4 Stages of Starting a Lawn Care Business
If you are just getting started or looking to grow your business, these are exactly the things I wish I had known at the different stages of building my own million dollar business - and some tips to help you avoid the pitfall along the way. Breaking down your business into these four stages really paints a picture of what hurdles you’ll be facing and can give you the tools to set meaningful goals.
- How to go from $0 - $100k in Yearly Revenue
- How to make $300k in Yearly Revenue
- How to grow to $500k in Yearly Revenue
- How to create a $1,000,000 company
In the moment, everything seems hectic and crazy but taking a step back can give you the clarity to prioritize your time wisely and make a difference as a leader and entrepreneur. Hopefully, through my failures we can learn what works and what doesn't. That way you can build a profitable business with less speed bumps. So, whether you are just starting out or are looking for the next step, there is important information here for any business owner no matter the size.
How to go from $0 - $100k in Year Revenue
There is no easy path to success, however there are things you can do to make the trail easier to follow. This initial phase of your business is all about boots on the ground and not getting ahead of yourself. Most people want to go out and buy equipment and trucks but contrarily you need clients first. Starting by talking with your neighbors and your friends' neighbors is a great way to gain your first few customers. For example when opening a new location our goal is to gain our first 10 mowing clients before we even buy a mower or get the painted trucks. This ensures that once you do buy those things you have a way to pay for them. Obviously the caveat to this and the shortcut to accelerating through these phases is based purely on the amount of money you have available to invest in your business. One great way to support yourself while in this phase of the business is to get a job, either part time or full time and do this on the side.
At this phase in operations it’s important to view the position like a job and not a business. Making this distinction means that you are applying your time working in the business and not on the business. Generating a base revenue to fund your endeavors will set you up to expand down the road. You typically are the one wearing all the hats at this point and thus it is a great time to refine your skills and experiment with your systems. Learning a base set of skills like estimating, time management and technical skills will set you up to be able to train employees and grow a team as you expand. Focusing on quality customer interactions and trying to establish cornerstones of your business such as a Google my business page and website can put you leagues above the competition and accelerate your growth. The main reason you would want to consider this a job is for the fact that if you step away from the work then the operations come to a streaming halt. Some people are happy at this stage of working for themselves, however, know that true stability and generational wealth requires you to push on and continue to grow.
While in the beginnings of your business you’ll have a lot of firsts from your first dollar to your first big job. The flip side is you’re bound to have your first bad review and first insurance claim. Everything at this stage feels like it's a huge deal and it can be helpful to use your long term goals to guide you through the storm. Learning from your mistakes and adapting is the biggest skill you can bring to the business at this stage. Working to ensure you take the right steps along the way can make your failures lighter and your accomplishments bigger. For example, making sure you correctly insured your business, in the case of lawn care that looks like an Limited Liability Insurance, can help dampen the blow from accidents on the job. The other side of everything seeming so important is that you can waste time worrying about the little things like what mower to buy and what trimmer to use. By simply making a choice and moving on it allows you to continue to grow as you refine your business down the road.
You'll be better off getting progress than perfection.
It’s hard at the time but trying to see that one bad customer or one broken trimmer doesn’t affect the future outcome of your business can set you free from some of the daily stressors holding you back.
One of the largest impacts on your success at this stage is prioritizing your goals and ensuring you are headed to bigger and better things. Focusing your energy on maximizing your closing ratio and top line revenue are key to growing past $100k. You want to focus on closing as many jobs as possible and focus on closing profitable jobs. This doesn’t mean taking jobs at a loss for the sake of having work, it means giving as many proposals or estimates as possible and what amount of those are being accepted. At this point selling is your biggest strength and capitalizing on that is what will push you beyond $100k in yearly revenue to do bigger and better things.
How to make $300k in Yearly Revenue
Breaking this barrier is the hardest hurdle for most companies and is why you’ll consistently see them come up and then dip back down to the 100k mark. Building a business to this size requires you to hire a team, build a culture, stay focused on your pillars, and reconsider compensation. All of these things are easier said than done and can be a daunting task for most people. We’ll look at what I wish I knew at this phase of growing Augusta Lawn Care and what you can do to prevent failure and encourage growth.
I’m a big proponent that you have to hire a good team to form a solid culture but the real key in building a strong culture relies on how you fire as well. No one wants to be let go, much less let someone else go, however this is what can set you apart from other similarly sized businesses. Making sure that standards are maintained and that your entire crew is meeting those standards is the root of what makes a good team. Although the first step is to establish the standard, this means clearly laying out what is expected and what isn’t tolerated. This prevents the team from feeling tricked or manipulated. The next thing you’ll have to do is stand by your decision and actually fire those individuals that are bringing down the entire team. All too often I see owners holding onto one or two team members that are cultural cancers to the rest of the team because of tenure or other circumstances. By letting them go you show that you are there for the whole team's success and not the success of particular individuals.
It’s not just about who you hire, it's about who you fire.
One way of building this culture is through off site meetings and team meetings. For us that looks like quarterly meetings at a restaurant where we go over numbers and our plans for the next quarter. This gives the employees an opportunity to bring up their concerns or questions and helps form a bond between the team. Our daily meetings on the other hand help ensure everyone is on the same page and moving towards the same goals. Having meetings like this gives the employees a platform to express their thoughts and give input on the company; preventing alienation and stagnation within the team and keeping everyone motivated.
The biggest impact you could have at this stage would be implementing P4P, Pay for Performance, a new system of compensating labor. I constantly found myself wishing I could pay my hardest workers more and get lazy employees off their phones and back to work. The typical hourly pay just incentivizes people to spend as much time on the clock as they can and stay just busy enough to keep their jobs. It builds a wall between the employee and employer locking them into a tug-of-war over profits. P4P is different. It uses a percentage of labor revenue to pay the employees based on how efficient they were. This means that if an employee works faster than expected on a job, then they get a cut of the time saved. This generates savings for the business and passes those savings along to the employee. The most formative part about this system is that it aligns the view of the employee and employer to cut out waste in the business and start generating profit. I had to ask myself, “Will doing these calculations actually save more time than just running hourly?” and eventually, I came to the solution. By either using P4P software or working in Excel, you can do a simple calculation to determine the bonus pay for each employee each day. Its real benefits are seen in how the culture of the business changes once it has been implemented. The team is left to manage their own time and can directly control how much they make on each paycheck. This incentivizes them to work smarter and harder on each job while working to improve themselves and others. It shows them that they are just as much a part of the company as the owner and gives them a sense of accomplishment each day.
When I was expanding my business into this stage, I hit a roadblock that I’ve seen many other providers hit and that is a stagnation of growth. Once you get around this $300k mark, your business sense plateaus and one knee-jerk reaction that many, including myself, do is start expanding services. We implemented terf install, material delivery, customer projects work and so much more. While this does generate profit, it is essentially starting another business on top of your current one. You’ll be in Stage One on one endeavor and Stage Two on another. This tends to lead to strife and frustrations down the line as employees leave and with them the expertise for those services vanishes. Instead, I pose that the solution is to focus internally on improving the service base you are familiar with and streamlining the process top to bottom. This is akin to winding yourself up to leap forward.
How to grow past $500k in Yearly Revenue
Winding up for that jump is your best friend when you look to expand past $300k on through to surpassing $500k. I suggest to every single company I talk with to speed through this stage and shoot for that million dollar mark. The reason for this is that you see little to no increase in profits when you are at this stage, and that is why many will turn back. It’s very similar to the initial year or two of your business when everything is going right back into the business and you see very little returns. Staying around $300k for an extra year saving money aside and pausing growth is the preferable strategy when looking beyond that $500k mark.
The key to success here is delegation. This allows you to step out of the daily operations and finally allows you to work on the company. However, this is what generates the extended overhead and is the culprit for why you don’t see substantial profits going through this phase. Delegation is the key to this! Up until this point, you're like an octopus extending through each area of the company and everything ultimately ties back to you. Once you start to delegate out tasks, the business starts to be able to run without you and that is when you truly have a business. One method to accomplish this is to write out every task you have on a sheet of paper and go down the list thinking who you could give each task to. This means eliminating the need for you to answer calls, do payroll, work on equipment or answer emails; it will allow you to work on expanding the company and accelerate growth.
How to create a $1,000,000 company
This isn’t the final marker for your company, but it certainly is a huge milestone for any company to achieve. Bringing your business beyond that million dollar mark requires you to shift your goals as the owner and implement new methods of growth. This shift involves you going from creating success in the business to creating a path for others to find success. The true accomplishment of a business owner in this position is to give your team the tools and opportunities to start at ground zero on their own and grow to your level. This requires you to become a leader. No longer are you working in the field. You are now in the role of Leader, inspiring others and creating incentives for them to achieve greatness. One such method is through Open Book Management. This involves peeling back the curtain and teaching your team the inner workings of a business; giving them the practical knowledge to propel themselves further in life. Along with that, comes the idea of profit-sharing by providing more incentives for your team to stay efficient and care about the company as a whole.
All of this doesn’t mean that you put a break on things and start giving away all your profits. At this stage, you actually start using your profits as a new form of leverage for your business. You have spent the entire time leveraging labor to pursue bigger and bigger dreams and generate more profits, but now it is time to use that capital that you have generated as a new form of leverage. This can look like opening a second business or location, using the capital from your first endeavor to fund the next and skipping all the headache from starting at ground level like you did so many years ago. It becomes apparent at this point in time however that you are going to need General Managers or something similar to keep all of these different endeavors running smoothly. This can be one of the hardest parts of expansion and something that you are faced with time and time again from the first day to the last and that is relinquishing control over parts of your business. Getting a GM is a crucial step in setting your company up for success without your constant involvement and finding someone you can trust is imperative.
Lastly at this size you’ll want to realize the price elasticity of your business, this is crucial in expanding capital. If you have successfully built to this size you most likely have a strong customer base and provide quality work and customer service. This means that most of your customers will remain with you through price increases, operational changes, and more because of your reputation as quality service providers. This can be seen in companies like Apple. If they raised the price of the iPhone from $800 to $900, everyone would still buy the new model when it comes out because of the power behind the brand and their reputation of quality products. Realizing this allows you to grow exponentially well into the future.