Now is the time to take a look at your business and figure out how to hire the right people to elevate your company to the next level.
If you’re running a little bit bigger organization, I think the question you want to be thinking about right now is, “Who could we hire next year, or by the end of this year that would be business changing in the next calendar year? This person’s going to cost some money, but if we could find this person and they could bring an entirely new set of knowledge, experience, understanding to our business, take a ton of stuff off my shoulders, take a ton of stuff off some of my really talented team members so that they could move onto other things and this person could show us new ways to do things that we’re doing now, possibly incorrectly or not as efficiently or optimally as possible. What might that do for our business?”
This video explains whether a COO or CEO is a better option for your company.
I talk a lot about building a real company that can run itself and that doesn’t require your daily involvement. I really do believe that’s the ultimate goal of business. You want to build this asset that can generate wealth for you and it becomes an investment in the sense that you don’t have to actively participate in it every day to make this thing run and operate.
The goal for many is to get a president or a CEO or someone to run this company. But, here is an alternative thought. What you really need is a COO. You could be CEO or president, they’re almost interchangeable terms in most cases. You could be the CEO and still create a pretty exciting, amazing lifestyle and still generate a lot of wealth and not completely relinquish all of your duties within the company.
The number one position that you need in your company so that you have some time and freedom to get away is a COO. It’s a Chief Operating Officer. This is the individual that essentially runs operations.
Now, when you’re smaller, your operations manager generally isn’t the same person that can grow into becoming your COO. COO is typically a term you’d use for a bigger organization. So, your operations manager when you’re doing $500,000 or $1 million probably isn’t going to be the COO of the company when you’re doing $10 million, unless that individual is really learning and studying and growing as an individual. A lot of times you’re going to have to replace that individual and bring in someone that has some experience in that area.
The COO is going to run operations. They’re going to do a lot of hiring. They’re going to do a lot of firing. They’re going to make sure the processes and procedures are in place. They make the engine of the company run, whereas the CEO, which might be you, is more the strategy, the strategic thinking, the big ideas, the moving the company forward, leading, and recruiting. A lot of those roles, they can take 60, 70, 80 hours a week, but most of the time they don’t really. What I mean by that is if you have a great COO, operations manager, you as CEO could really get away from your company for three weeks. You could get away from your company for four weeks and the company will still keep turning and running.
I created the video because it’s very easy to think you’ve got to hire a president or CEO to run your company. You believe that until you get to that point, you won’t have built a real company and that’s not necessarily the case. What I’m suggesting is that what you really want to focus on is operations and then hiring a COO-type person to run the operations of the company. You don’t have to completely walk away from this thing to be a great company that can sort of run itself to be a real company. Rather, you could put yourself in a position where all you do is the core CEO-type activities of strategy and some money and key hires and things of that sort.
When that’s all you have to do within your business, now you have a lot of time to do other things. You have a lot of time to go on trips, a lot of time to be involved in your family’s life, or to start another business or to do something else. Now you’re not consumed by the daily grind of everything that goes into building and running a company. Think in terms of COO versus CEO.
Jonathan’s number 1 tip to grow a big business fast…
This one point I’m about to make might be one of the biggest reasons why you never successfully grow your company into a big business. I’ve had to learn this one for myself because this one comes from experience. If you’re an individual that is willing to work really hard, that grew up believing that hard work will move you forward in life, and you believe and pride yourself in a really strong work ethic. If you feel that you’re not too good to do any task inside the business, that nothing’s below you, that you’re willing to do it all, you’re willing to learn it all, you’re willing to be the best…that can get you into a lot of trouble because the most important skill that you and I have to cultivate as we build bigger companies, and I’ve learned this first hand, is you have to turn into an individual that manages and delegates and coaches and trains.
You can no longer be the person doing the work. In fact, if you want to build the best business possible, you really should do virtually zero work. That doesn’t mean that you don’t do work. What I mean is you’re now in a strategizing, planning, getting the bottlenecks out of the way of the team, coaching and training and organizing type role. You’re in the role of bringing the very best players to the team and putting them in the right spot in the company so that they can move the company forward. You shouldn’t be doing the marketing. You shouldn’t be paying the bills. You shouldn’t be mowing the lawn. You shouldn’t be filing. You shouldn’t be doing anything like that. You should be setting the goals, and you should be creating the company structure and putting the right people in place.
If you’re that person that feels guilt when you’re not working and doing the activity, if you feel guilt when you feel that you’re not working hard, if you’re not really doing the thing and you’re spending more of your time thinking, if you don’t think that thinking and strategizing and planning is work, then you’re going to feel guilty. You will not move your company in the right direction because you’ll never act in the role that you need to act to get your company to the next level.
You and I almost need to reprogram ourselves to believe that delegation is the right thing to do, and not feel guilt around actually doing the activity. If you look at all the most successful biggest business owners, this is the role that they’ve moved themselves into. You never see them actually doing the work themselves. Even if they might be the best at that task, they have handed it off to somebody else.
I’d argue that once you start to build up some money in your business, there’s almost nothing that you could possibly be the best at or you couldn’t hire somebody else to do it just as good as you. If you have enough money, you can always find somebody to do whatever you’re capable of, as good or better than you.
In this video, Jonathan describes the three main roles you take on in your job as CEO.
It’s January and this is the month you set the tone for the rest of your year. If you nail this month and you nail this year, it sets you up for the next 5 years. If you are running a larger company, something that I’ve struggled with and I’m still working on to this day, is to remind myself of what I’m about to tell you. I hope it’s valuable for you because it’s incredibly valuable for me when I actually live what I’m about to tell you. I try to do it every single day.
Your job as the owner, as the entrepreneur, as the individual running a larger company, one that does a few million and up gross revenue, is to recruit the very, very best people you can possibly recruit on to your team. You want to spend a lot of time in this area.
Your next job is to make sure you filter out and get rid of everybody that is a drain on the company and anyone that hurts the culture and the morale of the company. You are in the employee management business. You are recruiting the best. You’re getting rid of the under-performers that hurt the team.
Then, your job is to remove the bottlenecks for your team. You’re supposed to make life easier for them, help them stay efficient, help them work fast, help them progress in their area of expertise in whatever it is they provide and do for the company. You want to set the strategy for the company. You want to make sure that everybody in the company is working that plan.
You have the big vision. Where are you going in 5 years? You set the strategy. You make sure everybody’s working that plan and then you remove bottlenecks for your team. That means you might have to get contractors involved. It might mean you have to hire another employee. It might mean you need to fire an employee. It might mean that you need to help an employee get educated in a certain area but you’re there to remove their bottlenecks.
Your typical day looks more like coaching and critiquing, giving advice and feedback, and redirecting and assisting more than anything else. When you reach that point, you’re living the life of what a CEO should be doing. You’re not doing all the work. You’re more delegating and coaching and advising.
Your job is to think and lead. If you’re doing that then you’re achieving what you need to be doing to get your company to the 5 million, to the 10 million, to the 20 million dollar mark. None of it’s easy. I struggle with all of this. I did it better at CitiTurf than I’ve done it at Service Autopilot probably because I’m a little more passionate about Service Autopilot. I’ve stayed in the thick of everything longer than I should’ve and so I’m talking to myself just as much as I’m talking to you.
I hope this gives you some encouragement to really focus on that in January, February, March and the rest of this year. If you’re still a smaller company, work as fast as you can to get yourself into that position and that’s when everything really starts to accelerate inside your company.
See past employee difficulties to build a stronger, more stable company.
When I started studying marketing, a number of the individuals that I really started learning from early on, I would read their material and go to a seminar or conference and they would talk about marketing and other business topics. Over the years, I’ve heard this theme across many, you could call them internet gurus, marketing gurus, whatever the case may be. The theme is that employees are bad. Employees are terrible. You don’t want employees. Build a business that doesn’t require employees.
For many years it was sort of pounded into my head that employees are bad and terrible and no fun and employee difficulties will be the misery of your life. I think it’s a really dangerous way to think and that’s why I wanted to make this video. Because we often, in our business too, will have problems with different individuals and then we’ll say “Man, I can’t find any good employees! There’s not anybody out there that’s any good. They all cause me trouble”. You can think of all the different excuses that you have.
The reality of it is that when you build a great team with great people, and the only way to do that is to let quite a few people on your team go and to constantly be pruning the team, which is something that is not fun in any way. But, the only way to build a great team where you don’t end up with the attitude that you can’t find good people, nobody does a good job, and you dream of having no employees. The only way to get to the point where you don’t feel that way all the time is to constantly be getting the ones that cause you pain, that cause you trouble, that you’re constantly dealing with, that you’re constantly having to talk about, that you’re constantly having to have another meeting with, is to get them out of the business.
When you build a great team, then it’s great to have employees. They can move you forward personally. It’s great to get to work with exciting people that are moving themselves forward in life, that are growing and advancing their careers. Then it actually is great to have employees. If you read too many books and you listen to too many of the wrong people, and it’s some very, very smart people, it’ll be very easy to succumb to the idea that you want to just build a small business without people to make my life easier. That is absolutely incorrect.
Having the right people on your team and having a lot of the right people is exactly how you make your life easier ad better. When you get to work with great people, you’re just going to be happier and they can also help you build an organization. Not just so that it’s bigger to provide you more money, but so it’s bigger that it’s protected in that you have some layers within the company that if a couple key people leave, it doesn’t all fall apart.
The bigger you can build your business the better because it gives a safety net to your team, to you, and to your family. It gives you some people on the team that can cover each other so everybody can go take some vacations and take a break and get recovered mentally. Think in terms of building bigger. Don’t just focus on going small because it seems like it will be easier if you don’t have a bunch of employees that may be difficult. Because from my experience, that’s not the case. The real case is having the wrong employees and keeping them on your team. That’s what’s bad.
Follow this business owner tip to free up your time and keep your company moving forward.
I’m sure I’ve recorded several videos about this topic, and I know I’m repeating myself but, it’s an incredibly important message to hear. It’s one that I have to remind myself of, and if you saw my white board in my office, I have the numbers 10, 100, 1000 and 10,000 written on my white board to remind me that I need to be working on 1000 and 10,000 dollar an hour work.
Let me explain. I’m going to keep it really simple because this is critically important. It’s January. You’re setting the tone for the whole year.
If you’re doing a task that you can hire someone to do it for $10 an hour, then you’re only worth $10 an hour and you are now a massive bottleneck in your company. If you were the guy that could launch this company, start it, get it going, and could make it happen and keep it running, then you’re obviously not a schmuck. You obviously have some skills and abilities and you’re willing to learn and do what it takes to get your company and yourself to a certain level.
So why are you still doing $10 an hour work? You are much better.
I don’t mean that as a negative to somebody doing $10 an hour work. But, you have a bigger skill set and your company needs you to be doing that bigger skill set. You want to spend as much of your time as possible doing the really expensive high-dollar stuff.
The same is true of $20 an hour. If you could hire an irrigation tech for $20 an hour and I’m out there doing irrigation work, I’m only worth $20 an hour to my company. But what if I was working on a marketing campaign, or an employee procedure, or advertising campaign for getting more employees? That’s work that maybe you’re uniquely suited to do. When you’re doing irrigation work, or lawn work, or whatever, that you could hire somebody for 10, 15, 20 or even $25 an hour to do it, then that’s all your worth and you’re letting your company down. You’re not moving your company forward doing the 50 and 100 and $200 an hour work.
Consider putting a note on the desktop of your computer, or on your white board, and just write the numbers 10, 100 and 1000. Maybe you don’t yet know what $1000 an hour work looks like, but keep that in your mind in everything you’re doing. Look at that white board and say, “Okay where am I playing right now? Am I playing in the $10 an hour work category or the $100 an hour work category?”
If all of that is too much to imagine, then write $10, $20, $50, $100 and $200, smaller numbers, and ask yourself every time you’re doing something which type of job are you doing and try to get that smaller stuff off your plate and try get it to somebody else.
The question is, “This will be my 3rd season in business. I run a two man crew. I’m wondering if I need to step away to sell and market and hire someone to replace me?”
Absolutely. Yes. With that question, there is no other reason in my mind to be in business but to give yourself a little bit of leverage. Now, if you desire to be the guy doing all the work and run a 2-man crew, if that’s what you like and that makes you happy, fantastic. From your message, I’m pretty certain, it’s not the case. You need to start this path, as soon as you can. I’m going to answer your question but I would recommend that you go over to the website, howtogrowyourbusinessfast.com. Put in your name and email address and the website will send you 2 videos.
One is of a talk I gave with Planet. It was a webinar about how to get off the track and basically get out of the field. I think it was about an hour. Then, I also gave a talk at GIE in 2013 and it’s a little bit geared towards bigger companies but there is a bunch of stuff in there that you could take away and that’s an hour and a half long talk that I gave. I would highly recommend that you take those 2 resources and figure out how to get out of the field.
Now, let’s say you go hire somebody to take over your position and now you’re free. What are you going to do and what’s your plan of action?
I think a lot of people stay in the role of running the crew because they can’t get their head around, exactly what, why, and how to grow this business. If you can’t answer that question, then you keep saying, “I’m not quite ready yet, I’ll do it next year.” You procrastinate because you don’t know what to do. How do you solve a potential procrastination problem? You need a plan. What’s the plan? If you free yourself up, how are you going to bring in new business? What are you going to do? Are you going to knock on doors, put out door hangers? What is it? Are you going to talk on the telephone?
Just because your freed up, it doesn’t mean that anything magical is going to happen. You’ve got to know what you’re going to do. It might just be that over the winter, you’re going to get a great website put together. You may plan to start working on your SEO or pay per click or content marketing. If you don’t know what any of that means, do some Google searches. You figure out what the door hanger is going to look like. Maybe you put together a gift card or referral program to garner a new business. Watch my videos and learn about marketing and think of let’s say, 3 ways that you’re going to get new clients. Get that stuff all worked out over the winter and then you start doing it.
Be ridiculously specific with your plan. Don’t just say, I’m going to put out door hangers. No, you have to know which neighborhoods you want to hit, on which day, and how many. You might do 500 in one neighborhood on one day and 500 more to a different neighborhood on the next.
You need to have all of this in place so that when you hire somebody, you don’t get overwhelmed or distracted. Spend the time now to think through exactly what it means to put out door hangers, exactly what it means to get a website up and running, exactly what it means to knock on a door and sell certain things or go knock on all of your existing client’s doors and try to sell them something else. Again, be ridiculously specific where you know step by step what to do. Almost to the point that you could hand it to a friend or business partner or employee and they would look at it and have a pretty good idea of exactly what to do if they were going to do.
If you do that, you’ll overcome the biggest hurdle to growing and getting started. You’ll have an action plan. Once you get out of the business and start doing this and practicing this because it’s a new role, you won’t have to do that anymore.
I’m just saying do that first so that you guarantee yourself a level of success when you do hire somebody to replace you. The very simple answer that I could have answered in 10 seconds is a yes. If you don’t take the action I described to go with, the yes of getting out in the field, then you may not be overly successful. You’ve got to make sure that when you get free, almost all of your time is devoted to selling and marketing activities. If you free yourself up and 80% of your time is devoted to inconsequential things like maintenance and other miscellaneous things, and 20% is devoted to sales and marketing, you might as well have stayed in your old role of doing work and then just work extra hours to do sales and marketing.
If you do it right, you absolutely want to get off that truck and you want to do it now, not next year. Good luck.
Do you feel like you don’t make enough money in your lawn care & landscape business?
Are you frustrated? Not getting ahead?
Watch this video to learn exactly why this is happening and how to finally make money in your lawn care business.
In your lawn care business, do you feel like you don’t make enough money? Do you feel like as you grow your company, things aren’t getting better, that there’s never money leftover?
I’m going to show you in this video exactly why that’s happening. I’m going to show you why the business doesn’t feel like it’s ever improving.
Some of the common complaints that we hear from guys are, they feel like they’re not pricing the work correctly, not making enough money, the business never gets better, there’s never any money leftover no matter how hard they work or how much they grow, and they feel like they’re just always scraping by.
When they started the business, things felt good. Then, as the company grew, they felt like they could never get ahead…feeling trapped by the growth.
I’m going to show you some numbers. Now, if you get caught up in the numbers that I’m demonstrating, you’re going to completely miss my point because I have not put the thought into this to come up with real numbers. Don’t be caught up on the numbers, they’re only to get you thinking and to illustrate my point.
Let’s say when you first started out, you were working for somebody else working 40 hours a week.
You were making $14 an hour, which means you were taking home about $560 a week. We’re ignoring taxes and all that. Let’s say you were in this industry and the company had some seasonality in it, so you worked this job and maybe another. Again, just keeping this simple.
You worked 40 weeks of the year, so you were making $22,400 per year. Then you decide since you have all the experience, that you can start your own company and make a lot more money.
You go out and start a lawn care company. Let’s say, overnight you sell 40 hours a week worth of work. You are now doing the exact amount of work that you were doing for your prior employer. You’re working 40 hours a week, but now you’re selling your work at $30 a man hour.
Whether you’re mowing yards or doing irrigation or installation, you’re selling that time on average for $30 a man hour. If you’re mowing yards, and you price the yard at $30, that means it takes you about an hour.
If you’re making on average $30 a man hour, and you’re working 40 hours a week, you’re making $1,200 a week. You’re doing way better than you used to when you had your job. You’re still working 40 weeks, but you’re making $48,000 a year instead of $22,400.
Things feel good. You think, “This is great. If I could just grow this business more, I could make a whole lot more money. If I were to go get more jobs and hire more employees, think of all the money that I would make.” You think growth is going to fix your problem and it’s going to let you have this really great lifestyle and you’re going to make tons of money. You run the numbers and think, “Man, if I had people I’m going to make a lot more money.”
This is where you really can’t get stuck on my numbers.
If you’re selling time at $30 an hour, but now you get a helper. If two of you are doing a job together and you sell that job for $30, that means you can only be on that property for 30 minutes because your 30 minutes plus his 30 minutes equals one man hour. That’s $30.
If both of you work an hour on the job site, you better bill $60 to make $30 a man hour. Now you’re selling your helper’s time at $30 a man hour. You think, “Oh, I could hire a guy for $14 an hour. I could sell it for $30 an hour. Think of all the money I’ll make.” But there are all of these costs.
Let’s say when you think about how many hours a week you work and you take the cost of your truck, the cost of gas, the cost of equipment, and you just divide those costs out by the number of hours you work a week to arrive at an hourly cost to run the truck, hourly cost of gas, hourly cost of equipment.
I’m going to say it for the fourth time…these numbers are not exact and are solely to make a point.
When you run the numbers, you’ve figured out that it cost you about $2 an hour to run your truck (these are working hours), $1 an hour for gas, and so on.
This employee now has a truck, gas expenses, equipment expenses, supplies, he has insurance on his truck, materials cost, and you are paying his worker’s comp and a storage unit. There are so many other costs that I didn’t even account for here.
On an hourly basis, if you were to look at all those costs, he’s costing you about $21.67, which is quite a bit more than the $14 an hour. That doesn’t even account for payroll costs, or what they call labor burden. That’s immediately another 8% of the $14 an hour.
Now you’re billing him at $30 an hour but you’re spending $21.67 on him. For every hour you work this guy, you’re making $8.33. If you are still working 40 hours a week, and now your employee is also working 40 hours a week, you were making $30 a man hour before, now you’re making $38.33.
You were getting to take home, in my very elementary example, $30 a man hour which was equating to about $48,000 a year. What’s great is, now you’re also getting to take home another $8 a man hour because you have a helper. Well, then you get another helper. The realty is that you have to go sell enough time to keep this other guy busy. You now don’t have time to work 40 hours a week. You have to be doing things to generate business.
You’re out doing estimates, answering billing questions on the phone, answering sales questions, and selling. Now, you’re really putting in 70 hours a week.
You’re worn out. You’re working weekends and most nights. The business is starting to get really stressful and frustrating. The only answer is, you’ve got to work a little less. You need to get off the truck for part of the week so that you can do all the other activities of the business and have your team now generate the billable revenue.
As you add more employees, all of these new things happen in the business that take all of your time. You can’t be out there doing as much work. Let’s say that you were to get out of the field, or start to reduce your time in the field. If you want to continue to make $48,000, or make an equivalent of $30 an hour, you now have to take these guys so that you’re selling their time at $8.33. You now need 3.6 of these guys.
You need almost four guys out there in the field doing the work, so that with the money leftover, you can make the $48,000 a year that you were making before when you did all the work yourself.
Basically, now you have four guys doing the work for you, but now you’re busy doing all the other stuff for the business and you’re not making any more money. That tends to be the exact problem that most guys get into. You have four guys, you’re swamped, and you have no where to keep all your equipment.
Keep in mind, in my example there’s no profit leftover, you’re not building any money in your bank to protect you for a rainy day, and you’re not putting any money aside to go buy new equipment. You’re not doing any of the stuff that you need to be doing. Your are simply surviving in this example.
Now, you sit down one night and you’re overwhelmed and beat down because nothing is getting better. You have four employees but, they break stuff and things happen. That cuts into that $48,000 that you were making. You’re not always truly making $8.33 per guy. Something’s always happening.
You think to yourself, maybe if you had eight guys things would get better? That means you better get out there and hustle and sell and do everything it takes to grow the business.
Pretty soon you’re so busy again and you’ve hit a brick wall. You’re back in that same spot again. If you’re married, your wife’s worn out with you. If you’ve got kids, you never see them. You don’t know what to do.
You think, maybe you should get an office assistant. If you got an office assistant, that person could answer the phone and do a lot of the smaller activities that you’re doing so you’d be freed up to go do the bigger stuff.
You get an office assistant. Now you need an office and phones and you need all these other things. Your office equates to about $1 an hour for the time you sell across your guys. Your office assistant equates to about $2 an hour for every hour of time you sell for a guy.
You also have about $1 to help pay for the office expenses. The utilities cost you about 50 cents. Now, notice what’s happened down here, your cost has gone up to $25 a man hour, and so now you have to have almost five guys to make the same $48,000 a year you were making.
This is the trap that keeps happening. This is what happens so often.
A guy starts out and he’s making decent money. He wants to grow the company. You look up three years later and you’re thinking, “I’m not making any more money than I was making before. Maybe I’m making less or barely more, but I’ve got all these people, all these trucks, and I’ve got all this stuff going on. Why is there no additional money for me?”
It’s because you’re still selling time at the same price you were selling it when it was just you. But now, you have all of these expenses you never had before. I didn’t even put in marketing expenses. There is a whole list of expenses that I didn’t account for. This, again, is a super elementary example. My numbers are all wrong, but you get the idea. This is exactly what happens.
Now look what happens if overnight you were to change your hourly rate to $40 a man hour. Now how many guys do you need? See? You’re now making almost $12 an hour for every hour you sell of a guy’s time. Now you only need about three guys.
Let me just illustrate that one more time because this is a critical point. I need almost 17 guys when I was selling time at $30 an hour. If I sell my time at $40 an hour, I need barely two guys to make what I was making before. Now imagine that I actually still had the 17 guys, but now I’m making $11.83 per man hour on my 17 guys. Let’s do that math.
For every hour that ticks by in the day that you have 17 guys out in the field making you money, making you $11.83 an hour, you’re accumulating $201 every hour that passes. On a 40 hour week, you’re accumulating $8,000 a week. Originally you were making $48,000 a year, and we used the example of working 40 weeks a year. Now, you’re making $321,000 a year.
Now, this is an exaggeration. With 17 workers, you’re not going to make $321,000 a year in take-home pay and be growing the business and everything else that it takes. My numbers are flawed, but can you see the difference in the problem?
Originally you kept your hourly rate at the same hourly rate as you were originally selling time for when it was just you and you felt good. You were making money. Then as you grew the business and you acquired all of these additional expenses, you didn’t consistently adjust your rate. As a result, you kept adding people, but the business wasn’t getting better. In my example, we were still selling time at $30 a man hour.
It was taking something like 17 guys to generate the same income that you were making years back. By simply adjusting our rate that we sell time for, look at the dramatic difference it had. You would go from making $48,000 a year to $321,000 a year. This is the power of constantly adjusting your rates.
Now, granted, you can only sell time for so much. You have to be competitive in your market. The trap is that so many guys go out and they build a company and everything’s going well. They keep adding more and more expenses to their business, but the rates aren’t going up. They’re either not becoming more efficient as a company, or they’re not adjusting the rate that they sell time for. Their margins keep getting smaller and smaller.
The only way to solve the problem is to keep hiring more and more people and selling more and more. You can’t sell your way out of this problem. You have to, at some point, correct your pricing. For those in commercial contracts, or those in residential contracts, the only way to fix the problem is to either get rid of all the work that originally built your company, or raise the pricing on all the work that originally built your company.
Oftentimes, the contract that you have doesn’t respond well to you taking as big a price increase as you need. If you realize three years later that you’ve been underpricing and you have to go back and raise prices 30%, that immediately gets most of your clients to go out and look for better pricing because it’s such a huge price increase.
Oftentimes, that’s the only way a guy can fix his business because he was underpricing his work from day one. This is maybe my final point. If you’re watching this and you’re just getting started in business, make sure that you’re pricing your work today, right now, at a price that will support your business as if you already have all of this additional cost.
Now, with that being said, if you’re pricing your work correctly today, when it’s just you and maybe a couple of helpers, then you should be making a lot of money. Don’t spend all that money. You should be putting it in the bank to help fund the growth of the company.
Let’s say, you’re out there with a couple of workers and you’re making $65,000. If you’re spending all that $65,000 to support your personal lifestyle, when you want to grow the company and you go through the phases of your business where you start to hire people and start to add costs, you won’t have the money to put in. You go through these ups and downs in the business where some of that money that you’re pocketing now is needed for the business. You can’t take quite as much out because you’ve got to invest a bit in the business to hire some people and buy some equipment.
My point there is that this is what happens. This is a common trap. A lot of guys early on make a lot of money when they’re pricing correctly. If they spend all that money to buy a house, a car, a cool truck, or whatever, if they’ve got kids, now they have no money leftover. They have to continue to make that 65 to 70 grand a year just to live personally.
These guys have no money to invest in the business. They aren’t able to take a temporary pay cut to afford all the expenses of the business to take it to the next level.
If you pay attention to these numbers from day one and you’re aware of them, you will grow so much faster and your business will be so much better.