OPERATIONS SYSTEM PART 2
OPERATIONS SYSTEM PART 2
There’s quite a few parts to a successful lawn care business machine, isn’t there?
Things that make up the operations side of the business. Stuff like customer care and marketing, which we’ve discussed. You’ve also got your information technology, equipment and management.
Management basically covers your people and yourself, some of which we’ve already discussed. So let’s start with IT, because the current level of technology adds tremendous power to your business. It’s entirely possible, and frankly necessary for a while, to turn your truck into a mobile office.
IT – Profit in the palm of your hand
When I first started in the lawn care business 25 years ago we did have computers, but we didn’t have smart technology yet. Wireless internet was still in its infancy and the ability to connect to the internet from the road was virtually unheard of.
Yet jump forward to today, which isn’t really that far ahead, and things have changed dramatically, haven’t they?
Now you’ve got a laptop you can hook up to a hot spot – either a portable hub or even your phone. You’ve got smart tablets that are just about as good as computers themselves and even the incredible power of your iPhone or Android at any time of day or night.
Of course, your IT also includes the software itself. With applications like QuickBooks, Zero, GreenPal, Quicken and even Microsoft Excel and Google Docs, managing data and keeping track of things in real time has never been easier.
The lawn care business is, if nothing else, an exercise in data management.
Sounds weird, right? I mean we’re talking about mowing lawns here and I’ve suggested using printed paper for your checklists and logs.
Yet the other side of that coin is that somebody – probably you in the first year or two, needs to enter that data into your software so that you can keep track of things and make sure that cash is flowing steadily into your pipeline.
So at one point in your week, perhaps the second half of Friday or maybe Saturday morning, you’re going to want to enter all of the week’s logs and checklists for your customers into your spreadsheet or other tracking software.
Just like setting aside time for marketing, you want to set aside time for information management as well.
What's more … Use Google Calendar to create reminders for these sit down events that MUST happen every week.
A system to make sure your systems happen each week.
I know this isn’t really the sexy side of Mean Green. Nobody wants to sit at a computer for a couple of hours and type stuff into an excel spreadsheet or update their QuickBooks. Yet doing so is going to make a huge difference in the power of your business.
And by setting up a system to do this, you’re also setting yourself up to hand off this task to a bookkeeper later on. It’s easy to get complacent here, but you absolutely can’t afford not to.
You want to make sure that customers are getting serviced.
That invoices are being sent.
That online payments are being deposited and that checks are getting to the bank.
Also remember that once you hire Kevin Clueless and then others, you’re going to have a payroll to deal with, too.
As if this weren’t enough, you’re going to want to track the incentive systems you put into place, so you will need to keep very accurate records on your income, expenses and how well your people are working.
For example, if you calculate the profits Mean Green has earned every two weeks or so, then you’re going to need to know exactly how much money was made, what expenses you incurred, what you’re paying out in terms of payroll and some way to judge the performance of those who are earning bonuses. This all goes against some percentage of the profits that you decide to share.
For example, let’s say that you earned $10,000 in the past 2 weeks.
You figure that you and Kevin both worked 100 hours and that your total payroll expense is about $5,800.
You also had $2,200 in expenses between gas, equipment and so forth.
So that leaves you with $2,000 in profit. This is how you might break it down:
Mean Green gets 30% or $600.
Kevin gets a single profit share as an hourly non-management employee.
You get 3 profit shares as management employee and owner.
That said, you may need to adjust your incentive system. The point is , you have an incentive system that ensures top quality results from your team members and that your customers are constantly getting what they want.
No incentive system means you'll get half assed work out of your employees and will have to deal with constant turnover.
This is another example of working on your business rather than working in it.
That money could also be saved for a year-end bonus as well. The point is that with accurate record keeping and the right use of IT, your life is considerably easier.
Equipment management system
I’m not going to beat this one to death. You already probably have a good idea of how to keep your equipment serviced and cared for.
Yet again, this section is about setting up a system. You should already know certain things about the life of your equipment, when you need to buy replacement parts and when it’s time to sell an older piece of gear and buy a new one.
That means planning ahead and that’s why Mean Green gets a piece of the profits – because you need that stash of cash to buy new stuff.
For example, equipment maintenance items that need regular attention would be things like:
You probably have a similar list, if not a bigger one. Yet here’s a great time to create systems. You can create, for example, a single or set of maintenance checklist sheets that tell you and the crews what to do and when.
Suppose that Monday is gear care day. Maybe you stay an hour later on Monday afternoon to service the equipment. You double check what needs to be done on your checklists and then save them so you know what was done when.
A great IT tool to help you along with this is the Google Calendar app. You can use it on your computer or even set it up on your phone. What’s great about Google Calendar Is that you can plan way ahead and create reminders. Now, every Monday, you and the crew get a notification that tonight is equipment maintenance day.
Now you’ve got a system that’s virtually automated. All you have to do is listen and do what you’ve told yourself to do. That’s the power of systems and the power of today’s IT.
Managing yourself – the hardest job of all
When it’s all said and done, there is one system that’s more important than anything we’ve talked about. That is the system you create to manage yourself.
Let me give you a potential scenario. A series of stages in which your business grows larger and you grow wealthier.
As you move through these stages, you’ll find that the tasks you do every day change – yet your own set of values, your own work ethic and your example should never change.
Stage 1 — Caterpillar:
This is what you've already done.
You start with next to nothing and create,
through the sweat of your brow, a solid lawn care company. You, working alone, wear all the hats in the business and have created a $60K to $100K annual income for yourself.
This is a vital stage in your business development because it's here that you learn all the nitty gritty details. In order to succeed, you must master everything from mowing to edging to closing new customers to tracking your progress to time management.
Stage 2 — Chrysalis:
This is where you are now. It's where you take what you learned in the caterpillar stage and mutate it into a set of systems. In many ways, you're still the caterpillar, but you're moving from a one man band to a small business with a couple of employees.
It's here that you really have to get good at creating systems and at following them. Remember that at the end of this blueprint, our goal is that you have a second crew run by Kevin, a helper for him and a helper for you. Essentially you're running two crews and Mean Green is earning somewhere around $300,000 gross each year.
This stage is even more vital than the first. Because while the caterpillar stage set you up to be able to create systems, these systems that you're making now will allow you to grow as big as you want. Your systems work whether it's you by yourself, you and 3 guys or whether you're running 50 crews with regional managers and an office staff and a business that's pulling in a hundred grand a month.
Stage 3 — Butterfly:
After this guide, you'll be set up to make big changes in your business. Believe me, it's a lot easier to go from you and 3 guys to the $100K or $500K per month mark than you might think. For many, going from working by themselves to creating systems and having two crews going at once is a much bigger
Yet if you do the work, just as when you first started, you'll get to the goal. That's why self-management is so critical and starting and keeping good habits now is vital.
Don’t be greedy
I’ve already talked about being your own best employee and setting an example for those who work for you. Yet this topic is one that I think is worth mentioning because it’s where many new people, new to a growth spurt that is, wreck their ship on the rocks.
It’s too easy to start making more money and to take it all home yourself. You hire a couple of guys and start a new crew and suddenly, instead of making $100,000 per year, your business seems to triple in no time!
Now there’s $50k or even $100K floating around that you didn’t have last year. It’s natural and all too tempting to simply grab that money up and horde it for yourself.
Just remember the story of the goose who laid the golden egg!
What you’re after is a balance between production and production capability. What Dr. Steven Covey called in his book, “The 7 Habits of Highly Effective People” the P/PC balance.
Basically what you’re doing is balancing what you produce with your ability to produce it. Don’t be the farmer who slaughters his golden egg laying goose. Instead, nurture the goose and make sure it keeps popping out those priceless nuggets!
So when there is extra money in the business, re-invest it:
Pump more into your marketing budget.
Create a profit sharing program that rewards your people for good work.
Pay yourself a bigger salary.
Save money for new and replacement gear and other future needs.
By exercising patience and caring, you’re going to maintain and grow a goose that not only continues to lay golden eggs… she’ll lay them more often and they’ll be larger and more valuable.
Stick with me, young grasshopper, because in the next chapter I’m going to give you a possible roadmap that takes you from a 1 man army to a guy with two crews, triple the income and who’s poised on the brink of really big things!