The Fastest Cash Flow Model in Home Services (It’s Not What You Think)

If your service business is busy, but you're not getting rich, pay attention. In this video, I'm breaking down 12 steps that make service businesses buckets of money. Not hustle, not ads. Real profit levers. I've been rejected by customers, underpriced by competitors, and crushed by the off season. I've also fixed the math and built a $50 million lawn care business. Pricing, efficiency, turn, follow up, miss one and growth stalls. If you think this won't work for you, you're exactly. Who needs to watch? Because I thought the same thing. Let's jump into it. Number one, rejection is a prerequisite to mastery. I've done follow up phone calls for my entire business career at Augusta Lawn Care, but I actually learned that skill selling life insurance at State Farm. And let me tell you, it's a whole lot harder than selling mowing services and landscaping was. One time I was calling early in the morning, I got to the office early, I was super hyped up, I listened to Brian Tracy, I was ready to go and I had my script all out there about, you know, what would happen to your loved ones if you were to pass away today. And all this stuff. I just remember the gut punch of people hanging up on you, of people saying that you're crazy or why are you calling me so early? And, and honestly, I have made so much money from follow up in lawn care landscaping because of the rejection I experienced prior to mastering the skill. And so if you're just getting started, whether it be follow up phone calls, knocking on doors, sending out proposals, hiring, interviewing all the skills that are associated with owning and operating a business, many times the rejection that comes early on in the process preludes the when everyone looks at me like, oh, you've done such a great job, you're so good. And now I can pick up a phone and, and I can do a follow up phone call and sell people that are saying no. Sell someone stalling. Sell someone who says they need to talk to their spouse or it's too expensive. I can walk them off the ledge and get them to accept my proposal, but it's because of the dozens of phone calls, hundreds, thousands of phone calls that were made. And many of them were rejection at first. So don't quit in the early innings when in the end of the game you're going to master the skill. Number two, care, conviction and confidence is not salesy. A lot of times people will not do follow up phone calls because they feel like it's too salesy and they don't Want to come across pushy to the customer. I like to reframe this as if you cared for the customer and you had the conviction that you were their best option, you would confidently follow up. If you go out and do a proposal, send out the quote to the customer, and it just kind of sitting there, it's pending. Maybe you remind them once or twice. I'm going to follow up and I'm going to call them. Why? Because I care for them and I truly believe I'm the best option for them. Now, if you can't confidently say you're the best option for them because you have bad customer service, you don't show up on time, you're constantly missing deadlines, bad reviews and surveys are coming, well then you got to fix your operations first. You got to make sure you're delivering a high quality product. But assuming that's true, that I am going to push quote, unquote, I don't mind being quote, unquote, salesy. And I'm not going to lose a job because, because I simply did not do any follow up. I am going to confidently follow up knowing that I care for this customer. And because I care for them, I want them to choose the best option for them. And I believe I'm that person. I still remember one time when I lost a $70,000 project for a landscaping job. Cause I saw my competitor doing the job and I went back to the estimate and sure enough, they had never even seen the estimate. And so I actually went to the customer's house the week after and said, hey, Mr. Jones, I'm really sorry. I just went back and I saw you never even saw my estimate. You never even saw my proposal. Because at the time I was only emailing the quote to the customer. For some reason, my email was not getting through. My bid was about $10,000 cheaper than what they accepted from my competitor. And I know that because I talked to my competitor. I asked to see their quote. They had a higher price and they were able to upsell a couple of things that I didn't even have on my quote. Why? Because they followed up. They actually got their quote to the customer. The day after I got mine to the customer. And they're like, yeah, the customer accepted right away. Sure enough, if the customer would just seen my quote on day one, they probably would have accepted. But because I didn't call, because I didn't text the estimate, I didn't follow up at all. The next day, my competitor sent a quote that was more expensive and had a Bunch more upsells and somehow close the job. And so we're speaking into our own brain about, oh, it's too expensive. Oh, the customer just needs more time. I don't want to be salesy when reality the they haven't seen your quote and they're ready to purchase and they're ready to spend more than what's even on the quote that you gave them. But you have to follow up. You have to ask the customer as a human being, what is standing in the way of me solving this problem for you? And if you believe that you're the best person to do the job, treat them as such by following up religiously. Number three, There are three core financial levers in any home service business. Pricing, overhead, and labor efficiency. If any one of these three get off track, it can sink the business. If your pricing is way too high, you won't close any jobs. Your close ratio will be so low it will become impossible to get work. Secondly, overhead. Think of the shop expense. Think of this as insurance. Think of this as anyone that's not producing labor revenue like your estimators or people in the office, all of their wages. And the third lever, the third massive part of a business is, is labor efficiency. When it comes to home services, ultimately, we have to take an hour worth of someone's time as a laborer, add materials, add training, add equipment, add skill, and then upcharge that one hour of labor to the customer. That's ultimately the arbitrage that we have in home services. And so if that labor is inefficient, in other words, if 30 minutes out of every 60 minutes is spent driving behind a windshield, having team meetings, and doing anything other than actually performing the work, we have a big problem. So when it comes to these financial levers, I really have three very quick and dirty ways of measuring whether or not I'm hitting my metrics. So when it comes to overhead, I'm trying to keep under 10% of my revenue to be able to cover all of the office rent, all the office utilities, all of the office equipment, and anyone that has wages associated with the office. I don't want to have a whole bunch of admin people, people answering the phone, people in the office taking 20, 30, 40% of my revenue, I'm trying to keep it under 10%. If I can do that, that keeps overhead in check. Now, when it comes to pricing, I want to make sure that I'm able to get over a 20% profitability, which means for every $5 I make in revenue, I want to make at least $1 of profit. And the third financial lever of labor efficiency, I want to make sure that I'm at least 70% efficient. In other words, the less than 30% of my labor is being spent on inefficiencies like drive time, meetings, loading and unloading, and all the other stops that happen throughout the day. So under 10% overhead, over 20% profit, and under 30% labor efficiency. Number four, get your CAC back ASAP. So when it comes to your customer acquisition costs, this is how much I am spending to get one new customer. When it comes to Facebook ads, Google Ads, door hangers, whatever ad strategy you're using, I want to recoup that cost of acquisition as soon as possible. Let's Compare business A versus business B, both with a customer acquisition cost of 150 bucks. So that's been $150 on ads in order to get one new customer. Now, business A is selling a service for $50 every week. And we're going to assume they have 50% cost of goods sold or 50% gross profit, however you want to say it. Which means they make up $25 worth of gross profit per per service. Once they're on a recurring basis, that's $150. Their customer acquisition cost divided by their $25 gross profit means we need six services to go buy before they pay back their customer acquisition costs. Now let's look at business B. They're selling the exact same service for $50 every week. They have the same 50% cost of goods sold, so they're not being any more efficient. They're also getting the customer for the same $150 customer acquisition cost. However, they're going to sell a $600 one time job with the initial estimate. Now, if we assume that same 50% gross profit, that means they're going to make $300 gross profit on the very first initial service that they offer to the customer. This could be for the landscaping industry. You're selling mowing on a recurring basis. And these are a one time cleanup or a project or a molten stall or a treatment package for the whole year. That $300 of gross profit is immediately pays back the customer acquisition cost. And you get money to go buy another customer by recouping the customer acquisition cost and then having the cash set aside to be able to go get another customer allows me to grow so much quicker than someone that has to wait six weeks just to get paid back for the customer they just purchased. And the way another six weeks to be able to then go afford to buy one more customer. The problem is if within that six week period the customer cancels or stops the recurring service, you actually are losing money. Because by the time you get to six weeks that means we are break even just to pay back getting that customer number five obsess about annual customer value. Increase this before ad spend. So if I only look at the how much I make per month on mowing, for example in the middle of spring and summer, let's just say it's $150. But the fact is that during the fall I sell a $600 cleanup for leaves and during the spring back in Fe able to sell a $500 mulch install. Well, that 1100 dollars is not taking into account that $200 per month. So what I'm going to do is I'm going to focus on ACV annual customer value. I'm going to track, okay, I have 500 customers, I made a million dollars in revenue. That would be $2,000 annual customer value. There's going to be some one time projects in there that are 10, $20,000. There's going to be some customers that only spend 100 or $200. But I'm looking my average customer value and I'm tracking that over time because I want to see that number going up and to the right. Now, before I send a single dollar on any sort of advertising, I am going to do make sure that my general managers are doing two things. Number one, following up on every single estimate that's been sent to customers. Why would I go after a new customer when I already have an estimate sitting pending that I've already talked to the customer, they've asked for a quote, I sent them the quote and now I'm just waiting. The second thing is I'm going to go into Copilot and I'm going to send out text and emails to all of my customers and promote a seasonal offer or service that they could accept. Right now we recently sent out a text message to all of our contacts and had over 50 estimates within 24 hours. Why would I go spend $100 or $200 cost per lead to Facebook when I can just message my existing contact database and immediately get quotes without spending money on ads, you could double or triple the size of your business without getting a single new if you just took the existing customers you have and instead of spending them spending $1,000 a year, they spent 2,000 or $3,000 per year with you track ACV and focus on increasing that before ad spend number six, churn will keep your business small. There's this thing called a growth ceiling, meaning there's this invisible hand that you cannot get beyond and grow the business past. And it's cause from churn customers that are leaving, that usually would be on a recurring basis, but they're leaving out the back door. Now you can actually calculate how big your business will get before it hits this growth ceiling. That is your revenue growth divided by churn. That is your growth ceiling. So for example, if you grew revenue from $50,000 to $60,000 last month and is all recurring revenue, that's $10,000 of revenue growth. Divide that by 5%, that equals $200,000 per month. That is the largest your business will get before you stop growing. Someone can build a $600,000 800,000 million dollars business and then they like, I want to keep growing. So what do they do? They keep pouring money on ads and they'll grow to 1.5 or 1.6 because they increase the growth percentage by artificially spending a bunch of money on ads. But if you just spend more money in ads and increase revenue growth and you don't fix Churn, you're still going to hit a plateau. This is going to be super frustrating because you're like, well, I grew to $800,000 million dollars in revenue and we started to plateau. So what I do, I spent more money on ads, 1,000, 2,000, 3,000, $5,000 a month, and that got you to 1.5 million. But you plateaued again. Now if you actually stop spending money on ads, you'd probably go back to about a million dollars in annual revenue. We build custom websites for home service business owners just like you, and you get a 15 minute free consultation about your website. Because our team, on average, when someone joins as a client, we increase the number of leads they get by almost double 80% within the first 12 months. In fact, if you go to our website, you can actually go through and see all the different websites that we build for a whole bunch of different home service businesses that have taken their business to the next level. Go check it out and book a free consultation call today. The fastest way to double your business in the long term is not spend more money on ads. It's not even to sell customers more stuff. It's, it's actually just to reduce the amount of people that are leaving every month due to bad quality and bad service. And you're not answering your phone and not getting back to them and not following up. Fix those problems first because that's the leaks in your bucket that are causing. You have to keep constantly spending more and more money on ads, replacing the customers inside of the business that are leaking out every month. Number seven Know what makes you different than everyone else. It's so easy to conform to the biggest player in your market and just try to look like them. But if you ever want to surpass them, you'll have to figure out what makes you unique and then really zero in on that. They might really focus on one specific service. I would rather focus on a different service and get really, really good at that. So I am different than them in some regard. And everyone complains about Chuck and a truck and all the competition in their local market, and yet they constantly are trying to make their website look like them, their truck look like them, their advertising look like them, their services look like them. Just lean into the thing that makes you different than everyone else so that customers are able to realize your difference in the market. I remember when I first started Augusta, I would actually dress up in a suit and tie for client meetings. And I remember reading that a blue suit with a red tie and a white shirt was like somehow like the best thing for sales. After work. I would wipe down and I would still be dirty. Like I was still mowing the lawns, but I would wipe down. I would get into my suit and tie and I'd go out and do my estimates. Although I don't recommend you dress up in a suit and tie for your estimates. In home services, I realized that I needed to lean into the thing that made me unique and different. It was the fact that I was young and people were just wanting to support me and I was paying for my college and they just wanted to support me. If you're young, lean into it. If you are saving up for college, lean into it. Like lean into whatever is making you unique. Number 8 bring your churn down by selling more to the same customers. If you just looked at all the negative feedback that came from customers and solved all of their problems, you would fix every issue in the business. If you sell more services to the same customer, it makes your service much more sticky. It's harder for them to leave if you've sold them two or three other services and solved more of their problems. This really came to light when I was talking to a business owner from up in Canada that was only mowing lawns during spring and summer, but they had about a four month period during the off season when there was snow on the ground and they would. They refused to do snow removal. And I said, look, I understand you want to keep simple services, but we've got to add snow to fix your off season. And more importantly, by adding snow removal, you reduce the number of customers that are leaving at the beginning of spring that you thought you were going to have for mowing. But now all of a sudden, they change their mind. Sure enough, their churn went from 44% in one year and then they added in snow removal. The next year, their churn was reduced by more than half. Why? They solved more problems for the customer and they made sure they would be harder for them to switch because they were solving more problems and, and it sold them more services. So you're not being salesy, you're simply solving more of their problems. That then in turn makes it harder for them to leave. Number nine, complaints are your ticket to lower churn. Embrace them and make changes accordingly. We sent out automated surveys from Homeworks via text message. Now, we found between 90 and 120 days to sort of be the sweet spot for recurring customers so they don't get frustrated. But yet we get consistent feedback on that survey. It's going to open up the customer portal inside of Homeworks and they're going to give us a review from 1 to 5 out of 5 stars. Now, if they give us 5 stars, I'm going to push them over to leaving an online review on Facebook or on Google. Now, if it's four stars or less, so it wasn't 100%, great, then it's going to open up a text field for them to fill in and give us feedback so that we can improve. This allows me to be able to see all the problems in the business, even if I'm on the other side of the world. It allows me to see, is there a trend of which employees are on the properties when we get low reviews and surveys from the customer? Now, we talked about customers, but this also works for employees. Every time an employee leaves, I'm going to do an exit interview and figure out, why are you leaving now, sometimes it's just people are moving across the country or they got another job offer, moved to a different industry. But I want to know those things, like, well, I just assume they're making more money someplace else. What if that's not the case? What if it's their manager? What if it's the fact that they really hate mowing and they just want to do landscaping? These are the type of things that if you figured them out during the exit Interview, you could change your pattern of behavior for the future to make sure you don't lose that grade A talent. So if people are leaving because of a dollar or $2 more per hour, can I figure out a way to build a ramp so that as they stay with me, they also make more money? Can I add more benefits? Medical, health, life insurance, gym reimbursement. There's so many ways that I can really just sweeten the pie to make sure that I'm not losing people over a dollar or two per hour. Those exit interviews again, are my ticket to solving every problem in the business, whether it be externally with automated surveys for my customers, or whether it be internally with exit interviews for every employee that's leaving. Number 10. Get reviews, respond to reviews and show reviews. When it comes to Google reviews, Facebook reviews, any sort of online reviews you're getting, first off, get them. Recently we actually had an initiative at Augusta to be able to not only get like online reviews in text, but also get them in video. And we have over 30 customers that have left video reviews a minute, two minutes, three minutes long, talking about their experience with the business. That holds way more weight than just a simple review, even on Google. And what I did is I made sure that I got the review on Google and then I asked them for the video review by having all of these online reviews, these video reviews, I can use these in my ads as well as on my website. So I've got to get the reviews, I've got to show the reviews. And there's one part in between that's responding to reviews. One thing that I suggest you do is use AI, ChatGPT, Gemini, whatever you're using and copy their review in and then say respond back to this review with SEO friendly keywords for my response. It'll then give you the exact verbiage to use and in your response. But it's going to lace it with certain keywords that are pertinent to your service, to your market. And then that is going to be scrubbed a lot by Google and these AI algorithms when people are searching for services in their area. So it might mention your city name, it might mention the different services that you did for the customer. And by having a thoughtful review, not just a thank you, we appreciate your business. Like that's fine. I'm glad you responded to reviews. It shows Google that you are responsive and that you're active on your account on Google Business. However, I'm also going to make sure I have a two or three sentence response that is keyword Friendly showing my service area and what services I offer so that down the road the algorithm, when scrubbing my site can quickly identify that I serve this area and I do these services and overall customers are happy. So I need to get reviews using automations from homeworks to collect those via text as well as email. Then I need to respond to those reviews using AI to generate SEO friendly responses. And then I need to show those reviews on my website and on social media. Number 11 never lose money in a quarter Monthly revenue should Never drop below 50%. This is one of the only reasons, in my opinion, to add more services and that is during the winter or your off season if your revenue drops by more than 50%, that's the only time to add some more services. And I see people like, they hear me talking about upselling like, oh, I'll add pressure washing my mowing service like, whoa, whoa, whoa. All the pressure washing leads come in during your spring rush for mowing, so you're just exacerbating and making even spring rush even more difficult to manage. I remember I would use, I would lose 70, $100,000 every single off season just doing dumb tasks with my crew. I just try to keep them busy. So we'd organize the shop. I remember we'd make cookies and take them to property managers. We do free pressure washing for our mowing customers just to literally keep my crew busy, sharpen the blades, resharpen the blades, reorganize the shop, move the trailers like we did everything and some of it was a good preventative maintenance, etc. But a lot of it was like I was not creative enough to come up with the services required to make sure that I didn't lose money during the off season. Back in the day when I had a bad off season when I didn't know what to do, I would have to keep $100,000 in the bank account and I wouldn't be able to spend any of it because I know I'd burn through 100 grand during the off season. But once I knew that I could sell winter services, I could do gutter cleanouts, I could do a lot of other services during the winter. Christmas lights, snowplowing, I can do other stuff and make sure I never went below 50% of my best months in revenue and I never lost money. But now knowing that I didn't have to lose money every single off season, I didn't need to keep that cash set aside. I was able to invest in buying more trucks, invest in marketing, invest in the next big Hire that would unlock the next level of business growth. None of that is possible if I'm losing money or my revenue drops by more than 50% during the off season. Number 12. We lack reps, not tactics. The most common question I get by far is what marketing or leads platform works best? And my answer is always the same. It's the one that you actually track the leads on and the one that you're constantly improving. When we first started Augusta Lawn Care and we started franchising, we started doing door hangers. And we kind of did. By accident. We figured out that door hangers were a decent strategy, but we realized that one door hanger is not created equal to another door hanger because we take two different door hangers and one would convert like one out of 100. One would convert like one out of 300. Not very different. For example, we started testing things like, what if we put the price on the door hanger instead of telling them just to call for a quote? Oh, that improved our conversion. Okay, what happens if we put it with a black Sharpie instead of just printing it on the door hanger? Oh, that improves. Oh, what happens if we cross out that price and then we write in a lower price so it seems like it's a discount? Ooh, that include increases our conversion even more. What happens if instead of them having to write out their customer information, we just make a QR code with a form so it fills faster? These are all little things that we kept tweaking and adjusting over the course of years. And because of all those little tweaks and adjustments and improvements and split testing over the course of five to six years, the conversion on the door hangers more than 5x. So if in the past we were getting one out of every 300 door hangers was converting to a customer, now it was 1 out of 60. Why? It was just simple little tweaks over and over and adjusting. And the hard thing about home services is I can't compare last week to this week because last week might have been raining and this week was sunny. And so there are other variables, and you almost have to really test year over year changes. And that's why whoever is just committed to the ad platform the longest and is tracking their leads and then making little tweaks and adjustments and running little tests, they're the ones that. That in five to ten years have mastered a platform and are able to get leads for the cheapest price. What separates the greats is that they just keep doing the same thing over and over. And then modifying it ever so slightly. It's not the person that is in the gym that has the fancy new piece of equipment they saw on tv. It's the person that just kept going to the gym day after day, doing the same thing and slowly modifying and increasing the weights, slowly modifying and increasing their form. That's the person that builds muscle and business. That person that does the reps beats the person that gets the new shiny tactic every day of the week.