Transcript
A (0:00)
500 for the year. That seems really expensive. I was thinking more like 300. That's what a potential client said after he viewed an estimate. Meanwhile, I'm standing at the gas pump thinking $500 is what I drop in a day just to keep the trucks moving. So let's talk about that.
B (0:18)
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 Prof. Sign up now@yardbook.com the link is in. The show notes. Time now for profits with PayJack, an essential podcast for you in the green industry who are looking to unlock the full potential of your business. Hosted by John Pajak, your certified financial coach, 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.
A (1:22)
Welcome to Profits with Paycheck, the podcast where we talk about business strategies and financial insights for the green industry. I'm your host, John Pajak, and today we're going to talk about something that every single one of you has heard before. You're too expensive. And I want to hear, I just want to challenge that right out of the gate. I want to just say you're not expensive, you're just finally charging correctly. Now, I was talking with my Good friend Joe DePace, Joseph DeBace, he's up in Michigan, Wonderful human being, great, great technician, great business owner. Love the guy. But he's telling me, you know, he calls me up and he's, he tells me he sends out an estimate for just over $500 for the entire season. And I think it was like 504. It was, it was literally just over 500. And the response came back and the guy's like, yeah, it seems really expensive. I was thinking more like 300 or 350. And Joe and I were talking on the phone and, you know, we're not making fun of anybody, but we just both started laughing, you know, not because it's funny, but because, you know, if you don't laugh, you just kind of lose your mind. And, you know, that's what we do as Midwesterners. You know, we don't go to therapy. We just laugh at our problems and keep working. But, you know, that conversation stuck with me and, you know, as I'm Thinking about it, I'm like, man, you know, I was starting to really think that Joe's price was low for the level of work that he does. I was like, yeah, I. I charge a little bit more than that, you know. But anyway, later in the same day, you know, I'm out driving, I'm getting to the shop in the morning, and I go past the gas station that's right by us and it's 3 96. And then, you know, I'm doing some stuff. I wasn't really doing production today. I was doing, you know, being the gravel back mechanic that I am, you know, just fixing the equipment that was down, prepping everything for the other guys so that they could go do their job and, you know, be efficient. And I go back out and go grab some parts. And I noticed that that same gas station is just a couple hours later is. It's 409. And then, you know, I go home, I make a, you know, got to get home a little bit early so I could take my daughter, pick her up from school and take her to karate practice. And at the end of our road, which is not far from our shop, there's two gas stations across one another. Both of them were saying 479 a gallon. And I was just like, what, wait, what am I flipping out? I'm like, I swore it was just like 4:09 earlier. But anyway, I take her to karate. After practice is over, we're coming home for dinner, and we pass the same gas stations and now they're 4.99. And I remember I pointed it out to her. I said, it's, do you look at those prices? It's 499. She goes, I thought it was 479. I go, Me too. But within a half of 45 minutes, they changed the price, they upped it 20 cents. And this is all in one day. You know, this they went for it has increased literally like a full dollar in a day. A dollar and three cents in one day. You know, it's like, it's like the weather we have here during springtime. We get all of them, just a matter of hours. You know, sometimes you don't like the weather. Just wait 20 minutes and you'll be different, you know. But, you know, I'm sitting there and I'm starting doing the math because I realized I got two trucks sitting at the, the shop right now that both need fuel, you know, both trucks and their loadout, their equipment that's in them. I started thinking about it. I'm like, that's gonna be about a hundred gallons. So if I could, you know, I did find a gas station that was just on the. I don't frequent it often, but it's a little bit further down the road, and they are still selling gas for 4, 434, 435. Let's just say that after tax, you know, so I'm sitting there and I'm like, this is gonna be like $435 on the low end to fill up two trucks and all their associated equipment. Or it's gonna cost like $500 on the higher end. Because if it's 499, I mean, it's basically five bucks a gallon, right? I need a hundred gallons. That's five hundred dollars. And it hit me, I just kind of went back and I'm like, oh, man. You know, that potential client said $500 was too expensive for the year. Meanwhile, $500 is what it cost me to stay in business for a day. Now, obviously, we're not going through a hundred gallons a day. You know, I don't want to make that, you know, assumption here, but, you know, each one of my trucks uses about 50 gallons per week, you know, and that covers. We work a 4, 10 schedule. So it's 4 days, 10 hours per day. And our. We have good, tight routes and we drive round trip from the shop to all the, you know, each truck. Now, we have multiple trucks, but each truck drives on average, 35 miles round trip a day. Some days it's less, some days it might be a little bit more. But I generally try to keep it around that 35 mile mark. So these are tight routes. They're very efficient. We're not driving all over the place. You know, when we get into a neighborhood, we basically stay there and we're knocking out three, four, sometimes five properties before we even move the truck. So let me ask you this. If we're burning 50 gallons with tight routing, what do you think it looks like for guys running loose routes? Is this hitting you? Is this maybe. Is that hitting a little too close to the nerve for you? Maybe. Maybe. Are you one of those guys that runs 80 to 100 miles a day? You know, I'm just asking. It's a little bit different when you're doing project work, but, you know, if you're doing regular maintenance, recurring work, that's a. That those, those will eat you up. So, you know, this is one of the things that I tell people is you got to stop looking at the dollars and you Got to stop looking at the gallons when it comes to fuel, you know, specifically, because gallons aren't going to lie to you. And here's what I mean. You know, $100 in fuel tells you nothing. You just see it as an expense. You're like, yeah, I'm spending about 100 bucks a week. Well, that hundred dollars in fuel at $2 per gallon, that's 50 gallons. And if you're looking at $5 per gallon, that's only 20 gallons. It's the same hundred dollars, but completely different amount of work that you could actually get done. And that's the trap. If you're only watching the dollars, you'll think nothing's changed. More than likely, you're noticing it, though. I'm not going to say this is not a silent thing that's happening. You're gonna look at your bank statements, you're gonna look at your receipts, you're gonna look at anything, and you're gonna immediately see this. The fuel pop up. It's gonna be like, whoa, I am spending a lot on fuel this year. The thing is, if you're. If you're watching gallons, you realize your production capacity, it's literally shrinking right in front of you, and it's. And if you don't adjust your pricing to match that reality, your margins just disappear. So, you know, and here's the thing. You know, there's perception versus reality. And this is the problem. I see a lot customers, they don't know what it costs to produce the results that they want. They guess, they pick a number that feels right in their head, and then they try to justify it. $300 sounds fair. Yeah. Based on what? It's not fuel, it's not labor, it's not insurance, and it's not materials. It's just a feeling. And the dangerous part, there are contractors out there reinforcing that bad perception by charging too little. And unfortunately, a lot of these guys, they think they're going to make this up in volume. You know, they. They. They get caught in this volume trap versus an efficiency model, you know, and the thing is, you know, oh, I'll just get more work. I'll just get more work, and then we'll make more money. But honestly, they never hit the volume that they actually need. Why? Because, you know, they're wasting time driving. They. They're not focusing on keeping tight routes. They're not focusing on trying to be more efficient. You know, they finish one job, they pack up, they drive five minutes, they. That five minutes they think is good. And Then they unload again and they repeat. Meanwhile, we got like, we're, we're super tight. We. We might finish like three houses and then roll down the street and knock out, like, three more. And that's the difference. Efficiency is winning and not the cheap pricing. You can't dig yourself out of a hole by digging deeper. It's just not. It's just not gonna happen. So we're gonna take a quick break, and when we come back, I'm gonna show you why, you know, this isn't just about fuel and what you need to. And I just want to talk about what you need to do right now to protect your business.
