Why Home Service Companies FAIL to Scale (And How to Fix It)

Hey, everyone, it's Mike Andes. And today I'm talking to two other members of Copilot CRM that are doing around $1.2 million in annual revenue.

I feel like it's growing too fast.

And they're moving from that manager role into that of an architect. They have more time on their hands. They're trying to figure out systems, procedures. There's a lot of good information here. Someone else's 90% or even 80% is your 100%. It's just us talking together. Just more of a conversation between landscape business owners. Let's jump into it.

This year is the first year where I have somebody in the office helping me. And so, like, that's a huge admin, is a huge thing that's being taken off my plate. And now I'm faced with the reality that I, my, I have one job. It's a sell work. And it's funny, I don't know if you experienced this or you talk to other owners that have experienced this. Maybe you have Austin, depending where you're at in the company, but I've noticed that I've almost trained my nervous system to just be completely used to needing to do everything. And it almost feels really strange for me to just step back and be like, I have one job to sell. Have you talked to other people that feel like that?

Basically there. There's two different ways I look at it. So first off, kind of like, like calendar wise. So what's happening to your calendar is it's changing and it feels really weird because, like, they talk a lot about like manager time versus make your time. I think there's another one. I think there's worker time. And you're switching from where the majority of your day is worker time, doing emails, phone calls, et cetera, to where now you're, you know, you mostly manage your time, which includes some sales.

But that is, it feels weird. Like I, I, in the past year and a half or two made the switch from manager time to make your time. Also very weird to not like, have a to do list. And like lots of meetings, like four to five of these days don't have meetings now, like Monday, Friday. And so it's attacking the one or three things that I'm trying to focus on. Right. And so it's just a difference. And you're going to. Each time you level up. It feels weird at the beginning because it feels like you're not doing anything. It's like, well, if I'm not reacting to 50 emails a day and 20 phone calls, like I must be, you know, either bored or lazy. And so it's just definitely a switch. Also like you're switching from labor to manager and now you're switching to architect. Right. But you actually step away from the business and the architect isn't actually doing the work. They step away and start to analyze things. And so it's, it's, it's tough to sometimes realize like working harder now doesn't make sense. It is working smarter, it is creating the systems, it's being more reflective and actually filling this document in. Right, right. And so yeah, it feels very weird when you transition from like either manager to maker, from worker to manager. And it also feels weird going from like labor to manager, manager to architect. So it changes your calendar and then it changes like the whole psyche of like being less reactive and more proactive. And that's where like when you're moving into that role, that's where I really encourage like either coaching or some sort of framework around like what we just did, like the strategy stuff because like it actually gets you to be more reflective and still have a framework by which to be successful. Because in the past the framework for being successful is get things off the to do list, like just complete the email, complete the inbox, complete the voicemail and every day like done, done, done. As you move up that cycle like of higher leverage tasks, the, that the dopamine hit gets less and less like the less, less frequent I should say. So you might do one thing well this year versus one thing every hour that a few years ago, right. You complete the job, you cut that dopamine, complete the job.

Right.

So it just, it's, it's, it feels very different.

No, I'm glad to hear you say that too because I've talked to a couple people that have said the same and knowing that it's weird every time you make that shift because I find myself, I have every single day I'm having because I've been out of the field for about three years, like 99 out of the field. And so that was a huge shift to make. But now shifting like passing off emails, like where I'm only getting the most high priority emails and I don't have, I'm working email off of my phone. So it's not, doesn't even, it's not even on my phone anymore. That's just so bizarre. It feels almost surreal. And what I find myself doing is like my mind is wired to go back to the to do list. Like I'm, I'm wanting to go back and like do this stuff. So I'm having to catch myself and I don't know if that's the dopamine hit thing or just, you know, it's just a wiring. But I'm having to like pry myself off of all these aspects of the business and just focus on the most important stuff. I mean I've sold like 200,000. I feel like they're pretty much done, but about $200,000 worth of projects in the last three days. But I feel like I would have. And that's a huge win. You know, like that's, that's like, you know, a fourth of our revenue last year.

Thanks for that perspective. I, I think we're in a similar boat. We've gone from. I'm kind of battling this aspect of what I feel like is growing too fast. We have, I think that I move into this architect phase and that has happened in a 24 month calendar year or 24 month time period. So we went from about a hundred thousand to last year we were 3/4 of a million and we're trending to 1.2 to 1.5 probably this year. I think we're about 4x from where we were this time last year. You talk about a to do list. I think my problem is the to do list seems to grow faster than I can knock them off. And I'm also hiring. I've hired for sure. We've stayed lean. I've tried to, I've been adamant to invest in the business. But we're made up of with that. We've evolved significantly in that 24 hour period. We went from pretty much a mowing company with a little bit of landscape jobs. I was one of those guys that had a full time job on the side. And then I decided to kind of pour into it along with a couple other things. But short story is is we went from lawn care only to lawn care and landscaping with a little bit of artificial turf to now we are artificial turf, commercial and residential landscape install and then property maintenance. So.

I'm going to run two property maintenance crews this year. I suspect that's going to generate about $300,000 of our revenue. Our landscape install, residential and commercial should be around 500 to $600,000 in revenue. And then I think we're going to be about half a million dollars or so in artificial turf. I think we've kind of become one of the bigger, more consistent artificial turf installers in northwest Arkansas. But so here I am now. I've Gone from I do everything, a little bit of everything business wise specifically.

Not so much in the field unless we're in a pickle of course or we need critical thinking on a job that maybe someone else can't do and then. Or is concerned that they won't make the right answer. Which I think reflects on me as much as anything. But to now I'm. Hi, I'm hiring our first admin person. They should start next week. I'm actually going to be putting them through that co pilot training. Our bookkeeper who.

Hire you know, for 350 bucks a month or whatever she said, she said hey, sticker on the task, go through all of Copilot and then have a time and y' all are going to work on it together. I'm still trying to learn Copilot, kind of trying to make myself uncomfortable. I've utilized a low end software that doesn't have very good support for managing our day to day operations and QuickBooks to. I'm trying to utilize Copilot to its full extent as best as possible. But so nonetheless I'm. I'm in this boat where I've got a few, you know, strong employees. We're actually at about 10 guys. The. A lot of labor. Some you know, a couple that would, I would say are strong enough to be drivers on a landscape lawn care crew. But so now here I am trying to figure out am I. How do. How do I properly allocate or you know, not only my time but entrust people to somewhat care. I know that they'll never care like I care. I do have one guy that I think is. It's as close as it'll probably ever get to Karen. Like I care. But so, so here I am just trying to figure out like I think goal and vision is something that I've. I've very much got on. It's quality over everything. I guess culture over everything. Um, those two things are, are number one, number two for us. That's my vision as to where this is going. So pay for performance to me I think is very important because it rewards people for the things that they do and the efficiencies as they provide our company.

So yeah, I think the part that I was like the challenging part before we did P4P was like when I said those words, no one believed me because they're like yo, okay, so if we charge more money, you will make more money. But they don't see the clear indication that like when you make more money they will make more money. And that's what that was. The big thing with P4P is like, okay, now everyone on the crew is aligned with like we want to raise prices. They know that if we hit capacity, we will hit like the number, this number of customers, we will raise prices. They know if we raise prices by 15%, they're essentially going to 15% bump in pay. And so they are incentivized not only from a, like go out and get more jobs like when you're out on the, on the route, for example, but they know that when we hit capacity, we raise prices. And when they raise prices, they immediately on the next paycheck will be getting more money. And so the nice thing about aligning with P4P or profit sharing open book management is they actually believe you when those they say they, when you say those words. And furthermore, you don't even need them to believe you because you have evidence. You say, like, if we raise Mr. Jones price from $80 to $120, you all will make 50% more money. Right? And so I've just found it so much easier to communicate with the team. Even like from my perspective where like I don't see the team at all. Like, I don't know the names of the guys, I don't hire them. If I ever show up. It's very easy to communicate with them because they all numbers. But furthermore, they know that if they make more money, like if I make more money, they will make more money. It's just, it feels so much more natural to talk to them.

There is a motivation uptick a little bit from that, you know, like a dopamine high from it for them. And to your point, they do see our significant growth. And all these guys that have been here.

They at least in front of me act like they are all bought in and love it.

So I always felt it was like the frame of like, what happens if I'm not here, right? Because I can give like a bonus better here, there because I know the job went well, but there's not a framework for it. People a feel like, well, I thought we did really good. Why don't I get a bonus now and then? It's because, like, you know, on the back end, hey, this month we were pretty skinny because X, Y and Z. This other job didn't go well. And so having a framework by which like a general manager, I was like, especially you guys size, it's like you start to think like, okay, what in my day do I need to be an owner versus what could a general manager do. And so like the general manager is just usually if they're an operations person, they, they're good at following the system and you know, tweaking and making it better versus you are there to like, create the system, make the, the framework by which them. For them to be successful and then they execute on it. Right. And so the thing about pay for performance is it makes, takes. It takes away the ability for people to say like, I want a raise, I want a bonus, I want more money. Like, that whole aspect gets taken away. We have yet to have one single person ask for a raise. My first location, and it's been years since we've had P4P. But it's because it's a matter of like, if someone asks for more money, you look at the, at the board, you say, well, so and so made $10 more an hour than you. And like, so maybe follow what they're doing. And they've done that for the past six months. And so it's like, how do I create a framework for the general manager to be more successful the same way like now, Austin, like you're hiring this admin person is like you're trying to figure out like the software mostly that you can actually hand this off to somebody because being in your head is very difficult. And so that's the framework because like, I knew even when we did start PvP at my first location, I knew we were going to franchise. And I knew if I franchise, I would either A, have to sell the location or B would have to run without me ever being there. And so just everything started to become like, okay, what would I do if I were not here? Well, we can't do this service. We can't do this service. We can't do this. Like, I'm not going to be able to have everyone using this excavator out in the shops. Like, we got rid of that, so that just become the frame. And it took a few years to kind of get to the point where like, okay, now I could actually hand this off to somebody and they could actually run it without a whole bunch of HR problems around bonuses and I want more money and all the rest of it.

So, you know, you talk about P4P. I'm curious, Mike. And specifically I would like to figure out how to do it for landscape and.

Property maintenance. I think property maintenance get. Tell me if I'm wrong here, but in a lot of ways it was probably built with property maintenance in mind. And then, you know, as I build a job in copilot I see where obviously I can add budget hours and things like that. I can see where the landscaping side, it can be very functional for that as well. But I, I've actually yesterday I was like, I want some tips and tricks or what are some tips and tricks on being able to get to that point on Copilot to where. Because I want to utilize it to its full functionality, I'm in. You know, it's like, I think that it is solid software and with the support that y' all give, I think that it has opportunity to be significantly better in the coming years compared to other software. So I don't know, I'm just trying to figure those pieces out.

Yeah, like the first off, like the delegation is the thing that ultimately you just heard, hey, what are the lowest value tasks that I'm doing from 6 to 10? Like, this is actually a really good exercise I would recommend doing. It's a pain in the butt. I hated doing it, but I was forced to. So let's go every 15 minutes writing down what you're doing for from 6 to 10. Like you will hate your life by the end of it. But like every 15 minutes, what am I doing? And then what I did. So basically you're gonna have, let's just call it for you, 16 hours, that's four. So that's you can have 64 entries, right? Everything from having lunch to driving to doing an estimate, etc, and then you essentially take those 64. You, over the course of three days, you're 180 tasks that you were doing every 15 minutes and then you're simply going to group them all up and like, hey, how do I chop out 20 of these? How I chop out 30 of these? How do I chop out 10 of these? And you're going to take the lowest value TAS tasks in the, in that time study and just delegate them because like 1.2 million in revenue. And if your guys are, if you're charging a hundred dollars an hour to the customer, your time is easily worth 200 an hour. And so anything delegate to get rid of things off that calendar is the first. Like create blank space. Because once you create the blank space, then you will actually get to the point where max is starting to feel now, where it's like, okay, what do I do? Like now, now I like, I have, I'm not, I'm not getting the dopamine hit of doing things now. I actually have four hour blocks to like work on something else. That when you're like, okay, this whole process that we're doing with sales. If I could restructure from ground zero, what would I do differently? Like, you don't even have the time to do that now because you're just like doing this, doing it, doing it, doing it to actually have like a four hour block. And like, let's question every single aspect of this. Could this be automated? And then going through every single stage of the sales process, could this be automated? Could this be automated? Could this be automated? And then also, like I always also think about like when it comes to creating a system is like, yes, we can get maniacal about creating systems, but, or we can just create a business environment that makes it easier to, for systems to exist. In other words, like, is it easier to create a system for something simple or something that's complex? Simple. Right. So that's like simplification of services, simplification of scripts, simplification of my email. Like everything is simpler. And then, then it's also a matter of like what's more easy, you know, easier to create a system around something that's standardized or something that is custom. Right. And so this is like Max is running up against like it's harder to create that system for a custom job compared to something that's like the same every single time, even if it's a, it's a large project or a hardscaping job. Like it's standardized. Now premium, the premium goes to custom and goes to things that are very, very hard to duplicate. And so that's where it's very easy to go after those type of jobs because they're so much higher margin at the beginning. But it's also very hard to systematize, hard to hand off, hard to actually scale without you being there. And so even when you're like creating systems for like your, your admin person, like would be answering the phone, for example, there'll be a period of time where you slow down. So there'll be a period of time where you actually will get less done with them in the office compared to you just doing the work yourself. And that's why most people will not delegate things because there's a period of time where you actually will get less done. It'll take you longer to get your stuff done because you'll have train them and do your work. And it takes you twice as long to do the work because now you have to train them. Right. And so, you know, prepare yourself mentally for that. Because that's like a weird brain fart where you're like, this is stupid. I'M just going to take it myself. One thing I would do is like realizing that someone else is 90% or even 80% is your 100%. So even from like an email perspective, I still remember the exact day when I took my email off my phone. And what you can do as an intermediary, for example, taking email off your phone is have a folder that they drag stuff into that you can see. And then in iOS you can make it where your inbox is a folder. So you can just make it where when you can't see anything else besides what's in that folder and you, you literally have to actively log out and go back into the account to see everything else. So that way you know if it's in that folder, they saw it and they know you have to deal with it versus the ability for you even just like hop out into the inbox anyway anytime. So I was kind of like circular thought there. But yeah, it's, it's, it's. You're, you're both at like this cool time when you're switching more from manager and architect starts to become what is needed the business to grow. And the thing that gets people caught up here is burnout around not delegating backwards and then not creating systems for the people behind them to actually follow. And they end up just doing their job half the time. Like they end up going in the inbox on the weekend. They end up listening the voicemails, they end up like checking the invoices. It's like you're eventually have to realize that people are gonna make mistakes and like that's just part of the cost of business essentially.

That's a great point because that absolutely will happen. Austin, have you ever heard of the book buy back your time?

I've heard of it, yeah.

I can't recommend highly enough to just go to your nearest bookstore or go to Amazon and order that like immediately because it was an absolute game changer. I mean frankly. So between listening to Mike for years, because I think I said Mike that I remember when you had like 36 or 56 followers on YouTube. It's been like one of the most fun parts of my career, like peripheral parts of my career as far as like just the green industry has been watching, you know, you over the last like 10 years, Mike. It's just been, it's just throwing that out there. That's just been super fun watching you build up all the media around Augusta, the channel. I just think it's really cool. You're obvious, you're A great egg in so many ways.

And yeah, congrats man. By the way, congrats on that and.

Also congrats on your engagement.

Well, Mary, come on, everyone missed the.

Oh yeah, I know. I saw everybody. How about that?

Yeah. But thank you. I appreciate it. Ok. Okay.

But like real recently I guess and.

Huh. Yeah, two weeks ago. Yeah.

Oh nice. Yeah, I saw the engagement email. I didn't see the marriage email, but yeah, that's great. You know, I, my, my business journey has been a little bit more circuitous because I had a. At. At 20 when I should have been really focusing on my business. I decided to get married to someone that was not really. Turned out that we just were not really each other's person and we were way too rash and had two kids. And so I'm a very devoted and you know, dad that spends a lot of time with my kids. So I'm almost working more part time than I, I could be because I've spent so much time with them the last two years, even just during my work days. You know, my, my youngest has add pretty strongly and so and unexpectedly. And so she just needs a lot of extra attention. And so what compounds this? I think what makes me feel like I need to focus even more on architecting my business is that I have to make it run without me because I've been forced to. If I'm gonna be there for the rest of my kids childhood before suddenly they're teenagers and you know, have cars, I have to spend a lot of time with them. So there's, there's extra impetus for me in, in doing all this beyond just the monetary, you know, ego gratification of having a larger business.

But it's a forcing function. It certainly is. Yeah.

And so Austin, I, I can't recommend you. You are going to sidestep so much mental gymnastics if you just read buyback your time and deeply imbibe what he talks about. Because he basically just slaps you over the head with if you, you figure out what he calls your buyback rate, which is like Mike, you were taught saying say 200 an hour. If anything costs a quarter of your buyback rate or less, you have to delegate it or you're holding yourself back. So if you can get something done for 50 an hour or less and you have cash reserves, do it. Just say wave goodbye to it. And now I'm still sick and I still want to check my email all the time. Like I, I have. I'm not cured. I still, I still feel that compulsion to Check the email. Like, oh, what's going on? I got to see, you know. But, but it's. I'm, I'm in rehab and it's happening. But that book will probably change your life if you really, really take it in. If you don't mind sharing. What's your, what is your net profit margin on your current revenue?

Man, you know, I got to admit, switching into. So last year it was right about 15% on 700,000, 750,000.

It's higher right now. I, I just connected our QuickBooks and Copilot and I really don't have a freaking clue for this year. I think it's.

You're growing that fast? That's tough.

Yeah, yeah, I met. Well actually I had a meeting with my bookkeeper yesterday and I said we're going to start having a weekly meeting because right now I have a hard time looking at our QuickBooks and understanding what's going on, you know. And then. So one process that we're putting in place is my wife now, she enters in all of the receipts on a Monday. The bookkeeper starts to manage the transactions and connect receipts and things like that on a Tuesday. And then I think there's going to be a total call every Thursday with each of us to kind of take a peek at that. I have for the first time I've hit a line of credit where we are on a commercial job, our first big commercial job. And so I teed up a couple lines of credit for that. So even our cash situation, I mean I, we're very fortunate to not have to worry about ever making payrolls, stuff like that. But man, I really struggle understanding what our true profit margin is right now. Right before this call, I started to peek at a job. I saw the guys spend a little extra money on some stone install and I was like, okay, so it looks like we're, you know, where is this one? So, so I'm still kind of looking at each job specifically rather than what's going on. I do suspect that in the summer. So this is our first year doing like full fledged monthly billing, property maintenance. So we did a little bit of that last year, but I've got more that started in January, so. And then we're going to have a lot of that recurring transactions once the mowing season I guess starts in northwest Arkansas. We haven't started mowing yet. We'll probably hit some of our first few yards next week. But I don't really know what to expect there either. You know, I have in my head Projections, but that's as far as it goes as of today. So. And then. And that won't be the monthly recurring revenue I think we've gone from. I've had. I had a goal this year. By the end of this year I wanted $15,000 a monthly recurring revenue on property maintenance contract. I see us hitting that easily. But I would, based on last year, I'd expect, you know, the May through September stuff to. And our profit margin goes through the roof as soon as we start mowing and getting that recurring stuff from May through September. And then I'm just kind of gearing into the winter months to try to eyeball what we got going there. So. But. So yeah, that's a long winded answer to your question of pretty much I don't have a clue.

If you'd be open to it, I'd be happy to talk with you like after this call. At some point we can exchange contact information and talk because I feel like there's some things.

Well, last year was a year of investment.

And this year I've actually, we've moved to an S Corp very recently paying myself like a salary and I was just taking money as I needed it. I do have other sources of income. I'm in real estate. I don't sell real estate or anything, but own property and things like that but build or whatever. But all that aside, I think I fully expect us to have a 20 to 30% profit margin this year now.

Not any other reason than the bookings we've already got when it comes to artificial turf. So last year we did probably 10,000 square feet install worth of artificial turf, which is, we'll call it 10 jobs approximately. We're already there this year, you know, so. And booked out, you know, a solid two months with a lot in the pipeline. Another thing on the time allocation, I am, you know, our sole estimator, especially when it comes to artificial turf. But you know, it is a premium product and we can make really good money. You know, last year we were there. Artificial turf's not huge here. I talk to a lot of people and say, yeah, we do a lot of artificial. Really artificial turf. Who does that around here? We're not in one of those warm climates that I think is traditionally known as artificial turf. But we're in substantial, really one of the fastest growing regions in the country. And it, if it's not us, it's going to be someone else. So there's a lot that are trying to move in. I partnered with a manufacturer that helps and what's also happened is, is, I mean, we've upped our SEO gain substantially. So which is also an investment to some degree. Not a crazy expensive investment, but. And that's all the more reason that I've needed to go to admin. But that specifically is going. Having the more artificial turf that we have is going to drastically improve our profit margins in general. So I mean, I'm fully invested into the artificial turf side of things, so it's a luxury option already.

So, Mike, do you feel like looking at companies like us? So for me, I want to. I, I have. I feel like I can pretty much indefinitely keep our install team busy. But I'm wanting to treat Recurring with Copilot as its own business because I want to hire someone as a general manager. There are our maintenance general manager and one of the team members who seems like they could be a great fit for that. It would probably take a couple years, but the goal is to basically run that division like it's its own company. With that in mind, have you had experience with companies that are in this position where you could maybe impart some ideas for how to do that as quickly and as efficiently as possible? Like the right frame of mind to be where we're trying to get Recurring to be a million a year, you know, because we can probably sell six to six hundred to a million a year in installs with one and a half to two install teams. But I want to get recurring to like a million a year as quickly as possible. And I'm just trying to get my head screwed on straight with it because I'm in more that manager role. I want to build somebody up to be a general manager. Leads word of mouth works great for high end installs because people come and visit their friends and they see this gorgeous water feature, they see this landscape like, oh my God, I've never seen a landscape like this. Who did this? And then they just send people our way. Recurring is totally different. Like we need to pump some leads into the business. That's where I just have. I'm just not good at it. I don't know how to get like these, this lead flow to come in and I'm not sure like how to get that spigot turned on as quickly as possible.

That's where sometimes having a different brand is helpful because like if you have landscaping all over your current website, people come to it and they're like, oh, this is a landscaping company. I'm looking for lawn care, I'm out. Like their, their attention span for Lawn care is so short versus projects. They're willing to invest into reviews and pictures and videos. Like we can see a session time on a landscape job versus lawn care. And it's like more than triple because they're just willing to invest more time into this purchase because it seems like a larger ticket. And so that's why it's like not a bad idea to at least have different service pages on a website but. But even potentially a different brand because like lawn Care, I'm like my estimate request form is like right above the fold. They get to the site and everything is optimization. Whereas with if you're trying to do massive projects, it gets a different feel that the site should be having. Also a matter of like the light, how lightweight the site is to rank well on Google like and even like driving ads to it. Do you want to do instant pricing? If you have an instant pricing form and doing also $100,000 install looks weird, right? And so that's why like I think having the split is potentially helpful or make your service pages on your site look like their own kind of page or like site almost. And then you drive traffic from the ads for lawn care and recurring to the actual other page.

And are you Google Ads like say again? Sorry, the, the ads that you're talking about, are you doing things like Google Ads and Facebook ads? Like is. Is that something you recommend as a driver?

Yeah, like it comes down to like first off like you having the time to be able to figure those out. Right. You could get an agency to do them. But yeah like you could easily get a lead for say 30 to $60 on. On Google during peak season. Right. If you're going to spend that money during the off season when there's no traffic, you could be paying five times that and then it doesn't make sense. And so it's really a function of you know, can you, can you like from. If you're keeping the business the same that what we try to do is every dollar is spent on marketing is going after recurring and then I upsell the recurring customers the one time projects and if people come around for one, you know, one off jobs from, you know, word of mouth, great. But like all my marketing dollars are spent on recurring because those are the ones I'm trying to like I'm trying to get them in the funnel with a low, low end service and then upsell them the other stuff. For you it's a little different because people are coming directly to you for the $300,000 job. Right. But from a marketing perspective, you're 100% right. And I see companies trying to do this $200,000 install stuff with marketing, like without a huge amount of like actual installs and word of mouth isn't great, et cetera. They spend so much money on advertising because it is like you said, like word of mouth is travel. So much better. The challenging part is it's hard to control. Like you can't control word of mouth. And that's the nice thing about the recurring side. If we know, okay, if I can get a customer for under $100, I will back up the truck and I will buy every single one. The reason I can do that is because I know I'm recoup that cost within one month. If I can recoup the customer acquisition cost within one month, I should just be doing this all day long. And so, yeah, like we do Facebook ads, we do Google Ads. And you know, max, you're smart. Like within a matter of 24 hours, you would be able to get 80 to 80, 90% efficient at that at running those. And then, yes, you get an ad agency, but like we consistently see they add about a 10 to 20% increase in efficiency. It's our good. But usually you can put a Google tag and on Facebook, put a Google Pixel or Facebook Pixel. And as long as you can track that cost per lead and you're decent at like, okay, that picture did not work. I can see based upon the numbers. I will switch it out. All right, it works better. Okay, let's change the hook. Okay, great, that worked better. Now let's change the offer. I'm going to do a free service or something like that. That's where it gets the part that I see people like, oh, Facebook ads don't work. Okay, well, what did you offer? Did you change the picture out every seven days? Like, because it becomes white space if people see it more than 10 times. Like, you're gonna, yes, you're gonna see a deterioration of your cost per lead if you don't change out the creative, if you don't change out the hook. You know, it's a cost you no more to create 40 variations of one ad compared to just running one ad. Well, I'm not gonna put money behind one ad, the picture or a video with, with a title. I'm going to say, okay, I'm gonna try five different hooks. I'm gonna have five different meets or like the, the actual offer. And then I have five different CTAs. I now multiply it all together that's 125 different offers or ads that I can run. And so now all of a sudden, I realized that out of the 125, six of them work really good. So I take those six, I tweak them all five times. Now I have 30 pieces. So, like, that takes time. That's why having an agency is sometimes helpful. But I honestly think like 90% of agencies don't even do that where they're actually looking at how do we create 50, 60 pieces of. And that's gonna take a long time. No, you can literally inside the ad just say, okay, here are all the pictures and video. Here are all the different variations of the, of the description here, all the variations of the headline. And then it does it all for you. It'll optimize it and tell you exactly what the cost per lead for every single one, as long, as long as you have a Google tag and you have a good Facebook pixel. And so, like, to some people it seems like Chinese, but within 24 hours on YouTube University, you will figure this out. So it is much more of a marketing game. And that's why I think it mostly when it comes to recurring people is underspend. Honestly, if you can do a decent job enough, you can get a cost per lead under 100 bucks. This is like Augusta Leeds. Everyone's like freaking out. When we were 49, 79 cost per lead, and instead of Augusta, they would, they would back up a truck and take a mortgage. If we could get a customer for 57, 79, like, it just is an absolute steal because we know we can recoup that within one month, we have an average. What your average churn is it just becomes an arbitrage of math. Unless I'm churning through customers literally every three months, assuming a cost of goods sold 50%.

You gotta be like, not good to not make sense of that. But it's just hilarious to be how many people will go do an acquisition and they're literally paying $500 per customer. It's like, well, it's gonna be 50 grand and it's for 100 mowing customers. It's like, that's $500 customer acquisition cost. And yet you aren't willing to like go spend 30 or 40 a lead at Google services, like, you close half of them. It's pretty good.

Yeah. If you can figure out simply your churn and your customer acquisition cost, like, you have yourself a little money machine. And that's, that's the nice thing about the recurring side is it becomes More of a machine versus I depend on high quality work, high quality labor, and then word of mouth that I can't really control. So I look forward to seeing you do it. You'll do a great job. You'll do a great job.

Well, I'm excited, I'm very excited because this feels new to me. I'm happy to keep the installs with the two crews because I feel like that's like, that creates a backbone of like 3 to $400,000 of personal income for myself. It's like that's something and, and I'm an artist in that regard. Like I, I enjoy the art.

Yeah.

But once those jobs are sold, then the crew is implementing and then I'm like sitting here in the office like, okay, now I have to do something. And what I want to do is grow the recurring side of things again as its own company. Like basically as if it's its own company. So we already have the different pages. Our website is set up so that we have separate service pages, which is great. So I think I'm going to just kind of dive into YouTube University and see about how to tune Google Ads. Facebook I don't have as much experience with. Do you think if I'm like, if, if Austin and I wanted to do more of these kind of ads, would you say Google's a good place to start this time of year? Just get Google Ads up.

Google's lowest risk because you're doing based on intent based marketing. You can't go into assuming you're targeting lawn care, landscaping, hardscaping, turf, whatever. It's hard to lose tons and tons of money on Google because people are searching for that keyword. Whereas with Facebook I see people. You could literally spend thousands of dollars if your offer's wrong, creative's horrible, the headline's horrible, and your site converts poorly. Like you could be pretty bad. You could lose a lot of money. So what I see happening is the way to lose money in Google is overspending in your local market when traffic is low. So when you go through the, the COPA or YouTube University and Search, you'll see people being. There's a, there's a number inside your Google Ads that basically says your penetration and if that's too high, you're overspending. So. So for example, what nice about Facebook is if I go from $10 a day to $50 a day, I can expect to a lot more people to see my ad. If I go from $10 a day to $50 a day on Face or Google that might not be the case because there's only a certain number of people searching for those keywords. And so I end up just spending way more money for the, the sixth click. Instead of just getting five and paying $10, I might pay $50 on it and just one more click. And so that's where with Google it's like I can't dump money on it. And so that's why usually Facebook, you go there when you like, hey, I have a big budget, okay. I want to hit every single person here. I am not doing intent based marketing like Google. I'm going to interrupt them when I have an offer so good they'll actually get into my and I'll convert them. And so I think a lot of people overspend on Google, especially in smaller markets, like if you have under 20, 30,000 people, usually we don't want to be spending more like 20 or 30 bucks a day on a campaign because it just starts to become waste. But you can see, like, even if you don't even see that, look at the numbers, you could just be like, okay, what's my cost per lead? And if it starts going up, as soon as you increase your budget, you know, you're just starting to pay for more expensive leads based upon like the way they have it set up.

So. Yeah.

Where are you located, Max?

We're in the, we're in Oregon City technically, but it's the Portland, Oregon metro area. So we're, we're around a million people around here. Only about 300000 of them are in, in an area that I would want to access. So, you know, we don't, I wouldn't want to go too far. There's parts of town where traffic's too bad.

Yeah, well, that makes sense. Are there any resources that you would recommend for someone that wants to get better at this? Because again, like this is, this is my weakness. My weakness as a business owner has always been let's turn the spigot on. It's. I have relied way too much. I've my company, I've spent the first 10 years in business just staying pretty small, not really thinking about wanting to get big, being intimidated by advertising, thinking I wanted to just do highly custom things. And.

A lot of it just my headspace of where I was personally at the time led to that. Now I'm, I just think much bigger. I've got a very supportive partner and you know, we want to really take this, really take this places. But I'm realizing like, if I ever want to Sell the company in 15 years or something. It's going to need to have recurring revenue as a base. You know, it's like that. That's where it makes it sellable. My our skills as designers I think are unusually good, but that's not a sellable thing. So I want to try to get to a million and recurring as soon as possible. If you were like to bullet point three things knowing that I've been in business long enough that I'm probably going to understand what you're talking about. Three bullet pointed things of how to just turn that spigot on. If you were me, what do you think that might be?

I would hire you have the capital. I would hire a conversion expert for your website so that every lead you drive to that, that that website is going to convert at a higher rate. Like I consistently see conversion rates so low it's like you could triple this business if you just fix one thing. That's the conversion rate. So first off is conversion rate because you then take all of your ads that come downstream from that and immediately 3 and 4 and 5x them just by better conversion. So getting someone actually understands like speed of load time where things pop up like et cetera, that'd be the first thing. And then really from there it's like learn Facebook ads and Google Ads to at least be able to have a conversation with an expert about it and then either A hire them or B have them train you on doing it. Like I would, I would probably do if I was you. I'd do coach, I would go learn it myself. Then I go pay an expert to show me how to do it and then I go do it and then you go do it. But doing the conversion on the site would be the first thing I would do. Like we spend gobs of money on conversion stuff because it just like I know if we can just tweak it by like half a %, that's like 10 like hundreds of leads a month. And so that's why I would go because you're going to figure out the operations side, no problem hiring, etc. Like I'm confident side but as long as you have the metrics, like if someone could send you a report, you can determine whether or not Facebook, Google is it. And even things like door hangers like you can run campaigns of door hangers. Like it's just money in getting customer acquisition costs of determining what is that dollar amount. And so you can we have like people inside August Nation, they do 30, 40, 50,000 door hangers and they just run the math. Like, okay, we get X amount of door hangers per hour. We know that out of every X amount we get a lead and they convert this rate and then we just run the Math. Okay, great, $40 cost, customer acquisition cost, go. And then you. So it's just a matter of like knowing your customer acquisition cost across all those only comes though if you have a Google Pixel or Google tracking code. If you have a Facebook Pixel, if you actually can track the door hangers instead of just being like, ah, leads come in. So those would be the main thing, like track the leads, convert the leads better on your website and then figure out the actual ad platforms enough to be able to have a really good dialogue with.

Someone. Yeah, I think. How much do you think? If I. If I. Our current maintenance revenue is probably about 100 to 150k a year. And the rest of it is. Is projects going from that to a million. If we want to try to do that very quickly. I'm just curious on the people that you've worked with, how many people have you seen that have scaled to a million within like a one to one and a half year.

Period?

It just comes down to like how much you have for marketing because as long as you have your customer acquisition cost and you know what that is like, if I was you, Max, I would take one year and figure that out. Like for these channels, I know my customer acquisition costs. And then you go into your next store with a budget knowing, if I spend X on this, I will get X amount of customers. If I spend X on this, I'll have this many customers. You always want to also remember that churn for recurring services highest in the first three months. So baking that into your customer acquisition cost is usually I recommend when you're going with a big budget. And so then you go into your second year and you just have a budget. Literally a budget. Like I know if I spend this much, I will get this many customers. And most of us don't do enough, enough reporting to know that number with confidence to know. Okay. And also it's seasonal, right? So your customer acquisition costs will be different in the spring rush versus in the middle of July and August. So you know, again, people usually advertise when they're slow because they advertise when they're slow. It's also when customer acquisition cost is highest because people don't need your services. And so then people say marketing doesn't work and you didn't market when everyone needed the service and leads were like 10 or 15 bucks a pop. Right. And so, you know, that's why it's challenging too, to even say what your customer cost is because, well, what time of year are you talking about? Right? And so, you know, being able to have enough data and reporting to say, okay, I know that my customer acquitting cost peaks during these times, it goes down during these times. I know where to spend the money when most people don't have enough budget to actually determine that either. So if you took one year overspent, knew you're going to lose some money on doing like say three or four channels and figure out, okay, what's the seasonality curve each month? What's my customer acronym cost for Facebook? What's my customer cost for Google? What's my customer option for door hangers? And then map it over the course of a year and then you have a really good idea of like, what do I spend? If I were to dump 30 grand on this or 40 grand on this, where's that money going and when? And then what will that relay in terms of customers? And that relays into I have to buy an amount of trucks and a certain amount of employees.

Etc. Do you think, do you think 2,000amonth is a reasonable budget for this season? If we're trying to establish what's working, like spend 2,000amonth between Google Ads and Google local services, see what is doing better and just go from.

There. Yeah, I would probably do one other one just because you. I think with 2000, you could probably get another one. Like if you wanted to say online, I'd do Google, I would do Facebook. And I just track that over the course of at least six months, I would do every single week. So I know what that curve looks like. That's like the most valuable part. So that next year you know when to start spending the money, you know when to stop spending the money and switch to a different platform. So for example, like Google, you could potentially, when everyone's wanting to spend the money, it also affects your ad rate. Whereas on Facebook, you're competing against like all the network, right? Versus with Google, you're competing against your local market. So when your competitors stop marketing, the cost per lead will go down. Right? So it has a lot to do with locality. With Google versus Facebook, it's like, hey, look, you're competing for space on their, their scroll, their feed. Just a little more.

Consistent. Appreciate you guys. I should probably bounce.

So. Yeah, I'm gonna bounce.

Here. I had a feeling, but yeah, thanks. Thanks for the time. I appreciate it. Congrats.

On. Thank you, man. I appreciate it. We will stay in touch. We'll send you guys a recording of this, too, so you have.

It. Super.

Yeah. Thanks again. Thanks, Max. Thank Austin. Take care, brother.