Starting (and Fastlaning) a lawn care service business

[Johnny boy]

This is a F*cking great post - it's a perfect example of how knowing your company's numbers can give you so many opportunities. Good job on getting your guys to track their average visit so you can even calculate the 2 minutes saved per job.

their time is tracked but it’s not exactly the way you think

I’m going to explain something we call time value. I will break it down as how I reasoned and calculated each step because it’s hard for an outsider to understand the exact process. To me it’s obvious but nobody seems to feel the same way lol.

I took a sample list of customers of different size yards. This was a couple years ago I did this.

I measured their square footage and recorded that number.

Then I measured their average visit time as recorded by tracking our employees.

So now I have a list of customers with their average visit time and square footage.

I plot that on a graph using the data points.

Then, you see that it’s a curvy line. There’s a 10-15 minute setup time to drive there to each job.

Smaller square footage yards will still have beds, the lawns will curve, so it’s a longer amount of time per square foot.

Then it levels off. If you want to mow a large place it will have a larger portion of the lawn that can be mowed without turns, less amount of beds, etc.

So that is going to follow a logarithmic function. You use linear regression to find the function blah blah nerd math = you end up with a curve that represents how long every visit takes based on the square footage on average.

Okay, so now you have an important number, but we need it to mean something for us. So we work backwards from another set of numbers. $$$

If I have one guy working, I pay him $23 an hour. Plus payroll taxes, add in gas costs, add in the equipment cost on average, add in the space we pay to rent to park that truck, add in the insurance for that truck, etc. and we get about 6 thousand dollars every month that truck is working. I cut expenses and lay off people when I don’t like them (most of the employees) so our expenses are only 10-11 months of the year. So we spend about 6000 a month on that one truck to run and pay for the labor.

I want one truck to bring in like 12,000 of revenue at least per month.

If you’re a customer on our schedule, you get services every week or every other week. 90% are on every other week.

That means we have a 2-week schedule until it repeats.

So if your place took an entire day to visit, every two weeks, you are 1/10th of our entire schedule for that truck. (M-F times 2 is 10 work days)

This is important.

Imagine our 10 days as a big pie.

I NEED that ‘pie’ to be ‘worth’ 12,000 a month worth of monthly contracts.

If your giant yard that took up 1/10th of our whole schedule (an entire day that we’d be at every 2 weeks), I need you to pay $1,200 a month. Because if we had 10 of you I would make $12,000 a month worth of customers and the schedule would be full. Does that make sense?

So now we know what our time is worth.

And it’s in terms of what you’d pay per month. I don’t know what the money from each visit is, everything is monthly since it’s easier math for me and more relevant.

So now we have to link together what our time is worth with the visit time formula.

Since I want to make 12k a month in revenue from each crew so 1.2k a month from a full day of work on a biweekly customer, I use a nice round number to show the ratio between the average time a visit should take and price.

I use 4. (It’s now 4.25 but let’s use 4).

If your place takes us roughly 30 minutes because it’s a small-ish square foot place. I’m going to have you pay $120 a month. Simple.

That’s because one employee could probably do 10 of those a day.

That would get us to $1200 a month if he did 10 of those places in a day and only worked one day. He would do this for two weeks and when we got back to the same customer we would have done 100 customers and we would have our 12k revenue. Make sense?

So he can do ten of those a day.

The place takes 30 minutes but realistically he cannot do 16. 8 hours of 30 minute visits. There’s inefficiencies. Tools break. They go to the dump. They forget a rake. Etc. So we say 10 of those 30 minute places is a good safe bet.

That’s 300 minutes then.

This is where we get that “4” from for finding the relationship between average visit time and monthly payment.

If you have a 30 minute place, I think we can have one employee do 10 of them in a day. That gives them a full day of “300” for their “time value”.

A customer should be paying 4x the time value as their monthly payment.

If your place takes 45 minutes, it should be times 4 to get your monthly price if you’re getting biweekly visits. Thats 180 a month. The guys could do 6.67 of your places a day and if those customers are paying 180 a month we will hit our 12k revenue goal.

Employees have a set time value associated with their wage. If they want $23 an hour they get 300 time value worth of properties on their schedule each day.

So price, square footage, visit time, and employee wages (and thus expenses) are tied together with a formula.

By definition, if a crews jobs have customers who’s payments are below our 12k a month goal, their time value would not add up to 300 a day, which means by definition their schedule is not full.

Do you see how beautiful it is?

By definition the schedule isn’t full until it’s perfectly profitable at our desired numbers. BY DEFINITION.

This must be a lot of work right?

No.

It means we have a spreadsheet showing square footage ranges and simple price tiers.

Measure the property, it fits in a price tier, that’s their monthly payment. Simple.

When we onboard them, it shows their time value because I have a field that divides their price by 4 if they signed up for biweekly services.

It spits out the time value. My office employee puts that number in their name on our mapping software and our dispatching software.

So customers look like this to the employees schedule



This makes it easy to balance people’s schedules too!

If we see someone has an 86 time value, that’s huge. If someone has a 25 minute time value it’s small. So two employees will have their time values still add up to 300 but one could have 4 jobs and the other could have 10, and it’s still fair!

This means we can look at a list of 500 customers and not know who they are, where they live, what their place looks like, and we can quickly know how long their place should take so it makes scheduling a breeze.

I can add up the time value for all of our customers and tell you we would only need 6.78 employees to complete the work. I could tell you the average time value is 37.5. I could tell you we have a total time value of 1050 on the second week on fridays and only 789 on the second week on Thursdays, so even though there’s more Thursday customers we still need to move some Friday customers to Thursday to balance the schedule. I could tell you how much expected revenue we should get from the amount of customers we have. I can track the average visit times by employee and see the total time spent by employee compared to the visit times and see if they’re average too long or getting them done in less than the time value and see a ratio of efficiency.

Why is this a perfect way to run it?

The schedule is balanced.

By definition the schedule isn’t full until we’re fully profitable.

The employees don’t need to be micromanaged because they get to head home when the jobs are done and they have a set workload each day.

They are incentivized to work quickly but not poorly so they don’t have to return.

Payroll is simple and I just pay them their 23 an hour times 40 a week so it’s like a simple salary.

It doesn’t create much of an opportunity for the employees to complain since they get a balanced workload.

We can keep track of a whole bunch of data like how long a persons visit should take just from a glance at a map.

All it means for employees is “you’ll have a decent amount of workload each day if you want 23 an hour. Get it done and head home”. Simple.

All it means for the office is “put this number in this spot on their name. And when you do the schedule make their day add up to 300”. Simple.

All it means for me is “Hey look a F*ck ton of money ”

Simple.

 

Dislike ads? Become a Fastlane member: Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)