Take a deep dive with master bookkeeper Dan Gordon, as he explains what tools to use, business organization strategies that include systems, procedures checklists, and more. Learn the tricks of accounting automation that will help you move the profit needle for your company.

2. UP NEXT:
THE LARGEST PROFIT
LEVERS
Dan Gordon, PCO Bookkeepers

3. THE RADICAL PEST AND LAWN
CARE OPERATOR
The Ultimate Guide
to winning at business by understanding how to set up
financial and operational systems
Daniel S. Gordon, CPA

4. WHO ARE PCO BOOKKEEPERS & TURFBOOKS?

5. ● We are a firm dedicated to helping pest & lawn companies
grow by providing them with the business intelligence they
need to prosper in today’s competitive environment.
● We work with service firms around the country to provide
bookkeeping / accounting and CFO services using the most
widely used computer programs such as QuickBooks,
Pestpac, Real Green, Servsuite and many others. We are
experts in these technologies and understand how to use
them to provide the critical information needed to grow
your business in terms of revenue and profit.

6. We are a team of industry professionals that include
degreed accountants, CPA’s, Enrolled Agents, and full
charged bookkeepers who have the specific knowledge to
produce meaningful information specific to PCOs with
regard to building recurring revenue, increasing profit, and
reducing taxes.

8. ● We work with over 300
companies in 42 States
● Our clients have combined
revenue of over
$500,000,000 in annual sales
● Our data is real not just
answers to industry surveys

9. ● We work with service business
who are interested in selling their
business
● We represent sellers in getting
them maximum value
● We structure deals that minimize
taxes

10. From Technician to CEO
Published by NorthCoast Media
Available on at Amazon.com
DANIEL S. GORDON,
CPA
The Evolution of a High Growth
Pest Control and Lawn Care
Company

11. LET’S BEGIN

12. WHY ARE WE IN BUSINESS?

13. To maximize the value of our business...Period!
There is no other reason!

14. IN MAXIMIZING THE VALUE
OF OUR BUSINESS WE:
Create a great place to work
Increase salaries & benefits
Create job security
Do business in a socially responsible manner

15. LET’S GROW OUR BUSINESS

16. First let’s go over how we run a successful business with a
recurring revenue model
This business model is simple
(Not Easy But Simple)
We are in a service business and sell our time.

17. THIS TIME THAT WE CHARGE FOR INCLUDES
Identifying a customer need
Providing a solution
Setting the customer up on
a service contract
Doing the same thing over and
over until you have built a route or several routes.

18. THE CONCEPT OF SELLING TIME
Time is a perishable commodity.
Once it is gone, you can’t resell it.
If you route your calls effectively you will be
able to maximize the amount of time that you
can sell.

19. THERE ARE SEVERAL WAYS THAT WE CAN GROW
Are we growing the number of employees?
Are we growing sales?
Are we growing our current income?
Are we increasing the value of our firm?

20. Let’s assume we are growing the
value of our firm
How do we MEASURE THE VALUE
of our firm?
Accounting approach: Assets minus
liabilities

21. ASSETS INCLUDE
Customer Lists (The most valuable asset)
Accounts Receivable
Trucks and Equipment
Furniture and Fixtures
Real Estate owned
Other Assets

22. LIABILITIES INCLUDE
Accounts Payable
Credit Lines
Loans Payable

23. HOW A RECURRING REVENUE
BUSINESS IS VALUED
Consider this: The selling price of many service firms can be
equal to about one year’s gross revenue or more. If you grew
your firm’s sales by $250,000 last year, you have increased
your net worth (or wealth) by a quarter of a million dollars or
more.

24. BUT HOLD ON
The gross revenue needs to be profitable recurring work.
One shot work is helpful in meeting current expenses but
adds very little value to the your firm.

25. THE CUSTOMER LIST
(YOUR MOST VALUED ASSET)
Long Term
Can be compared to machinery in a manufacturing
business:
-Must be “well oiled” by providing great service
-Routes must be tight allowing for the greatest output
from this machine

26. THE CUSTOMER LIST
(YOUR MOST VALUED ASSET)
Short Term
Can be compared to a life insurance salesman setting up a
book of renewable policies that generate current income.

27. YOU NEED A PLAN
The plan must focus on growing your customer list as well as
selling more to existing customers
This is the asset that will
spit out the profits.

28. YOU NEED A PLAN
Remember:
We are not in a high margin business. Rather it is a
moderate margin business where you generate high profits
from customers that use your service on a scheduled,
recurring business

29. SERVICE CONTRACTS VS. ONE TIME WORK
Consider that it costs anywhere from $25.00 to $250.00 or
more to generate a lead from various sources
Which is better, a one time at $500.00 or an ongoing service
agreement at $75.00 per visit?

30. FUTURE CUSTOMER
ACQUISITION REQUIREMENTS
Target annual revenue per customer: $500.00
Cost to acquire 1 new customer (average): $150.00
Expansion goals: Double revenues over 4 Yrs (20% per Yr)
Assume 100% retention

31. Year Revenue
#
Customers
Current
New
Customers
Cash
Projection Needed # Customers Required Requirement
Current Yr $500,000 1000 1000 0 $0
1 $600,000 1200 1000 200 $30,000
2 $720,000 1440 1200 240 $36,000
3 $864,000 1728 1440 288 $43,200
4 $1,036,800 2073.6 1728 345.6 $51,840

32. MONEY REQUIREMENTS
Over 4 years, we need $161,040 in marketing dollars.
How does it get paid for?

33. SEVERAL OPTIONS EXIST
Through daily operations and cash flow.
Through financing (i.e. bank, finance companies, etc.)
By giving up equity (i.e. silent partner, not so silent partner,
joint venture)

34. Benchmarking Revenue Per Customer
Most companies look at revenue for the company or
revenue for the branch and determine profitability
from there.
Disadvantages to Looking at Your Business This Way
You can have unprofitable customers
You will never understand your profitability as you
will always be looking at the sum of the parts as
opposed to the parts themselves

35. Suggestion
Look at dollars per hour or dollars per sq ft of
coverage per customer
Look at revenue per customer per year
-Benchmark that number
-Try to increase that average each year
By doing this you guarantee profitability as well as maximize
the amount each customer is spending with you

36. ACTION PLAN
1. Calculation: We sell time – how much time does it take
including call backs to service an account?
2. We want to grow: By how much over what time period.
dollars & number of accounts
3. What is the plan for growth – details/budget

37. ACTION PLAN
4. Calculation: What it will cost to achieve the growth and
where does the money come from to grow?
5. Are all of your customers profitable? Calculate the dollars
per hour spent on their services

38. FINANCIAL PERFORMANCE

39. AT THE CLICK OF A BUTTON,
CAN YOU TELL ON A MONTHLY BASIS...
How much money you made?
How much termite or lawn care you did?
How much maintenance you did last year?
What your labor percentage was?
What your material percentage was?
How much you spent on sales and advertising?
What your gross and net margins were?

40. A WELL-DESIGNED LAND CARE AND/OR
PCO PROFIT AND LOSS STATEMENT INCLUDES
Revenue
Broken up by department with recurring & non-
recurring revenue accurately displayed
Direct Costs
All cost associated with putting a truck on the road &
performing service

41. A WELL-DESIGNED LAND CARE AND/OR
PCO PROFIT AND LOSS STATEMENT INCLUDES
Gross Margin
Revenue minus direct cost
Sales & Marketing
All cost associated with sales and marketing

42. A WELL-DESIGNED LAND CARE AND/OR
PCO PROFIT AND LOSS STATEMENT INCLUDES
G & A (General & Administrative) Expenses
The cost associated with running the office. Usually these
costs are fixed with regard to transacting business up to a
certain level
EBITA
Earnings before interest, taxes & amortization

43. A WELL-DESIGNED LAND CARE AND/OR
PCO PROFIT AND LOSS STATEMENT INCLUDES
IADT
Interest, amortization, depreciation & taxes
Net Income
Net performance of the business

44. PROFIT/LOSS RATIOS & BENCHMARKS

45. ● Gross Margin
● Technician labor cost as a percentage of revenue
● Material cost as a percentage of revenue
● Selling cost as a percentage of revenue
● Office labor as a percentage of revenue
● Other G & A as a percentage of revenue

46. DRILLING DOWN IN PROFIT
AND
LOSS STATEMENT

47. WHY IS IT SO IMPORTANT TO SET UP A
P & L USING THE APPROACH DESCRIBED
It allows us to make accurate conclusions about
how our management staff is executing our
business strategy.
It allows us to isolate revenue types that will add
to the value of our business.
It allows us to isolate expense types so that we
can implement cost controls.

48. BENEFITS OF HAVING PROFITABILITY
INFORMATION IN THIS FORMAT
Allows us to create management bonus &
incentive structures.
Allows us to determine which service is profitable
& why.
Allows us to consistently value our company.
Allows us to identify specific improvement
needed and measure
those improvements that are required.

49. RATING OUR ACCOUNTS RECEIVABLE
● We can age our accounts receivable
● Current 30 days, 60 Days, Over 90 days, with percentage
of total
● We can try to improve those percentages on monthly basis
● We can use a ratio called number of days sales in receivables
to see how close to our terms we’re keeping our customers.

50. AVERAGE COLLECTION PERIOD
Calculation: (AR balance/ ( Average Daily Sales)

51. FINANCIAL PERFORMANCE

52. ACTION PLAN
1. Set up your chart of accounts:
A. Recurring and non-recurring revenue
B. Gross margin
C. Selling & marketing
D. General & admin
E. Net income

53. ACTION PLAN
2. Measure your accounts receivable
A. Aged
B. Days of sales in A/R

55. SALES PERFORMANCE

56. WHAT ARE THE IMPORTANT DATA POINTS
● Number of leads received
● Number of leads closed
● Number of proposals written
● Dollars proposed
● Dollars sold

57. WHAT ARE THE IMPORTANT DATA POINTS
Closing percentages
Follow up actions including dates
Commissions earned by sales staff
Base pay for salespeople

58. NUMBER OF LEADS RECEIVED/CLOSED
Sometimes we draw conclusions based solely
on the numbers.
We need to distinguish between creative leads
and inbound leads, as the latter will yield much
higher percentages.

59. Batting Average =
# Leads Closed
# Leads Received
Pitch Efficiency =
# Proposals written
# Leads given

60. Sales Dollars Efficiency =
# of Dollars Sold
# of Dollars Proposed

61. Using the proposal dates and follow-up dates we can
age our proposals, last contact dates, and make
estimates of likeliness of closure.
What we obviously find is the older the proposal the
less likely we close it.
What happens if we introduce telemarketing?

62. Sales compensation as a percentage of sales
Base Salary + Commissions
Total Sales
=

63. ACTION PLAN
Nothing Happens without Sales!
A. Set up your sales metrics
B. Explain and review with your sales people
C. Monitor the sales KPIs

64. OPERATIONAL PERFORMANCE

65. EFFECTIVE ROUTING
HOW TO…
-Increase sales
-Lower expenses

66. EFFECTIVE ROUTING
Routing will affect both revenue
and expenses.

67. The single largest expense for a pest control company
is
LABOR
Land care companies for the most part compensate
their technicians one of two ways or a combination of
both:
Technicians are paid an hourly rate.
Technicians are compensated as a percentage of their
route

68. Technicians are paid an hourly rate
This rate climbs by 50% (overtime) after the
technician works 40 hours in any given week.
Technicians are compensated as a percentage
of their route
As a percentage of the dollar value of the
jobs that they complete

69. TO INCREASE PROFITABILITY WE NEED TO
INCREASE EFFICIENCY
(Fit more work into less time)
This increases profitability by increasing total dollars of profit

70. USING OUR TECHNICIAN WHO IS
PAID HOURLY
Example 1
Let’s say we have a technician that earns $15.00 per hour.
Further, let’s say that he can complete one job in an hour
that produces $50.00.
In this case our labor percentage is 30% (15/50 = .3).
This means for every $100.00 of revenue we have a profit of
$70.00 (ignoring all other costs)

71. USING OUR TECHNICIAN WHO IS
PAID HOURLY
Example 2
Let’s say we have a technician that earns $15.00 per hour.
Further, let’s say that he can complete two jobs in an hour
that produces $50.00 each or $100 total.
In this case our labor percentage is 15% (15/100 = .15).

72. USING OUR TECHNICIAN WHO IS
PAID HOURLY
This means for every $100.00 of revenue we have
a profit of $85.00 (ignoring all other costs)
By fitting more work into one hour we have been
able to increase our profit by $50.00 per hour
Here we have increased our revenue in dollars
and decreased our labor expense as a percentage
of revenue.

73. USING OUR TECHNICIAN WHO IS PAID A
PERCENTAGE OF HIS ROUTE
Example 1
Let’s say we have a technician that earns 25% of dollars produced.
Further, let’s say that he can complete one job in an hour that
produces $50.00.
In this case our profit is $37.50
($50.00 – (25% x $50.00) =$37.50) (ignoring all other costs)

74. USING OUR TECHNICIAN WHO IS PAID A
PERCENTAGE OF HIS ROUTE
Example 2
Let’s say we have a technician that earns 25% of dollars
produced
Further, let’s say that he can complete two jobs in an
hour that produces $50.00
In this case our profit is $75.00
(($50.00x2) – (25% x $100.00)) =$25.00) (ignoring all
other costs)

75. USING OUR TECHNICIAN WHO IS PAID A
PERCENTAGE OF HIS ROUTE
By fitting more work into one hour we have been able to increase
our profit by $37.50 per hour from $37.50 to $75.00 dollars.
In this case we increased the revenue by $50.00 per hour while
holding our labor expense constant as a percentage of revenue at
25%

76. UTILIZATION
One of the most important benchmarks in judging
how efficient your routing is is called utilization.
Utilization is a calculation that CPA firms and law
firms use to see how productive their accountants
and lawyers are at billing their time.
However, this calculation fits our industry perfectly.
Quite simply, utilization is the following fraction:

77. UTILIZATION
Total Technician Hours Spent at All Stops During
the Time Period
Total Technician Hours Clocked in (Paid Hours)
During the Time Period

78. UTILIZATION
Example
Let’s say that your technician spent 30 hours at various
jobs doing actual work for a one week period.
Let’s also assume that according to his time card he
was punched in and paid for 50 hours.
His utilization would be 60% (30hrs worked / 50 Hours
Clocked in).
This means that he was producing revenue 60% of the
time he was clocked in.

79. UTILIZATION
Example Cont.
Let’s say your average dollar per hour on your accounts
for the day is $75.00. With a 60% utilization you’re
actually taking in $45.00 per hour.
If your technician clocks in 8 hours for the day, he will
produce $360.00 for the day ($75.00 x 60% x 8hrs).

80. UTILIZATION
Example Cont.
If his utilization is 75% he will bring in $450 ($75.00
x 75% x 8hrs).
If he is 40% utilized he will bring in $240 ($75 x 40%
x 8hrs).
These numbers are using the same $75.00 per hour
but varying the utilization percentage.

81. UTILIZATION
This point illustrates the fact that there are two
ways of increasing daily revenue:
- Raising your prices (dollars per hour). This is not
always feasible.
- Increasing your utilization by making your
routing more efficient.

82. ACTION PLAN (REVIEW)
1. Calculation: We sell time – How much time does it
take, including call backs, to service an account?
2. We want to grow: By how much over what time
period? Dollars & number of accounts

83. ACTION PLAN (REVIEW)
5. Nothing Happens without Sales:
a. Set up your sales metrics
b. Explain and review with your sales person
c. Monitor the sales KPIs

84. ACTION PLAN (REVIEW)
6. Efficiency and pricing are the most important determinants
a. Set up your routes with estimated service and drive times
b. Plan your utilization percentage
c. Make your technicians accountable in adhering to
minimum utilization standards

85. QUESTIONS?
Don’t be shy.

86. The Radical Pest & Lawn Care Operator
Dan Gordon, CEO
PCO Bookkeepers
dan@wealthdepotmail.com
linkedin.com/in/dangordoncpa
@pcobookkeepers