Jonathan:
Hey, I hope you’re doing really well. I wanna show you some data to make a point. But before I do, let me set this up for you. I think this is one of the most important things to understand in business and to grasp. It requires a mindset shift for almost all of us. And I am absolutely included in this. This is an area that we all struggle in and we were probably incorrect about, especially early in our business. If you don’t make this mindset shift, it will really hold you back. You’ll spend money in the wrong way. You’ll overspend in some areas. You’ll underspend in other areas. And it will have a big impact on if you get your business to where you want to go. I believe the key to getting where you wanna go in business is to constantly have these mindset shifts over and over where you keep reaching a place where you understand how something works at a whole new level. And then it has an impact on the decisions you make.
So there’s this concept, and I don’t know what the term would be for it, but I call it invisible numbers. There are all these invisible numbers floating around in your business. It’s money that could be saved. It’s money you’re not earning, that you’re losing but you don’t realize it. It’s money that you should be spending because if you spent that money, it would make you a whole lot more money. But you don’t spend the money so never make a whole lot more money. Because you never had the experience you don’t even know you lost out. That’s kind of confusing, so I hope you followed that.
Let me try saying that one other way. Let’s say that you had this opportunity to invest in something. It was gonna cost $1000. When you invested that $1000, it would have made you $10,000. But you don’t make the $1000 investment, so you never make the $10,000. But because you never made the $10,000, you don’t know you essentially lost $10,000. You didn’t have the experience so there’s no pain associated to it never happening. But the reality is, had you made that $1000 investment, you would have experienced having $10,000 more in your bank account. But you don’t even know to be upset or disappointed or dissatisfied because you don’t know that you lost out on $10,000.
And that is happening all around us inside our businesses because of the decisions that we make. The only pain we feel is that pain when we make or spend money, and it’s a disappointment because it doesn’t make us more money. Or we feel like we lost or we wasted money. But we don’t feel pain and frustration when we don’t take the leap and spend the money or invest in something or fix something. I’m gonna show you some examples. We don’t feel any pain in those scenarios because we never took that action and therefore we never reaped the reward or we never, in my example that I just gave, never experienced maybe a mistake. Complicated. Hopefully you followed me.
Let me give you an example and I think it’ll clean this up. This is really important. So let’s just imagine, if you’ll look at my screen. I have a few calculators for you. Let’s imagine that you were to cut eight miles a day of driving out of your day. Okay. Let’s just say you pay your team $14 an hour on average. I feel like that number is really moving up. So I’m gonna up that to $16 an hour. That’s your average cost per man-hour on your truck.
Let’s just go with fuel as only $3 a gallon right now. If you’re traveling roughly on average about 30 miles an hour in the truck. You’re in the city. And none of these numbers are gonna be perfect. It’s costing you about 53 cents a minute, or I’m sorry, a mile on payroll. Then we’ve calculated out your fuel costs here. I just put a random 10 cents as your truck cost. We’ll just keep that really simple. The idea is we’re gonna save eight miles of drive time and driving per day per team member. Okay. You’ve got an average of let’s just go with three individuals on the truck. So there’s three individuals on a crew. It could be two. It could be whatever. The broader idea here is that I shared a concept with you.
Let’s just say you have six crews. Okay. So that means you have 18 individuals inside your company. If you save eight miles per day, then you save $384 per week in labor. You save $50 a week in fuel. You save $24 a week in vehicle cost, because you’re wearing it down more slowly. Things of that sort. So your total per week savings is 458. And your total per year savings is $23,000. If you’re a profitable company and you make this change, you personally as the owner make an extra $23,000 a year. Or you as the owner have $23,000 next year to pay down debt or invest in your marketing so that you can grow from six crews to eight crews. Then when you grow from eight crews, the numbers get better. Eventually let’s just say you have 50 crews and you’re one of the top companies. Look at the numbers on the table. And I know that almost getting too out there, but the point here is I want you to think about this. How much money’s on the table.
Let’s say you’re a big company. Right. So I live in a bigger world, maybe, or a different world. Let’s just say you have a lot of crews, okay. Now you’re thinking about building an office or buying an office or where you should rent. There’s a lot of money on the table. Not only are you thinking about when you build your office, hey where should I put my location from a mileage standpoint, so every eight miles across a lot of crews is worth a whole lot of money. If you were to move your office in such a way that it’s eight miles closer, reduces eight miles from all your routes, and your office is going to cost you $100,000 a year, that’s an easy decision. You’re saving a lot of money.
Or maybe another consideration might be that your office isn’t very close to your team members. Because where most of your team members live, maybe they’re driving your trucks or whatever the case might be, they’re driving quite a distance to get to the office. And they’re on payroll. There’s a million scenarios here. How much money’s being left on the table. This is an invisible number. You don’t know and I don’t know until we do the math that every eight miles of waste inside our organization is costing us, and let’s get back down to a more realistic number, that’s definitely for a very large organization there. Let’s get back down to six crews, or maybe you’re saying, look man, I’m just getting started. I’ve only got two crews. Still 8000 bucks. What would you do with $8000 in your pocket? And that’s just eight miles.
What if you’re wasting 12 miles a day? The numbers, you can play with these numbers and you see it’s significant. And that’s only on two crews. There’s a whole lot of companies running around six crews. So you’re talking about $35,000 right there that goes into marketing. So that’s an example.
Let’s look at a couple other examples, ’cause I just really wanna nail this point down. It’s so important. I like to use this one right here. So look at this one, number … there’s so many. I’ve got tons of these. But think about this one. All right. So you don’t really have a system in your company for making sure that work does not slip through the cracks. Or work doesn’t get delayed so long that it never happens. The seasonal nature of certain work is that unless you perform it within a certain timeframe, it’ll essentially no longer be an option to perform the work.
I’ll give you an example. Think about weekly mowing. If, for whatever reason, you don’t mow Miss Smith’s lawn this week and you have to skip it because you couldn’t figure out how to get back to the property due to weather concerns or something like that. Unless that works under contract, that’s lost money forever, because next week you’ve gotta mow the lawn. You’ll lose that one visit of the year.
So there’s all these scenarios where that could be happening due to inefficiencies or there might be a scenario where your team doesn’t have a system that when Miss Smith walks out the front door and says, “Hey, could you guys trim the bushes? Hey, could you guys tell the office to have somebody take a look at my irrigation system?” Whatever the case might be.
Or a neighbor drives by and hands your team a phone number and says, “Hey, will you have the office call me? I’m interested in using your service. Or I’d like to get an estimate.” Then that little note goes into somebody’s pocket or in a glove box or in a … we’ll go back to the note. Miss Smith says, “Hey, could you please do this thing for me?” And somebody on the team writes it down on a sheet of paper and puts it somewhere in the truck. On the dashboard, in a pocket, whatever, and it never makes it to your company.
Or the team’s working and Miss Smith says, “Hey, can you trim the bushes?” And that’s a $200 trimming job. And somebody keeps it in their head and then that never gets communicated back to the office or texted to the office.
how many little things like that happen a week, ’cause there’s no system? If it’s just two of these types of jobs per week, and the job is $100 on average, that’s $200 a week in savings. It’s 10,000 more dollars a year to your business. How many little things are there like this in your business? You might say, ah, there’s no way that we’re missing two a week. We’re only missing one. Still adds up. Or maybe you’re missing five. How often does this happen?
Let me find a couple other here. Couple others and I just wanna try to really nail this down and give you an even better example. So let’s use this one. You can ignore this little statement right here. Let’s just say eliminate 10 hours per week spent doing something. Okay. Whatever it is. Let’s just say your team will cost you $16 per hour. So if you save 10 hours per week on a team member, meaning you take 10 hours of work off their plate, and they make $16 an hour, then you’re saving $160 a year you’re saving $8300. All right.
So now let me give you some analogies of where this is appropriate. Let’s imagine that your team member is using a laptop that keeps crashing or having problems or is slow. Slow is a common one. It’s really slow to pull up reports in let’s call it Quick Book’s desktop. They’re old desktop software. And a faster computer would help solve that. Or maybe, in my example here, it’s you’re using a piece of software and/or maybe it’s buying them a better phone. Or maybe it’s buying them a better whatever. Or maybe it’s investing in a faster piece of equipment out in the field. And that faster piece of equipment’s going to save them 10 hours a week. So they’re going from a 36-inch piece of equipment to 61-inch deck and/or they’re going to a more efficient spray rig with a 600-gallon tank versus a 200-gallon tank where there’s waste in the day because they’re having to fill up that tank.
You can imagine any scenario where you’re saving 10 hours a week at some dollar amount, $16 an hour, $20 an hour, and this is for one individual. Imagine if your average individual $16 an hour, you’re saving them 10 hours a week, but I don’t have a per man calculation here, so let’s just saying that you’re doing this across five team members, so that would be a 50 hours a week to the company. You’re saving $41,000 a year.
Now you might look at this, say well if I … that’d be great. I’d love to save this time, but what would that individual do? There’s a million things this individual could do. If you saved this amount of time on a spray tech, for example, over the course of, across several spray techs, across just four spray techs, and you save 10 hours a week. And that may be a little bit of an exaggerated example. You’ve effectively made it unnecessary to hire a fifth. If you save each spray tech, four spray techs, 10 hours a week, you now could give the work of what would have gone to a fifth spray the tech, you could spread that work across the four guys you already have.
Or if you save somebody in your office 10 hours a week, that individual could now do some email marketing or they can make some collections calls. Or there are a million other things they could be doing where that work, that time that you saved them becomes productive. So this is an example of invisible numbers inside your business.
Even after you save this individual 10 hours a week, so you’re saving yourself $8300, you don’t necessarily notice it because what happens? Now that individual with the saved 10 hours just start doing 10 hours of other work inside your organization that should have been getting done that wasn’t getting done. Or you don’t even realize because you saved them time, you didn’t have to hire that next person as fast. So you don’t understand that you’re saving yourself $8300 until you look at this math. When you start looking at math like this, you start really calculating and thinking about how can I get savings here, here, here, and here so that we can become more efficient.
And that’s the game of business. So if you’re making a buying decision, all right. I’ll leave it at this. Let’s say you’re making a buying decision, and that buying decision is I could save my team member … we’ll go back to my mower example. By going to a bigger deck or a bigger piece or a faster or more efficient piece of equipment, if I could save 10 hours a week. Maybe it’s 10 hours a week across one individual. Maybe it’s across a crew. Whatever the case might be, but that 10 hours a week, if I could save that on an average $16 an hour team member, then I’m saving $8300. Now if you’re talking about buying a $9500 piece of equipment, how fast do you get your money back on that deal? You almost pay for that piece of equipment in one year. Just in the savings.
Or let’s say you’re thinking about buying a, I’ll go with software. I live in the world of software. You’re thinking about buying a free software solution or thinking about buying a $20 or $30 software solution versus a $100 software solution, but the bigger software solution, the one that costs more because it’s probably much more advanced, will save this amount of time. So which one really costs you more? If you go with the, we’ll go the solution that’s 20 bucks. And it doesn’t really save you this amount of time.
And this is where it gets challenging for you to figure out which one’s really gonna save you the time. ‘Cause everybody … is it gonna be for a cell phone, a laptop, a piece of equipment, a truck. It could be for a piece of software. It could be for anything. The challenge is actually in figuring out which one really does bring the greatest productivity gains. But back to my point.
What do most of us do? We make a decision based on the piece of equipment we can afford now. The truck we can afford now. The piece of software we can afford now. The whatever we can afford now. We don’t look at the return on investment. This is the return on investment. So if that thing that you could buy for cheap, let’s call it 20 bucks an hour, only saves you, hypothetically for my example, two hours a week. Then, in that case, you’re saving $1600. Or you could spend say $60 more per, we’re going with a month here actually, and save 10 hours. Then you save $8300. You’re talking approaching $6000 per year in additional savings for, in my example, what equates to about $600, $700 a year in extra cost.
That’s how you wanna look at it. You wanna look at what is it going to save you versus what it costs. And many of us simply look at the cost without spending the effort in our buying decision to understand the savings. The savings matters way, way more than the cost. This is true for every element of the business. And that’s why I call this a mindset shift. Whatever you’re buying, whatever you’re investing in, whoever you’re buying, think about it as a team member. If you’ve got a team member that is 10 hours less efficient than another team member, you could replace that individual and the new individual you hire is 10 hours a week more productive. By keeping the underperforming individual, you’re losing $8300 a week. I’m sorry, a year. You don’t know it. You don’t experience it.
And actually it’s greater than that, ’cause you have to actually multiply this number times your billable hours, not by the cost of the team member. And that’s a whole nother discussion. And so I hope I’ve done my job here to illustrate my point.
My goal was to communicate that you’ve gotta run the math behind the scenes and you can’t make any decision, whether it be hiring a team member on what they cost. Whether it be buying a piece of software, a piece of equipment, a certain type of cell phone, a certain type of cell phone carrier where you’re gonna have fewer dropped calls and fewer “I can’t hear you, hang on a second, I’ll call you back” junk. Whatever that thing is, you’ve gotta analyze which one’s gonna save me the most money and give me the most efficiencies and the most productivity gain. And you’ve gotta run the return on investment on that thing. That’s how you decide to buy. You never make the decision on a truck or equipment or anything based on cost. Make it on this.
And that’s the mindset shift. The companies that run this way are more efficient, more profitable. They move faster. They have more money to out-market and they have more money to hire the best people. They have more money to go recruit people. They have more money to pay people to recruit for them. They’re the ones that win. They’re not getting lucky. They’re just doing the right things.
I hope that helps. I’ll tell you what. If it doesn’t, or if I was a little long-winded, which I know I can get talking, or let’s just say I didn’t explain it clear enough. Post in the comments, because I think this is truly one of the most important things, and I’ll look at the comments and I’ll record another video if I need to, to do a better job explaining this.
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