#133: Increasing 30% year over year with no marketing? Will it still work?

Paid advertising should be your number one generator for business. Where most business owners get it wrong is they pump the brakes on this once they get too much business.
50 grand a month, does that scare you? Yeah, I mean, that's scary. Marketing is scary.
Like, if it's been revenue, I mean, my brain is like, oh, we can handle that very fast. Right.
But now it's scary, I think. Yeah, and if you're not used to doing it, it would it should be scary.

Right. We have two quadrants unexplored.

I'm curious to see like, hey, if paid quadrant two is the highest ROI, we've never nibbled at it.

Yeah. What does that mean? If we actually put a lot of our time and focus into quadrant two.

Right. And then back to Daryl's point, like it's a domino effect because we pay marketing to get clients.

But then those clients are going to do our same concept, which is referrals. Right.
So it really is a domino effect. So I am very curious on that.
Hey everybody, welcome to another episode of Next Level Pros. Today we have Carter and Josh.
They flew in here from Austin. Super excited to be diving in and talking about their business.
They're building a pretty sweet business down in Texas. Urban Oasis is the name.
It's a landscaping business, correct? Yes, sir. Yes, sir.
So thank you so much for being here with us too. Very excited to be here.
Kurt and I just flew in from Austin at a 4 a.m. flight uh yeah so we urban oasis we actually do design and build so it started more of a landscaping and we've built it out to do outdoor construction in general that's what it's uh at now excited to kind of see where it's going but over time started as landscaping and now it's outdoor construction and uh in big terms it's design and build nice so you So you guys are on pace to close out the year, right? We're sitting in December,

close out about 6.3 million. Is that right? Right.

Cool. And what kind of margins are you running on that business?

We're at 22%.

22%. So 22 net.
So for those that are listening and just understanding the difference, so net

is obviously what you take

home at the end of the day. You know, considering ad backs, you know, some of it's going into the inventory or whatnot.
Gross margins, what's your guess's gross margins right now? So we're closer to like 58% on gross. Okay.
So what I am seeing, I just want to Just check you real quick.

It looks like I'm seeing a gross margin of about 40%. So yeah, 58% cost of goods sold.
42%. Got it.
Got it. Gros margin.
Sweet. Sweet.
And so you guys have built this business. I know just kind of bootstrapped from, from the ground up, right? Yeah.
Yeah. Pretty much.
Josh and I are originally just friends from middle school and, uh, yeah, it's been a wild ride since then. We connected just through sports and our love for entrepreneurship.
Uh, we were super good friends in high school, played sports together there, started a mowing company, uh, at that point at that, uh, we went to college. So went to u chicago josh went to a&m and then covet hit and that brought us back home so we're basically just sitting at home like okay we've got uh you know 24 hours a day of time and we've got five hours of zoom calls going on a day we can put it on 2x speed and uh basically just have the whole day of opportunity so at point, I'm just looking into, I'm just cleaning out a closet at that point.
And I come across a bunch of checks from our old mowing clients and I just call them down the list. And I'm like, oh, hey, man, remember us? We did your line when we were in high school.
And I called 22 of them. One of them calls us back and says, yeah, man, I've got a pathway for you.
So at that point, Josh and I just load up my parents' car, basically, with materials from Home Depot. We don't know about this.
And we just basically go and install a pathway based on YouTube education and my parents' car. So, yeah, we do that one.
They're happy with the final result. We beg them for a Facebook review and say, hey'am, please post this to your friends.
We really want to do this. This is something exciting for our future that we could possibly carry on.
They post us. We get one other person to call us.
We go out there. We do a killer job.
They post us and we go viral. At this point, we get 50 calls in a day.
I'm out just doing what we do. I'm like, Oh, Josh, this is taking off.
And what are you guys doing at this point? Like what kind of jobs? Uh, this is just pathway work. So basically like installing, like installing just bricks to make a pathway, um, putting down squares of sod in people's backyards, just doing random.
And, uh, yeah, like I said, we had no background in this. We just wanted to be entrepreneurs and we were excited about it.
And yeah, people started demanding new services of us. And somebody says, can you do turf? We say, yeah.
Can you do masonry? Okay, sure. And we just start taking on jobs.
And like I said, the phone was ringing off the hook. And so we start calling our friends and say, okay, the first thing we need to do right now is get people on site to help us.
So we had a few of our friends that luckily were in the area that could help us out. We start driving around and find some contractors that can do stuff.
We're asking landscape suppliers, do you have anybody that you can point our direction? So the first couple of jobs, are you guys doing this on your own? Yeah, actually the first couple of years. I mean, I'm saying you guys are physically doing the labor.
And the first couple of years. Oh man a lot of work so beginning we were on our hands and knees spreading manure in people's yards with zoom earbuds in getting called on and i'm telling josh hey dude please turn off the bulldozer like i've got to answer this question love it because at that point to clarify we were still in school yeah okay i was in a and f he was in So while we ramped it up, Carter mentioned like, hey, we have so much time in our hands.
Sorry. So you guys, you guys moved back home because of COVID.
Right, right. So that's right.
Yeah. So yeah, right.
So sorry, I was off track in the beginning. So basically to restart that, Josh and I were friends growing up.
We went to high school together. Then we separated for college.
I went to UChicago. Josh was at A&M and COVID hits and they say,

you've got to go do online school now. We don't have a campus anymore.
So that's when I moved home. Josh moved home.
We're back in Austin. And at that point I was bored.
I was going through the closet, calling the checks on our old mowing clients checks. And that's when I was asking them, hey, do you have any work for us? So at that point, yeah, one person called us back.
We did that job. Fast forward five years, you know, we had gone through hell and back building up a team of specialists.
And that kind of brings us to where we're at now. So how many calls did you go through to get that one return? It was 22 initial calls and I got one guy and that job was 360 bucks.
And then that spiraled into... That spiraled.
And it was really lucky, honestly, because we just had really good vibes. Just, hey, we do good work.
I mean, we're just trying to be outside, really, because everything was indoors, and we hate being indoors. So we started doing that, and then what really kind of universe, anything that you can call it, luck, really brought us into this lady who posted it, and then that's what went viral, is her post.
And then at that point, when we had people calling, we people calling we're like well maybe this could be a real business but we still at that point didn't know if it was or not until we started actually like doing more jobs starting seeing a little bit more money come in we posted on our personal instagram was like hey who from who's here from our high school pretty much so we started getting people up what caused her post to go viral was she had a lot of followers or just a local person who had local friends that knew you guys? Yeah, yeah. So we were actually physically working on that job and she respected that we were outside on our hands and knees.
She happened to own a remodeling business herself. So I think she knew how to engineer the perfect review to get a lot of impressions.
And she posted on an app called Nextdoor app, which has an element of virality that others may not. And so it's all neighborhood driven.
So if one neighborhood hypes it up, then the next few closer neighborhoods get that post expanded to them. And so it went to 50 something neighborhoods.
And in those neighborhoods, that's where the phone started ringing. That's awesome.
Yeah, it's awesome. Year one, what did you guys close the books at? How much revenue did you get? So we actually started in summer of 2020.
So for those six-month period, it was about like almost $400,000 for the first six months. And then I guess if you would call that year one, that would be around that much because we only had the last six months of the year.
And at what point did you decide, hey, this is a real business and we're going to start working on it? It was kind of, honestly, natural organic growth that we first had. Because we were starting to see money at that point we've never seen before.
So we're getting $40,000 a month. And we're like, whoa, this is nice.
What else can we do with it? The more we grew was more people called, more services were into us. And Corden have always been entrepreneurs.
literally since i mean in high school we were 13 years old cutting grass instead of going to the mall so that whole time we've always had that back end entrepreneur we've had other businesses that didn't work with covid but in our head we saw landscaping not just like oh go work outside we saw like hey it could be a business how do we actually like make it into something bigger than that but at what point did you decide to go all in on it give up school give up those type of things it's probably maybe probably march 2021 really started really kind of cooking up where we're now hitting at that point maybe 80k uh per month and then we're having a lot of people come in so at this point maybe we have 10 people car drive still doing the labor and managing the jobs ordering material doing all that stuff but uh i would say that around that point i know exactly when we hit 100k on our first month which i think was may 2021 so it's our first 100k month when you're doing this i mean you guys are doing you guys are the salespeople labor the everything right right yeah so you guys are making quite a bit of this and just turning a profit that was probably our highest margins honestly at that point it kind of yeah over time we grow into a business but yeah at that point we're doing everything and then we would just kind of get people out there to help us actually do the jobs yeah i will say it wasn't an efficient process like we didn't have the best suppliers at. We didn't know how to sell jobs correctly.
And so there were elements of underbidding or undercharging or overcharging in that time. So it was all over the place.
It was super unpredictable. And say like that first three years, we had no idea how much we were really making until the P&Ls came out.
Yeah, for sure. So what point did you say, hey, we need more help.
We need guys that actually know what they're doing, or did you learn most of this just through trial and error, or what was your biggest mentors in building this thing? Yeah, it was a lot of trial and error for sure at the beginning, just knowing new services, I mean, not knowing. The first maybe two years was only landscape.
So it wasn't too much crazy stuff. I mean, it's not rocket science.
I mean, hey, put soil inside. Like we learned that on YouTube and it was pretty easy to do.
But I've always had a really good personality on like really like talking to people. And since I speak English and Spanish, I was able to like really navigate into like finding guys to like really know what they're doing.
So at one point we had two guys that really know everything about landscaping. Like they would that in their own but they didn't know sales so that's when we kind of started saying like hey this is a big niche especially in texas there's so much work some houses are huge over there so these guys know what they're doing quarter and i are always been entrepreneurs and that kind of merged us into like hey let's get new services how do we get that well let me talk to everybody so i'm always talking talking talking trying to find who does the right kind of serviced.
And that's kind of merged us into like, hey, let's get new services. How do we get that? Well, let me talk to everybody.
So I'm always talking, talking, talking, trying to find who does the right kind of service. And that's kind of where it started.
Very cool. Very cool.
So fast forward to December of 2024 right now, right? So you guys are pacing, going to be doing about six to six, three million this year, which is awesome.

Fantastic. Nice work on, on building that out.
What are, what are the biggest struggles that you guys are dealing with? How, how big is your team now? So our team right now, we have about 21 people that work with us. We now have architects, head designers, you know, accountants, finance managers, just a lot of internal kind of back-end team members.
And then we work with a lot of contractors and subcontractors. So on a weekly basis, we work with maybe 50 people per week.
Nice. So that's the amount of employees.
What are the biggest things that are holding you up now? I would say from my end, I do a lot of the admin work.

One is getting the right kind of people into the team.

We actually had maybe two or three hires that we just got into three months ago

that we thought were going to be a great fit.

But now actually seeing them implemented into the team, they just didn't work out.

So finding the right people that would stay because we wanted them to stay, it was as an issue being pretty challenging. Yeah.
And on my end, I would say it's the custom nature of our projects. Like it's kind of hard to scale whenever every project is so customized to the client's needs.
So, you know, if you're envisioning like a painting, right, if you can just stamp the same template painting over and over, that's a lot easier to create a lot of paintings than a custom painting every time. So I'm trying to find a way to standardize some of the processes and the projects themselves within Urban Oasis.
I think the commercial route is one that we definitely want to pursue. The maintenance route is one that we want to pursue.
There's a lot less interpretation within those sides. For sure.
I mean, there's a lot of different ways you can make money in that business, right? And so like really defining who you are, what you say yes to and what you say no to. So what are some things that you guys are currently saying no to that allow you to really focus on who Urban Oasis is? Two small projects.
That's one that we used to have a hard time doing. We used to just want every project that we could get our hands on.
That costs a lot of issues. $350.
Yeah, no more of those. Yeah.
What would you say is your smallest project you'll do? $10,000 right now. It's dynamic.
We kind of adjust it just on a quarterly basis or so. But yeah, right now it's about $10,000.
Last year, our average project cost was around $26,000, and we're trying to get over 100k into next year

and a lot of that is word of mouth like like we discussed earlier like you know if you do a really big project they're going to tell friends that are in that similar niche and same goes opposite so once we start taking on more larger projects we think that it's going to be easier to stay in that niche for sure plus now our infrastructure is able to hold that like we have now internal designers architects now we can incorporate pools into our projects which that's a huge revenue change for us next year uh that we haven't done anything yet on that so we're excited for that and then uh yeah on the challenges side yeah like smaller jobs have been pretty hard to handle just because of it's limited time that

we have now like hey there's a hundred people that are interested from that maybe a couple say yes but how many can we actually fit to carter's point like it's getting harder and harder to yeah we need another crew okay that means another truck another trailer another foreman we need more actual actual labor in the team.

So it kind of compiles into, you everything we expand then everybody needs to expand per crew because we manage everything on a crew basis so what what would you say the the five-year vision is for urban oasis like who who is urban oasis what do they do? How big are they?

Yeah, we actually talk about this and we have meetings with our team

to kind of always go over that and emphasize it.

But our biggest, biggest mission

for the next five years,

we do have like a one, three, and five.

But for the five year,

we want to be in 30 million revenue

is where we're targeting

and expanding to three states, 10 cities.

So that's kind of like our big picture plan on how to grow that. And then who we are in general, like we have a ton of really, really good reviews on.
The experience that we provide to the client is a lot different. So when we first started and the kind of answer the question is contractors in general, and I'm talking in Texas because because that's kind of where we're at has always been very like of a negative connotation where no one texts you back you have to text three people and then only one answers and then they show up late our whole whole entire mission since we started which is why we really ground has been our communication is literally on point every time if we say hey our eta is 105m., we show up literally at 1.05, and we're there on time.
We text the clients. We're always there.
So the whole experience they get from, one, that communication, and then, two, the team that we actually, like, are growing are all very similar to us. Like, we all have very similar values.
Our energies are the same. Very clean and percentable, as always, we try to do.
So I feel like clients, especially high-end clients are feel really comfortable us being in their house for two months i mean these are very wealthy people they have their kids there they feel safer with us uh in that kind of context so on the big big picture is 30 million in revenue getting to 10 cities in states, and then always providing a full design and build experience where the whole time the client knows, hey, these guys got my back. So that's kind of like who we want to portray at all times.
So when you say 10 cities, is that like 10 different locations physically? Right. Right.
So 10 cities. Yeah.
I mean, right now we and san antonio and then dallas is on the works uh we actually have a couple of jobs lined up that i'm actually going to go do myself in dallas uh just to kind of get the infrastructure kind of set up but yeah it's cities right now but so texas right now so so question for you i mean i i love i love the goal of 30 million or whatnot. Like why so many cities? I mean, at that many cities, it's only 3 million per location.
Right. Yeah.
That's kind of a question about market share, right? Like that we've had is do we want to grow three locations to 10 million or is it easier to grow 10 locations to 3 million? In our experience, the climb to 3 million was a lot easier than the climb from 3 million to 6 million. And that's a lot of a result of partnerships that we have.
Like we'll work with different home builders or design companies or whatever it may be. And we think that we can establish that group relatively quickly to get to 3 million per location rather than trying to build this out.
Because we've talked about it for sure. Like do we try to build us into the 30 million goal? It's possible, but it's going to be super challenging.
So that's kind of the logic there. We are open-minded though to deviating from that.
We're brand new in San Antonio. We're starting Dallas here pretty soon.
And so as we take root in those areas, we're just going to... So what do you view as the negatives of doing this strategy of going to 10 locations? Definitely the hiring and training is going to be a super tricky one.
I think establishing a reputation is easier said than done. A lot of these partners are nationwide and so we are banking on that a lot for this strategy.
So hopefully our reputation kind of progresses with us in these locations and these relationships do stand, but something that's going to be tricky yeah it seems like your your customer is like a one-time customer most of the time yeah yeah we have i think we calculated roughly maybe about five to ten percent of the clients come back for phase twos but since we are a full design and build you do your job and then i mean you're not gonna add a second pool to your house or a second deck and outdoor kitchen. So usually clients either are one-timers, they do the entire thing or they're like, Hey, my master plan is this.
We designed that for them. And then we do like, Hey, phase one this year, they kind of save, get the budget up.
And then we come back and do phase two. But in general, it's only one master plan per client.
How are you guys getting most of your new clients? It's word of mouth right now. Yes, we're going to launch a marketing team.
Well, we've started it. They're just kind of compiling data on what the best marketing sources are going to be.
But we're actually going to allocate a budget starting January. And what percentage are residential versus commercial projects? It's probably an 85-15 split.
85% residential. Yet you're not doing any marketing.
Correct. Right.
So a lot of the other kind of clients do come from a lot of partnerships that we have. We have really good partners who are designers, custom home builders, pool companies that don't do landscape.
So we do kind of integrate with other companies. And then we're kind of now their go-to for like, hey, I just designed a beautiful $3 million but they don't do the landscape they only do the house right so they're like hey urban oices come in do everything outside get my coi and then kind of be good cool well let's uh let's jump over to the screen share i'm going to share a couple things just based on what you've uh shared with me so far just to better understand so back behind you i I got it set up.
So like right now, you guys, so tomorrow we're actually going to be doing a little bit of a workshop, right? So you guys are in town. We're going to be covering a marketing workshop in which we dive in.
And so you guys, you guys are hanging out a lot in quadrant three and four of marketing. So quadrant four is referrals.

So there's essentially four different types of marketing, right?

So you got organic, which is quadrant one.

You got paid, which is quadrant two.

Quadrant three is affiliate. Quadrant four is referrals.
So you guys are basically all your business is affiliate and referrals. Is that correct? Right, right.
And so, I mean, affiliates are fantastic relationships. Now, depending on what industry you're in, those can sometimes be more expensive than, you know, because you have to give like some big discount to a builder or whatever it may be, right? And they don't want to do the project for your typical high-end stuff.
How much of your stuff is for builders right now? Maybe 10 or 15 so not huge no not huge we try to diversify we don't want anyone taking a big chunk of that right so a lot of your affiliates you said are just design companies what else full builders new home builders yeah i think that's the primary buckets nice nice and referrals, what percentage is coming from referrals? Probably 40%. Maybe not necessarily from referrals.
I would say the 40% is just our online presence in general, people going to the websites, people telling their friends or Google reviews, whatever it is. So when I think about your strategy of getting to $30 million, I think what you're saying is correct, that the first 3 million is pretty easy to get to with your current strategy from a marketing standpoint, right? Because you have like this established bucket of affiliates that you know that you can go and to get the low hanging fruit up to 3 million per location is probably fairly easy.
Now, the cool thing is, is like you have all these other avenues to be able to go and market that you're, that you're missing out on, especially if 85% of your business is to end users, which is B2C, right? Directly to the consumer. You said 85%? Right, yeah.
Right. And so there is a huge opportunity.
Right now you're in, you said what, Austin and where? In San Antonio. Austin and San Antonio, just those two cities.
Correct. Right.
Okay. And those are, you know, what, an hour away from each other? Mm-hmm.
Yeah. Hour and a half.
An hour and a half, yeah. Okay, got it.
So Austin san antonio what's the population of austin god so well now with the outskirts so it is austin and a one hour radius yeah so that compiles like a lot of cities not just austin just to clarify yep but yeah maybe 1.2 million okay tony's even bigger get chat gpt that for us though let's let's see what uh what they've got so population of uh austin metro and population of san antonio metropolitan be interesting to know so you know when i so when i hear 1.2 million and you know the target is only 3 million per location i think like man there's there's a lot more a lot more opportunity especially if you can figure out how to market and sell to these people. And the downside, I know you talked about downside of having 10 locations is like training and different things like that.
But I'll tell you even more is just straight up overhead costs. When you're talking about locations, you have to have manpower at every single location just for it to exist.
And overhead, the downside of overhead is you pay for it regardless of whether or not you make sales. Right, right.
And so every single location adds drastic amounts to your break-even, right? And understanding your is so so so important like for example how much how much fixed cost do you have that you have to cover every single month right now do you know yeah break even and actually we got this from daryl that we started like really analyzing our break even we're at about 279k 279 000 that's for us to break even okay right

so in revenue per month we have to hit 279 to be at i get zero profit okay got it got it so city wise we're at 2.47 million in austin and 2.7 in san antonio so how much in awesome 2.5 and 2.7 2.5, 2.7.

And that's all Metro?

Those are Metros.

Right.

Yeah.

So first of all, that's good news. Good news.
You thought it was 1.2 and it's 2.7? Check Austin, Chedubiki. I'm sure it's that.
What's that? Check Austin. Oh, that was 2.5 Austin.
Or like Austin Austin, by itself? Oh. It should be close to that one.
Right. But Metro is what you cover, right? Right, right metro is what you cover right right yeah it was what we cover yeah i mean we're not on here to say hey gotcha but like to understand right right well why is the market cap right yeah so i mean two and a half million people right like what you guys are currently doing is essentially a dollar a person right now and so the the question is is how do you get that up to you know three or four bucks a person across across the board and and really just understanding like what it takes to get there right um but yeah like uh so you said you're at 270 000 on your on your on your break fixed yep okay i think too uh you know i'm not saying you guys should do one or the other because it's up to you guys but um you know when you start to spread yourself out into multiple markets when you have more when you can go deeper in the current markets you're in it kind of sets you up to like spread out your mistakes in in a way that are harder to identify where like when you have fewer, you're able to clean up your systems and really identify what's working well.
Cause it's awesome to have multiple markets so you can kind of compare them against each other. But when you start adding them, right, if you could go deeper, you would, you would end up having better margins, as well as better systems and processes.
And since you guys have such a good name brand, it gives you more control over building that brand as you go deeper into the current markets you're in. For sure, for sure.
Yeah, that's such a good point. And the reality is, even though a lot of your customers are one and done, with the average customer moving every seven years and most move within their same metropolitan, right? Like that amount of re recurring revenue is, is actual, you know, a, a real thing for sure.
Um, you know, and the thing I've learned in entrepreneurship is like a lot of times we make decisions based on ego. Uh, I don't know if you guys ever find yourself in that camp.
Maybe. It happens.
You got us. So let me just tell you some of the mistakes that I made early on in entrepreneurship was I did things to impress other people.
Locations, that sounds cool, right? More locations. A lot of times when we're very egocentric we'll do things based on more locations than more money right it because it sounds bigger it looks cooler right like oh man here i am interstate you know i'm going to fly into my location up in wherever you know it is and so a lot of times that that type of uh mentality really taints our decision making uh it instead of making decisions that are best for the business we make decisions that are best for our ego you guys ever find yourself doing that i think maybe naturally yeah i think it happens right like i mean we just keep progressing and then we're reaching the investment so we've i mean never seen or had experience with so i think i could see see that car and i have never had like issues with like i mean car and i both worked on in our hands and actually did the work ourselves like everything we've asked people do we've done in our own kind of landscaping company yep and in general like i mean landscape doesn't really sound too cool but car and i and I never really cared about that.
Like we're very low key, honestly. A lot of people know what we do for sure.
Uh, but I could see like, yeah, it does sound cool for our team to say, Hey, we're in 10 cities. Oh, for sure.
And me and Josh like to have those conversations too. Like, Oh yeah, we're flying out here for a podcast.
This is awesome. Or like whatever conversations we have that have to do with entrepreneurial benchmarks.
And I think this is one of those maybe like, oh yeah, we have a huge team. We've hired so many

people this year. This is awesome.
And it's more of just like scratching this itch as entrepreneurs

that we've always had. But I think we could definitely hone that in and check that box

while also doing super meaningful targets. Like if we switch it to revenue instead of

number of locations, I think that would do the same thing.

Right. Do you know what the compounded annual growth rate is going to take to get to 30 million? Have you calculated that? Mm-mm.
Yeah. Chat your PT on that one.
Well, and what I mean by that is like, so you guys have grown 25% year over year, right? Until just last year. Just last year.
It's been 75 since inception. Okay.
Okay, so it was 75 since inception, and then it was 25% this next year. Do you know what it's going to take for five years to grow to $30 million? No.
40%? So I think it's a little bit less than 40 percent but like uh daryl's calculating here real quick but um the the important thing to understand is like just picking a number out of a hat is like you don't want to right like uh one of the things that we that we teach in creating like a vision and direction for the business is not only have a big number, but have a roadmap of exactly how to get there. You probably heard me talk a lot about this.
Yeah, that one's good. And so like with that, you have to have details like, okay, what does the annual growth rate have to look like? And what does it take to be able to grow at that percentage? What do you have the- 38%.
Okay. So it's like a a 38 growth and so right now you you've experienced a 25 so what changes do you have to make in your business to be able to scale at 38 which is you know close to double what what you guys did this year what right i think how we did it i guess in our own brain and what kind of made sense we analyze and say hey what have we done that's what we're using as hey this is what's true how we did that is saying hey per one city and we did it all by cities and that could be locations or however we i know we talked about maybe doing south austin north austin but to three million we can get to that how many of those can we do per year and then if we do that in five years how many cities could we accomplish right that's kind of how we ran the math it wasn't really like hey percentage base i guess of how we're talking about it so we just said hey with what we have and what we've done in the past can we replicate that concept right so that's kind of how we did it in our own heads uh and that's how we did the math on the 30 million.
So because the math makes sense, right? And that's a simple way to look at it. I think what's challenging though is when you start to scale your business with that many employees and that you start to find things that are a lot harder to manage at that level to get the same profit, right? We've had a lot of people where they're three times the size they were, you know, three years ago, but they're making no money because they skilled and their expenses were kind of out of whack because they're spreading themselves so thin.
Now, once again, there's ways to grow without doing that. And that's where going back to what Chris says, having this five-year plan where you really think through your skilling process.
but so there's there's a few things that you have to make sure that scale. One is like your pay structure, how you actually pay, and then your management and what it's going to take to manage that kind of growth.
Because to Daryl's point, growth requires more management. Just because you can do $3 million in one location when you have 10 locations doing three million that's going to require a whole lot more management than you know right you can't pass the management yeah that's that's a good point and i guess in our heads like we've never been tied to something like if you had this conversation with us two years ago we probably would have had a different answer right so we're also not super attached especially like yeah us and i working with with chris and daryl like also through the uh program i'm with you guys has really changed like our approach so we've never really been then tied down to it our big concept is just saying hey how do we make landscaping a real business and a kind of corporation not just like hey go do yeah go do grass i guess i think too one thing that i think i i see in this is like if you guys can get your businesses to 10 million a location and scale that you're probably you're you guys are worth a ton of money right and i think i think finding a way to like make your business go really deep into each market and then be able to replicate that is going to be significantly more valuable than just being able to pick up just the cherries on top.
Like the low-hanging fruit. Yeah, the low-hanging fruit is only so valuable, right? Especially if you're...
Just one thing, too, on our side. Like I said, this conversation just in general has grown crazy from when we first started to where we're going.
Yeah. Because right now, like cars closing, hopefully like a huge deal that we've never really messed with on the commercial side, which we know how to do it.
I mean, we've done commercial, like it's just the high ticket price, which I guess would be like the higher end in fruits. If we do that, then next year we might already be in 12 million in Austin.
Right if that does hit right so how do we also calculate that we're just kind of going with with the curve i guess yeah yeah and and so i mean that brings up another another topic it's like what you are and what you aren't right like and maybe this is what you are right the these these big projects or whatnot but if it's not the thing that you specialize in, like what do you specialize in? And so because, I mean, money is made when you create a specialty and you are the go-to location business for that particular solution, right? Where when customers think of your company, right? So when they think of Urban Oasis, what is Urban Oasis?

It can't be like jack-of-all-trades, everything in landscaping.

It's like these guys specialize in doing X.

Right.

Yeah, and that's something that I think we've had a bit of a challenge discovering about ourselves.

Because as we start projects, one thing leads to another. And eventually someone's asking if we can build their house.
It's like, we got to draw the line somewhere. Yeah.
And I think where that line is, is outdoor living spaces. So we want to be a one-stop shop because there are a lot of people that pay for convenience in this world.
You know, you want to be able to go to a restaurant and order your whole plate from one restaurant. You don't want to, you know, a la carte from different places.
So we're kind of that for outdoor living spaces. We're not going to, we don't have any plans to do any of the major construction stuff, but there's not really any limits to outdoor living space projects.
So to Josh's point, like these huge seven figure jobs in the pipeline, we'll take them because they're all just turnkey outdoor living spaces. Yeah.
Right. Cool.
And as long as you feel like that is simplified enough, then, then go for it as Josh, me and you talked about before, you can make money doing anything. Literally, the biggest challenge that we have, for those that are watching and listening to this, as entrepreneurs, is saying no.
right like if we because we can see value creation in anything right like i look at this desk and i'm

like is saying no right like if we because we can see value creation in anything right like i look at this desk i'm like wow if i actually owned the countertop company and i oh and i could uh hire a few guys to be able to create the the actual woodwork of it and i could own the painting company as well that comes in and does the work and oh and this is you know i mean there again there's opportunity in everything there's opportunity in creating cell phones there's opportunity in selling water there's opportunity in uh you know being sound producers whatever and so just really understanding exactly what makes urban oasis different than everybody else and not just a one-stop shop.

I think to add that too, it's like, what is more, right? A lot of times, like we see something and

it's more than we thought. And so we're like, okay, what's next? What's more? And the catch

or the challenge is more locations. Is it employees? Is it profit? And sometimes that

more that we're searching for is kind of off the mark of where we started and all of a sudden yeah you do have more of a business and you've got all these locations but you could be making way more money and you could have a way better lifestyle if you were to go deeper if you were to focus on your systems if you're focused on um you know the things that really drive your business to to

change and morph into something even bigger than you imagined i mean i'll give you daryl kind of hinted at this a little bit earlier but i mean one of our uh there there's a guy in our community where you know they did 100 million last year and net ebitda uh they were they were like 1.2%

and like cash was like

0.6% or something

so net EBITDA, they were like 1.2% and like cash was like 0.6% or something. So like 600 grand on, on a hundred million dollars.
Right. But if I were to ask you, like, would you love to do a hundred million, have a hundred million dollar in revenue business? Not that one.
Heck yeah. That would be a hundred million is awesome.
But then it's like, well, what profit do you get? Right, right. And it's interesting, if you run a highly profitable business, if you can figure out how to net out margins of 30% on 10 million bucks, that's a whole lot less work than running a $100 million business with a fraction, a fifth of the profitability.
Totally. And so going back, I think just from a practical standpoint, you guys have an incredible opportunity to dive into organic and paid marketing within your markets.
And when we're talking about going deep, that is the place. Most people do not compete in the paid space or compete well, right? Most people hire out their marketing, right? They bring in an external agency.
They don't understand their strategy. So they hire somebody.
They say, hey, take this off my plan. I'm going to pay you X amount of dollars to be able to get this done.
They don't really know exactly how they're going to be able to bring in new clients. And so then that agency, which probably doesn't know a whole lot about their business or industry or whatnot, they attempt it, they get a little bit of return, but since there's not good tracking, you know, the business is like, well, I don't even know if I'm making money off of this, right? Like that's literally most people's paid strategy.
And so what I would encourage you guys do and obviously you're here for tomorrow right we're going to be diving into uh this specific uh these specific topics like how do i uh hit all four quadrants right the organic the paid the affiliate the referrals and so because paid is typically where you can get the majority of your market penetration, where you really get direct traffic tied in, whether that's pay-per-click through Google and inquiry-based type stuff, or that's Facebook or YouTube or TikTok or whatever else. Like you guys have a really cool way to go and get paid.
Because first of all, what you guys do is the stuff that goes viral on organic and paid platforms, right? Like befores and afters. Like, I know we love those.
I mean, people on TikTok a while back. Yeah.
So, so you did a little bit organic. The problem with with when you go when you go viral on like an organic type thing is it doesn't hit any of your target audience right now now all of a sudden you got somebody in africa that's sweet before and after and they're like oh man cool stuff can you do uh you know a 200 job for me in south africa i don't think so yeah and so like although organic's good paid is different right because you can target your audience you can be able to get the exact ideal client profile we call an ICP right and so when I'm looking at your guys's business like 85 residential no paid you're doing zero paid advertising right now.
Is that right? We're doing some experiments with it. I don't think we're getting much result.
It's more teeing us up for January when we have a real budget. Yeah, less than a thousand a month right now for sure.
So you're spending less than a thousand bucks a month. Yeah.
Right. And so where a business of your size should be spending anywhere from like 5% to 10% of your total revenue on paid advertising.
And so, I mean, you can do the math of 6 million, like at 10% or let's call it 5%, you're spending anywhere from 300K all the way up to 600K, which is how much a month? $150,000. $25,000 to $50,000 a month, right? So you guys are, you know, 2% of where you should be, right? Of like your total spend.
And so like you have an incredible opportunity. And the reason I bring this up is because right now you're formulating strategy of three states, 10 cities, 30 million, without ever really exploring the number one thing that should be driving your business, which is paid advertising.
But first of all, congratulations. The fact that you guys have been able to do it through affiliate and referrals, I think a lot of companies suck at that.
Yeah. It actually sets up your company for having this ability to trial in the air and not have to worry about your business falling apart if it doesn't work, right? All right.
That's a good point. Do you guys have a runway that most people don't? You've put into hard work and now you have a company that offers a good product because people don't get referrals based off of crappy work so you really have everything stacked in your favor to to really figure out the organic and paid side which from there like upward and onward right right yeah that's actually our plan because we've never really explored it like what you're saying like hey i mean if yeah we're soon be spending 30 to 60 or whatever 25 to 50k a month right because next year hopefully revenue goes up then yeah where can we go i mean that's what i was saying like we just it's hard to plan when it just changes so fast because what if that quadrant two pushes more than quadrant four right which it should right like paid advertising should be your number one uh generator for business right because you in most where most business owners get it wrong is they pump the brakes on this once they get too much business right instead of growing the operations or doing the things that to be able to fulfill on that they they pump it they get scared they see the numbers They're like, oh, that's too high, right? Like 50 grand a month, does that scare you?

I know. Yeah, and if you're not used to doing it, it should be scary, right? But once you understand the science of it, they're like, okay, if marketing is 10% of my revenue and I'm doing, so what I'm looking at here on your financials, I see actually only 1%.
You're spending 50K, it says advertising and promotion. So what does that incorporate right now? That might be like yard signs and flags at our shop and stuff like that.
Right. Which is part of marketing, but it's more branding related rather than direct marketing is what we call it.
But like, you know, so you're spending about 50K a year where it should be, you know, 600,000. But the cool thing is like when you dial in this budget and really come at it from a scientific approach, you'll start understanding that for every $1 I spend, it's going to equal $10 in revenue, right? And so if I go and I spend another $500,000, that means I'm going to get another 5 million, right? And so obviously any business owner in their right mind, they want that.
Right, right. So what's the percentage usually from paid marketing? Yeah, that's a great question.
So your marketing should be, and I would say, and sales. So marketing and sales should be a total of about 20% in these type of businesses.
And so usually about half of that is attributed to marketing and a half of that's attributed to sales, which I know you guys don't have like a huge sales team or anything built out either. Right.
So maybe that's another thing because now, and that's another challenge. Okay.
Yeah. Let's try that.
But then what do we need? More sales guys. Right, right.
We only have three people right now that do that. So what do we need for that? So when I see this business, I get stoked.
I'm like, 30 million, let's do that at one location. Because those two things, those drivers, marketing, and having a high-performing sales team, all of a sudden, you can flip this thing on its head, right? Because you can be generating sales in a variety of different marketing methods.
You could be doing organic door-to-door sales where people are going out and looking for quotes, right? By going door-to-door, you can do paid advertising. You come in, you close it across the kitchen table, or you do virtual.
I know we've talked a little bit about like virtual sales and those types of things and getting like real high ticket closers in, in the room. Cause right now your, your sales department consists of who? Uh, yeah, me, Josh, and we've got a two other sales reps.
Yeah. Here's, so here's the great thing too, right? Let's say you start pumping up the paid advertisement.
What also comes along with that? It's the referrals, which you guys are already good at. Right, that's a good point.
So by increasing your paid advertising, if that became one of your biggest pieces, your referrals are going to tag along with it. And so you're going to increase your referral business as well.
Right're out of two part lane that lead. Yeah, that's a good.
And the other thing to consider here when we're talking about 10 cities is guess who doesn't scale? Me and Carter. That's right.
That's right. And so, you know, although it's been easy up until this point to get $3 million in sales per location, you've had Carter and you in basically every single location.
You guys don't scale, right? Like your team can scale if you have good systems for recruiting and training and everything else. But the reality is, is you're not going to get the same type of production as you will from an owner that's sitting right underneath their nose.
And so like, these are all things that you have to consider, especially when you're talking about like multiple locations, but man, huge opportunity from a marketing and sales standpoint. But also this also goes back to like, I mean, all this is tied together from like creating like a five-year plan way that you have your offer dialed in.
Because if there is not enough margin to be able to spend 20% on sales and marketing, you don't have a scalable business. And so then it goes back to, okay, what am I charging on the top line basis? Because right now, from a percentage standpoint, you guys are charging 100%.
You have 58% COGS, right? Right. Which means you have 42% gross margin, okay? If I have 42% gross margin and I go and I allocate 20% to sales and marketing, and then on top of that, I see you guys have like 10% to 15% in everything else, right? What does that leave us with? That only gives us 7% net margin at the end of the day.
Right. And, you know, which for a traditional construction business, that's very accurate, like 7%.
The reason why you guys have been able to maintain a higher percentage is because one, Carter's doing all the sales, right? And you're not paying a big sales team and everything else. And so it's like, okay, how do we restructure this that allows us to still hit those targets of 20%? And so what do I need to do to my top line numbers to be able to be priced in.
Yeah. Have you guys thought through a lot of this?

I think for us, one thing that we've always struggled with,

and we actually hired a couple of people to kind of help us mentorship side and just like more finance oriented,

is we've noticed revenue per month dictates that margin a lot

because at a certain benchmark,

I guess it's similar to maximizing our current team because I feel like our current team can still manage say upwards to like 700 so if we did that even adding the 20 i feel like it would still be a higher margin than what it is today yeah once we kind of pass the highest maximum point then yeah maybe it is charging higher prices we're just kind of like stuck in that point like at what point yeah so you're you're referring to more like utilization right like utilizing your fixed assets or your fixed labor which is like you got this management in place or whatnot right like if we if we maybe had the same team better systems and do say 700k a month then our margin would instantly go up already yeah that's the other thing too on your that's kind of like a on your financial you guys are doing cash basis right yes cash basis and i think one of the things that would really help you guys know your numbers better on a month-to-month basis is going accrued because then you're assigning the the revenue with the work cost right the expenses are tracked directly and, I mean, we were same thing, right? We started off doing cash basis. I mean, for a long time, it was like, as long as we had money in the bank account, we kept going, right? Yeah.
No, I agree with that. Yeah.
Because we're trying to create this bell curve of revenue to profitability, right? Like, okay, when we have too little revenue, we're not going to make any money. When we have just right, we're going to make a lot of money.
And when we have too much revenue, we're overutilized and we don't make money again. So assigning revenue targets to that profitability level is going to help us set the right numbers of revenue going into the next year and maximize that.
But to the pricing question, yeah, we have also experimented with raising some prices here and there just in small samples just to see how it impacts conversions. Generally, it's unaffected.
So yeah, conversions kind of stay the same with that. So it's something that we might look into, especially because right now we're kind of- Sorry, you're saying that as you increase price, it doesn't impact your conversion.
Right. Definitely not proportionally.
So if we increase price 10%, we're not losing 10%. Right.
Which is perfect. And perfect.
Like, and, and that's a, that's a key thing for anybody to understand that's watching this or listening to this is just how valuable an additional dollar is to the business owner versus the customer, right? Like using this example, coming back over here to the, uh, uh, to the whiteboard, where if it was a hundred dollars and you're taking home, uh home 7% at the end of the day, if you go

and you charge the customer 101, you've increased their price by 1%, right? And your 1% goes directly

to the bottom line, which has increased your net profit by 12%, right? So I mean, it's just such a

drastic difference. Totally, totally.
So yeah, super excited to continue implementing that and maybe make it our standard. I mean, especially because we find ourselves or we perceive ourselves to be high value landscaping company that's offering a lot more than the market average, yet we're priced similar to the market average.
So it's to us kind of justifying, we just need to become comfortable telling customers, look, we're more expensive, but it's because we have these offerings that others don't. Yeah.
Yeah. And this goes to one of the core strategies and principles that we always teach that you don't have a true competitor.
A lot of times when we go and we look at the marketplace and we try pricing according to the competition out there, we make poor decisions for our business versus actually doing what's best for our business, backing it up with the actual financial strategy and saying, okay, this is the structure that works and this is what we're going to charge because we know that the market, one, will absorb this, they'll accept this, and two, this is the numbers that we need to be able to make our business work. I think also too, you got to realize there's so many businesses out there that don't really offer good quality because they can't.
They can't afford to, right? They can offer the product that you asked for and that's it. And so having the margin to give the best product you possibly can, customers appreciate way more, right? And I think you guys already deliver something above the market, which is why you guys get so many referrals.
So just charging for that. Now you start to do all these marketing tactics, some work, some don't.
Right. So it's costing you, but the other end, it's like, you guys have the profitability to be able to bear those costs.
And so it just, at the end of the day, makes you a better company down the road. Based on, based on us saying, just kind of this discussion, what do you think, what are some mental changes or even some things you're like, I need to implement that? I think for me personally, the biggest one I would definitely say is the 10 cities.
Yeah, sounds cool. I feel like definitely changing the mentality of what that means.
I guess it's more revenue oriented should be your goal. And then how do we achieve that by dive deep into what we have? It does make a lot of sense for us to probably be in maybe three cities that are very close by, which would be probably Dallas, San Antonio and Austin.
So maybe like being the best in Texas is better than being okay in three cities or three states. So I feel like for me, just talking on this conversation, like really knowing what goals should be based on data or like logic instead of just like numbers out.
Here's a reality. What if you accidentally get there way quicker than you realize? And all of a sudden you're doing 30 million in Austin.
You're doing 30 million in San Antonio, then all of a sudden you have you have a ton of money to go and scale this thing even faster right and so that's that's kind of the the catch-22 is like you might actually be able to scale faster into 10 cities by going deeper oh i see what you're saying yeah that totally makes sense yeah i'm kind of on the same vibe as josh there i want to see how far we can take austin based on this conversation and create a good infrastructure that we can just kind of copy and paste. So maybe bringing Austin to 10 to 15 million and kind of reevaluating the structure.
Is this sustainable? Is this working really well in Austin? Okay, let's take these exact same positions and hire them into different cities and build that city now to 10 or 15 million or whatever it may be, 10 million, 30 million market allows i mean also we're super blessed that we have in texas being crazy right now with a bunch of people moving into the city becoming one of like the biggest cities in the u.s you guys are thinking uh uh governor uh newsom huh thinking uh elon now being all the now all the people leaving california and the oh yeah that was huge definitely in 2021 that was everything it's like i think yeah half of our business came from from californians coming into texas literally yeah so what i what i'm hearing you guys say so i have listed on here i so really like re-evaluating the map of what it what it looks like to get to 30 million Yeah, it might be easier if we're saying that we have two quadrants unexplored. I'm curious to see like, hey, if paid quadrant two is the highest ROI, we've never nibbled at it.
What does that mean if we actually put a lot of our time and focus into quadrant two? And then back to Daryl's point, like it's a domino effect because we pay marketing to get

clients but then those clients are going to do our same concept which is referrals right so it

really is a domino effect so i am very curious on that which we've never explored we have since

uh we've been working with you guys we really like dive deep into like not just our own personal

knowledge that we have yeah we're just like trying to put ourselves back and say hey i mean yeah we

i studied entrepreneurship in a&m but i mean they taught me some stuff on books. They've, no one has taught me anything based on like actually growing a business besides you guys.
So appreciate it. Excited to see that.
That's a, that's a good testimonial. We appreciate it.
So, so I have, I added, so I have go deeper, basically deeper per location, then implement a paid

marketing strategy.

Right. And so I think, you know, those, those three things, you know, just addressing those could, could, you know, drastically impact the business and the direction that you're going to be going.
And so appreciate, first of all, thanks, thanks for your time, but thank you for the testimonial. So wrapping it up with the end of this episode, can you share with guys what you've been able, how being a part of Next Level Pros and part of our elite group and how that's impacted your life? Yeah, yeah.
It's been a crazy journey because I've been listening to it for a long time and then super lucky and blessed to be now part of the inside of the group and i guess the biggest thing that i've learned personally i've been the one kind of exploring i have always been more of the explorer and carter's more like structured i'm always like everywhere he's like keep it linear and clean but yeah on my end is just like one talking to people that are done what we want to do is one having mentors is extremely important saying hey can i just talk to somebody about it because right now like car and i just talk about it but both of us are in there i guess in the same level echo chamber right echo chamber so yeah so yeah having that kind of like guidance mentorship is a big. And then having specific things of like,

hey, do you even have this?

And then knowing what that actually means.

Because in our head, we go, oh yeah, marketing.

We think putting signs out is marketing,

but that's not even the tip of the iceberg, really.

So I guess understanding fully that and being part of this amazing group,

just seeing real change and outcome really motivates.

Starting our culture with our own team

and seeing the team respond back to it,

Thank you. Just seeing like real change and like outcome really motivates like starting our culture with our own team and seeing the team respond back to it just kind of keeps making me want to do more about it.
So love it. Yeah.
Those are probably the biggest things right now. Culture has been my number one focus and it's been amazing.
So awesome. Tell us a little bit more about that.
What are some things that you learned from our community that you've impacted on your your culture so i guess the biggest thing i've learned is just saying like hey who is urban oasis on outside facing and inward facing we've always really pushed on like hey urban oasis to clients is like this clean perfect communication best outcome on their design and build but we haven't really focused too much on the inside team which now like every time i talk to some of the guys on the team it's just like work related i don't even know about their like family some of them are getting married having kids and now like everybody like knowing each other on outside of work has really like made us tighter and then the second thing is like having people knowing our mission vision our core values like that's something i just integrated maybe three months ago and now like every time we do our meetings or google meets now the employees know it and probably the coolest thing out of everything to wrap it up is i have had i have an executive assistant who now helps me like i guess employ new people and now he's pitching what i pitched him which is the same core values the mission statement and division also now people like saying that like without me even saying it was like awesome too so cool like having a nice little uh replication of yourself right right so i was like dang that's cool like he's like now me i love it i love it that was awesome to see well appreciate you guys jumping on the the show you guys have been incredible being here and for the listeners and those that are watching on youtube make sure that you like comment subscribe if you have any questions we are more than happy to dive into them just leaving on the uh the comments in the comment section and as always for those that are looking at getting more from the Next Level community, go on over to GoNextLevelPros.com.

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