Pittsburgh is cruising right along. We paid $472k for the property with 20% down ($95k). We generated $6,244 in revenue in our first month and had $3,907 in expenses (including $996 in principle) for $2,337 in profit.
Our Annual Net Operating Income at that pace would be about $40,000 with our cashflows being $28,044. That would be about a 30% cash on cash return on our investment and would put our operating NOI at about 8.5% of the overall purchase price.
Gotta be happy about that!
Erie is a little messier. We paid $632,000 for the property and put in $126,000 cash.
We went up and cut locks and got ready for the massive self storage auction on the 19th of this month by taking photos and then securing the units. It turns out we have only 25% of the units occupied with paying tenants, another 25% available for rent (empty) and then 50% of them heading to auction. Thats over 90 units!
This month we did $4,048 in total revenue. Our interest payment (we are interest only for 6 months) is $1,896 per month and we spend $1000 on taxes and insurance and another $1000 on snow removal. A few miscellaneous expenses as well bring us to about a break even month. Not bad for 25% occupied!
I did some PR this month and got us an article on the front page of the Corry journal about the auction. The Erie Times will hopefully run the story later as well! We also put craigslist ads up for the auctions and have over 100 people who have requested to get notified about the auctions.
All in all – a busy month! Excited about a few more acquisitions in the pipeline in the next few months!
How much money does a lawn care company make?
This full time owner with a part time employee generated over $100,000 in revenue and $70,000 in profit working 54 hours per week for 32 weeks over the summer. AND he graduated from a top 15 business school in the middle of his busiest month. Impressive!
Andrew Huber, Nick’s brother, came on the show to do a 2019 season recap and go over the profit and loss statement for his lawn care company. He is 24 years old.
The Lawn Squad is a lawn care, landscaping and weed control company based in Bloomington Indiana. 2017 was the first year in operation but Andrew was a full time student at Indiana University so he didn’t really get serious until the 2018 season. In May of 2019 Andrew graduated from college and stepped into the business full time.
In 2017 Andrew ended the year with 16 recurring monthly lawn clients and generated $11,638 and $4,629 in expenses for a profit of $7,009 as a full time student. He estimates his 2017 total commitment at 165 hours. Thats $42 in profit for each hour committed to the business.
In 2018 the company generated $39,253 in revenue and $6,310 in expenses for $32,942 in profit and ended the season with 30 recurring customers. He estimates his total 2018 commitment at 800 hours. Thats $41 in profit for each hour committed to the business.
Andrew took a lot of credit hours while working on his MBA at Indiana in 2017 and 2018 so he did not follow leads or answer customer inquiries diligently. Each year in mid-May when he would get overloaded with work he would basically stop answering the phones.
Early in the business’s life Andrew used his personal vehicle to haul equipment and leased the family lawn mower to handle his jobs.
He put the majority of the profits back into the business in both 2017 and 2018 and grew slowly while purchasing used equipment. He used this guide to purchase his truck.
Total Investment – $27,750
2019 got off to a blazing start as Andrew got more serious about following leads and building up a larger customer base. He also hired an employee to run the truck one day a week and take some work hours off of Andrew’s plate.
Jobber, the customer management and invoicing software, was a game changer for The Lawn Squad. His quote request page is professional and easy for customers to fill out. When they do he gets an instant notification and is able to turn around estimates in minutes from his smartphone.
Scheduling is another game changer on Jobber that has saved Andrew a ton of time. It allows him to optimize the route based on the job locations and his employee is able to run down the list and mark as complete and send invoices.
In April 2019 Andrew got his weed control and fertilization applicator’s permit. He took an online course (10 hours), studied for another 5 hours and then traveled for a day of in person courses, exams. This was a big step for him because weed control is extremely profitable for him.
Also in spring of 2019 he upgraded his WordPress website and implemented a lot of other tools on this list.
In 2017 and 2018 when he was a student he wasn’t able to answer all of the calls and didn’t have an easy way to send quotes. This year he answered his phone more often and chased leads a little harder (still not as hard as he could have) and booked way more jobs.
He estimates that he sent out 40% of his quotes within 1 hour and 36% of the 320 quotes were accepted by the customers. The part time employee worked 530 hours (22 hours per week from May-Oct) at $13.50/hr. Andrew’s liability after workers compensation and Payroll taxes was $17/hr. Remember there are a lot of additional costs of running payroll that should be considered.
Andrew ended 2019 with 55 lawn care clients and 20 weed control and fertilization clients in Bloomington for a total of 75 customers.
He had 320 job quotes sent out and 36% accepted his proposals. Hours worked 1,940 hours over 32 weeks for 54 hours per week (5 admin, 2 quoting, 47 on the truck). Now lets look at the numbers:
Total Revenue: $106,200
Total expenses: $32,355
Total Profit: $73,645
Hours worked by owner: 1,940 (54/wk for 32 weeks)
Profit per hour worked: $37.96
I often like to run the numbers as if the owner of the business hired an employee to take over his or her own personal responsibility. This is a good measure of the overall potential and health of the business because it simulates the business if the owner had stepped back to work on the business instead of in the business.
If Andrew hired a competent crew leader for $16/hr the total payroll liability after workers compensation and payroll taxes would be about $20/hr.
Assuming the employee is 20% slower than andrew at doing the work the total hours worked by that employee would have been 2,328 (1,940 x 1.2). Multiply that by the $20 / hr liability and the expense would have been $46,560.
If you add that expense to the profit and loss statement that turns Andrew’s profit goes from $73,645 to $27,085.
Keep in mind this is just a rough estimate. There are additional expenses that come along with hiring employees and growing. Right now Andrew doesn’t have a legitimate garage to store his equipment and service them. He doesn’t have an office. Those will add slightly to the overall overhead as he grows.
There are also tremendous advantages of Andrew getting off the truck and working on bringing in new customers or growing the business.
Here are some key questions Andrew needs to answer this off season while planning for next year:
What additional revenue could he have brought in if he weren’t on the truck for 50 hours a week?
Should he raise his prices or are they high enough for him to hire employees and scale up the operation?
What about landscaping and other high margin, higher skilled work? Should he treat the lawn care as a base and focus on spending his time on weed control and landscaping?
From day 1 Andrew has gotten the majority of this customers from his Google My Business location in Bloomington. See all of the tools he used in the early days here.
Andrew got a few early clients to leave him 5 star reviews and that has helped him rank. Bloomington has a population of less than 100,000 so it wasn’t extremely competitive.
He has never done paid advertising of any kind. The GMB location has brought him 90% of his customers and referrals and word of mouth have brought 10%.
Sales and marketing have been his weakest link since day 1 but he has never needed to do those things to grow his business.
His biggest advantage is that he turns quotes around quickly using Jobber and can look at Google Maps and measure the property so he doesn’t have to drive around looking at places to quote them. He has found that every hour he lets pass before sending a quote the odds decrease drastically of securing the job.
FIRE THE BAD CUSTOMERS. 20% of Andrew’s customers cause him almost all of his headaches. They complain, email him, and request weeks off when the lawn needs mowed but isn’t overgrown. He is starting to learn that not every customer is for him. Nick agrees wholeheartedly.
He mentioned that he needs to hire an employee or several employees. This is the largest stress for him at this time and he’s not sure how he is going to approach the hiring and training. Nick recommended checking out The Hiring Series here on the blog.
He needs to purchase another truck and trailer so he plans to shop in the 5-10 year old range and try to get a reliable truck under $10,000.
Marketing, sales and SEO will take a priority spot because right now he is reliant on his Google My Business location too much. He plans to do some customer appreciation by sending thank you notes out to his clients before Christmas.
Andrew plans to do some studying and has already started on this booklist.
The highest margin and most profitable work has been the weed control and fertilization clients. Andrew wants to nurture and develop that side of the business because its easier to train and quicker work.
Overall Andrew knows he has done the easy part in building a great living salary for himself through the business. The hard part is hiring employees and building a business that isn’t relying on him for 50+ hours a week of his labor.
Huge thank you to Andrew for coming on the show and congratulations on the great work so far! We’ll catch back up with him in 2020 after a blowout year!
Show notes from Episode 118 of the Sweaty Startup podcast. Sponsored by Jobber.
It was a game of SEO – ranking on Google as soon as possible. He dominated it and sold several affiliate sites for $150k+ before getting in the web hosting game and now buying businesses to roll up under his hosting brand sitearrow.com. More on his recent business on this year’s episode of TMBA.
In this episode we don’t touch on Google My Business (Google Maps) SEO. I’ll have an entirely different episode for that with a local GMB specialist. This one will talk about web based SEO.
SEO stands for Search Engine Optimization and its the art of making your online location show up in common search engines when people search for what you have to offer. Kevin gives us the three most important aspects of SEO and how to do well in all of them:
Are people searching “grass cutting” or “lawn mowing” or “turf care” in your area?
Figure out what keywords people are typing into Google when they are searching for your service in your town and then optimize your website for those keywords.
Research keyword search volume in a specific geographic area using a tool called keywords explorer on ahrefs.com. $7 gets you a 7 day trial that gives you basically all the time you need to do the research for your service business.
Ahrefs will also tell you how competitive certain keywords are in your area and how good you need to be to rank.
There is an entire field out there called content marketing. The art of writing and displaying epic content on your website designed to catch the eye of Google and rank you higher in search results.
The next step is an “epic” 1000-2000 word piece of content written on a specific page of your website designed around those keywords.
To use the lawn care example again this could be “The ultimate guide to lawn care in Bloomington Indiana”. An article that outlines the best lawn care methods and things to keep in mind to have a healthy and well maintained lawn. It could also be an article about your company with photos and details of jobs you have done in the past.
Design this piece of content with the people in mind who do the deep dive research on a topic before they chose a service provider. This is going to show that you are the expert and that you can be trusted if they chose your business.
The strategy here is to naturally sprinkle in the keywords on this page in a way Google recognizes it and gets that page to rank.
Photos and videos can also be input into the page with Geotags and captions and alternate text so Google Can further recognize the page and your keywords.
Remember that Youtube is the second most popular search engine in the world so getting videos out there, even if shot with your iphone from your cargo van, can really help customers learn about you and Google rank your website!
When Google was first started out the primary way they ranked web pages was by counting links that directed traffic to that webpage. The more links, the more people must like that piece of content and the higher it should be ranked. More on that and the current link environment here.
Links are still incredibly important and Linkbuilding is an art you need to spend some time doing. Nowadays its not just the number of links but the authority of the sites that link to your site. Google gives each website a ranking called “Domain Authority”. Famous websites and high traffic websites have high authority. Get a link from them and its very very valuable.
Links could be local newspapers, YouTube videos or even Little League teams that you sponsor. An example of this is a local cycling team like Storage Squad racing team here in Athens that my company sponsors. They’ll throw you a link for a $200 annual sponsorship. Reach out to them if you’re interested in that!
While doing research Ahrefs will actually tell you how many links they think you need to rank in certain positions on Google.
You can also get Facebook, Youtube, HomeAdvisor, Yelp, TripAdvisor and other local lead generation websites to link to your site.
Reach out to local newspapers and send them a press release written like an article with something interesting to say. Send them a guide for doing fall cleanup and why its important that time of year. These outlets are hurting for content. Help them by providing some and they’ll reward you with a high authority link!
You can also guest on podcasts and share your knowledge in exchange for links – just like Kevin did by joining us.
Kevin’s Final Tips:
Bounce rate (how many people leave your site immediately) is important! Google tracks how much time people spend on your website (dwell time) and how many pages they visit. The higher the better!
Don’t forget about YouTube! Make videos of you talking about your service or actually providing your service and embed them in your website and optimize those videos to rank on YouTube as well! Ahrefs has a tool for YouTube as well!
Make sure you page loads really fast. Fast pages rank better! Compress your images with ShortPixel so they aren’t too large. They also have a wordpress plugin that allows you to optimize your website. An SEO professional can help or you can read online articles like this for things you can do!
Kevin shares that hiring out SEO help shouldn’t be complicated. Make sure you keep an eye on your own ahrefs.com backlink checker profile and domain authority so you know how much they are delivering.
How many backlinks have they gotten you? How much content have they written for you? Is it worth the money? If not – fire them and move on! Are you getting more customers? For local SEO you should be able to hire a one time project based agency to optimize on page, get some content out there, and build a few links. Larger companies should consider an ongoing SEO monthly relationship with a firm!
Kevin also shares an offer with us to build a custom SEO optimized website for under $1000. Check out more on that here.
Show notes from episode 117 of the Sweaty Startup podcast.
After graduating from Penn State, Sam Evans made an unconventional choice for himself in forgoing a traditional post-graduation career to continue the junk removal service that he had launched two years.
While friends of his were taking corporate jobs throughout the east coast, Sam stuck to what he knew could be successful and is now pushing $180k in sales in 2019 with a 70% profit margin, and it looks like his bold decision has really paid off.
Every new business relies on that first humbling push towards generating leads and making sales. For Sam, this meant dropping flyers in local neighborhoods and guerilla marketing by posting on local Facebook groups, up to 40 a day so long as moderators didn’t block him from the group.
His first summer was rather slow, with relying only on his $1000 pickup truck and a pricing structure that undercut the competition. Since then, he’s raised prices to meet the competition, connected with local realtors for referrals, launched a website and purchased a dump truck with his decal on it.
Sam hasn’t taken any money out of his business yet, but utilizes an envelope system for accounting and allocates his income accordingly. He maintains multiple different checking accounts for his business, putting 1% towards a profit account, 3% towards owner’s compensation, 18% to taxes, and the remainder in operating expenses. This is similar to the envelope-based personal finance system popularized by Dave Ramsey.
Learning to Love Outsourcing
Sam tells us that his biggest learning has been that the tradeoff in outsourcing operations that lie outside of his wheelhouse, and says a 10% hit to margins to keep his accounting and CRM systems in place is a huge asset.
With all accounting, scheduling, and other processes either outsourced or automated, Sam estimates that he now has 10 hours a week that he can spend driving new business rather than stress over these tasks.
Growing more customers after the first slow summer [7:20]
Using the profit-first accounting system [11:05]
Don’t be afraid to outsource [17:55]
Episode 44: Max Maher and the impact of guerrilla marketing
Show notes from podcast episode 112.
Determination and energy, keys to a successful entrepreneur, can also lead to overcommitment. Letting scope creep get the best of you can lead to clients demanding more of your time for the same price, and may negatively impact the work you’re producing.
Today’s caller, Nico, is just a few months into his digital marketing agency but has already landed luxury clients like Ferrari and Maserati. He is doing nearly $10,000 a month in revenue all from his bedroom living a lean lifestyle at his parent’s home.
With this newfound business, he’s finding himself struggling with time management and committing to a set direction to grow his business while sticking to what he does best.
Even though Nico is on a monthly retainer with most of his clients Nick suggests tracking his time so he knows where he is most profitable and what customers may be costing him money to service.
Customer’s are as needy as you let them become and if they get used to instant responses and drop everything kind of service they will grow to expect it and your life will become a stressful mess.
Nico is suffering from scope creep – taking on work of all kinds without being sure that it is in his wheelhouse and his highest value per hour work. Nick suggests hiring out and outsourcing the lower skilled work so Nico can focus on his core competency:
Its fine to cast a wide net and dote on his clients. He’s 21 years old and growing something special. But as time passes and he grows his business he will have to pick and choose carefully what kind of work he takes on and what he spends his time doing.
Nico also discusses in this episode how cold calling and walking in businesses earned him these early clients. Connecting and speaking with the clients in person was all it took to convince them to give him a shot.
Nick also discusses getting serious about a morning routine free of distractions. That is when the deep work should happen because you are less likely to get distracted by customers or general surprises of the day.
Tracking time for your own benefit [7:20]
Customers are as needy as you let them become [14:15]
Nick’s podcast, book, and routine recommendations [17:00]
The fascinating story of how Nico’s agency [20:20]
The decision tree of your business’ future [27:20]
Scaling Up Your Business Podcast: How to Plan Your Week for Success