As you grow your landscape company, there are five key hurdles you'll encounter on your path to $10 million. Many of them you'll encounter more than once, and you'll encounter them even if you're nowhere close to $10 million in revenue. In today's podcast interview with Mike Callahan, we'll uncover what are those five hurdles and how can you overcome them, including how a scorecard can help you retain A-players on your team. The simple concept of the big three and how you can give each employee on your team a big three to focus on every day, and a whole host of other business takeaways that you should focus on now before the end of the year.
Hey, everyone, Jack Jostes here and welcome to The Landscaper's Guide Podcast, where we share sales, marketing, and leadership inspiration for the snow and landscape industry. Today, I'm excited to bring Mike Callahan back on the show. He's got a lot of valuable tips that I think are perfect to listen to and reflect on as we're in winter, end of the year, good business information.
And I want to let you know that we have some exciting live events coming up, some virtual workshops and a ski event, and I hope to see you at that. So, check out landscapersguide.com/events, see our show notes for a link, and I'll see you at those events. Now, let's hear the conversation with Mike.
01:33: Introducing Mike Callahan from Simple Growth
All right, everyone, welcome back to The Landscaper's Guide. Today, I'm excited to bring back Mike Callahan. He's the CEO and founder of Simple Growth. His company helps people with CRM setups, marketing automation, and they also have a coaching division. He is a repeat guest. We interviewed Mike in March of 2021, right after we launched our show, and that was on how to automate your landscaping sales process and avoid business owner burnout. So, see our show notes for a link to that episode. Today, we're going to talk about five growth hurdles that businesses experience between zero and $10 million. Mike has personal experience with this many times. Mike, what else should we know about you that I haven't already said?
Mike Callahan:
Yeah, just a quick background. Started actually a lawn care business in the early days in high school just to pay for that car insurance and buying a car. Parents instilled some really good work ethic. Long story, really, how we got our purpose here is we help business owners take their life back from the business in the lawn care industry. After going through high school and college, looking at all the influencers I thought in the local industry at that point back in '95, '96, YouTube really wasn't a thing, probably date myself, going on and getting all the content that you're providing and on the different YouTube channels didn't really exist.
So, the only way you actually went out and found a business to model after was usually in your local market. So, I looked at all the guys and girls running these companies, multimillion-dollar companies I thought were really successful. There was one common piece, Jack, they all had all the chaos of the business coming at them. They were fighting fires. There was definitely no cell phones at this point. To compound the problem, I went and took five years of college at a college called RIT and did business management through some of the entrepreneurial classes. These business owners, one of which owned multiple supermarkets, was literally working a cell phone in between classes or breaks because chaos was going on.
So, as we got to basically at five years of college ending it, I had two to three full-time crews mowing out while I was out in school and had basically built a business that the way you probably should have built it is that business was running without me for the most part, because I was full-time college student in the trimester system, which was really heavy on the academics.
03:51: Mike Shares How Marketing Automation Changed His Life
So, I got to the end and had a conversation my folks, I said, "Man, do I go to my corporate route or do I go to this lawn care route?" Obviously, you can guess the route I went was probably making at least six figures of profit in the lawn care business at that point. So, I was looking at it from a financial standpoint, why would I ever want to go to the corporate place and make 50, 60 grand at best going in?
So, what I did is I dug in, unfortunately, and said, "Okay, well, I need to be at the center of this freaking thing now day in and day out like everybody else who's successful in my market." So, I ended up marrying the girl that I was dating through high school and probably five, maybe six years after college, literally on Valentine's Day she came home and was like, "Mike, I'm out of here. This business runs your life."
But really what I had done was built a business after college that literally destroyed my personal life, work-life balance, friends, family. This business consumed me. I was working 70, 80 hours a week, seven days a week, sometimes 100 hours a week. After hitting rock bottom, I searched the internet how to get my life back to my business. I found Tim Ferris, four-hour work week, dug in deeper, found marketing automations. One night I went in with no tech background and bought an automation software program thinking I was going to be running the thing from the beaches of [inaudible 00:04:58].
Obviously, it didn't quite work out that way, but I took every waking minute that I didn't have stayed at home instead of going to the office and literally automated this business and went from that 70 to 80 hours a week, seven days a week, to three to five hours a week, to becoming an absentee owner, and 30 days at a pop if I wanted to. So, that was kind of the journey.
Fast-forward probably another five to eight years after that, an acquisition company came in, business wasn't for sale, we ended up selling it as we got a local competitor to bid them up. But after that acquisition, we started this company, I really got serious about this company called SimpleGrowth, where we help businesses. We've done a few automations, CRM setups such as Service Autopilot, Copilot, with job costing matrices, and then we have a coaching division that helps folks get to a million. Then we have our masterminds that goes from a million to beyond. And kind of diving in exactly what some of the stuff we were going through and actually went through in my business here in the five stages.
05:53: The 5 Stages of Going from Zero to 1 Million in Annual Revenue
Well, Mike, you successfully sold your company, your landscape company, you've got your software company, you've got the coaching side, the automations. You've worked with a lot of different companies in the green industry. What are some of the challenges that business owners, what are some of the hurdles that they face, let's say, zero to a million? What are some of the things that you see, some of the hurdles along the way to a million dollars in annual revenue?
Mike Callahan:
Yeah, Jack, basically, as you're looking at, there's five distinct areas, actually it's almost six distinct areas, and we kind of look at the size of the business and the employees and the hurdles. So, if it's cool with you, do you mind if I break that down per area and put some high level on it?
Jack Jostes:
Yeah, I'd love that.
06:35:How a New Landscape Company Gets More Leads
Mike Callahan:
Yeah. As we're looking through stage one, two, three, four, and five, we're looking at the number of employees in the business, the annual sales, the team size, and really the biggest thing is the growth hurdle. What I've learned going through this is that these growth hurdles do not actually disappear. They continue to follow you. So, it is possible, if you're watching this, you're a million, 2 million in revenue, you can literally put your head down and grind through this. But if you're doing that, eventually, these things are going to catch up with you. They're not going to allow you or your leadership team to be liberated from the business and actually work on the strategy.
So, stage one, I actually like to break up in 1A and 1B. Stage 1A, you're just starting out, you've got a full-time job and literally your biggest hurdle is time. How do we actually go out and work on the business while we got a full-time gig? Soon after that, traditionally, most people are like, "Hell with the man, I'm working for myself, he's making all this money off of me. So, I'm going to go out and actually start a full-time business." At this point, you've got probably a team of one, you're running between about four to $10,000 a month in revenue, but your biggest issue is leads. You can't get enough leads out of your friends, family, maybe church groups, wherever you're pulling leads out of, you simply got to have enough leads to keep the lights on. So, that's the biggest issue.
Then, we roll into this new employer stage. So, you've got about two to three employees and your revenue is somewhere between a 100,000 to 300,000. This is where even if you hit $1 million, maybe 2 million, this issue may still be there. So, if you're hitting these perks and you're hitting between one to 300,000, give it a second, because a lot of times the clients we work with when they come in, these are still big hurdles in the business, Jack, but really the biggest issue here is sales.
08:15: Why Every New Business Owner Must Focus On Sales
What I mean by this is there's certain things that we need to be tackled. The first thing as a business owner, whether you're small or big, is the business owner traditionally is the full-time salesperson. But what we really need to do is have a distinct time, whether it's part-time or full-time, when you clock into that part of the day of that week, all you do is sales. There's got to be a budgeted sales goal and an actual. So, you could be able to actually go in and say, "Okay, this is the percentage to budget and this is the percentage of time left in a month," but if we're not really clear and dedicating that time to sales, this hurdle will not stop.
What we traditionally see, Jack, is we'll do a lot, a lot of sales and then we do a lot, a lot of work, and it's really this teeter-totter effect. And that's the biggest issue. That first piece of that sales part's got to be tackled, so we get really clear on the sales goal, and that's what we're doing in that blocked out time.
09:02: The Importance of Knowing Your Financials to Define Your Break Even Revenue Numbers
The second part of that is we need to get really clear on our financials behind the sales. So, it is not scalable for just the business owner to have all these estimates in their head, but before we even pull it out of the business owner's head, there's one number, Jack, that we need to get ahold of, it's really is a breakeven number. What does it cost per man-hour, per division, per guy or girl? So, as soon as they clock in to when they clock out, that's what it's costing you per hour.
Now, we saw some of those in average, depending whether it's maintenance, or design/build, or fert, running maybe between like 38 and 45 bucks per labor hour last year. Now, with inflation and different things going up, I'm seeing those as high as 48 to almost in the low to high 60s depending on the industry. So, they've definitely changed. So, if you haven't updated this breakeven, if you even haven't, and you're using a financial consultant, I highly recommend circling back to them before we go into next year, because that number has definitely changed.
09:54: The Importance of a Consistent Sales Process
But in the main part of this here, we've got to have a consistent sales process being tracked. That's all we're doing we clock in, clock out, we need to have a breakeven per division with a revenue per man-hour goal. And eventually we want to evolve into a production rate-based estimating system that can be delegated to whether it's somebody in your office or a virtual assistant halfway around the world. But we've got a fully flushed out system that's financially based, set goals with time allotment, and a system that anybody in the office or virtual assistant can do. So, those are the first two stages, Jack, that we're looking at. Before I jump into stage three, we're looking at about two to three employees and that's 100 to about 300,000 in annual revenue. But, obviously, you've got a lot of experience in the industry, so I don't want to do all the talking here. I don't know if you have any questions or concerns before I hop into stage three.
Jack Jostes:
Well, I like what you said here, and one of the things that I think happens, especially when you grow from the stage, I went through this in running my own marketing agency of going full-time, and then bringing people on and not knowing your breakeven numbers is I think what causes, I think it's something like 96% of businesses go out of business in the first year, and largely it's because they're not making any profit at all. They don't know any of these numbers. So, I'm just more so agreeing that these are on-point ideas and challenges. And the sales process, the repeatable sales process is something that we help people with all the time. I like how you said getting to a production rate estimating system that anyone can do. Because a lot of times people listening, they say, "Oh, I'm the only one who can do estimates." Maybe you're the only one who is doing estimates, but it doesn't mean you're the only one who can when you have a system and when you have your numbers shared with your team.
Mike Callahan:
Yeah, 100%. I just did a talk, we're in conference season, or are coming out of it here, but I did a talk, a keynote for a little over 500 lawn care landscape companies, and literally it's like show of hands of how many people actually know that breakeven number. I'll tell you, Jack, for a little over 500 people, if I could have counted maybe 20 people in that audience, that would've been a lot. So, it's a scary reality. Really, if you look into this or listen to this, it's almost the analogy of playing Russian roulette with your financial future, your employees, your family, and eventually that chamber's going to be loaded. It's going to get you right in the face.
In the early days after that divorce I talked about, we stopped running the numbers and being really accurate with the numbers. We shifted almost to a bank account balance. That summer, if we had 120 to 150,000 in the bank account, that was normal for us. But normally, we'd be running the QuickBooks budget verse actual. The issue there, Jack, is we were running those cards weekly and the payment was coming in before the bill. So, I ended up losing 75 to $80,000 that summer, and it was too late. But that's the scary thing that can happen, if you don't know those numbers and you're not tracking them, you're putting yourself and your employees and your family at risk. That's why I'm really so passionate about getting these foundational pieces in before we go to scale.
Jack Jostes:
Well, and I think it's also, it's something, like you said, I think maybe even before we pressed record, that big businesses need to know these numbers and they're a moving target. So, you're never really done calculating this number. In fact, I have a mastermind also with some of my top clients and we're doing part two on production rates and somebody else is sharing their spreadsheet and the person who brought it up is a $10 million company that's been in business for 40 years and they're like, "We thought we had this dialed in, but we're realizing in October of 2023 that we don't and we're needing to make some adjustments." Let's talk about it for a minute, because I think it's something that sometimes people are embarrassed to admit that they need help with.
Mike Callahan:
You just nailed it, that is it.
13:56: The Simple Way to Calculate Your Break Even Point
Jack Jostes:
Maybe you lose sight of it or you haven't looked at it in a while. So, let's just dig into the breakeven point. How do you figure it out? How do you [inaudible 00:14:07] your people to figure it out and really know it and make it meaningful?
Mike Callahan:
Yeah. Let me preface this. I would highly suggest getting an industry professional, Jason Cupp, Jim Huston, just to name a few. This is all these guys do day in, day out. Now, if you don't have the bandwidth or you can't get on the schedule soon enough, we used to do financial consulting, it's just something we don't really dive into. But if you're just looking for a rough, dirty number within, well, it's probably going to get you in about 25 to 50 cents an hour. I mean, it's pretty accurate. But if you're looking at an issue, you're looking at your P&L, your profit loss in QuickBooks, we want to run this into an accrual basis.
First thing I want to know is what's your total expenses? There's going to be an expense line up top, your COGS account, your cost of goods sold, it's up top of the P&L, scroll all the way to the bottom, there's an additional expense, that's your fixed general administrative cost. You're going to add those two together, Jack. Up top in that COGS account, again, you're going to have your total expenses. So, you're going to have your labor, you're going to have your materials, and you're going to have subcontractors. What you're going to do is go literally take your total expenses and back out your materials and subs.
Then we're going to divide in our total production just in the field, that's going to get us our breakeven number. Now, the piece that most people forget or don't look at is the debt service. Our long-term payable loans. That's going to be this kind of the silent killer that nobody talks about, that's living on your balance sheet, Jack. What I'd recommend, once you do that, is actually go over to your balance sheet and add back in to your expense line what your debt services is.
So, you're going to really have your total actual breakeven. Once again, if you're going on a high level, we've got our total expenses from your COGS and your bottom line G&A expenses, that's going to be your total expenses. We're going to back out our subs, we're going to back out our materials, and then we're going to add in our debt service. And then you divide that by your total production in the field, and that's going to get you a pretty, pretty close number without spending five to six hours with a financial consulting if that's something that's not in your budget.
Jack Jostes:
Well, one thing when you're doing this exercise that I think is important is looking at a date range with complete financials, because like you-
Mike Callahan:
Correct, the rolling 12, I don't think we mentioned that.
Jack Jostes:
We haven't mentioned the rolling 12, but like you said in that summer after you got divorced and stuff, you were looking mainly just at your bank accounts, I think. If a customer had paid or not will impact things quite a bit, or if the time sheets are in, or basically what I'm getting at is I think you have to look at a date range in the past, where you're certain that all of the expenses from a job, all of the material costs, the labor, things like that. Because I know that some people, they're not super timely with this, and if you're missing, I don't know, big material costs from a project that you haven't paid for yet, or things like that, that can give you some bad data. So, how much data, so it's November right now, let's pretend that I wanted to do this to get clear before January. Should I look at January through October 31st? Would that be?
Mike Callahan:
Yeah, that's going to probably be close enough, but probably a rolling 12, because you're going to take a snapshot of all 12 months, that rolling 12 would capture that whole area. So, if there's any seasonality or issues there, it's going to hopefully catch some of that seasonality as well. But what you hit on is you want to make sure all the numbers are in there, that's for sure.
Jack Jostes:
Right. Rolling 12, meaning looking at it from October '22 through end of October 2023.
Mike Callahan:
Correct. To your point, we want to make sure everything's reconciled and job costed up through those months. So, we want to take an accurate snapshot where everything's in there.
Jack Jostes:
Okay. And you mentioned some great people, we can put links to them in the bottom. Okay, moving on, I think we got to two, I think we were at point three.
18:10: The Importance of Repeatable, Simple Services to Offer
Mike Callahan:
Yeah, we're jumping into an interesting spot at stage three. We've got four to 10 employees and, Jack, you probably can relate to this even with a marketing company. First problem is service. So, we've got now the business owners hiring people that they don't know, and based on a team of four to 10 people, those people that you don't know are actually out in the field doing the work and you cannot physically supervise all of them. How do we set up simple services that are repeatable and can be delegated to other people on your team?
So, when we go to set these softwares up, I think that the record is about 250 services that I saw in a software that they're literally trying to do. So, we really want to get it down to maybe five gateway services that we can sell over the phone or through our website and at maximum maybe five to eight services that we're upselling off of. We want to create a simple scalable business. As you get bigger to two, to three to 5 million, you may offer upload or expand the service offering, but at least to get to a million, what I've found is the quickest way to get there and the most profitable is creating a very simple scalable business.
19:00: How Marketing Creates Consistent, Predictable Client Acquisition
When we've got going out and hiring guys and girls we don't know and they're doing the work by themselves, simple the service, the easier is to train and keep quality. Then, to compound that, marketing. Now that we've got our sales system put together, this is kind of right in your wheelhouse, we need to be able to go out and create consistent, predictable client acquisition through marketing. So, Jonathan Pototschnik of the Lawn Care Millionaire, co-founder of Service Autopilot, gave one of the most eloquent analogies, Jack, that I still use today, but I give credit where credit is due.
But imagine we had this imaginary vending machine here. Every one of your ideal clients is just sitting in there, your perfect client avatar, and you knew for every 150 bucks you stuck in the top of that vending machine, that perfect client kicked out consistently. How many $150 would you stick in there? As many as you probably could. But the idea is we need to be able to know what our client acquisition cost is per marketing source. So, if I put $80,000 across three different marketing sources, each one of these should have a certain return of leads, and a certain closing ratio, a percentage, and that's going to net out a client acquisition cost. Eventually, if you have enough data and good data, we can know the client lifetime value.
So, we'll find out when we've got those different vending machines, not all leads are created equal. So, if we have one from HomeAdvisor, it might cost you 30 bucks to get a new client. Maybe you'd want to double down on that. But when you actually figure out the client lifetime value, that HomeAdvisor lead or client for 25 bucks is only worth 250 bucks. Maybe you got one through your website, through SEO, or Facebook, that's running 150, 170 bucks, but they're worth 15 to $20,000 client lifetime value. So, it allows you to view a full picture of the return on investment and the acquisition cost. But that's going to be our stage three, four to 10 employees, about 300 to $1 million. We've got one main team for management and marketing and service right now is your biggest growth hurdle.
21:01: The Number One Reason Why Landscape Companies Lose Money
Jack Jostes:
I like that. When you're talking about getting to a million profitably and having five gateway services and five to eight upsells, how often do you see landscape companies offering too much, meaning they're going outside of their core service? And how do you handle that? Do you coach people to stay away from doing that or I think there's that temptation that, "Oh, I'm growing revenue, I want to offer all these additional services." That is a great way to grow a landscape company in some ways, if you're staffed well and if you have the services. But also it can create a lot of chaos. If you don't have your estimating dialed in, if you don't have your services dialed in, you can just be losing money even while you're making revenue.
Mike Callahan:
Yeah, it's that complexity. It's slowing you down. As we talk about our stage four, and the percentage of small businesses, not even lawn care business, to get 2 million, there's a reason, but if we get a real simple business going up and eventually expand it, that's going to be the key to it. But it's not unusual. So, we do several hundred software setups on Service Autopilot, Copilot, to mention a few. But I would say the majority of them, Jack, come in with way too many services. They're average at best in a lot of things, and they don't even know if they're profitable.
Then what it's doing is the services they're really good at that are simple, the non-profitable ones are actually diluting that, and it's just literally hindering their growth. When you're going out and hiring these people you don't know, the complexity of some of these jobs is creating an almost impossible thing with a business owner, like the early days that I told you I had to be on every job and I had to manage and micromanage stuff. That almost lends itself to have to have, because you've created such complexity.
22:43: How to Know When It’s Time to Expand Your Services
Jack Jostes:
So, staying focused on what you do best and then adding on, I don't know, there's no right or wrong time to do it. I think it's when your business is ready, but I don't know, how do you figure out when you're ready though to expand beyond those initial services?
Mike Callahan:
Yeah, the ones we're seeing successful is about a 1.5 to 2 million. They've got the core gateway services that they're downselling to, and then upselling the ancillaries to double and triple the client value. Jeff Domenick, who owns an equity group called KeyServ, we do a lot of work with KeyServ, and one of the talks that Jeff gave to our group when we were talking about it at site two, or down at DalaCasa in Mooresville, North Carolina, is Jeff traditionally likes to see the acquisitions, the best acquisitions are getting up to that million and a half to 2 million, and then they're coming across and cross-selling or upselling that client base.
But from what he's seeing in his experience, and I can say it's almost identical, is that million and a half to 2 million till they get to it, because it's almost, "Can you afford a new division manager of this division you're building?" If you can't, that's probably not a good time to add it, because really what you're almost doing eventually, depending on the makeup, whether it's maintenance and construction or design build is you're adding almost a mini little company underneath that umbrella. But really the companies that we're seeing grow really quickly and very profitably have a very simple scalable service makeup.
Jack Jostes:
The third challenge was really around service and marketing. What happens around, what's the fourth?
24:12: The Magic of Breaking the Million Dollar Mark & How to Continue Growing
Mike Callahan:
Yeah, stage four, we're breaking that magic million dollar mark. We've got about 11 to 25 employees, maybe a couple more employees if you're a maintenance business, because you're going to be a little more labor heavy, which would be obvious there. But 11 to 25 employees, one to 3 million in sales. Your team size is really going to be multiple teams and leaders in the business. But as you're going into it, if you've broken that million dollar mark, take a minute and really enjoy it, because you've broken literally the top three to 5%, really close to five to 7% of all business, small businesses in the United States. It's just not lawn care landscape. So, you're really an elite business here. But you're facing a whole new set of problems around people and systems.
If you remember, in stage three, the business owners going out and hiring people they don't know? Now, at this point, the people that you've hired that you don't know are going out and hiring people they don't know. So, it's a big issue there. And between 11 and 25 team members, maybe a little bit more on the maintenance side, we've got systems that we need to build in.
So, we've got these people that we don't know that have hired the people they don't know, what are the hiring systems? How do we go out and hire, train and fire the core values? How do we get really clear on our mission and drive that through the process? How do we go out and build internal systems for scheduling and billing? And all the things that need to be done at scale. Because at this point, the business owner really should be empowering a leadership team. So how do we build the systems that evolve without the actual business owner themselves?
25:35: The Biggest Growth Hurdle for a 3-10 Million Dollar Landscape Company
That's where we get to the core of it. Once we get to stage five, I'm going to suggest some of those hurdles from that three to 10 million growth company is running about 26 to 100 employees. But what you're going to find there is in that stage five business, between three to 10 million, your biggest growth hurdle is leadership and culture.
What I'm going to suggest, at least in the last few years I've seen, leadership and culture is generally shifting over to stage four and happening before we get to stage five. The reason why I think that is, is the labor market, it's really hard to go out and hire and retain A-players. The only way you retain A-players in my opinion is getting really clear on a purpose. So, at SimpleGrowth, we help business owners take their life back. Everybody on our team drives that one goal. It's customer focus around that purpose. There's nothing we do that doesn't add to that purpose. Then, we've gone in and created a culture.
This is the same exact thing we did in the lawn care company. We've got really clear in these core values. And we started to hire, train and fire and we started to create job descriptions and roles that actually aligned around these core values. In addition, these A-players, when we created this culture and aligned it with productivity, the A-players wanted to know what winning looked like and if they were winning.
So, if you're just sending your crews out, an amazingness example for lawn mowing, and they cut 20 lawns, is that winning, Jack? Is it losing? Well, I got the job done, but what are the things that spell out winning? We almost create this scorecard. We like to call this a big three methodology, but if each person in the company can only pull three levers to get to, let's say, our $3 million revenue goal this year, and we have three things, our AMB, as measured by, maybe the revenue, that $3 million mark, we've got the number of crews, and we've got the actual number of clients. But we're going to get really non-emotional with what success looks like to hit our goal for the year.
We back that all the way down to the employee level. So, on a very simple maintenance crew, the crew leader's big three may be budget verse actual, a quality score, and maybe we have some kind of PPE, personal protection equipment, something around that, or maybe pre and post trip reports that we're doing around the equipment. Whatever that third piece is, it's going to be important at that size of the business or bottleneck.
It may just be literally, is the truck clean for the next day? Because sometimes, let's face it, the guys are just slobs in there, we want a clean looking, presentable, professional truck, but we get really clear on that. Then, they know at the end of each day if they hit those big three, they're reported publicly on a daily and weekly basis. We almost have a little competition each week per crew. But now the A-players know what winning looks like and they know if they're winning. The analogy I'd like to use here is you imagine going to a sports game, Jack, with no scoreboard.
28:23: Why Keeping Score (and Setting Goals) is Always a Good Idea
Jack Jostes:
This is really funny, because I coach a soccer team and I was talking with somebody about a different group where they actually didn't keep score and they wanted the kids just to, I don't know, feel good about playing, and I'm really opposed to that. I think you need to keep score, and even when you lose, there's something to learn from it. But, no, I couldn't imagine going to a sports game of any kind where there was no score keeping.
Mike Callahan:
It's interesting you say that. Both my daughters are great, but the older one, Stella, she is hyper, hyper-competitive. She would be the A-player, for sure, but she's keeping the score on her own at the baseball game, because they don't keep track yet, and she'll tell you exactly what the score is at the end of the game and she's really excited they won or she's pissed off, "How do we get better and beat them?" But I think it's natively built into these A-players and athletes to keep the score and you're going to literally push them away if your business doesn't have a culture and productivity that align. Really, the best thing that your employees can say is, "I'm clear, did I win? Did I lose?"
Jack Jostes:
I agree.
Mike Callahan:
There's fair compensation and this is what I'm getting compensated for.
Jack Jostes:
The clarity is so important. I read a management book, I'm not going to say what it was, it doesn't matter, but I read a management book and I really disagreed with it, because this company said that they don't have goals and they don't like setting clear goals. I was like, "This is nonsense." I just had this reaction to this book. I was like, "This is garbage." When I looked that company up on Indeed and Glassdoor, they had scathing reviews. So, this was a very large company with a terrible culture, terrible retention. Their employees did not like working there.
I think having clarity around goals and how you're doing, and then praising it publicly and also talking about it openly when you're off track, I found in my own company is very motivating. I like the way that you broke it down for the big three, even for the maintenance crew, and what is theirs and how can you make it a daily win. I think that's really important to find those daily wins, especially during the 100 days of hell, because this is hard work, it's hot, you're understaffed, and having clear wins for people will also then create financial opportunity, too. Talk to me a little bit, how does the financial incentive play into that? I mean, we're not probably going to bonus people just for cleaning out the truck, but how does this tie into A-players want to get compensated?
31:15: How to Reward Your Staff for Doing Great Work
Mike Callahan:
Yeah, there's really two ways of looking at it. You've got your labor in the field, your production staff, and you've got your office staff. So, one of my good buddies, Garrett Matthews, owns Matthews Tree & Pest out in Shreveport, Louisiana, without totally getting into his financials, he loves me to share some of the stuff he's doing, because he's crushing it, but company a little over 10 million.
But Garrett gives a percentage of the profit to his leadership team. So, they've got their salary, but it's basically he's got a [inaudible 00:31:40] culture, but it's also based on productivity, good, productive profit, very similar to what we did at Callahan's Lawn Care. But Garrett's given them a piece of that pie and they're tracking it weekly and monthly, because obviously they want a piece of that.
On the flip side, just like we did at Callahan's Lawn Care, now it's called P4P, the popular term, it was piece rate back in the day, but we would actually have their pay based on the budgeted hours, and a quality score tied to that. So, it wasn't uncommon for someone to have a three to $4 an hour technically raise on an average per hour, because they're working harder and more efficient.
Now, there's a minimum threshold of revenue each team or employee needs to generate. But basically if your goal was to be out by 3:00 and have a better work-life balance, and get your kids off the bus, as long as you hit that quality score and hit your minimal hours, we were good. We had another gentleman, Carlos, that came in from Mexico City every year, he lived here, was a US citizen, but he had dual citizenship and he went back to Mexico every year.
Carlos wanted to work as long as he possibly could, so the other gentleman with him was an H-2B worker. So, they worked longer hours and we ended up building more route density. So, it was really, you can empower your team member to almost have their own little business within yours. So, if their goal was to just work minimum amount of hours and make the most amount of money, they can. If their goal was to not work the winter months, and just crush it in the summer, and double down, we empowered them to do that. But it created a culture almost like them drinking the Kool-Aid. They could actually attain the goals they wanted and they were aligned with the company goals.
Jack Jostes:
Well, Mike, we could continue talking about this and I know there's a lot more. We've got to wrap up, though. Was there anything else on the five stages of business or the five hurdles that we didn't get to that you wanted to share before we wrap up?
33:26: Mike’s Secret to Continued Success as a Leader
Mike Callahan:
Yeah, Jack, I think we covered them. I think just the key takeaways, those hurdles, whether it's time, leads, sales, marketing with service, people and systems, or leadership and culture, those don't ever go away. As you alluded to, Jack, they sometimes tend to evolve just like that breakeven number, but if you haven't gotten really clear on your financials and put that into place and updated that for next year, that would be my biggest takeaway. Get really clear in the numbers, run a non-emotional business, and continue to watch and consume this content. Because we want to go out, and out-learn our competition. That's the key is continue to develop as a leader, because the leader you are today is not the leadership skills you're going to have at three to five to 10 million. So, we need to go out and continue to improve ourselves, and as we grow a larger team, we need to continue to improve our leaders, because what got us to one point skillset-wise is not going to get us to the next. So, we want to teach those folks up or eventually replace them if we have to.
Jack Jostes:
Well, and on that note, I talked with one of my clients who has grown beyond 10 million, and one of the things that he said was the hardest was about the people and realizing that some of the people who got him to 1 million were not the people to get him to 3 million, and from three to five, and from five to 10 and having to graduate some of those employees or find different rules for them. I think that's one of the other not fun parts of running a business is the people aspect. Because what is rewarding about it is the people aspect, but sometimes your business outgrows certain people or your people outgrow you. So, it's just the nature of the game.
Mike Callahan:
The scary part is sometimes the business can outgrow you if you're not willing to continue to grow, you may have to look that 10, $12 million mark and beyond to actually find a CEO to actually run that business.
Jack Jostes:
Well, that might not be a terrible thing to find a CEO to run your company.
Mike Callahan:
I wouldn't be complaining.
Jack Jostes:
Yeah. Maybe, I don't know. My agency coach talks about experiencing depression though at these milestones of people in my mastermind, well, they'll have reached 5 million and they're super depressed. Then they talk about how the company doesn't need them anymore, and they feel like they've lost some sense of identity that they've had and usually-
Mike Callahan:
Very common.
Jack Jostes:
So, I see that in the landscape industry, too, and I think you just need to find something else that challenges you when you reach that point.
Mike Callahan:
Yeah, absolutely. We've got a lot of folks in our coaching division that have actually elevated to become coaches with us after they got certified, because the fulfillment wasn't there anymore.
Jack Jostes:
Well, Mike, you've been a wealth of information on this show. You have your own Facebook Live show. Thanks for having me there. So, everyone should check that out. I'm going to put links to that. Where else can we connect with you if we want to learn more?
36:25: How to Connect with Mike Callahan from Simple Growth Systems
Mike Callahan:
Yeah, best place is simplegrowthsystems, with an S, .com, or if you want to just book a direct call with somebody on our team just to get a free business analysis and see with the automations where your business is at and what you might need to go into next year, it's real simple sgscall.com.
Jack Jostes:
Sgscall.com. Love it. All right, well, I'll put links to both of those in the show notes. Mike, thanks so much for coming on The Landscaper's Guide.
Mike Callahan:
Awesome. Thanks for having me, and thanks for raising the professional level in the industry. It's been awesome.
Jack Jostes:
My pleasure. Thank you.
I hope you got some value from that conversation with Mike. I know I did. I always learn a ton every time I talk to him. I'm a big fan of having a scorecard. We have a scorecard at Ramblin Jackson. We're measuring everything. But only the most important thing. So, we're measuring a lot, but we're able to look at that scorecard together as a team and see what's on track, what's off track, who's at capacity, who's under capacity that may be able to help out when another person is over capacity? So, for me, that scorecard gives me a lot of insight into my company and can't imagine running mine without it.
That was just one of the takeaways that I wanted to share from this. The other one was around sales process. Totally agree with Mike around sales process. One of our goals at Ramblin Jackson is to get the owner out of sales, and we have some workshops designed to do just that. So, check them out at landscapersguide.com/events. I hope to see you at one of them. Thanks for listening to The Landscaper's Guide. My name's Jack Jostes, and I'll talk with you next week.
Show Notes:
Watch the full episode + see the transcript at: https://landscapersguide.com/podcast/
Tell us where to send your beef jerky: https://landscapersguide.com/toolbox
Connect with Mike Callahan on LinkedIn: https://www.linkedin.com/in/simeplegrowth/
Check out Simple Growth online: https://www.simplegrowthsystems.com/
How to Automate Your Landscaping Sales Process & Avoid Business Owner Burnout: https://landscapersguide.com/how-to-automate-your-landscaping-sales-process-and-avoid-business-owner-burnout/