Do you ever find out, weeks or even months after you finish a project, that it wasn't profitable? Or worse, do you not know why it wasn't profitable? Job costing is an essential part of running any business but it can be challenging. Receipts over here, invoices there, time tracking in this program, spreadsheets, bookkeeper over there but it doesn't have to be so chaotic. Today, I interview Kevin Kehoe, the founder of Aspire Software, a cloud-based business management program exclusively for landscapers. And in our interview, Kevin shares the five key transactions that are part of any landscaper's job costing. And he shares the top two metrics that he believes are the make or break between his clients that are doing 4% net profit margins and some that are doing north of 20% net profit margins. And they've done over $3 billion worth of business that has gone through Aspire Software.
So, although Kevin mentions a lot of this in the context of using Aspire, I believe that this video and this podcast would be helpful to any landscaper, regardless of what job costing software or lack of job costing software you're currently using. So, if you want to increase your profit margin, check out today's episode.
Kevin Kehoe
Founder | The Aspire Software Company
Jack Jostes:
What's up everyone, Jack Jostes here and welcome to The Landscapers Guide to Modern Sales and Marketing Podcast. This show is really meant to help you enjoy your landscaping company and make more money. And today, we're going to focus on how to make more money with this exciting interview with Kevin Kehoe from Aspire Software. Kevin, thanks for coming on the show. Tell us a little bit, how did you get involved in the green industry?
Kevin Kehoe:
Yeah. Really, thanks for having me, I completely appreciate it. Love to share ideas, et cetera, with your group of people and audience. I've been in the industry since 1989 or so. However, I was a consultant going way back and that's what I did from 1989 until 2014, when I founded Aspire, we built the company up. And Aspire, of course, is a pretty big company these days. I was trolling around looking for speaking opportunities and, of course, every national association in the country is located in Washington DC. And so, I sent letters out, actual real letters, to people and said, listen, if you need to speak on short notice, someone cancels on you, I'll show up, I'll bail you out, here's my topic and the only call I got out of 150 letters was from, guess who? The American Landscape Contractors Association.
Kevin Kehoe:
And so, when they said, could you come and talk to our people? I said, you actually have an industry that has landscape people and companies. They said, yeah, where are you been? I'm like, well, frankly, my connection to landscape is me mowing the lawns when I was a teenager, right? So, I've been in the industry since then and it's been incredibly rewarding.
Jack Jostes:
Well, that's funny because I also do a lot of print sales letters today. It was one of the things we were talking about, offline marketing, I believe, can work really well as part of online marketing. And in my opinion, you can't just do one or the other, they can compliment each other. And I've done a lot of speaking with NLAP and a few years ago I arrived really early for a talk and the speaker didn't show up and it was somebody else who didn't show up, I was two hours early because I like to geek out and make sure I'm just ready. And I was like, hey, do you want me to talk? And they're like, yeah, yeah. And I ended up speaking to this huge audience that came to see this other speaker who didn't show up. So, it's funny how that works out and just showing up is half the battle, right?
Kevin Kehoe:
Yeah. I mean, if there's an inspirational message in any of that. Sometimes opportunity comes knocking at the door and listen, my life would have been totally different if Debra Holder, who was the executive director of ALCA at the time, had not called me, right? So, I mean, I thank God that that happened and I got in this industry because it's been fantastic.
Jack Jostes:
Yeah. It really is an incredible industry and it's a challenging industry. It can be a difficult industry to make a profit and especially right now with labor costs increasing, with material costs increasing... I don't know, it's always important but it's more important than ever that you're on top of your finances on a daily basis. We were talking how a lot of business owners get caught up on their finances on maybe at the end of the month or the end of the quarter. And by that time, it's often way too late to make an adjustment. So, I know that we're going to share some things that people can do to get that daily information. And one of the things that we talked about, before we started recording, was the five core transactions when it comes to job costing. So, Kevin, what are those five core functions?
What Are The Core Transactions Of Job Costing?
Kevin Kehoe:
Yeah. I think to really understand job costing and maybe understand Aspire, right? Aspire, essentially, is an operating system for your business. Think about it iOS, right? Or Windows, right? It's the platform. And the underlying architecture in something like our software is to do the most thing in the world, which is the cost of the job, am I making money? And so, to build that system, right? The operating system, there's a very linear workflow. And the number one transaction is, make a contract, right? Someone has to write the contract and guess who that is? The designer and a salesperson, that's their job. And so, that contract has to be available in the system to do the next step, transaction two is, create the work order or the work ticket, right? Because that's what the crew sees. The crew sees, you've got four days, 10 hours a day, three guys, right? That's the thing you have, that's the work ticket, someone has to create that.
Kevin Kehoe:
Now on Aspire, all that happens, right? From the work ticket, right? It goes down to what we call payroll, right? Transaction number three, the crew has to identify itself, punch in, punch out, hours get collected every day, goes to payroll so you can pay them. Of course, in most jobs, there's materials. So, the fourth transaction's purchasing, right? Keeping track of what's on order, who bought it, at what price, when is it arriving, right? And then, the very last transaction, number five, is bill an invoice. So, most companies do that in multiple places, right? They invoice in QuickBooks, they have a spreadsheet or a whiteboard for scheduling, they've got Excel for contracts. The problem with all that Jack is, it's not integrated and it's really hard to manage that data all over the place in multiple spreadsheets. And so, what happens is, A, people don't do it and B, they screw it up, it gets inaccurate over time, right? Spreadsheets, they degrade.
Kevin Kehoe:
So the "genius" beside Aspire is, the salespeople do one thing, the schedulers do another, the purchases do another and the payroll do another, the invoice people do another and they never talk to each other, they never have to put spreadsheets together they want. All the information just goes from A to B to C to D, right? Down the line. And at the end of the day, when you say, right, they done, you can go in, just like a cash drawer and you can see how I'm doing on the job, which is incredibly important. I mean, strategically, you want to look at the job after and go, are we accurate in our bidding? Do we do the right price? Did we get the right hours? Is the crew good? Of course, the classic battle always is, sales can't sell at the right hours and production can't do it at the right hours, so you'll never end that problem. But what you have is, the ability that day to make a change, instead of waiting a month later and going, oh my God, we're not going to make money.
Jack Jostes:
So, from the first part of contracts, does Aspire, are you able to send a proposal through that a customer can sign?
Kevin Kehoe:
Absolutely. Yep. You could do the proposal, you send it out, they could sign it online, comes back in the system, it's all electronic.
Jack Jostes:
Because that alone can be a sales killer. With Aspire, you can send the estimate, the client can sign it and they can also pay, all through the internet.
Kevin Kehoe:
Absolutely. And you can send them multiple versions because we have what's called a client portal, right? So, they can go out there and see all the open work orders and bids, go approve, approve, approve. And then, we get that information electronically. Not we but the person who runs our software and now it becomes a work order, right? It's a work ticket that says, hey, listen, we sold this, someone's got to put it on a schedule somewhere, right? Assign it to a crew, assign it to a route. And so, all of that happens electronically also.
Jack Jostes:
So, once I have a work order, where does time-tracking happen? So, you mentioned for payroll, people need to clock in and clock out. Let's pretend that I'm on the Kehoe landscape crew, right? Do individual employees, is there an app that they use or how do people in the field actually track their time to a specific job?
Kevin Kehoe:
They have an app. So, if you could picture a monthly white board for schedules, which people do, dragging around magnets and stuff, with different jobs and hours, that's what the schedule looks like. So, whatever the scheduler does, the crew will see exactly the same thing in real time, right? And so, everyone has what's called a pin number, like an ATM and in the morning, you do it one time, pin number, pin number, pin number, three guys on crew. So, now they're being charged wherever that thing goes and they see the schedule and the hours, when they get there they hit start and it starts counting down the time, right? On the clock. When they've done, they hit stop, go to the next job, whatever it's, so at the end of the day, you essentially have GPS timestamped stuff that says where they were, what they did, how long they were there and someone who probably scheduled it, right? Will look at that, review it and say, saved. And that goes over to payroll, which is an event that happens later, right? Maybe twice a month.
Kevin Kehoe:
It's a real live app, you can take pictures on it, you could do all kinds of cool stuff.
Jack Jostes:
And through the client portal, let's pretend that I'm a second homeowner and I have hired a landscape company to do a backyard landscape installation for me, through the client portal, would the field crew be able to upload photos from the job site that I could see?
Kevin Kehoe:
They could, right? So, you could share that, we have a function called issues, which is a real-time conversation between the client, if you want, right? And the crew or whomever, right? You can manage that, who does that. But literally, that's what most people do, right, Jack? At the end of the day. They tell the crew, take the pictures in the morning, save them, take the pictures in the afternoon, all that uploads into the system, on the job.
What Are The Mistakes Landscapers Make In Job Costing?
Kevin Kehoe:
Well, number one, they don't do it. They don't do it. In other words, one of the big things is, without a system where you can track purchasing, often materials become very difficult to track. Hours are easier, right? Because you can kind of do that pretty well on a spreadsheet and get a good idea where you are, on a job, you can't always necessarily compare it to the budget. Especially, Jack, if you get into a DB job design build, right? The backyard and you have multiple services, right? Excavation, lighting, irrigation, stone, plant, right? All those are probably bid at different margins and done by different crews. And so, if you don't really track it very well, you don't know where you are on the job, by the phase or the service type or by materials and all gets mixed up. And so, materials become a big problem, right? And then, knowing where you're off on the job, right?
Kevin Kehoe:
In other words, irrigation's gone way over, can we go steal it from the stone guys later? Or very critically, can we get a change order, right? And if you're going to do a change order, like you know, you better do it immediately, right on time and not later, and go, listen, we underbid the job, so I got a charge you 3,000. Customer's like, no way, man.
Jack Jostes:
Right. Yeah. You can't do that late. And if you do need to do it, you better be able to demonstrate why...
Kevin Kehoe:
You got to have photos, pictures, details, right? All the stuff you need to collect somewhere.
Jack Jostes:
Right. Especially if it's an expensive change order, you're going to need more of that documentation to support, hey, we found this unknown rock material here or whatever it was that you didn't scope out correctly. So, Aspire can help manage a burn rate throughout the project. So, let's just pretend, in round numbers, that we have 100 hours allocated towards a project, we'd be able to see that, okay, 50% of them have been used and there's still a projected, oh, 60 hours remaining.
Kevin Kehoe:
You would. You'd be able to see it at a job cost report, right? For the actual job. You just click the job number, there it is. Or we also have a graphical interface, where you can see it on the schedule or it actually show you the burn rate on a bar, right? Red and green, when you're getting in danger. Jack and to think about it, what's revolutionary about Aspire or others like that in the industry is, not that they do this, it's that they can take so much data, photos, pictures, site walks, check sheets, bids and collect it up in the cloud, very cheaply, obviously, right? And you have the access to it if you're smart enough and know how to write the reports and get all that data. It's like, think about it, if you have an account manager, which is a very valuable position and they have relationships with 50 of your clients and they leave, okay, what happened? What'd you do? All that data's lost. But the next guy comes in, next talent comes in, every photo, every bid, every conversation, every issue, it's there.
Jack Jostes:
Yeah. So, when I'm in that one-to-one communication with a homeowner, with a client, does it log emails and phone calls, things like that?
Kevin Kehoe:
Yes. Not automatic. You can log them through the system, right? So, you can receive it and say, accept it or you can send it out to the system on an email. It does not do texts but you can send photos, et cetera. Not texts but emails.
Jack Jostes:
Right. Texts are difficult, from that matter.
Kevin Kehoe:
A bit of a challenge, technically.
Jack Jostes:
But the emails thing is so helpful, in account management, really in any industry. My industry, if you're a landscaper. Customers and then from, again, from the customer's perspective, they want, if the account manager shows up and says, hey, I noticed that, last time we talked was you were meeting with Larry four weeks ago and you talked about X, Y, and Z. Is that still of interest to you? Oh, wow, I'm glad that you knew that. Yeah, let's move forward, versus starting over, right? From scratch.
Kevin Kehoe:
Right. Very invaluable. So, you as the, as you said, the customer rep for that person, can go to their page, right? In the software and say, show me the last six things we did with these people. I want to see the email thread, I want to see all the photos and pictures, any issues that were from internally generated or by the client. In other words, you can act like you actually know what you're doing, right? The left hand in the company knows what the right hand's doing. It's such an impressive thing once you get it all together. And so, you could see the challenge sometimes is, the managing of the transactions, the collection of the data, Aspire does that automatically. The real challenge for contractors is, understanding how to get at it and use it, right? To turn it into a system of processes of customer service, right? Which is the biggest thing in my mind's eye is, can I improve my level of customer service? And that relies on knowing stuff.
Jack Jostes:
Are there specific metrics that you advise clients on tracking, maybe outside of job costing? Which we already talked about. Are there certain metrics that you find that landscapers aren't tracking that once they start tracking have a big impact on the organization?
Kevin Kehoe:
Client retention is the primary driver of net profits, right? If you can keep your clients and keep them happy, you will make more money than the guy who loses more of those people. So, there's your metric. What am I retaining? Number one and number two, what am I upselling on top of that? And that's true, whether it's for a commercial maintenance company or a residential DB person, right? Am I getting more repeat business from it? Because once you have that data, you can go out and market all this, right? And use it all to say, listen, we gave you 16 proposals last year, you've hired two, do you not want to do this stuff? You want a new bid on it, right? The sales people always have stuff they can use to generate the next sale. So, to me, the two big metrics are, do I know my retention rate? Do I know my upsell rate and level of volume for each of those people? And am I increasing that, right? Because those things will drive your bottom line like nothing else.
Kevin Kehoe:
The gross profit is 50, 51% for every one of our clients, not everyone but on average, right? Across the board, which says, people are making money. In other words, the job cost system is doing its job. You look at the bottom line, it ranges from 4 to 22.
What Really Makes A Difference When It Comes To Net Profit Margins?
Jack Jostes:
Wow. So, without naming names, what are the people doing that are making 4%? And then, what are the people who are making 22% doing differently?
Kevin Kehoe:
Two things, right? Number one, if you look at just the data, the retention upsell rates are better, right? In other words, essentially, loyalty and the benefits that come with loyalty. Number two is, they just have what I call FPIOs right? Funny People In The Office, right? That's your administrative people, your AMs, anyone who's not billing hours, right? The crew leader bills hours, right? Your crew bills hours, everyone else is overhead and they just have fewer, like 20% fewer of those people. In other words, if you took two $5 million companies and one is making 12, one's making 4, the 4 probably has three account managers, the 12 guy's got 2. The guy's got 3 operations managers, the other guy's got 2. The person has 3 people in the office, the other guy's got 1. You know what I mean?
Jack Jostes:
Yeah, for sure. So, I run a landscape executive mastermind with some of my top clients and they're all around the country and one of them is doing north of $4 million and they were at 26% net profit and they have almost completely automated their office. They have somebody who works four hours a week in their office and they actually work remotely for this person. And it's because they have totally geeked out on the software, the job costing, everyone in the mastermind was like, how do you get away with this? With somebody doing this for four hours a week. And it was through these systems that are automated. So, automating as much as possible.
Kevin Kehoe:
That's Aspire, right? Aspire's automating all those things that people used to do. And so, the goal, people say, I don't want to fire people, have less people, that's not the goal. The goal is to have everyone you have do more, long-term, right? That's the goal. You know what? By the way, that makes them happier. You can pay them more money because they're more productive.
Jack Jostes:
For sure. It's not about getting rid of people, it's about being efficient and then, having that profit allows you to pay people more, take care of people, absolutely. So, we've got to wrap up. So, Kevin, tell us a little bit more, how can people get in touch with you? How can we learn more about Aspire?
Kevin Kehoe:
Yeah. Jack, thanks for having me, by the way. Aspire Software, right? That's our company. If you go to www.youraspire.com, you can find out all about us. But if you're interested in learning more about our software, I'm going to give you my email, right? It's kevin.kehoe@youraspire.com and I will make sure you get a free demonstration, hook you up with the right people. We do a fairly intensive sales process, right? Trying to understand who you are, before we try and sell you anything, so that you're actually making the right purchase, right? Because when you get a new piece of software, in the very beginning, you want to look at everything, I'm like, no, you don't want to look at everything. Really know what you want to know and set it up very simply, so that when you go back later on, your data structure is really easy to see, that's all.
Jack Jostes:
And I'll bet that you help people identify who their funny people in the office are too sometimes.
Kevin Kehoe:
We do. Hey Jack, thanks very much.
Jack Jostes:
Thanks so much for listening to this episode of The Landscapers Guide to Modern Sales and Marketing Podcast. My name's Jack Jostes and it's been a pleasure talking with you. This episode reminds me that, one of the best ways to measure your marketing, right? So, you're going to measure your job costing with some of the tips that Kevin outlined. Another thing you want to do is track which marketing led to the new customer you have, that way you can cut marketing that doesn't work. And I have a whole chapter in my book, Get Found Online, about how to measure your marketing and how do you actually put this data in QuickBooks? So chances are, you're not using this little known field in QuickBooks and I'd love to send you a free copy of my book. You can grab one at ramblingjackson.com/book and check out chapter 11, measured results. So, I hope you learned some things today that you can implement right away to increase your profitability. And with that, I hope you have an awesome weekend and I look forward to talking to you next week.