WEBVTT
1
00:00:00.571 --> 00:00:01.252
Chapter 2.
2
00:00:01.832 --> 00:00:08.035
The Problem with Home Services Five years ago, I franchised my business, Augusta Lawn Care.
3
00:00:08.755 --> 00:00:12.017
We've since grown to more than 180 locations and counting.
4
00:00:12.597 --> 00:00:17.640
To change the level of professionalism in the lawn care industry, we need to reach 1,000 locations.
5
00:00:18.420 --> 00:00:20.941
To do that, I knew something had to change.
6
00:00:21.741 --> 00:00:28.325
This story begins in Las Vegas in February 2024, when I went to Acquisition.com headquarters.
7
00:00:29.165 --> 00:00:30.545
I met Alex Hormozy there.
8
00:00:31.365 --> 00:00:32.966
He's an entrepreneur and investor.
9
00:00:33.586 --> 00:00:36.926
He built a portfolio of companies worth over $500 million.
10
00:00:37.787 --> 00:00:40.027
He also wrote some best-selling business books.
11
00:00:40.667 --> 00:00:43.227
Alex is an expert in making businesses run better.
12
00:00:43.888 --> 00:00:46.808
I told Alex about my business and asked for his thoughts.
13
00:00:47.248 --> 00:00:49.388
I shared my goal of reaching 1,000 locations.
14
00:00:49.709 --> 00:00:51.769
He told me to look at the unit economics.
15
00:00:52.209 --> 00:00:55.490
How much money does each Augusta Lawn Care franchisee make?
16
00:00:55.930 --> 00:00:57.810
He gave me the target I need to hit.
17
00:00:58.470 --> 00:01:03.032
average $200,000 in annual profits and franchises will sell themselves.
18
00:01:03.672 --> 00:01:10.935
I asked myself, what problem must we solve so that $200,000 in annual profits occurs every single time?
19
00:01:11.475 --> 00:01:16.777
Not sporadically, not at one-off best performing locations, but every single time.
20
00:01:17.517 --> 00:01:19.598
This became the Augusta business model.
21
00:01:20.338 --> 00:01:22.719
Grow to $500,000 in annual revenue.
22
00:01:23.420 --> 00:01:25.300
Optimize for profits and raise prices.
23
00:01:26.081 --> 00:01:30.883
Target $800,000 in annual revenue and $200,000 in profit.
24
00:01:31.623 --> 00:01:34.985
This led to a six-week deep dive into spreadsheets and reports.
25
00:01:35.705 --> 00:01:38.107
I looked at the unit economics of Augusta Lawn Care.
26
00:01:38.747 --> 00:01:40.348
I examined all our locations.
27
00:01:41.148 --> 00:01:44.650
I studied the green industry, lawn care, landscaping, and tree service.
28
00:01:45.430 --> 00:01:47.531
I also looked at home services as a whole.
29
00:01:48.232 --> 00:01:53.495
This included janitorial, window cleaning, roofing, pool cleaning, and handyman services.
30
00:01:54.335 --> 00:01:59.278
In total, I analyzed financial statements from over 250 home service businesses.
31
00:01:59.838 --> 00:02:00.619
I noticed a trend.
32
00:02:01.259 --> 00:02:03.861
I found that most home service businesses are seasonal.
33
00:02:04.601 --> 00:02:07.823
They don't have many leads for three to four months out of the year.
34
00:02:08.684 --> 00:02:10.705
They average single-digit profit margins.
35
00:02:11.699 --> 00:02:14.540
If you remove one quarter, profit margins skyrocket.
36
00:02:15.161 --> 00:02:17.021
The drop in revenue is dramatic.
37
00:02:17.722 --> 00:02:19.683
I call this Q4 collapse.
38
00:02:20.543 --> 00:02:22.784
One quarter, any quarter of the year.
39
00:02:23.724 --> 00:02:26.786
During that time, the business still has bills to pay.
40
00:02:27.366 --> 00:02:31.208
The banker isn't going to push off loan payments until after the off-season.
41
00:02:31.888 --> 00:02:35.369
the landlord isn't going to forgive rent payments for three months.
42
00:02:36.330 --> 00:02:43.972
Regardless of revenue dropping, you still need to pay for general liability insurance, software subscriptions, truck payments.
43
00:02:44.812 --> 00:02:45.953
And so I developed an idea.
44
00:02:46.931 --> 00:02:49.213
turn that negative quarter into a profitable one.
45
00:02:50.073 --> 00:02:53.376
Doing so will have a dramatic effect on your profits.
46
00:02:54.217 --> 00:02:56.298
I don't mean make it a record high quarter either.
47
00:02:57.039 --> 00:02:59.661
What if you looked at the other three quarters of the year?
48
00:03:00.341 --> 00:03:08.448
Take the median profitable one, not your best quarter, not your worst one, then use the average quarter as the revenue target for the worst quarter.
49
00:03:08.908 --> 00:03:14.413
I found that in doing so, businesses in my test group increased profits by an average of 72%.
50
00:03:15.393 --> 00:03:17.035
Some businesses were more severe.
51
00:03:17.435 --> 00:03:19.837
They had large negative profits for one quarter.
52
00:03:20.438 --> 00:03:23.921
Making this change could double or triple their profits for the year.
53
00:03:24.521 --> 00:03:25.422
Here's a case study.
54
00:03:25.982 --> 00:03:28.524
This is from an actual lawn care and landscaping company.
55
00:03:28.905 --> 00:03:30.666
I removed their name, but the numbers are real.
56
00:03:31.347 --> 00:03:32.408
Lead count by quarter.
57
00:03:32.988 --> 00:03:34.870
Quarter one, 79 leads.
58
00:03:35.490 --> 00:03:35.910
Quarter two,
59
00:03:36.711 --> 00:03:37.132
490 leads.
60
00:03:37.152 --> 00:03:38.273
Quarter 3, 311 leads.
61
00:03:38.893 --> 00:03:39.394
Quarter 4, 203 leads.
62
00:03:39.414 --> 00:03:40.174
Revenue by quarter.
63
00:03:40.195 --> 00:03:40.955
Quarter 1, $80,000.
64
00:03:41.576 --> 00:03:42.116
Quarter 2, $330,000.
65
00:03:42.136 --> 00:03:42.897
Quarter 3, $420,000.
66
00:03:56.310 --> 00:03:58.092
quarter four, $290,000.
67
00:03:58.573 --> 00:04:02.297
You can see the massive seasonality.
68
00:04:02.918 --> 00:04:06.121
The spring rush brings a huge spike in leads during Q2.
69
00:04:06.742 --> 00:04:08.304
Revenue peaks in Q3.
70
00:04:09.185 --> 00:04:13.489
This is because it takes time to convert leads into completed work and then collect payment.
71
00:04:14.491 --> 00:04:17.013
Here's what their profit looked like throughout the year.
72
00:04:17.982 --> 00:04:20.805
Key one, negative $60,000.
73
00:04:21.586 --> 00:04:24.550
Quarter two, $50,000 in profit.
74
00:04:25.391 --> 00:04:27.513
Quarter three, $60,000.
75
00:04:28.434 --> 00:04:30.597
Quarter four, $20,000.
76
00:04:31.498 --> 00:04:32.940
Profits peaked in the third quarter.
77
00:04:33.280 --> 00:04:36.764
Then they tapered off as the year ended and entered a slow period.
78
00:04:37.725 --> 00:04:38.685
Case study number two.
79
00:04:39.526 --> 00:04:43.387
I checked out a company that puts up Christmas lights and provides other winter services.
80
00:04:44.027 --> 00:04:45.868
They do snow plowing and salt spreading.
81
00:04:46.688 --> 00:04:48.969
Its business shows the opposite seasonal pattern.
82
00:04:49.589 --> 00:04:51.710
Their lead count by quarter tells the story.
83
00:04:52.830 --> 00:04:54.090
Quarter one, 10 leads.
84
00:04:54.811 --> 00:04:56.151
Quarter two, five.
85
00:04:56.971 --> 00:04:58.432
Quarter three, 40.
86
00:04:59.252 --> 00:05:00.633
Quarter four, 170 leads.
87
00:05:02.434 --> 00:05:04.436
They completely shut down during Q2.
88
00:05:04.896 --> 00:05:06.297
In Q4, their business booms.
89
00:05:07.018 --> 00:05:09.680
Most of their revenue comes from Christmas light installation.
90
00:05:10.561 --> 00:05:13.464
The demand for that service speeds up after Thanksgiving.
91
00:05:14.505 --> 00:05:16.146
Their revenue follows the same pattern.
92
00:05:16.526 --> 00:05:17.047
Quarter 1, $70,000.
93
00:05:17.347 --> 00:05:18.148
Quarter 2, $30,000.
94
00:05:18.168 --> 00:05:18.668
Quarter 3, $90,000.
95
00:05:19.149 --> 00:05:19.789
Quarter 4, $390,000.
96
00:05:28.283 --> 00:05:31.344
Their profit also demonstrates this seasonal swing.
97
00:05:32.284 --> 00:05:34.725
Quarter one, $10,000 in profit.
98
00:05:35.586 --> 00:05:37.586
Quarter two, negative $50,000.
99
00:05:37.626 --> 00:05:38.307
Quarter three, $30,000.
100
00:05:38.347 --> 00:05:40.708
And quarter four, $90,000 in profit.
101
00:05:45.631 --> 00:05:47.652
During Q2, they hardly get any leads.
102
00:05:47.832 --> 00:05:52.374
Their revenue drops to almost nothing and they lose $50,000 in three months.
103
00:05:53.394 --> 00:05:58.016
But what happens when we take our worst quarter and improve it to our median earnings?
104
00:05:58.937 --> 00:06:00.878
Let me show you with our long care case study.
105
00:06:01.578 --> 00:06:04.899
This company made $1.1 million in annual revenue.
106
00:06:05.480 --> 00:06:08.021
Their off-season is January, February, and March.
107
00:06:08.781 --> 00:06:11.502
During these three months in Q1, they lose $60,000 in profit.
108
00:06:13.203 --> 00:06:19.065
To find the median, I examine their three other quarters of the year, Q2, Q3, and Q4.
109
00:06:20.105 --> 00:06:24.767
Their profits are $20,000, $50,000, and $60,000.
110
00:06:25.667 --> 00:06:30.189
Arranging these from smallest to largest, I take the middle value, $50,000.
111
00:06:30.769 --> 00:06:33.350
Not the best quarter, not the worst, but the median.
112
00:06:33.990 --> 00:06:37.412
To remember, think of the median as the divider in the middle of a highway.
113
00:06:38.192 --> 00:06:42.494
Now, I replaced their worst quarter, Q1, with this median value.
114
00:06:42.995 --> 00:06:47.417
Instead of losing $50,000, what if they made $50,000?
115
00:06:48.137 --> 00:06:49.498
The results are dramatic.
116
00:06:50.018 --> 00:06:54.240
Their yearly profit jumps from $70,000 to $180,000.
117
00:06:54.300 --> 00:07:00.023
That's over twice the yearly profit by making their worst quarter like their average one.
118
00:07:00.464 --> 00:07:02.505
I call this virus seasonitis.
119
00:07:03.505 --> 00:07:09.489
You're infected with seasonitis when your revenue drops by more than 50% in any month of the year.
120
00:07:10.349 --> 00:07:15.132
Seasonitis also occurs when you have any month of the year with a negative profit.
121
00:07:15.872 --> 00:07:19.174
There's a 26-page PDF workbook that accompanies this book.
122
00:07:19.614 --> 00:07:22.116
Find it at mikeandies.com slash workshop.
123
00:07:22.756 --> 00:07:26.457
Fill out page one with your quarterly leads, profit, and revenue.
124
00:07:26.617 --> 00:07:30.278
This will help you determine the impact of seasonitis on your business.
125
00:07:30.898 --> 00:07:31.659
I know, I know.
126
00:07:32.079 --> 00:07:34.719
If you're like me, you rarely look at attached PDFs.
127
00:07:35.420 --> 00:07:36.880
Please make sure to use this one.
128
00:07:37.300 --> 00:07:39.441
We will use the workbook throughout this book.
129
00:07:39.881 --> 00:07:42.822
It will become your roadmap to curing seasonitis in your business.
130
00:07:43.502 --> 00:07:43.942
It is free.
131
00:07:44.583 --> 00:07:48.806
You will get twice as much from the book if you use the workbook alongside reading.
132
00:07:49.306 --> 00:07:52.689
You have the game plan to execute instead of theorizing.
133
00:07:53.389 --> 00:07:55.551
Go to mikeannies.com slash workshop.
134
00:07:56.211 --> 00:08:00.594
I added video training to support the book's concepts and show visual examples.
135
00:08:01.275 --> 00:08:05.377
Fill in page one with your business's revenue, lead count, and profit numbers.
136
00:08:06.198 --> 00:08:09.720
Take your worst quarter and replace it with your median profitable quarter.
137
00:08:10.320 --> 00:08:10.820
What happens?
138
00:08:11.440 --> 00:08:17.683
Many home service business owners see their profits drop or vanish for three to four months each year.
139
00:08:18.484 --> 00:08:22.885
So many of us in the home service industry accept seasonality as part of the business.
140
00:08:23.626 --> 00:08:27.888
In doing so, we consent to living on the edge of a dangerous precipice.
141
00:08:28.688 --> 00:08:32.329
Many home service companies don't break even until summer.
142
00:08:32.989 --> 00:08:34.910
They dug a deep hole in the off-season.
143
00:08:35.570 --> 00:08:39.031
It takes over six months to escape negative cash flow.
144
00:08:39.591 --> 00:08:40.051
Is that you?
145
00:08:40.611 --> 00:08:42.171
Go to page three of the workbook.
146
00:08:42.671 --> 00:08:44.752
Enter your revenue and profit for each month.
147
00:08:45.452 --> 00:08:49.053
Circle the month that you get above the break-even point for the year.
148
00:08:49.673 --> 00:08:53.094
That's actually the root of many problems inside our companies.
149
00:08:53.654 --> 00:08:56.495
This is what makes home services a horrible business.
150
00:08:57.195 --> 00:09:01.104
Nonetheless, we neglect the most obvious gaping hole in our business model.
151
00:09:01.465 --> 00:09:04.110
That gaping hole is something I call Q4 collapse.
152
00:09:04.772 --> 00:09:07.538
Q4 collapse and seasonitis go hand in hand.
153
00:09:08.393 --> 00:09:10.335
Now, why do we ignore Q4 collapse?
154
00:09:11.055 --> 00:09:16.179
It is the most important problem to solve, but we replace it every single day with urgent tasks.
155
00:09:16.960 --> 00:09:18.561
A customer calls and they're angry.
156
00:09:19.041 --> 00:09:20.883
Someone leaves a bad online review.
157
00:09:21.443 --> 00:09:22.624
Customers threaten not to pay.
158
00:09:23.445 --> 00:09:25.106
There's a flat tire on one of the trucks.
159
00:09:25.807 --> 00:09:27.048
A piece of equipment breaks down.
160
00:09:27.788 --> 00:09:30.450
Employees don't show up for work or threaten to leave.
161
00:09:31.091 --> 00:09:32.692
The transmission blows up on a truck.
162
00:09:33.353 --> 00:09:35.995
A lawsuit from a past contractor gets delivered.
163
00:09:36.635 --> 00:09:38.896
An unexpected tax bill shows up at the mailbox.
164
00:09:39.376 --> 00:09:42.238
These fires demand our attention 24-7.
165
00:09:43.498 --> 00:09:50.482
We often miss the main issue that could fix many problems in the business, solving the Q4 collapse.
166
00:09:51.122 --> 00:09:56.545
Now, let's figure out how much more money you'd make if you solved your Q4 collapse.
167
00:09:57.345 --> 00:10:02.068
Subtract last year's actual profit from your projected annual profit.
168
00:10:02.828 --> 00:10:06.872
Use the median quarter instead of your worst quarter for this projected number.
169
00:10:07.413 --> 00:10:10.176
You can find this activity on page four of the workbook.
170
00:10:10.576 --> 00:10:12.238
I call this difference the jackpot.
171
00:10:12.718 --> 00:10:16.623
This is the extra money you'd earn if you fixed your Q4 collapse.
172
00:10:17.323 --> 00:10:22.028
It assumes your worst quarter could match the median of your other three quarters.
173
00:10:23.009 --> 00:10:29.333
On average, I saw a 72% increase in profits when I analyzed over 250 home service businesses.
174
00:10:29.873 --> 00:10:32.935
Let's calculate your projected profit margin increase.
175
00:10:33.755 --> 00:10:39.558
Start with your projected profit for next year, using the median quarter instead of your worst quarter.
176
00:10:40.479 --> 00:10:43.861
Next, subtract last year's actual profit from this number.
177
00:10:44.690 --> 00:10:47.733
Finally, divide that result by last year's profit.
178
00:10:48.074 --> 00:10:50.116
This will show your percentage increase.
179
00:10:50.897 --> 00:10:58.545
I've seen businesses increase profits by 50, 80, or even more than 100% by addressing this one problem.
180
00:10:59.546 --> 00:11:06.313
Equation, projected profit for next year minus last year's profit divided by last year's profit.
181
00:11:07.034 --> 00:11:08.295
Now, I want to make this tangible.
182
00:11:08.976 --> 00:11:09.676
Money is paper.
183
00:11:10.357 --> 00:11:14.259
Let's examine what this can do for your business and for your family.
184
00:11:14.940 --> 00:11:17.742
Maybe it's always been your dream to drive a luxury car.
185
00:11:18.502 --> 00:11:21.565
A leased vehicle worth $100,000 costs about $1,400 each month.
186
00:11:24.767 --> 00:11:30.991
This covers all your expenses like insurance and the lease payment, so it totals around $17,000 per year.
187
00:11:31.812 --> 00:11:38.076
If your jackpot exceeds $17,000 per year, you could afford this by solving the Q4 collapse.
188
00:11:38.977 --> 00:11:43.780
If family time and vacations are important to you, a family of four can take a trip each year.
189
00:11:44.381 --> 00:11:47.783
Options include a cruise, Disney World, or travel within the U.S.
190
00:11:47.843 --> 00:11:48.824
The cost is around $8,000.
191
00:11:50.265 --> 00:11:56.528
If college matters for your kids, in-state tuition costs around $10,500 each year per student.
192
00:11:57.188 --> 00:12:02.370
Once you add rent and living expenses, this could total between $20,000 and $30,000 each year.
193
00:12:03.091 --> 00:12:11.154
If your goal is to buy a house and you earn over $60,000 a year from solving Q4 collapse, you can afford an average home costing $800,000.
194
00:12:12.975 --> 00:12:18.342
This includes mortgage, taxes, and insurance, totally around $5,000 a month in the U.S.
195
00:12:18.903 --> 00:12:22.868
Even if you aren't saving for a major purchase, the money can be life-changing.
196
00:12:23.469 --> 00:12:30.378
For an extra $25,000 a year, you can delegate many of your least favorite household chores, cooking,
197
00:12:31.119 --> 00:12:33.859
Meal prep, cleaning, even grocery shopping.
198
00:12:34.620 --> 00:12:39.400
By hiring out these household tasks, you can save between 40 and 80 hours a month.
199
00:12:39.620 --> 00:12:44.861
That's two hours every workday evening, plus an extra date night with your spouse every week.
200
00:12:45.642 --> 00:12:47.262
This is the golden ticket.
201
00:12:48.102 --> 00:12:52.243
What would solving Q4 collapse do for you, your business, and your family?
202
00:12:52.883 --> 00:12:55.023
Don't be vague, be very specific.
203
00:12:55.603 --> 00:12:57.604
If you want to travel, where do you want to go?
204
00:12:58.184 --> 00:12:59.564
Who's going with you on the trip?
205
00:13:00.204 --> 00:13:04.047
The clearer you can envision your goal, the more motivated you feel to pursue it.
206
00:13:04.827 --> 00:13:06.028
Are you flying first class?
207
00:13:06.749 --> 00:13:07.850
What are you going to do on this trip?
208
00:13:08.410 --> 00:13:09.431
What color is this car?
209
00:13:10.211 --> 00:13:14.274
How will you use your free time once you've delegated all your household chores?
210
00:13:15.155 --> 00:13:16.916
This is your golden ticket.
211
00:13:17.817 --> 00:13:19.798
The goal of this book is to help you get rich.
212
00:13:20.559 --> 00:13:24.562
Together, we will figure out what problems are making you poor and then fix them.
213
00:13:25.302 --> 00:13:28.764
In the chapters that follow, we will define five cures for seasonitis.
214
00:13:29.484 --> 00:13:31.305
Each cure has a clear game plan.
215
00:13:31.905 --> 00:13:36.668
You can use it to fix Q4 collapse and avoid off-season unprofitability.
216
00:13:37.328 --> 00:13:40.650
You can hit your jackpot and get your golden ticket.
217
00:13:41.711 --> 00:13:45.172
So back to going to Las Vegas and visiting Alex Hormozy.
218
00:13:45.853 --> 00:13:47.013
Now what did I do after that?
219
00:13:47.554 --> 00:13:50.655
I spent eight months creating a plan to fix seasonitis.
220
00:13:51.396 --> 00:13:53.617
I realized the real issue was Q4 collapse.
221
00:13:54.405 --> 00:13:55.946
Fair warning, it will take time.
222
00:13:56.586 --> 00:13:59.348
At Augusta Lawn Care, we have over 180 locations.
223
00:14:00.009 --> 00:14:03.771
It will take two years to achieve complete integration of the ideas in this book.
224
00:14:04.451 --> 00:14:07.393
That's a reasonable timeline to expect for your business as well.
225
00:14:08.254 --> 00:14:16.859
You may experience positive results and wins right away, but our goal is to completely replace your Q4 collapse with median quarterly revenue.
226
00:14:17.580 --> 00:14:18.940
Abolish your off-season.
227
00:14:19.501 --> 00:14:22.262
This will take time and commitment to the plan we create.
228
00:14:23.203 --> 00:14:26.024
First, let's define when your business gets sick.
229
00:14:26.685 --> 00:14:31.867
Seasonitis happens when monthly revenue falls over 50% from your best month.
230
00:14:32.468 --> 00:14:37.070
It also applies if your business has a negative profit for any month of the year.
231
00:14:37.851 --> 00:14:41.953
Check your monthly revenue and profit numbers to spot seasonitis in your business.
232
00:14:42.793 --> 00:14:47.702
On page two of the workbook, mark an X on any month where your business is sick.
233
00:14:48.584 --> 00:14:53.913
This is where revenue falls below 50% of your best month or where profit goes negative.
234
00:14:54.694 --> 00:14:58.221
These marked months represent when your business needs treatment.
235
00:14:59.022 --> 00:15:01.166
Pinpoint when your business has seasonitis.
236
00:15:01.787 --> 00:15:06.395
Now we can create specific solutions to boost these tough times.
237
00:15:07.096 --> 00:15:07.477
Are you ready?
238
00:15:08.098 --> 00:15:08.459
Let's go.
1
00:00:00.571 --> 00:00:01.252
Chapter 2.
2
00:00:01.832 --> 00:00:08.035
The Problem with Home Services Five years ago, I franchised my business, Augusta Lawn Care.
3
00:00:08.755 --> 00:00:12.017
We've since grown to more than 180 locations and counting.
4
00:00:12.597 --> 00:00:17.640
To change the level of professionalism in the lawn care industry, we need to reach 1,000 locations.
5
00:00:18.420 --> 00:00:20.941
To do that, I knew something had to change.
6
00:00:21.741 --> 00:00:28.325
This story begins in Las Vegas in February 2024, when I went to Acquisition.com headquarters.
7
00:00:29.165 --> 00:00:30.545
I met Alex Hormozy there.
8
00:00:31.365 --> 00:00:32.966
He's an entrepreneur and investor.
9
00:00:33.586 --> 00:00:36.926
He built a portfolio of companies worth over $500 million.
10
00:00:37.787 --> 00:00:40.027
He also wrote some best-selling business books.
11
00:00:40.667 --> 00:00:43.227
Alex is an expert in making businesses run better.
12
00:00:43.888 --> 00:00:46.808
I told Alex about my business and asked for his thoughts.
13
00:00:47.248 --> 00:00:49.388
I shared my goal of reaching 1,000 locations.
14
00:00:49.709 --> 00:00:51.769
He told me to look at the unit economics.
15
00:00:52.209 --> 00:00:55.490
How much money does each Augusta Lawn Care franchisee make?
16
00:00:55.930 --> 00:00:57.810
He gave me the target I need to hit.
17
00:00:58.470 --> 00:01:03.032
average $200,000 in annual profits and franchises will sell themselves.
18
00:01:03.672 --> 00:01:10.935
I asked myself, what problem must we solve so that $200,000 in annual profits occurs every single time?
19
00:01:11.475 --> 00:01:16.777
Not sporadically, not at one-off best performing locations, but every single time.
20
00:01:17.517 --> 00:01:19.598
This became the Augusta business model.
21
00:01:20.338 --> 00:01:22.719
Grow to $500,000 in annual revenue.
22
00:01:23.420 --> 00:01:25.300
Optimize for profits and raise prices.
23
00:01:26.081 --> 00:01:30.883
Target $800,000 in annual revenue and $200,000 in profit.
24
00:01:31.623 --> 00:01:34.985
This led to a six-week deep dive into spreadsheets and reports.
25
00:01:35.705 --> 00:01:38.107
I looked at the unit economics of Augusta Lawn Care.
26
00:01:38.747 --> 00:01:40.348
I examined all our locations.
27
00:01:41.148 --> 00:01:44.650
I studied the green industry, lawn care, landscaping, and tree service.
28
00:01:45.430 --> 00:01:47.531
I also looked at home services as a whole.
29
00:01:48.232 --> 00:01:53.495
This included janitorial, window cleaning, roofing, pool cleaning, and handyman services.
30
00:01:54.335 --> 00:01:59.278
In total, I analyzed financial statements from over 250 home service businesses.
31
00:01:59.838 --> 00:02:00.619
I noticed a trend.
32
00:02:01.259 --> 00:02:03.861
I found that most home service businesses are seasonal.
33
00:02:04.601 --> 00:02:07.823
They don't have many leads for three to four months out of the year.
34
00:02:08.684 --> 00:02:10.705
They average single-digit profit margins.
35
00:02:11.699 --> 00:02:14.540
If you remove one quarter, profit margins skyrocket.
36
00:02:15.161 --> 00:02:17.021
The drop in revenue is dramatic.
37
00:02:17.722 --> 00:02:19.683
I call this Q4 collapse.
38
00:02:20.543 --> 00:02:22.784
One quarter, any quarter of the year.
39
00:02:23.724 --> 00:02:26.786
During that time, the business still has bills to pay.
40
00:02:27.366 --> 00:02:31.208
The banker isn't going to push off loan payments until after the off-season.
41
00:02:31.888 --> 00:02:35.369
the landlord isn't going to forgive rent payments for three months.
42
00:02:36.330 --> 00:02:43.972
Regardless of revenue dropping, you still need to pay for general liability insurance, software subscriptions, truck payments.
43
00:02:44.812 --> 00:02:45.953
And so I developed an idea.
44
00:02:46.931 --> 00:02:49.213
turn that negative quarter into a profitable one.
45
00:02:50.073 --> 00:02:53.376
Doing so will have a dramatic effect on your profits.
46
00:02:54.217 --> 00:02:56.298
I don't mean make it a record high quarter either.
47
00:02:57.039 --> 00:02:59.661
What if you looked at the other three quarters of the year?
48
00:03:00.341 --> 00:03:08.448
Take the median profitable one, not your best quarter, not your worst one, then use the average quarter as the revenue target for the worst quarter.
49
00:03:08.908 --> 00:03:14.413
I found that in doing so, businesses in my test group increased profits by an average of 72%.
50
00:03:15.393 --> 00:03:17.035
Some businesses were more severe.
51
00:03:17.435 --> 00:03:19.837
They had large negative profits for one quarter.
52
00:03:20.438 --> 00:03:23.921
Making this change could double or triple their profits for the year.
53
00:03:24.521 --> 00:03:25.422
Here's a case study.
54
00:03:25.982 --> 00:03:28.524
This is from an actual lawn care and landscaping company.
55
00:03:28.905 --> 00:03:30.666
I removed their name, but the numbers are real.
56
00:03:31.347 --> 00:03:32.408
Lead count by quarter.
57
00:03:32.988 --> 00:03:34.870
Quarter one, 79 leads.
58
00:03:35.490 --> 00:03:35.910
Quarter two,
59
00:03:36.711 --> 00:03:37.132
490 leads.
60
00:03:37.152 --> 00:03:38.273
Quarter 3, 311 leads.
61
00:03:38.893 --> 00:03:39.394
Quarter 4, 203 leads.
62
00:03:39.414 --> 00:03:40.174
Revenue by quarter.
63
00:03:40.195 --> 00:03:40.955
Quarter 1, $80,000.
64
00:03:41.576 --> 00:03:42.116
Quarter 2, $330,000.
65
00:03:42.136 --> 00:03:42.897
Quarter 3, $420,000.
66
00:03:56.310 --> 00:03:58.092
quarter four, $290,000.
67
00:03:58.573 --> 00:04:02.297
You can see the massive seasonality.
68
00:04:02.918 --> 00:04:06.121
The spring rush brings a huge spike in leads during Q2.
69
00:04:06.742 --> 00:04:08.304
Revenue peaks in Q3.
70
00:04:09.185 --> 00:04:13.489
This is because it takes time to convert leads into completed work and then collect payment.
71
00:04:14.491 --> 00:04:17.013
Here's what their profit looked like throughout the year.
72
00:04:17.982 --> 00:04:20.805
Key one, negative $60,000.
73
00:04:21.586 --> 00:04:24.550
Quarter two, $50,000 in profit.
74
00:04:25.391 --> 00:04:27.513
Quarter three, $60,000.
75
00:04:28.434 --> 00:04:30.597
Quarter four, $20,000.
76
00:04:31.498 --> 00:04:32.940
Profits peaked in the third quarter.
77
00:04:33.280 --> 00:04:36.764
Then they tapered off as the year ended and entered a slow period.
78
00:04:37.725 --> 00:04:38.685
Case study number two.
79
00:04:39.526 --> 00:04:43.387
I checked out a company that puts up Christmas lights and provides other winter services.
80
00:04:44.027 --> 00:04:45.868
They do snow plowing and salt spreading.
81
00:04:46.688 --> 00:04:48.969
Its business shows the opposite seasonal pattern.
82
00:04:49.589 --> 00:04:51.710
Their lead count by quarter tells the story.
83
00:04:52.830 --> 00:04:54.090
Quarter one, 10 leads.
84
00:04:54.811 --> 00:04:56.151
Quarter two, five.
85
00:04:56.971 --> 00:04:58.432
Quarter three, 40.
86
00:04:59.252 --> 00:05:00.633
Quarter four, 170 leads.
87
00:05:02.434 --> 00:05:04.436
They completely shut down during Q2.
88
00:05:04.896 --> 00:05:06.297
In Q4, their business booms.
89
00:05:07.018 --> 00:05:09.680
Most of their revenue comes from Christmas light installation.
90
00:05:10.561 --> 00:05:13.464
The demand for that service speeds up after Thanksgiving.
91
00:05:14.505 --> 00:05:16.146
Their revenue follows the same pattern.
92
00:05:16.526 --> 00:05:17.047
Quarter 1, $70,000.
93
00:05:17.347 --> 00:05:18.148
Quarter 2, $30,000.
94
00:05:18.168 --> 00:05:18.668
Quarter 3, $90,000.
95
00:05:19.149 --> 00:05:19.789
Quarter 4, $390,000.
96
00:05:28.283 --> 00:05:31.344
Their profit also demonstrates this seasonal swing.
97
00:05:32.284 --> 00:05:34.725
Quarter one, $10,000 in profit.
98
00:05:35.586 --> 00:05:37.586
Quarter two, negative $50,000.
99
00:05:37.626 --> 00:05:38.307
Quarter three, $30,000.
100
00:05:38.347 --> 00:05:40.708
And quarter four, $90,000 in profit.
101
00:05:45.631 --> 00:05:47.652
During Q2, they hardly get any leads.
102
00:05:47.832 --> 00:05:52.374
Their revenue drops to almost nothing and they lose $50,000 in three months.
103
00:05:53.394 --> 00:05:58.016
But what happens when we take our worst quarter and improve it to our median earnings?
104
00:05:58.937 --> 00:06:00.878
Let me show you with our long care case study.
105
00:06:01.578 --> 00:06:04.899
This company made $1.1 million in annual revenue.
106
00:06:05.480 --> 00:06:08.021
Their off-season is January, February, and March.
107
00:06:08.781 --> 00:06:11.502
During these three months in Q1, they lose $60,000 in profit.
108
00:06:13.203 --> 00:06:19.065
To find the median, I examine their three other quarters of the year, Q2, Q3, and Q4.
109
00:06:20.105 --> 00:06:24.767
Their profits are $20,000, $50,000, and $60,000.
110
00:06:25.667 --> 00:06:30.189
Arranging these from smallest to largest, I take the middle value, $50,000.
111
00:06:30.769 --> 00:06:33.350
Not the best quarter, not the worst, but the median.
112
00:06:33.990 --> 00:06:37.412
To remember, think of the median as the divider in the middle of a highway.
113
00:06:38.192 --> 00:06:42.494
Now, I replaced their worst quarter, Q1, with this median value.
114
00:06:42.995 --> 00:06:47.417
Instead of losing $50,000, what if they made $50,000?
115
00:06:48.137 --> 00:06:49.498
The results are dramatic.
116
00:06:50.018 --> 00:06:54.240
Their yearly profit jumps from $70,000 to $180,000.
117
00:06:54.300 --> 00:07:00.023
That's over twice the yearly profit by making their worst quarter like their average one.
118
00:07:00.464 --> 00:07:02.505
I call this virus seasonitis.
119
00:07:03.505 --> 00:07:09.489
You're infected with seasonitis when your revenue drops by more than 50% in any month of the year.
120
00:07:10.349 --> 00:07:15.132
Seasonitis also occurs when you have any month of the year with a negative profit.
121
00:07:15.872 --> 00:07:19.174
There's a 26-page PDF workbook that accompanies this book.
122
00:07:19.614 --> 00:07:22.116
Find it at mikeandies.com slash workshop.
123
00:07:22.756 --> 00:07:26.457
Fill out page one with your quarterly leads, profit, and revenue.
124
00:07:26.617 --> 00:07:30.278
This will help you determine the impact of seasonitis on your business.
125
00:07:30.898 --> 00:07:31.659
I know, I know.
126
00:07:32.079 --> 00:07:34.719
If you're like me, you rarely look at attached PDFs.
127
00:07:35.420 --> 00:07:36.880
Please make sure to use this one.
128
00:07:37.300 --> 00:07:39.441
We will use the workbook throughout this book.
129
00:07:39.881 --> 00:07:42.822
It will become your roadmap to curing seasonitis in your business.
130
00:07:43.502 --> 00:07:43.942
It is free.
131
00:07:44.583 --> 00:07:48.806
You will get twice as much from the book if you use the workbook alongside reading.
132
00:07:49.306 --> 00:07:52.689
You have the game plan to execute instead of theorizing.
133
00:07:53.389 --> 00:07:55.551
Go to mikeannies.com slash workshop.
134
00:07:56.211 --> 00:08:00.594
I added video training to support the book's concepts and show visual examples.
135
00:08:01.275 --> 00:08:05.377
Fill in page one with your business's revenue, lead count, and profit numbers.
136
00:08:06.198 --> 00:08:09.720
Take your worst quarter and replace it with your median profitable quarter.
137
00:08:10.320 --> 00:08:10.820
What happens?
138
00:08:11.440 --> 00:08:17.683
Many home service business owners see their profits drop or vanish for three to four months each year.
139
00:08:18.484 --> 00:08:22.885
So many of us in the home service industry accept seasonality as part of the business.
140
00:08:23.626 --> 00:08:27.888
In doing so, we consent to living on the edge of a dangerous precipice.
141
00:08:28.688 --> 00:08:32.329
Many home service companies don't break even until summer.
142
00:08:32.989 --> 00:08:34.910
They dug a deep hole in the off-season.
143
00:08:35.570 --> 00:08:39.031
It takes over six months to escape negative cash flow.
144
00:08:39.591 --> 00:08:40.051
Is that you?
145
00:08:40.611 --> 00:08:42.171
Go to page three of the workbook.
146
00:08:42.671 --> 00:08:44.752
Enter your revenue and profit for each month.
147
00:08:45.452 --> 00:08:49.053
Circle the month that you get above the break-even point for the year.
148
00:08:49.673 --> 00:08:53.094
That's actually the root of many problems inside our companies.
149
00:08:53.654 --> 00:08:56.495
This is what makes home services a horrible business.
150
00:08:57.195 --> 00:09:01.104
Nonetheless, we neglect the most obvious gaping hole in our business model.
151
00:09:01.465 --> 00:09:04.110
That gaping hole is something I call Q4 collapse.
152
00:09:04.772 --> 00:09:07.538
Q4 collapse and seasonitis go hand in hand.
153
00:09:08.393 --> 00:09:10.335
Now, why do we ignore Q4 collapse?
154
00:09:11.055 --> 00:09:16.179
It is the most important problem to solve, but we replace it every single day with urgent tasks.
155
00:09:16.960 --> 00:09:18.561
A customer calls and they're angry.
156
00:09:19.041 --> 00:09:20.883
Someone leaves a bad online review.
157
00:09:21.443 --> 00:09:22.624
Customers threaten not to pay.
158
00:09:23.445 --> 00:09:25.106
There's a flat tire on one of the trucks.
159
00:09:25.807 --> 00:09:27.048
A piece of equipment breaks down.
160
00:09:27.788 --> 00:09:30.450
Employees don't show up for work or threaten to leave.
161
00:09:31.091 --> 00:09:32.692
The transmission blows up on a truck.
162
00:09:33.353 --> 00:09:35.995
A lawsuit from a past contractor gets delivered.
163
00:09:36.635 --> 00:09:38.896
An unexpected tax bill shows up at the mailbox.
164
00:09:39.376 --> 00:09:42.238
These fires demand our attention 24-7.
165
00:09:43.498 --> 00:09:50.482
We often miss the main issue that could fix many problems in the business, solving the Q4 collapse.
166
00:09:51.122 --> 00:09:56.545
Now, let's figure out how much more money you'd make if you solved your Q4 collapse.
167
00:09:57.345 --> 00:10:02.068
Subtract last year's actual profit from your projected annual profit.
168
00:10:02.828 --> 00:10:06.872
Use the median quarter instead of your worst quarter for this projected number.
169
00:10:07.413 --> 00:10:10.176
You can find this activity on page four of the workbook.
170
00:10:10.576 --> 00:10:12.238
I call this difference the jackpot.
171
00:10:12.718 --> 00:10:16.623
This is the extra money you'd earn if you fixed your Q4 collapse.
172
00:10:17.323 --> 00:10:22.028
It assumes your worst quarter could match the median of your other three quarters.
173
00:10:23.009 --> 00:10:29.333
On average, I saw a 72% increase in profits when I analyzed over 250 home service businesses.
174
00:10:29.873 --> 00:10:32.935
Let's calculate your projected profit margin increase.
175
00:10:33.755 --> 00:10:39.558
Start with your projected profit for next year, using the median quarter instead of your worst quarter.
176
00:10:40.479 --> 00:10:43.861
Next, subtract last year's actual profit from this number.
177
00:10:44.690 --> 00:10:47.733
Finally, divide that result by last year's profit.
178
00:10:48.074 --> 00:10:50.116
This will show your percentage increase.
179
00:10:50.897 --> 00:10:58.545
I've seen businesses increase profits by 50, 80, or even more than 100% by addressing this one problem.
180
00:10:59.546 --> 00:11:06.313
Equation, projected profit for next year minus last year's profit divided by last year's profit.
181
00:11:07.034 --> 00:11:08.295
Now, I want to make this tangible.
182
00:11:08.976 --> 00:11:09.676
Money is paper.
183
00:11:10.357 --> 00:11:14.259
Let's examine what this can do for your business and for your family.
184
00:11:14.940 --> 00:11:17.742
Maybe it's always been your dream to drive a luxury car.
185
00:11:18.502 --> 00:11:21.565
A leased vehicle worth $100,000 costs about $1,400 each month.
186
00:11:24.767 --> 00:11:30.991
This covers all your expenses like insurance and the lease payment, so it totals around $17,000 per year.
187
00:11:31.812 --> 00:11:38.076
If your jackpot exceeds $17,000 per year, you could afford this by solving the Q4 collapse.
188
00:11:38.977 --> 00:11:43.780
If family time and vacations are important to you, a family of four can take a trip each year.
189
00:11:44.381 --> 00:11:47.783
Options include a cruise, Disney World, or travel within the U.S.
190
00:11:47.843 --> 00:11:48.824
The cost is around $8,000.
191
00:11:50.265 --> 00:11:56.528
If college matters for your kids, in-state tuition costs around $10,500 each year per student.
192
00:11:57.188 --> 00:12:02.370
Once you add rent and living expenses, this could total between $20,000 and $30,000 each year.
193
00:12:03.091 --> 00:12:11.154
If your goal is to buy a house and you earn over $60,000 a year from solving Q4 collapse, you can afford an average home costing $800,000.
194
00:12:12.975 --> 00:12:18.342
This includes mortgage, taxes, and insurance, totally around $5,000 a month in the U.S.
195
00:12:18.903 --> 00:12:22.868
Even if you aren't saving for a major purchase, the money can be life-changing.
196
00:12:23.469 --> 00:12:30.378
For an extra $25,000 a year, you can delegate many of your least favorite household chores, cooking,
197
00:12:31.119 --> 00:12:33.859
Meal prep, cleaning, even grocery shopping.
198
00:12:34.620 --> 00:12:39.400
By hiring out these household tasks, you can save between 40 and 80 hours a month.
199
00:12:39.620 --> 00:12:44.861
That's two hours every workday evening, plus an extra date night with your spouse every week.
200
00:12:45.642 --> 00:12:47.262
This is the golden ticket.
201
00:12:48.102 --> 00:12:52.243
What would solving Q4 collapse do for you, your business, and your family?
202
00:12:52.883 --> 00:12:55.023
Don't be vague, be very specific.
203
00:12:55.603 --> 00:12:57.604
If you want to travel, where do you want to go?
204
00:12:58.184 --> 00:12:59.564
Who's going with you on the trip?
205
00:13:00.204 --> 00:13:04.047
The clearer you can envision your goal, the more motivated you feel to pursue it.
206
00:13:04.827 --> 00:13:06.028
Are you flying first class?
207
00:13:06.749 --> 00:13:07.850
What are you going to do on this trip?
208
00:13:08.410 --> 00:13:09.431
What color is this car?
209
00:13:10.211 --> 00:13:14.274
How will you use your free time once you've delegated all your household chores?
210
00:13:15.155 --> 00:13:16.916
This is your golden ticket.
211
00:13:17.817 --> 00:13:19.798
The goal of this book is to help you get rich.
212
00:13:20.559 --> 00:13:24.562
Together, we will figure out what problems are making you poor and then fix them.
213
00:13:25.302 --> 00:13:28.764
In the chapters that follow, we will define five cures for seasonitis.
214
00:13:29.484 --> 00:13:31.305
Each cure has a clear game plan.
215
00:13:31.905 --> 00:13:36.668
You can use it to fix Q4 collapse and avoid off-season unprofitability.
216
00:13:37.328 --> 00:13:40.650
You can hit your jackpot and get your golden ticket.
217
00:13:41.711 --> 00:13:45.172
So back to going to Las Vegas and visiting Alex Hormozy.
218
00:13:45.853 --> 00:13:47.013
Now what did I do after that?
219
00:13:47.554 --> 00:13:50.655
I spent eight months creating a plan to fix seasonitis.
220
00:13:51.396 --> 00:13:53.617
I realized the real issue was Q4 collapse.
221
00:13:54.405 --> 00:13:55.946
Fair warning, it will take time.
222
00:13:56.586 --> 00:13:59.348
At Augusta Lawn Care, we have over 180 locations.
223
00:14:00.009 --> 00:14:03.771
It will take two years to achieve complete integration of the ideas in this book.
224
00:14:04.451 --> 00:14:07.393
That's a reasonable timeline to expect for your business as well.
225
00:14:08.254 --> 00:14:16.859
You may experience positive results and wins right away, but our goal is to completely replace your Q4 collapse with median quarterly revenue.
226
00:14:17.580 --> 00:14:18.940
Abolish your off-season.
227
00:14:19.501 --> 00:14:22.262
This will take time and commitment to the plan we create.
228
00:14:23.203 --> 00:14:26.024
First, let's define when your business gets sick.
229
00:14:26.685 --> 00:14:31.867
Seasonitis happens when monthly revenue falls over 50% from your best month.
230
00:14:32.468 --> 00:14:37.070
It also applies if your business has a negative profit for any month of the year.
231
00:14:37.851 --> 00:14:41.953
Check your monthly revenue and profit numbers to spot seasonitis in your business.
232
00:14:42.793 --> 00:14:47.702
On page two of the workbook, mark an X on any month where your business is sick.
233
00:14:48.584 --> 00:14:53.913
This is where revenue falls below 50% of your best month or where profit goes negative.
234
00:14:54.694 --> 00:14:58.221
These marked months represent when your business needs treatment.
235
00:14:59.022 --> 00:15:01.166
Pinpoint when your business has seasonitis.
236
00:15:01.787 --> 00:15:06.395
Now we can create specific solutions to boost these tough times.
237
00:15:07.096 --> 00:15:07.477
Are you ready?
238
00:15:08.098 --> 00:15:08.459
Let's go.
