Today, I am at the GIE Expo and Landscape Show in Louisville, Kentucky with author and consultant Tony Bass, who's going to share us the secrets to running a profitable lawn and landscape business so you can lead a wealthy life.
Jack: So, Tony, for the people who are watching or listening that haven't heard of you, who are you? You've wrote some cool books. Tell us, just quick intro, who are you? And what do you do?
Tony: Yeah. So I started in the landscape industry about a long time ago. It was 1987, and so, gosh! That's, like, 31 years ago. But here's what I've learned. I've learned that if you want to become wealthy, this is a fantastic industry to do it in. And as a matter of fact, after 31 years of starting a lawn service business from scratch, building it up to millions of dollars in sales, exiting that company with a seven figure payday for me and my family, and then going on to teach ... Now, we've got over almost 2,000 companies that we've helped train on the principles of become wealthy from landscaping. And I've got five of them. And I don't know if you wanted to try to cover all five of them, but we can!
Jack: Yeah, sure, let’s do it! So what's the first principle of building a wealthy landscaping company?
Tony: Well, here it is. You've got to price your jobs right. Okay? And this is no secret, and you may have even ... hear me say that before. But the fact is is that it will always be the truth! I recommend to companies that if you want to become wealthy in this industry, raise your prices. Because most companies are underpricing their work. First.
Second, you've got to learn how to decrease your expenses. And this is all part of this idea that making your company more profitable is the first step to wealth. Raise your prices, decrease your cost, and then always and forever, as long as you work in your company, you've got to work on processes and procedures to improve productivity. If you improve productivity, then there is unlimited wealth in this industry. That's principle number one.
Jack: So what would you say to the lawn and landscape contractors who are listening that are working 14, 18 hours a day, and they're saying, "Well, the design can only be done by me, and only I can do this part." And they're stuck in the weeds of their business. What would you say for people like that who ... You know, what are they missing from a mindset that's stopping them from getting to the next level?
Tony: They're lacking confidence. They need to raise their prices. If you're working 14, 16 hours a day, that's a lifestyle problem. I mean, you can do it for a while. You can do it for a few years. But you can't do it forever if you want to have a family. Now, you can work the 14, 16 hour days. You'll lose your wife. You'll lose your relationship with your children. And none of that's good. And so I'll never recommend that you stay on that train forever. You've got to begin to work on your business more and at less over time.
So the wealthy people in this industry always must understand that their first fiduciary responsibility to their family and to their customers is to price their work correctly and make sure that they are profitable. If your company is not profitable, wealth is going to be elusive.
Jack: That's absolutely right. So pricing is the first key. What's the second one?
Tony: Here's the second thing. If you price your jobs correctly, if you own a business and if you begin to grow that business, you will soon be facing the most expensive thing in your life, and that's called taxes. You will forever be paying taxes. And whether or not you understand it today, your tax bill, federal state, local taxes, will take more of your money than anything else that you do. And so you must study! You must learn how to lower your taxes. And in most cases, you have to build a power team. A CPA, a tax attorney, advisers who understand the industry and the relationship of your company and money to help you reduce your tax liability year after year after year. Because 25 cents to 45 cents of every single dollar you earn in profits or payroll is going to go to taxes, robbing you of your wealth.
It's pure robbery.
You feel it right now, don't you?
Jack: I do feel it. Yeah.
Tony: So you're understanding what I'm saying here? You ready for number three?
Jack: Yes. What's number three?
Tony: So here it is. When you understand some very basic parts of lowering your taxes, you are going to find out that investing in real estate is a tax advantaged investment. Now, just about all of us over time, Jack, will invest in real estate. If you buy your own home, you're investing in real estate. If you buy the building or the facilities that you work out ... you know, with your business ... then you are investing in real estate.
Many business owners in this industry make a huge mistake, and they stop there! You should not stop there. My recommendation is that you purchase one investment property a year for at least 10 consecutive years. 10 investment properties could lead to a six figure income without a single employee while you're reducing your taxes.
Alright. So here you go. Now, once you have got your company profitable, making great money, you're working on lowering your taxes, you're investing in real estate, now it's time for you to re-dial, re-focus in on your business and find one, two, maybe three specialized services that you are extraordinarily efficient in or you're extraordinarily successful at selling for higher prices. In other words, after having been in business for a number of years like I have, you get a little more confidence in what you're doing. You're going to be courageous enough to ask for more money for your services. And when you ask for more money and you're still winning business, you'll be regretting the days that you were taking on work that was too cheap! Right?
So specialization, whether you specialize with enhancing your company's performance with equipment, processes, procedures, exceptional marketing, exceptional sales techniques, whether we talk about services like holiday decorating, outdoor kitchens ... You know, there's always ways for you to specialize and simply charge more for those services.
Jack: Yeah. And one mistake I see in landscaping websites and in online marketing is that a lot of companies lack ... First of all, from an operations standpoint, they're lacking that specialization. And then they're ... On their website, what one of my coaches would say is they're a me too landscaper. And they say, "Oh, me too! We do commercial. Yeah, we do landscaping." You know, all this stuff.
How important is it, do you think, to position your company as a specialist in your marketing? I know a lot of people are afraid to do it, but that seems like one of the five keys to being wealthy.
Tony: You're exactly right. The more focused you can become over time, the more efficient you tend to be. And efficiency tends to create some price advantages in the market. But while you're efficient, it doesn't mean that you have to be cheap.
You see, the way people become really wealthy over time is that they figure out how to provide services at a little lower cost inside their business, while charging a little bit more than everybody else does. And so there's a bigger margin in between. And that is going to be a wealth principle that's going to stick with you for the rest of your life.
Jack: Mm-hmm (affirmative). And how ... Well, tell us the fifth one, then I want to ask you a little bit about how your super lawn technologies actually helps people, because I've interviewed one of your customers about how they're using it to not only charge more, but operate more efficiently. So before we get to that, what is the fifth principle?
Tony: So step number five in become wealthy is you have to understand that your business is probably going to be your most valuable asset over time. And so we've got to make sure that your business is set up correctly that it could be sold. You see, you can make a few simple adjustments in the way you set up your contracts, the way you set up your organizational structure, the way you go about hiring your employees and structuring the day to day work, that could actually make your company two times, three times, four times, or even five times more valuable than if you set it up a different way.
And so you're going to work in this business 5, 10, 15, 20 years. And I will guarantee you that if you build a company that's based on one time jobs without written contracts and you think that collecting cash money all the time is in your best interest, you're flat out wrong! And you're wrong because ... Here's the way companies become extraordinarily valuable. They always have written agreements with their customers. They always work towards building a re-occurring income stream. And that' with annual contracts or, even better, multi-year contracts. And then those multi-year contracts are for services that never go away! Lawn mowing, fertilization, holiday decorating ... You know, pressure washing the home has to be done every so often.
So those re-occurring revenue services set up in contract form become your most valuable asset.
Jack: So would you advise that maybe for, let's say a company that's really heavy on the design build side, maybe they're really a specialist at outdoor kitchens or something, would you advise that they still build in a maintenance department even though it's a little outside of their specialization? Because-
Tony: The most valuable companies in our industry, Jack, are those that have about 70% of their revenues or greater from re-occurring revenue. And, listen. There's so many talented designers in this industry, gifted artists, and I love you, I love you, I love you. But, you know, this old dirty maintenance work, from mowing lawns to fertilizing lawns to keeping plants trimmed and shrubbed and beds mulched and all those things, they're not all that sexy services. But the re-occurring revenue stream is highly desirable.
And it is a fact that companies that build a re-occurring revenue stream can be sold for two, three, four times their future earnings. The future earnings! That is, the easiest money you will ever make is when you sell your business based on the future earnings of your company that you never had to create yourself.
That's right! I would rather buy that. Right? Wouldn't you?
And so one of the founding principles in the E-Myth is that you work on it so that the business becomes a sellable asset one day. You know, when I had the proverbial knock on the door, I was 41 years old, 24 years before the federal government recommends that you go into retirement.
But because I had an asset, and that was a business that was creating income for me and my family, and it was creating income while I did not have to be there anymore ... I had enough team, I had enough people, that that company was a standalone business. And that allowed me to exit that company with a seven figure payday, and I never did anything more than do that old, nasty work, man. Mowing and trimming and fertilizing and picking up trash or cleaning gutters, or whatever else it may be that people needed help with. And they will always need help with those services.
And so when I'm asked, "Can you become wealthy from landscaping?" My answer is, "Absolutely, you can! It's up to you. It's up to you. It doesn't matter what the customer thinks or don't think if you will make sure that first, your pricing is right, second, that you work very hard on learning about taxes and reducing taxes ...
... that's going to accelerate your wealth. If you begin to invest in income producing real estate and then if you learn how to specialize your business into one area ... and you can help them find specific customers. Right, Jack?
Got to have an online marketing plan. But ultimately ... and I want to get real serious here for just a moment ... if you fail to build a business that could work without you, then you are destined to always work in it. And so my recommendation is that day in, day out, you just think about the fact that working in it is a job, working on it is a choice. And when you work on your business, you are able to build a business that will work for you and not just because of you. And if you can get a business that will work for you, then you will become very wealthy. You just follow these principles.
So this is all great. They've watched the video. They're all done. Right? Hardly!
Jack: So tell us, how can people get started? How can they work with you? How can we learn more about this?
Tony: Well, thanks for asking, because we've been here at the Green Industry Expo this year, and we just completed our fifth annual Growth Summit, which we called The Wealthy Landscaper, in which we dove deep into these five concepts that we've talked about today. And this training has not been provided just by me, but by my power team of experts in the areas of tax reduction, improving tax advantage investing through wealthy real estate investments, specialized services, and preparing to sell your company.
So I've got a power team I've put together and we've got a complete faculty of recorded videos that dive deep into each of these subjects. And when you study this information ... If you want to access it, just go to thewealthylandscaper.com.
And you're going to find a little short introduction video there. But then, you'll get invited to jump in and dive deeper around these ideas.
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