Should you wait until you have a dedicated manager in place to lead a new department at your snow and landscape company, or should you just start offering that service before you get to that point? Find out the answer to that question and many more in this interview with Jeremy Macliver about how to increase your net profit, including ghost profit. What is ghost profit and how to find it? And simple end of the year sales, marketing, and financial questions that you can answer as you look back on 2023 to set yourself up for a very profitable 2024.
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 interview Jeremy Macliver because he's an EOS implementer. EOS is the entrepreneurial operating system. We follow it at Ramblin Jackson. It comes from the book Traction. We don't really get into that in today's podcast, but it's built into how Jeremy and I think, and it's one of the reasons that I enjoyed this conversation, and that reminds me that one of the keys to enjoying podcasts is having quality protein as you listen to them. So I'd love to send you some beef jerky. Yeah, we have a beef jerky club here at Ramblin Jackson, so if you want me to ship you a cool marketing toolbox, it has a marketing Field Guide that'll help you figure out which marketing to focus on first, and some of my favorite beef jerky.
Just tell me where to send it at landscapersguide.com/toolbox. I'm going to put a link to that in the show notes. And without further ado, let's hear from Jeremy Macliver about how to increase your profit.
02:02: Introducing Jeremy Macliver, EOS Implementer & Owner of Disruptor Group
Hey everyone, welcome back to The Landscaper's Guide Podcast. Today I'm excited to have Jeremy Macliver, who's a professional speaker, certified EOS implementer, coach, and owner at Disruptor Group. He's a serial entrepreneur who helps leaders master the art of business. He's also owned and led many companies himself and has a mastermind, the Disruptor Group, that specializes in tree and landscape companies. Many of you listening are aware, I run EOS. It's the Entrepreneurial Operating System. It comes from the book Traction. Big believer in this, big advocate of it, and we've done other episodes on that topic before so I'm going to link those in the show notes, but wanted to get right into it with Jeremy because before we pressed record, he told me that his goal for 2024 is to help 100 companies increase their net profit by $100,000. So is that true, Jeremy? Did I get that all right so far?
Jeremy Macliver:
That is true. Let me add a little clarification: a hundred tree and landscape companies. So we are very specific about where we want to do that. And so yeah, $10 million of increased net profit, $100,000 from each company in the tree and landscape space. That is our goal.
Jack Jostes:
And what are some of the biggest opportunities? So most of the people who are coming into your mastermind, they're already north of a million dollars in revenue. What is on average their current net profit margin percentage? And then what are you trying to get them to? Or is that the right way of looking at it, to get to that hundred thousand dollars in cash net profit added to the bottom line?
03:58: Why You Should Focus on Actual Dollars Vs. Percentages
Jeremy Macliver:
So I love that the first thing you brought up was percentages, because sometimes I love percentages and we focus in on them, but notice we didn't say, "Our goal is to get you from 6% to 15%." We are actually looking at those things that are going to generate more net profit dollars. And so I actually encourage our teams to deal with it, look at it in both, because percentages you can compare a little bit industry to industry, or company to company kind of thing. We're seeing the mix really can be all over the place, especially when we first start with a company. You got a million-dollar company and it depends on how they're reporting their wages, so we do actually go before we do this and we actually solidify the owner's compensation to make sure that that's right.
So sometimes when we look at these in the beginning, that's why I'm almost afraid to say it over the air what that number is. We'll see 25%, we'll see 5%, and it really has to do with owner's comp if they're a million. Once we start working with the three to five, the $10 million ones, the owner's compensation isn't as big of an effect on it. And most of our clients after working with us are hitting in the 15% to 17% range. But we really like to look at it from a dollar standpoint, because really at the end of the day, the game is how many of those dollars can you get in the bucket? In the hours that you're going to work, how many dollars? I would way rather 10% of $5 million than 20% of a million, right?
Jack Jostes:
I think that's important, focusing on the actual dollars. And to get there though, we got to be aware of our percentages and things. And I liked that you mentioned getting clear on owner's comp, because one time, I had somebody on the podcast who said, "Yeah, we make 50% net profit," and they weren't included as an employee. Their wages weren't in there and their whole family, who works for the company, was not included, either. So that was a little misleading as far as getting to 50% net profit. So what are some of the key things though that you see out of the gate that you look for once you get the owner's comp organized in the way you want in their QuickBooks or whatever accounting program they're using? What are some of the key things that you help people either cut or increase? How do you find $100,000 in net profit cash?
06:36: What is “Ghost Profit” and Why is it Important?
Jeremy Macliver:
So most of the profit that we can help them find is what we call ghost profit, the profit that never made it to the P&L in the first place. So we're looking at, "Okay, if you're spending money on marketing..." because we believe you can get... we see companies get all of their $100,000 in net profit in just the marketing arena because they have horrible conversion rates, they're not getting the right target market clients in, all of that stuff. They're spending a ton of money and they're not converting like they should be.
Once we get that stuff coming in, then we begin looking at what is their mix on their projects? If they're selling a landscape project, they're going to have different profits for hardscapes, for the different things that they got going on in the yard. And there are some ways that we can look at that and say, "You missed out on some opportunity on this project that was needed for this to be profitable. Some of the things that you're selling, you're making more money on than other things that you're selling." And so quite honestly, some of it, the simplicity of increasing it is getting the leads to convert, and once you get them there, knowing exactly what you need to sell to have the right profit in the project from the get go.
08:14: How Selling the Right Services Impacts Your Conversion Rates
Jack Jostes:
Tell me more about that, because you mentioned tree and landscape companies, and with that, there are landscape companies that do tree service and they do construction and they do landscape maintenance and lawn care and maybe snow, depending on the region of the country. So getting leads to convert is largely sales process, I believe, of getting a system in place to sell systematically to customers. But then, selling the right services is also partly a function of marketing. We call it, "Hell Yes Customer," meaning who do you really want and how do we then tailor our marketing to them? Talk to me a little bit about what are you seeing with landscape companies that are full service? Is it a good thing that they're offering all these services? Is it a problem sometimes?
Jeremy Macliver:
Yeah, so most often, if they're landscaping, as we would talk about, they're doing new install, more of a construction type thing, and they're doing the home services side of it, kind of where they're doing the trimming, they have arborists, and they're doing the maintenance. I unfortunately don't see very many of those that really, really win. And I get to look at the P&Ls of a lot of them. The ones that, "Hey, I'm this or I'm that," seem to accelerate their growth. "I am a construction new install company," or, "I am a home services style tree and light shrub planting company."
Most often, that is. The exception where I see that they can flourish, it usually has to do with size. And I would say that if they're below $5 million in revenue, what I just said is going to be pretty relevant. Once they start getting past that point, they start getting enough leadership that they can start actually running multi divisions. But in that, I'm encouraging them to run P&Ls or their P&L, whether they're running multiple or single version of that, that are explicitly differentiating their profit centers because when it's all costed together, they don't know really what's going on.
Jack Jostes:
Yeah, I think accounting for products and class correctly is so important so you're able to do this analysis and then track your employee time to each of those services and all of your costs instead of just to a job. And this goes down the rabbit hole. That's interesting. At $5 million, I've heard some people say that you shouldn't have a division unless you have a dedicated leader for that department. Do you agree?
Jeremy Macliver:
I do. It's usually at some form of size that you're running into an actual leadership team that can begin to branch those out, but you also don't want a crew to show up one day and they're doing new install, the next day they're doing maintenance. The inefficiency of that is almost... when you start pulling the math on it, it's unbelievable of how much they're switching around. You're like, "Well, it's just using the same tools." It really is costing a lot more money. The unfortunate thing, Jack, is that we're all entrepreneurs and so we're like, "Oh, I can make money here and I can make money there and I can make..." but the ones that really, really win get really clear on their brand, get really clear on their message, their ideal client, and they go after that like a laser and they pierce through it.
12:09: The Way to Get to A Profitable $5 Million in Revenue
Jack Jostes:
I believe that. So how do you get to... or is it rather the way to get to $5 million is by being laser-focused on that one customer and staying profitable the whole time instead of offering everything to everyone and having a lot of unprofitable revenue? Is that what you're saying?
Jeremy Macliver:
Absolutely. Focus, a hundred percent. So you're going to go a lot farther, a lot faster if you're in the categories we're talking about landscape, hardscape... not just hardscape, but the full new install construction, where you're project managing versus maintenance or arborist, tree trimming, those kinds of things, where you have more of the scheduling, the dispatching, the client experience, the burden on the office, the system, everything is completely different for when you have this repetitive versus you have this project management thing. And yeah, your fastest path is to choose one or the other, because I got teams making a lot of money in either one, so they're both really profitable.
Jack Jostes:
So we said that the path to finding this cash is not always reducing expenses. It also sounds like it could be as big as discontinuing an entire service line. How often are you advising that to people?
Jeremy Macliver:
You say, "I'm advising." It's funny. Every time that it's happened, it's that we just got clear on our numbers and we allocated the cost of this, the cost of this, and the cost of this, and they're doing three different things. And they realized that, "Okay, I did two and a half million dollars last year, a million of it..." I've seen numbers like this. "A million and a half of it was new install and half a million was maintenance and half a million was tree trimming. And I made as much profit on the maintenance and tree trimming a million as I did on the other million and a half, and I don't even like the million and a half, I hate it."
Jack Jostes:
Right.
Jeremy Macliver:
Or the flip. I'm not biased on one or the other.
Jack Jostes:
Right, sure.
Jeremy Macliver:
When they look at it like, "Okay, in a million and a half I made 2% or I lost," I've seen that one, "I lost money. If I would've actually not done this million and a half and I only did a million-dollar company, not two and a half million company, I would've actually made more money and I'd have been happier because I'd have been doing what I like." So once we just get really candidly clear on allocating the numbers, usually it's not me coaching them. It's like, "Hey Jack, which one do you want?" Like, "Oh, I love this one. I hate that one," right? Vice-versa.
15:13: The #1 Thing You Should Do Before The End of the Year to Project Next Year’s Profit
Jack Jostes:
Well, Jeremy, we could spend the whole day talking about this and a whole host of other things. We've got to wrap up. This is coming out at the end of the year in December. What's maybe one thing you'd like to ask the audience to do before the end of the year to maybe get clear on their numbers and get some clarity on what they're going to do next year?
Jeremy Macliver:
So we actually have a profit calculator, but there's just a handful of numbers that I really would quickly tell them, "Hey, just go look at these. Go look at your marketing spend to your leads and compare that," right? Or, "Do you have a good ad spend of the leads? What your lead to sales conversion rate?" And by lead to sales, I'm looking at it in two ways, lead to how you got to an estimate and lead to you got to a actual sale. Look at both of those numbers.
And then from there, just pick apart the... if you're familiar with the P&L and you're listening to this, that was all in the income section of it with a little bit of the marketing expense coming up to it. The other area I'm really looking at is in that cost of goods, making sure that I'm delineating the cost to that revenue so I can look at how profitable that is, because most of the things that are below on your expenses, your rent, those kinds of things, you're probably not going to find your $100,000 in those. Every once in a while we'll find one down there, but usually, that is not it.
Jack Jostes:
I love it, and I want to just plus one endorse looking at those conversion rates of leads to estimates and leads to sales. And you'd be amazed how many people don't actually know that. So simply looking at it, looking at your leads and keeping track of that, would... like when you're looking at the numbers with your people, it'll help you figure out what to do. Maybe you can get a little faster at responding to people, or maybe there are certain people that you shouldn't even create an estimate for, is another...
Jeremy Macliver:
Those two are almost two of the simplest needle movers that we can work on with a team because it changes everything below. The amount of impact it has is crazy. And so we're going to those right away every time.
Jack Jostes:
I agree. Well, Jeremy, thanks for coming on The Landscaper's Guide. For people who want to connect with you, learn more, how can we get in touch?
Jeremy Macliver:
If they just want to, they can go to disruptorgroup.com or they can send us an email at jeremy@disruptorgroup.com.
Jack Jostes:
Awesome. Well, Jeremy Macliver, thanks so much for coming on The Landscaper's Guide. I'll put those links in the show notes for everyone, and it was a pleasure talking with you.
All right, everyone, hope you got some nuggets in there. I definitely agree with some of Jeremy's final points about tracking your leads and how many of them turned into an estimate and how many of those closed into a project and what was the value of that, and what was the marketing source of that? So track that. Ask customers, "How did you hear of us?" And take a look at this because getting your marketing dialed in, keeping what's working and investing more in that, and then cutting what isn't working or making adjustments is one of the best ways that you can continue to grow with the right leads. I also liked what he said, but I want to hear from you.
What do you think? Because part of me as an entrepreneur wants to dabble and I see my clients want to offer new services and I see them doing it, and I also see enough of them or I talk to enough people in the industry that are not profitable, or like he said, they have a whole division that isn't profitable. So what do you think? Do you need to have management in place before you offer a whole new service, or should you start offering it beforehand? I'd love to know. Hit me up on Instagram or send me an email, jack@ramblinjackson.com. I love hearing from you all. And remember, you can get a free bag of beef jerky and marketing toolbox. Just tell us where to send it at landscapersguide.com/toolbox. See our show notes for that. And again, my name's Jack Jostes. Thanks so much for listening today, and I look forward to talking with you next week on The Landscaper's Guide.
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
Check out the Disruptor Group: https://www.disruptorgroup.com/