What I Wish I Knew Starting My Lawn Care Business.

Hey everyone, it's Mike Andes and you're listening to the landscape business course. Today we're going to be doing more Q and A. And again, if you would like to submit your questions, you can just text the word landscaping to 360-227-6362. And when I ask for questions, you can submit them on the next show. Make sure you sign up for Landscape Summit. It's coming up in less than or about a month now. Landscape businesscourse.com conference. Read about all the details. You can hear what we're going to be talking about. I've added three, four, I think four more topics in addition to what we have listed on the website because now we're virtual and I'm going to have more time. So really looking forward, we're going to do live Q and A throughout the days. It's going to be a lot of fun. So let's go ahead and jump into the q and a. First question comes from. See here, one second. I don't know who it is. 678 area code. What are your percents you try to maintain with revenue? Example, 33% for employees, 15% profit margin, overhead, owners pay, etc. Okay, good question. A lot of this depends on your size of business in terms of how much revenue you're doing. In general, I want my, the biggest number I track is the, is the labor, the amount of labor revenue, what percentage of that goes the employees. But in terms of your gross revenue, I don't want more than 40% of the labor of the revenue going to pay the employees in the field. Okay. So again, we're taking off overhead in terms like office people, estimator, things like that. But you don't want over 40. Like that's high, high, high. I'd want it more around 30%. So what you said there, 33% would be pretty accurate. In terms of profit margin, 15% or more is really, really good. I shoot for 20 as the business matures. But 15% is a great place to start again. Some people are like, I do 30% or ID 40%. You're probably smaller. You, you're not gonna run a 40% profit margin business and run it at $2 million in revenue. Like if you are, great, kudos to you. But it's unlikely. So at a million plus revenue, 15% margin or more is good. And I'm talking like after the owner's been paid. And then in terms of owner's pay, that's really up to you. Right. Traditionally you're going to want to minimize that. If you're an S corporation, for example, in terms of what your owner's pay is. So yeah, I would say 15% margin or more after the owner has been paid. What is the average base pay for employee? How much revenue should one person do in a day? That's all gonna tie back to the percentage of labor revenue that goes to the employees. Right. So same thing with your next question about how much does a two man crew do in a day? It comes down to that percentage. Right. So if I'm gonna give 33% is my target for how much of my revenue goes to the employees and, and they do $1,000 in a day. Well, I want $333 going to their wages or less. Right. For example, on P4P, you standardize that you give them a percentage of the revenue. It doesn't change. Next question. Hey Mike, my name is Steve from Austin, Texas. My question is I'm going to be separating my business money from my personal so I'll have two different accounts so I can do a clear P and L so I know exactly what the business is making. I will also be door dashing food at night and weekends so I can still pay my bills and leave as much money in grow it. Since I'll be delivering in my truck. How would you suggest I track my fuel so I can keep a good P and L as I'll be using fuel for both doordash and with the lawn care business. Thanks for all you do for the community, Steve. West West Pro Lawns. Yeah, so there's apps for this in terms of tracking your miles, tracking your fuel expenses, things like that. I would in this case, when you're doing doordash and your lawn care business in the same vehicle, I would do it based on a mileage basis so it's easier to do based upon miles. And there's a certain amount of money that the IRS will allow you to write off in terms of your taxes based upon the miles. And then that's gonna be easier in this scenario versus if you know, you use your vehicle only for your business, you can write off everything, fuel and maintenance, all the rest of it. Whereas in this scenario, honestly doing it by the mile is probably gonna be the easiest. I just track your miles. There's plenty of, plenty of apps that do that honestly. So just check those out on your phone. Next question. How do you figure a Christmas bonus for your core crew? Is it a percentage of their salary or a set dollar amount? Thanks Mike. Merry Christmas. Okay. So we do not do a Christmas bonus necessarily. We do end of the year bonuses and that bonus is a quarterly bonus based upon profit. So last week crew out in the field all got a bonus and it's based upon quarterly profits. And it's because we do profit sharing. So. So I'm not a huge fan of like, oh, it's Christmas, everyone gets a bonus. Like they didn't work for it, they didn't earn it. And I really feel that people will feel entitled to a Christmas bonus if you keep giving it. What happens when one year you can't afford it? Whereas if they're being paid based upon profit, you can give them more if they perform more and you can give them more if they perform more. So I like to be where they earn things and some people make that, twist that and make it sound weird. But honestly, I feel like people want to work hard and they want to feel like they are getting compensated for their work. Not just cause it's a random day of the random day that was circle on a calendar like the 25th of December. Right. So I would prefer profit sharing. It's something they can actually move. Like if they want to make more money, they can move that higher, become more profitable. Same thing with P4P but in terms of bonuses, we do it. Quarterly profit sharing is what we do. Next question. How about how are some things you. What are some things you'd recommend a first year business owner does on the back end to set them up up for success next spring? I would recommend a website and I would recommend simplification of services from day one so that you don't have to one day tear apart your business because you've added every service under the sun and now you're trying to get employees and they're breaking everything because there's so much complexity in the business. I would just start off with simple services. And whether that when I say simple services, I don't mean just like mowing, like basic services, I mean like figure out what you're going to do and stick to it. So even if you're like I want to do hardscaping and landscaping, figure figure out what paver patio you're gonna install, figure out what type of walls you're going to install and stick to those. Don't have like everything in the book. That's when you add complexity. So when I say simple services, I mean like simplify your services regardless of what industry or segment of the landscaping world you're in. Next question. Commercial versus residential difference in profits and which type of business is easier to manage? I think easier to manage, honestly. Cause commercial, from one regard, because you're dealing with less customers in terms of profits, you're going to have a thinner profit margin on commercial. You're going to be able to grow much faster using commercial because the contracts are bigger, you have less people to deal with. Like I said, under commercial you have property managers and maybe for $100,000 contract you have one person you're talking to versus with residential, you have 30 or 40 people for that same hundred thousand. So a lot more legwork and you're going to have a little more overhead with a residential model because you're going to need admin. You're going to be doing estimates more frequently. You're also going to be having a lot more office, administrative because people are calling and there's more customer service, et cetera. There's the volume of people.

Next question. Walla Walla, Washington. But for. Whoa. Lots of questions. Okay. Hey, Mike, how are you doing? I'm thinking I'm going to book a meeting with you so we can talk more. I have questions about P4P and lots of other stuff, but for now I want to say thank you. Okay. Okay. You're welcome. Cool. Yeah. And we're talking about PVP at conference too. Two part question, next question. Two part question. What would you. What helped you when you originally stepped out of the day to day at Augusta to not succumb to temptations? Oh, this is a good question. To step in when there were challenges and step on managers toes. Okay, so that's the first question. What helped you when you originally stepped out of the day to day at Augusta to not succumb to temptations, to step in where there were challenges and step on managers toes. So I did that and I still probably occasionally do, but I'm better now at literally what you got to do is cut yourself from like I could talk about some other stuff, but let me actually go to the root of the problem. The root of the problem is that you know everything going on in the business. All right? So if you know what's going on in the business and then there's a problem. Yeah. You're going to jump in. For me now, I don't have a clue what's going on in the schedule. I don't have a clue what's going on in terms of customer issues. And so I can't jump in. I have no context. And so I would make sure you're not getting the emails from the business. I would make sure that you are not involved in any project management. And therefore when something goes wrong, you physically, you can't jump in because you have no idea what's going on. So that would be the best thing. Cause like when you are still at the day to day, like you're still there, but not in day to day operations, you hear enough to think you can jump in and help. And sometimes you really do have a faster, better way of doing things. But as you get less and less involved, you're gonna start assuming things and making them mad. And so I did that several times, jumping in, trying to help based on what information I did have. And then you just gotta realize eventually, like, look, I gotta step out of day to day operations and then let them do their thing. And even when I think I have a good idea, I usually won't say it now for a while because there's a really good chance I don't know what's going on and I don't have any context. So that's the number one thing I would say, like cut yourself from getting more information, not allowing voicemail to come to you, email to come to you, customer issues don't come to you. And then if something comes up and you hear about it, you can't even really react because you don't have the information that's necessary. So that's what I would say. That's like, yeah, that's. Yeah. Number two, you are still involved on a few meetings monthly. So this is the second question. You are still involved on a few meetings monthly, Numbers, purchasing equipment, et cetera. Do you have plans to take another step away and delegate those things to. And if so, how are you preparing for that?

So you're talking about the local shop. Honestly.

I feel like I can do these things with such minimum involvement that I can continue this for quite some time. In terms of like being involved in meetings. Like, yes, I could easily not be there right now. Like I don't have to be at team meetings. I'm literally just there say hi to everyone. Fist. Well, you don't do much fist punts in Covid. But like, you know, just there and supportive and just being their presence. Right. So I don't have to be there for meetings monthly, numbers.

I don't have to be there for that purchasing equipment. They basically, I leave those calls up to them. So like they purchased a truck last weekend. That was up to Lee. He's the office manager now, so he kind of makes the decisions. He purchased a whole bunch of ramp racks last Week, like seven of them. That's all up to him. So I'm not really involved. I'm only there when I want to be and honestly I don't have to. The first, the first location that's the one that's closest to me. So I kind of go there to be connected like the Mount Vernon location. I'm so disconnected. Like in terms of they run like a franchisee and probably less even support from me directly than any of the franchisees because they use the systems and they don't need my help. They do a really, really good job. So in terms of delegating, I have really delegated a lot of this stuff. The numbers are already crunched by someone else all the time. The meetings are done by other people. Liz and Lee, they take those over in terms of purchasing equipment, Lee's now taking that over. So I don't really need to be there. Honestly, I like to feel like I'm somewhat involved on the day to day operational level. Like I like to feel like I can get in a truck and know what's going on. So I like to hang out occasionally. All right. But no, I don't have to be there. They do a great job. Next question. Hey Mike, is it wise to hire a reputable marketing agency? Do your Google Ads work? We're looking to reach a specific client niche, mainly white collar professionals and entrepreneurs who have so far been the demographic with the highest quality clients. I'm not very familiar with Google Ads and I believe this firm could do a much better job than I could do. What's your advice? Okay, big word of caution for all the people that are getting calls from Google Ads people and saying they're from Google, they're never from Google. Google does not place ads for people. These are agencies and a lot of times they do really lousy work. Alright, so I would only use an ad agency if I had heard about them from a friend and they use them. And you vetted them somehow and ask a real marketing professional if this company is good. Cause I have seen people use them and it's literally the most standard generic vanilla ads that you could literally watch a YouTube video on and copy and do better on in terms of keywords and all the rest of it. So just be careful. That's all I would say. But it sounds like you know them and you think they're really good and you have vetted that, then it might be worth it. But honestly, Google Ads especially is not rocket science. Educate yourself, you know, so. But again, if it, if it's if you're a bigger business, you know, not have the time for even that, it might be worth spending a couple hundred bucks a month having someone else do it. But be very careful about especially Google Ads and people calling and saying they're from Google like that's a bunch of garbage. They're an agency. I know I need a lawn. Next question. I know I need a lawn care work permit in my county. Do I need one for every county and do I have to have all permit numbers or how can I just get a state lawn care permit? Okay, you're gonna have to talk to your local department of licensing. Just dollar.

And you're going to be able to get a lot more information. Just ask them. They will tell you in general, usually you need a business license and then whichever city you're doing business in, if you collect sales tax in those individual cities, you then have to report how much money you made in each of those cities. So that way they can collect the correct amount of B and O, state income tax, whatever. All right. And sales tax especially. So talk to your department of licensing. They will tell you. Next question. I'm trying to knock out all of these in this one video. Hi Mike. I'm not okay. Hi Mike. As soon as small business owners we are faced with so many moving parts and especially people who are very technician based with little business skill. Being that we have to have a balance of three personalities. The technician, the manager and the entrepreneur. My question is, since I'm a solo guy that is mainly technician based, what steps do I take to work on my business rather than in my business to build it so I can start getting employees and creating systems so it's not such a personality based business. Thanks again. Okay, cool. Great. Start thinking about this from day one again, simplify your services so that way you don't need to go hire very skilled technicians. Right now you're a technician. You just said that. Make sure that that rule is simplified and you can make it easy. Like don't buy an F550, an F450, a bunch of diesels and a bunch of flatbeds and then a bunch of solo or trailerless setups with ramp racks and a bunch of enclosed trailers. Like the more complexity you add, the harder it's gonna be to get a technician to replace your spot. And in terms of finding someone and be able to shift them out quickly and change them quickly again back to McDonald's. The reason they are so successful is they can take a 15 year old and turn them into a profitable employee literally within a matter of a couple hours. Cause they simplified things down to like, okay, flip the fries, flip the burger, boom, boom, boom. This is how you do it. Go. Very, very simple. So I would do my biggest, you know, in terms of creating systems and all that. Simplify what you're doing. And then it's easier to create systems. It's harder to create systems when you have a bunch of complexity, bunch of different types of equipment, bunch of different types of services. That's what would be my biggest thing is simplify your services. And again, I don't mean necessarily. You need to do only mowing or only maintenance. If you're gonna do hardscaping. Great. Just focus on those specific types of patios, the specific types of walls. What services do you specialize in? That's what I mean by simplify. What percentage? Next question. What percentage of profit should the project manager of a landscape project. Of a landscape project get compared to laborers? Okay, so we do not do a percentage of profit on. So we're. What this person is asking is on. On a project. In terms of a project manager, what percentage of profit should they get compared to laborers? Okay, so it's very difficult to look at one job and immediately down to the penny what your profitability is, because there's so many moving variables. What if you have to go back to the job in two months because of a warranty issue on a plant or because someone messed something up? So it's a little bit difficult to do that. We do not pay people based upon profits on jobs. We pay on things that are less subjective. Because if someone breaks down on a specific job, technically the profitability of that job gets shot. Right. But we do it based upon budgeted hours, and we give the project manager a bonus based upon the budgeted hours. Okay, so that's all in P4P. That's how we do it. And we talk about the conference, we talk about Atlantic business course. Next question. Are Facebook lead generation ads an effective form of marketing? Yes, they are. Do not be anything under $50 per lead form got from that ad platform is usually pretty good. And sometimes they're very, very poor leads, depending on the market. I've seen some places where the lead generation ads of Facebook is pretty poor. Like one out of three, you show up and they don't even know who you are. So just keep that in mind. But yes, it is a good platform. It's getting more expensive, but it is pretty good.

This is Jose from Massachusetts. What's your thoughts on lawnbot biz. I do not know what lawnbot biz is. I'm going to search it right now. Lonbot biz, I guess I'm guessing this is like where you do mapping and it's based on square footage and things like that. Because I have used this. Okay, yeah, instant lawn quote. Okay. So I'm not a fan of these. Just to be perfectly honest. Not a fan. If I could actually find one that was accurate, I would like it. But when you're basing things upon a lot square footage, super inaccurate. I can have an acre lawn or an acre property acre lot, and literally have less than a thousand square feet of lawn. And yeah, I'm gonna give them this massive price based upon their lot square footage or vice versa. Right. I could have half an acre of lawn, and it'd be half an acre lot and literally the entire thing be lawn with a small tiny house on it. And I'm gonna pay the same amount or charge them the same amount as someone that's gonna take three times as long as they have a gate. They have a bunch of flower beds that you got edging around. They got a backyard, a gate, a fence, all the rest of it. So not a fan of doing it by lot square footage. Especially on P4P. Your guys will kill you. Because the same lot square footage can take five times as long. So it's very inaccurate in terms of budgeted hours. Next thing is, I would love if they could somehow figure out accurately the turf square footage. Only then it would be a little more appealing. But I have not seen a software that can yet accurately predict lawn square footage and not just lot square footage. And then on top of all of that, you have the factor of the lawn being a foot tall, and yet the person's accepted the estimate at $40 per mow. You show up and now you're having to tell them, oh, actually the first mow is gonna be $300. Cause it's like two feet overgrown. So I haven't seen huge success with this. It definitely reduces the friction of the sale, which I love. But I have just not seen this work. I have tested this, this out. I'm not just breathing through my nose here. Hot air like I. We have tested this out. And the amount of admin work of just following up people that have overgrown lawns or inaccurate estimates based upon square footage of the lot is way too much in my opinion. Next question. Talk about the MBA course a little bit. Oh, my. Yeah, so I took an mba. Oh, I see you're Saying my MBA course. Got it. Okay. So yeah, I went Isaac my MBA at college, I created an online course. I'm calling it the MBA for Entrepreneurs. It is not a master's. You do not get a degree from getting this course. I'm basically trying to encapsulate everything I learned in my MBA and taking just what is relevant to small businesses and putting it into a course. Link is in the description. I'm literally only like 30%, not even 30%, like 20% of the way recorded. It's going to take me several months to finish it. But right now there's a. Because I'm only. I'm adding to it every few weeks. There is a coupon code. Just use the word coupon code presale and you get 40% off until it is completed. Okay, so that's what the MBA course is. It's basically an encapsulation of everything I learned just for small businesses. Because 90% of what I learned was for corporate, for Fortune 500 stock market. You know, for you, you're not going to really worry too much about discounted cash flow against your stock price. Like it's not gonna be a big issue in your small business. So I try to consolidate what you really need to know for small businesses. Give some of my opinions on things like entity structure, tax advantage, tax savings, where you can save money, things like that. Next question. Is there any way you could give help us with giving us systems in our business without becoming a franchise? Of course I understand we have to pay money. I try to give as much as I possibly can away for free here. Right. Like so all this Q and A and stuff. Like I try to give as much as I possibly can. The franchise is basically a way for me to be able to invest in a specific business model. Right. And so a lot of people say, well, you should just open up command center to everybody and take everyone's calls. It wouldn't work. We'd have to charge 30 to 40% more and it wouldn't become like cost savings. The reason we have to charge more is because everyone's using different softwares, everyone's using different systems. The only reason we can run command center so lean is because all the franchisees use the same systems and use the same way of pricing and use the same way of doing estimates and have the same automations and we have the same way that we do the notes in people's accounts so we can do shorthand. Like that's what makes it work. Okay. And everything we talk about on the podcast I give away for free. Like everything here. Like some people, you know, they might join Augustine think it's like brand new material. It's not. It's like what we talk about on the podcast just being more done for you. Right? So the marketing is done for you. Instead of just talking theoretically, the website, we manage it for you. We're constantly changing it, improving, adding videos, things like that. So everything we talk about on the podcast is basically a man manifested in the franchise and then just we take as much as we possibly can off your plate and do it for you. So that's basically it. I try to give as much as possible. P4P is huge for us and I give it away to everyone here and I give it on the course and we're not gonna talk about conference. And so I try to do as much as I possibly can, but there's just some things that I will not be able to because like for example, P4P version 3, the software building for the franchisees, I'm not giving that away to the public. It's. It's our secret sauce. It's what I got to give to them. But I try to give the elements of that software, the version one, to all of you publicly. On landscape business course. Next question. Dealing with bad clients who won't pay. Keep changing work orders, but don't understand the change in price is our issue right now. All right, so you've got to make it very clear in your estimate that any changes to the estimate will require a work change order that is approved by the customer and it will result in a change in price. Make sure it's very clear on the estimate. And then if someone tries to change something in the job, you need to be very clear, okay, we gotta actually stop submit a work change order and you need to approve it. Instead of just like, okay, yeah, we'll add that in the end of the job or just rolling with it and then they think it's for free or whatever. Like you've gotta say, okay, look, that's different than what you want to add another plant, great, we gotta do a work change order. That's gotta be a separate line item. You need to click accept or email us back with confirmation that not just verbal, it has to be written either through our software or through email that they want the job and they accept the extra price. You've got to be very, very clear. And then when they get their bill, it says, hey, here's the estimate. You originally accepted work change order here on this date. Work Change order here on this date. Here's the price change on each of those and here's your total. Gotta have it in writing. Last two questions. Next one. How do you quote mowing prices over the phone? We are pretty rural and I feel like it's harder to be accurate without the abundance of cookie cutter lawns. Lots of hills here too. To answer this question, it looks like the next one's different. Yeah. So this is the reason why we still do drive by estimates. We just drive by the property. You can knock out like 30 of these in a day. You get more accurate in terms of P4P in terms of budget hours. And you can upsell people. So the extra cost of having to drive by, you can upsell them to a cleanup or to.

Trimming their hedge that you can see is overgrown, as well as the fact that then on those services you can charge an E fee, an estimate fee, and that covers the cost of sending an estimator out. So, man, I got torn to shreds on a video I made a few weeks about E fees. People saying I was trying to like scam people and all the rest of it and saying that I have free estimates, but then charging the back end. Look to the customer, they're paying the same amount, $400. You could say, okay, that's either X amount, you know, 380 of that is labor, and then $20, that is an estimate fee. Or you could say it's $400 of labor to the customer. They're paying the same price. Okay. It's basically, are you allocating money towards labor? Are you allocating money towards overhead, which is the E fee? So but to the customer, it doesn't change. So you will go back and watch that video. But yeah, anyways, I got torn to shreds. People saying I was down, down deep inside your heart, you know you're wrong. Blah, blah, blah. Whatever. Next question. Also, please do a video on paid advertising versus free. We could use help selling tree work in the off season. Would help for in season two. Okay, yeah, one day I'll make a video about, you know, advertising or I'll make a video about video advertising and kind of some of my things about that I share a little about in the course. We're gonna talk a little bit at conference and yeah, it's huge. I think video is awesome. Face to camera. There's my short. This works really well on a Facebook ad. When you're scrolling someone, you know, seeing an ad that is a local business and it's your face that will usually get them to stop. That works pretty well. Next question. Again, assuming that you're pretty personable and like excited, do not be like, hey, it's Mike over here at Augusta. Give us a call if you want us to do your lawn care. Have a good day. Bye. Like, that's not going to sell nothing. All right? So you gotta be like, hey, it's Mike over to Augusta Lawn Care. Like, share a little energy. My goodness. All right, last question. Hey, Mike, Harry here from St. Louis, Missouri. I am looking to start my lawn care business, but I am only 16 and still go to school full time. Do you think I should get my LLC and then I start in 20, 21? Okay, so you haven't started yet. You're 16 years old. Do not put only before 16, okay? When you start judging your age, that's when other people start judging you your age. Just be professional. They'll treat you differently. Okay? I had to go to school and to college at 13 and 14. I never addressed it. People don't address it if you make it a big deal when it comes to age. I'm only saying this for the few people who are young. Young, like 13, 14, 15, 16, 17. And you have that like, oh, I need to tell people my age. Don't just be really professional and people will treat you like an adult. Okay. Yeah. Everyone thinks like, I must have had all sorts of crazy experiences in college because I was 13, 14, et cetera. Like, rarely, very rarely did it happen. It's because I just didn't think about it and I didn't address it. And kudos to my parents for making it around the home that way. And then when I went to school, I just didn't make it a big deal. So like, I just acted like a 28 year old and people treated me like a 28 year old. So don't worry about your age. That's my first thing in terms of still going to full time school. Do you think I should get my LLC when I start? Yeah, I always recommend getting your llc. It's really cheap to get set up. It gives you an element of liability protection. At 16, you don't have personal assets, probably that someone could go after if you got into a lawsuit or the business went bankrupt or whatever. But I would still start now. LC Just give me a good habit when you start out to do that. If you're going to make less than $12,000 on your tax return, you're going to get a basic deduction. If you do your own tax return. I'm assuming, though, Harry, you probably are going to go underneath your parents. So this is something you're actually going to talk to their CPA about in terms of how you're going to structure your business. If you are doing your own business and you're sorry, your own running your own taxes, you're going to file separately from your parents, then you're going to get a standard deduction of $12,000. If you make under that, you're not going to pay any taxes. So. But from a liability stand, just getting the habit, doing LLCs, that'd be my two cents. Costs a little bit more than a sole proprietorship, but it just gives you an extra little bit layer of protection in terms of liability. So hope that helps someone. I hope that you all come to Landscape Summit. That's my only wish, my dream. You can make all my Christmas dreams come true if you just show up on live Zoom at the conference can be a lot of fun and I really, really look forward to it. Sign up today. Go to landscapebusinesscourse.com conference.