Why Contractors THINK They Are Profitable But Have NO MONEY!

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#LawnCareMillionaire #LawnCareBusiness #MikeAndes

[@BobbyBowker]

I started my business in 2018. Watching everything relating to the field on KZbin that I could find. Of course I came across Mike Andes. I found him a valuable resource of information back then and still do to this day. In 2023 going into my sixth year, the only channel I watch now is this one. It’s all I need. Thanks for everything that you do. Mike.

[@lovinbusiness]

I gave this video a like and I'm cementing to help your algorithm. I love the business content. Come on KZbin LETS GOOOOO

[@MikeAndes]

The gentleman’s agreements is signed!!! ✅✅😅

[@Misterpoisonivy]

This comment deserves a tag 😂

[@FrostyBravo]

Firstly Thank you for this type of content and all that you do. secondly I do prefer the old whiteboard videos better, it makes more sense to have you and the whiteboard in the same shot because you talk with your hands and it really helps when you point to stuff. your a great teacher!

[@skylerstewart2675]

Liking and commenting for algorithm. Also I think I cried when I found out my city had an Augusta franchise - I remember seeing their previous name in ads… I missed my shot at being part of Augusta nation. Early bird gets the worm. 😂

[@CopperCreekCuts]

Gentleman's agreement for the education, already subscribed but liked! :D

[@MikeAndes]

Much appreciated! And I didn’t even ask?! 🤣

[@CopperCreekCuts]

@@MikeAndes I know the drill by now! :D

[@javanwinders3399]

Thanks for the information!

[@HubertusKeil]

Mike, this has been by far the most interesting video i have seen in a while. Amazing great hands-on information. THANKS SO MUCH!

[@jd_dumpsters]

Thank you! Business can be so difficult. At times you know you're making a profit while growing but then you're like where did it all go.

[@tractor629]

Hi Mike. Thanks for doing these videos.. I’m an HVAC contractor and appreciate this info!!

[@dewainkoester1026]

Thanks Mike! Great information.

[@briane3050]

These are the videos that make the world go around. At least my world anyway. Thanks Mike!!!

[@SavageElites]

What a resource you are! Liked!

[@zanderballock5899]

I have 10k post cards to be sent out for advertising. We are about a month away from mowing. Should I send out some post cards now to my target route then resend them to the same clients 2 weeks later to get double the reach in that area?

[@JavierRamirez-ks9ji]

Wow love the #s mike definitely studying them

[@TheWillKelly]

Outstanding breakdown making things these KPI's simple and easy to understand. Straight Gold!!!🔥

[@allphaselandscape]

I've always been aware of overhead recovery in the background when I price jobs. That said, I just made sure that I figured our burdened labor cost plus direct costs for the job and then built-in enough profit to cover overhead expenses. It has worked just fine but as the numbers have continued to grow I can see a real benefit in tracking these things much more closely and breaking out the numbers. I find that my experience allows me to price things pretty much dead on, but that feels irresponsible like a crap shoot versus knowing with certainty.

[@MikeAndes]

❤️🌟👏🏻

[@mikeutubename]

To keep it simple would you consider dividing up projected overhead into working days per crew and adding it to cogs? Then put your margins per cogs item...ie: labour 40%, material 20% etc based on each project and the variables that play into them.

[@paulnicholson8524]

Way to go Mike!

[@abclawnworks9127]

Awesome review!

[@Franklin23_]

Great video mike!

[@albertapodaca]

Remarkable tablet thanks Andy.

[@justinoberlin3863]

Thank you.

[@jarmonlawncare]

Thank you for this video! Much needed. Mike, I noticed that a lot of your shops are storage units or shipping containers. I am running a 6 person, 3 crew team. When we finally purchase some property, would you recommend shipping containers or building a shop?

[@MikeAndes]

Lots of variables to consider. Bring it forward as a discussion on the Lawn Care Millionaires FB Group.

[@mansajose5226]

Thank you sir

[@DakGeorge]

Dropping another comment to say thanks for these great lessons and help to get you thrown higher into the algorithm

[@MikeAndes]

I appreciate that!

[@kendrickbettis3328]

Man this helped me out a lot! Unknowingly to myself. I’m actually charging what I need to charge using this.

[@iamahardscaper]

Great video! In my opinion, regardless if you think people don't need to focus on their Overhead Recovery they should know their overhead costs because otherweise they are just quoting blind. MORS is just another method to come about taking that overhead and including it via markups. Whereas the Overhead Recovery method we use to make back based on labor hours allows you to use markups to take care of coordination / warranty call backs rather than using those markups to make back overhead. Just my opinion. Keep it simple. Make the money you should be making on each project. I think the first example should be a margin and not markup. 540 000 divided by .6 to get you to your 900 000 recovery.

[@MikeAndes]

I agree 100%.... Just remember I am taking into account that 80% of the public audience on KZbin would struggle to accurately measure their OH expenses.... So I have to make more generic/basic numbers advice.

[@iamahardscaper]

@@MikeAndes Makes total sense and what you are doing is amazing. I just love talking about this and love the discourse around this topic.

[@d.bray1]

This is my favorite content 😅

[@Bradenmorrismowing]

Great video

[@QuietLawn]

Hey Mike, Thanks as always for sharing so much. Now, I understand this is coming from the perspective of a company under one million and that my perspective may greatly change as we grow and learn, but I think that not knowing what it really costs to deliver our services or at least having a general idea is the single biggest problem in our industry and why so many fail. It was the point of your video about Tigran. The vast majority of companies will go under well before they reach a million in revenue because they're not charging enough to be profitable but they think they are. We were one of them until we implemented the single overhead recovery method. Before that, we had no idea we were losing money. I know it's not a perfect method, but it's simple and most companies could implement it within a couple of days. I understand your greater point that the main focus should be sales and close ratio and that you shouldn't spend a ton of time on this, but I think it's very important. If even half of landscapers understood the basics of overhead recovery, it would change the industry and affect pricing for all of us. I don't think we raise the level of professionalism in our industry without it.

[@MikeAndes]

TOTALLY AGREE! I just rarely see people calculating overhead correctly (speaking as a percentage of the public contractor audience).... the only thing worse than knowing your numbers is THINKING you know your numbers and the business still failing. You have above average understanding and comprehension of your numbers. Probably top 5% .... I just gotta keep in mind that others hear the videos I make and I don't want them being misled.

[@QuietLawn]

@@MikeAndes Thanks Mike. I'm sure that we're one of the companies that's not calculating our overhead correctly. It's not easy and there are a lot of assumptions. But, just understanding the concept and knowing that there are many, many other costs to account for other than direct costs has been game changing for us. I think everyone getting into business should at least understand this concept or, otherwise, they're just guessing with their pricing and hoping they get lucky. We purchased a spreadsheet from Profits Unlimited that helped us figure our man hour rates in one afternoon. I get your point and totally agree that many of us spend hours, days, weeks, and even months researching equipment, vehicles, software, and crunching our numbers because we're scared or don't understand how to market and make sales. 100% agree. But, I think it's well worth spending an afternoon or two figuring out what you should be charging to ensure you're not selling your time at a loss. We sold ours at a loss for the first few years.

[@WHANDER0609]

My favorite part, when you said "33% profit, no you didnt..pause"! Great video mike

[@MikeAndes]

😂😂 that’s what I get for mathing on the spot 🤣

[@WHANDER0609]

@@MikeAndes it's the no you didn't and pause that got me lol

[@salinepools]

Thanks for this info Mike! I was wondering why we were not making any money subcontracting. We have been marking up jobs by 30% but seems not enough but don’t want to price ourselves out of jobs. Say our sub gives us an inv for pump housing $750 and installation $120 do we x it all by 1.6 to make a decent profit? Our overhead recovery is 43%. Any help very much appreciated! Thanks!

[@patricksimoneau7647]

In this video you said people should add fuel to your overhead costs. In a recent video you said fuel is a direct cost, not overhead. Or did I misunderstand?

[@MikeAndes]

Fuel is not a fixed expense or overhead. If I said that in the video, I misspoke... SORRY! It was near midnight when I wrapped this up.

[@patricksimoneau7647]

@@MikeAndes No worries! This is what I was thinking, just wanted to clarify for anyone else who may have been confused. Thanks for the quick response!

[@TheBigdan1111]

Hey mike, any courses you'd recommend for creating online ads? I know how to create them but want to learn how to optimize them

[@platinumlawnservice]

I use LMNs free budget tool. With everything entered in using MORS it puts me and my wife charging near 150 an hour! Seems high so should i trust the system? Ive double and triple checked the numbers. One thing i noticed is it uses a prospective gross revenue to calculate the final number. So the higher the prospective number the lower the charge rate per hour

[@MikeAndes]

This is my concern. Knowing the numbers are great but the validity of the numbers hinge on accurate inputs

[@markrandall2997]

This is why I love this channel nobody gives you the goods like MA. Jesus didn't worry about if his channel bombed he was here to sew good seeds. You're teaching us to fish and you're on a mission to lift up your fellow man not just mindless entertainment. You're a blessing to us wanting to truly learn business 😎🙏🇺🇸

[@jmflandscapinginc]

Crucial data

[@eduardoortega6789]

Sensational

[@Sutherland420]

All your franchisee's should watch this video! I think you are forgetting insurance, truck payment, repairs, marketing, gas. Time spent on customer service, fixing equipment, and quoting. Plus windshield time! No way that is 10% of your costs. Plus you should be profiting 20% on everything, where is that %?

[@MikeAndes]

What are you talking about? OH recovery has nothing to do with profit margin. It is simply a way of calculating break even and costs

[@Sutherland420]

@@MikeAndes Did you read the rest and include those costs?

[@gmlctv5572]

Moral of the story: Don’t be the 99%‼️