This SILENT KILLER is Eating Away at Your Lawn Care Profits! [Nobody is Talking About This]

Sam.

What's up, everyone? Mike andes here@landscapebusinesscourse.com today we're going to be talking about the thing that's eating away at your profits. Right now I'm having a little bit of issues my Internet. So hopefully things are okay for you guys. We're going to be talking about inflation, if you haven't figured it already. I want to, you know, I didn't put this in the title of the video because if I put how inflation affects your lawn care business, no one would watch. But this is super, super important. So for the 20 of you that are currently logged on because you're eager beavers, I appreciate it and trust me, you will want to stay for this one. All right, I'm going to try to make a little more concise this evening, but it's about inflation and what it's going to do to your business. Now, you might have heard some recently in the news about how inflation is going to go up and why it's going to go up. I'm not going to spend too much time on that, but I'm going to talk about how it's going to affect your lawn care business and what you need to do to, to adjust yourself for it. So first of all, let's go over a couple little things. Let's spend 15 minutes talking and I'm going to spend 15 minutes answering your questions. First things first, in the past, inflation is really a good thing for our economy as long as inflation is kept in check. And for the past 15, 20 years, it's been like one and a half, 2% inflation, nothing major, nothing crazy. And it's a very good thing. Now the thing is this, when we talk about inflation, we're really thinking about the cost of stuff going up in dollars value. For example, a loaf of bread 25 years ago might have been a dollar. Well, now it's like $4 or $5. The cost of goods going up and really in three major areas I want to talk about in relation to our lawn care business. Number one, the cost of labor going up as a function of inflation. Number two, the cost of materials going up as a function of inflation. And number three, which is not really related to inflation, but something I want to talk about tonight and that is taxes. So how are these things going to affect your business and why is it really important? So if you have no idea what inflation is, all you need to know is basically that things go up in cost over time. And a lot of this has to do with monetary policy. A whole Bunch of different stuff. We're not going to get into the macroeconomics of what causes inflation. But you've probably heard in the past little while that because of all the money printing and stimulus that's been going on, that there's a really good chance that there is going to be inflation coming up in the next few years. What does that mean for lawn care business owners and what do we need to do about it and prepare for the next few years? Let's get to that in just a second, but first I want to do a diagram and show some numbers behind why inflation is a really big deal and why it is absolutely eating away your profits. So we are going to assume that, you know, Bob, I don't care, I don't care what name he is, the lawn care owner guy. Let's just say Bob has his revenue for his business right now. Let's, let's assume his revenue for a 2020.

Was equal to $500,000. Okay, so that's his revenue for 2020. Now we're going to assume that he has a 20% margin. So let's go ahead and go 20% profit margin, profit. So if we actually do the numbers on that, he is going to at the end of the year have a whopping $100,000 in profit, pretty good little business doing lawn care, doing landscaping, etc. So there's his profit, take home, pay, whatever you want to call it. That's his bottom line of his business. 20% profit margin on a $500,000 revenue business. Now what does inflation do to his business? Okay, so over time we're going to assume just 2% inflation. Right? Right. Now, okay, we're going to assume 2% inflation comes along and starts eating away at his profits. So 2% inflation comes along. What that means is now instead of a 20% profit, that's going to slide down to 18%. Okay, so at the end of the day, his, his hundred thousand dollars is going to go down because now 2% off of his profit is coming just in the form of inflation. Labor going up, costing more in labor, materials, mulch dumping debris, fuel going up in price over time. You know, 50 years ago fuel was what, like 20 cents a gallon? I don't know, I wasn't around. So 2% is coming off this 18. So in 2021, let's do the math. 2021, 2021. Now his 18% profit margin because we're going to assume he doesn't raise prices. He doesn't raise prices on anything. He does but inflation is coming. Inflation is costing him more for materials, fuel, labor, insurance, all the rest of it. 2% is chipping away at this. So now he's at 18% profit margin. He didn't raise his prices, didn't change anything, didn't, didn't charge any more fees. 18% profit margin. I need to do my math better. 18% of that is going to be 2%. That's 10,000. So now he's at 90,000. All right, so after year one at one year goes by, he's down now to $90,000. So literally inflation at 2%.

After one year cost him $10,000 in profit. 10, 10% of his profit wiped out because of inflation. Everyone's like, oh, it's only 2% of your profit. No, it's not. It's 10% of his profit in one year. They got wiped out simply because of inflation at 2%. Okay, now let's keep running the numbers. If we keep going along this path, five years later, so let's go to 20, 25, I'm going to assume 2% every year. Now remember, it compounds so now 2%, you know, it keeps going down more. So it's actually worse than what I'm about to you. But if you run the numbers after five years of 2% coming off every single year, he's going to be at a little bit above $50,000 in profit on this business. He's literally going to go from a hundred thousand dollars a year in profit all the way down to $50,000 per year in profit because now he's down to 10% margin. Okay, now I know for some of you're like compounding interest and all this other stuff, it does make a little bit difference. It's not exactly 50,000, but you're getting my point. And that's all I need right now. Okay, so yes, it'll probably be like 53 or 54,000 if you run the math. But anyways, he's ran the same business. He's still doing the exact same thing. Nothing's changed. Still running his lawn care business. Nothing has changed pricing, nothing. And yet his profits are literally have been cut in half over the course of five years because he didn't raise his prices. Literally half of you listening right now that want to book a consulting call with me, which is definitely something you might want to do. So there it is. If you like half of you that need to book your consulting, let me save you the money. Let me save you. Is it 399 now? Let me save you 399 by telling you right now you need to raise your prices. And for a lot of you, it's because of this inflation. As time goes on and that 2% keeps eating away at your profit margins, then how your take home profit is falling quickly. It's eating away. It's the silent killer. Because there's not like a day on the calendar that's marked and like, oh my goodness, our profit went down. That never happens. It slowly changes your supplier. Now all of a sudden, it's $40 per yard instead of $38 per yard for your material. Yeah, that is a 5% increase right there. That happens all the time. So every couple years. Oh, they just do it every couple of years. They raise it a few dollars. That's like 5% inflation, if they did that every year. So you've got to realize that the cost of materials, the cost of labor, and other things in your business are costing more money, and you need to raise your prices accordingly. So in this scenario, what could Bob do to counter the effects of inflation? He needs to do is he really needs to raise his prices by at least 2% a year in order to recoup inflation. So for example, maybe he's charging $50 per hour. Okay, so $50 per hour to the customer. If he's charging $50 per hour to the customer, a 2% increase would equal $1.

That that needs to go up every single year. What that means is that if he would raise his price every his hourly rate to the customer by $1 every year. So by the end right here, his hourly rate would be $55 because it's been five years. So $55 per hour is what he'd now be charging the customer in terms of labor. That's just the labor part. That again, inflation affects labor. You have to do the same thing to your material cost. So if you're charging the customer $50 per yard for material, you'd also need to charge them a dollar more per yard per year. So again, same thing needs to happen for all your materials and, and all your labor. You should be adjusting your prices every two to three years maximum. Every single year. At Augusta, we are slowly bumping up prices either on the labor side or on the material side, kind of like back and forth, year by year. So usually I'd say every two years we're affecting both of them. So like one year we raise up the hourly rate. The next year we raise up the material cost on our pricing sheet. But, but at the end of the Day. The only reason we're doing, we're not trying to make more money. We're just trying to keep up with inflation. All right. As the cost of business goes up, your prices must also must go up. This is why I'm very afraid of people that have been in the business in the lawn care industry for 20 years because they get so wrapped up in the fact that they've had customers for so long, they're afraid to raise their prices and inflation is eating them alive. A successful business 10 years ago could literally be wiped out because of inflation. Your profit margins completely obliterated the cost of labor. Like now you need, you need 15 to $20 an hour to get a decent labor. 20 years ago, 8, 5, 7 dollars per hour. The cost of inflation is dramatically increasing. We're going to get in that in just a second. You must raise your prices. All right. Now what's happened recently, and this is why I'm talking about this today, is because you've probably heard recently quite a bit about inflation. As the monetary policy of the United States has changed over the past 12 months due to the coronavirus COVID 19, the stimulus response, literally trillions and trillions of dollars, well over $4 trillion has been pumped into the economy. As money is poured into the economy and people start buying more things, it creates more, more demand. As demand goes up, price goes up. So if you don't know what I'm talking about, demand, the supply and demand curve. As demand for products and services goes up, the price of those products and services also goes up. So if you give people a bunch of money and they start buying a bunch of things, the demand is going to increase and therefore the price of those goods and services will go up. That's why everyone's afraid right now about inflation. Because all this money has been pumped into the system and now they're expecting no longer 2% over the next few years. They're expecting 3 to 5%, probably around 4% inflation. And the Fed is actually saying that they are welcoming this because they've have, they have a new federal policy, a new economic policy they're looking at and it's called a flexible inflation. So in the past, they've always shot for like 1.5 to 2% inflation. That's like been their, their golden spot every year. They try to like manipulate interest rates, they try to manipulate how much bond they're buying. Basically like quantitative easing. That's called. They try to basically manipulate, make sure that we stayed about 1.5 to 2% inflation. It's healthy for the economy, it doesn't devalue our currency, etc. A bunch of macroeconomic junk. Now we look at how does that affect our business if we go to 4% inflation for the next few years, that means that this is massively, massively going to eat into your profits. Because now, now let's take. Let's pretend that for the next three years, instead of 2%, we're going to experience 4% inflation. Okay, so year number one. Let's see here. 4% inflation is happening now. Like, literally, this type of video will get hardly any views. Like, right now we have 50 people live versus when I was talking about bi weekly versus weekly mowing, like 120. But promise you, this is eating people's lunch right now. All right, so let's go ahead and change inflation now to 4% inflation. If you guys like me doing these live videos on the whiteboard, please give me a. Like, it does take me time to set this all up. Oh, you know what I just realized? You guys can't see some of this sick. I'm sorry. All right, that should be better now. Okay, so now you can see all my numbers, except we can't see Bob's name. Poor guy. But please give me a. Like. If you like this setup, I will do more of these in the future. The audio will get better as we improve the set and everything. But I hope that this is helpful for all of you. Okay, let's go ahead and talk about what happens at 4% inflation, because this is very, very possible that in the next three years, we expect experience 4% inflation. Now, I haven't done the math and written this down, so let's try to do the math. I'm horrible at doing math on camera. I'm actually pretty good in person. But let's see how this works. So in 2021, if we have a 4% inflation now, we're going to have 16% as our profit margin because the cost of labor goes up. Guess what? Very hard to find laborers right now because there's this thing called the stimulus package and this thing called the unemployment boost of $300 per week, which means if someone made $200 from the state, now they're making $500 per week to sit at home and play Xbox. That's really, really hard to compete against when you're asking someone to work outside in the hot, blazing heat. It sounds really, really nice to be able to sit at home, do nothing, and make money. So guess what? We're gonna have to do. We're gonna have to raise our prices to buy. No, we're gonna have to raise our wages, I should say, to get good laborers. This has been the hardest year across the board for finding good laborers. Now, if you're like, oh, I got this great labor, it was no problem. Okay? But I'm talking, like, scale, like trying to find a lot of employees. Very difficult right now. This has been the hardest year for us ever. In the past. We're. We put a couple Craigslist ads up, got like tons of applicants. We wouldn't have half of them come in for an interview. Now we're using Facebook, indeed, Craigslist, all the rest of it, to get a good applicants. And a big reason, because it's really hard to compete against the government who is literally printing money and giving people stimulus checks and giving them free money to stay at home. Now, if someone lost a job, I get it. But when it comes to trying to compete against them, guess what we're going to have to do? We are going to have to raise how much we're able to pay them either through P4P pay for performance, profit sharing, or our hourly rate is going to have to go up to attract employees to actually work hard out in the field. Now.

4% inflation is going to now mean that we have 16% of our profit. So now it goes from 20% profit. Now we're down to 14. In one year. In one year. So now if we do the math Here, that means that 5, this is now going to be 80,000 after one year. After one year, we, inflation alone, this silent killer of profit took out $20,000 in one year. So if last year you're like, I made $100,000, we are golden. Guess what? Just inflation. Without you doing anything different, without you changing anything in your business, you can literally lose $20,000 in profit. Okay, now what's going to happen after 2025? After 4% for five years, literally, you could be. Because technically, if you run the numbers here, it'd be at 0%. So, like, let's run the numbers. Okay, here we go. We're not raising our prices anything like that year number two. So 2022, we're going to be at. Let's just fire through this. 2022 equal 12%. Okay, 2023, we're going to equal 8%. 2024 equals 4%. Literally four years from now, Bob here could be literally making $20,000 in profit. If he doesn't raise his prices, if he doesn't change anything in his business, if he doesn't raise the cost of his rate to the consumer, if he doesn't charge more per yard of material, if he didn't charge more for plants, if he doesn't have a higher material markup, if he doesn't charge an estimate fee, if he doesn't charge dumping fees, if he doesn't make sure that he actually gets paid what he's worth and continue to increase that every year, he can literally get wiped out. Now, some of you, again, yes, this would actually be more around 6 or 7% because of, you know, this is not a linear path. Interest does not work that way. But again, you get the point. His business literally can get crushed over the next four to eight years simply by the silent killer of inflation. As inflation goes higher, if we do not raise our prices, you are losing profits because you are going to have to pay more for employees. You are going to have to pay more for fuel. Even over the past six months, you've seen the cost of fuel go up as the cost of, of oil goes up. Oil goes up in inflationary times. That's why way back in the day, they had like the whole oil crisis and people were like, lined up for what, miles? They're paying all crazy amounts of money for fuel. They're in high inflationary periods of time. When you look at places like Zimbabwe where they, they literally brought wheelbarrows of cash, it's because of inflation. Okay, so what does this mean for your business? You need to raise your labor price, labor cost. You need to raise your material cost. You need to add dumping fees, estimate fees, et cetera, to cover one thing, because this is the third thing we haven't talked about. We talk about material costs going up, we talk about labor costs going up. There's this thing that's going to happen. I predict, and trust me, it doesn't take a profit to realize what's going to happen in the next several years. And that is that at $100,000 of profit, guess what's going to happen in the next few years? A little thing called taxes is going to go up. Now, you literally have to be smoking something very strong to not think that taxes are not going to go up in the next five years because we can't print $4 trillion in money, be at 0% interest.

And not think that taxes are not going to go up. All right, Just the fact that people are getting money for free right now, staying at home, doing absolutely nothing, and that life is just hunky dory right now. And everyone's just living off the government. Trust me, taxes are going to go up, just guarantee it. So maybe in the past if Bob was getting $100,000 and he was in an income back after he did some deductions, he did his Roth IRA to do some savings without having to pay tax, et cetera, maybe he paid a whopping, let's say 20,000 DOL in taxes. All right, so may, you know, 20%. Okay, well now let's say in five years, five years goes by and now instead of paying 20% taxes, he's now going to be at 40% taxes. 40%. Guess what, instead of getting 80,000 take home, now he's literally going to go all the way down to 60,000 take home pay. Assuming that his 40% tax bracket is now happening. So same amount of money, he's still profiting, the business is same. He actually, let's say, let's say he actually did raise his, the amount of money that he, his prices, he raised his prices by 4% every year. He actually stayed up with inflation. But let's just say his take home pay stayed the same. $100,000 take home pay. But within, with the cost of taxes going up now literally probably doubling his tax bracket, taking away certain tax credits, etc. And he's going down to $60,000. This is gonna happen, this is going to happen. And trust me, you want to be in the right side of inflation. That is you're charging, you're actually ahead of inflation, you're charging the correct pricing, you're raising your prices. And again you can't just like oh, I'm gonna raise prices. Woohoo, let's go. You've gotta increase value. We talk about almost every single live stream. You've gotta increase value in order for prices to be able to be elastic enough to actually raise them. All right, so that is inflation in a little nutshell and why you need to pay attention to it. And I promise you, I promise you inflation is going to pick up. I promise you inflation over the next few years is going to exceed 2%. There's people out there like oh no, it's not going to happen. Some people are expecting like 6%. I don't think it's going to go that high. Just my personal opinion, I think it's going to average because this is the thing that the government's saying, they're like hey, over the next 10 years we just want inflation to average around 2%. Well it's been almost deflationary, like almost negative. The past 12 months. So what they're trying to do is they're going to let the economy run hot, that's what they say, and pump a bunch of money in. Inflation's going to up, say, 3 or 4%, but over the course of five or 10 years, it's still around 2% because they're looking at now this whole average inflation number. Okay, so all 70 plus of you that are now watching this, please hit a like. Hit the like button. Join the Facebook group, join the texting group, and let's jump into some questions.

All right, yeah, like, everything is going to go up. Fertilizer, fuel, everything. Prices are going to go up more and more. The cost of transportation is like your trucks. Guess what? In the past six months, used vehicles have gone up on average by 15%. If you go to a Honda dealer right now, good luck trying to get a mower for, like, the next three months because they're so backed up. Guess what? Demand's going up. People are buying. There was also a shortage on supply because coronavirus shut down the factories. So when you either increase demand or you reduce supply, price goes up. Guess what we've done in the past 12 months? We've done both. We've given people a bunch of money, and therefore, now we have massive amounts of demand. Landscapers have money. They've been given PPP loans, Eidl loans. They mean stimulus checks. All of these things, all the money's there, demand's high, and now supply is lower because the factories have been shut down by the coronavirus. And yes, I do know that by saying the word coronavirus, I lose money on my monetization. But that's fine because that's what it is. All right, comments? I'm gonna pull these up.

Okay. Whether it be trailers, too. Like, my goodness, finding a trailer right now is a pain in the neck. Everyone's so backed up when it comes to our manufacturers. Let me go ahead and put this bad boy up. Pull up your questions. And here we go. Hey, Mike, I know you have a Mooresville, North Carolina, location. Isn't there another one? You're coming? Yeah, there's a couple that are in the works. What is the most professional way to ask for money from a customer? I honestly try to get their credit card information on file so you don't have to ask them for anything. Just charge them when you want to. If the Internet is lagging, you better have a chat with that gym owner next door. I know, Chuck. Tell me about it. No clauses. My conduct for gas prices increasing Is this something I should be worried about? No, Jack, I would not put clauses in my. I know some people have said like, hey, if it goes over $4 a gallon, we charge a premium or we charge some sort of fee.

Personally, I don't really like that. I would. Because then, then you got customers arguing over like, oh, well, my gas is like, oh, the gas price went down. Do I want my price down again? Like I want the fee? No, like, look, I'm going to raise my prices above inflation so over time I can stay ahead of the curve. And they don't have any sort of, you know, leeway on that. Does this change your mind on incurring fixed interest debt? It doesn't change my mind because I feel like, you know, this is a great point. Okay, so what, what Josh is saying here, I know who this is. Josh, bless your heart. So what he's saying here is, okay, if I have fixed interest at 4% interest rate now with inflation, if inflation goes to 4%, technically I'm getting free money. So this is why, this is why I took out Eidl loans when the government gave them to me. Because the interest rate that they're at is gonna, in my opinion, be lower than or equal to what inflation's gonna be next few years. So I'll be able to pay it off over the next few years and basically have borrowed the money for free. Okay, so this is definitely something to think about. Yes, if you can get fixed interest rate right now when they're really low, they're starting to swing back up. They're starting to swing back up right now because you can't go like negative, like you can't go down forever. So they're starting to come back a little bit right now. But yes, I have taken on more debt in the past 12 months than I ever thought I would. Mostly for like real estate, like trying to lock in refinancing and doing cash out refinances on real estate because like the interest rates are so low. So yeah, like if I can lock in a 2 1/2% interest rate on real estate and inflation is going to be at 4%, like I'm making money to borrow the money. So yes, that is absolutely a good point there. However, when you, whenever you borrow money, you're implementing risk and in my opinion, a lot of landscapers just do not know how to manage that risk very well. They go out and buy, they go, they take interest bearing loans and go buy assets that depreciate at like a higher rate than Inflation. Like if I have a 10 year lifespan on a truck that means that there's 10% coming off of it every year. Like I'm now buying, borrowing money, paying interest on money that's not going to buy an asset that's decreasing, increasing in value. So to answer your question directly J.D. josh, I would say yes to especially assets that are increasing in value. And if you have an asset in terms of a business that you can pump money into, great time to take fixed debt, fixed interest debt right now.

Thanks for the great helpful content. Mike, your story is so inspiring. You've been super helpful in motivating me better business owner. God bless you. Thank you Victor. Mike, thank you for all the information you provide. My biggest concern this year going into my second year, I always send all my inquiries, all the mowing prices. But with fuel going up in Illinois, how can I ask the customer we need to raise price in order to make a profit. If you go to the core section templates and downloads, there's a letter that we've used many, many, many, many times and literally have had less than 1% of people cancel because of a price raise. It's just really simple. You just assume the sale. Do ask them to call you don't say. If you have questions let us know. Like just say hey here, here's the new prices. We're starting on this date. Let's roll.

But yeah, that's in the course templates and download section. Just download the price increase letter. Mike, what should I be doing? What should I be doing? You're a smaller company just hitting 100k. We're getting a lot of calls but work tends to slow down around August. During the summer months we're really busy. And being an owner operator with one full time employee, do I hire another person to be able to do more of the work so I can focus on lining more work up or keep going with one? We have very minimum business debt. Okay Tori, go ahead. Like if you want to expand, you want to grow, you're doing 100,000 revenue by yourself. That's pretty good. I'd go get an employee if I was you. You have my blessing. Long care journeyman. By the way, join the franchise and you get free coaching calls. That is true. That is true.

Do you know the Facebook group sign up link or your page doesn't work? Try a different account. So I do screen out literally half of the people that try to get into the Facebook group. So if you don't know what I'm talking about right now, I'm gonna go ahead and throw this up for you. What? They're talking about the Facebook group. Ah, turkey sandwich. There you go. That's the Facebook group. Go ahead and join that. It's completely free. But keep in mind, I do have to screen like every day there's probably 20 to 30 people asking to get in. And I screen them quickly. Like I don't have the time to like look at everyone's pages and everything. But if someone doesn't hasn't been on Facebook very long or they don't have a lot of pictures or it looks slimy or like they're out of like some weird country, I'm just blocking them. I'm not blocking, I'm just declining them. So try from a different account or try to apply again to get into the group and, and maybe send me a DM just so I know that you're legit or whatever. Okay, let's keep going here. Hey, Mike. This is my first year. A legitimate license, insured and full time. I'm having a really hard time finding mowing customers. Landscaping is no problem. What do you recommend?

I would recommend making your. All your marketing really centered around recurring services and mowing and then allowing those landscaping jobs to come to you natively because of the brand awareness and because your mowing customers come to you first when they have a project. Because I want to focus on like the long, like a long term strategy is recurring services. Short term, I can always go out and sell more landscaping jobs very easily. Especially right now when there's so much money and people's home equity is so high and they have so much like free liquid cash. Yes. Paper patios and walls this year are going to do incredible. But I don't know what's going to happen in three or four years. What happens when we have another March 2020? What happens if we have a 2005, 2008 scenario when people don't have the money and people are afraid and they constrict for longer than a month like we had last year in that scenario, I'd much rather have that long term strategy having recurring revenue. I did door hangers, door to door knocking and just started Facebook ads.

Yeah. So same thing I would say in terms of going, you know, I just keep doing the door knocking, all that sort of thing. Just keep this in mind. Fill your schedule with landscaping, but always focus on your marketing with mowing for the long term. That's my opinion. That's how we built Augusta and that's how we kind of teach At Augusta lawn care. Yay. I'm trying to do, like, different times just to catch people. And I'm trying to do it more on the weekends, too, just because I know you guys are. A lot of you are working. So.

Good information. Thank you. I reached out to my fertilizer distributor to place an order, and each bag of fertilizer was $3 more times 40 bags per pallet times 20 pallets. Ouch. Yeah. So like right there, you got 120 times 20. So you're looking at $2,400 extra for your fertilizer this year. Guess what? You need to be increasing your prices by that at least that amount. Right? So absolutely. Fertilizer is going to go up, Fuel is going to go up, Cost of your trucks are going up, Taxes are going up. Basically. Basically, everything is going up. So your prices better be going up or else you're going to be left in the dust. I am smoking something.

Can the government just give me my 33,019? Can I just have my 2019 tax return money? It's been over a year. Uncle Sam. What is the most professional way to ask a customer for more money? If you underestimate a spring cleanup.

Take it in the mouth. Honestly, in my opinion, if it's spring cleanup, small job, it's not worthy of a work change order. Just take in your mouth. You learn from it. On your next one. Go get the next one. Don't spend so much time going over a spring cleanup. Like, just learn. Okay. I miss budgeted this. Okay. In the future. I know that when that happens, I see that in a property, it's going to take me longer than I thought. That weeding didn't take five minutes. It took me 25. I got this cool little podium here now. That's why I'm able to do this live here is I'm able to like, raise this up. It's super cool. It's like all like hydraulics. Super cool. Look at that. All right, so let's go ahead and go to the next question. Thank you. This is your favorite. Thank you, guys. About to buy my mowing equipment to start prospecting for clients in bit of a dilemma. How. How about to buy my mowing equipment to start prospect? Okay, you got this backwards, Richard. Let me see here. Actually, you're saying wifey is a property manager and she can get me in about four to six properties that can probably bring in some money right off the bat. Buy bigger equipment and start big or ease into it. Okay, definitely ease into it. And this scenario this is what I, I hope that I can reach younger guys before they do this. Because everyone goes out and buys a big truck, big trailer, bunch of mowing equipment, and then goes and finds mowing customers. They have it backwards. Go get the customers and then as you grow, build up their truck and your mower. And guess what? You might find out when you start marketing that you get certain mowing customers and the type and profile of properties. You don't need certain equipment. Like, why would you go buy all the equipment and then go look for customers? It's backwards. So that's kind of a big passion of why we're even trying to get in a Snapchat and Instagram and like TikTok next month. I hired someone just for those platforms. I'm trying off the young guys that think that they got to go buy the stuff and then go get customers. No, you need to get customers that then create revenue and profit and cash flow that will cover the cost of that equipment and you'll be able to make a better educated buying decision when it comes to that equipment. So if you estimate a $600 job and you think you did more than $600 worth, you just charge without telling them you're charging more. No, no, no, that's not what I meant. I meant you would eat it. Like, just charge them the $600. If you say, well, I should, I should have charged 750, okay, just let it go. Water under the bridge. As long as you only did what was on the estimate and there was no, like, change in scope of work, I would take it, eat it, learn from it, and on the next one, make sure you charge more. Do not, in my opinion, go after another $150 from that customer. Just take it, learn from it, and on the next one, charge 750. Unless the scope of work change. Now, if the scope of work change, then you should have done a work change order before the end of the that the customer knew that the price was going to go up because what they're asking of you had changed.

How do you feel at raising price? Yes, I like it. At least. This is the thing about raising every year. Then the client starts to be like, oh, you raised it last year, now you raised again. Are you going to keep raising it? So I usually try to raise more like 10% every couple years instead of raising like 2 or 3% every year. I know some people do it that way and it works great for them. I just happy you're raising prices. I don't care how you do it. Just do it. Like, yeah, that's all I would say. Whether it be there's several ways you can raise prices, right? Like, you can raise prices by increasing your minimum rate. Like, for example, on mowing, say, okay, instead of charging only 25 per cut, I'm gonna move that to 30. Okay. That's gonna raise your prices. You can raise your prices by, okay, instead of charging $50 per hour. Always been here before. Instead of charging $50 per hour, I'm charging 55. That's a 10% increase. You probably don't have to do that every year, so you might want to do it every couple years. Dump fees, estimate fees, markup on materials. All of those things are areas you can raise prices. We got almost 100 people watching tonight. Thanks, guys. What's your minimum MO price? It ranges across the system. I think it's 32 at most of our locations, to be honest. But some of our markets are a lot cheaper, like El Paso, Louisiana. There's areas where they are cheaper. Danny. Okay, so, Danny, you're live. So, Danny, Danny's our new film guy. He's been working for about a month and a half now, I think, and he made the video a couple days ago, Entrepreneurs Journey. If you guys have watched that and show some love in the comments to him, he's worked very hard on that, and I really appreciate his hard work. How do you feel about listening to Fortunate Son by CCNR on replay? By mowing, unfortunately, I don't know what that is. I am very bad at anything. Movies, pop culture, or music, to be perfectly honest.

Jesus. What are those values that never lose value? What are those values? I think you mean like, what are those assets? Like, I'm talking like, real estate. Things that are going to go up in value or provide value to the business. So, for example, buying a truck, you say, well, it's a depreciating asset. I'm not going to get any debt on it. Not necessarily because you get debt on it, but it's a good purchase, and it's going to last you five years, and you're going to make $200,000 because of your $15,000 purchase. Probably a good buying decision, right? So most of my marketing is towards mowing. I just can't find people interested in it. Ben. Okay, so again, you can't say it's because of your service. Look at your marketing. Should be on a different platform. Should you be doing different? Is your branding off? Do you have a website? Because there's a good chance they're Getting your door hanger and then going and trying to find you online. Those are all the different layers. Like, so, like sometimes people like, oh, like door knocking doesn't work. It's like, well, yeah, but when they got your door hanger and they talked to you and then they went online, did they see a bunch of bad reviews? Did they see nothing at all? Did you show up in, you know, dirty uniform or did you show up with a polo? Like, these are all so many different factors. So, yeah, just keep that in mind too. It's hard to kind of over, you know, Ben, unfortunately, I don't know who you are, your brand, your website, any of that sort of your pricing and things like that, what you look like when you go to unrocking, all that stuff. So there's a lot of facets I can't see, obviously. But hopefully that kind of triggered something. What is a good debt to income ratio to stay under, to leverage growth without getting overextended? I'm thinking about using 10% income to finance mowers for a second crew. So this is what I would do. Because really what it has to do here is someone asked me this other day, like, how much money should I be having in the bank in terms of just like reserves? It really comes down to your risk tolerance, right? Like, so, for example, when it comes to reserves, I said, well, look, some people are going to want three, three months worth of revenue in the bank. Some people are only going to want one more, one month's worth of payroll. And some people are going to want one month's worth of cash flow. Like so there's so many different ranges. It depends on your risk tolerance. Right. And so when it comes to this, how much debt would you be having again? I wouldn't be looking at percentage like that as much as I would be looking at how much did your first crew profit. So, for example, I love having the whiteboard. If I can get in the habit of doing Q and A in front of this whiteboard and actually start answering questions, there's going to be so much better information come out on these Q and A's. Let me tell you what so goodness. Clumsy. So if we have a business, if your crew one, David, if your crew one.

Pumps out $40,000. I know, I'm just making up a number like, come on, give me a break here. Let's just say it's a solo route. They do $40,000 in profit over the course of a year. Okay. That's their profit. Now, let's say, okay, now let's look at Crew 2, which is a potential based upon whether or not you take out the loan. Okay? So now the question is, what is the cost of capital? Cost of capital is what's the interest going to be, etc. So let's say, for example, well, if we just look at payments, which includes principal. So cost of capital traditionally only refers to interest. All right? So the cost of getting that money. Can you guys see that? Oh, you. Good, good, good, good. Cost of capital typically only talks about interest. But if you want to be a little more conservative, because the interest on, let's say a whole crew, a truck, set up everything. Let's say, let's just say 40,000. Let's say $30,000 for your new truck and the equipment that you need. And so let's say that the interest on that is.

200 bucks a month. So then the interest over the course of a year would be $2,400. So then if you look at, okay, cost of capital is only $2,400. If I can make $40,000 on profit per year because of that, like, let's go. Like, this is a great deal now. But if you look at it more from a more conservative standpoint, your payments per month might be, let's just say, $1,000 per month to get this equipment. So now we're looking at $12,000 in payments, most of that going towards principal. So in this case, 9,600. Oh, you guys can't see this? Don't worry. All is not lost. $9,600 in this case would be going towards principal pay down. Like the actual cost of the loan, the actual $40,000 that we had to $30,000 in debt. I hope this didn't make too much complications for you guys. Sorry. But basically, if we had $30,000 in debt, we have $200 per month, $200 per month in interest. That's $2,400 per year in interest. That is the cost of capital. If you want to be really liberal in terms of getting debt, that's what people look at, okay, cost of capital, $2,400. Sometimes people will take depreciation off this too, by the way, but $2,400 versus I can profit $40,000. Let's go. Now a little more conservative is, okay, I got $12,000 per year in payments, and 96 of that's going to principal, 2400 going to interest. But at the end of the day, I'm doing $12,000 in payments. But again, I can make $40,000 in profit. So if I take 40,000 minus 12, I still can do $28,000 in profit because I borrowed this money and that's on an annual basis. Then what you can do even more conservatives. Okay, that $30,000 debt, maybe I amortrized over five years. So I'm going to use lose $6,000 in amortization or depreciation, I should say every single year. Then you could say, okay, well, I'm going to add. I know this is a little bit over your head, but listen to a few times. If it is, okay, because this is really important, then you really should be adding $6,000 per year in depreciation to those assets. And now this becomes 18, 18, and this becomes 22. Okay? So at the end of the day, you start asking yourself, okay, so am I willing to make $22,000 per year, have a $1,000 payment and, you know, pay this off of maybe three or four years? But again, you're not going to make $40,000 profit like you did in your crew number one, because now you have this debt burden. Okay, so these are things to think about. I know. It was like a little bit deeper. Watch it a few times. It will make sense. Well, that answered my question after I had already responded. Again, thanks. Thanks for the help, Mike. You really helped me a lot in shaping a legitimate business. Have you had a hard time finding land or warehouses for your franchises? Keep looking. Chuck over in North Carolina is killing it, crushing it. He's doing amazing. He was the one that yesterday in the beginning of my video, I gave a shout out to. He's just doing a great job. He just found some space. Our New York location, corporately owned location, just found new space. You just got to keep looking and finding and trying to find a spot. We have, you know, we create. We create for our franchisees like a. A one page kind of lease that they can give to homeowners and landowners and potential retail place or storage areas. That really helps. So if you do that, it gives you some legitimacy. You can go to places and ask for space, things like that.

Okay, wow. Too many questions. Okay, I have to go quickly here, guys. Sorry. Maybe they mean a 48, a 22, a string trimmer, and a backpack to start with. That's a good starter set. You can run with or without a trailer. What's your opinion on every door? Direct mail. Pros and cons, Damian. Just search eddm. Mike Andes and I've done a few videos on that in the past. Real estate can also go down. We need an options market on real estate. This is true. However if your cash flow again this is the beautiful thing about real estate in my opinion. Yes, it's slower growing. Yes it can go down in value. This is the thing. If inflation's going up, traditionally rent is going up and if rent is going up then I can cash flow and I don't have to sell. Right. So you know you're only losing money on a stock or an asset of any sort like real estate if you sell when it's low. So if the the value of that real estate is going down but rents are going up and I or even if staying they're staying somewhat stable or I didn't over leverage myself and I got good interest rates and I'm able to at least cover my mortgage and get through that time, then we're good. Right? But you're exactly right. There is absolutely real estate can get down. Thank you for your for you're the best. You answer my question Gabriel. Do your employees have Pesticare Apple caters license in order to use Roundup on your customer's property? Gabriel, this is something that we recently changed. We're going all organic to be able to get around this. Again simplification making things more and more simple and I will be making a video hopefully next few weeks on some of the products we're using as well as why we made the change. But again just trying to get very, very simplified services and make things more scalable because at the local office I'm there less than an hour a week and there's a lot of employees and they're hiring new people and all the rest of it and I want as simple as possible. I'm not going to get I don't want them all having to have applicators licenses. Hey, just got here. Thank you for the motivation and tough love Mike. Oh Dean. Yeah, I am keeping the same goals I came into the year with 2021 is gonna be awesome. I can't get engagement on my next door local deals to save my life. How have they worked for you? We are sponsored as well. Would you consider making a video on local deals like you did for Facebook? Yeah. So sponsorships in my opinion are not good product. Local deals are a good product. You got to have a good creative like your picture needs to look good. You can't just have a random like their stock photos. You need to make a good picture and you need to make sure that you have a catchy text too. That's what we've seen, like literally. Yeah. Anyways, I got to keep moving along. I always show up in good clothing, usually a button up or professional collared pullover. I do have a website but very little online presence for reviews as I didn't have an online presence before. Yeah, Ben, So it's like there's never one thing. It's rarely one thing that will fix your marketing. It's like a multi level approach. Right. So what do they see? Can they see those reviews when they go and search you up online? Do you have video? Do you have pictures? Is your pricing way off? Is it way too low? Like all sorts of different things. There's so many varied things. Right. So should I have a website set up before door knocking to increase? Yes. In my opinion. Yes. Didn't want to take on that expense before necessary. I want to be Apple, like with branding and pricing. Okay. So Richard, this is the reason. This is the exact reason why with Lawn care web design we do not have the upfront fee. Because I want someone to start and for it to prove that it's worth having. And in my opinion, if you're gonna go door knocking, you need to have a good online presence. So if you leave a door hanger someone, the first thing they're going to do if they want a good quality service is they're going to look you up online.

What did I miss? I just see a bunch of numbers. Eddie, you're gonna have to watch it. The reason I like doing this live stream, by the way, some people don't like it and I get that, I totally understand their longer form, etc. But I try to stack the content at the beginning. So if you just want that, you can leave afterwards. And the better thing is I don't have to spend time uploading. As soon as this stream is done, you guys can watch it on YouTube. That's awesome. I don't have to edit, I don't have to move cards. I don't do anything. It's just live. I love it. All right. Love the whiteboard. Awesome. Good evening. Did you ever think, do you ever have you ever thought about doing an HOA package, giving a discount for 100 plus accounts? We haven't really, to be perfectly honest, we don't want hoas. We haven't had good experiences with them. Just in terms of our business model. Right. When you're going after like residential is different than HOAs. HOAs are commercial. And it's worse because now you have like 100 different bosses. They all think they can control you tell you what to do. HOAs are, are can be good if you're in certain markets. But in our market, for example, we have never had great luck with hoas. We'd rather just stick to our core competency, which is residential, you know, 10,000 square feet less proper turf, et cetera. In Virginia, it doesn't matter if you're. If it's organic, you must have applicator's license to spray in a commercial setting. Yeah, Darrell. So in that case, then you got to go. Got to get your applicator's license. In our market, you know, if we're doing chemicals and things, we have to. Otherwise, we do all organic stuff. All right, thank you so much, everyone. I really appreciate you guys. It's Saturday evening. I appreciate everyone that's joined Lawn care Web design the past week. Landscapebusinesscourse.com we hired Zach, who just started with us on Thursday. He's gonna be working on Facebook and Instagram stuff, so expect that to get a lot better. We have now animated. We're starting to work on. And we finished the first day of animating Max, our mascot. He's gonna be doing a lot of really cool stuff on Instagram. Facebook, though. Look forward to that next couple few weeks. And then April, we're gonna have someone on TikTok and and on Snapchat. I'm really trying to capture that younger audience trying to change the perception of what it means to get into business in this industry again. Like, literally the question tonight, focus on getting customers and then go buy equipment. Don't get buy equipment, because you saw on Instagram and think that that's what you need to go get customers. If I could just change that one thing, it'd be worth me hiring these two extra people. And obviously, Danny, he's live tonight, killing it as well. So I appreciate that's all of you that supported me doing this is why we're able to hire these people, produce more content. And my goal and ambition is to change a lot of the perceptions that we talk about in terms of value and price so that people raise their prices according to inflation, and we're not all out there price gouging each other. And in a massive race to the bottom at $30 per cut. Okay, so thank you so much, everyone. Have a fantastic evening. I'll try to do a couple of lives each weekend for the time being as long as I can. Thank you so much. We'll see you next time. It.