Why the 92% CAN'T GROW a $1M Business

By saying no to them, you are prioritizing things. Remove complexity, remove customization, simplify and standardize. In business, everyone says you need to create systems. You need to build your business so you can sell it, you can delegate inside of your business, and you can automate things inside your business. That things are done without you being there. Now, how this presentation is going to make you more money is twofold. Number one, you're going to get a formula for creating systems in your business. This is the systems framework that I use when we talk about Augusta lawn Care. Because I need to think about right now 170 owners and how it's going to impact their business. So I'm going to share the formula that I use to synthesize whether or not a system is good. Also, I'm going to give that framework in terms of testing the effectiveness of new systems. So once you implement a system, is it actually working? Because there can be a system for every single aspect of the business, but whether or not it's effective, we can actually measure it. One of the most common questions I get is I want to have systems in my business, but how do I create a system? First, let's understand what a system is. Please follow me. For the first little bit it is pretty theoretical. And then at the end I'll tie things together a bit. A system creates a repeatable outcome. The result is the same every single time. Think of a car manufacturing factory. It sources rubber and metal, glass and and fabrics to build a vehicle in some sort of truck, van or car. Now the goal is to build the vehicle the same exact way every time. The factory that they build uses systems to achieve this goal. In our businesses, we can create a system to produce the desired outcome or the goal in every aspect of the business. Every single time the same exact way. We can build a system for answering the phone. The goal is to close the appointment. It could be to diffuse the situation. If a customer is unhappy, it could be to collect payment. But we have a goal in that call and we can create a system to ensure that happens every time. We can build a system for doing an in person estimate. The goal is to likely observe the property, build the quote out quickly, and then create notes and a video for the project manager so they can then take the handoff and complete the work. We can build a system for following up on the estimate. So once the estimate has been sent and it is pending status, we can have a system like we talked about yesterday, in terms of what level of follow up do we use the goal of building that system is that every single time, the customer accepts the proposal. So by tweaking your follow up system, by tweaking your automations, by tweaking all these different aspects, what you're doing is you're tweaking the system, you're making the funnel so that every single time this occurs, I call a customer, the outcome takes place. Okay, so we know what a system is and we know we need systems. That goes almost without saying, but how do we build systems? Call this a simple system framework. And there are four basic principles. And I kind of made this into a keynote because I made a video edit. It was one of our lowest performing videos. I was like, yeah, that's a good one. All right. Number one, it is easier to create systems for simple processes. These are the four core elements of how do you build systems? It is easier to create systems for simple processes. What does simple mean? It means to be basic, clear and minimal. Number two is easier to create systems for standardized processes. Standardized means doing the same way every time with little variation.

The third core element of building a system, it is harder to create systems for complex processes. If something is complex, it is harder to build a system around it. Now, if you notice here, I'm not actually giving you the how to build the system. I am showing you the environment and the conditions that are required to make a system easy to make. So you can use these four core elements in any aspect of the business to create a system. So complex is the opposite of simple.

The fourth core element is it is harder to create systems for custom processes. Now everyone brags about, well, we do project custom. That word to me is horrible. I just think how in the world can you ever systematize something that is custom and changes every single time?

Custom is the opposite. It is diametrically opposed to being standardized.

So the core elements first steps to creating a system. And this is very different than I usually speak, but I think it'll be helpful for some. Remove complexity, remove customization, simplify and standardize. If you just do those four things inside the business, the level of.

Peace of mind you can have when you leave on that vacation is significantly higher. Because by having these four core elements, you will be able to create systems. So instead of addressing today how to create a system for answering the phone, or how to create a system for following up on estimates, or how you should be doing a walkthrough of a job, I'm simply saying if you do these things, every single system creation in the business will get easier. Right? So we can have simple and standardized hiring processes like, whoa, I don't know what. Go to chatgpt. Say, I am a lawn care business. I am a roofing company. I am a cleaning company. I want to create a system for my hiring product. Put it in there. Give all the details of the size of your business. Tell it everything you want to know and it will give you a very good starting point. Okay, I can't find it on Google. Great. We now have this new tool that you can talk to. I don't type very well. Great. Click the little button. The bottom right hand corner has a microphone. Now, little pro tip. You can also use it for business coaching and therapy. I'm dead serious. Okay. You put that microphone on and you say, hey, I'll just give you the tip. I've done this before. All right? Say, hey, my name is Mike. I own this size of business. These are the different things that we're doing. I do not want you to respond back to me or ask any questions until I say. And then I go on a five minute rant telling it all about my businesses and the problems that I'm having and what my revenues are and what my profits are. I'm done now. And now I want you to ask me questions that a therapist or a business coach would ask to ensure that I get to the right conclusion on my own. Give it that prompt and it will start to ask you questions and you will be shocked at how good it is at identifying the bottleneck necks and constraints in the business and creating systems. You can create simple and standardized sales scripts. Again, I'm not going to share or tell you what the system is for the sales scripts. I just know if you have simple and standardized processes inside your business, it will be easier to create a system around your sales scripts. If you have a thousand different services, you have a thousand different offers and you have a thousand different customers that you're trying to serve, it's going to be very difficult to create a system around your sales scripts. You can create simple and standardized services. Again, easier to create systems for simple and standardized services. Simple and standardized materials. So I don't need to have 10 different types of wall block. I don't need to have five colors of those wall blocks and then 40 variations and shapes and sizes and brands of said wall block. That is what we call a custom builder, a custom contract or custom job and is diametrically opposed to being standardized.

Now, when I say this, people think that I am talking about you can only do simple services and somehow they Think that I am only saying you should do mowing because I have this premonition that you should join Augusta and therefore I am pitching that everyone should be doing simple services like mowing. Quite the opposite. Very false. Because you can still standardize even a complex service. You can build an entire house using systems. You know, you said I can't do complex services. I'm not going to install a paver patio. There are companies that are using systems to be able to build an entire house with the said paver patio. And they do it because they standardize everything. So even though you might not be simplified, you can still standardize the same house plans, the same type of carpet, the same type of cabinets, the same type of countertops. Everything inside of this house is exactly the same. Now, on the left hand side, we see what we would consider a custom home. And somehow again, we in our mind believe that that has a higher value and we have associated custom with higher value. And that is true from the consumer's perspective because someone lost their shirt on that job and someone overpaid and someone over improved. But on the right hand side, you have a company like Lennar. Whoops, whooped back. What happened there? Oh, sorry, Lennar. Sorry guys. There you go, Lennar or Dr. Horton. These are massive home builders inside the United States that build thousands and thousands of homes every single year. And how they do it is they have systems and it is not simple to build a house, but they have standardized it so much to the point where they either copy and paste house after house after house and, and they make money. You know who does not make money? The custom home builder. You say, oh no, they're doing great. Wait until a recession happens. Even the past few years. Watch what happened to custom home builders as people stopped building custom homes.

Custom versus standardized. Now if you go into many large businesses, any brand such as Home Depot, it feels very similar. I could take the Home Depot logo off of that front of that store and simply just show you the shape and colors of, of the front storefront. And most of us would know that that was Home Depot. If you go to any store, thousands of stores around the world, somehow the Big Mac will taste the same. And somehow when you walk into any Apple Store, although the size and the layout of the store may be different, if it's a genuine Apple Store, it is going to feel very, very similar. Whether it be the type of tables that they use, the, the distance between the phones and where the employees are located to be able to service customers. They achieve this using Systems. And so, yes, this is how big businesses get big. And yes, this will mean saying no to the customer.

When they ask you to complicate something or make it more customized. I know we do retaining wall blocks like that, but is there any way we could just go ahead and do a slightly different version of it? They will always want you to be more customized. The same way that you would like to have an extra patty on the Big Mac, you would like to have it done slightly different. Can I have a few more pickles? Could I have the bun slightly. A little softer? I want a little less salt inside the ketchup. That's not going to work. And they say no to you every time, and you actually come to expect it. And yes, this will seem, quote, less personal.

You will not do every service. You aren't going to say yes to every single time someone offers you money. Just because someone offers you money does not mean you need to take it. And by saying no to them, you are prioritizing things. I'm gonna butcher the quote, but it just came to my mind that is a matter of you can tell someone's level of focus by simply what they say no to. And so I'm focused on my business. But if you're saying yes to drinking every single week and blacking out on the weekend and having issues with issues with friends, not taking care of your body, your mind, or your soul, you will eventually have a problem inside of the business. And you are not focused because of all these distractions that you consistently say yes to.

When it comes to building systems. In order to do so, you will not be able to deviate from the processes that you build, and it will come across as less personal. And. And the vast majority of us, the 80%, to use the phraseology we just talked about, he was speaking of the 80% of landscapers. 80% of landscapers in our industry love custom services. You know why? Because they, like, that's where they think the money's at. They also love the ability to be able to customize things to exactly what the customer wants every single time. And they'll say yes to any service because they are offering them money.

But the 20% others that make money in this industry are the ones that do this. I will not do every service. I will focus on my core offerings. I will focus on my one or two cures during the off season that we talked about yesterday, and I will not change my process. But because 80%, or 4 out of 5 landscapers, or 4 out of 5 home service business owners.

We now believe that in order to be a good home service business owner, or we should be able to change our processes, we should be able to say yes to the customer. We should be, quote, more personal, and that is what's keeping us small. If your goal is to make more money, this works. Having systems, simplifying and standardizing processes inside of the business. Okay, why do we want to create systems?

The core element is that there are two ways that a business is ran and there are two ways that a business grows. The first way is that your business runs on your grit, determination and hustle. The second option to run your business and make sure it runs well is to run it on systems. And so I believe that most flawed business models are masked by hard work, long hours, and stubborn determination. And if these ingredients were taken out of the business, 80% of small businesses, specifically in home services, would fail.

Because they don't have any systems. If you take the business owner out, the person who owns the equity in the company, things fall apart. These are some of the ways that right off the top of my head, I can name off. Many of these are the type of things that if you were removed from the business today because there are no systems, these things fall through the cracks. All of a sudden, projects start kind of getting a little bit behind. Materials don't show up on time. The rental equipment that was supposed to show up on day four, the excavator, all of a sudden wasn't scheduled, it wasn't booked. Oh, we're two weeks booked out. You can't even get that piece of equipment right now. Hiring and training processes. If you become the bottleneck and there are no systems, you can't hand it off to anyone else. And so if you are gone, the business simply falls apart. And I'm not pointing fingers here, because this is exactly what happened to me seven to eight years ago when I was stuck underneath a dump truck and for two weeks couldn't do any work. I realized that every single aspect of the business that I was involved in, I had become the bottleneck. And there was no systems. And as I stated yesterday, if I had dependence, if I would have had to have taken any money from that business, I would have gone bankrupt. I was fortunate enough to be young enough to still live at home and still live on very little. But it is extremely risky to run a business and have dependents. A family, a spouse, people that are depending on you, even employees and team members that are looking to you to provide for their families. It is extremely risky to run a business that if any of these functions of the company that are paramount and essential for the growth and the expansion of the company, if these things would fall apart and you were not there, you are simply not being a good steward of what God has given you.

Whether or not you're religious. If God has entrusted you with these talents, quoting the Bible, if he has given you these resources, these employees to manage the family that you lead, and then you squander it by not building systems in the business, shame on us.

I like to think about building the Business to leave. It's a very good book. I do recommend reading it. It has a lot of similarities to what we've been talking about the last couple days. Built to Sell. The premise is build the business to sell, even if you don't. The only thing I don't like about this book is that only 1% of businesses in the United States will ever sell. So the wording is a little off. I like to call it built to leave. Build the business in a way where if you did get stuck underneath a dump truck like I did and you did get put out of commission, you would have the people, processes and the systems in place that the business could continue to run. Now, systems are the recipe for building a business that runs without you. A business that runs without you is a business that other people want to buy.

As we talked about yesterday when it came to enterprise value versus book value, the vast majority of home service businesses are simply worth their book value. I would say 90% plus. Because if you don't have systems and you have to be there in order for those core functions and essential functions to run the business is simply worth the assets on your balance sheet, your cash, your trucks, your equipment. And the vast majority of home service businesses, when they are going out of business, sell for book value. If you want to build enterprise value and you want people to give you some sort of market premium on top of that book value, you will have to build a business that runs without you.

Now let's go ahead and create a method to evaluate a system. All right, so you say I have the system for answering the phone. I have this system for creating an estimate. I have this system for sending out emails. I have this estimate for this system for how I'm supposed to handle bulk messaging my customers via text. I have these systems in place. Great. Let's determine whether or not it is good or whether it is bad. We call this the simple system framework in your binders or in your books. Page 67. Here we go. This is what it looks like. It's a simple quadrant. On the left hand side we have standard and we have custom. And on the bottom we have complex and we have simple. This is the way to be able to determine whether or not the system you have created is actually good or whether or not it can be improved.

All right, let's look at these four different quadrants. The very first one, I like to call this the treadmill junkie. The reason I call this the treadmill junkie, because you will simply not operate in business very long. This is the business owner that will at best last five to six years simply because they are on the treadmill and they will eventually burn out. It is simply a matter of time. They are doing custom jobs and they are very complex jobs. They will never be able to leave the business for a vacation. They will never be able to hand the business off to a general manager. They will never be able to sell the business because no one in their right mind would want to. And furthermore, no one has the skill because they have such custom and complex services.

All right, the next quadrant in the top left there is the master juggler. I actually really respect this person.

They're the project manager. If you have a great project manager, they usually fall into this category. But if you as the business owner are falling in this category, we could have a problem. All right, so now this is going to be where we have complex services, but it's all standardized. This is building very complicated structures, designs, etc. But you have a very, very standardized way of doing it. How materials are ordered, how equipment is measured, how to make sure that things go well in terms of project management, etc. This is the project manager. These people are extremely organized. They're very good at standardization. Many times great operations people. All right, bottom right hand quadrant, jack of all trades. This is the person that does simple services. They don't really specialize in anything, but they do. They're willing to do anything like I will fix your cabinets, I will also mow your lawn, and if you want me to paint your fence, I got you. This is the jack of all trades, also known as the solo operator. Because you can never scale this. You can never grow the business to where someone that mows the grass can also fix the cabinetry.

This is the solo operator. Now a standardized, simple process is going to be built to scale.

This is the multi location operator. This is someone that can have multiple locations and thereby it's almost impossible to. If you want a real true test of the systems You've built in your business have two locations because you can't be at any of them all the time. You have to be at one or the other. And you will immediately see all the problems in your process. Immediately see just how much time management is important and how you stink at it. And that's what I had to go through realizing, okay, I have my second, third, fourth. I was like, oh my goodness, I can't even be there. All of a sudden I see all the holes because I used to be the guy plugging all the holes. And the vast majority of us, we simply take a business model that has holes and then we spend 80 hours a week plugging the holes instead of building a system to make sure the holes don't exist.

So we have this model. Top right hand corner is the built to scale. You have multi location. But I believe that there is the upper echelon of that quadrant. And this is what I call built to leave. This is the absentee owner. And the same way that built to sell is written in a way that is really a matter of building the business as if it was going to sell. I would also say if you don't want to be an absentee owner, I would still shoot for getting in this upper echelon of the quadrant which is I can build the business in a way that I will be able to leave it if I wanted to. Or God forbid something happened to you and you're put out of commission because life happens. The number one reason locations at Augusta Lawn Care get closed down has nothing to do with money. It has nothing to do with finances. It has everything with their personal life.

So alright, let's take that exact model that you've now written down on page 67. We're going to run some actual systems through this test because you can take, I'm going to take, I'm going to do two examples. But this can be used for any system inside of a business. Here we go. Let's talk about giving estimates. So if you're going to give estimates out to customers, there are multiple ways to do it. Now the treadmill junkie is going to give 3D designs for free. They are going to do custom work so they need a design and it's very, very complex. But we're going to give out a free design and we're going to spend hours doing it. Whether we hire someone else to do it or we do it ourselves, we aren't charging for it. And it's 3D designs because it's very complex. When you have walking through a design, et cetera. All right. The master juggler has a project book. Now, I'm a huge fan of having a project book. The reason the master juggler needs a project book is that when he's on site with the customer, Instead of saying, Mr. Jones, we're going to build a retaining wall. And what do you want? Do you want gray? Do you want black? Do you want red? No. The project manager, the master juggler, instead has a project book where he says, Mr. Jones, we have a retaining wall. Does this one look good to you, or do you like this one? Why? Because he's standardized. He has one, two, maybe three options that he standardized that wall down to. And inside of his project book, he shows the customer, they say, yes, I like that. And then he closes his book and they move on with the sales process. This is the master juggler. These people are very organized. They're very good at project management, and they've standardized their services. So instead of having 500 or 600 variations of wall block between colors, shapes, sizes, and brands, they simply have one or two. Before we got out of building retaining walls, at my location, we had one color, one size, one brand block. It was the only retaining wall we would ever install. The only one. And to my knowledge, I have to talk to Lee Marcus and the other general managers. To my knowledge, we never had someone decline based upon having that one block because we had a very good project book that showed three or four different curved, straight, different variations. And they said, do you like this? It was gray and it was rounded, and it worked. So what did we do? We took what would otherwise be a very complex service, but we standardize it, and that's what the master juggler does. Now, the jack of all trades does drive by estimates, slightly improved. He's not doing super complex services. These are simple. All right. But, hey, Mr. Jones, I know you want me paint the fence. I'll drive by this evening. I will shoot you over a quote. That's how he gives estimates. He just drives by the property. He doesn't need to meet the customer in person because it's simple services, but he's going to do anything and everything. Now, if I want to build the business to scale it, I'm going to do over the phone estimates because no longer do I need to even visit the property. And I can pay someone like we were just talking about in the last keynote, much less per hour to be able to answer the phone, give the quote over the phone, and that will scale because it's easier to find people to answer the phone than gain all the skill and wisdom and knowledge and experience that you have in your brain. But the real, the kicker, the upper echelon of systems is when it comes to giving estimates, is instant pricing. Right? So every single system, if you throw it into this matrix, you can determine whether or not you can find improvement. And over the past three to four years, I've simply just tried to move the systems that we create up and through to the final destination, which is building the business to leave. Because if I don't have to answer the phone and if I don't have to hire someone to answer the phone and jobs still get closed 24, 7, I can be gone from my business and jobs still get one. And therefore, the business is built in a way where I can leave the company. All right, let's look at project management. So for someone that is running systems in their business that are complex and super customized, this looks like on site daily. You're at every single job all day long. And if you don't, if you leave for one hour and you come back an hour later and nothing's changed, this is again the treadmill junkie. And if you find yourself in this spot, when it comes to project management, you will not last long, because eventually something will happen and you won't be at a project and it will go bad, or it will not get finished, or it will go twice, three, four times as many budget hours as you allocated. All right? You have to be on site every single minute of every single day in order for a project to actually get completed, because it's very complex and it's extremely customized so you can have a complex service. But then if you also add the fact that every single time you do that job, it looks different, good luck trying to train that to someone. So that wall block that we used the one time in one day, a crew member could get efficient at building that, because I showed them how to build a foundation, I showed them how to lay the block, and I said, now you just stack them on top of each other. Here's how the drainage works. Oh, and now let's go ahead and do as if we were doing a wall into a slope. Boom. Within a matter of a few hours, they were efficient enough to jump on a crew and be efficient and profitable doing retaining walls. If you were going to expect them to do four or five hundred different variations of block, it could take years before they actually became proficient and profitable at that work. All right, the master juggler checks in on the jobs, because he has complex jobs, but he standardized them. The crew does know how to do them, but you still gotta check up on them every day. Just making sure things are in line, making sure the project is a 10, 15, 20 day project. We've gotta make sure we're hitting certain benchmarks. We've gotta make sure that things are as we had said in the job note. So we check up on the jobs on a daily basis. The jack of all trades does an in person walkthrough when it comes to project management. They show their crew the project every morning. And this is what I ran into several years ago, and that was I would have to stagger start time my cruise from 6:30, 7 o', clock, 7:30 and 8 o'. Clock. Why? Because they had three to four different projects and I needed to show them the job at the beginning of every day. All right, set this baseline. Because I say this almost every single conference. If you as the estimator are returning back to a property to walk around said property and show the crew the job they're supposed to do for the day, we have a failing system.

That's where you're at right now. You're at jack of all trades. You are walking through the job with your crew, just simply going over the notes to make sure that they know what to do.

Well, what's the alternative to that? Because we have customized jobs. They're always looking different, but they are simplified. So my crew can do them, but I've still got to show them what to do every morning. And so I would spend two, three hours every morning just simply driving from project to project that had been sold and just showing them the work. So my day wouldn't start until 9, 10 o' clock after I showed them simply the projects and walked them through. Okay, so yes, the notes say this, this is the bush that that note refers to. Okay, now over here, this is the patio we're installing. Now make sure we bring the tractor through that gate. This gate they want stay locked. Okay, great. Number three. Okay, now that's what my day looked like for hours at the beginning of the day. And that's what the jack of all trades does as they scale the business. But really, if you want to build a business to scale and have standardized and simple processes, we're gonna make estimate videos. That is where on every single estimate that you do in person, that is a project that you're going to get completed, you are going to video the job. It's gonna take you two, maybe three minutes. You're gonna store that video so that when the crew is assigned to the job, you're gonna give them a video and you're giving them job notes. And if you have to return back to that project, that is system failure. Either the project was out of your scope or the crew is completely out of line and ill trained. Right? If you have to return back to a job site after being there already as a salesperson, there is system failure in the business when it comes to project management. Now, what's built to leave, built to leave is recurring revenue. And this is what we talked about yesterday. This is why I'm such a believer in generating some source of recurring revenue. Because you don't have to be there in order for the jobs to get done. You put them on a route and it just happens. They have enough notes, they have enough information to be able to go to the property every single time and be able to know exactly what to do. And they do the Same exact service 10, 15, 20 times in a day. So they get to know exactly what to do. It's simplified and it's standardized. But better yet, you could leave and the business still generates revenue.

In summary, when it comes to building a business that can grow, that can grow without you, I want to avoid complexity, I want to avoid customization, I want to simplify all aspects of the business and I want to standardize all processes. By doing this, you will have built a business that you can leave. Thank you very much. Let's have lunch.