This $750K Landscape Business STALLED OUT... (Turnaround)

I chose to do this because I listened to you.

I know how you're feeling. I feel the same way.

It's hard not to be disappointed.

My name is Mike Andy. I travel around the country turning around small businesses that are struggling.

If I'm going to be in business, I want to be in a business that actually does well and makes money.

The business will eventually either collapse, fail, be bought out.

He brought that up in there and I was like, I almost wanted to smack them in the side of the head.

They have over $90,000 worth of debt. They have very little cash in the bank and they can't keep employees and they're all leaving.

I have a strangely talented team.

This is actually kind of meaningless work.

To talent is being underutilized and it's my fault. And as a leader, I think that is your responsibility. And I'm just like, I don't want to deal with this person right now. It's like, this is terrible.

You're on your own, so don't ask us for anything.

That was kind of like burning me out.

Fred can't get out of his own way and it's keeping him from building a million dollar business. This is not your passion. You do not enjoy this.

Try not to get emotional now.

If the business made a bunch of money, does that change this whole dynamic?

I don't think so because it's not just about money for me. I'm like so against that. Maybe that means I'm not gonn successful.

Let's see if we can turn this thing around.

How's it going, Mr. Mike Anderson?

This is a cool spot. How you doing, Fred?

My name is Fred Sutherland. I own Sutherland Landscaping and I wear many hats in the business, from being the owner and CEO to being the guy who has to sharpen lawnmower blades and janitor, you know, that's part of owning a business.

And what was your name? Nicole. Nicole. Good to meet you.

Yeah, my name's Nicole and I mostly.

Do some office admin.

And bookkeeping. I wrote you that. I wrote a note for you inside too.

Hey, sweet, man. Very nice. Appreciate that.

So, like this spot? Do you know the owner of the farm or anything like that?

Well, through mutual friends, I think. I made two phone calls and then the second phone call, the guy's like, actually, I might know of a great spot. So I just drove out here to take a look at it and the farmer was actually here. It was like total disaster. I was like, hey man, could I come here and clean it up for you and pay you money to have operate my business. And he's like, yes, please. When can you start?

This is what you want. You want away from people that report you. Like, that's what we've always gotten in trouble is like if it's too close to. To our target market. It's like, yeah, it's nice from a driving perspective. But then you get neighbors and they report you for the couplings and all that sort of thing.

So I only pay a thousand bucks a month to be here.

Yeah, yeah, keep that arrangement.

This was kind of like it was in rough shape. So we, you know, did the electrical work and got it set up for us. People thought I was crazy for doing this thing. Like this turnaround thing. They're like, how's that gonna help your business? Gonna make you look bad and all this stuff? I think that vulnerability actually, and admitting your weaknesses and being authent what's going on in your inner narrative is a strength, actually. So we have like two primary divisions. So like one you would. Guys would call them HOAs.

Strata.

Strata maintenance up here and then some commercial, and then we have a residential renovation side of the business.

And that's where I guess this comes involved the tractor a lot.

The tractor, yeah.

Cool. And you get this quite a bit then?

Not as much as I should. When I'm working on construction projects and this piece of equipment is operating, we're doing pretty well. But as soon as I stop doing that, for whatever reason, like if I have to give more energy to pruning on our stratas, it's that classic. Like stuck at manager, not quite at architect. I've listened to a lot of your stuff. You're actually one of the reasons why I started my business to kind of gain confidence.

I get the blame now, but it's.

Like so a lot of the. We're just classic in so many ways.

What Fred is referring to here is the roles that a business owner plays depending on the size of their business. For example, if a business owner's between zero and $200,000 in annual revenue, the main focus should be out in the field servicing the customers and doing the actual work. Between 200,000 and $800,000 in annual revenue. The role of the owner is that of a manager because you're hiring employees and you have to learn how to lead. As the business grows past $800,000 in annual revenue, the main role and responsibility of the owner is. Is that of an architect because you step away from the business you have other people managing and really focus on acquisitions. Systems and strategy, that's the classic business. So 2021 was the first year, and that was 250,303. So right off the rip, 300,000 year two. So 2022, that was around 500,000 then. Yeah. Okay. And then last year, 2023, around 700,000. Yeah. And this year kind of on track for about the same. Maybe 750. Is that what we're shooting for?

This isn't quite working the way I wanted it to. Let's reevaluate. Let's make some adjustments.

So what aspects of that in your mind, like when you say it isn't working because like three years in 700,000 plus business, most people would be like, I'll take it. So what, what aspects is the letdown?

Things kind of the first two years went according to plan, and then the third year, my dad passed away. The death of my father really, it really. It hurt, man. He passed away in a prison by himself. So in many ways, my worst fears for his life were.

It happened.

That's where the revenue stopped. You just look at a P and L and you know, and I know there's a visionary and I see grow, grow, grow and plateau. Whatever will happen right there. I can just draw right to there.

Yep, you're right. Yeah. Because you lose. It robs energy. Right. And there's a grie. And there was a lot of existential things I was kind of wrestling through. In the end, there's more important things in life than a business. And I think people are more important than business. But it does take energy and it did shift my focus. And like, he said he could see it on the profit and loss statement when it shifted. But it was kind of funny because 2022, I guess the third year, I was locked in, man. Like, I had all the strategic plan.

Like it was when you grew above 500,000.

Oh, yeah, we were gonna go for it, like, and it just like, bam. We can make all the strategic in the world, but sometimes life happens. You got to just deal with it when it's there. But I thought I kind of this year I was like, okay, this year it's going to happen. We're going for it again. And it just didn't. Grief has, It's. It's hard to prepare for that. What it does to you emotionally and physically. And like, there's all sorts of stuff that I just was. I didn't really know how to deal with. So, like, we kind of hit a. It just emotionally, you just, you get rocked by that. And it lingered for a while. It's good, too, to. It's good to have.

Drive and capacity and vision and.

But have.

A heart too, if that makes sense. It's gotta take a second.

Ah, you think you move past this stuff, but you just don't. Yeah.

You don't really move through grief. I think grief changes you forever. But that's not always in a bad way. I think I will forever be broken in a good way. And it wasn't until the fall that I was, like, back into the business again. We were gonna push again, but then I was trying to grow by bidding jobs profitably, and I wasn't landing any of them. So we tried to double our maintenance division this year.

Failed me.

When I think of the crew that we had, like, last year, we should have just been, like, killing it, you know? Like, I've been in a lot of, like, different industries, like, seeing a lot of, like, different companies, and just like.

Yeah.

Not that it's all about profits, but I think profit is, like, the reflection of you doing the right things. It just seems like there's, like, almost like a disconnect there, you know? Or like, it seems like something's missing or something's not quite getting correctly applied. How efficient we were and, like, the workers we had, there's no reason why it shouldn't have been through the roof.

And then that kind of discouraged me because I was like, can I get anybody to join me me in this thing? Like, what is with this stupid industry? Like, you can't keep people around. And I'm like, I kind of. And you just kind of get into this negative cycle.

How many Google reviews do you have right now?

Only, like, 26.

Or if you had to guess, is it like five leads a month from the website? Just in general. Oh, in general.

Yeah, they come in. So I'm terrible at marketing in the sense that I've. People said, oh, you need to get more Google reviews or you need to do this. And I'm like, why? I always have more work than I can handle, always. So I'm like, what's the point of doing all this stuff?

Well, it's also a matter of if you have so many leads coming in, you know what you do? You raise your prices.

That's. And that's. I didn't do that. I realized I was like, okay, I should be doing that.

I think you do a big trade off of, like, profit for guaranteed work, let's say. But I just think the margins are, like, tighter, especially if you are Doing that quality work and kind of going that extra mile, I think it's just going to be like tighter margins. So when we just keep doing this stuff, I think it's just kind of like keeping us alive. But it's hard to move forward.

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 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 is 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 an accepted job, I'm simply going to look at my spreadsheet like, okay, 150 this week, next week pay. We're booked for this week. 120. That's when we'll start. We'll start you on this week getting all this.

Got it all memorized?

I got it all memorized, yeah.

Is this in your book? You got like a.

It is. It is.

It is.

It is in there. Yes, it is in there. Total business turnaround, page 108. Once you hit the budget hour capacity for labor and assets, you will set the backlog threshold. Then you can start to raise prices. Once you reach that threshold, maximize your profit without losing out on potential jobs. By raising prices. By raising prices, Our hope is that some estimates get declined due to price. This will keep the backlog in check and prevent it from growing too far out into the future. It's more being directionally correct. Like there's going to be changes that happen on projects. But we account for it. We account that 25% of someone's day is either wasted or there's going to be work order changes. Again, you operationalize it. So it's like, okay, when we are booked out more than a month, we go to this price. When we're two months, we booked out at this rate, we hit three months, we Go up to this. So all of a sudden, yeah, you're still in March and you're booking out six months. But that work is now being done at a $20, 30 more per hour rate because you're booked out so far.

Yeah. And we have not done that. That's. We have to do that. We've never had a problem finding work, but we were, we were not that. The idea that he had of like having us, okay, at one month booked out, we're going to move our pricing to this. And after three months booked out, we're going to move our pricing to this. We never thought of that. That's a fantastic idea that I'm like, that's going to solve a lot of problems, help us be more, more profitable.

And then if someone comes like, well, no, I can't wait. I need to get in two months. Like, I can't wait six months. Fantastic. Our like emergency work. It's going to cost you this and we can fit you in and that margin is literally going right into your pocket.

Yeah. No, you're. That's a really smart way of doing it. Definitely was discouraged. Yeah. I just needed some perspective changes and I really appreciated talking with Mike. Like there were some, some things he said that were like gold. I was. Hadn't thought about that. The other piece that's a distraction is I like got involved in this non track club. Oh, you need a coach. Okay. Okay, coach. Oh, you need something on the board. Okay, well now I'm the president of the board. Now I'm like leading you through a strategic planning process and it becomes this huge thing that just stole so much of my time the last two years. Yeah.

So this is why I would say that happened. It's because you lost vision of where you were going. And so you just like, okay, maybe I'll do this, maybe I'll do this. And then all of a sudden you start going. You don't know where you're going. Like to use a biblical wandering in the wilderness is happening. It's not like we're going over here.

Yeah, you're 100% right.

Oh, even Fred might go through seasons of where he kind of gets maybe burned out, things kind of slide and then he comes back for a hard push and I feel like he's. Yeah, maybe there's a realization that like that's not quite sustainable that first year.

The reason you were so gung ho is cause you had that vision. Oh, track and field president didn't like align with that. No, it didn't. Right. But you have a benchmark to determine whether or not it does or not, versus being like, well, maybe that will kind of fulfill me a little bit. Maybe I'll do this. And, like, you're just looking for grasping at straws, and then the thing just starts to just deteriorate.

It got 100%, got neglected. I was feeling pretty discouraged and, like.