← Profits with Pajak
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If you wait until the grass starts growing to think about money, you're already behind. The lawn care season doesn't start in April. It starts in your numbers. Today we're going to be talking about Every lawn care business owner should be focused on in the preseason when it comes to budgeting because the guys who plan now are the ones who stake home in July.
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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 at Yardbook. 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 Pak, 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 Pak.
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Welcome to Profits and Paycheck, the podcast where we talk about business strategies and financial insights for the green industry. I'm your host John Pakistan and right now a lot of lawn care operators are sharpening blades. They're starting to get their trucks serviced, they're organizing the shop and maybe they're already marketing. And that is all very important. But the real work of the preseason is the financial preparation. Because I really want to take today, I want to walk you through what you should be focused on financially before your first round goes out. Because if you do this correctly, the season becomes controlled instead of chaotic. Here's a problem that I see. Most owners start the season emotionally and not financially. And this is like a year to year thing. This is what I observe. You know, you got operators that just start the season thinking, you know, let's just get going and then as we go we will figure it out. Or you know, hey, you know what, the cash flow is going to just figure itself out. Or if we need to pivot, we'll pivot it when we need to. And a lot of times that mindset, it could create panic. Panic with hiring, it could also be due to you could be underpricing your services. It might turn out into like, man, I don't have enough to get through. And it turns out like you got to take a loan out. You know, maybe you're buying equipment that you weren't necessarily ready for. You're buying it out of pressure, and before the spring is even sprung, you're getting stressed out. And the problem is not the lack of effort. The problem is lack of forecasting. And that's why when you have a preseason budget, that eliminates a lot of surprises. So you need to know what your fixed monthly burn rate is. And I mean, this is before you cut your first lawn or, you know, put your first fertilizers down or whatever it is that you do. You know, what does it cost to exist every month? And obviously this involves going over all of your overhead, your fixed expenses, the things, you know, like insurance, your truck payments, your equipment, financing, your mortgage on your shop, your software, the advertising commitments, your, your phones, your utilities, your, your payroll, and like, what you're paying yourself, you know, don't forget about that. Don't do this based off of what you think it costs. You need, you can't just hope your way that, oh, if I hope it's only this much. You got to know the real number, because that number is going to tell you what you have to produce monthly just to survive. We're not talking about even profits at this point. We're just talking about break even costs. This is the point where you're not making any money, but you're not losing money either. Because if you don't know what your monthly burn rate is, you're guessing at survival. And then another thing, you need to build a revenue target before you book your jobs. And most owners, you know, they, they work backwards. They book the jobs and they hope that the revenue works. But you need to decide, what is my revenue target for this season? What is my net profit goal? You know, you, you have to know these things because now you have a target to shoot at. Because if you don't have a target and you're just shooting, you're never going to hit anything. You know, because you, you might be, you know, dead center. One shot, the next shot your way left, the next, your way right, and you're up and down, you're all over the board. But if you're like, hey, you know what? This is our bullseye. This is what we need to make. It's much easier to focus on that. Even if you're off by, at least you're in the ballpark. You know, you're in the, you're in the zone. You might not be hitting the 10 ring, you might be hitting the 9 and the 8, and hey, guess what? The 9 and the 8 ring are still good. But if you're hitting the, you know, off the paper. If you're familiar with target shooting or you're hitting like the outer edges, you know, that's not, that's not really good. You know, you also have to know like, what's realistic, your, your production capacity. What's a realistic number? Because, you know, I've heard guys talking about like, I mow 35 lawns a day. Oh yeah, well, we owe, we, we mow 40 lawns a day or we owe, we, we mow 60 lawns a day. It's like, well, how many, you know, how big are your properties? You know, there's a guy that I know that's local that, you know, he claims that he, he does like 45 lawns a day, but they're all in a HOA and you know, multifamily homes. And the average lawn size for each one of these properties is like, you know, a thousand square feet. It's really nothing. It's, it's very small. But he counts that as one lawn even though he's doing like 60 buildings and it's one stop and it only takes them, you know, eight hours to do it all. You got to put into perspective, you know, a lot of guys are doing, maybe they say they only get 10 done, but they're doing 10 acres. Each one of those properties is 10 acres. You have to understand what your realistic productivity rate is. Because if you say, I'm going to expect to do 61 acre properties in a day off a two man crew, that's probably really unrealistic. You know, it works different, like say, with the HOA capacity. Okay, but you know, you got to think about this. You know, if you want say $750,000 in revenue at a 40% gross margin and a 20% net profit, well, you need to engineer your pricing to hit that. You're not going to discount your way into the volume. You know, this is why preseason is when your pricing discipline is set. And once those trucks are rolling, you know, you don't have that already planned out and you don't have the game plan, then this is when emotions take over. 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. Now, hopefully you have already done some cash flow planning. And I, I always recommend, even before the season starts, like in the off season, to have a cash flow plan for the first 90 days. Now, if you're behind the eight ball on this and you didn't do that, there's still time for you. Okay, because we're still in the preseason. But this is where I find a lot of operators get hit. And, you know, when you're first starting the season off, you know, you kind of, there's generally a spike in expenses. Now, this doesn't mean it's going to be every single month, but you think about things like insurance renewals or for me, with a lawn care company that specializes in applications, fertilizer and weed control, we have our fertilizer purchases, our chemical inventory, equipment repairs if necessary. If we didn't fix everything over the winter or we're getting ready for the season, you might tack on some extra equipment repairs. Your marketing spend might be higher because we're getting the, you know, getting back into things. And this is our, our when we were trying to capture new, new clients and payroll, you know, before our, our cash flow really wraps, ramps up, you know, you know, you got to, you have to answer these questions like, you know, how much cash do I need in reserve to survive the first 60 or 90 days? And if you don't have that number, you're really operating on hope. And I'll tell you what, calm operators in May are the ones who prepare in February. So there's still time. You still have a little bit of time before the season really kicks off. Another aspect that you should look at is labor forecasting. Okay? Especially before you hire, I highly recommend that you do not hire emotionally. You need to create a forecast like, you know, how many production hours per week are you going to need to hit your goal? You know, what revenue per man hour do you need to hit and what labor burden really, truly costs you? Because again, I'll throw a quick number out. You know, let's just say you're going to pay somebody 20 bucks an hour. Well, with all the taxes, the labor burden that's attached to it, maybe that person is actually going to cost about $25 an hour. Or if you have a better benefits package like you start offering like a Roth IRA or you know that you're automatically going to take or contribute, help them contribute to or 401k a solo 401k or health benefits, you know, like dental health. And the more your fringe benefits package gets, the more money it's going to cost you. So maybe now that $20 an hour person, after you have all the labor burden, the fully loaded labor burden and like the fringe benefit package, if you have PTO, vacation, all that stuff, maybe it's $30 an hour. Okay, you have to calculate all that. And that way, after you run all these numbers, your preseason budget should really answer these three questions, like, when can I afford to add a second truck if needed? You know, at what revenue level does a new tech make sense? And what happens if, you know, rain wipes out a week? Do we have enough people on hand to, you know, make the difference up? You know, because there's going to be times when, you know, mother nature doesn't work in our favor and it's like, are you going to have enough people on hand to keep people from getting so stressed out and burnt up and you know they're going to quit on you? You know, these are, these are things that even though they're out of our control, we can help that situation by having enough employees. And the thing is, if you plan your labor now, you're going to avoid payroll panic later because there's nothing worse than saying, oh, you know, it's only going to cost me this much, it's fine. And then all of a sudden it rains for a week and you have to make up that with overtime. And instead of working a 10 hour day, everybody's pulling twelves. That adds up really quick. Okay, so you don't want to ever fall into that. Another thing that we need to look at is, you know, most of those, the capital purchases that we were going to get, they have to be justified. And I know every year, you know, there's temptation to buy something in the preseason. You know, whether it's a new mower, a new truck, a new trailer, or any new sexy, shiny thing that you got your eyeballs on before you buy it, ask yourself, is this going to help increase production? Is this going to help reduce your labor? Is this going to increase our revenue? Or is this just something that's emotional that I kind of just want? And it's like, well, it's really not going to move the marker on any particular thing, but I just want it. You know, every time you purchase something, every kind of capital purchase that you're buying, it should have an ROI timeline attached to. Shouldn't just be like, well, we'll just, we'll Just make minimum payments on this thing until it's paid off. Well, how long is that going to be? Is it going to be five years, seven years, 10 years? You know, it's crazy. I mean, they have these eight year loans for trucks now. Are you, is that going to work for you? You know, so really, if you can't justify the purchase of a piece of equipment or whatever, then it should wait. So I just want to just recap really quick. Your lawn care season is not necessarily one by hustle. It is one by preparation. And the operators who stress in July are usually the ones who skip budgeting in February. So I want you to sit down for two uninterrupted hours, okay? Just sit there and schedule this out. Don't sit in front of a tv. Go somewhere quiet. Go to your office, go to your shop, whatever it might be, and face your numbers. No distractions, no guessing, no avoidance. Because when you control your numbers, you control your business. If you're interested in this, I'm going to just throw this out there. I offer budgets, break evens and bottom lines, which is a system that can help you dial in those numbers. We are not only going to figure out what your budget is for the season, but we're also going to look at what your break even point is so you know exactly what your price points should be for each of your services and that way you could be profitable. And that's the whole name of the game. So again, thank you for listening to Profits with Paycheck. You could find the budgets, break evens and bottom lines at my website@johnpajak.com I want to thank you for listening as always, always and 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 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 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.