Ground Etc.
ABI presents Ground Etc, where we talk all things turf care and ground prep. This podcast is for grounds keepers, landscape contractors, and anyone interested in working in the dirt. From the right equipment, to the right crew, to the strategies needed to run a successful business. We talk to experts of the industry about the ground, the work, et cetera!
Ground Etc.
How to Win Bids & Make Money – With Kevin Keigley
This episode, ABI’s co-founders Scott Holmes and Kevin Keigley are back to talk about how to build a landscaping business from the ground up, and which strategies and equipment he used to help his business grow.
- I'm Scott Holmes and you're listening to "Ground, etc." In this season, we're going to be talking all things soil prep and landscape contracting. From the right equipment to the right crew, to the strategies needed to run a successful landscaping business, we'll talk to experts in the industry about the ground, about the work, et cetera. Well, Kevin, in today's episode, we're gonna dig a little bit deeper into the business side of the contractor business, which in all honesty can be really difficult. I've been around you for 27 years. I've been around a lot of contractors. Not a lot of 'em make a lot of money. It's a hard business to make a living in.
- It is.
- It's not easy. And so we're gonna dig a little bit into that with some questions and let you share some of your wisdom from 50 years, 40 years...
- yeah.
- Of being in the landscape contract business. I'm gonna start with this one. This is really generic, but what are the big problems that landscape contractors run into on a regular basis?
- Probably one of the biggest problems is weather.
- Okay. Well, that makes sense.
- You have to be ready to go when the weather's right. And when I say that, sometimes it can be even too hot, even though you don't have rain in the middle of the summer, you slow your pace down. So your biggest season is in the fall. That's when you want to get most of your seed planting in. You can begin in 1st of August, and I've gone up to the end of October and had very successful seeding.
- Now that's in the Midwest.
- Yes.
- Yeah. I mean, different parts of the country could be different, but yeah, we're talking Midwest.
- So with that in mind, you need to maximize every opportunity you have to be in the field. That means minimize breakdowns. Hopefully the people are there on time and you maximize your productivity, getting everything done as efficiently as you can. And you haven't worn your people out, 'cause you gotta do this day after day.
- Right.
- You can't just work one long day until the evening and then show up at noon the next day. No, you gotta get up again early and go after that job.
- Yeah.
- So the main thing, you don't want equipment that is breaking. You want to be very efficient when the time comes because those windows of rain and it can be very frustrating. To have everything ready and then get a rainstorm but when you get that window to go, you gotta be ready.
- Yeah. So obviously keeping your equipment in good shape, having the right kind of equipment.
- Right.
- That's all really important. Let's talk about staff for a second. In most parts of the country, landscaping is somewhat seasonal, as you just mentioned.
- Yeah.
- You're really hot in the spring. Really hot in the fall as far as your workload.
- Yeah.
- But it's a lull in the winter. It's a lull in the mid of the summer. And it's a problem.
- Yeah.
- Especially for your staff.
- Yeah.
- How did you keep good quality employees? Because I know that's a big problem in this industry.
- People might be surprised when I tell 'em this rate, but normally when I was doing bidding work, if I had a person operating and a piece of equipment, I needed to get $200 an hour. I mean, I felt that that was my target. If I was in the 150, I'd had to do better.
- Now we have to clarify, this is 20 years ago.
- No, I'm actually saying
- Oh, you mean even currently?
- Yeah. Yeah.
- Okay.
- I'm kind of transferring those numbers to nowadays.
- Okay. Got it.
- But $200 an hour with a piece, a person on the equipment. Now what does that compare to? Now if you would have three laborers doing the equal amount of work then to try to get that same kind of productivity, you could divide that by three and roughly $65 an hour is what you're trying to get. And, if I can get the same amount of work done for $200 an hour with one man, you can see that we're bringing in the same revenue, but the costs are so much more doing it the other way.
- Right. So I understand that, but you still have to have staff.
- Yes.
- So, with a seasonal business how did you keep good staff?
- Well, my point is this, if you have fewer people you can pay more.
- Well, that's true. Okay.
- So I might be the highest paying company in the area so I can get the cream of the crop.
- Yeah. But your overhead is still equal to other people as far as staff.
- Oh, less. 'Cause I'm getting more work done and it's costing me less.
- All right.
- Because the equipment, it's all about the equipment and the efficiencies of the equipment.
- Yeah. Makes perfect sense. Now did you, just outta curiosity, because we are in the Midwest, did you have to lay people off in the winter?
- Well, that's also helpful because if you have less people, there's less people to deal with.
- Yeah.
- And when it comes to the layoff.
- Yeah.
- If we had great individuals, we would put them on a snow plowing schedule, but they would get to make up a little bit of the extra when we're in season going at it from sometimes sunlight to sun down.
- Of course.
- To try to get to work done. They got a reprieve in the winter. And they'd only have to go out maybe when it's snowed and then it's a good time to go over the equipment. But from a management standpoint, obviously we brought you on as, I brought you on as a partner in the business and I found that to have somebody of different abilities, I'm more in the soil and I'm a numbers guy. And you're more the artistic and the storyteller in the marketing, has been a great match. I would encourage anybody that was picking a partner to join them in the business that they could compliment each other. And that's what works the best for us.
- For sure. It would be crazy to have two business owners who are good at the same thing.
- Yeah.
- I mean all I see is conflict there.
- Yeah.
- I mean, you and I have been, we were just telling some of our staff today. in 27 years, we really haven't a fight. We had disagreements and that's normal.
- Yeah.
- But we've never had a fight because we both respect each other's territory, right? And that's an important aspect of a partnership.
- Yeah. And I would tell anybody that's thinking about getting in business and they're having a partner, you are marrying that person.
- Oh yeah.
- Hopefully you have the same values, the same amount of free time and share a lot of those same work ethics 'cause if you don't, it's gonna be conflict.
- Yeah, for sure.
- And luckily, we lucked out.
- We did, we've been very fortunate. So, we've talked about the efficiencies, the equipment, the staffing. But without jobs, that doesn't matter. You gotta have sales.
- Right. Right.
- So what can business, what can landscape contract business owners do to get the attention of potential clients? How did you separate yourself? There's an old phrase in marketing, this is old. It'll show somebody called the purple cow.
- Yeah.
- Right? How do you have something that's different because we're in the northern Indiana area and I bet you there's 20 seeding contractors within an hour and a half, right? So somehow you have to separate yourself, Distinguish yourself. So how did you get the attention of clients?
- Well, when you get the opportunity to work for somebody, you wanna exceed their expectations.
- Okay.
- You want them, you wanna be able to take care of like their customer. If there's questions directly that you want to take care of those as opposed to everything having to go back through the contractor, you try to deal with the end customer as much as you can. So repeat business is critical. So once you get in front of somebody, you want to keep 'em.
- Yeah.
- As far as being known, I would say if your work is really good and people are driving by it, you'll get noticed. And people will want to get quotes from you. And there's some guys, it's all about bottom line and I'll never get their business.
- Right.
- But the quality people, the people that sell the high end or quality end of the business, or just don't wanna have problems, we'll wanna do business.
- So you're talking about home builders.
- That's true.
- And not necessarily the end user, the actual home owner. But you're talking about repeat business from contractors who build homes.
- Yes. That's right.
- And I remember this early on. You had four or five main relationships.
- Yeah. They say, "Here's three houses we need, as soon as you can do it."
- Yeah. And they just kept feeding the business.
- And we don't put 'em off. We try to get 'em quickly.
- Yeah.
- And you can't do that. I mean, when we were in our prime, I mean, it was nothing to put four or five lawns in a day. I had two crews.
- Yeah.
- And each crew would put in two to three lawns, depending on the size. So four or five lawns a day was an average day.
- Yeah.
- And then I'll tell you something else. We were very, very good at large properties. I mean, I love those jobs and we were so efficient at it that we had grading patterns that were unique. I don't know anybody else that would use these grading patterns, but I would, if I had like 400 feet x 100 feet, I would do very large circles. I would go 100 feet and catch both edges and just start going down the field.
- So inside to outside,
- Inside, outside. And then, and here was the key, when I got to the inside, I would drop whatever spoils I had on my rake. On the TR3, it would carry spoils. And then I would go around and I would have a skid steer and a dump truck right on the field. And we would just load the spoils out and we would just work our way down the field. And so I didn't actually move the outside pass until I was satisfied with the end result. But I would keep working that. And so the inner pass was loosening, the outer pass was finishing.
- Hmm.
- So I was, I could sweep just down through the whole area and it was nothing to do four or five acres in a day.
- Yeah. And just leave a long line of trash.
- The trash was being picked up as we went.
- Yeah.
- See, the last thing you ever want to do is rake an area and then make a bunch of piles. That's never a good idea because you have to go over the finished area to pick these piles up. I always like to pick 'em up as I'm going.
- Okay.
- So if I got 75% of that pile, I just kept kicking the pile down and I never had to do that final cleanup, pick up that final rock. I just kept getting bulk, bulk, bulk, move the bulk.
- Yeah.
- And then I got finishing passes and then we get all done, we put the seeder on it and applied the mulch. But oh my gosh, I can't tell you how many dollars we could do in- If we did four acres and we were getting three or 4,000 an acre, it was a good day.
- Yeah. No kidding. Yeah. Good day. So aside from having relationships with builders, which obviously is, I mean, you would advise anybody to go out there and network, build those relationships-
- Contractors.
- Contractors, right. Who will feed you work.
- They're doing school jobs or big commercial work. Yeah. You wanna get all the, not only home builders, but any contractors-
- Right. But I also-
- A lot of excavators too.
- Sure.
- Need a seeding company to work beside 'em 'cause they don't wanna do that work.
- I know. You used to do a lot of repair work on septics and things like that.
- That too.
- So yeah. So that's generating business from relationships and ongoing repeat. But I also know that you had sales guys out and I know you did it too, that you just, right to the end user. I mean, somebody had a new home, the contractor didn't have in his contract to put the lawn in and they had to put their own lawn in, right?
- It happened.
- Yeah. So how did you get their attention?
- It's easy to see somebody that needs a lawn and you can see the progress coming up from when they dig the hole and you know what's coming up. So we had flyers that we would insert into a door, the rubber band and attach 'em to the doorknob. And they were very effective. I did a neighborhood, I'd drive around in the area and drop those. And I was looking to get one because I knew if I could get one, I could get the rest of the neighborhood to at least pay attention to it. Because they would see, "Wow. They came in, in three or four hours, they put the whole lawn in, it looked great, it came in great. They followed up. They did the fertilization." And again, I'm one third the cost of sod. So here they are contemplating, do I want to pay for sodding or do I want to do the hydro-seed?
- Yeah.
- And we won a lot of business that way.
- Yeah. That's great. So we did talk about, how you would win the bids, and let's talk about the end user. What was your differentiator on your quotes and on your process that helped you win a bid against competitors?
- Well, I think I averted to this in the earlier pod that I tried to be truthful.
- Yeah.
- If somebody was, I was trying to give them a realistic expectation. If we were doing the spring or early summer seeding, I would tell them we're gonna run into problems. The germination will be difficult in the heat, in fact, I came up with- I had situations where we've put lawns in and people would have irrigation and they water, water, water. And it would total 100% crab grass.
- Yeah.
- And then I'd do other jobs that were roadside, I don't know about different parts of the country whether this would work. But in Midwest it worked. But roadside and nobody put a drop of water on it and they kind of went dormant all summer. And when the cool rains came and the season came upon 'em, the fall season, that grass would come in. And so the roadsides that didn't get any water actually looked better than the heavily over watered.
- Yeah, 'cause they laid dormant and waited for the right temperature.
- And they kinda wait, lay dormant and the wheats didn't prosper and have to compete. And then when it did get the rain, the seed, it would surprising how long a seed will sit there until you actually get to the moisture and will come in.
- Is there ever a time not, so, and I understand this from being your partner for years, seed will lie dormant and then come up. But is there a point where it will burn out? I mean, do you not wanna put it in a certain time and have too many months of dormant?
- Sure. I think it's always risky to do something in early part of June and no water on it all summer. But it is surprising what'll come in. But I would also tell you this, that you need to be good at over-seeding. And when I say over-seeding, I like to use an aeration process. I wanna open up that ground and re-loosen and then enter in some more seed when I do that. And we actually are introducing a very powerful aerator underneath the force. And I think it's gonna be great for lawn renovations for seedings that didn't come in exactly the way they should have. They just need a little help. And this is gonna be a tremendous tool.
- I think we can talk about it. I mean, by the time this airs, people will have seen this at Equip.
- Yeah.
- And they'll have seen it. And it's actually a partnership with another company. But it's a brand that you used. Before I was your partner at ABI, I was an employee for a couple months with hydroseed. And this is why you had me do it.
- Yeah.
- I was going out and using this AERA-vator.
- That's what it is.
- I just gave it away.
- AERA-vator by 1st Products.
- Yeah, yeah. 1st Products' AERA-vator. And I mean, besides your own inventions, I've never heard you brag about anything.
- Yeah.
- Like you have the AERA-vator.
- Very powerful-
- For what reasons?
- It shatters the compaction of the soil and it creates holes for water to penetrate, but it also has a vibration aspect to it that shatters the surface tension.
- Yeah. Right.
- And allows the roots to go down. And the moisture to go down.
- And then, on the tractor version, I know the one I used actually had a seeder with it.
- Yeah.
- So you could over seed while you were AERA-vating. That was an interesting concept.
- I liked the AERA-vation action. And then I would actually take a actual seeder and run it over it. And I got amazing results from that.
- Yeah. So one of the things that's coming out at Equip, and people have seen our Z-23 for years now, almost eight or nine years we've had it on the market, but we've never been able to do active attachments.
- Yeah.
- We've never had the hydraulic reserve capability to run like a power rake or an AERA-vator or a power broom.
- Yeah.
- But we can now.
- We can now.
- 'Cause union, our engineers have figured this out.
- Right.
- Yeah.
- We're very excited taking it to another level.
- So the AERA-vator which we were talking about, I don't know if you reached out or if Nate, our engineer, reached out to 1st Products, but they gave us the rights to incorporate their technology into the force. I mean, we didn't redesign or copy the AERA-vator, we're using theirs.
- Exactly. And you can look at other products in the market. I'm not gonna name 'em by name, but there's other people using these same, the same product.
- Yeah.
- Same AERA-vator on their attachments or on their drive machines.
- Yeah.
- But our uniqueness is belly mount.
- Yeah.
- Most of them are behind it. And the way we've actually been able to pivot this, it's kind of unheard of that usually they have to go very straight, pick it up, move it, set it back down, and go. Our engineer has come up with a feature that it actually have a pivot action that's underbelly.
- Yeah.
- But there's a certain amount of radius we can get away with so we don't have to pick it up and drop it.
- Well, that's important because we have a zero turn platform.
- Right.
- So you wanna be able to maneuver.
- I can go in, go around a tree, come back, let's keep it engaged.
- That's great.
- Yeah.
- That's gonna be a really big, a big winner. I think people are gonna love that. And of course, we've always pitched against the power rake, but that's an industry standard.
- Yeah.
- Right? And so now we're welcoming that back into our portfolio products.
- Here's my take on that. I don't think the power rake and I don't know, I could probably talk about it as a Harley rake. People know it as that.
- Yeah.
- Should be used to relieve compaction.
- Yeah.
- It's an inch nub, inch and a half nub, say what you want, but it doesn't break up the compaction.
- Right.
- So if you have a tool that can get through like a TR3 or a SR3 or something with scar find action, to rip that compaction up and now you're trying to go over the surface and you wanna use a Harley after you've relieved the compaction? I don't have a problem with that. But, believe me, if I don't have to have a $70,000 piece of equipment with a Harley type attached to it, just think of the cost savings.
- Yeah, no kidding.
- And the maneuverability.
- And maneuverability, I mean obviously, everything that we, you and our team have designed over the years has been about efficiency, about speed to completion, about profits, helping contractors make more money per hour.
- Yes, exactly.
- I mean, that's what it's all about. It's because it's come from a lifetime of trying to do that on your own.
- Yes. Right.
- So it's not, I used to say it's not true anymore. I used to say we don't have engineers sitting behind CADs and drawing. We have Kevin out in the field figuring out what works. Well, we've now grown up and we've expanded and now we do have engineers-
- My steel pile in the back is a fraction of what it used to be.
- Yeah. Right.
- Because the engineers put it on CAD, say, "Kevin, this isn't possible." Or is possible. And then when we go and actually make a sample of it to test it, we're so much farther down the road.
- Yeah. So another question about owning your own landscape business here. What is the hardest, most difficult, most challenging part of owning a landscape contracting business? Particularly seeding contracting?
- I think it's probably managing people.
- It always is.
- Especially when you have weather conditions and just trying to make their lives as pleasant as possible.
- Yeah.
- Trying not to make too many demands on them. Be an encouragement.
- Yeah.
- Do whatever you can. But it comes down to the fewer people you have to keep happy, the job gets easier.
- Yeah. Yeah.
- It really does.
- Well, I know-
- And, you supply 'em equipment that they enjoy driving.
- I know.
- All these guys that work for me, they wouldn't be caught in a factory. They love the outside.
- Right.
- So you're giving 'em something that they are passionate about. They love to be outside. And then when you give them equipment that operates easily?
- Yeah.
- They love to, they're not gonna leave.
- Yeah. Yeah. And I wanna speak to, both your and I passion for our staff. We've been asked to leave-
- Very blessed.
- Very blessed to have great staff. But we also really are proud, maybe it's not the right word, but we're honored-
- Honored-
- Honored that
- Good word.
- Yeah. That we've been able to provide a lifestyle and a living. I mean, I've got some-
- To me, it's a ministry.
- It is a ministry.
- To be able to, at ABI we have 85 people.
- Yeah.
- That's 85 families.
- Yeah, exactly. And we've got families who have been with us for 20 years now.
- Yeah.
- And I've watched them put their kids through college.
- Amen.
- And that brings me great joy.
- It does.
- And I'm very honored to have been able to help provide that. I know that's how you feel too. So we're not anti employees. We're actually very pro employees.
- Right.
- But it does make sense when on an economic scale, if you can do things more efficiently and more profitably and you can minimize your staff-
- Right.
- That's the right thing to do. But once you have 'em, take care of 'em.
- Oh, absolutely.
- Because there's nothing harder to replace then-
- And I'll say this, you know how long it takes to train somebody else once you pour into 'em?
- Yeah.
- So you wanna do everything you can to retain them.
- Yeah. Most business owners don't understand that.
- No.
- They do not understand the cost of replacing.
- Yes.
- They figure, "Hey, somebody will come in for half a dollar cheaper."
- Yeah.
- "I'm gonna hire 'em." So I would contend and I'll speak for myself 'cause for 25 years I've been a owner with you. But I get asked, what's the hardest, what's the greatest joy and the greatest struggle? And a lot of times it's the same thing. It's the employees.
- I can remember on a few occasions that over the years I had great friendships with my employees. And sometimes you have to make a hard decision and you'll let 'em go.
- Yeah. Yeah. And we've both done that.
- Just differences and yeah. And now probably those are the hardest days.
- Taking care of your staff...
- It gets back to people.
- It does. It comes right back to people. And it can be the most difficult and the most rewarding-
- Yes.
- Part of the business.
- Yes.
- It's the same thing.
- That's right.
- It's people.
- That's right.
- So, alright. So that's probably the hardest and the most joy-filled is the staff. What tips do you have for landscaping business owners trying to grow their business?
- Okay.
- Yeah, 'cause growing- Let's talk.
- Before we talk about growing, let's talk about making a profit.
- Okay. Talk about making a profit.
- I'm talking to any business owner now.
- Yeah.
- Not just landscape business. Today, if you'd ask me what do we need to make a day every day?
- Now you're talking ABI?
- I'm talking about ABI, I could tell you to, to-
- I know you can, I hear at every board meeting.
- Anybody that's running a business and doesn't know their breakeven point, I don't think are running the business properly. You have to know when you're losing money and when you're making money.
- Yeah.
- And so, how do you identify that? Alright, let me try to go through some math. So let's imagine that, first of all, I want to identify fixed cost. That's where it all starts. So fixed cost would be like, owner salary, would be secretarial salary, mechanic salary. You got rent, you got equipment, expenses, gas. And you add all that up. Okay? And let's say that comes to five, 600,000, let's say 600,000 round numbers. Now-
- Are you talking per month?
- No, for year.
- For the year. Okay.
- Let's say you have 600,000 in costs, in fixed costs. And what that means is if I do one job, it's gonna cost me 600,000 if I do 500 jobs, those 600,000 are still there.
- Fixed overhead. Right. Fixed overhead. Yep.
- So now let's look at our variable end of this. Okay? How much do I profit with every sale that I make? So you take the cost of seed out, you take the employee's wages out and you need to know what you need to identify that margin. So let's say that I'm charging out and I'm making the cost of my margin. Okay. The cost is let's say 33%, one third of the cost or 25%, okay? Let's pick, let's fixate on one third. So at one third the cost of a sale. All right? So my point would be if I did, okay, going back to that 600,000, okay? If I did 900,000 stay with me here.
- I'm with you.
- 900,000. Okay? And my cost is one third.
- Yep. Yeah.
- You with me? Then 600,000 helps me pay the bills on the 600 fixed costs.
- Right.
- That's my break even point. My breakeven point is 900,000. If I don't make 900,000 to pay the fixed, I lose money.
- Yeah.
- Now, if I get to 1.2 million, guess what? I made two thirds of that. So I make 200,000 profit when I get to 1.2.
- Right.
- But I needed to, I had to have my target of 900 to break even.
- Right.
- So knowing your fixed cost and knowing your margin. Now, the more you can charge, okay, for getting work done, and the less it costs, your margin goes up.
- Right.
- So if you can go from a 33% cost to a 25% cost, guess what? More of your sales can go to pay your fixed cost. And then you can make more profit.
- Right. I mean, if you're already past your break even, every dollar goes to profit.
- Yes. Except that your variable costs still have to be paid. So you're actually making the margin of anything over the breakeven.
- Yeah, yeah, yeah.
- But that's so critical. I see people do work for me, whether, I don't know, whether it be put a roof on or do different things on my house and I see what they charge me and I go, "I don't know how they're staying in business."
- Right.
- I mean literally, I know what it takes to be in business. I know what it takes to put a truck on the road and the insurance. But I will say this, we are seasonal. We have to make all our money in 30 weeks. I don't look at 52 weeks.
- Are you talking about hydro-seeding?
- Hydro-seeding.
- We're going back and forth.
- I know, but that's a 30 week thing. So I have to make all that money in 30 weeks and then I always look at snowplowing as an added bonus.
- Right.
- I don't count on that. It's enough to pay for the repairs on the trucks and the wages for the people and there's hardly anything.
- It's a stop gap. It keeps 'em busy and they're not looking for another job.
- Yeah. Yeah. But if you have a bad winter or a good winter, depending on which way you're looking at it-
- I've heard of landscape companies actually make more in the wintertime-
- Really?
- Than in the summer. And that's a puzzle to me because I know the fixed costs and I don't know how you could charge enough to actually make that work.
- Well, what they might be doing is bringing in more revenue, but maybe not more profits.
- Yes.
- I mean, there's a big difference.
- When you start subtracting the repairs
- Yes.
- On the equipment that's damaged because it's very rough work on your equipment.
- I mean, I have fallen victim to this trap of, "Oh, if we just made another million dollars next year, we're gonna make more money." But if you spend that, if you buy that sale, you can make 100 million, which I might only make 100 thousand at the end of it. It doesn't really matter how big your top line is. It's really about your bottom line.
- Yeah.
- It's all about your bottom line, which comes into those efficiencies and processes and things like that.
- I can't say it enough. Here's the illustration. Let's say you have an employee and based on wages or whatever they might make 40 or 50,000. Well, you buy a force, okay?
- A Z-23.
- Z 23, and let's say it's 30, 35,000 and there's a three year guarantee. If there's anything goes wrong with that thing, let's say an engine, it's gonna be replaced. And we've had them out there. We're not getting any of that.
- No.
- I don't wanna imply that at all. But let's say you get five years out of that. Well that's about 7,000 a year.
- Right.
- So you're looking at $7,000 a year in cost of the machine. Now you gotta put some gas in it.
- Yeah, sure you do.
- But compare that to a wages of one person? When it's replacing three people?
- Right. No, it's-
- I don't know how. You have to invest in equipment if you're gonna be in this business. If you think you're gonna get everything done by laborers, plan on working for nothing.
- Yeah. And that's exactly right. That's exactly right. So if a contractor wants to grow the business, let's say that they are bringing in-
- I have a best example I can give you.
- Okay.
- One of the largest hydro-seeding companies in Ohio came to see me 20 years ago.
- Yep.
- There's a video
- No, I remember I shot it.
- Henderson Turf.
- Yeah.
- And this gentleman was using Harley rakes.
- Yeah.
- And he had 23 people. And I showed him all my methodology. I showed him the, he bought 'em all. In fact, every year he buys like one or two more tools.
- Right.
- But I showed him how we loosen the soil with a TR3, how we get up to the edges. He says, "Man, my guys, I'd have two guys just doing the edge work." I said, "Yes, I know." And it eliminates all that. He told me he went from 23 people down to 10 and grew the business by 50%.
- That's crazy.
- So it was just nothing but profits to the bottom line.
- Yeah.
- And he couldn't say enough.
- Yeah. So you kind of answered my question, but there's gotta be, maybe from a marketing, I don't know. But if a contractor's making 750 and he wants to make a million, and he's got a fixed overhead that can support it-
- When you say make, you mean sell-
- I mean top dollar, top dollar.
- Yeah. Top line sales.
- Total sales.
- Yeah.
- What would you recommend? How would he go about growing that business?
- Well, that's the other end of the business. And that's what you're good at.
- Yeah, I know. But I'm interviewing you.
- I'll ask you that.
- I'm interviewing you.
- Obviously getting in, just taking really good care of customers. And let them sing your praises.
- Yeah.
- And then when people get the visual of you, again, I'm not in the house, I'm out there in front of everybody. This is a very unique situation where people can actually see you doing the work, drive by and see the finished work. And then they have inquisitive, how- If you can put some signage out there a little bit, they'll remember.
- Yeah. And I think, you know, having a marketing presence.
- Yes.
- Even on a small business is really important. And then I've always found that structuring your sales people's pay properly to where if they are good, they make great money, but if they're bad, they make bad money.
- Yeah. I would say that the size that I'm talking about, and you are right, the owner would probably be doing most of the sales. But if you got to the point where the owner actually had a salesperson and I got to that point.
- Yeah, you did. I know you did.
- Yeah. And then you're probably operating with more like three crews.
- Yeah.
- And once you get to that size, I think any one person could handle two crews selling and managing that business. Once you get to three crews, then you need a salesman out there and yeah, you wanna motivate him. And what you want him to do, you have to identify the margin and give him a percent of the margin.
- Exactly. That's what I'm saying. Pay him properly.
- Right. You don't pay him by the sale. You pay him by the marginal profit.
- Yeah, and you and I have, I mean we, how many, we have 13 salespeople at ABI?
- Yeah.
- And we probably have eight or nine marketing, nine or 10? I can't remember how many now at this point. But I mean, we have tried every methodology of payment for salespeople. Because you gotta keep 'em motivated.
- Yeah.
- And sales is not always fun because it's very mathematical. I mean, you used to have to pound the phone, pound the payment, whatever methodology it is. But when you give them an unlimited amount they can make, if they hit certain targets, I think those are the right kind of salespeople. I don't care. You and I have said, if we have somebody making a half a million a year in sales, God bless 'em because that means we've made 1.5 million in profit. Or I'm just throwing stupid numbers out. But you know what I'm saying.
- After you cover your overhead.
- I understand. You gotta know where your overhead- You gotta know where your fixed costs are at. I think that's a big takeaway from this session is you gotta know the math behind your business.
- Yeah.
- If you don't know the math, if you're just out there swimming, trying to bring in sales.
- Yeah. You're probably not making-
- More inefficiently, more sales can actually make you lose more money.
- Right.
- If you do it inefficiently.
- If you do it efficiently. I totally agree with that. Yeah, I totally agree with that. So one more question here on equipment. How do you make sure that you have the right equipment? And I know we're gonna sit here and say you need API equipment 'cause we believe, we're passionate about it. But if you're out there as a general contract, I mean, is it going to trade shows? Is it trying to sneak around and see other contractors' equipment and what's working for them? Because I know, one thing I learned a long time ago is contractors don't like to share their secrets.
- Isn't that the truth?
- Isn't that the truth?
- We would have situations where we would sell a tool in an area and they'd almost put a tarp over it because they said, "This is a competitive advantage over my competition that I don't want them to know how I'm getting them done so successfully."
- Yeah.
- And it's so different because we do sell to the equine market. And that market is so different.
- Yeah. They love to talk about it.
- 'Cause they love to tell everybody, "Wow, you need to buy this," because they're-
- Well, their arena drag's not making the money. It's keeping the horses safe.
- Right.
- The contractor's making the living.
- Making a living. Yeah.
- And my job was to pretty up the equipment that you invented. Label it right. Make it look right.
- Yeah.
- Make sure all of our cont- I can't tell you how many contractors would call me, go, "I love that TR3, I scraped every label off." Like, oh my gosh.
- True.
- Everything I tried to work for, they're just taking it off. Right?
- Yeah.
- Because they didn't want anybody else to see it. So how would you recommend that a contractor make sure that he is getting the right equipment? Come to ABI?
- You know what? I think my son lives on YouTube.
- Yeah.
- And so Google it.
- Yeah.
- Google "Lawn Prep".
- Yeah. You're gonna get a lot of ABI. We have a lot of stories. We have people that have had driveway experiences and they love the tool. And that would be my advice. And Google the other equipment too. And I think you'll find that there's a heavy preference. And I guess my question would be is, in some of these other competitive tools, how new is that tool? Is it brand new? Did it work really good for a month?
- Yeah.
- How many of 'em are out there that have been out there 10 years and still working? Still doing the work and not breaking down?
- Right.
- Very few.
- Very few.
- In fact, there's a lot of tools out there that can't take the day-to-day work, and it can't survive a couple years.
- Yeah. Yeah. Kevin, is there anything else you wanna share? My questions are done. Do you have anything else you wanna share to the contractor market out there? Especially young. I have a passion for young men and women who are in their twenties, thirties, early forties, who are really trying to raise the value of their family and the quality of life for their kids. I mean, do you have anything else to share?
- Anyone interested in this industry, in this line of work, my guess is you have a passion for it. You have a passion to work outside. You have a passion to work in the dirt. It grew up with me. I mean, I was on the sod farm. In fact, I remember being in an office and I would see trucks drive by or I'd see work being done outside. And I'd be drawn to it. But you know what? If you're doing what you love, it's not work anymore.
- Yeah.
- It's not work anymore. And it just couldn't be more true. But it does help to have equipment that eases the burden of getting it done. And I quite often, when I actually put a lawn in with the tools, I draw the attention of the neighbors and people come over and watch it and that's always a fun thing, you know? "How did you come up with that?" You know? And I get to share that. But my own joys of it, in inventing these tools and seeing them work it, all I can say is I've been very blessed. And it's a passion of mine. And I'll say, have a good wife because I know many times after a long day, my wife would be very understanding.
- Yeah.
- And, we couldn't do it without the two of us together.
- Well, absolutely. I mean, just like our partnership as a marriage, owning a business with your wife, that's a partnership too.
- Anybody that's in business, their wives have to take a toll.
- So, I'll wrap up by saying I'm such a big believer in passion. I agree with your statement, if you're not doing something you love then you're probably in the wrong profession. But I also know that you can have passion about something, but not have the efficiencies, not have the right staff-
- The passion will leave.
- And passion will go away.
- Yes, it would.
- You can't be under a cloud of burden financially, emotionally, physically doing something you love and still enjoy it. It doesn't work that way.
- Well said.
- Yeah. It doesn't work that way.
- You gotta get out ahead of it.
- You gotta, you gotta do things the right way. And then you get to live your dream. Like you and I have lived our dream.
- We are living the dream.
- We are, we are living the dream. Well that's all we have for today. Thanks for joining us.
- Alright. It's been a pleasure.
- Yeah, it's been great. This has been a great conversation. I'm glad we were able to document this not only for the podcast, but just for the sake of documenting this conversation. So this has been great. I'm glad you're listening. Glad you're watching. Please sign up and follow us on our social media channels so that you can continue to learn more about "Ground etc". Thanks for your time.
