lead let's just say an average of one a week Maybe, maybe.

I mean we're courting probably about four or five different people right now but it's slow and then right now there's, it's not pressing for them because they're like, you know, things aren't growing.

I haven't been seeing a lot of new properties come in. A few here and there. I don't see a lot of jumps forward between that and having the people to be able to run more trucks. So right now we have six, six maintenance crews. If we had two more trucks and two more drivers and crews, you know, I feel like we could get more work.

Well when leads come in I know it's A different process, commercial. But like, what percentage of those do you typically end up closing?

Probably half. Yeah, probably half. I tell the companies, I say we're a large small business. We are. We're competing with them for a lot of these properties. But, I mean, you can call and talk to Jody or myself. You know, you call us for an emergency, we're going to handle it that day. We take over properties all the time from your big lawn care companies that are nationwide. And they, I mean, the first thing they tell us is, yeah, I mean, they're not responsive. They're not attentive to their small little needs. And there will always be some that we won't be able to get that are maybe just worried about the bottom line and want the cheap price. But some places do take a little more pride and it's easy to get those properties because it's not hard to outshine the big guys as far as quality responsiveness, just being good people.

You wouldn't happen to have a balance sheet, would you? Do you have one? If not, it's totally fine. I have a pretty good understanding of like the debt breakdown and stuff like that.

We worked on your three year strategic plan.

Yo, this is a language I can speak. All right? This is stressful. We have less than two weeks worth of cash flow on hand. Like, this, to me, is a big, big problem. $50,000 in the bank on $1.8 million business. Since I literally have a location that does that, I just, in my brain, I'm literally thinking about all the things that have come up in the past 24 months that literally could have sunk this. That is a literally a matter of like payment processor not going through correctly. That is a matter of an insurance claim. That is a matter of insurance premium going up. There's one truck getting in an accident. When you actually bring the gravity as leaders, to let the business get to a place that is that fragile at this size is not being a good steward of what we've been given as just leadership. Right. And if I was just talking to you one on one, that's, I would say we have a $1.8 million. Like, that's something to be proud of and there's something there.

Cash is like oxygen. Without it, the business is going to die. Ultimately, when you build a $1.8 million business and you have a family depending on you, your employees and their families depending on you, you can't be running the business so skinny on cash.

Do you have a line of credit, though, as a backstop?

We do not. No.

Okay. Have you tried to look in to.

Get one we talked about?

Yeah. I would highly recommend, like, as much as, like, I want to be like, don't need debt. Go forward at $54,000 in the bank and you're doing 1.8 million. It's just a matter of, like, yes, we can cycle through it quickly, but that would be a huge stress reliever. It's just knowing that if something crazy happens that sucked, 30, 40 grand, which in a $1.8 million business can go tomorrow. Right now, when you quote, unquote, don't need it, is when you want to go with the line of credit.

We had already talked about that. And it's just hard being in business for not even a year like this coming up. February will be a year. So that makes it hard. I mean, when I've tried to go out and get a line of credit, that's the first thing they say. Well, you haven't even been in business for a year.

Even if you had to collateralize some of the equipment, that's paid off as a way to just secure it, but you're not going to use it. The goal is like, open it up. So that way, in the event of something crazy happening, you have something to fall back on because that is literally less than two weeks of revenue in the bank account. I have a very similar sized location, so, like, I know that can just disappear. Like that.

Is that location you have? Is that, like, majority residential properties that you do?

Probably 95%.

95%, yeah.

Is this a debate you all have had about residential versus commercial?

Oh, yeah.

We're throwing around the idea of doing more residential. Doing more residential.

When I first started Augusta Lawn Care and just had a few employees, I also tried to go after commercial jobs. However, the big boys, the big competitors, they were able to outwork me with better trucks, better equipment, and more employees. And I didn't have the manpower to be able to effectively compete on price. And a lot of times those commercial customers were much more price sensitive. Potentially, they can make more profit by focusing on residential customers instead of commercial.

What's your target hourly rate right now for the commercial work? For maintenance specifically, you're talking about man hours. Or when you're doing an estimate, what are you multiplying the hours on site by, like, the dollar amount?

Six. Well, 64 hours a man hour.

Okay, 60 is the target. You're probably. If we actually had took a blended average, you're probably thinking more like 50, 55.

Probably, yeah. 55.

That's what I'm okay, cool.

That's our goal is not to make price necessarily the final determining factor. It's like they want somebody they can rely on, they can trust and good people, that's who everybody wants to be around.

In terms of the debate on residential, when it comes to that, yes, there's more phone calls. Trust me, we deal with a lot of phone calls, but you usually have a less price sensitive customer. And so therefore we charge at least 80, $80 for man hour, at least. And a lot of them go for more, 90, 100 per hour for residential because they see the value of the communication more than the commercial client. That will drop you and go try Brightview for a year or two because the cost and like that's just the game we're not going to win in terms of price. It's so difficult to be lowest bidder and so many of these bids, especially the big ones, go to lowest bidder first. So even if you lose the contract and then they find out how bad they are, it could be two or three years before they come back to you. And so I'm not, I'm not pushing to say, hey, you must go residential, but if you feel like you can only close 50% of the jobs and you're only charging $60 per hour and really what you're actually hitting is 50 to 55, which is more in line with, I'm thinking based on the numbers, that's a hard business to make sense of financially. So it's really a matter of like, which lever do you think right now we can pull? Is it the price one? Like can we raise prices or is.

It a pretty big one? Because I haven't increased prices in.

Years.

Okay.

And some of these properties I've had, you know, since the 90s, you know, some of these commercial properties.

Merciful heavens. So I'm going to go out on a limb, I'm going to go out on a limb and say some of your, some of your jobs, your man hour rates probably getting down to 45.

Yeah.

And if you haven't raised prices in the past three years, I'd be telling you raised prices. Not a single one of our locations has not raised prices in the past three years. Because like the past three years, your base pay, let's just call it 2015 was what, $11 an hour, $10 an hour. And what's your starting wage now?

15, 16.

Okay, so we've had wage inflation of 60%, but we haven't raised prices. So right now that 60% of what you currently have. Let's just call it, let's call it 30% of 893,000. It's $200,000 that otherwise would have been profit 50, 10, 15 years ago. And everything else has gone up to fuel and everything else. Right. All the profit from the business has been sucked into wage inflation.

If more than 50% of your gross revenue goes out the door to direct labor, which is people out in the field doing the work, I've never seen anyone be profitable. Why is that happening? It's a matter of usually either two things. Pricing is too low or labor is just super inefficient and they're not getting the work done fast enough.

If you say by raising prices, we are going to lose a bunch of contracts because you have competition. Brightview, that's when you probably need to go more residential. And if that's why you haven't raised prices for 20, 30 years is because of that and their competition, they just keep going lower and lower in price on you. And then, then it's like, hey, let's get out of that market. Because that's a losing game. Like we don't have public money like they do. They will go into a market, they will throw money and lose tons of cash because they need to be sure to explore. On Wall street they say they grew by 10%.

Some of the things that Mike was saying, I agree with 100% but I didn't want to overstep my boundaries. I definitely didn't want to kick him off his, his groove. So I kind of held back. But everything he said I 100% agreed with. I would just add things.

We don't have that luxury. We have $54,000 in the bank. Like right now at 60%, 60% of revenue is going to direct labor. Then we have another almost 20% going to indirect labor, which is office estimators, your wages, et cetera. That business will never make money. Like if labor is literally sucking 70% of the revenue, there's no room for profit. 57% was direct labor and then another 293 indirect labor. I think most people, if they just looked at those numbers, like the $293,000 indirect labor is where we need to target first. I'm not so convinced of that based on seeing the operation because you need the person in the shop with this much equipment, you kind of need them. You need the part time salesperson because you guys are both not involved as much. You need the operations person because again, you need to back up to you guys, when. When 70% or more of the revenue is going out to just wages, that means we got to cover rent, insurance, fuel, new trucks. Everything has to be covered with 30% or less of the revenue. And any business I've walked into that, the direct labor is more than 50%. I have never seen them be profitable.

I was very nervous about the whole thing as far as, yes, every company's gonna have issues, pros and cons problems.

Well, that's what I like about Mike is that he's really. You can tell. And I was telling him in there, like, you can tell he cares. That's. That's the winning ticket.

That was the only thing that made me nervous was him going, oh, no, you need to shut the doors. Close it down. You know, that's what I was afraid of.

But when I see 57%, I either see, a, prices are too low or B, inefficient labor. And so this is, like, where you attack it from either, a, do we go for trying to raise prices by going to residential, or we raise prices over time to our commercial jobs. That's one. One lever or second lever is. Is there inefficiencies in our current crew that we can somehow weed out? Typically, there's less of those on a commercial site because you have less stop and go. But at 1.8 million, if you can make the labor 10% more efficient, you'll get $180,000 in extra profit. How can we take our current 24 guys and instead of going out and hiring to 26 and 27, how do we go from 24 to 20 and let natural attrition get some rid of some of them but still be reduced as if there's 26 or 27 of them? Can I use the whiteboard?

Oh, yeah.

Oh, man. Let's go.

So I thought this would be the perfect spot to add a pitch. Is there anything you want to pitch in this one?

Not really. I think I. I just say thank you and, like, tell them to go to the links in the description to support.

Yeah, but I need you to record it.

I got it now.

Hey, everyone, thanks so much for watching.

We really appreciate it.

And we were able to go do these turnarounds all around the country due to your support. So if you'd like to support us going and helping these business owners, go to the links in the description. All sorts of different services and products that help you grow your business. Also, if you want to turn around and be on the show, go to mikeandy's.com turnaround. It's completely free. We come out to your place and.

Try to help you turn the business around.

Perfect.

All right, let's do it. Now we're happy.

Let's go.

Okay, so CRU leave. There's six of those, and then I'm assuming three underneath each of them. And then we have ops, which is Derek, which they all kind of report to. And then I'm just gonna call it you guys up here. So these guys are on salary, I would assume, right now? If you say, okay, you guys gotta get done in eight hours. Do you know how much revenue is a crew makes per day? Probably 800 and 1,000.

Oh, yeah, at least. I mean, I would say between a thousand and fifteen hundred.

If you look at the math, be probably a thousand to twelve hundred. It's probably at twelve hundred. Something like that. Okay. It really comes down to you guys, though, because right now you're saying, hey, you got to get back within eight hours. I don't think in the current model, you're able to switch to an actual P4Pmodel where everything is based on budget hours and they get a percentage of labor revenue, because it doesn't sound like you've broken that down granularly enough on the contracts for them to actually show up to a job site. And, like, we're making $200 of labor revenue on this job. However, what you could do is really focus on what's the revenue per crew and then compensate bonuses based upon that. Because what you want is tension in these crews right now. You have no tension. They all are fully aligned to making these jobs go as long as possible. So the crew leader right now gets salary.

Yeah.

Do they have any incentives?

No.

Okay. That. That's huge.

What motivation does the crew actually have to work harder every single day? We as business owners work crazy amounts of hours in order for the incentive of making more money. So why not give incentives to your team members so they also want to get the jobs done as efficiently as possible and make more money too?

Because I think we can eliminate a fourth man. I think that these guys can all increase by 15 to 20% if you just have the incentives aligned correctly. You already have base pay installed at certain levels. I assume for a top crew leader.

You'Re looking at per hour? 22 an hour.

Okay. And then for the team guys down here, what are they typically per hour?

It's anywhere from, say, 15 to 18 per hour. Yeah.

So I would be trying to get at least 10% of their wages. At least at least more like 25. If you can get there eventually in incentives. And you can simply say this because this is what hard working people want to hear. We want to make it here that the harder you work, the more money you make. And right now, that's not how it works. It's just based upon who asked for a raise. And just be honest. These are the things that they know and no one talks about. Whoever asked for a raise, if I needed employees, guess what? They got it. If we didn't really need employees, they didn't get it. That's not fair.

We've done a lot of that this past year. Is weeding out the people who are just bad eggs. I think watching a lot of Mike's content, you know, we're focused not on hiring people with no skill, but hiring people with a good attitude. That makes all the difference in the world.

We're basically helping develop teams. A lot of that is psychology. Hiring people, building teams. Because you don't hire for the bottom people. You don't hire for the people that you have to let go. You hire for the people that are going to take the business to the next level.

I can guarantee it's not fair how you're paying your guys. Right now. There are guys making twice as much profit for you that are making a dollar more per hour, or worse yet.

A dollar less per hour because they.

Didn'T ask for a raise or whatever. Your most loyal, most profitable employees could potentially be making as a crew leader, 22 and on the field, 18, $4.

More per hour, and yet producing two.

To three to four, five times as much profit for the business. That makes no sense.

We've had this problem lately where people come in for interviews and then they never show up. Or a couple of weeks and they show up. They're just not cut out for the kind of work. So a lot of people can't handle it. You can apply that to anything in life, really. Like, yeah, maybe nobody will see it, but you could have done better. You could always do better.

Because they don't think it's fair either. And guess What? Out of 24 guys, they know the five guys they want to cut tomorrow. And you're like, fantastic. I'm going to put an incentive based on how many crew members are on your team. So if there's less crew members now, all of a sudden, the benchmarks for how much revenue is produced just went down for you to hit your bonuses. I guarantee you, guarantee you. You have crew leaders saying, hey, I want this guy axed. And don't worry, we will get all the jobs done and then just put it out for there for them to chase. Like there's nothing for them to chase right now besides clocking more hours.

Most of the guys want to be here and. But there is that human nature of, you know, I'm getting paid an hourly wage so I'm going to drag my feet a little bit.

I look at these, each of these individual business businesses, right? When you have someone on salary and they're directly managing three to four people every single day, and it's not like a lottery of who's working with who. These guys are running their own operation. And if you can make these six guys like always think about profitability, efficiency, getting their crew in and out, you can make this 20% more efficient like that. If when we switch residential to P4P strictly model, we're looking at between 25 and 30% increase in efficiency. And so that's why I was like, if we can't pull the price lever and we're not going to switch industries to go get that, we have to go after the efficiency lever. And I think this is where it sits. Let's go ahead and figure out. This would be the hard part, and this is probably where I lean on you a lot. To help them with is like, figure out the revenue per crew. Because if you can figure that out, you can say, okay, this crew is making us 300,000 per year. This crew is making us 250k per year, right? And you could say, well, that's based upon the contracts. Yes, it's based upon the contracts. But like we have to look at these as individual subunits of the business. When you have a crew that's so governed like that, you need to look at them individually because you could very well have someone doing 300,000 and someone else doing 150. And that crew is literally costing the business the equivalent of two other crew's profits being drained away from the business. And then it's a matter of like, well, do we need to go raise their prices? But now you have the crew leader vouching for that. And they will actually tell you like, there's no way we're going to be able to hit these numbers. Why? Because these two properties I've been doing for the past four years are so underpriced, we will never hit that. And that's information you need to know. Because now they start thinking like the way that you would if you were on the properties.

That's where you kind of Separate manager and leader, because managers manage people, leaders develop people.

That'd be great.

It showed that you're little, literally invested in their success goes a long way.

And that's the only way to, like, get more efficiency out of these guys. Because, like, I assume every single week with 24 guys, someone's asking for a raise. And so it's a matter of, oh, you want a raise? Fantastic. Here's the benchmarks. You need to make an extra couple bucks an hour. Like, since we instituted P4P, I have never had one person ask for a raise. And we don't talk about overtime because no one wants overtime. And they're all getting in and out. And they, they also know which customers we need to raise prices on. I just have to ask them in a team meeting if I wanted to, like, hey, who's your. This person and this person. Because they know when they show up there, they're like, oh, we're not going to make money on this.

Yeah, I mean, I'm a little bit not worried, but I guess intimidated by figuring all that out and doing it right. But excited too, because I think, absolutely, if they're incentivized to do more and then make more money, then it's going to be good for everybody. So they see all the numbers for what come in that property.

If you wanted to think like an owner on the job site and actually think this way, they need two things. They need to be compensated like an owner. That's the incentive program. And then secondly, they need the information of an owner, and that is open book management. Because if you all went on the end of the crew lead for one month, I guarantee you'd be 50% more efficient than these guys. The reason is because you have two things. You're paid, like an owner, 100% commission, and then you're basically, you have all the information. You know, there's only a week and a half worth of revenue in the bank. And yes, right now, if they saw $54,000 was sitting in your bank account, they'd be like, wow, they have a lot of money. Okay, let's break that down.

That goes out in payroll.

Every single, every single pay period. Right. They don't have complete information like this, to me, is a big, big problem.

We want to show you what things are, how it can improve, how you can make more money, you know, so if that scares them as far as the lack of money we have in the bank, or if we have too much money in the bank, and they think, well, you should be paying Me a lot more money. I mean, I guess it's just not a right fit, because I think that is definitely the way to go, is opening up the books.

You know, we've been talking about it. I mean, I think that's the only way that's going to increase the efficiency and to be able to get more leads and to add more, you know, properties to each crew is they have to see the numbers and want to be able to make more money. They've got to see all the numbers.

I get the benefits of it. I think Jody gets the benefit of it. We'll take casualties as we go.

It's a game. If you. If you really want to break it down for the crew, like, they'll get so much more involved as a game. Every single day, walk in the office, they see a crew like the six crews and how much revenue they're producing per crew. And they just know that they're getting a bonus based on every hour they worked last month, based upon how much revenue they produce. And secondly, whoever wins at the end of the month, you make a big deal of it. You can get, like, those big UFC belts, have a presentation at the next team meeting. Now all of a sudden, your team meetings turn into this big celebration.

I love the game aspect, getting that game and visually and having those guys compete against each other. As long as it's fair across the board, which you've made a point to do that. Love it. Love friendly competition.

We have to, in my opinion, open the books of the team.

I got a question. Do you let every one of your members know everything about your numbers?

100%.

They understand.

I try to get them to understand it.

My degrees are in accounting. I have a degree in management, a degree in accounting, a master's in accounting, a degree in psychology, and I'm actually working on my master's in psychology.

So I break it down as simply.

So when you say you open up your books to your guys, you're showing them just the margins. You're not saying, here's the utility.

Oh, I show them the. The profit and loss statement. I show them the balance sheet. I show them everything. And I try to explain every single line.

But profit, loss doesn't show cash. It shows efficiency. And I do agree with that. You know, at a certain point.

Yeah.

So when you're saying, open up the books and put all that out there, I don't disagree with that. But they're not going to understand a lot of that. I mean, your bottom line guy knows everything about your company.

Yeah. Yeah.

How many people do you have?

So, like, my first location only had about 20, 25 people. But then, like all my employees, oh, my goodness, 150.

So 150 can pull out and know exactly the percentages.

Yeah. Like, even the media team, they take the.

Just out of curiosity, what are the goal.

What are your goals of your company?

You're 100% owner of your company.

Yeah.

What is your goal of your company?

Maximize profit. Make sure that every single person on that team is able to get forward in their career, whether it be internally or moving on to something else. Because if you can get a crew leader to actually think about cutting out waste, making things more efficient, and increasing revenue and understanding numbers, they suddenly become much more valuable when they move on from this job. And if you actually want them to move ahead in their career, you actually are willing for that to happen. You are training them for the next position. You are training them to be a general manager at some other facility. If you're not constantly making new locations, opportunity inside the business, ideally, looks like.

We'Re going to be getting a lot.

More size of business, $2.8 million. There'll be opportunities inside the business, but we are literally training them to get a better job because I don't want them at 15 bucks an hour for five years pushing a lawnmower.

Well, when you're building teams and you're getting, you know, emotional intelligence and you're really developing people more of a coach and not a manager. It's all psychology. Building a team may not always necessarily mean monetary. Again, it's not always about money because not everybody is working for money for vacation or working for retirement or working for something like that. As long as they make.

A certain amount of money, they'll be happy. And that's not necessarily saying they're one of the bottom links. That could just be an understanding between the leadership and the employees.

Look, they're coming here for money. Let's all break this down and be very, very simple about the fact that we want to make this business profitable and they are coming for a paycheck. How do we know this? If we didn't pay their paycheck this time, they'd be gone.

That's the root of everything. You want to break it down. Everybody wants to make more money, Right.

I would say, number one, is going to be money. When you give a crew a bonus or something, they're very, very happy for that.

The bottom line, I tell you right now, I love Jody. He's a great man. But I wouldn't be here if it wasn't for the paycheck. He respects it, and Jody respects honesty.

All right, before you start hating on the coach here, just keep in mind the business isn't actually paying him anything. He's from what's called the sbdc. And it's a great resource because paid by the government, and it's completely free to use a business owner, small business development center, look them up in your local area, and potentially get some help for your small business.

It took me a long time to be comfortable with the fact, like, we are in business to make money, and you all come to work to make money. So it's like, maximize that, right? And yes, there's purpose and we have mission in the business and all the rest of it. None of that matters if we go out of business. None of that matters if we don't have profit.

I happen to think that we had.

$540,000 in the bank.

You will be able to do a.

Lot more for the community. I think there's probably foundations and charities you'd like to give to, whether it be the fire department or local communities. Like, I think there's a lot more good that happens when you become profitable. And so let's just focus on profit. And so everyone gets distracted. Like, well, what about this? And, like, service mix and route density. Like, make more money. And if you get aligned with the team, it's like, that's why we have the scoreboard. It's our money. It's liberating. We're able to say that to the team because guess what? We're thinking about numbers all day long. Like, let's just be open, honest. Like, we are here to make money. And your employees, they will be happy when they get an extra $250 on their paycheck. And one way to really simplify profit sharing is here's a bunch of cash. If it's not going into your pocket, the business owner, or your pocket, the employee, that's waste. And every single thing that we are doing this business that is not putting money in the pocket of the owner or in the employee is waste. Until those blades are turning, revenue is not being made.

You being at the gas station four.

Times a day, that's waste. And that's what gets cut. Everyone's like, well, you're making your guys work so much harder. No, it's the waste that gets cut. And that's why I can afford the bonuses. That's why I can afford the profit sharing. That's why I can afford a $5,000 bonus if we get our debt paid off.

Well, we have some work cut out.

To do when it comes to all the changes too. Like I default to violence.

Do it harsh. Like, do it like, there's a way to do this over the next six months, next year, or is. Like within the next 48 hours, we're going to determine how much revenue for crew. We're going to determine how much revenue per employee. We're going to create a scoreboard, we're going to create an incentive program around this and we're going to get done. We're going to open up the books and we're going to make some mistakes. But take violence. Like default to violence. I really do believe in four, eight hours, this thing gets turned around. Like, I've never said that before. Like, I really do believe that.

Hey, man, how are you?

Our crew leaders, we've moved them all to salary in an effort to really help curtail the overtime, which works. So we'll see how it goes over the summer. But. And I know like Mike was saying when he was here, you know, in a way to incentivize the guys somehow, so they're incentivized to work harder and not necessarily hourly. I guess the one thing I wish I could get more help from on is the nitty gritty of implementing a profit sharing. Aside from P4P, that's what, that's what I'm working on.

Do you guys end up setting, like.

Getting that line of credit set up?

It's in process. We've been a little bit slow with that, but it's pretty much almost all done. You know, if we need it, it's there. I mean, we're good right now, but yeah, if, if, if it something arises, then we'll have it. We've added two small commercial clients, so not much. But we adjusted some other people's roles. We promoted a different guy to lead our maintenance operations. It took the guy who was leading maintenance operations, cut his salary less than half of what it was and made a mission salesperson pumping out a lot of proposals. So very promising as far as a lot of stuff looks like it's about to fall. It'll probably really start falling the next couple weeks, I imagine as the grass starts to pop up and people are going, oh, crap. Yeah, we do need to get this cut down. We went back, adjusted price prices on every client, picked out 90% of them. Were going to adjust their, Increase their prices. I was waiting. We're actually going to send all those emails out next week. I wanted to send it to them when, when things are growing. My, my thought process behind that is I'm gonna wait till things are growing. They know they need me so they just can't fire me and be like, that's winter. Nothing's growing. Yeah, we're excited about that. I mean Mike, he brought a lot of great insights.

Do you guys end up going through.

And like opening up the books to your team and kind of like sharing the numbers?

Not.

A little bit, but not complete transparency all the way? No, I'd say we're trying to do that more with our upper level management, probably down to about crew leader level and letting them know what things are costing and how much money is coming in, but not on a complete 100% transparent level. Not that we haven't decided not to do it. We just want to open the door slowly, I guess.