Ezra McCarthy
Hello and welcome back to the Lawn Care Blueprint. Today we’re gonna be bringing part two of our series with Jonathan Pototschnik, owner of CityTurf in Plano, Texas, also the founder of Service Autopilot. And if you haven’t listened to the first episode, I’d encourage you to go back and check our great conversation.
Last time, Jonathan dropped a lot of value on the podcast and so we just broke it up to make it a little bit more easily accessible. And so no doubt you’re gonna get a lot more value from today’s episode.
Welcome back, Jonathan. You mentioned profitability. So as you begin to scale, it sounds like you weren’t taking a whole lot out of the business. And sometimes it’s interesting what I hear from people is they say, well, I’m investing everything into the business, but what they may not realize is they’re just kind of have a bloated budget with a lot of waste.
So how did you grow? And did you use debt in that growth? If so, why yes or no? And then how would you recommend somebody finance their growth? Because obviously growth does take cash and to grow effectively and possibly even quickly.
Jonathan Pototschnik
Yeah. No, we didn’t use debt. I financed three trucks and they were cheap trucks. They probably were paid off in a year and they didn’t even have to be financed. We just financed them because I was keeping the money free for marketing. We ran a really lean business. So I, I feel very strongly that we ran a very well run business from the big, pretty much from the beginning. And the reason we weren’t making any money and the reason why we weren’t taking any money is because for two reasons: If I remember correctly, we were spending 25 % of our revenue on marketing and that lasted for quite a while.
Ezra McCarthy
Can I pause you there? Are you talking about gross revenue? Most people… I agree with you, but most people are gonna squawk when you tell them 10%.
Jonathan Pototschnik
Yeah, gross revenue. Wow. Yep, that’s how you grow.
Yeah, so City Turf went a million slow, took five years to get to a million, didn’t know what I was doing, plus I was doing all these other things. And then it went to 10 million like that. And then it got stuck at 10 million for a long time. I was gone. stayed at, kind of stayed in that 10 to 12 million forever. During that time, we reinvented the revenue of the business. So we transitioned from being probably around $8 million. Not everything I say is perfectly accurate, but it’s close enough to give you an idea. It’s time has passed. I’ve done too many things in life. forget, but I wouldn’t say around 8 million in revenue. We really started reinventing the revenue where we are moved. are minimizing mowing, really building fertilization. We control some other revenue sources, but also around that exact same time, we really stopped marketing in the business. I’m gone.
I’ve been gone from the business a long time in a sense. And we were living on a great reputation where we frankly had, we’ve had forever more lead flow than we would even close a year. We’ve always turned away business because of all the money I spent and all the work I did in those early years on marketing. It just propelled the business. I’ve just got back involved in the business in the last year to build an actual marketing team and really go again.
And so the business has been very successful, but it’s grown and then it’s just around that 10 million or so, it’s just kind of flattened out where it’s just very slowly grown and reinvented the revenue because we, we didn’t, we don’t have a marketing engine inside the business. And so had I never gone off to do other things like service autopilot or the coaching stuff, I would have, if I had stayed in this business, we would have had a massive marketing engine and we would have pushed harder on the marketing side, but we just didn’t have those people inside the business once I left the business. That was a gap in the business when I wasn’t involved. And so I think marketing is where you spend the money.
That’s why that’s what I’m trying to bring back to business right now in a massive way to really get it going, moving fast again. It’s growing, it’s very profitable, but it’s not growing as fast as it should. That’s a little bit of the backstory on marketing, but to answer your question, 25% was what we were spending. I was maybe more at times. I don’t really remember, but a lot. then, and it worked. Yeah. yeah. Yeah. Yeah.
Ezra McCarthy
So that was for several years then you were continuing that aggressive marketing.
Jonathan Pototschnik
Five years at least, yeah. Maybe more, maybe seven.
Ezra McCarthy
That’s interesting because like I said, people are just not even thinking that way and then I have people that organic works SEO works, getting great websites. But sometimes people just think I’m gonna get a website up and people are gonna flock to my website.
Jonathan Pototschnik
That’s nonsense. It’s the same concept as I have a thousand clients. If I spin up pest control, 400, 500 of them will buy. Nah, like 50 will buy. It’s really hard. Everything’s hard. Even selling back into your own client base is hard. Everything’s harder than we think it’s going to be.
Ezra McCarthy
It is and then I ask them, what else are you doing? And they’re like, well, nothing. And they’re like, why are people banging down my door? Yeah. And sometimes I have to, I try to tell people like, this is a tool in your toolbox. This isn’t a magic wand, but it is great. And everyone, you need one. It’s ridiculous if you don’t have one. That’s a whole another point. But I think I just wanted to really emphasize that because it’s so easy to look at marketing as an expense rather than investment. And I’m not just saying this. You can do postcards, you can do a lot of things. I’m not just saying buy for me, but…
Jonathan Pototschnik
Yeah.
Ezra McCarthy
Marketing is so important. And then there may come a time where you’re in profit mode, like you mentioned, your business has been in and you’re transitioning it. But we need to take that time to invest in marketing. So now with all the changing landscape, you’ve got AI, you’ve got all these things, the marketing world’s kind of in turmoil. Say someone’s trying to grow from 250 to 500, they’re at 500, they’re going to a million. What would you recommend they really begin to put some of that resources in? Maybe some minimums that they should be spending percentage wise and then where should they be investing some of that hard earned money?
Jonathan Pototschnik
I don’t really have a budget per se. I always, I still subscribe to the, this goes way back, but one of the most influential people in my life has been a guy by the name of Dan Kennedy, a marketing guy. And all of that came from me trying to figure out marketing for CitiTurf. That’s what got me into studying marketing, like from the beginning.
And so I, that’s how I found Dan Kennedy. Dan used to always say, why would you have a marketing budget? And I don’t remember how he worded it. He would have worded it quite well, but the example would be this. If you have a $20,000 marketing budget, but it’s not working, why would you, and you’ve spent 5,000, why would you spend the other 15? If you, you know, it’s like, if it’s not working, don’t keep, you don’t just throw money at it. That’s stupid. You fix it. And then you throw money at it.
If you’ve got a $20,000 marketing budget and for every dollar you spend, it brings home $8. So you spend or marketing you get $8 back, why are you eliminating it to 20,000 bucks? Could you spend 50? That’s a great trade. So marketing budgets are tough. Just to say, tell somebody, you should be spending 5 % a year on marketing. It’s kind of a meaningless thing to me, what you wanna do is position yourself to be able to spend as much money as you can possibly spend on marketing. It’s like if you look at my 5ForFifty channel, I talk about, in some of the videos I’ll talk about how do you recover your marketing spend as fast as you can.
If you’re like, hey, I’m a small little business, I don’t have a lot of money, but I could probably spend 10,000 this year. Well, if I spend 10,000 on marketing, I wanna get back money as fast as I can so I can spend that 10,000 again in two months. And so I give an example of in that case, you try to sell the client some bigger ticket items that are highly profitable. So you’ll get a big chunk of money back. So you spent 150 bucks to acquire them or 80 bucks to acquire them or whatever it is. But in that very first sell, you make back 80 bucks in profit. You’ve got your 80 bucks back. Like right now I’m simplifying the concept to go spend it again. It’s like, so there’s ways you can think about making a small budget go farther.
And the idea is that you want to be able to spend as much money as you can possibly spend on marketing. You still want to put yourself out of business. And this is where it gets a little tricky for a lot of people because they don’t spend any time understanding their numbers. They don’t have an accountant or a bookkeeper that can help them understand how much money do I really have? Like most people just look at how much money is in their bank account, like, yeah, I can hire this employee. I could spend some money on marketing, but they don’t really know what’s coming in November when the season slows down.
When am I going to have to start replacing equipment? When am I going to have to replace that truck? Have I saved up any money to replace that truck? They’re not thinking that way. So they never have any confidence to spend more money on marketing. So this is not as simple as just saying, you should spend 20% of your money on marketing. That could run you out of business. That could put you in bad debt. It’s a little more complicated than that. You want to understand the numbers of your business. You want to think about how do I make my marketing really efficient? And if you do those things, then your goal is to spend as much as you can.
Ezra McCarthy
That’s really helpful and I think if you’re over, man, if you’re over $60,000, $100,000 a year and you don’t have a bookkeeper, you’re a decent bookkeeper, you’re just, you’re really missing out. And so many people I think just run their business at the end of the year, they look at their credit card statements and they try to compile something for their accountant and pull out the shoe box with receipts. And you can’t drive looking at your rearview mirror.
Jonathan Pototschnik
Yeah.
Ezra McCarthy
And you can’t run a business at the end of the year looking backwards. And if you need a recommendation, I can give you one if you’re listening in, but you’ve got to have clear, up-to-date, quick accounting. And I know it’s hard. I hired someone this year. It was like the 15th of the month, and I hadn’t heard anything. And then I emailed them, like a week goes by, nothing. And so I’m like, OK, I can’t run a business when I’m waiting that long. So I ended up finding a paper keeper who gets back to me quickly. And they’re out there, and you need one.
Jonathan Pototschnik
Yeah. This is money well spent. If you want to think about it, I don’t want to get off in the weeds here too far, but one of the things you want to eventually understand is what does it cost you to produce to work? That’s called COGS. And so you want to find, sometimes an accountant or bookkeeper won’t help you with that kind of stuff, but you want to, if you were looking, you want to find one, if you’re in the trades, that will help you understand that number.
What is it costing me to produce the work? It’s the foundational number you have to know. I frankly didn’t know it for the longest time in the early days of my city turf business. I got other things right that allowed us to run a profitable business, but I didn’t understand that I should be focusing on that as one of my most important numbers. I learned that later, but I will just tell you when you’re looking for a bookkeeper accountant, you want to take one little extra step and you want to make sure it’s a person that understands how to help you set up your books and track the data so you can understand COGS.
I won’t go into the weeds on all the details about that. But if you get that stuff right and you understand what’s called the cashflow of your business is basically the ins and outs of money in your business. Money coming in versus money going out and the timing of when that happens. If you understand that, you can start to understand, can I actually spend 5,000 this month to print the door hangers or pay a distribution company? Can I spend the $3,000 this month to run Google ads or whatever the scenario might be?
Until you have those answers, you’ll never do those things. Your business will go slower and your life will suck for longer. Let’s see, there’s no other way. It just be more painful for longer because it’s going so slow that you have to move a little quick in the early days of your business to get through the really challenging times where the thing is just really small and everything’s on you and you have no money to hire people and understanding your data and then eventually marketing is how you do that.
Ezra McCarthy
So helpful and you know, I’m actually not quite sure how you grew up, but I know growing up I could remember the times that we hired someone to do something around the house because we just we didn’t grow up with a whole lot. I’m actually the youngest of 15 kids,
Jonathan Pototschnik
We neither. I don’t remember hiring anybody to do anything around our house ever. When I was growing up. Yeah. I have no recollection of ever doing that.
Ezra McCarthy
So many times in business, I think we get into this mindset and we think that we look at an account and we think, well, I could do that. But the problem is we don’t. And we look at this and we think I could do that and we don’t. So how did you get out of that in your business? You just mentioned you didn’t grow up with a whole lot. Did you fight that DIY mindset or just like, okay, I’ll bull through. I’ll add this to my plate. And then ⁓ we know it probably just doesn’t happen.
Jonathan Pototschnik
Oh yeah. I fight. I mean, I know to a lot of people, maybe I’ve gone quick. In my opinion, I feel like I’ve gone slow. Just understanding what I understand and how I see the world now and how I see business as I’ve grown in business. I just look at it and say, I went slow. I could have done all this so much bigger and better. And that’s the story of life as you learn. And a lot of what has led to me going slow is unwiring lots of beliefs I’ve had as I’ve grown up.
And so for example, I’ve never used debt. And I think there’s a lot of great things about not using debt and not being in debt. But as I’ve matured in business, it’s like, okay, well, if I understand my numbers and I don’t use excessive debt, then a little bit of debt is actually really, it’s like a fire into the business. Like if I had financed some of my trucks and some of my equipment, I could have put that money into marketing and more growth or hiring key people faster.
I don’t normally like to give advice like that because I think almost nobody should actually use debt for the very simple reason that they don’t know their numbers of their business and they don’t have an advisor saying, it’s really safe to do this. I also think debt is like alcohol to some people. Some people should never, ever, ever drink a drop of alcohol because it will destroy their lives because they can’t control themselves. Debt’s the same thing. Some people like, back to my alcohol thing, some people can have some drinks and it’s no big deal. It’s never gonna have any negative impacts on our life.
Some people just can’t do it. Debt’s the exact same way. Some people can handle debt and some people can’t. You gotta know who you are and I don’t know if most people know who they are. And so if you know your numbers and if you’re very careful and prudent with the use of debt, it can be an amazing thing to help you go somewhere much, much faster. And I’m that person. I’m very good with money. And I can use, I could use debt very carefully.
It would have been better for me to have done it, but it wouldn’t have been good for me necessarily to do it in the very beginning because I didn’t know anything in the beginning. An example would be like, you could listen to a podcast and say, Oh man, I should do all these marketing things. And you go $50,000 in debt, trying all these marketing campaigns that you’ve never tested and they don’t work. And now you’re in a hole that you’ve got to dig out of for years. So you only apply debt when you’ve tested and you’ve proven this thing will work.
For example, well, door hangers or postcards are an easy example. If I can prove that I can mail out a postcard and I can acquire a client at 110 bucks and that client’s worth $1,500 a year and they’re gonna stay with me for four to five years, like, oh, that is really good numbers. Now I can start to ramp up my postcard marketing. But I’ll tell you even then you’ll learn other lessons like for example, if your postcards drop when it’s raining, your results are suppressed and the whole campaign could be blown. There’s still all these other or if mail to me postcards and you forget to balance it with how many people can answer the phones in my office.
You just wasted lots of money. So even once you prove that the numbers work, there’s all these other little things you haven’t or yet learned. So there’s this element it’s like, okay, you can apply debt to this problem, but you should apply it very carefully and methodically and slowly ramp up into the thing to the debt specifically. I’m a fan if you’re very careful with it and it shouldn’t be probably used early in the business. It should be used later as gasoline only if you can handle it. And I think you had other questions in there and I’ve kind of forgotten them exactly what you asked, Ezra, but…
Ezra McCarthy
The DIY mindset. How do you escape the DIY mindset?
Jonathan Pototschnik
Yeah, so I very much because we didn’t grow up with money. My dad was an artist and so very hard, like it’s very hard to become an artist and actually make a career.
Ezra McCarthy
What kind of artist was he?
Jonathan Pototschnik
Painter. He’s a painter and he’s done ’til this day. It’s all he’s ever done. So oil. Yeah.
Ezra McCarthy
No wonder you were broke.
Jonathan Pototschnik
Well, yeah. And he’s a very successful artist now, but it, know, you’ve got to build that career. Yeah. You basically, paint a painting and you put it in a gallery and you hope somebody likes what you painted and they buy it. And that’s, that’s the only world I’ve ever lived in. That’s what he’s always done. And my mom stayed home. And so trying to build that art career in the early days is very, very difficult. So we were very frugal. And then even when they could have afforded to do more, well, by that point, you’ve been frugal forever. So you don’t change. It’s kind of like me. I’m anyway, I, it’s hard to unwind some of those things. It takes time.
And so that mindset served me incredibly well, but it also slowed me down. So it’s not me being negative. It’s like, if you want to optimize for something optimized for having no debt and not getting yourself in trouble in life, but I had to unwire some of that thinking I also think that I’ve just generally been somebody that for whatever reason it’s probably how I grew up needs safety like I’m always optimizing for safety like what could go wrong in this scenario How do I protect against it that can really slow you down? Well fella that in the early days he was there was this way back. I’m in like high school. There was this guy named Bruce Williams. Maybe I wasn’t beginning high school.
He had this radio show and he was a successful entrepreneur and he had a radio show on an AM station. I remember always listening to it. I think it was called the Bruce Williams Show and he owned like daycares and floral shops and all these different businesses and he would give advice on the radio. And I remember in a sense, I liked him. I remember him giving the advice that you should do the job in your business before you hire somebody so you know how they should do the job. Well, that made perfect sense to me. In hindsight, I don’t think that’s a good plan.
And so there’s lots of stuff like that where there would be things I learned in the early days where it’s like, okay, now that I’ve become probably more successful than those people were that I was listening to, it’s like, I disagree with that kind of a thinking and I’ve kind of found my own way. So there’s been a lot of that.
Ezra McCarthy
I think it’s really helpful and a good example is even with this podcast, our editor, she does a good job. I have no idea how to edit it and she does a great job.
Jonathan Pototschnik
You don’t need to.
Ezra McCarthy
Yeah, and so many times we get so wrapped up and we think I’ve got to learn this, I’ve got to learn that. But to help our business get propelled further, if we can get people who can do a good job or learn to do a good job and we can take that time and focus it somewhere else, then it is going to be a great trade.
Jonathan Pototschnik
Well, you used a wonderful analogy and I think I’ve used a similar analogy before. You were talking about the coach never going out on the field. A coach can’t be the quarterback. He couldn’t be the lineman. He couldn’t be any of these, but he’s not going to be the kicker. I can’t do any of these. Like, yeah, maybe he technically understands the basic mechanics of how to do it. Maybe one day in his past, he played one of those positions, but he’s not good at any of those things, nor should he be.
And it would be absolutely absurd to think that he needs to be. Like you don’t need to be a great quarterback as a coach, hire a quarterback and know what a great quarterback looks like. That’s like stupid. But we do that kind of stuff. We think that way. And so I love the sports analogies because so many people like sports. Just, you just think about it from that perspective, you would never run an incredibly successful football team the way that we run our businesses. Nobody does. That’s not the same thing. And so the whole game of business, which I didn’t understand for the longest time.
It’s all about people and it’s assembling a team of experts to do the different functions of the business and keep them all marching in the same direction as a united team. And when one of them isn’t going to help the team get to where it needs to go, you bring in a new person, replace them. It’s exactly the same concept. And if you think about running a business like a football team, you’ll run a far more successful business. You don’t need to understand. I don’t know. I couldn’t install an irrigation system. I don’t know how to do, I’ve done it. I actually forgot. I was wrong. There was a time in the business where for three weeks or four weeks I had to do but maybe a little longer, I had to go spray.
That was like a year so into the business. I forgot about that. Because earlier I said, I only worked for a couple of days. That was true until this, I had to fire yet another person and I couldn’t find a spray tech. So I forgot about that. There was one other time I had to go spray. So I remember generally what made me think of that is I don’t really know how to do fertilization weed control. I was doing it back then, but I didn’t know all the details. Every time there was a problem, I had to call Mike at Lesco to come help me figure out what the weed was or what to do. And Lesco used to be this company you’d buy your product from, but I don’t know how to do all these. I don’t have the faintest idea.
I never got a license in pest control. I used to write code. I never wrote a line of code at Service Autopilot. I don’t even know any of this stuff to build a great business and you don’t either. You just need to have the skill of finding good people and giving and helping build an environment that they can do great work within. For sure. And then, and getting bottlenecks out of their way so that they can do their job. And if they’re not doing their job, the skill of moving them off the team and bringing a new person in to take that role. That’s really the main skill you need.
Ezra McCarthy
Hiring. and firing. Ugh.
Jonathan Pototschnik
Yeah. It’s easier said than done. It is. That’s hard. That’s very hard. Yeah. Very, hard.
Ezra McCarthy
Well Jonathan, this has been great and something I always love to ask people is what’s one book recommendation and you can’t say they ask you answer by Marcus Sheridan. No. Well that’s a good one. Yeah. And I did read that one from I think maybe on Paul’s you recommended it but what’s one book you recommend and then one podcast.
Jonathan Pototschnik
From a marketing standpoint, since we talk about marketing, I’m a fan of Alex Ramosi stuff. I really, honestly haven’t read either of his books. I’ve only like, I’ve got both of them and I’ve kind of flipped through them. But what I know of Alex and the videos I have listened to from him, I think he is giving some of the single best advice in business and he’s a master at making it simple. And so if I were to recommend a book, I would recommend reading anything that guy writes. That would be my advice.
Since we’re talking about marketing stuff. I’m a fan and it’s newer. Like there’s a lot of great old books, but his stuff is very current. So it’ll feel applicable from a podcast standpoint, you know, I’ve been trying to eliminate most of my podcasts to be frank. I pretty much just listened to All In, Lex Friedman, and there’s a podcast, the guys that did something millionaire. I used to listen to it. Hold on. I’m going to tell you, I’ll try not to take too long at this. It’s like Moneywise or something like that. I forget the name of it. Okay, then it’s, sorry. I don’t.
Ezra McCarthy
That got me curious.
Those other two I listened to, well, Lex can be a little long, actually I listened to that whole four and a half hour debate. The other day I’m like, man, I wonder how many other retards are spending four and a half hours a day listening to it.
Jonathan Pototschnik
I actually skipped that one. I don’t listen to every single thing he puts out, but I, ` Oh okay. So the two most consistent pods, sorry, I’m looking at my phone now. The two that I listen to everything. I listen to most everything from All In. I listen to most everything from Moonshots, which is with Peter Diamandis.
Ezra McCarthy
Never heard of that one.
Jonathan Pototschnik
And then I listen to probably 50 % of Lexus. Sometimes I’ll fast forward through them, but he’s interesting. He does a good job. And then the other one that I listened to probably 70 % of, I think it’s called Moneywise. Yeah, it’s Moneywise.
Ezra McCarthy
Okay, I’m gonna check these out.
Jonathan Pototschnik
Yeah, and they, my first million, if you’ve ever heard of my first million.
Ezra McCarthy
Oh, it’s Sam Park. Yeah, I listened to that every one. That’s a great one.
Jonathan Pototschnik
It’s Sam’s. Money-wise, it’s his. And so basically, he just interviews a lot of people that are super wealthy about how they actually spend their money and invest. Yeah.
Ezra McCarthy
Yeah, it’s really interesting.
Jonathan Pototschnik
Yeah, those are the main ones that I listen to. You were asking me earlier if I had read Andrew Wilkinson’s book. Yeah. Every once in a while, he’ll put out a podcast. I listen to his stuff. He’s got a podcast. He’s very inconsistent. But I forget the name of his podcast. Yeah, but when it comes out, I listen to it.
Ezra McCarthy
Yeah, it’s good. I listened to it.
Never Enough.
Jonathan Pototschnik
Never enough, yeah. When that comes out, I listen to it. Those are probably my go-tos.
Ezra McCarthy
Yeah, those are good. Well, Jonathan, this has been great. Had a lot of value here. I want to respect your time. If someone wants to find out more about you, ⁓ where’s the best place they can reach out to you or find more about your information experience?
Jonathan Pototschnik
Right now, the only place is a five for 50 on YouTube. So the number five and then FOR 50 spelled out. If you look me up on YouTube, I respond to almost every comment. I’m a little behind because I just got back from France, but I respond to almost every comment. So I’ll interact with you if you respond to those videos.
Ezra McCarthy
And he also does have a podcast 5ForFifty.
Jonathan Pototschnik
Yeah, right now what I’m doing is just putting out the episodes on about a two month delay so that people can listen to them. I was at one time, I was about to launch a podcast and that got tabled with some other people and, I may end up doing that in the future, but right now until the end of, until November, I’m not going to do anything more than just put out one video a week on YouTube. That’s kind of my thing. I’m just busy with other stuff and we’re traveling a tremendous amount. So, that’s sort of what to expect. It’ll be one video a week on YouTube, and then my podcast is those very same videos from YouTube on about a two-month delay.
Ezra McCarthy
Thanks, Jonathan. That’s been great. Thanks for listening to each one today. This has been a lot of great information from Jonathan’s experience running CitiTurf. Be sure to subscribe to the podcast, share it with a friend who is looking to grow their business, and we’ll catch you on the next one.
