A (14:47)

Here's Megan Koberly from the Landscaping Bookkeeper.

C (14:51)

The Landscaping Bookkeeper is a company for lawn care businesses under 300k. We like to onboard you under 300k so that we can educate you on your finances. Many bookkeepers love numbers, but we love the education behind the numbers. So each month we want to organize behind the scenes, but then we want to meet with you monthly to deliver your statement of cash flows, your profit and loss called the income statement and your balance sheet. And our real goal is to help you to understand how each of those work together so that you can see the health of your business and not just crunch numbers. It's about actually putting them inside a framework so you know when to purchase and what to do with each of those facets of business.

A (15:29)

Schedule your free 15 minute call today at thelandscapingbookkeeper.com Most jobs go to the

B (15:36)

first contractor that picks up the phone. But you can't answer the phone when you're on a lawnmower. So here's a solution. It's called Voice Assist by CallRail. I'm going to show you how it works. I'm going to call a pest control company that uses voice assist. Take a listen.

D (15:51)

Hi, thanks for calling the Pest Patrol. I'm Betty, a virtual assistant. What's bugging you?

B (15:56)

Hey Betty, I wanted to see if you could schedule somebody to come out, take a look at my property and give me a quote for pest control. I was looking for yearly service.

D (16:04)

Sure, I can help with that. Do you have any questions about our services before we get Started collecting some details.

B (16:10)

What would it cost to come once quarter.

D (16:13)

We offer a quarterly service plan with four treatments per year. The cost typically ranges from $350 to $480 annually. Keep in mind, final pricing depends on an in person evaluation.

B (16:25)

Yeah, let's get one scheduled.

D (16:26)

Can I have your first and last name, please?

B (16:28)

Paul Jamison.

D (16:29)

I've got several openings. For example, on Thursday, March 19, we have 10am 10:30am, 11am and more throughout the afternoon. Would any of those work for you?

B (16:40)

Yeah, 10am Works.

D (16:41)

Your appointment is confirmed for Thursday, March 19th at 10am and a confirmation email has been sent. Could you share the address of the location where you'd like to service?

B (16:50)

Sure. It's 1234 Main Street.

D (16:53)

Is there anything else I can assist you with today?

B (16:56)

Oh, that's it. Thank you so much, Betty.

D (16:57)

Thank you for your call.

B (16:59)

Well, did you hear that? That's CallRail's voice assist. It's so good. It speaks for itself. You can qualify more leads, book more jobs, and stop losing opportunities to businesses down the street. Try for free@voice assist.com Again, that's voice assist.com. All right, so we talked about indirect cost, which is nicknamed overhead. Now let's talk about direct cost, and then we'll draw it all together with real numbers. So your direct cost is what it actually costs you to do the work. Direct cost is you guys are out there mowing Mrs. Smith's yard. So what does it cost you to actually mow her yard? So you're going to have to pay a worker to be with you to do that yard. And you have to pay yourself because even if you own the company, you're still a. You're still a laborer. So if you have two people on this crew, in my example, you guys, your wages is direct cost because in order for Mrs. Smith's grass to get cut, you and your. Your other labor working in a truck with you, and you guys have to get paid to go do that work. That's your wage and that's the biggest direct cost. My mentor, Jonathan Pitoshnik, he talks all about that. We're in the business of selling time. So you're paying the wages of the laborers, which in my example, you're one of the laborers in this example. And then you have another laborer with you. But you two going out there and cutting Mrs. Smith's grass, that's a direct cost. The job is going to get done if you guys don't show up and do it. And then in addition to Just your, your regular hourly wage, there's payroll taxes, there's workers comp, unemployment insurance. It actually cost a little bit more if you're doing everything the right way than what you're actually paying somebody per hour. And other direct cost would be gas because, or diesel depending on what kind of truck you got. And the fuel. If you're not using Crest commercial for the batteries and you have, you know, old school gas stuff, you have to pay for the 50 to 1 mix ratio oil to go into your power equipment, then you have to obviously pay for the fuel or the diesel to go in your vehicles. So those are what you would call direct cost. If you don't have gas or batteries to power your equipment and you don't have gas or whatnot, diesel to have your vehicle have enough energy to get to the customer's property, then you can't serve the customer. So those are direct cost. And then there's still more direct cost. If you would like to think about, you know, your lawnmower blades and your string trimmer line and all, you know, you need all of that stuff to service the customer. So those would be direct costs. Just the basics. So let's do this. Let's add together for a two man crew some basic direct cost and indirect cost. And I'm not going to get crazy. Like I mentioned, some of you all have way too many subscriptions. I'm only going to calculate the bare minimum. You need a CRM, you need accounting, you need some basic marketing. And I'm going to, you know, you know, you know, you know, you need a bookkeeper. So those, I'm just going to keep it basic like that. I know some of y' all have all, I mean you have all kind of stuff for all kind of stuff. Um, yeah, I'll use a mile tracker too. I got, I use a mile IQ to track my mileage every day. But. All right, so let's, let's go ahead and let's crack some real numbers here. I'm going to do one month in, in season. So you guys, hopefully I'm saying, you guys, there's two of you in my example here. I'm going to give you $20 an hour for your laborer who's in the passenger side of your truck with you. That's, that's about average. And then I'm gonna, I'm gonna give you, the owner, $30 an hour because a lot of people who own the company, they don't really pay themselves a fair market wage. And then if you go to replace yourself. And you have to hire somebody who's going to be a crew leader and actually do everything that you do. You're probably going to have to pay them $30 an hour or more to really run your business the way you run your business. And if you're not already paying yourself that, you're gonna have a wake up call of all wake up calls when you have to start paying someone else that and you realize I don't have the money to pay this person. Cause you haven't been paying yourself that. Because anyway, I'm getting ahead of myself. But these are my numbers. All right, for my math sake here, you're paying your employee $20 an hour. So that equals you're working full, full weeks, 40 hour weeks. That's gonna equal close to 4,000amonth that you're paying your employee. Right? My, my Exact math is 3840, but I'm going to round up to 4000amonth. You're paying yourself $30 an hour and that's gonna, that's gonna be just under 6,000amonth. You're working full, you know, full 40 hour weeks. Then you calculate the gas, which is high right now. It ebbs and flows. It's kind of up right now. Your materials, your, if you're, you're hauling away stuff to a dump, just everything like that. I'm going to be very, very conservative here and I'm going to call all of that about 1400amonth. So your total direct cost to pay you to pay your one employee. Again, I'm doing a two man crew example here. Your, your basic fuel, materials, dumping stuff off at the dumping place. That's all direct cost. That's $11,000 a month. Now we have to calculate the overhead, the indirect cost. So unfortunately most people, I'm going to calculate that they have payments on both their truck and mower. So let's call that 1400amonth. Your insurance, 400amonth. I'm going to be very, very conservative here. But your, your software, your phone system, we're going to say 250amonth. That's very, very, very low. But I'm just, I'm just proving a point here. Even with the lowest numbers I can think of, how much it actually costs to run one crew of a lawn care business per month. Your marketing, Footbridge Media CallRail. Bear, Bear, Bear, bear, bear, bear, bear, bear. Bare minimums, $300 a month. Again, you can spend quite a bit more than that. I'm just, I'm going Low Here, your bookkeeper, CPA, 350amonth. Your shop where you store your, your mower and your equipment and all of that, we'll call that 400amonth. So with those examples of your truck mower payments, your insurance, your software, your bookkeeper, your storage unit, that's another overhead of 3,100amonth. So you gotta add up now to run my lawn care business with a, with one crew of two people. My direct cost in this example, which is conservative numbers here, I'm not, these are not out of the ordinary numbers. That's 1100amonth plus the 3100amonth for the overhead. That would be in my formula here, $14,100 a month to run this two man operation. So you got new guys coming into industry and they're charged $50 for a yard and they're thinking, oh, I'm making $50. I'm, you know, I'm rich. I'm, I'm, I'm banking, I'm balling, not having any clue that. Well, let's go a little math. Let's take a math a little further. Okay. 14, 100amonth for one crew, for a lawn mowing business doing everything legitimate, professional, legal, all of that. Well, now there's another part of the equation is you have to actually divide that by the number of hours billable hours you actually work. So if you guys are working 40 hours a week, you're not actually like mowing 40 hours a week. Let me explain it. You're probably really like the blades on your lawnmower probably actually only spinning 30 of the 40 hours a week. Because if you calculate the time you drive from your storage unit or your shop to the customer's yard. And then if you calculate the time in between each customer's yard and you calculate what we call non billable hours, you're probably working 30 hours a week. Like where you're actually got the string trimmers going and the lawnmowers are going. But you're, you're probably working another 10 hours a week just driving in between places and sending out your invoices and jobber and doing, doing all that stuff, probably another 10 hours. So I'm only calculating, I'm only calculating 30 hours a week times four weeks would be 120 billable man hours per person. And you gotta multiply that by two because we have a two man crew. So anyway, what I'm gonna do for my math here, again I'm being conservative. I'm taking, we've Talked about our direct cost and indirect cost to run a crew is 14, 100amonth. Now, I'm gonna divide that by 240 billable man hours. Again, that's, that's only 30 hours a week in my equation because I'm calculating the other 10 hours, you're just kind of doing windshield time and stuff. So anyway, if you take the math of 14,100amonth divided by your 240 billable man hours a month, the break even here, that comes out to $58.75 per man hour, my friend. Just listen to the math. If you and your employee are on a property for exactly one hour, that would be two man hours. So, so you, you and your, your worker, you go to your customer's property and you're there for one full hour. But there's two of you, we would call that two man hours. It costs your business $117 and 50 cents just to break even on that property. So if you're charging your customer a hundred dollars and it takes you one hour for two guys, that's two man hours. You're losing money. You're basically paying the client to cut their grass. There's so many guys out there thinking, oh man, I'm charging her $100, my customer $100. But you're there for, for a whole hour with an employee, that's two man hours. You're losing money. This is what I, this is the wake up call that we need. So if you're, if you're break even in my, in my very, very conservative example here is $58.75 per man hour. And I went on the low end of all my, you know, you could easily spend more on marketing than I gave in the example. You could spend more on other, other spots. But this is why you need to be charging at least $75 per man hour. Honestly, up to $85 per man hour is kind of the, the basement floor here just to build a profitable lawn care business that you can scale. My, my example, I came out to the math of a $58.75 per man hour break even. But we ain't trying to, we ain't trying to break even here. We're trying to be profitable. So that's why when you hear industry experts saying the average man hour rate in a lawn care business is $85 per man hour, this is how quickly you get to that math. And so if it takes you, this is just very, very simple math. If you go to your customer's Property, and it takes you one hour, but there's two of you. So one guy gets out and starts mowing, and there's a lot to mow, while the other person gets out and they start doing a soft edge along the garden beds. And then they do a soft edge. What I mean by soft edge, you flip the string trimmer up and you give a really nice edge along the garden beds. Then you give a nice edge, maybe use a blade edger along the driveway and the sidewalk and the walking paths. You get all the edges done real nice. There's some bushes to trim. So while the other guy's still mowing, the other guy is trimming the bushes. And then whoever gets done first is blowing. Maybe you got two blowers going at the end. You're blowing off the deck, you're blowing off the driveway, you're blowing. I like to blow the grass a little bit in the front yard. You know, if there's any clippings that clumped up there. You do all that, and it took you one hour, but there's two of you, so it took you two man hours. How much should you be charging for that property? Well, if you're only charging $100, you're losing money, so you need to be charging them for that property. I would say at least $150, $75 per man hour times two man hours. That property. That takes you one hour efficiently. I mean, you guys aren't goofing off. You're working the whole time. From the time you get out of the truck to the time you load the trailer back up. It's. That's a hundred and fifty dollars property for some of y'. All. You're like, man, I thought I was charging a lot. I was charging the customer a hundred dollars to mow their grass. And it was taking us an hour, me and. Me and my labor, you know, two of you takes us a full hour every time we're charging a hundred bucks. And here I am thinking I'm doing good, and Paul, you're telling me I'm underpriced. I'm giving you math. What. What part of my equation was not honest math? Wages. The fair market rate down here in Florida. You want to get somebody reliable. As a labor, it's $20 an hour. You want to get like a. A manager, so to speak, a crew leader. And that's what you're doing. If you're the one on the, you know, you're the one driving your truck and basically the foreman, you're. You're the top dog here. That's $30 an hour. So my, my wages that I'm using here in this equation for a two man crew, we want one crew with two man. I'm using fair market rate wages. I'm, I mean gas, I'm just, I'm just ballparking, but that could be more than I'm actually doing in my equation here. Insurance, Truck Payment Jobber, QuickBooks if you're using CallRail or footbridge media or, or the landscaping bookkeeper if you have a shop or you know, a storage unit, Cube Smart or, you know, I don't know all the names up where you live, but there's all kind of ones down here where you have your, your storage. You got to pay for all of that and then you got to get out there and you got to work 40 hours a week, but you're not really actually working 40 hours a week. You're probably only working 30 hours a week. So I, I did my billable hours at 30 hours a week. This is just all math I did here. That equals $14,100 a month to run this simple two man operation. That's a break even at $58.75 per man hour. And this is, this is on the conservative end. I could tweak these numbers a little bit and add a little bit more expenditures to the business and your, your break even rate's quickly going to be above $58.75 per man hour. So anyway, when we say there is a man hour rate average in the lawn care business at 75 to $85 per man hour. This is the reason behind that. This is why all the, the legitimate companies you go to Equip Expo and, and there's 27,000 people there. And you might not know who these people are walking around, but I, you know, I look at the little name badges and I can see, oh, you work for that company. Oh, you work for that company. Like there's, there's a lot of companies in this industry that are very profitable. They've been around for a very long time. They're running successful businesses. They know these numbers inside and out. And so when they go out to quote work, they're at most of the time they're accurately pricing because they know what their break even is. So they know, okay, we're $85aman hour minimum. They're just calculating. Now the, the math is, well, now we really need to be dialed in that we calculate how much time is it truly going to take our team to, to do this property. And as long as they get that number right, all they got to do is, is add to the equation we charge $85 per man hour and then they should have an accurate quote. And then when they're going out and they're doing that work, they're doing it at a profit. Now I'm very careful not to share too many numbers on this program because you might say, well, what do I charge, Paul? $75 per man hour. $85 per man hour. Because I'm seeing this guy on Instagram saying he's charging a hundred dollars per man hour. And the thing is you, your market is different because Southern California and even parts here of Florida that are very high end and then and parts of Atlanta, like it's different in those markets than it is in Arkansas and in, in Kentucky. And like there's, there's just different parts of the country that have different, some charge more, some charge less. So you need to know your numbers because at the end of the day it, it doesn't really matter what the guy on Instagram's charging. It matters. How much do you pay for your storage unit? I literally, I did. This is on a yellow pad. See as much producer. That's me hitting my yellow pad on my microphone. You like that? I'm, I'm doing this math old school on a yellow pad. But it's as simple as, okay, well how much am I paying for my storage unit? Write that down. How much do I pay my bookkeepers a month? Write that down. How much am I paying for Footbridge Media? The, to build my website, maintain my website? Write that down. How much am I paying Call Rail to answer my phones and do my marketing? Write that down. How much am I paying for my, my business phone line, right, your Verizon Wireless or whatever you got. What's the one you got, mister? But whatever you got for your phone and your software, your vehicle insurance, how much is that a month? How much is your general liability insurance a month? How much is your truck payments a month? You write all of that down and then you get into how much are you paying your employee per hour? Write that down. How many hours your employee working a week? Write that down. How much are you paying you as the owner operator? This, this is the one where most guys screw up. They, they don't include what they're paying themself. That needs to be in your equation. So you're, so you're quoting your work properly because what if you stop being the guy who's driving the truck. You're, you're stop being the crew leader and you hire somebody to do what you do, you got to pay them $30 an hour or more to do what you do because you're running the whole show here. So, so anyway, when you run all of that math at a regular workweek in season where you're bill, you're able to bill out 240 hours, you know, billable man hours, which all I did on my 240 equation there is I took 30 hours a week that you're actually working like you're actually serving customers yards. 30 hours a week. And I'm going to give you 10 hours a week that you're sharpening your lower blades and you're at the gas station getting fuel in your trucks and you're, if you're using Crest commercial, you're charging all the bat lake, all of that, you're driving windshield time. I'm giving you 10 hours a week for non billable, 30 hours a week for billable. And I'm multiplying that by two man crew. That's how I got 240 billable man hours a month divided by my 14,100 very conservative amount of what it costs to run this lawn care business. And that's $58.75 per man hour just to break even. But we ain't in the business of breaking even. We're in the business of making profit, running a profitable business, a successful business. That's why when you're out quoting work this year, you need to be charging at least 75 to $85 basement floor, bare minimum, so that your business is profitable. And if by all means, if you can charge more, if your market allows it, charge more and then hire professionals who can help you crunch your numbers, analyze your numbers, look at your numbers. I'm so thankful for John Pajak. I'm so thankful for Joey Koberly and his wife Megan and Kevin Salters and their team Stephanie and their team who helps us crunch our numbers. I'm so thankful to my accountant who helps me crunch my numbers. I do everything I can to keep my numbers squeaky clean in quickbooks. Like it's accurate, it's honest, it's real, it's clean. What I mean by clean is it's accurate. So that then when I have people smarter than me looking at all my numbers, they can say, okay, let's try to do better here. Why are you so spending so much money there? Can we, can we get more lean and mean over Here. Ooh, I think, I think this customer over here, you're kind of under chart. Like we can. We can look at all the numbers and we can level up based off of the math. So I'm just doing yellow pad math for generic two man crew in lawn care. But I hope it opened your eyes that in the most simplest way of running a lawn care business, legally and professionally, I came up with $14,100 per month just to run that crew. And you got to be making a lot more than that if you want to be turning a profit. So you got to be charging at least 75 to $85 per man hour. And then. And then that's calculating that you're actually out there with work to be done. Like, you know, you're pulling up to a customer's property and you're getting the work that you have the work. And so all of that is thank you to my barber for getting me all stirred up on all of this. But I say all of that to just show it costs a lot more to run a business than we realize. And when we're out there quoting work, we need to make sure we understand this math and that we're doing a great job with marketing to get. Get in front of new customers and to give them fair, honest pricing so that we are profitable and then go out there and serve them well and make that money. So, anyway, I hope this helps. This would have been better to do, like in person where I could write instead of writing these numbers on a yellow pad, you know, like writing them on a board and letting you, like, digest them and see them. Because I'm looking at them and it's just like, it's a wake up call time, folks. It costs. We're running businesses here. There's a lot of indirect costs and there's a lot of direct cost. We're. We need to recoup all of that and make sure that we're not just breaking even, but we're profitable. So make sure that we're marketing with excellence and we're charging enough. I appreciate you listening to today's program. The softwares and things of that nature that I mentioned throughout the program. Mr. Producer will put those in the show notes. If you're. You're new to the industry and you're like, oh, man, I need a bookkeeper. Oh, man, I need someone to build my website. Oh, man, I need a CRM. Yada, yada, yada, yada. The ones that we recommend are all in the show notes. So you can take A peek there. If you need help hiring the best to, you know, have the systems and operations in your business running on all cylinders, just take a look at the show notes. Appreciate you listening. And last but not least, we need folks if you, if you're blessed by the show and appreciate all this information that I share on the show, it would mean the world to me if you could please leave us a five star rating and review on Apple Podcast. Um, that's my favorite to ask you today, my friend. If you found value from my podcast today or on other episodes, you're like, man, this is helping me a lot. One way that you can help our show is go on Apple Podcasts and leave us a five star rating and review. That would mean the world to us. So thank you in advance. If you're kind enough to do that for us, we would appreciate it. All right, well, thanks for listening to today's program and we hope to catch you on the next one. Peace.

A (43:14)

Hey, it's Marty, producer of the Green Industry Podcast. This episode is over, but check the episode notes for links to products and services that you heard about during the episode. And thanks for listening.

B (43:26)

We all prefer things a certain way, like groceries. If you want groceries just how you like them, you gotta try Instacart. They have a new preference picker that lets you pick how ripe or unripe you want your bananas. Shoppers can see your preferences upfront, helping guide their choices. Because when it comes to groceries, the details matter. Instacart get groceries just how you like.

E (43:47)

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