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You know what's funny? The machine that's killing your profits is usually the one you're most proud of. It's paid off. You've owned it forever. You know every squeak, every rattle, every trick to keep it running. And every time someone suggests you replace it, you say, why would I? It doesn't cost me anything. But what if that's not true? What if your cheapest machine is actually your most expensive machine? Today we're going to be talking about when it's time to sell, replace or retire equipment before it starts stealing profits from your business.
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Today's episode is brought to you by Yardbook, the all in one CRM for your lawn care business. And as an exclusive partner of this podcast, you can get started today and begin simplifying your business and maximizing your profits. Sign up now@yardbook.com the link is in. The show notes Time now for Profits with Paycheck, an essential podcast for you in the green industry who are looking to unlock the full potential of your business. Hosted by John Pajac, your Certified Financial, the show features in depth discussions with successful entrepreneurs, thought leaders and industry experts. Providing practical advice and proven strategies on financial planning, operations, marketing and sales. Profits with Paycheck has valuable insights and action steps that you can implement today for creating long term success. Now here's John Pajak.
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Welcome to Profits with Pajak, the podcast where you talk about business strategies and financial insights for the green industry. Today we're going to be talking about fun stuff. We're going to be talking about when it might be time to retire some of your equipment. Now, most owners become emotionally attached to equipment. I'm not talking about, and again, I'm not talking about some big business guy, right? I'm talking about you and your business. You know, maybe, maybe you're still a one man show and this really hits hard for you because a lot of times we, we put our, we invest our emotions and our entity into the things that we've built. So, you know, our truck, our trailer, our equipment that's on those vehicles, those become part of our identity in a sense and we become emotionally attached to the equipment. I'm speaking from experience here, okay? You know, we remember that that machine helped us land our first big account. You know, we remember making the final payment on it. We remember all the jobs it completed for us. But you know, the problem is equipment doesn't care about our memories. It doesn't even though we think like, oh man, this machine's really gotten through. It came in, it came through. In a pinch. For me, it doesn't have those memories. It's just, it's just steel and metal and rubber and whatever else it's made out of. You know, the equipment is a business asset. Its job is to generate revenue. And the moment emotions start entering the conversation, your objective decision making disappears. I mean, it's, it's, it's, it's like talking to somebody when they're starving, when they're hungry, right? They make irrational judgments. They make, they start snapping at you for whatever reason and you know, it's like, here, just eat the sandwich, please. And they eat the sandwich and then all of a sudden they're just like, oh, I'm, I'm so chill now. Right? That's kind of where I'm going with this. You know, we gotta, as business owners, whether you're a one man show or you start growing into a bigger business, we have to make a separation between our emotions and business strategies to help our business grow. Now I feel like when it comes to equipment, there's three stages of equipment life. Now we got like phase one, right? That's the, well, let's call it the honeymoon phase, okay? Because the machine is new, it's reliable, it's productive, doesn't really require very much maintenance, just the basics. And every hour it operates, it's generating profit. Okay, that's our honeymoon phase. Then it kind of rolls into stable production. You know, it's like phase two of our equipment life. You know, maybe, you know, we get the machine paid off or it's nearly paid off. The maintenance is predictable. You know, it's, it just needs a couple little repairs here and there. Nothing big, you know, just, oh, we, you know, cable isn't working right anymore. Okay, Replace that. No big deal. Your productive, your productivity is still very high. It's making you money. This is like the sweet spot when it comes to machines. It's like again, we, it's pretty much paid off or it's paid off, doesn't require a bunch of tlc and it's making money. And I'll tell you what, most machines could stay there for years, all right? Then we kind of slide into the last stage, the final stage, and that's where, you know, this is where a lot of us owners get into trouble because we, we will sit there and we will justify that. Well, it's paid off. Yeah, it's requiring more maintenance, you know, because the repairs are starting to add up. We look at it and we're like, well, it's not that bad. It's you know, it just needs this thing, and it'll be fine. But the things we don't realize, you know, with these more frequent repairs that we're making now, our downtime is increasing, and especially if this isn't our machine anymore, you know how it is, like, oh, this is my machine. I could take care of it. It'll be fine. But let's just say this is a machine that goes into your fleet. You got more than one person working, right? You have, you know, maybe a couple trucks on the road. Even if it's one more truck, and your lead guy gets this machine, and he's just, I'm sick of this damn thing. You know, every time I turn around, something else is going wrong. Now I got to hold. It's like the cable keeps going out. I got to hold the throttle open on it so it stays up there. You know, it's like, you know what I'm talking about? I know. You know, whether it's a lawnmower or a spreader, sprayer or any other type of machine, you know, if it's got a throttle on there, sometimes those cables just go out and, like, you're sitting there, and you're like, I could just make it through the next day, the next day, the next day before you replace the thing, right? So what do you do? You either you're. You're holding it in the field, hold it wide open so that it stays at high RPMs, or you take a bungee cord or something, and you wrap it around there, and you. You know. You know what I'm talking about. You've been there. But you know what? That. What does that do? That causes your employees to lose confidence in that machine. They're sick of it. They. Then they start letting other stuff go because it's. I don't know if you've ever heard of the broken window theory, but, you know, a home that has a broken window, well, it's like, well, nobody's really taking care of this place, so if something else goes wrong, then it's okay. You know, I could see that in Gary, Indiana. You know, a house that has all their windows in place tend to keep all their windows in place. The second one of them gets broken, then everybody looks at it, and the kids or whoever is deciding to break windows, it's like, well, there's already one broken window. So here we go. Smash all of them out. Let's tear down the gutters now. Yeah, let's, you know, burn the house down. Let's. It's Fine. Okay, I'm sorry. That's just Gary mentality. But the same thing happens with your. Your employees. Like, oh, you know, the. The throttle doesn't. It won't stay where it's. It's supposed to. So we have a bungee cord holding it down. Oh, there's a rip in the seat now. Eh, who cares? Just keep sliding off at the same way. Don't bother to patch it. Just make it worse and make it worse. It's fine. Whatever, you know, and before you know it, the thing is just a trash heap just rolling on somebody's lawn, right? You know, when you have downtime with that machine because maybe it's not getting taken care of properly now, your customers begin experiencing delays because you're down a machine or the machine is not functioning properly and you're always having to fix it. Now, that machine isn't creating profit, it's consuming your profits. So those three stages are, you know, they're real. You could probably look at your truck and trailer right now and pick one machine that's in on your trailer and go, yeah, that's probably my. That these are all phase two, and there's my phase three machine right there. You know, it's like, that's the. That's the one. I don't know why I keep it, but I just got. I got paid off. And it still works sometimes, you know, but anyway, these are. Let me just start explaining some of the hidden costs that nobody ever really calculates. I mean, most people only look at the repair bills, right? And that's a mistake because the real costs are hidden. You know, a broken mower isn't just like a $600 repair. It's a loss of production. You're missing jobs, you have to reschedule. And that throws a whole headache into your routing procedure. You might have labor over overtime for your labor because they're slowed down, they're not getting. They're not as effective, they're not as efficient as they once were. Then you get employee frustration, and you got, you know, maybe you have to rent pieces of equipment while that other one's down so that you're not completely screwed. And then, you know, this could also. All these things could run into customer complaints. Now, most customers aren't going to complain about the condition of your mower while it's on their lawn. What they're going to notice is like, hey, you're supposed to be here on Wednesday, and I got a message that, you know, we're coming on Thursday, and you're still not here. And then you're telling me, like, our machines down and blah, blah, blah. Well, this has been going on for a couple weeks now. Like, we were supposed to be on Wednesdays every week. Our. Our schedule's messed up and they get upset about that. Okay, some people don't care. Some people do care. But that $600 repair that you thought it was, because you see, that bill can easily become, you know, like a $2,000 problem. What if, you know, you're losing so much production that one client just says, you know what? I'm done. Take us off your list. We're okay. What did that customer. How much money did that customer bring in per year? You know, if that's one customer and it's a mowing client, I mean, that could be, you know, like fifteen hundred dollars a year. And on where you're at, that's, that's, that's more expensive. I'd rather, you know, I'd rather keep that client. It's expensive to get clients. Not to mention the missing revenue from when a client quits. That's. That's a lot. Back when I was getting my lawn care business off the ground, I was juggling routes, invoices, and customer notes with paper and prayers. It was chaos. Until I found Yardbook. Yardbook gave me the structure. It helped me track chemicals, route efficiently, invoice faster, and most importantly, it helped me grow a profitable business. If you're tired of duct taping your systems Together, go to yardbook.com and sign up for free. And if you're ready to go premium, use promo code paycheck to get your first 30 days on me.
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Are you mowing lawns, running crews, and still wondering where all the money went? You're not alone. Naylor Taliaferro of LCR Media has been there. And that's exactly why he created Profit Accelerator Live. Join Naylor and expert speakers John Pajak and Eric Triplett for two powerful days of hands on workshops designed specifically for lawn care and landscaping business owners in Richmond, Virginia, June 26th and 27th. This isn't a conference where you'll sit in the back and take notes. You'll leave with an actual business plan in hand, knowing exactly what to charge, how to manage your time, and how to attract better customers. Tickets are just $299, but right now you can bring a partner or fellow business owner free with our two for one special. Tickets are just $299, but right now you can bring a partner or fellow business owner free with our 2 for 1 special. Only 75 spots are available and they will fill up fast. Use the link in the show description or go to profitacceleratorlive.com to secure your spot today. Put more money in the bank and more time in your schedule with Profit Accelerator Live.
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Hey, guys, John Pajak here. If you're a lawn care operator, landscape hardscaper dealer, or anyone working in the green industry, I want to highly encourage you to take a serious look at Equip Expo this October in Louisville, Kentucky. Because Equip Expo is the largest trade show and educational event in our industry. For three days, you're going to have the opportunity to see the latest equipment, test drive machines, attend educational sessions taught by industry leaders, and network with thousands of companies, contractors from across the country. Now, I've been attending for years, and every time I go, I come home with new ideas that make me money, save me time, or help me run a better business. So let's talk numbers. Registration is currently $30, but if you use promo code paycheck, you're going to save 50% and get your ticket for just $15. And if you wait any longer, prices are going to keep going up. So the question isn't whether Equip Expo is worth the money. The question is whether you can afford to miss the opportunities waiting for you there. So head over to equip Expo.com, use promo code PAYCHECK, and I'll see you in Louisville this October. Link is in the show notes. Now, here's a simple framework that I, I have laid out in my business that I want to share with you. Now, this is the rule of three, okay? When three of these start happening consistently, this is when replacements should be considered, okay? Now, this is my opinion, you might say, well, I can handle it, whatever. I'm just trying to help you, okay? So when we're looking at repair frequency, if we're fixing something every month, okay? And I'm not talking about the maintenance, I'm not talking about sharpening the blades or greasing it or air filter changes, oil changes, that stuff that, that's expected, okay? That's part of it. I'm talking about actual repair repairs. Maybe you have to weld the frame up or maybe you have to, you know, the casters are starting to do a death wobble or something and it's driving you nuts, okay? I'm talking about stuff like that. Wheel motors start going out, okay? The oil keeps leaking out of somewhere and you can't figure out where it's coming from. Okay. Things like that. When you're starting to fix something every month, that's the first sign when you have downtime. Okay? That's the second thing. The machine is spending a meaningful amount of time unavailable. You know, whether it's due to repairs or waiting on parts, we're doing all the things right, and it's just sitting there. That's another indicator. And then when it's when you start losing productivity with that machine, because if your employees start avoid, they're not, they're not using it, they're avoiding it, or they work slower because of it, you know, one, one of those issues could be tolerated, okay? Because anything that is mechanical is going to have problems. Eventually it's going to break, you're going to have to repair it. That doesn't automatically mean that you just throw it out, okay? So I'm not saying just if it needs to be repaired that it, it's bad. If there's a lot of downtime with that machine does not necessarily mean that it's bad. Okay? Just a very perfect example. There are machines out there that are different quality, different, different build, different duties, okay? They're meant to get the crap kicked out of them, okay? So you should expect some downtime with them. Case in point, there's two pieces of equipment I'm going to point out here. Okay? You may have a ride on, stand on aerator. Those pieces of equipment take a heavy hit and then, you know, they only get used like maybe once or tw, you know, one or two months out of the year. But there's going to be downtime with them. Okay? You're going to have to replace the tines. You're going to have to do go through everything, make sure the chains and everything are tensioned. And if it doesn't have chains, it's got hydraulics. You're gonna have to go through all that stuff just to make sure that everything's good. You gotta imagine it takes a beating, okay? So repairs and a little bit of downtime with that machine is not unexpected. But at the same time you don't want it the downtime to be during prime time when it's actually being used. Okay. The other one, for example, is a skid steer. Those things really do rough and tumble work. It is not unusual with the work that they do for repairs to be happening, but they shouldn't take up your entire life. Okay. To replace the teeth on a bucket or to replace, you know, maybe a hydro line starts to leak. That is kind of expected in some ways. It Also depends on how you're using it. Okay. If you're using it just in landscaping, it's generally, that machine's gonna hold up way better than a. A skid steer that's used in demolition construction. Okay. So I'm just making some, you know, pointing some things out here that you have to take into account as well. Okay. Now, if at the same time, you know, the hydraulics on that skid steer, nobody wants to use it because the sticks are floating all over the place, and. And you go to, like, turn left and it won't turn left, or, you know, the bucket starts going up and then you can't control it. That's a whole different story. Okay. I'm just trying to talk about the obvious things. Okay? So anyway, if, like I said, one issue out of these things and normal machines, it could be tolerated, but, you know, you start having two of these problems that should really get your attention. But three, if you have all three of these things happening where you have this, it's always down. It's. It always needs repairs, and you're losing productivity because of this machine. That is a warning sign. Okay. When you start to, you know, I. I just. When I always calculate, like, the revenue per hour for all these pieces of equipment. And this is where the conversation can get really interesting because, say, a ride on spreader sprayer generates $150 per. Of production per hour. If it. Repeatedly, if it breaks down. And let's just say I've had a machine that I was so mad, I literally had two of them, and two of them couldn't be in production at the same time. I would carry both of them on the particular truck and trailer combo, because when one would go down, then the other one was the backup, and then the other one would go down. It was like, you just kind of had to bounce back and forth between them. It was so aggravating. But, you know, if you look at repeated breakdowns, and that costs you 30 productive hours in a season. Okay? So let's take that 150 of. For production hour times 30 hours. That's $4,500 in expenses. Okay. Of lost production, I should say that in that expense, it's lost $4,500 in production. Now you had the repair expenses. That could be, you know, multiple breakdowns. Maybe it's the same part. Maybe it's different little parts here and there. Maybe those add, like. Like $2,000. Okay. Let's just say that for the repairs, it was $2,000. Suddenly we've got $6,500 sitting there. Okay. Now that's before we even start talking about employee morale or customer retention. Okay. At some point, the replacement becomes cheaper than the repairs because we got to look at this. You know, again, if it were me, like when I was using it, I was frustrated. I'm very mechanically inclined and I was just getting furious. I love this machine when it worked, but when it didn't work, I absolutely hated it. And I hated both the machines equally because they were almost. They were just a couple years apart in. I had a 2017 and a 2019 version of this same machine. Both of them actually sold the 2019 because it had more stuff on it, it was more prone to break. But anyway, when I had a tech trying to use it, he was like, I would rather just pull hose. And I'm like, I understand. So what ended up happening with those machines? They went bye bye. You know, they were not only a morale killer, but they were also physically costing so much money that, you know, within one season I could. I'm just like, you know, what if I just stop hanging on to this thing and I sell it? You know, I figured I ended up fixing them up so that they were actually still good, but I didn't want. I knew that the headaches would still come back. I just got rid of them and I could. It's like, well, with that amount of downtime, that amount of repair bill, I could actually buy another one of those machines if I wanted to. But I didn't want to get in that headache again, so I found a different one. But anyway, needless to say, you know, the flip side of that coin is there are times when you should absolutely keep a machine. Because not every old machine should be sold because some, some equipment is, is incredibly reliable. You know, the parts remain available, the maintenance costs are low, downtime is rare, and if the machine continues to produce profit, I would keep it. Because age alone is not the reason to replace equipment. The economics is. You know, I have literally seen, you know, five year old machines that should have been sold two years ago, right? I've seen 20 year old machines that are still earning their keep. I literally have a machine in my fleet right now that most people would just be like, that is ancient. And I'm like, yeah, but guess what? Every time we turn the key, it fires up. Every time I push this valve, it opens up and it sprays the way it should. The spreader on it is working just fine. It is crazy. It has hands down beat some of the newer equipment that I had that only lasted, you know, two seasons before I literally had to do a complete overhaul on it. So that's just. I just want to say that, you know, not every old machine, just because it's old and it has some wear and tear on it does not mean it needs to be replaced. Okay? But you know, I, and I hate to say it this way because I don't want to be, I don't want to, I never want to hurt anybody else. But you need to start to identify pieces of equipment and you need to sell them before everyone knows it's worn out. Okay? This is where many owners miss an opportunity because the best time to sell equipment is often before you desperately need to. Now for me, I talked about two machines earlier that were giving me nothing but grief. I have the for I'm fortunate enough to where I planned for replacement for equipment and I was able to get some different machines in place to take them over. So those machines were more like backups for me and I don't want to ever screw somebody else. So I took the time to go through both those machines, fix them up, got them running and not quite looking brand new, but they were good looking machines. I replaced everything, just about everything on them. The only thing I didn't replace, I even replaced the tires on it. Just even though I knew I wasn't going to get my money back on it, I just wanted to make sure that they were set up. But you know, honestly with the best time to sell your machine is when it still runs well, it still has some market value. You could actually take it out and just fire it up, you know, take it out, let somebody else start it up and let them play with it and do all that stuff without any worries, like, oh, I got to make sure I jiggle this before I do that. You know, basically when you could do that, you're going to attract a buyer and be able to get it out of your hair. But you know, once major failures become common and it's like there's certain machines out there, like, you know, like when the hydro motors start to leak and people could see that even if you're trying to be, you know, shiesty and whatever, you're cleaning up the, the spills and trying to hide it, you could see, you know, sometimes the metal gets stained so bad that from hydro leaks that no matter what you do, you could always see it. And if somebody knows what they're looking for, you know, they're like, I see, okay. They know that there's going to be an $800 bill, $1,000 repair bill in front of them very soon. And that resale value, it drops like a rock, you know. Now you don't want to be selling a problem, you know, you want to be selling a functional asset. And I think you should always be honest, you know, if you know that there's an issue and you're not going to fix it, at least tell the person what is wrong with it so that it's fair, you know? I know, I know. I'm a terrible. I talk myself out of so much money when I sell equipment. I tell them everything wrong with it. They're like, what's right with it? Well, let me tell you what's wrong with it first and then we'll get what's right, you know, But I just don't, I, you know, I just want to have a clear conscience about it. Anyway, let's move on. That's not that important. But anyway, the main thing is, you know, equipment, it exists for one reason and it's to make the company money. It's not to provide memories, it's not to provide bragging rights. It's not because you've always owned it. And the goal isn't to own the equipment forever. The goal is to maximize your profits. And sometimes that means, you know, sometimes that means keeping a machine for 20 years, some, sometimes it means selling it next month. And the smartest owners aren't asking, how long can I keep this machine? They're asking, is this machine still helping me build a more profitable business? Because paid off doesn't automatically mean profitable. And that's a lesson I think all of you guys need to hear. So as always, I, I'm hoping that this helps when you're in that position as you're growing, especially if you're a newer guy and you, you know, you had your, your dream piece of equipment, whether it's a mower, a skid steer, you know, spreader, sprayer, whatever it might have been at one point in time, it's going to lose its, its glimmer. And even though it might have been the thing that really got you started, at some point it's going to be time to let it go. So I'm hoping that this helps you look at it from a more statistic, data driven decision rather than just an emotional decision. Because again, I, my purpose is to help you grow a more profitable business. So with that being said, I want to thank you for listening. God bless. Keep pushing through and we'll catch you on the next one. Thank you once again for listening. If you've enjoyed the show, please leave a review and share it with fellow business owners. Your Support Support means the world to me and helps keep the show going strong. I want to give a special shout out to our friends at Yardbook. Their continued support has been instrumental in bringing this podcast to you week after week. If you haven't checked them out yet, visit yardbook.com and see how they can give you the tools to streamline and manage your lawn care business. Also, don't forget to explore the resources and upcoming events that I've collected just for you in the show Notes. These are curated to help you stay ahead in your your business with the latest tips, tools and networking opportunities. Whether it's a new tool, an insightful article or an event you don't want to miss, I've got you covered. Until next time. Keep pushing through and God bless.
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