The "Secret" to Building a $1M Business in 2025

Number one reason why home service businesses fail is they run out of cash. Today I'm going to share with you how you can solve your cash problems once and for all in your home service business and build it to a million dollars in revenue. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 150 locations around the world. And over the past year, I've traveled to over 30 small businesses that are doing home services and tried to turn them around. From failure to success. It makes me mad that there's thousands of home service business owners every day that are working 10, 12, 14 hours a day and have no cash in the bank. And that's why I started the turnaround show. But the problem is there are hundreds of other small business owners watching the videos in the same situation but afraid to have us come out with video cameras and microphones and capture it all. And I don't blame them. So I made the roadmap, the blueprint to be able to turn your business around yourself using this book. With all that being said, let's get into the book. Why you don't build a $1 million business. Reason number one, you have cash problems. Universal roofing systems had dug itself a hole. We are in Phoenix, Arizona, trying to help this roofing company turn around. Why does it need to turn around? Because they're paying $600 per day in just payments on their debt. They had to let go both their employees and sell a truck just to make those payments. And we are literally days, if not weeks away from insolvency. What was revenue peak for like a month in 20? 23?

70 grand. About 75 grand.

Great job. Let's go, dude. Good. Now it's a matter though of it sounds like we got. Customer didn't pay. Yeah. So how much do they owe you right now?

A total of like 30 grand between the four jobs.

Got it. And so that's really tied up working capital.

Yeah.

I was like, oh, that's no problem. I could handle that because of the volume of work that was coming in at that time. And then when it started slowing down where I needed a bank payroll, then that stress. That stress.

It was. It's almost too much.

We have $40,000 in supplier debt. We got about 25,000 in debt on equipment that is the trucks. 14,000. Is that like a payday loan kind of thing or like from stripe or. Where does that come from?

So it's a mca.

Okay.

So it's a daily.

Daily. And so how much on that? Every day.

Right now it's about $600 a day, which is. That's what's killing me.

And at the time it like bailed us out, but now we're like, okay, we're paying out more. We're paying $14,000 in loans a month. Sean and his wife had big hopes and dreams of what Universal roofing could become. They were very optimistic that the new big contract was right around the cor corner. All their leads dried up. They changed their branding to focus on commercial work. They were alienating their residential customer base. Here's the thing, 100% of their revenue was actually coming from residential work inside of Maricopa County. The new site, like, why is it built as if you are a national company?

Because I want to get those big commercial jobs pretty much like from the website I had was residential and I was getting all the residential calls. And so since I really want to branch into commercial, I was like, let me revamp the website where it's just commercial. Like, I wanted the best roofing website site that there is in Arizona. And so that's why it looks like when you look at it, we look like a huge. Like a huge, huge company.

Right. You literally told me the reason people choose you right now is because you are a family owned business. That doesn't scream family owned to me. That makes sense. If I was you, I would lean into what makes you unique and different because there's a bunch of other companies that are trying to be the best looking website for commercial in Arizona. Okay. That picture on your website is more representative of what your unique selling proposition is, which is you are family owned. In short, they'd fallen victim to a common limiting belief. It's that big jobs are the way to turn around a failing business and stack more cash in the bank. It's like if you're driving your car and you're running out of gas and you're like, man, if I can just floor it and go super fast, then I'll be able to get there. When reality doing so will probably burn more fuel and you'll actually get less far in the process. Getting the massive commercial job or a huge commercial contract is the exact same thing. Yes, you'll go faster, but you're not necessarily gonna go further if you run out of cash.

And now it makes sense. You know, you go right here to our and it just looks huge.

I looked at this. We actually didn't know it was the right company. Did you install that one?

Those are Shutterstock.

Exactly. Right? Well, and the shutterstock doesn't convey the thing that you that is your unique selling proposition. The same thing is true if you walk into a gym and you see a bunch of meatheads lifting 400 pounds, you're like, oh, I should do that. Well, if you go straight to the 400 pound dumbbell and try to pick up the thing, you're gonna hurt yourself. The same thing is true in business. We start with smaller jobs. You'll work your way up to those larger projects and larger contracts that the big guys are handling.

So we got invited. We are receiving an award from the chamber of Commerce. I hear this for here locally Maricopa, for the fastest growing contracted company, fastest growing contractor company.

But I'm struggling totally, right? But this is the thing. New business within the first year, everyone's struggling. First three years is typically hell for like, I'm not judging you for that. If you would have been in business for 10 years, I'd have a very different way I'm dealing with this because I'd probably like there's other issues that are so bad when you close down, but when your first year, like everyone has these problems. So it's just part of the process. But this is the thing. A picture of you receiving that award with like the mayor of Maricopa, like handshake smiling right here, does a whole lot better than shutterstock of these random solar panels, I think. I think that like these pictures is like you getting the award, your family next to the Maricopa sign. Because that is where exactly 100% of our revenue is coming from right now. And that is our unique selling proposition. Think of it this way. If your business loses 10% a year, the bigger you get, the more cash problems you get. On several of the turnarounds I've been on, there's been companies with massive income concentration that is 30, 40, 50, 60% of their revenue is coming from one or two customers. They just might lose one contract and all of a sudden half of their business is gone. This leads to a massive problem with cash flow.

Prior to 2023, we had six years in a row that were best year ever. Dating back to my last year as a. I'll call myself a chuck in a truck. In 2017, I had no two subs and we did 180,000 with no employees. I was ecstatic. Over the moon. I ended up landing three dealerships in a row, which sent us from I think it was 120,000 to 180,000. Then I'm coming into the business. I came into this brand with 100,000 in existing business. And then in year one, I think we went to 350. Then we went to 550, 750, a million 30. So you can see those kind of increases.

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 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. If 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 one of them's 15 grand a month, another one's 10 grand a month, another one's 8 grand a month.

Okay, so, okay, so more like 40%.

Okay, so they're big.

That's my bigger concern. That's what I see. What happened with commercial. So we just came from a place in Ontario. 67% of his business evaporated in one day.

I knew that we were losing a couple of those contracts. So we actually dropped about 500,000 in revenue. 2022 we ended with just over a million. 2023, we ended at 639,000.

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. We couldn't have done anything better. I mean we went over the top.

And they ended up going with Brightview.

And then you don't know if you're gonna make it. Some days you don't know if it's all worth it. Like should I quit? Should I hang it up? Should I just go back to my job and not worry about any of that? You do have those, those struggles and some don't make it.

I don't know if you can tell. There was one back there, it was a Kindercare center.

Yep.

So we had 14 of those in January. I had a call the and just pretty much to lock it in to make sure that we're both on the same page about renewing. They said, yeah, of course, we have no problem. You know, you guys, services are great, we have no complaints. And then that company changed their management structure, whatever. And then they Took all their operations internally and so we just lost all 14 of them. @ that moment, my heart kind of dropped and I was like, wow. Like what do you mean? Like we were just getting ready to get started on mowing and stuff. I spent money on an additional truck, I spent money on marketing. And like all of it was pretty much based on having that on that revenue. Getting those news was kind of like sent me into a panic.

Mode. So out of the 150,000 revenue last year, how much of that was made up from that.

Contract? 40 to.

50%. If more than 20% of my annual revenue is coming from one customer, one contract or, or one job, I look at that as income concentration and a risk to the business. Because if they leave, that means I'm going to have to be laying people off and I'm going to have assets like trucks and equipment that go unused. If you're on a road trip, you need to know two things. How much gas do I have in the tank and how fast am I using it? If you know how much money you have and the rate you are using it, this increases the odds of reaching a million dollar enterprise. It is possible to make a lot of revenue and still have a cash problem. When you burn fuel faster than you refill it, the tank will eventually hit empty. There are always ways to fix this. The simplest fix is to raise prices. Raising prices will help address the long term profitability problem. I raise prices, raise prices, just raise prices. We're gonna raise prices on every single customer. Remember, there's two ways to have a cash problem. One is cash on hand and we want to have at least a month's worth of revenue in the bank. 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 dollar 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. If you have a million dollar business and your profit margin is less than 5%, you got a problem that is 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. 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. 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, etc. 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 290 indirect labor. When 70% or more of the revenue is going out to just wages, right. 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. When I see 57%, it's 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. 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. Remember, there's two ways to have a cash problem. One is cash on hand. Secondly, though, we can have a profitability problem. The problem is we were getting all this work early this spring to make $60,000 a month. However, we're charging $60 an hour, so we're probably making like 0% margin. Usually around 55 to $60 per hour is what you need just to cover the cost of labor and your overhead. So typically we want 30 budget hours of work per 40 hour employee because that means a 75% efficiency. So if I can do 30 budget hours of work in a 40 hour week, that's pretty standard. Their efficiency score right now is like 40% because they're probably doing about 35 budget hours in 80 hours worth of work. In my opinion, if you, if you have budget hours divided by clocked hours and it's less than 50%, you'll never make money. If you're at 70%, you'll do okay. 90% is like the gold standard. That is where they are super efficient. They're usually very motivated by P4P because they're making 6, 7, 8, $9 per hour on P4P. So when, when 60 or 70% of revenue is going to wages and you're still a labor revenue producing team member. Yeah, that like it probably tell it's, it's really bad. Okay. So I'm pretty confident saying pricing is actually a problem. Okay. Because at 60 you will break even by the time you take out materials, you take out overhead, you take out wages. Like just wages. Let's say you're paying someone 20 bucks an hour. By the time you pay taxes, you're looking at 25 to 30. Well now that's 50% of your revenue. And that's again, $60 per hour is time on the job, let alone the 20% of waste of them driving, loading up training, meetings, etc. So now your effective hourly rate, like how much they earn divided by their clocked hours is probably like 45 to 50 bucks an hour. Okay. Because if you're charging $60 on the job site and they have 20% waste, you're really under 50 per hour. And so then you take away their $25 per hour and we're already at over 50%. And it's assuming they hit budget hours like.

Clockwork. I'm still doing jobs now that.

I sold in the spring. You're saying you're booking out six months? Sometimes.

Yeah. Almost a year.

Sometimes. Yeah, yeah. So then you have to get lazy, like focus on schedule. Scheduling. You should be able to book down to the day in six months when I'm going on the schedule. And how you do that using budgeted hours. So you could, you could just know, okay, If I have five full time guys and they're working 40 hours a week, I'm not going to assume that you're going to get 40 budget hours done. There's me waste, there's going to be job overages, the weather's going to get bad. I'm going to assume 30 budgeted hours or a 75% efficiency score. Three out of every four hours they work will actually be getting work done. Now I have a baseline 150 budget hours, 5 people times 30 per week is what I can accomplish. And now when I get accepted job, I'm simply going to look at my spreadsheet and be like, okay, 150 this week, next week, hey, we're booked for this week. 120. That's when we'll start. The best home service businesses that I see produce a 20% or more profit margin. And you might not be at that now, but established well run home service businesses can produce over 20% profit. Margin. After they've really honed in their business model, the next step is to audit your business. This includes your employees, your customers, and your expenses. Ask yourself which employees and customers generate the most profit. You'll need to cut the team members who aren't efficient. Most entrepreneurs don't enjoy doing this, but it's necessary. Underperforming employees drag your profitability down. So if everyone shows up right now, how many guys are there? I think there's 24. And then is there usually 16 or so that show up? Is that kind of like the goal? 16, 18, like rolling right.

Now. They got a board in here. It shows everybody on it. So I can come in and then.

See. Got.

It. Crew didn't show.

Up. 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 able to produce as if there was 26 or 27 of them? Them? Truly, there's six of those, and then I'm assuming three underneath each of them, and then we have ops, and then I'm just going to call it you guys up here. So these guys are on salary, I would assume, right now, if you say, okay, you guys got to get done in eight hours. Do you know how much revenue a crew makes per day? It's probably at 1200, 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. 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, 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 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. 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. Like, 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. It's like, right now, it's just, like, don't have the extra money. Like, obviously, like, we'd come up with it if we had to, but it's just like, always comes back to that. Money solves everything. Yeah, it'll solve all of these things. And that might mean being a little bit ruthless and firing people, and that stinks. There's never been a day I've been able to sleep the night after firing someone. Like, it's just gonna keep happening. I've just come to the grips. I will collapse every single time. It is what was required to make money. We will not be able to change the labor force. We will not be able to change people's skill level. We won't be able to change any of that stuff. But what we can change is our price. What we can change is how we collect. What we can change is how we get a website to get more leads. So just stay focused on that. All this other stuff is.

Noise. We're at break even right now to today. We're at 146,000 in expenses and around 156,000 in sales. I don't see any of that because as soon as I get it, I got a credit card bill and every dollar that I've made, I've spent. But that doesn't even cover the money that I've taken out to cover expenses. So it's not necessarily return earnings at that point. It's just like, all right, I'm just trying to keep the business alive. How I see sales is. Sales is the heart of the business. You don't make money cutting trees. You make money doing sales. At the point of sale is when you make your.

Money. We're paying probably 12 to 15% of revenue going out to an admin.

Person. About a quarter, 25%, I.

Think. So 25% of revenue is going to the.

Sales?

Yeah. Well, there's all your profit after that. Sit down. From October to January or February, it's like, hey, this is what I paid you and this is what we.

Sold because it was like 13,000 sold. 12,000 is what you cost.

You.

Yeah. So why do we still have a.

Salesperson? And that's the tough part. I think Jennifer is an amazing person. I love her personality. I love how she connects and talks about the.

Customers. It's been six months. It's been six.

Months.

Yeah. Like you, you, you're being nice, which is.

Great.

Yeah. But like what's right for the business. Sometimes you just have to bite that bullet. That'll be a tough conversation. But like that's what's going to be needed. Like, we can only be nice for so long before everyone loses their job. Because the sales position like that is the bottleneck to all of your revenue. Like all your revenue has to come through that person. So their close ratio is 30%. And you hop in there and all of a sudden now you have more accurate estimates and your close ratio jumps to 60%. You just doubled your business. But when we're talking about like potentially damaging someone's house and taking out power lines, like you're the one that needs to be doing.

That. The maintenance got left behind the most. But then the projects. If I leave for an estimate or go get materials and I'd come back three hours later, it was like a half hour's worth of work was.

Done. Oh, yeah, I know how that is. So you're like, oh, this'll be done by the time I get back. And then you get back and it's like, what.

Happened? I'm realizing that I don't have time and I don't have the system set up in my business to be.

Able to run it.

Well. I don't have it set up where I could leave and the business would.

Continue. In terms of your current team members, it doesn't seem like either of them. You're like, I must keep these.

Guys. The one guy, he put in his two ignote.

State. Okay. And then your brother is the other.

One.

Yeah. So my wife keeps saying to fire him or let him.

Go. Well, this is easy. Then it all happened for us. The thing is, he's getting married in.

May. So I'm like, I don't want to take away his livelihood.

Income. I don't.

Know. I just, I feel.

Bad. I understand. But he's not $96,000 in debt. That's true. Right. Like you're taking the brunt of his problem on. But ultimately, if the business fails, he is going to lose his job. And that's actually what's happening to improve Cash flow, you can figure out who your ideal customers are. They will buy your most profitable services often and without trouble. Determine a service's profitability by checking its hourly rate and direct costs. Direct costs in this case are your labor expenses and the price of materials needed for the job. You gotta make it profitable. Like, we will never make money at 40, 50 bucks an hour. I mean, I think we break pretty much break even on mowing. I'm gonna guess we lose 20%. You think? Oh, yeah. It's being hidden by the fact that the landscaping and the Christmas lights is paying for the trucks. It's propping everything.

Up. And then the check came in from the big job. So it was 27 grand. But at that point I still had to pay my other sales guy, and then I had to pay my secretary and then pay the materials and then pay myself. And then back at square one.

Again. You're saying that should quantify with the.

Customer. I recommend that highly because then.

Problems with that in the past with customers don't take our jobs and do it themselves. And then with the quantity given with.

Them. So they're like, hey, I'll take the 62 bag and do it myself. They just know how many bags.

They need because beforehand they didn't know prior knowledge of how to get a bag.

Count. Yeah. But then really we're depriving them of information and there are going to be the customers like, thank you. I know. And now I need 62 bags. That's not really your ideal customer anyways, because we're selling the service, there.

Are times where we get these bigger estimates that I have to also do like all sorts of back end stuff. And those can sit there. Like if I'm calling around to nurseries and I'm trying to get pricing on different materials, it's a newer material. I've got to call three different suppliers to see if they carry that particular.

Material. And so there's two that's gone at that point, Right? Well, there's two things in that regard when you say that, and that is one, if we're waiting for pricing on. On, you know what I'm gonna say? Don't do those jobs if you don't. Can't get pricing to someone right away. That is a really good indicator that that job should not be done. You don't know the pricing, therefore your guys have never installed it. Therefore you don't know how much of it you need. Therefore you don't know what happens if you run out and you don't have another Supplier, for example, with lawn care, If I get one new customer, 50% of that revenue is going to be going to direct costs which is variable, which is wages and cost of goods. Because I don't have a building, but I do have a labor that has to go out property and actually do the work. If we lose customers, who cares? Right now we're not making any money on them. If the business was in operation to like look good in front of the community, yes, we want to avoid Google reviews at all costs. But if the business's goal is to make money, stay in business, be able to pay the bills and, and be able to grow, we gotta be at least somewhat profitable. Hey everyone, I just want to take a quick moment and say thank you for your support. Really it's because of the community in the home services industry that supports all the different products and services that I offer online in order to be able to afford us going out and doing these turnaround shows. They're expensive. We bring a whole crew of people out there. It doesn't cost these business owners anything. So I really appreciate it and I would love to see you in person at Blue Collar Summit if you're able to make it. It's coming up here in just a couple weeks. It's in Seattle, Washington for three days and I look forward to seeing you there. Thanks. Next audit. Your expenses add up your fixed expenses. These can kill a business, especially if you are seasonal. Why? Because your revenue will decrease during certain months, your fixed costs won't. In lawn care, revenue can decrease by 80% or more during the winter. During this time, fixed expenses like insurance, rent and loan payments can eat up your.

Cash. So it was this, it was two tractors to the tune of $257,000. And the payment on that equipment was five grand a month. And I was freaking out. So there was a ton of debt. I was still paying the sk. Now you've got skid steer loader, two tractors, but still had two trucks, both had payments. So I mean there was a lot of debt, like a lot. We're talking four or five hundred thousand. 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. Once insurance found out what kind of contracts we were getting into, our insurance just ballooned. We used to pay 7,500 a year. Then it went to like 30,000 a year. Then from there it went to $90,000. We came down 400,000 DOL in revenue, probably 300,000 in snow. So our business essentially came down 40%, yet our insurance came down 10 or 20,000. I love coming here to work. I really do love this environment.

Here. It's.

Nice. I like it, I enjoy it. I don't need it. And, you know, there's 30,000 a year that I probably don't have to spend if I wasn't doing.

Snow. Let's say we pull the band aid off. Our insurance is going to go from what, six, seven grand a month to two or three, you.

Think? If we're not doing snow at all, I'd be very surprised if it's 25,000 or above.

That. So probably 5,000 in savings just from insurance per month. Yeah. Then we rent some of this out to somebody else or move away from it entirely. Let's just call that an extra savings of $1,000 in rent. Then we got the fact that, like, maintenance on these big pieces of equipment, all of that is probably, I would say, at least a grand or.

Two grand a month this year, for sure. Like, we knew that this year we went full service. Tires, the machine was five years old. We never changed the tires.

Before. Let's just say a thousand bucks. So this is where it's like, okay, we're literally going to save $7,000 in straight overhead every single month. The fact of the matter is, to cover this $7,000 in overhead at 20% margin, we need to be creating $35,000 a month in revenue just to cover this. And so if I have a decrease of 35,000amonth in revenue, I don't really care as long as I can kick this out. Either I grow by 35,000 and pay this, or I don't pay this, and I just go reduce my. My size of business. When we look at this, this is like basically the cut we're looking at. Can we go down from 600,000 to, you know, 200, 250,000 when we look at the drop? So it's okay if at the end of 2024, you sell the loader, you sell the seller, and you do go into that savings, a bit of 20, 30, 40 grand that you lose during that winter time. But now you don't have this, You've paid off the other truck, your fixed expenses are so low, you'll be able to get through with 40, 50 grand come into spring the following year. And now you're really going for it because you figured out what works in 2024 in terms of advertising. Probably have yourself a crew leader or manager. That why I think 20, 25 is gonna be the year. You go to a million. That's when you'll crush it. If you still have problems, you'll need to sell assets. Okay, so we should just literally go through this whole place and be. Okay, what are we selling? What's staying? What's going. All right, we gotta get rid of this thing. What do we think we can get for two.

Grand? The way it sits right now, yeah, it's probably, like.

2,000. All right. $2,000. 500 bucks.

Probably. That's my baby, though. That's what I started the business.

With. I just sold my first truck, too. It was great. Now I gotta see it driving around town. It's still painted yellow. All right, so I got another $500. Great. This is gonna be our daily driver. Let's go. And then we got this bad boy. What do you think you get for.

That? That.

I bet someone would buy that thing for.

25.

25,000? Oh, yeah. Oh.

Dude. Okay.

Great. It has a box on it, but, like, you put a flatbed on.

That. Okay, so we're up to, like, 27, 28 grand. How much we get for that thing? Two grand, you.

Said? Yeah, I'd say, like, two grand.

Yeah. And then for the tray, like, another thousand.

Bucks. Yeah, I can get rid of that.

Thing. Okay, we have 30 grand. We can liquidate like that. Now let's go address the equipment. Do we need all this equipment if it's just you and Jade? We have, like, six mowers. Which ones would you keep? This one looks nice. These are older.

Ones. Yeah, so, yeah, this one works. It. You know, it's got a. This is our pull cable. So if it spicy in the heart, it'll kill you. But mercy, we. We can fix that. We can fix.

That. You got to take that down.

Bro. Yeah, I bought that thing for.

$7,000. It's probably worth five.

Grand.

Probably. If you clean it up, tiny it up, yeah, that's probably worth, what, four grand? We have at least $45,000 of equipment that can be liquidated in two weeks. What's the monthly payments right now? Because that's the part I did not see anywhere. Cause I see, like, all these cards in terms of, like, just fixed expenses going out the door. Cause we got, like, a lot of credit cards. They're mostly small amounts, but, like, they add.

Up. Yeah. Monthly expenses right now are.

6,000Amonth. Covers.

Everything. That's debt.

Payments. That's debt.

Truck. Okay, but just for credit cards, because, like, we got an apple card. We Got a Wells Fargo card. We got Chase card, new Barclays card, Capital One card, Dick's card, Wells business cards, Home Depot cards. Okay, so an actual credit cards are basically 6, 7, 8, 9, 10, 14, 22, 30. About 30,000 in credit card.

Debt. Yeah, and that's so last year I paid everything off in June. By November, I was like, oh, I'm gonna grow.

Everything. Since I've come back, his business has grown a.

Lot. He's got two trucks now running.

Separate things and then dump.

Trailers. He's got a bunch of ride.

On mowers, tons of commercial.

Accounts. So everything's starting to pick.

Up. Oh, I need this tool. So then I go spend three grand on it and, oh, I'll just.

Put it on a credit.

Card. It'll pay it off, you know. Oh, I need a plate compactor. 2,500 bucks. Okay, I'll go get that. No, I need this. I'll go get that and then I'll, you.

Know. So in, in the short term, from a cash perspective, we are essentially, we have $103,000 worth of assets. If we sell everything, and we have $96,000 worth of liabilities due to debts. Instead of trying to fix this right now, why would you not just sell everything and do something.

Different? I knew what I needed to do, but I was also torn between stepping back and doing that. Just pedaling the metal full into it and, and just try and grow it again. And then if I did that, slim chance I could just take off and make a ton of money and make it work. But ultimately I would probably be back in the same position, but far worse. I mean, this year I would have probably been better off just working at McDonald's. I probably would have made more money in my.

Pocket. Everything that's going wrong, there's definitely been a lot of.

A lot of hard days and definitely long days. And just like sitting and just like thinking, you know, and just like, right, sitting at the lot, sitting, looking out at the pond and just be like.

I've done like, I've done all this just to like make no money. It's like, that's crazy. Like, I might as well just, like, I might as well do nothing. I might as well just be unemployed. Better yet, just like, you know, working, you know, McDonald's or something. I'd make more money than what I do right.

Now. You'd have $6,000 in your pocket if you sold everything right now and you went and did something else. The good news is this is simple. The bad news is Gonna be really difficult emotionally to get rid of all these trucks and go back to one truck, a trailer, and then a smaller trailer is gonna seem like a massive step backwards. But you're also going to literally have, for the first time in a couple years, $50,000 in the bank. And you're going to have like all this work coming this coming spring. So you have two weeks to essentially sell four trucks. I don't care if you have to give them or get them out of here. The fact that that thing is costing you more per month in insurance than what the total value of the truck is is insane. When you're taking on more debt, you're taking on more risk in the business. What you want to be very careful of is when the amount of debt you have in the business exceeds the amount of assets you have in the business. Because if you do that and the business fails, that means you will not be able to sell off your assets and pay off your debts. In that case, you have to declare bankruptcy. So instead of buying a bunch of big equipment, can I rent it? Can I use it for a couple months? Instead of going and hire an admin staff member in a big fancy office, can I get them to work part time or work remote or maybe a contractor instead of going a really skilled project manager for a few projects each year. I thought admin hires would be easier than field labors. And I was so wrong, dude. It's so wrong way hard. I thought the same thing. Now I'm a big believer. It's the exact same thing. They're still gonna have churn. They still need management, they still need metrics, they still need one on one calls, they still need retrain, quality control, all of that. You're spending most of your time on admin. Yeah. And so at a $500,000 business, which last year I will say was not the case, but that's the issue with working. I think you're spending more time managing her than just doing the work yourself. So that's kind of why I was starting to question having done it before. So I think you're probably right. I would say during our spring rush, we're gonna hire someone for five hours a day and they're gonna be admin. It's gonna be $100 a day, you know, maybe a little more. So let's just call it 120 bucks a day. We know that's when all our leads come in, we out into the.

Future.

Yeah. And that's when you can't handle it yourself. That is so smart. I've never thought about like temporarily hiring someone. Well, it's like if you have a seasonal demand, you should have seasonal work. And so we can do the same thing for admin that you do for your guys out in the field. And if you say hey look from because I know your market. So March, April, May and June, there's your four month spring rush. You're going to work from 8 to 1pm that's going to give you the flexibility to say hey, we're open 8 to 5. You only have to answer the phone from 1 to 5, 8 to 1. You get all your operation stuff done, all your hiring, all your estimates, 1 to 5 is going to be. You're creating the estimates and you're ready for the phone. And you will follow the same process as them because now you have that time block for them. The fastest way to grow your business is to just add more services and more products to sell the same customer. And although that is fun and exciting and the fastest way to grow, it's usually not very profitable because when you add a whole bunch of services, you need different equipment. You have to train all of your employees on different services and, and by splitting your attention, you're not trying to market all these services instead of just one. There are million dollar companies that do one service, so you don't need to offer 20 in order to build the million dollar business. So do you think that it should be cut out? Like what's your.

Thought?

Absolutely. And so in terms of it being a suck, like obviously it's a big chunk of revenue. Like what is, why do you think it's a suck? Is it attention? Is it the time and equipment needed? Is it the fact that it's only him can do.

It? Like.

What? It is always kind of a separate service thing. It's never something that both crews themselves. When I say crews, I mean different departments. I say mowing and landscaping can't really do the trees do the.

Same. And it's like hard to find those.

Labors. I imagine it's very hard to find those labors. So anytime that we've lost one of those labors, it's been very hard to replace.

Them. Do you think it could be a service we just offer during certain months or is that pretty tough because people still want services during the.

Spring? I think if we were going to keep trees, I think that we should reduce to winter coast cutting. And that's what a lot of.

Tree cutting is need.

Anyways. Yeah, it's a lot of high need for that anyway. And then we can reduce to small scale pruning that the landscape crew can.

Do. I agree, but your, your idea of doing the not getting out of the trees is really just for focus.

Sakes. I just, maybe I'm just exhausted from this roller.

Coaster. So it's a good.

Division. I mean it should do 300. 300 plus thousand easy. We know two guys. No, two or three guys. One guy. Estimating two guys working in the field should do.

300,000. And you're doing the estimates for that right now.

Right?

Yeah. And so if you cut that, would you be able to take on all the other estimates and not have to have the full time.

Estimator?

Not as we're currently doing work. I'd have to simplify outrageously. I'd have to simplify.

Outrageously. What does that estimator do during the winter? Do they work in the fields at.

All?

Some. He works in the fields mostly he's doing all and getting work on. But we've always made it through, you know, working 30, 40 hours a week.

Really. Okay.

Okay. So we, you know, we've catch. I haven't, you know, I've got rid of the, the worst.

Employees.

Right. In the winter to keep everyone running. But I've never had to lay anyone.

Off.

Right. You know, that I wanted to.

Keep. If you're, you know, willing to be able to get in the field for a little bit of time and turn training into like work. Yeah. I think we give him the hours during the winter. We get rid of people and say like, look, you're a great mower. We don't have enough work for, for you. And at the same time that we're communicating with the team about like where the company's at, it's like, I'm gonna give you a job guaranteed March 1st. You can come.

Back. Yeah.

Absolutely. Right. And like it's a seasonal position. Right. Mowing it like we. The grass doesn't grow. I can only do so.

Much. And that goes back to like we do too much. Look at that list right there. Services we provide. Yeah, we do that whole list of services. If we did like 5, 6 max things on that and no.

More.

Yeah. She would be able to sell it because she would, she'd be able to learn six things. Well, there's 20 things on that list. I don't even know them front to.

Back. Let me understand the debt for a second. So when you say $100,000 in that, does that include the skid.

Steer? Skid steer. 73.

Grand.

Okay. Truck, I have 19 grand on.

It.

Okay. And then dump trailer is like.

7500. Got it. And then the rest is just credit card debt.

Basically. I mean, yeah, credit card debt is 10.

Grand. Okay, maybe. Okay. This is the bottom line. Some people would be like super pessimistic about the situation because it's a matter of like, literally your liabilities, like, is basically equivalent to your assets. So basically it's like if you sold everything, you could pay off your debts and move on. It's essentially where the business is at now, which if you go below that, it's insolvent, which means you typically should sell the business and just move on with life. However, you went from 70,000 to 200,000 and you probably would probably do 400 to $500,000 next to year. You will probably become profitable if you do 4 to 500,000 in annual revenue without having to buy any more trucks or equipment. And you can make your. Your labor is much more efficient by cutting all this stuff down. Yeah, because when I see $200,000 in annual revenue and I know you have a bunch of project costs, I say, okay, let's say that's $150,000 in labor revenue. Well, if you take someone that works 2,000 hours in the year and you do the math, they're not making a lot per hour. And so either A, you're charging too little or B, they're super inefficient. And so like, what, when you go out and bid a job, what's your target hourly rate? Like, do you. 65, 65. What do you pay per hour typically for a labor? Like 15 to 20 for entry.

Level? Entry level 16. Right now, both our people are 20 plus.

10. Yeah. Like right now, I would imagine if I looked at the finances, you're probably sending 70% of your revenue just wages. By the time you take office and you take your, your employee on the field, that business will never, ever, ever, ever, ever make money at that ratio. No, it needs to be at 40% or.

Below.

Yeah. Especially because you have a bunch of material costs as well. So really it should be like 30% or less. And so this is where, this is where what's hard for me making like a call like, hey, you should get out of business is you're growing quickly and growth sucks cash. And I think you have enough assets to get to 400, 500,000 without having to buy more stuff. Stuff. Like, in my opinion, like, the challenging part is if you're going to try to run both, is you need this business to still do at least 25, 30,000amonth just to break even. Because in my mind it's like, okay, we should just have you and Jacob working all day long. You should be taking calls, emails, estimates throughout the day, but you're primarily just working with him. You just cut out 90% of those services and then you guys become specialists and you can charge more. I recommend opening a lineup of credit because when you need a line of credit the most and you have no cash, the banks don't want to give it to you. And when everything's going good and there's profits in the bank, they want to give you lines of credit. So open it when you don't need it. 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.

That. 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 relief lever. It's just knowing that if something crazy happens that sucked 30, 40 grand, which in a 1.8 million dollar business can go tomorrow. Right now, when you quote, unquote, don't need it, is when you want to go get the line of credit. 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 size location, so. So like, I know that can just disappear like that. Be a good steward of what you have. Don't ignore your business's cash position excuses. Pave the road to failure. Bottom line, if you can't fix your cash position, nothing else in this book will help you. Cash rules everything in business. I see a lot of business owners trying to grow too fast. They buy more trucks than they need, they hire more employees than they need. Sometimes is for validation from others. Another way to fix your profit margin is to go solo. Do the work yourself. It won't make you rich and it is certainly not the long term goal, but it can get you back on track. So we're probably making like 0% margin, usually around $55 to $60 per hour is what you need just to cover the cost of labor and your overhead. So typically we want 30 budget hours of work per 40 hour employee. So if I can do 30 budget hours of work in a 40 hour week, that's pretty standard. Their efficiency score right now is like 40% because they're probably doing about 35 budget hours in 80 hours worth of work. Right. And right now there's just not enough budget hours for me. Like, you need a team member. Like, it can be done by one person. I think you get out there and you knock it out in literally four days. It looks to me like 2,000 to 5,000 is kind of like your wheelhouse for projects. This is the thing, like at 400, you're basically in this wilderness of revenue, right? Like the 200,000 to 500,000. You typically don't make a lot more profit at 500,000 compared to 200,000, because you go from solo. Like, you could literally just take these $100 per hour jobs and solo do these jobs and maybe have a helper on a big project, and you could easily do $15,000 a month on.

Projects. Most of that goes in my.

Pocket. Likely more profitable.

Honestly.

Yeah. And then this is the reason I actually think that might be a good idea is because if we know, okay, if we can pay $6,000 per month in fixed expenses, well, now we don't have very many variable expenses in terms of labor. We get rid of the secondary truck. So, you know, make the wife happy, keep the good.

Truck. Let's.

Go. There's not a lot of meat on the bone. Like, I don't see us selling that and having 10 grand in our PO to help us. A ton. Yeah. Because we're up against $96,000. Like, we can't crush our top line revenue. We have $6,000 a month. We've got to like pay out and fix stuff. If you just went down to like, you're doing all the work and it is a matter of you're likely going to basically do all of the recurring work and then have like a day or two a week. And on that day or two, you'd be trying to get project done, that'd be all you'd be doing. And you'd have literally a cap of only being able to do three or four projects a month. But those three or four projects at two or three grand a piece now become you're making 20 grand a month by yourself instead of all throughout as you're growing. Like, oh, I'M going to hire more, get more trucks. And so you just keep burning through all these leads and then you have no backlog during the slow season. I think you'll be fine. Like, I think this is a better route. I wasn't really sure which way to go in terms of should you just go get another job and get the skills? Because that is like, so like, if you learn someone else's dime how to do project management, learn someone else's dime how to do, manage the crew, et cetera, great. But I really think if you can get in there and do this and just like really track what your budget, hour capacity is and every time you get close to that, you're raising prices or you're cutting out customers are the lowest prices for mowing and you're optimize, optimize, optimize. And then you're gonna be literally, I think within a matter of a couple months, you'll be literally have a two month backlog of projects. Cause you only need one a week. And so the whole mindset just changed because we literally need two leads trying to get a gazillion just to fill the guy's schedule. And by the way, they're not making any money when their schedule's full. And you're not gonna go to them, be like, you guys are inefficient, you're gonna go to them like, I'm going back to solo. I just do not have the money. I'm going to try to rebuild the business. I need to make it more profitable. And I'm sorry, I want to give you guys time to find something else. And if you find something and you need to leave right away, I'm fine with that. I don't like giving people time between when you're letting them go, but in this case you're not replacing them. It is like you're just taking the humble pie of like, I'm going back to being by myself and I've got to fix the business. Why don't we just scale back to the services that you trust someone else to do, okay. And like make those really profitable. Like to be doing six guys and only do 30 to 40,000amonth in revenue. There's either a pricing problem or there's an efficiency.

Problem. I've gone from having anywhere from, you know, one to two employees up to like five or six. And the past three years that I've been in business have been a struggle. The current state of the business has not been fair to both my employees and my family. Family in 2023. We started with maybe four or five employees, and I had to sit everyone down and lay three people off all at the same time. And that was a. Not an easy conversation. And I never want to go through that again. I remember looking at, like, how much money we were bringing in and how many guys we had on payroll, and I was, like, doing just some simple math, like.

Wasn'T adding up. So I had of a lot, lot of time invested and, like, money invested in them. So I like, you know, I wanted to keep them, but I just. Right after doing the numbers, I was like, this makes. It makes no sense. So I told everyone to meet me at. At the garage over there. And I was sitting. Standing here behind this truck, and all the guys were lined up on the sides here. And I just had to sit him down and tell him. I was like, I'm going to do, like, I can do like one or two more weeks for you guys, but. But, like, it was such a hard conversation to have where I was just like, I can't keep you all. I just kind of opened up to him and I was like, listen.

I kind of did something irresponsible. I hired all of you on with this, like, whimsical dream that I was gonna, like, all of a sudden grow the business by, like, double in, like, a matter of, like, a few weeks. And, like, that doesn't make any. You know, it doesn't make any sense. So I just told everyone. I was like, I'm gonna have to lay everyone off and I'm just gonna do it myself again. They understood and they, you know, they appreciated that I at least tried to, like, you know, get them through a week or two so they could try and find something else. So I just couldn't, you know, I couldn't make it through. It was tough, but I kept pushing through and, you know. Yeah, Jade. He was there when I sat everyone down to lay everyone off. So he knows he was supposed to be laid off. But I just, like. I was like, all right. Like, I gotta. You know, I gotta at least try.

For. It was tough for a while. There was a couple weeks where I thought I was gonna be let go. I thought everybody was gonna be let go. So it's hard, but, you know, it's business and I'm lucky to still be.

Here. He was really putting in his all, and he was really excited about everything, so.

I had to try and keep him. So I did, and it turned out for the best. You know, he's a good kid and he's got his head on and he gets stuff.

Done. Like, what do you think about having just the two of you working and going after like, higher margin, cutting out all the other stuff and you guys just working together. So if you have all that work, though, like in 2021, how much revenue did you.

Do? I think it was somewhere only around like 200.

Maybe. So 200,000 and then you went to 300,000, but you tripled the amount of guys. You basically had to employ your revenue and productivity with just you and one other person. At $200,000, you can make like, you can probably 70 to 80 grand out of the business in profit. See, when I look at 2021 and you say, hey, I had one guy and myself, we did $200,000 in annual revenue, and we work like dogs seven days a week. I just say, okay, great, let's not work like dogs, Raise our prices and lose some customers. So we don't work seven days a week, make the same amount of money, but be way more profitable because we have a higher.

Rate. And that way I'm not like playing catch up where like, you know, when I had like six guys and it was like, I just need to get as many jobs as I.

Can. And then you're willing to take lower prices, which you start losing money on them. The thing is, in order for a business to grow sustainably, it has to have profit, right? And I think a lot of times it's very easy. Like, I will jump to the big business and I'll make it profitable, right? It's, it's so much safer to be like, I will take my, me and one other guy, make it very profitable, 30, 40% profit, and then I will slowly grow that over the course of time. I'd just be like, whatever work we can get done with a two of us, that's all the work we will do. And if we need to pare down services, trucks, equipment, whatever, to get down to where we're only doing about 70 to 80 budget hours a week, that's it. And then anything above that, we are going to raise price. Like, you're just overloaded with work. There's no more seven days a week of working. At least the seventh day you do invoicing. Because, like, if, if you can be like, okay, I'm just going to keep raising prices until there's not enough customers to where I don't have a seventh day of, of work. And on that day, I'll do the admin, I'll do the invoices. I'll do the estimates and I'll actually bring their money in that I earned. Then all of a sudden I think in one to two years you'll wake up and be like, I've raised my prices so much to the point I can afford a third guy. Growing the business is the goal. Returning to being a solo operator is a short term fix. The main goal should be to figure out how to take a 5 to 10 person team and get them to earn 80 to $100 per per hour. They should do this for 1,500plus hours in the year. That's what it takes to build a million dollar business. But it's not going to happen overnight. It could take five or 10 years, but you might have to take that step back in order to go solo and get back on the path of profitability.