Payroll is too high

[Gene $immons]

What do you do when your workers are excellent -

and the payroll is too high of a percentage of the sales?

Either I need higher paying jobs, or cheaper (read unexperienced) employees.

I hate to let good help go, But I might have to get back out in the field more than I planned on this season.

I try to keep tight routes, and be efficient as possible, but my 4 man crew is killing me on the labor costs.

[bobw]

Maybe you need to adjust your expected ratios a bit until you can get revenue to rise a bit.

Do you really think that your business will do better in the long run if you let go of the experience help and get cheaper help?

[suzuki4life]

i bet half of the people on here would kill to have your problem. Good help is so hard to find. i would go the better jobs route

[ncls]

Not knowing anything about your routes, but I would re-examine a four person crew. I run 2 man crews. We tried one year to add a third person to a crew to get more done with larger properties. While more work was getting done, not enough to justify the pay. All three just worked slower. Productivity actually went down.

[rodfather]

First of all, what % is your payroll to sales?

[Duekster]

Unless you are running commercial I think 4 guys is a bit much for a crew.

One in the back yard mowing, one line trimming and one in the front yard mowing. What is the 4th doing? He can't blow.

[terrapro]

Not knowing anything about your routes, but I would re-examine a four person crew. I run 2 man crews. We tried one year to add a third person to a crew to get more done with larger properties. While more work was getting done, not enough to justify the pay. All three just worked slower. Productivity actually went down.

zactly what i was going to say. except this route you have to buy a new truck trailer ins mower trimmers blower gas....but you may make that all back this year then next year you can start looking at the profit and loss sheet

[Gene $immons]

First of all, what % is your payroll to sales?


the last couple of days it has been around 45 to 50% or higher. Leaving the company with little after you figure in other expenses.

I thought about smaller crews, but I don't understand how that really helps anything, those employees are still on the clock each hour of the day.


A four man crew can maybe get 5 to 7 more properties done in a day than a 3 man crew. A 2 man crew is way too slow for me.

[topsites]

A two man crew is the most cost-effective, due to windshield time, that's what kills the 4+ guys. Three can do ok but no better than two and if you want a no-fail solution then run 2 men crews. If it's still sky high, I also see a self-defeating mentality that consistent advertising for help might resolve (and stop hiring these guys who think the world of themselves).

[1cooltreeguy]

YUP - 2 man crews are the way to go. Seat time(in the Truck) kills a 3-4 man crews productivity. Also, consider your best guy. Put him in charge of a hard worker that you can pay alot less to. Your best guy can train him and you'll get 2-3 years of cheaper labor. Be creative.

[Gene $immons]

Looked at the numbers again this morning.

Here in my area, we are not at weekly maintenence just yet, so I have the crew running all over town tackling stuff as it comes up (not tight routes)

Once we get into "regular schedules" I think I will have payroll at around 30 to 34% of the projected weekly sales. Which is not too far off.

I will try the two man crew this summer, not a bad idea for a route of smaller lawns.

Heck, when I first started out It was only me and one employee and we did around 65 yards a week, probably on routes that were all over the place.

I was just looking at recent daily numbers, and getting concerned about the payroll costs. I think I'll be ok once summer hits.

However, my main driver IS overpayed, not that his work is no good, just compared to what I know other LCO's are paying. I need to have an open an honest discussion with him about what I can afford to pay him each week, and see what he says. No good way to tell a man that he is about to make a little bit less money I guess. Hopefully he won't quit.

The new shop we have this year comes along with new overhead which was not around last year.

I've maxed out most of my lawns on what I am charging. So I will also try working myself more, and trying be be even more efficient in order to have a higher profit margin.

Lawn site kicks butt.

[F&SLawnCo]

I was going to suggest looking at the pay of other top tier lawn companies in your area, but looks like you did that already. I used to fall into the trap of wanting to pay my good employees more and more each year. We cannot forget that we are running our business here. I now keep in contact with some of the other lawn services in the area nad try to keep my wages competitive. Also, don't forget if you offer benefits, that is part of the entire compensation package.

[cpel2004]

Interesting topic, I asked this question before so I will ask it again. Where should your payroll be as a percentage of gross sales(payroll w/taxes) for only lawn maintenance, with and without employee insurance?

[rodfather]

the last couple of days it has been around 45 to 50% or higher. Leaving the company with little after you figure in other expenses.

I thought about smaller crews, but I don't understand how that really helps anything, those employees are still on the clock each hour of the day.


A four man crew can maybe get 5 to 7 more properties done in a day than a 3 man crew. A 2 man crew is way too slow for me.

that % is gonna kill you...even with matching employer payroll taxes, we are under 30%.

smaller crew will do little to help, all I run are 3 man crews...maybe you should evaluate the equipment your guys are using and/or how you route them daily in their routine?

[rodfather]

A two man crew is the most cost-effective, due to windshield time, that's what kills the 4+ guys. Three can do ok but no better than two and if you want a no-fail solution then run 2 men crews.

you're a solo operator, how would you know?

[rodfather]

Interesting topic, I asked this question before so I will ask it again. Where should your payroll be as a percentage of gross sales(payroll w/taxes) for only lawn maintenance, with and without employee insurance?

for us last year it was 26.4% with matching payroll taxes...we are heavy into maintenance (73.7% of total company revenue). workman's comp for us is $4.29 per $100 of payroll.

[HazellLawnCare]

I know what you mean about paying your main worker too much. My main guy is WAY overpaid for around here. I'm not giving him a raise this year and I expect to be back out where I need to be doing his job.

[rodfather]

I know what you mean about paying your main worker too much. My main guy is WAY overpaid for around here. I'm not giving him a raise this year and I expect to be back out where I need to be doing his job.

how much is way overpaid if you don't mind me asking?

[Duekster]

for us last year it was 26.4% with matching payroll taxes...we are heavy into maintenance (73.7% of total company revenue). workman's comp for us is $4.29 per $100 of payroll.
That's a good comp rate. I have to wait another year for mine to go down much.

[HazellLawnCare]

I pay him a salary of 32,000 a year. Now I know this isn't much in some areas buy there are lots of people in this area with college educations that don't make this. I am not opposed to paying this much, it's just sometimes he causes me too many headaches. My wife and I talked alot over the weekend and I have decided that I need to get back out in the field.

[rodfather]

I pay him a salary of 32,000 a year. Now I know this isn't much in some areas buy there are lots of people in this area with college educations that don't make this. I am not opposed to paying this much, it's just sometimes he causes me too many headaches. My wife and I talked alot over the weekend and I have decided that I need to get back out in the field.


a little more than $15 an hour overall...have you tried paying him hourly for the months he works?

[HazellLawnCare]

I've tried but he wants a salary. Somehow his lack of budgeting skills is my problem.

[rodfather]

I've tried but he wants a salary. Somehow his lack of budgeting skills is my problem.

I would discreetly ask around and see if anyone else is available...I pay my foremen $22.50 an hour, but that is seasonal. They have other things they can do in the winter that they like to do.

[David Hartzog]

i have found that more than 2 guys is usually overkill, and with 3 one will just stand around more and take longer smoke breaks. Losing experienced guys takes time and money in the end because the new guy dosn't know what he's doing and does something dumb to you equipment. when its winter and things are slow i try to schedual out the week so maybe only one guy shows at a time or give them both only 4-5 days out of 6. And, it seems to me that unless you have health issues you should always be "in the field". i mean the more work i do the less out of my pocket in payroll and taxes. i know my wife wouldn't want me here in her way anyway.

[HazellLawnCare]

sorry, i made it sound like i sit at home all day and rake it in. i am out working everyday, just doing other odd work. i am going back to the lawn mowing crew, it is the bread and butter of my business.

[Gene $immons]

Rod,

Will you hire me on at those rates?

Are you doing high end commecial accounts or what?

Most of our basic residential accounts (under 10,000sq.ft) are around $40.00 a week.

I am getting more and more commercial accounts for some reason this year. I like their pay better!

:usflag:

[rodfather]

Rod,

Will you hire me on at those rates?

Are you doing high end commecial accounts or what?

Most of our basic residential accounts (under 10,000sq.ft) are around $40.00 a week.

I am getting more and more commercial accounts for some reason this year. I like their pay better!

:usflag:

Sure Gene, in fact I might boast my guy's pay to 20/25 an hour this year

most of our accounts are high end resi's for us...3 - 5 acre average, a number of them in the 7 - 11 acre range

send me your resume lol :laugh:

[Tim Wright]

I would be highly upset if I worked for a business and agreed on a set wage/salary, and then after the fact was told that I was making too much and would be loosing money because the owner/boss did not figure his numbers before setting up the rates.

Now if the company was going belly up and we were trying to save it would be another issue.

Not that I am arguing the fact that you cannot afford to pay $15.00, but that should be known before hiring I think.

Tim

[Gene $immons]

I would be highly upset if I worked for a business and agreed on a set wage/salary, and then after the fact was told that I was making too much and would be loosing money because the owner/boss did not figure his numbers before setting up the rates.

Now if the company was going belly up and we were trying to save it would be another issue.

Not that I am arguing the fact that you cannot afford to pay $15.00, but that should be known before hiring I think.

Tim

I would be too, that is why I haven't done anything yet.

However, I don't have to give overtime anymore, and by adding on a new "cheaper" guy, I might even be able to have the crews finish all the weekly work under 40 hours. Especially if I get my butt out there more.

[Tim Wright]

I am kind of going through the same thing here, just a few steps behind you.

Tim

[bart may]

From the sound of your accounts being smaller, I would never have 4 guys on that type of lawn. You will find that 2 can tackle that and save you lots of money. I experimented a couple years ago with 3 man crews. I used myself and my next two best guys and they are fast and good. We would consistently at best finish the day 2-3 hours faster than the two man crew. So to me I just paid an extra guy for 6-7 hours to only shave off 2-3. I even was open to them about my experiment and they couldn't understand the reason either. Like I said though I think smaller properties like your doing can definatly justify only 2 man crews. The lawns that Rodfather is doing would benefit from a 4 man crew if you had enough mowers or trimmers to keep them mowing. Good Luck

[coif_kid]

This applies stictly to residential maintenance, as drive time is a substantial factor with this form of work, especially with the smaller properties.

Now let's assume one lawn takes 25 minutes, with 5 minutes of drive time between stops.

So.... with one person the lawn takes 30 minutes.

With two people, the lawn cutting time is cut in half (this assumes maximum efficiency, but in reality output per person tends to go down as the number of people increase) so 12.5 minutes, but there is still the 5 minutes of drive time. So.... with two people the lawn takes 17.5 minutes

With three people, the lawn cutting time is cut into a third, but there is still the drive time :D. So.... with three people the lawn takes 13.33 minutes.

With four people the lawn takes 10. 25 minutes.

So in an eight hour day (working hours) with a two man crew you technically could get 27 lawns done. With a four man crew you can get 45 lawns done. But if you were to have two crews of two guys, you could get 54 lawns done or 9 more lawns done a day as compared to the four man crew. Assuming each lawn was priced at $20, you would gross $180 per day extra with the same labour costs. The only extra cost would be an additional truck (you already have enough equipment for four guys) and fuel and the insurance for it. Without a doubt this would not cost you $180 a day or $3200 a month. Clearly put, two two guy crews are more efficient and more PROFITABLE than a four man crew.

[rodfather]

I would be too, that is why I haven't done anything yet.

However, I don't have to give overtime anymore, and by adding on a new "cheaper" guy, I might even be able to have the crews finish all the weekly work under 40 hours. Especially if I get my butt out there more.

I haven't had overtime in years. If I think the maint crews are gonna go over 40 hours for the week, I'll take myself and 2 of my landscaping guys in a truck/trailer and couple of mowers and catch up for a day. And I have some part time guys would are available at a minute's notice to use as well.