You’re Losing Money on Mowing (Fix It This Spring)

How do I grow this beyond the mowing and be able to acquire higher margin services? Maybe add another, maybe add shrub and tree fertilization.

I don't think adding services is ever a good idea to increase revenue. The reason for that is because there are businesses in your area that $million plus and they only mow. There are business in your area that do over a million dollars and they only do treatments. And so how I would look at it is instead of requiring both services, I would allow for mowing to come in as my gateway. I would increase the prices so I make better margins. Because like if you're making 23% margins on mowing, if you raised prices by 20%, you would now be at 40% margins.

Yeah, makes sense.

So, yeah, so like the, the bottom line is if I can, if I can bring customers in for a cut, everyone says, hey, margins are way better with treatments. I agree. Here's a problem. One, usually higher, harder and higher customer acquisition cost because there's less people up. Second thing is the annual value of a treatment customer is usually lower than that of a mowing customer. You might be at three or four hundred dollars per treatment customer versus a thousand to two thousand dollars for a mowing customer.

Average in my case average is like.

600, 700 for treatments. Yeah. Wow, that's really good. That's really good.

I'm in California, it's year long and I add aeration, so.

Got it. And so your mowing is like 1500 kind of thing.

Yeah, my average mowing is like 130 bucks.

Oh, so you're probably like 2000 or 2500 per year.

Yeah, 130 bucks a month. Yep. A year round.

Oh, okay. It's 12. So okay, so like $1,600. Okay, great. So still low. Your annual value for a treatment customer is still less than half of a mowing customer. And your customer cost can be higher. So what I would do if I was you would say, hey, look, we don't require treatments, but here's what I would do. I would jack your mowing price up and then offers a discount if they offer treatments. If they also get treatments. Yes. So I would create a package deal knowing, hey, this is what I want them to have, which is mowing and treatments. I'm going to offer mowing only, which is going to be like almost the same exact price. So for example, you could be like, hey, you, you're mowing and it's going to cost you, you know, $130 a month. Great. Instead of 130. Now it's 170. Okay. You're, you're going to be on the high end of the market. 180. But hey, if you do 100 and for literally the same amount, $150, $160, you can get treatments also. Like you just make the package deal. So good for treatments. But I would use mowing and just go higher margins where if they only accept mowing, you're okay with it.

Yeah, makes sense.

Okay.

But one other problem I have. So I run the operations out of like a half acre property and I only have limited proper space.

And I only have, I already have four trucks mowing. Well the four I just added a fourth one. They were starting to fill up. So like I don't want to because if I start to grow in the mowing base. Mowing base, like the. I grow the revenue but it doesn't grow the profit as much to raise prices. Yeah, just raise prices.

Define what your capacity is for mowing with the three existing three trucks. And like when I hit this number of customers, I must raise prices. And now all of a sudden your margin will go from 23 to 30 plus percent. And so I genuinely believe most people will switch services because they want to go from like oh, I want to go 15 to 20% margins. I want to go to 30%. Great. Why just raise your prices by 15 or 20%, especially if you're at capacity. So like I would raise prices significantly on mowing so much to the fact that we're like, I would, I don't mind if I just get mowing only and then, then, then you're indifferent as to whether and, and you'll make some room for new customers by raising prices and getting rid of some of the existing customers you have. Yeah.

What's interesting is I'm actually, I called her on, I'm already at the higher end of the market in prices in mowing.

But it doesn't matter what your price competition is because if you're at capacity, you need to lose some customers. So pricing against your competition is based upon like the opposite of value priced value pricing. Like I want to do your pricing based on value, which is how many customers can I serve, how many people are willing to pay what I am, I am charging and that's value based pricing. So don't worry about if you're at the high end. Doesn't matter. You don't want these service. You can't take any more mowing customers on anyways without buying more trucks. And there's a cap on that. Right. So I would just raise prices on mowing dramatically to the point where you literally wouldn't mind doing it for mowing.

Only for landscape projects, smaller softscape, stuff like that. 75 an hour.

My main, my main money maker is mowing and the full service contracts that I have. So that's where a lot of that's coming in. That and lights. So it's lawns, lights, and a little bit of snow. And it's all residential.

Yeah. So this becomes a math equation. Like, what's our capacity, essentially? Right? So like, if I take 75, I multiply by. By six budget hours per day. So not they're working eight hours in a day, but only six of them are actually productive. So let's just call it $450 of labor revenue. Not total revenue, but labor revenue per day. And then it's like, okay, well, they work 20 hours in a. A week, or, sorry, 20 days in a month. So $9,000 of labor revenue per employee per month. Right. And it's like, well, there's probably some material cost in there, a material markup. I got a little bit of estimate fees, dump fees. Let's just call it $11,000 per employee is the capacity. So if you got one more employee, assuming they're working full time and they're about 75% efficient, they're probably available to make 11 to $12,000 a month if they're always working. So, like, it's a very rough and dirty way of just like approximating revenue based upon number of employees.

Okay. Because I was shooting for.

Possibly 126, $150,000 generated by them, or at least they'd be responsible for that much work, depending on what I give them.

Yes. Two things have to change. Either one, the hourly rate goes up, or two, their efficiency or number of budget hours completed per day goes up. So if they complete seven or eight budgeted hours of work a day because they're really efficient or work longer hours, then you're gonna. You will hit that target. Um, I'm assuming a 75% efficiency score, which is six budget hours they complete out of an eight hour day. So assuming that, then you're gonna be probably more landing in the 140 range trying to get 1 60, 1 70. They're gonna either have to get more budget hours in a day or higher hourly rate per hour.

Okay, that's not bad.

So you're close. You're close. And also, we're also assuming that they're gonna be Able to continue throughout the, the offseason. Like assuming they can keep doing that. 12, 13, 14,000 a season.

Oh, and that's what I. And that's the way I have it all set up. I'm getting paid.

Well, that, yeah. But then the way I set up my, I don't know if you call them or what you call them a seasonal contract, but they're paying 12, you know, the 12 months. So we have cash flow coming in December, January or February.

Cool.

So that's that. Sweet. So close to 500,000 is capacity.

Yeah, that'd be good. If you can do, you know, two employees, 500,000 with yourself, like you can manage those. You don't need an admin person, you don't need an extra salesperson. Like that's a very profitable model.

We've spent the last 25 years doing project based work and then as we get older, we realize we need to transition out of this and we've thought about doing some retail. We've thought about, we've started a small full service lawn care route. We do mow snow year round services for blank amount per month price. But we don't know how to really market this. This is all kind of new because we've always just been relying on projects.

Got it Right now, Hanson, if like revenue for this year, what do you think you're going to be total like gross revenue?

Last year was the worst year we'd ever had. It's just my wife and I, we, we normally are around 200. Last year was only 1:15.

Okay, all right, go ahead.

No life circumstances. We added two kids in the last five years. I was his backup help because there's, there's kind of a labor shortage. We've tried having helpers before and they flake out. They're not competent, they're not dependable. And so it's kind of sad that I had an office career when we got married and I transitioned into him after unemployment and we did about seven years and then unexpectedly found out we were having a kid, which then took me out of the equation. I still do the book work, the office, things like that. But he doesn't have a second person to depend on to go do half a mowing route or whatever. So that's, that's been a wrinkle.

How long has that been the challenge? A challenge on that end is just the past few years.

Yeah, just the last five years.

Okay.

All right.

So since COVID Since COVID everything fell apart. Covid, it's all good.

Okay. But have you, have you tried hiring in the past like 12 to 24 months, or is it mostly just to say the two of you.

It's just been the two of us.

Okay.

The problem is we do so many different things. It's hard to train anybody. You know, we're doing like 20 different jobs, so we need to narrow that down to just a few things and then we'll have better luck at getting help.

Yeah, I agree. I think the world I like to live in is like, how do I make sure that this condition is, is improved? Right. Like, I know it'll be easier if you simplify services and you cut the number of services that you offer. It will be easier to find an employee. I know that if you increase the wages per hour for that person by five or six dollars because now the business can afford it because you raised prices, it'll also be easier to find employees. So whether or not it's easy to find employees, don't know. But I know it'll become easier if we do those things. So I think living in that world is positive because otherwise we're at the mercy of the labor market. And so I like where your head's at. Go ahead with a question. Sorry.

No, that's, that's a challenge too. Is the labor market here is really tight. I think McDonald's right now is offering, is it 18 bucks an hour.

Casey's is one of our big convenience store chains. They're not only offering high wages, they're also offering pay by the day. That's how hard it is to find people that will continue to show up for work.

It's just kind of a thing. We're out in the middle of the Midwest. Additional challenge has also been weather conditions have been really weird. We've been. We're basically in a five year drought. By July of last year, Mother Nature stopped watering lawns and so people weren't wanting customers. I did retroactive looks at our snow removal. We used to be able to count on 12 to 14 pushes per winner and the last two have been less than five, which is really bad because we've always tried to treat people on the fair side of things. We only pay. You only pay for the services we do. And we're getting to where we're almost going to have to go subscription based of, okay, you know what, we have overhead whether or not it snows. And to be stay in business and continue offering this, we're going to have to charge up front. We're not 100% sure how to do that and market it when our. We have a local Facebook community that every time things get a little rough, there's two or three or five new guys out there. I'll come mow your lawn for 20 bucks. Yeah, we'll come, you know, shovel your sidewalks for 20 bucks, like any size lot. We've actually joked maybe we need to just hire them and pay them their rate and then charge our rate, you know, because we've got the insurance and stuff. But that's been another challenge the last couple, three years particularly. But it's dropped our winter revenue a lot and then it's made even, even the mowing services unreliable. As far as our best practices tend to be, you only mow it when it needs it rather than every week, whether it needs it or not. So that's what I see.

Totally. So there's a couple things. First off, I think there's a scheduling issue and then this is an off season service issue. So I mean by scheduling issue is during the spring rush we want to focus primarily on recurring mowing. All right. We really want to set aside as much time as possible. We don't want to be putting projects that we could potentially push off into July or August. So for example, if a project comes in and is a little bit more complex service, I'm okay with that for now. We need to get jobs on the schedule. But I'm not going to do it during spring rush. It's going to go off in July and August. So like even if you tell a customer now, hey, sorry, we're booked out two months for that type of project. So that way it gives us capacity and gives us room to put more mowing jobs on the schedule. Initial mows take a long time. We've got to get them up to spec. And so we're going to spend our time on that, then we can fill in hopefully that gap of the summer when the lull happens, there's not much growth, et cetera. The other thing is though, during the winter, because the inconsistency of snow, we've got to figure out a different service that is winter services to sell our mowing customers. Because if we only have 12 to 14, you know, if we had 12 to 14 pushes, great. Five, we can't have our revenue getting halved or less. And so what we want to do is focus now all of our time and attention on, on taking the customers that we sold into recurring mowing and simply sell them a winter service that we come to their property regardless if it snows or not. So if it snows, hey, we're doing X, Y and Z. Fantastic. Whether it's 5 times or 14 times. And then also if we. If it does, if it's not snowing, we're going to trim your bushes, we're going to blow things off, we're gonna pick up branches. Cause I can guarantee in the Midwest, if it's not snowing, there's wind, there's ice. You're check. You can check the gutters, you can do a whole bunch of other stuff around the property. So, like, I do believe this is a solvable problem. And I think I would do that for one year and then start focusing on how to actually remove services. Because the removal of services right now, the service that you will remove are the ones I want you to do during the off season. They're the ones I want you to do during the July, August, September, when it's so hot you can't really mow or like your mowing leads aren't coming in. So I would really recommend if you just go to mikeannies.comworkshop. it's free training and it goes through how to do this off season, winter services really go through. That would be my recommendation. Because if you nail that, then you're gonna have the confidence going to next season to actually remove services and go all in on the recurring, more simplified stuff.

That makes sense. I think the goals and the planning and the structure is something we've just been maybe struggling with a little bit. It's kind of uncomfortable to do new and different.

Yeah.

And I know we talked to.

I'm not great with names. I think it was Dustin at Bloomington, Augusta.

Oh, yeah, yeah.

And he was talking about, we. We actually had the life goal of we are out of snow removal by the time he's 50. We're getting closer and closer, and we haven't made it yet. But he was talking about something similar and we've been talking over and just kind of. It's. It's a challenge to take the leap, I think, a little bit.

Yeah, yeah. And you can. You can. You can kind of slowly go into it. So, for example, in the workshop, I talk about the different ways to pitch winter services. And if you go really hardcore, which is basically going to customers like, hey, you actually save money. Here's how you save money. And your property's gonna look good. You're now knocking because there are people out there that are paying for snow removal on a monthly basis. And now it's only snowing five times, and they're like, this is crazy. So you go to those people like, hey, I got a solution. I am going to service your property regardless if it snows. And then for the people when there's like a ton of snow, let's say it happens occasionally and they are paying per push, they're like, this is crazy. I'm paying $800 this month for stinking snow removal. You go to them and say, hey, are you tired of these crazy unexpected bills? We come every two weeks no matter what, whether it snows or not. So like check out the workshop. I think it'll be helpful and it'll kind of give you some guidelines in terms of like, let's first fix the off season and then reduce services and then keep focusing on recurring revenue. And like the whole function of like there are a bunch of Chuck in a trucks and $20 most that will always occur. The function is how do we differentiate? And so whether that be, you know, the customer only can see the lawn being cut, they can only see the truck, they can only see the employee. So how do we differentiate ourselves? Do we answer our phone faster? Do we, does our website look great? Do we have a hundred plus Google reviews? These are other, other intangible things that can be done to differentiate yourself. So they can't even compare you against the $20 mo. Yeah, like if someone compares me to $20, I'm like, okay, what? Like you can't even compare us.

Sorry.

Like we answer our phone all the time. We show up in uniform trucks, we give you automations, you have a card on file, you don't have to worry about it ever. Like so there is no comparison. So make it so obvious to them. Like we. I don't think I've ever been like in the past several years compared to a $20mo guy because like the customer knows we aren't even on the same world. Right. So I would just emphasize that. But first fix your off season and then solve for like the complexity of services.

That makes sense. I hadn't found that workshop yet. I'm still working on getting up to speed on copilot. So I get it. Get started on that. So but that's, I think that helps a little bit.

I think for now as far as.

What to tackle first.

Yeah, I think for now because you're in the middle of spring rush, it's not time to be like thinking too much about the off season. But the objective is we want to increase recurring revenue. How to do that? We're going to make sure that any project that is Time insensitive. So we can move it off or it is a one time job. Those are going off into July and August. And if it's a big project, we're moving those bad boys off. And so yeah, that would be a starting point. And then come July, August you have more time. We're out of spring rush. Go watch the workshop and really figure out how to sell those mowing customers into the recurrence of winter services.

Because how to find somebody can come in to manage the business for me. Because I can, I can manage it, but I need, I'll see. I need some help.

Okay, so. So right now, like this year, Jaws, in terms of revenue, what do you think you're gonna approximately hit?

Last year? I like close to, I think it was the 92, 000 by myself. And then I get help sometime. But this year I got a projection. I say I supposed to go to 250. 200 and 250.

Okay.

But it's gonna be hard for me to make it. But now I think I'm close to 60 000.

Okay. Yeah. So like in the goal session, it's gonna be super beneficial because what we're gonna do is we're gonna go through each quarter and figure out where's the constraint going to be. Right now the constraint you're hitting up against is switching from labor to manager. You're gonna have to get an employee. And so that is one hurdle down the road. When you have eight, 10 employees, the next hurdle will be finding a manager so that you can become the architect and the manager manages the laborers. So you've gone from labor to manager, manager to architecture. And so the transition that you're experiencing, just simply finding an employee now the question becomes, is it easier to find an employee if I pay them $10 more per hour than what you're currently offering? And the answer to that is yes, you will find a different type of employee. So I would focus right now on making a very profitable service that enables you to be able to afford the benefits and the compensation that competitors cannot afford. And so that might mean that you grow to your current size this year. And instead of getting a second employee or another truck, for example, it might mean just raising your prices so that you can afford to pay your employees $5 more an hour. Because if you do that, I promise you will tap into a different labor market and you will find employees. And so go ahead.

So honestly, about the money is that is not the problem because I got so big, many big jobs, like I got Mosh and planting like 2500 and then $3000 job and then 12, 13. That's now I got a really good job. But most of the time and then to go to talk to the customer I have to go to the field to do it. Sometimes when I and they fail to do this job and then somebody called me. I can make it now. Now. And then I got to help her with me. And then for the meeting I have to stop my car in my driveway and then come to leader. They cannot. They cannot go by themselves. And then to make the job done. That's my issue.

Yeah. Yes. So you're in a growth bottleneck where you need another truck. Right. And so.

No, no, no. I already have two chucks.

But I can they drive.

But. But one is in the service for now. I don't have problem without two trucks. I have one. One Italy Chichola. I have one dump truck trailer. I have two pickup trucks. I'm good. And then I got two big mower. I'm really good. And I got two little like push and self propelled more And I got all my equipment. I got like three brewers and then so many. I got everything in place. But I don't. I cannot find good people. And to help me because I don't mind to take myself away from the field if it's possible and then to grow my business and then pay somebody to do it. And then because from the beginning when I. I was. Because I follow all your example and then I do it without no job and then no credit. And then now I got everything on place. I don't have problem to do what any type of job.

What do you pay him? What do you pay him now? Jasmic per hour for the field workers.

On 15 to 20.

Yeah. So this is my thesis. If you were able to build the business in a way that can afford to pay them 25 and you went and did an indeed ad or a hiring ad for 25 an hour. I happen to believe you would find better people and there would be more people lining up because you would tap into a completely different segment of the market. And so I always. Instead of saying I can't find someone, what I like to say is I don't know how to find someone that works for $15 an hour and does this standard of work that I want. I. I would agree with that or.

Even the problem about that. Because they cannot make it. Because I think I did just learning. They're not fast.

They're not.

They don't know the job that no matter what I. I trained them and I try to work with them because I paid them 15 an hour. I know it's not good but they weren't about that. I can, if something happened in the mos some of them I can fix them. I'm a little bit because I can go to YouTube to do everything because I'm little. I use your university. But the problem about that, like you said, I want to know if it's going to be better for me to get somebody to put in the feeling I can take closely with the customer or get someone to put them as a closer to the customer and I can be on the field which one you want to choose because sometimes when I send people out or when they're with me, I don't. I'm not satisfied with the job they've.

Done because that's going to be easy. It's going to be easier to find a labor than it is someone that's going to go out and sell the jobs for you. Because if they can go sell the jobs it's likely they're going to go start their own business or they're going to be outside of your pay range that you're willing to spend. So it's going to be easier. Right now you have constraints of getting work done and getting jobs and getting estimates sold. And so it's going to be easier to find someone to go get the jobs done than also go visit customers, meet with them and have that level of professionalism to actually sell the job. So I would fix that constraint first and then once you have enough employees, you have the time now to go sell jobs and it becomes a self fulfilling prophecy of you selling more jobs and hiring more employees. And until you get six to eight employees that will be the constraint is finding labors. We're going to wrap it up but I appreciate everyone hopping on for for today. Have a great weekend. Take care. See you all.