Dave Tucker has been in the green industry for decades. Dave has seen lawn companies of all shapes and sizes thrive and fail. In his research of the industry, he has discovered that there are four keys to making the most money in lawn care.
How To Make The Most Money In A Lawn Care Business
- Find The Perfect Customers
- Motivate Your Employees
- Track Your Revenue
- Develop Systems
1. The Perfect Customer
Travel time can be the number one killer of productivity and efficiency. Location is such a big deal that it’s worth around $40,000 a year for a company with ten crews that have three men on each crew to move it’s starting location 15 minutes closer to their customers.
How is that possible you ask?
- .5 hours (of traveling 15 minutes to and from your daily route), X 10 crews, X 3 guys (on a crew), X 36 Weeks (a season), X $45/hour (each man costs you per man hour) =
- $24,300 in LOST SALES per year. So even if you paid $40,000 to move your location 15 minutes closer to your routes, you would recover it in less than two years.
The Perfect Customer Is Able To Pay
Hopefully, you look at this point and just say, of course! But have you looked at your numbers in CLIPitc or CLIPxe? Did you make sure that all your customers pay their bills on time? Even if your late customers eventually settle after a few phone calls that means you paid someone (or spend your own time) for 10-20 minutes just to make late payment calls. Our policy is that when the customers don’t pay, we don’t cut! We try to have most of our customers’ credit cards on file and just bill them monthly for the service.
The Perfect Customer Only Wants YOUR Service
Do you like to focus on just mow-blow-and go jobs? Do you want more high-end customers that need some fertilizing, landscaping tips and weekly gardening? Know what jobs make you the most money and what jobs need your focus! Check out our article on the “product” part of your marketing plan. Then print out some CLIP reports to see what jobs make you the most, and listen to your best employees about what jobs make them the happiest (especially if they are succeeding in piecework!). High-maintenance customers, that always call you with complaints, argue over and edit your contract each Spring, and have a list a mile long of special requests each month are not perfect customers. You want good, everyday customers that pay you regularly, like your service, and don’t need much change from your company.
Get the perfect customers so you can do your best work and make the most money.
The Perfect Customer Won’t Force You To Give Away Your Extreme Profit
As Cutting Edge Lawn Care shared with us, it is never worth it to give away your profits just to get a customer. Cutting Edge used to take any customers that called them as long as they owned grass and wanted it cut. However, 80% of their customers didn’t have sprinkler systems, and they all lived in Texas! One summer they went from weekly and bimonthly mowings to stretches of 6-8 weeks between mowings because of a horrible drought. Then in January, they found out that the next season was predicted to be the same – long, dry, and hot.
Increasing Extreme Profit by Streamlining Customers
“That is when Todd and I looked at each other and said, “No way!” So, we thought about it and made a significant policy change. We decided from that point on to only accept new clients who had sprinkler systems, and who wanted weekly lawn mowing during the growing season, and who would sign one of our two annual service plans (one is 38 services per year, and the other is 52). That year, we turned down 80% of the people who called us for quotes. And, we grew 20% in sales.
The new policy saved us. The drought has continued in Austin since then, and we have grown every year. Last year, we increased almost $200,000 in sales… One other thing I forgot to mention was something it took about three years into the policy change for us to learn. Our new clients (with the sprinkler systems, weekly service, and on an annual service plan) were worth three times the value of our old clients base (no sprinkler system, bi-weekly mowing, and no service plan).
Initially, we thought they would be worth twice (biweekly to weekly mowing). But the fact that they had invested in a sprinkler system and they were willing to pay for twice the mowings meant that they wanted a much more beautiful lawn and landscape. So, they also bought fertilization, color plants, new shrubs and shrub trimming. We are so thankful that we raised our bar. We have very been blessed.”
Don’t give away your lawn service — find your perfect customers and stick to that type and your company will grow.
Here at CLIP, we get calls all the time from lawn care companies asking how they can “track their employees with GPS to make sure they’re doing their work.” Someone even asked if we have a GPS solution for mowers to make sure the lawns were mowed in stripes!
Employees can sometimes take their time at work — they make extra coffee stops, loiter on smoke breaks, and stretch lunch into 2 hours some days. Often, it’s hard to know if your crews are milking the clock. Of course, the worst employees will likely weed themselves out, but the best employees tend to take their time and do a great job.
The “Employee” Problem
Across the service industry here in the USA the #1 problem owners face is finding ways to motivate their employees to do better work. It usually seems that the owner can accomplish the same job much faster than the employee. Why do owners continually have to try to motivate the employee to work harder and smarter?
The honest answer is; we are teaching them to take as much time as possible because they are only getting paid for their time — not their efficiency.
When hourly employees take their time at work, they work more hours and in turn get paid time and a half for overtime. You can try to motivate your employees by saying that they’ll get a raise in 6 months if they do a great job but it’s much easier to motivate people with immediate gratification.
The Piecework Solution for Extreme Profit
When you use piecework to motivate your employees, they will get paid per property. The system is based entirely on how efficiently your folks are working.
Piecework takes most of the pressure away from the managers spending all their time “babysitting” to make sure the work is getting done. It also helps the owners immensely when it comes to accounting — your employees are merely paid a percentage of what you are paid.
On rainy days when the work is slow, you are both paid less — and on late Summer days when the grass is growing, and mowers can almost fly through the properties, you are both paid more.
Of course, you don’t want your business based on doing the fastest mowing jobs because quality will dip and you may lose customers. If you get your employees to focus on cutting the most lawns possible while doing a good job, you can ensure the quality stays high as well.
We have a ton of articles about how to motivate employees with piecework, and you can also check out Dave Tucker’s book, “Lawn Maintenance Piecework and the Beautiful Business: Getting Your Employees to Pull With You.”
How Can You Track and Use Piecework Legally?
Check your state for the laws on piecework, but most have legal ways to do it — typically they will insist that you pay your employees the federal minimum hourly wage and possibly set up a contract with them to have variable pay. We have used piecework in one of the most strict counties in the US, Montgomery County MD, and had no issue.
One objection we’ve heard to implementing piecework is that once in place you need to know your employees hours, how many properties they serviced, and what you charged those properties to discover percentages. The fear is that putting piecework in place is going to triple the time it takes to do payroll.
We can assure you that it won’t.
The truth is that piecework is the philosophical foundation behind CLIP. The entire system is built around the concept of piecework, and all of the tools you need to implement it are in CLIPitc and CLIPxe!
The CLIPitc app and CLIP2go make it easier for your crews to put in stop and start times, clock in and out, and allows you to keep up with where they are. CLIP also has dozens of reports that can make your transfer of employees hours to QuickBooks for payroll pretty easy. You can even make sure that you are meeting the minimum wage requirements.
3. Revenue Tracking
You need to include some factors when you start revenue tracking to figure out which customer pays you the most per hour.
- how many man hours the property takes to work on
- the number of people that are traveling and working and for how long
- how much you are paid for the work
- how much extra wear and tear on your machines or materials cost you should take into account at that property
Man Hours to Increase Extreme Profit
Determining your man hours is basically breaking down how much money you want to make for doing a job, and the time you have per person to hit that goal. We have some great infographics to walk you through the man-hour rating process.
The easy way to know what your man hour rating is with each of your customers is to just track it in CLIPitc.
CLIP has a series of reports that can tell you your man hour rating for each customer and even highlight which ones make you the amount of money you want to earn each man-hour, and which ones don’t.
When you have your employees track their times in the CLIPitc app or through a route sheet that you input into CLIP, it’s pretty easy to find out which customers make you the most revenue.
You need to be tracking and knowing exactly how much materials you have used on the customer’s property and bill them for that separately. If you haven’t separated your material costs from your labor costs on your jobs yet, you are likely losing a little bit here and there, and that could be affecting your bottom line.
It’s always nice to get a massive check from a customer. The problem is, sometimes those dollar signs can cloud your vision, and you forget all about the truckload of mulch and couple dozen pavers you used to get their job done. Factoring in these extra costs, that check doesn’t look as good anymore, and that customer might be your least profitable one.
How Does Revenue Tracking help Extreme Profit?
The question becomes; “How could knowing who my best customer is affect my revenue?”
When you know who your best customers are, you can look at the properties and figure out why. Is it because the travel time is down? Is it because the property doesn’t have trees to mow around? It could be many different reasons, but if you know which one you can bid your future customers better based on them.
It also tells you something essential — which customers you do NOT want to lose! That means that when you want to send a letter out raising your prices, you better ignore the best customers or you may lose them. Send out the letter to your customers that barely make you enough, if you lose them, you can just replace them.
Know who your highest revenue producing customers are so you can make all your customers give you extreme profit!
What is a system?
According to the dictionary, a system is “A group of related parts that move or work together.” Business is made up of many different parts including but not limited to customer service, accounting, employee management, marketing, etc. However, to have a profitable business that anyone can run, you have to design systems that blend seamlessly to create a smooth operation, which in turn, will make you more profitable. This way, when a new person comes on board or is promoted into position, they can lean on the processes in place and only need to learn how to do their job, not necessarily what their job is.
What would happen if your company had systems?
Systems can make your employees more reliable. And, with more reliability at the office, you might finally be able to take some vacation time. You could hire someone who may be bright but has no experience, quickly train them, and have them up to speed in a much speedier fashion.
With a set of systems in place, you could take a lot of menial burden off of yourself and use that time for other things.
What systems do you have in place to increase Extreme Profit?
How many systems do you currently have set up in your company? Can you define all of the areas that are systems based?
If you’re not careful, a system will create itself if you’re unintentional about setting it up. This means that any bad habits that the people that hold positions of responsibility in your company are baked into those processes and taught to your new hires and promotions.
Don’t wait until you see a problem to organize and create the process. Even if you have good people, you can still have bad systems if they’ve not been considered well enough.
What systems do you need?
Think of the different aspects of your company and the roles within and make a list.
In our experience, it’s best to have a system in place for every part of your company.Don’t just consider how the pieces fit together but also how they’re built.
Ask yourself these questions:
- What makes our business tick?
- Who’s responsible for what?
- How do we measure success?
- How do we track our progress?
- What tools do we use to accomplish tasks?
Systems in use at CLIP Lawn Care TN:
CLIPitc: CLIPitc turns our customer management, routing, scheduling, and job costing into seamless systems that any of our employees can efficiently use. We use the CLIPitc system to figure out everything customer related from routing to job costing to which customers make us the most per man hour.
QuickBooks: CLIPitc links right to Quickbooks so we always know what your customers owe and can make sure we aren’t cutting without being paid. It also helps us track all of our accounts receivable.
KnowItAll: KnowItAll links keywords to our documents, spreadsheets, questions/answers, passwords, and much more so that we don’t need a company Know-It-All and can just let our employees quickly search for the answers on their own (see our past article on KnowItAll here). Before KnowItAll, our CEO could barely go on a few days’ vacation without checking in regularly. Since KnowItAll, he has gone on month vacations without having to contact the office!
We also have a lot of our building block systems stored in KnowItAll such as training manuals, a company handbook, marketing documents, email lists, customer databases, and more.
Systems are what make your company run, whether you intentionally build them or not. Take some time and design the systems that work for you and you will be well on your way to extreme profit.