The Labor Shortage is KILLING Us! [Lawn Care Business Q&A]

Hey, everyone, it's Mike Andes and you're listening to the Business Bootcamp podcast. Before we get into the show, which is going to be an absolute banger, I really want to say a big thank you today to Gusto. If you haven't Already, go to gusto.combootcamp Try out their software completely free for 90 days, where you can sign up, have all of your payroll done through ach. Your employees have an app. It's very clear and transparent in terms of the breakdown of all their taxes and the withdrawals that comes out of their paycheck. I love that. And it's very, very cheap. It's great customer service. I would promise you won't be disappointed. Check it out today. Go gusto.com Boot Camp now, today we are talking about the labor shortage and I want to talk about a few little things, but then mostly focus on Q and A. So absolutely. If you're watching this, go ahead and ask your questions in the comment section. I'm going to jump to as many of those I possibly can tonight.

And I'll answer every single one. So whether we're here for 15 minutes or two hours, we'll stick around. And tonight is not necessarily to offer ideas or solutions necessarily to the labor crisis that we are having right now, but it's more or less just to find solace in the fact that we're all going through this. Small businesses. In my opinion, this is a horrible time to be finding employees or trying to grow in a business that is labor dependent. So couple things. First of all, why is it happening? The main reason, obviously, is the fact that right now unemployment checks are being sent out to people to stay at home in many states. And some states are actually already canceling that, thank goodness. And yes, I have, I have considered the thought of moving to one of those states simply due to the fact that, I think, you know, in Washington state, we are very much leaning towards giving people money. And I feel like it's going to be a damper for us for the next 12 months. And, you know, not so much at the local shop. The bigger, the bigger the company, the better you are right now. The smaller the company, 1, 2, 3, 4, 5 employees, the worse off you are. Same thing at command center when we want office people. So it's not just people out working in the field, because that's in and of itself hard just getting people who want to work outside and work hard. But also, even in the office, it's very difficult to find people that show up to interviews that you Give them a job offer, they're excited, and they literally just ghost you. Like. This is happening all the time, time now. And so why is that happening? You know, money printing over the past year, people being able to stay at home, et cetera. And I look at it, the analogy in my mind is kind of like this right now. Over the past year, so much money has been pumped into the system and people. The savings rate for Americans is the highest it's ever been because people are putting money aside, putting a lot of their stimulus check into savings or stocks or whatever they're doing. And it's like, you know, a hose, right? If you have a garden hose, you can increase the water pressure. And that's one way to get, you know, more. Get the, you know, if you're trying to spray the water far away, you can do it two ways. One, increase the pressure, the amount of flow, the GPM gallons per minute that's coming out of the hose, or both things have happened. One, we've increased the amount of money in the supply. We've now the. The economy is heating up. Everything's opening back up. Restaurants are opening up, travels opening back up. A lot of the industries that were closed down or hurt, they're all opening back up. And now people can go and spend money. So not only do you have this massive increase in pressure, the. I. E. The economy is heating up and opening back up, but now you've now have an artificial finger over the end of that hose causing even more pressure. Okay, so there's been a double whammy that has happened. Number one, the economy heating up. And traditionally, when the economy heats up, there is a requirement for the amount of labor that is needed in order to actually make that possible. You need more waitresses, you need more people driving, you need more workers, you need more people on the phone because the economy is heating up, people are spending money. And so traditionally you need to tap into labor. And then more jobs are created. The unemployment rate goes down. But now all of a sudden, we have this unemployment rate that's stagnant. It's not going in any too low or much fast, very fast. Because you got what, people wanting to stay home, take checks. Now the argument is that, well, this is great for employees because they're making more money. This is so far off, you cannot believe if you look at actual numbers and the data behind what. Who is most impacted by inflation? Inflation is simply the cost of things going up. When you go to the store, a dollar no longer buys a loaf of bread, which by the way if you ever wondered like why £400 is £400, did you know that stands for loaves of bread? I still remember learning that for the first time and just blew my mind. So there you go. But you go to the dollar, you go to the store. Now it's no longer a dollar for the bread, it's five, ten dollars for a piece of bread, for a loaf of bread. It's incredible. It's insane. That's the effect of inflation. And what we're seeing right now with gas prices, home prices, cost of, of, you know, used vehicles and the cost of consumer discretionary goods, all these things are going up in price. That is inflation. Inflation affects the lowest earners, earn our economy the most because they don't have most of their money in assets, they don't have their money in stocks or real estate. And they spend most of their paycheck on consumer goods. They spend most of their money on rent. Rent is going up. They spend most of their money on fuel. Rent, fuel is going up, most of it on food. As a function of a percentage of their revenue and their income. They spend the most on the things that are going up in price right now. So to say, like, oh, because it's great, it's good for the employees, it's good, we're becoming better, more equal because we have the bottom half of our economy is going to make more money per hour. Like is so messed up because those are the people who are going to be impacted the most by inflation. They're the ones who, most of their income goes towards the food, the fuel and all the things that are doubling and tripling in price right now. I was talking to one of my contractors the other day because our, the estimated cost of our real estate project went from 1.7 to $2.35 million over the past six months simply because of inflation. Cost of lumber, steel, everything is going up. And I asked him, I said, like, know it's supply chain, right? He's like, no, the biggest issue is, yeah, a little bit of supply chain issues. You know, transportation things are backed up. But he said the bigger issue is like, you know, the lumber mills can't get people to come work, you know, the oil fields can't get people come work. They can't get people to come physically do the work. So what do they have to do? They have to raise the price of labor. When you raise the price of labor, what do you do? You have to raise the price of your products and services. So yeah, of course oil is Going to go up. Of course, of course lumber is going to go up because people are having to pay 20, $30 an hour to get someone to do what used to be $15 an top. This is going to affect the people. I saw this meme actually. Sorry, I'm kind of rambling. It's just, I'm just opening this up. I see a bunch of the comments coming in. If you have a question, comment below. But I saw this meme. It was very funny. It was like, yes, we're not going to raise tax on everyone below $400,000 in annual revenue because that's what the new administration said. Hey, we're not going to raise taxes on people that are making under 400,000 in annual revenue. But here's the thing. You might need to make $400,000 a year just to be out of poverty. If the way we keep going here with, with infl might be. You might be stuck in that bracket here pretty soon. And I'm making $400,000 a year and I'm just not. I'm no better off than I was a couple years ago. Just because the rate of inflation right now and just things getting more expensive. I do think it's going to get better. I do think that over time as the money printer stops, as the, the flow of the water starts to get less and the thumb on the end of the hose begins to be restricted, hopefully the pressure is eliminated or reduced, I should say. But it is crazy. It is crazy. It is very difficult, especially for 2, 3, 4 person employees type of organizations. I would say about 90% of our franchise, Augusta Lawn Care is constricted by our growth because of labor. The ones that are larger, the big companies have been around for a while, but they have 10, 15, 20 employees. We're doing okay. Those locations are okay. They're a little bit better. But my goodness, finding people when you're smaller right now is almost impossible and it is getting rather crazy. So I'm gonna go ahead and jump into the questions and we will see if there's some good questions we can go over tonight. We can talk about labor, we can talk about anything with lawn care landscaping. Happy to answer any of your questions. Let's go ahead and jump into it. Texas is ending federal unemployment. So hopefully more of this happens. Yes, I am hoping so. Can't find good helps. So been solo for five years. Well, five years.

Yeah. Okay. TZ Vlogs. How can I productively mow for two acre yards with a 20 inch mower? You cannot necessarily do it efficiently. You can absolutely do it. You're just going to spend a long time walking. In that regard, I would definitely recommend getting a zero turn mower. I was talking to someone the other day, like, look, if your average lot square footage is half an acre or more, you need to be having a zero turn. You're just gonna, you're gonna make yourself price completely, you know, out of the price equation when it comes to bidding on jobs. Because it's gonna take you three or four times longer than everyone else. Extraordinary. Well, that's a long name. It's going to kill you because people are seeing that you are working for much, if anything. I actually don't believe this is true. So I just kind of explain why. And that is this impacts the people that we are helping. If this, if the mentality is, hey, we're helping the lower class and working class by increasing their wages, that is so far from, from the truth. Because inflation does not affect the top 10 to 20% of the population because they have their money and most of their incomes goes towards investments. Whereas the working class, most of their money is spent on discretionary income. Our discretionary items like food, fuel, those are the things that are going up in price that will affect them the most. Okay, methodical cut. Hey, Mike, what kind of employees do you look for right now? They just need to be willing to work hard and show up. Like it used to say. Like, you know, showing up was 80% of it. Now it's like showing up as 99.99% of it. If they can show up for an interview, show up for the first day of work, show up for a week or two, like, that's fantastic. And again, I just, I have bad. The people right now that are not working, I cannot explain what it does to someone mentally. I can't explain what's going to do to their future job prospects. And eventually this will change. And this, a lot of people left with their pants down. Mike, how high is the inflation going to get? And what does this mean for lawn maintenance and also what does it mean for project based work? Hey, Mike. Yeah. So again, when you increase the. We talked about the hose analogy, right? You got money supply and the economy heating up. That's like the water pressure or the water volume coming out of the hose that increases the pressure. And then we have the thumb on the end, which is like the government, you know, restricting the amount of labors, therefore making even more pressure on us. But when it comes to inflation, how high I think it's going to get, I don't think we're going to see 10, 15% inflation. Personally, I don't. That's why I think my, the percentage of my portfolio is invested in crypto is like 2% or less, because I don't feel like it's going to happen that extensively. What I do feel is going to happen is we're going to have 3, 4% inflation for the next year. Because now with the, with the Fed wanting to have the fact that, hey, we was on average over the course of 10 years at 2% inflation, what that means is because we've been at 1% or less, you know, for so long here, the last few years, we're going to just, you know, let the economy run hot at 3,4% inflation, which we haven't seen that in decades. Let's just be clear. We haven't seen inflation like that in decades. And so even 3 to 4% is very, very hot. With that, all the money coming in from the government, all of these states reopening, and people are wanting to go spend that money now because they've been saving it for the past 12 months, the economy's gonna run very, very hot. And what it means for lawn maintenance and what it means for project based work is the fact that in the short term, project based work is going to have a really, really good run. I think this year is going to be great because the real estate market is so hot. I feel like the problem is finding the labors, finding people that can do excavation and do block walls and paver patios, and then finding 10 of those people and then 20 and actually scaling a business. That's where I get a little bit concerned. And so in terms of lawn maintenance and product work in general, this industry, we have to raise our prices. We're going to have to match inflation. So if you're not raising your prices, if you want to look at inflation like in the past, you could go for five years out raising prices because hey, inflation's at one, one and a half, maybe 2%. You know, you're not losing very much money. But now if you're at 3 and 4%, that means you need to raise your prices on average 3 to 4% a year. Which means if you go 2 or 3 years, 10, you're behind. Which means if you're running a 20 margin business, half of your profits are going out the door to inflation. So what I think it means that we need to increase our, our labor rates, we need to increase our, our material markup is we need to charge for estimates, we need to charge for dumping fees. All of those things need to happen in order for us to stay competitive. And what's, what's brutal is that's only available to the people who have brand and can have a little more price elasticity. The brand new operators, the people with 1, 2 employees, 3 employees right now, are getting hurt the most because employees don't want to work for them because it's less secure. And then two, they do not have the brand equity to go just raise prices on a bunch of people and be fine. So it's very, very difficult for this. The smaller the business right now, the smaller they are or the more impact this is having on them. All right, have you had to raise your prices? Yes. Pharmacy. We have had to raise prices. We have not raised prices at command center. I don't plan on doing that. But for the local shop and for labor. Yes, but like, you know, at, at the command center, our labor costs have gone up 30 in the past six months. It's insane. Alex Lopez. Okay. Yeah. Wait till they want to get a job. They have been indoors Netflixing and getting fat. Oh, it's too hot. My back hurts. And wait for it. Playing with the cell phone behind. Okay, okay, here we go. We gotta get past some of these. Love the rambling. Okay. Hit the like button. Yes, thank you. Some of these questions. Sorry, I see them coming. They're just coming in pretty fast. One second here. Okay. Inflation is going to kill America. I don't know. It'll kill America. I think it's gonna affect the whole world. Like, honestly, if you look at Canada, they're in a worse spot than us, hon. Honestly, if you look at the financials, you know, we're in the news all the time, the United States, but you look at Canada, that has 30 million people and they are spending more. It's crazy what they're doing up there. I'm really close to the Canadian border, so what you see in there, Europe is, is killing us. It is gonna. This is gonna be a long term issue that affects us for a long time. Hey, Mike, we charge 60 per hour to our clients. We need to be earning 55 an hour to cover all company overhead, including labor and 15. Oh, and including 50 margin. Okay. We moved our brace rate up to $18 per hour. Do we charge more? So ideally. Ideally, this is literally what I would say before 2021 is you want your. Your what? You pay your employees to be 25% or less than what you're charging the customer. On base pay and P4P. So pay for performance. Now, if you're charging by the, you know, giving your employees hourly rate, okay, maybe I'll let you go a little bit higher. But traditionally on P4P, we want our base rate to be less than 25% or a quarter of what we're charging the customer per hour. So if I'm charging the customer $60 per hour, I want my base pay to be $15 per hour or less. We've had to break that rule a couple of times for some of our locations over this past year because we need employees. We have base pay being $22 an hour at some of our locations right now. It's crazy. Okay, people have no idea. Back to your thing here real quick though. You need $55 an hour to cover all company overh labor and 15 margin. That's a lot. That's pretty high. Okay. All labor and 15 margin. Well, yeah, the. The math on that is a little bit funky because if you're. If you're including your labor and your profit margin.

Then technically your profit margin is gonna be higher than 50. Okay, I see what you're saying. Your profit margin is probably 21, 22, I'm gonna guess. Okay, so in bottom line is you're gonna probably have to raise your rate if you're gonna raise it above $18 an hour. If you're gonna go to $20 an hour, you're probably going to want to raise your hourly rate or your hourly rate to your customer. Right? Because if you're at 60 to the customer and 20 to your employees, that's the line for me where you start really pushing it in terms of. In my opinion, once you add waste of 10%, now you're at like 45% of your labor of your revenues going to labor. That gets very, very dicey when you. This is a really quick number for you to look at. When you look at your revenue versus what you pay to your employees and wages fueled field workers, not overhead field workers. If that's over 50%, you really, really need to take a hard look at raising your prices or improving efficiency. Perhaps you're not on P, et cetera, but you don't like a business that wants to grow really fast. If they're above 50% of their revenues going out the door towards field labors, you get very, very concerned about the health of that business. I want it under 40% if at all possible. People have no idea. Even paying mortgages with interest so low is a terrible idea to be Dumping money in that when there are assets running higher interest profits.

Think we should permanently keep the wage higher after the shortage is over. I think you're going to have to. The thing about inflation, it's very rare that the United States goes into deflationary period. This was the concern last year, and this is why the Fed pumped so much money into the system, was to prevent debt deflation, which basically mean prices of things go down because people aren't spending money. So what they did is they artificially threw a bunch of money into the system to increase demand. So.

I don't feel like, you know, there's going to be ever a time when inflation happens and it's like, oh, like inflation's over, it's canceled. Inflation is canceled. We are now reducing everyone's pay. We're charging the customers less. I don't feel like it's going to happen once the, the prices go up. We're going to live in that environment the same way that once prices of bread and fuel goes up, it rarely goes down. Right. It just kind of like we become, it becomes the norm. Right. And so I feel like we're going to increase our prices, increase the wages. I do feel like the finger on the end of the hose like we talked about before, as that's released, the labor shortage will decrease, but will not affect the fact that the amount of money that's been pumped, like literally 25 to 30% of the money supply has been created in the past 12 months. That's insane. That's going to take several years to get out of the hose. We talked about the hose analogy. That pressure is going to take a while to cool off. What do you think of the Ford F150 Lightning? I think it's very cool. I think it's definitely the way the future Ford is a little bit behind the game in my opinion though. I think Tesla's going to eat them for lunch. And if you look at the pre orders, I think it kind of says that, that being said, they are subsidized by the government and I always get a little concerned when that's happening for the business, not so much for the country as much as the business. Anytime you're leaning on government subsidies, I get very concerned. You can't mow 2 acre lots with a 21 and make much. Okay, I was back to the other question. Better to stay, stay still as long as possible or get a crew to take over. Jobs are bid hourly. So if you're, if you're bidding things by the hour in terms of like telling the customer, hey, I'm going to charge you $50 per hour. This is when inflation is going to hurt you because it's going to be hard. It's like if I, if you're charging $50 per hour right now to a customer, they might take that, but they're not going to be able to handle like $80 an hour. People like lose their mind when you say, I'm going flower beds and I'm going to charge you $80 per hour. They like lose their mind. So this is when flat rate pricing is very important in my opinion, because you can raise that without having to tell the customer the actual number. And it still makes sense to them because again, in their mind, their wages are also going up right at their work. So the cost that they're willing to pay for someone else to weed their beds goes up. So inflation, like all this, when it comes to economics, it's very, very beautiful how it actually all works together because things kind of, there's so many things that balance itself out. Like, okay, if inflation goes up, well then interest rates go up. Interest rates go up, people invest less. If they invest less, inflation comes down. So there's so many checks and balances and measures. That's why I don't feel like we're going to get to 10, 15 inflation because there's just so much heavyweight, you know, slow moving things in the economy that counterbalance each other. Right. So yeah, if inflation goes to the moon, but then interest rates go up, well, we're going to have, you know, the people aren't going to invest the money anymore. They're not going to buy more real estate, they're going to buy more stocks. If interest rates go through the roof, stock market would go down, real estate would go down, people would not be spending money. So that makes inflation go down. So it's just, just, it's one big, you know, balancing act and you know, hand it to the Fed and, and to all the people who, you know, have to think about that stuff all day because it hurt my head. I stay solo, ain't got time to babysit. Yeah, I don't know, I don't know what's worse. Babysitting, as you call it, which I don't. You know, babysitting is one way to put it, or the alternative is that you're extremely vulnerable to you ever getting hurt and you never being able to get out of the field or you never being able to grow the business to the point where actually provides wealth for your Family or create an asset you can sell. Like, so there's definitely hands off. You know, there's trade offs. Like, yes, it's very stressful right now to have employees. Trust me, I get it. We have 40 locations, and I'd say about 30 of them are dying for laborers right now. It's stifling our growth. And at the same time, at command center, where we have office people, we can't find people that want to work, and we're paying out the nose for them compared to what we used to pay. And it's very, very difficult. I understand that, but I'd rather, in my opinion, like you call it babysit. I would say lead. I would rather lead people and have a lot of hard time doing so in comparison to working by myself all the time. And if I break my leg, my income stops. So, yes, there is a trade off there. And back to that point, I had. I had a YouTube poll up, and I found that 60% of the audience watching this right now has under 30 lawns, which basically means part time. Which kind of blew my mind because I really think a lot of my content talks to people who are scaling their business and growing. But 60% is 59%. 59% of our audience has less than 30 lawns, which means they're part time. And I think I'm not against that. By no means. I think it's great that people can make money on the side with lawn care. That's the beautiful thing about lawn care is it's low barrier to entry. But if someone's really wanting to take this to the next level and grow their company and make it something that is a real asset, something that has systems in place and people in place, it's not easy. That's why 60% of people don't do it. It's not easy. And so to look at someone has a big business has a bunch of employees, like, oh, that's no problem. That's simple. Okay, well, they have to do a lot of babysitting. Like, it's not easy. And so I understand why 60 of people don't want to. Lost two guys yesterday. Someone stopping and offering them 20 an hour. Yep. Seth theory. Any thoughts on a concrete curbing business? I think it's a great business. I think it's just, you know, it's another labor. And it's a materials and labor game. Right. It's a form of hardscaping. I think it's great. You're gonna. My. My biggest issue is the seasonality of it. Depending on where you're living in the country, because if you have snow, if you have rain in the winter, if there's, you know, cracking and all the rest of it, I wouldn't want to do that. And again, as simple as it is to do curbing, which I know it's pretty simple stuff, I still think lawn care and pulling weeds and trimming bushes is easier and people still figure out a way to mess that up sometimes. So I would still stick to more simple services than even concrete curbing. What are your, what are top reasons giving you for quitting? It's all sorts of things. The problem is right now the fact that they know that they can just sit at home and make the extra X amount that they, you know, by the time they have $300 plus up from the government federal and they have maybe two or $300 state, they're making five, six hundred dollars at least per week just sitting at home doing nothing. And that was even worse back in the pandemic. But there was actual constraints to people being employed. Well, now there's not. We're opening up the economy. So having that finger on the nozzle is crazy, creating all this havoc. And I think it's a big issue, honestly, in terms of people top reason people giving me for quitting. You just don't know. They just don't show up. Saul seems like business lobbyists should be able to crush the unemployment benefits once the vaccination rates are at peak. Javon, I've been thinking of getting a master's degree in business. Do you think that is a good investment to help me run my lawn care business? Personally, I would say 10% of your of what you learn, your MBA master's in business administration is going to be useful for your lawn care business. It's really geared, depending on which school you go to, going to be geared towards corporate work life. So like when I went to got my MBA about there was a cohort, about 25, 30 people that went through the two year program and I'd say about 19 or 20 of them were corporate America and they were coming in the evenings, right? So it was evening program and I liked it because there was a lot of older, more experienced people because the evening program, everyone had jobs or businesses, but most of them were corporate, which is great. They were able to get a promotion. A lot of them said it didn't really change their business, their employment prospects a whole lot in their career. But in terms of using it for entrepreneurship, like 10% of it was useful. I would say My personal opinion. And that's kind of why I made MBA for Entrepreneurs. Oh, we should definitely show this banner. See, we don't show enough of these banners on these Q and A's. I really need to do this. I made all these pretty banners talking about these things. Let me see here. Let's see here. MBA for Entrepreneurs. Oh, we gotta take the comment down. Just give me a second, guys. Let me take a breather here. So I made all these banners for the MBA for Entrepreneurs course. Landscape, businesscourse.com. look at all these beautiful things. Website, Lawn Care Web Design. We can build your website for you. There's no upfront cost. You know, you can get personal consulting. Join the texting group, join the Facebook group. See, I just got to get these off real quick and then I have to do them again. Join Augusta Lawn Care. Okay, cool. We're done with those. Cool. Let's go ahead and put these up. Bam. Back to the questions.

Where's are we at? Where are we at?

Let's see here. No one wants to work.

Okay, where we at here? Okay, we got that one done. We got this one done. James Lawn Vlogs. Most of the maintenance companies in the area all pay so differently, it's ridiculous. Also, training and upward mobility in most lawn maintenance companies is almost non existent. This is 100% true. I made a post a couple weeks ago on Instagram and Facebook. Well, let me Instagram and Facebook.

And I had in the background it said upward mobility. And one of the things that I was talking about was the fact that the way we can attract people right now is not necessarily by out pricing and outbidding other people. It's the fact that we can offer the ability to have upper mobility. A growing business, a bigger business is going to allow upper mobility. Someone that's making, you know, $15 an hour mowing lawns can see that, hey, in two or three years I can make in this company 25, $30 an hour. That is a possibility. There's upward mobility, there's opportunity to grow in this business. That's why it's so hard for people with 1, 2, 3 employees to keep people right now is because it's very hard for an employee without a long term mindset, which most employees when they're at a starting out, they're not thinking about 10, 15 years down the road, what's in front of me, the next paycheck, which is fine. They're starting out their career. And you know, a lot of them, especially with your 1, 2, 3 employees, they cannot see the vision of up and ability in a bigger company. It's easier, right? You can. They can see, okay, for example, our local shop, we have not had as much pressure from a labor side. It's been hard, but not as hard as many of our smaller franchisees. Because when they join, they can see, oh, like there's people who become estimators, people become office managers. There's people that have gone and opened their own location. This is why we have the 3F program. The franchise fee forgiveness program within Augusta is to allow for anyone joining Augusta for two years to become an owner without a franchise fee. And we do that for one reason. So that when people come and join any location, there is the chance for upward mobility. And when they see open book management, they see the owner making a bunch of money, they can point to that and say, look, I have the opportunity to make that money and become that. And there. I haven't created barriers for an employee to get to that spot. Right. So upward mobility is extremely important. That's why I'm a believer in building your business and not being solo or having one, two, three employees is, you know, there's that. I'd rather be solo than have two or three employees. Honestly, I really would. Unless you're charging high, high prices and you're very, very solid, you're able to pay overpay, guys. I get that part. But it's a really tough spot, two or three employees, because employees don't see any upward mobility. They don't see a chance to grow with you. They don't see a chance to improve their career, stay with you for five or 10 years. And that's a big reason why I would grow my business.

Depends on your area and your hustle, speed and accuracy. Staying solo. Unless someone physically approaches me for work and begs for a job, you'll probably be solo for a while. I don't think anyone's begging anyone for a job right now. No one wants to work. Okay, let's see here.

See here. No one wants to work until everyone sucks the job and labor costs skyrocket. Okay, see here. Whoa. A bunch of questions. One second here. Whoa, whoa, whoa. I gotta get through these. How do you charge for estimates? We charge by budgeted hours on the job plus the cost of materials.

I'm written. I'm writing up an estimate for a 51 house HOA. Super excited to at least get my bid in. Great job. Honestly, even if you don't get it, it's a good experience. A lot of our franchisees they kind of struggle with that. It's like, hey, like look, I understand this is, you're probably not going to get this bid, but it's a good experience. Figure out the numbers, figure out where you're at in terms of pricing against other people. You know, sharpen your skills on commercial work. It's great.

For the, for commercial for the first 20 minutes. Sorry, how much do you charge for estimates? Invoice online and collect payment, then do estimate or collect in person. Let's see here. Invoice, we collect payment online. We do not collect in person. We never collect check or cash in person.

I'm started in 2016, I'm doing really good, but I haven't raised my prices yet. I'm thinking to do it from South Carolina, I would absolutely do. If you have not raised your prices from 2016 and you have a substantial amount of base and you have a lot of work coming in right now, I would highly recommend you raise your prices. I cannot overemphasize the fact that probably less than 5% of your customers will leave you when you raise your prices. I have never ever, ever, ever, ever, ever, ever talked to someone who raised their prices and they regretted it. Never. Is a truck needed for starting solo longer business? No, nothing is required. Literally just your hands are required to get started because you can go out and pick weeds or rake, you know, if you go on a splurge and for $20 get a rake, you do out flower bed. So we get started. No, but if you're gonna actually, you know, expand any, any somewhat at all, you need a truck or some sort of of mobility to be able to expand outside of just like a probably 5 to 600 yard radius around your house. You can walk, you know, if you're in a neighborhood, maybe get 15, 20 houses. But if you actually want to grow the business, typically you're going to need some sort of mobility. What do you think about robot mowers as a solution? Yeah, so definitely this is a conversation we had several months ago. The fact that robot mowers, this makes them more appealing when the cost of labor goes up, when it's more and more difficult to get these labors. That being said, these restraints on the manufacturing, their labor goes up, their cost of goods go up, their transportation costs go up. So guess what, the cost of the robot goes up. So it's all, it's all connected. Jimmy Moon looking look for high school students. I'm in college running a lawn care landscape llc and we use high schoolers. Yeah, absolutely. It's a great place to get started sometimes. The trouble is though, working on their schedule is very, very difficult. And then you end up having a truck sitting there all day until 2 o' clock when they get off school. And then they work or they only work three days a week. You're juggling schedules, you know, if they don't have a license and then sometimes most of the time, depending on where you're at, they're not as responsible. Typically they don't feel the urge to make money, so they're less inclined a lot of times. But I'm not against it. We have done it in the past, we don't do it anymore because we'd rather have someone who needs the money to provide for their family or get ahead and pay the bills. You have to think outside the box here in the UK to get reliable labor. Also. Yes, this is literally a year round or not year round. Global around the world issue.

Is inflation the reason for the higher volume requests for high end landscape product loss of 10k plus requests in the past two months. In my opinion, this has nothing to do with inflation as much the fact that the money supply is up and the real estate market is booming. So if someone's value, their home has gone up a hundred thousand dollars and they have a home equity line of credit, they pull out or they refinance their home and they have all this cash sitting there, guess what they're going to do? They're going to put a paver patio. They're going to redo their landscaping. And so yes, landscaping products are going to see a very good year this year. If you can get laborers, you're going to have a great year again. I'm thinking long term is what I made a video a couple of days ago about this very same thing and that is recurring work is your long term game. It is your retirement plan. It is your compound interest. I kind of look at like the stock market. If I am doing long term buy and hold on certain stocks that I believe in for the long term, that's like my mowing in my long hair. It's going to save. I believe in it long term, it's there, I'm keeping it. There's no trading all the rest of it. Now if I'm a day trader or I trade options on stocks, short term options on stocks, I feel like that's kind of like landscaping. It's short, it's I make a bunch of money or I lose a bunch of money. It's complicated. I can't walk Away from it, a lot more involvement in the stock market. Watch everything. That's what products are. And so my mind, the long term game is going to be mowing and building my recurring base. In the short term, I need the projects to fill the schedule and grow revenue, get more employees, build the business. But long term, all my marketing efforts is focused on building that long term value in the form of recurring work. But to answer your question directly, Cliff, this is going to be directly correlated to the fact that the housing market is off the wall, bonkers right now. And for most people, they have a bunch of money, they've refinanced their home, or they have a home line of credit for a lower interest rate, they have a whole bunch of money and now they see their house as an investment. So we should invest money in our hardscaping.

If customers offer you crypto, would you take it? Right now it's not a matter of if I would take it or not. It's a matter of processing it. Right. So, you know, credit card processing checks are pretty easy to do inside of a CRM. Transacting crypto is gonna be a little more difficult. I think it's going to change the next few years as wallets become more digital, wallets become a lot more accessible. But right now, no, we don't. Diversity in your portfolio might help. Yes, diversity is always good.

Okay, I'm increasing my prices. Let's go.

Okay. Josh is long care. Haven't we had inflation in the past? Base wages haven't got up much at all in the past 10 to 15 years. What would make this time different with wages being higher? What's going to keep them high? What's going to keep them high is the fact that.

There'S a lot of. There's a big conversation. Right. The fact of the matter is, when you look at inflation in the past, it's not like inflation is followed by deflation. Right. What I mean by that is prices don't just go up and then come back down. Prices go up and then they level off. So the percentage of year over year inflation will go down. Like we're not going to see 3, 4% for the next 10, 15 years. That's not going to happen. The intensity of that pressure on the hose is going to be reduced. Okay. However, it's not going to be negative. It's not like we're going to go down. It's very rare. Rare that you look at the economy actually have that happen.

But there's a lot of, in terms of the actual Reasons jobs. There's a lot of economic reasons why, whether it be inflation, interest rates, money supply, taxation, all those policies play into why that typically doesn't happen. And again, it's all a balancing act. Deflation in, in an economy is horrible. Like deflationary action in an economy is very, very bad.

William Pendleton. If you're locked in a contract and now have to pay these higher prices for staff, what's best advice to deal with this? This comes down to a matter of like, if you're really hurting and you're losing money on a contract and you can't get employees, I would have a really honest conversation with that contract holder, the client, and be like, hey, look, we can't get employees to show up. We. We need to raise the prices because our labor costs are going up, our fuel is going up, our equipment costs are going up, Everything's going up. And I would walk away from them if I had to because there's other especially there's people drawing, asking, you got customers coming in left and right and you're turning away profitable work in order to keep doing that contract. I would have an honest conversation with them. Look, did you expect this all to happen in the past 12 months? No, we didn't either. And I can't be the next three years in this contract. And I needed the price to go up to this. Otherwise we're out. And right now, unfortunately, fortunately, everyone knows that this is happening. And if they were not reasonable and I was losing money on a contract, I would walk away. Honestly.

So did I. Did okay, Jeremy. I just raised my price at the beginning. The month after a video watch of yours. As now as now, I feel like I should do again. Yeah, it's that fast. Very true. I'm 85 an hour for everything and people freak out. So I love the client that say, just bill me. Everyone is happy at the end. Yes, sir. Where's the Augusta shirt? First time seeing me ending the yellow shirt. This is Saturday and yeah, I took this morning. I was actually working out in the field making some videos. I did some videos on how to price a lawn efficiencies of like when you're mowing a lawn. So actually mowed a few lawns and then recorded those. So next week those will come out. So I was in my Augusta uniform, but then I. I got changed.

Okay, good for you. Samuel Snowbarger. Are we really sure that people are sitting at home just collecting a check? Or maybe they are working on a side hustle and developing their own plan while getting paid Something to think about. This is true, Samuel. I do believe this. Whether it be someone making side money doing like an Uber or they're doing something like Etsy for example, or selling something on Amazon, I do believe that is, you're. You're exactly right. They're not just sitting home collecting a check. They are doing other stuff. If they're not like playing their Xbox, they are probably making money. Like if I had to be at home make, you know, beyond point, for whatever reason, I would look this like the golden opportunity to get ahead in life and go do the side hustle and make more money. So if there is absolutely the chance that that is happening.

But yeah. Blaze lawn maintenance. How would you handle paying yourself in a first year partnership while still trying to reinvest in the business? What I would do, I would put you on pay for performance and have a metric by which if you're out in the field working or you're doing estimates or whatever, there's certain hourly rate or if you're doing a percentage of labor revenue that you're giving your employees that if you're in the business working, you get that plus quarterly distributions from all the owners. That's what I would recommend. That way the person who's working in the business a lot makes more money than the person who just is just getting quarterly distributions for no reason. Well, not because they're a partner and they've invested in the upfront capital. So that's how I would structure it. And then that way the person who's working hard feels like they have, they're getting some money for that in addition to the fact that they have equity.

Would you say you're a niche business? I would definitely say so. And honestly, it's kind of like the old adage, niches are in the riches. We are not an all. You know, we don't do like all sorts of fertilization and chemical control and massive trees and concrete curbing and construction and arbors and like hedges and massive paver pools, all that stuff. We, yeah, we niche down on simple services. I would say simple services, simple projects. And when I talk about like systematizing or simplifying, I don't necessarily mean always just simple services. You can simplify your hardscaping business. Right? Just have less types of block that you install, less options for the customer, systematize them, create a very scheduled way of how you deliver on a project. Project management videos. We talked a lot about stuff. Robotic mowers is a labor solution. Yeah, watch the video. Just putting robot Mowers. Mike Andy's really good video on this and my. My thoughts on that. I am solo and I offered work to a lot of guys that I know that they are not working and the answer is no. Thank you. Yes, that is happening, unfortunately.

Well, questions coming in. Let me try to get to these. Train people pay. Train people pay well and have good corporate culture. And you won't babysit. You'll have pros.

I want to create a training program for guys, for few guys from mowing to Christmas lights, et cetera. What is a good software system to organize and store a training program that can be updated? Train. What's the name of it? Blanking. Trainual. They're pretty good. It's expensive, but Train. T R A I N U A L I've seen that it works pretty well. The processing charging for quotes. I don't understand that. Sorry. How do you communicate with the client getting their card on file? I haven't ran into many issues, but didn't know if you have set way to explain this. Currently using jobber. Yes. So we have an automation that as soon as a job is put on the schedule for someone, they automatically get a notice, an email saying, hey, put your car on file. And we. It's all how you pitch it, right? So we don't say like you must put your car on pile. We literally say, hey. One of the things people love most about Augusta lawn care is the fact that you can put a credit card on file and not have to worry about it. You know, payment made simple. And 90, 90 of people put their card on file. What's the rate to charge extra on material? 50%. This is your material markup is going to depend on your area. Between 30 and 50% is definitely where you want to be at. I would say.

You had mentioned that we should charge for quotes. Okay. So what I mean by that is the estimate fee. So we don't actually charge for the quote prior to coming. It's on the. It's tacked on as overhead recovery on the estimate itself. Watch a video on just typing like Mike Andy's charging for estimates or E fees. That's what we call E fees. And that's what. How much do you charge for estimates? Okay, here's the question again. So we charge anywhere from $5 to $80 per line item, depending on our location. As we grow and as we get bigger, we increase the E fee because we have more overhead. And so our goal in doing that is to be able to cover the cost of the estimator and so that's, you know, that's what we do. It also covers the cost of the office. Right. So you know. Yes, $80 per line item is what we charge some of our locations for an estimate fee per line item. Which means if the estimator closes, you know, five or six estimates in a day, they're making four or six, four or $500 in estimate fees in that day. That's going to cover their wages and it's going to cover the cost of having command center or an office person answering the phone, sending the estimate out, all the rest of it. So it's overhead recovery. It's a strategy that we use. Are you a genie? I don't know what that means. True lawn. So do you, so do you raise your current employees as you bring on new ones? Exist example existing 14 hours. New employees want 18 + in my area now. Yeah, I think you do have to, especially for field staff because you really have to. They'll talk, they're going to talk in the truck and they will tell each other how much they're making. Especially if you're hourly. If you're a P4P and everyone's making above base pay, it doesn't affect things as much. But again, if you're raising from 14 to 18 for new employees, you're going to make your most experienced, loyal employees mad if they hear that someone else is making more money them and they're brand new. That's killer. Right. So you know, when we had to raise some of our locations base pay on P4P we just raise it for all the, all the employees. As much as that hurts, just you have to do that.

Okay. So at what point in my business do you charge price for estimates? Would you add to credit if the job amount is accepted? I'm close to a hundred dollars weekly yards with me and three guys with two trucks and I'm stretched. Yeah. So what we do when we charge for estimates that we're not charging the client beforehand and then like crediting it back is too much admin for that. What we're doing is in the estimate baking in the cost of the estimate into the dollar amount that we're charging for that line item. What I would do is raise that estimate fee. As you are getting more and more busy and you, you're booked out further and you don't want the work as much. I would do that. Increase your estimate fee. It reduces your close ratio and therefore the work that you do get when you're really busy becomes more profitable.

Mike, that program that you have is awesome. I hope to implement something like that eventually. Which program, sorry? Any robotic motors you're considering using? Your testing? Husqvarnas and Hondas and Steels. Those are the three that I kind of keep an eye on. There's some other more startup type companies that down the road I'm definitely would, I would love to reach out. Honestly, if I can grow this YouTube channel to the point where I'm like over a hundred thousand subs, I really want it to be where I can get some of this. Like, I do not know why. I don't understand. I do not understand why everyone is testing out DeWalt mowers, right? Mowers. What's the other one? The yellow. Oh, what's it called? Hustler Mowers. All right. I don't like, I don't care about. They're all mowers. Why don't we use our clout to go try out cutting edge technology and share that with our community? I unfortunately do not have enough clout our social media presence right now. But trust me, when I do not if, but when I do, you can guarantee that if someone is willing and I have enough clout to call them up and be like, hey, I want to make a video about your brand new robotic mower. And I want, I want to show landscapers the pros, the cons. I want to do a test with. I want to have you set it up for me because I want you to pros to show us how it's done. And then I want to test from the number standpoint, mowers, real mowers versus robotic mowers. I want to take on Those actual like $60,000 robot mowers that you program each lawn into. And it's like 48 inches wide. Like I want to do that.

But anyways.

Mike, is the housing market getting going crazy, going to create another housing bubble like 2008? I don't believe so. Honestly, Mike, for a couple of reasons. Number one, the mortgages that were in 2008 were like mortgage backed security. There's a lot of like really low credit scores, no money down, horrible mortgages being given out. Right? You know, you could go on for that forever. The mortgage in the past year that have been given out have been given out to people with high credit scores. Money has been going down in terms of like money, you know, putting. People are putting cash down. These are not low.

These people can buy houses and they can afford these houses and I do not feel like As a housing bubble, uh, I feel like there is absolutely going to be a diminished over time as more supply comes on the market, I. E. Houses coming for sale. Because right now we have a constraint in this, the supply. There's not enough inventory on the market. So that increases prices because as supply goes down, price goes up. And I also feel though, like the interest rates as they go up, usually for every 1% interest rate, the interest rate goes up by 1%. The real estate market goes up or down by 10%. So if the interest rates go down by a percentage, like from 3% to 2% for example, you can expect the real estate values to go up 10%. If the interest rates go from 3% to 4%, you expect the house values to go down 10%. It just kind of works out that way. So I don't feel like there's going to be a housing bubble. I think it will eventually cool off a little bit. We'll go back to, you know, 4 to 5% appreciation every year, not like 15% like last year. But I don't feel it's going to create a bubble because the type of mortgages that have been sold in the past 12 months are high quality. Are there any good apps for keeping track of what stage a customer's estimate is at between office and estimator? Yeah, you should do this in your CRM. This is something that we're looking at as we develop our software for our forecast of lawn care is keeping better track of the funnel and where they're at in the funnel and not just like oh, they're either a client or a lead. Like that's very, very 01, very binary. And I like you know exactly what you said here, John. Something I have in mind, more of a funnel type approach. I have not seen anyone do this in the lawn care industry as very well, to be honest with you because it's a little more complicated. I've seen Hubs, HubSpot do this, I've seen Salesforce do this and some really big, more larger erps.

Our HOA just announced yesterday the lawn maintenance contractor canceled on them because they couldn't get enough employees to handle it anymore. Yep. And it's happening. How would you word in the terms and conditions how much the price will be increased based on fuel prices? I wouldn't do it based on fuel price. If you look at fuel price, fuel cost in your, in your business as a function of revenue, it's very small. People always talking like fuel surcharges and all the rest. I'M like, look, the labor cost is going to go up far faster than your, your fuel. So if you look at five years ago, fuel costs were about where they're at now, like three bucks, you know, in my market, right to three bucks is, is pretty common. Right now we're at 370. But even, even five, six years ago, we were at $354. We, we were at 450 in our, in our area for a while. So, you know, those go up and down. What really goes up though, is labor, and it doesn't go back down. Okay, so, you know, five years ago, starting wage 12, 13 in our area, totally fine. Now 18, 19, 20. So like literally 50, 60% increase over the past four or five years. So I, I don't think fuel prices are as big a deal as people make them out to be in this industry. Like, I just don't. If you're driving hours to get your job site, maybe it's a higher function of revenue. But if you're, if your fuel is like 5, 10% of your revenue and it's gonna make that much of a difference, going from $2.50 a gallon to $3 and 50 cents a gallon, I would not make that the biggest issue. I would make the bigger issue the fact that your labor costs are going up, that, you know, taxes are going up, that your trucks just doubled in price over the past 12 months. Those are the things that I would be more concerned about. And in terms of like, you know, putting in terms and conditions, I just feel, adding friction to the whole sales process. Lee feels. My name is Lee. I want to know you still got some clothes in trailer. I see you on say you was going to sell them. Oh, it looks like you wanted to buy trailers. We've already sold the trailer. Sorry.

You think maybe at school is coming out getting high schoolers to work like a summer temp job again? It's just a matter of dependability, reliability. Do they have their, their license? Do they actually show up to work on time? These are the questions I have around the high school issue and the fact that, hey, may I get four or five? But what happens in September when they all leave and I'm in the middle of fall cleanups? Do you charge more when you transition to car on file to recover the fees? Well, we never really transitioned. We started with credit cards on file. And that's just part of, yeah, like the overhead. It's the cost of doing business. Do you sell your P4P softwares on any platforms? Timothy Scott? Yes, landscape businesscourse.com comes with the whole portal. How to use it, the software as well as the Excel documents and things.

No Mike, my right cuts better than most almost.

That's funny Scott. Mike, do you think. What do you think is the best bang for your buck mo crew size? I believe a one man crew has the highest profitability percentage. What do you think? Yeah, great question. I did a video on what size should your crew be several weeks or months ago. Definitely check that out. I talked about it for a long time, broke down 1 man, 2 man, 3 man, etc basically the bigger your properties and the bigger your equipment and the higher cost of your setup, then your crew size is going to get bigger. The smaller you can get that in terms of smaller truck, smaller properties, less equipment, the more it makes sense to be solo and go to one employer or maybe two. And if you're doing more than that and then you're doing like five acre parcels with 6072 inch mowers, you're probably want four or five people, have a big big truck, all the rest of it. Stephen, when you first started, how far do you travel to clients? I understand route density. When I first got started I was 11 years old and I did what was in my neighborhood which was all of again maybe 200 yards, 300 yards. Then my brother and I got an old beat up Dodge Caravan and we put the push mowers in the back of the trunk and then we started working within maybe two or three miles. And we stayed with that until like well and we started Augusta and I started in Blaine, Washington and we stayed in Blaine until we were over 1.1 million and then we moved to Bellingham which is about 80,000 people living there. The franchise ownership program for employees, I don't see a question but basically that's called the 3F program franchise fee forgiveness program. We want them to see upward mobility from the get go. If they work two years, they don't have to pay a franchise fee for the franchise. So cool. Awesome. I really appreciate everyone for coming on here tonight. Just because I have made these and I don't use them enough. There's landscape businesscourse.com make sure you sign up. I think I really appreciate everyone signing up. We now have three people working the media department and we are doing that to try to create more content for our industry. Lawn care, web design. Just in the past week three people, three more people signed up. I really, really do appreciate ic. I know that this is not the cheapest option for your website. I totally understand that I do see the value and I do see the fact that you don't have to upfront. There's no contract and there's unlimited changes. You email us. Hey, I want this picture change. What? This banner change. I want to change this service page. Put this picture in. That's all included and you can stop at any time. So I do believe in it and I really appreciate it because it allows us to hire and spend the money and develop all of this stuff. And I really do appreciate all of you so much. Thanks so much, everyone. Have a great rest of your weekend and we'll see you maybe tomorrow or Monday.