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View Full Version : Current Economy has contractors dropping like flies


DVS Hardscaper
08-17-2008, 08:55 PM
Times sure have changed, compared to 3 years ago, even 8 years ago.

The slow economy is certainly taking it's toll on the hardscape industry.

In all seriousness, I don't even know who my local competitors are. Because many of the local hardscape contractors have folded up. They're dropping like flies.

It's times like these where strategic money management is crucial. Now, for the record - I'm NOT perfect. But with the folding of many contractors - the writing has been on the wall for years. When it comes to financial management - many contractors are clueless. they think they have everything under control - but really they don't.

MANAGE YOUR PAYROLL
This means watching your workers hrs. When they hit 40 hrs, send them home. Paying overtime will kill you. The best thing to do is use a payroll service to handle your payroll taxes. trust me......I KNOW.

MANAGE YOUR EQUIPMENT PURCHASES
If your work load is light - then don't be buying new trucks and equipment. With the soft economy, you're only working for the banks when you finance and lease everything you have. I only finance ONE truck at a time. And I only finance 1 piece of equipment at a time (ie: skid steer, tractor, excavator). The equipment distribution industry has perfected the art of making us contractors THINK we NEED to buy that beefy looking CTL. Buy wisely.

PAY FOR YOUR MATERIALS UPON DELIVERY
I've been a full fledged hardsape contractor for 12 years. In the beginning, I used to put all materials on charge accounts. There is nothing worse than owing a vendor money. For the last 5 years I have been paying for ALL materials upon delivery. And I LOVE it! This business is economy driven. One thing I do NOT lay in bed worring about is how on earth will I ever pay our vendors. Its a great feeling to drive away from a freshly completed job knowing that all expenses for that job are paid for free and clear. If you have been struggeling this year, do yourself a favor and STOP putting materials on charge accounts.


OTHER TIPS

We typically park our work trucks at our shop / yard each night. Well, to reduce fuel costs I have been letting the guys take the trucks home. In all reality, the workers houses are usually closer to the job sites than our shop is. This is cutting out about 30 miles (both ways) of driving, saving both fuel and employee windshield time.

Were a SMALL company. We do not rent a fancy shop. Nor do we rent a shop with road frontage. Fancy shops and shops with road frontage cost big bucks. For 12 years we rented a large dairy barn. It had cold water and electric, along with plenty of space for storing materials and dumping spoils. All that for $110.00 / month.
The dairy barn was torn down for development, so we now rent a 40x60 pole building. It has cold water and even 220 electric. We have plenty of space for dumping spoils and plenty of space for storing materials. We pay $475 / month, and being we're 60 miles north of DC - thats a BARGIN!


Many here are in markets that are untapped with competition. Those of you that have a steady flow of work need to be very thankfull. Or....if you have plenty of work.....are you charging enough???

Over the next 8 months we're going to see more contractors fold up. Some of the guys running bankrupt will surprise you. Be proactive and MANAGE YOUR MONEY.




.

mrusk
08-17-2008, 09:43 PM
SO DVS are you up down or the same compared to last year?

DVS Hardscaper
08-17-2008, 10:14 PM
Our area has been hit pretty hard, so we're way down. We do have work and we are working. We do not have a backlog. There is one contractor in our area that is running full throttle. All I can figure is that he HAS to be offering super, super, super low prices.

Most of our work is for people whom we did work for 5-8 years ago, along with referals. Thank god for referals! You can be a 2 year old company and land some referrals, but for referals to really work for you enough to where referrals will keep you rolling, it's my belief that you need at least 1 million dollars of sales under your belt, which fortunately we're past that.

Majesticman
08-17-2008, 10:26 PM
Same in Missouri.

It's an election year on top of the slow times which adds to the problem. In 24 years of biz the election years are always down because of the bickering politicians and the media waking everyone up and telling them how it is the end of the world.

I have seen worse.

tthomass
08-17-2008, 10:28 PM
I'm thankful to be busy but also, in a way, invite the economic adjustment. Its getting rid of competition that shouldn't be in business in the first place. Yes, some good ones will fold too but you get my point.

Here where I am is a different world. I'm only 25 miles south of DC but this place is a whole different economy. Yeah things may be getting slow but what has happened has been in the housing market here. There aren't layoffs and the country in a whole is NOT in a recession. A recession is defined by TWO negative quarters and we have yet to have ONE. The housing market is actually rebounding in this area with more and more sales.

I think it is best that we concentrate on our businesses and also take a good look at where we are spending money as every little bit counts. The media is in the business of making money and is mostly full of **** to be honest...........from the economy to the war. All of those foreclosures............yeah we're only talking about 2-3% of the loans out there.

I'm not saying things are tough in some areas, I'm saying concentrate on your business, keep it profitable and let the media carry on to the next big topic.

DVS Hardscaper
08-17-2008, 10:29 PM
Now I realize this is wishful thinking......but if the media would just keep their mouths shut for 3 weeks and not talk about fuel prices, foreclosures, and the economy - I bet things would improve greatly.

tthomass
08-17-2008, 10:39 PM
Wait till after the election........in our areas we should see a good climb in business. Regardless of who is in it will be a "change" and people will think more comfortably.........even if its not who they want. Now, if the democrats win there will be more of them moving to the area + the existing ones and they'll want to party, build houses, do landscapes etc........whatever the reason, I don't care........sales should be up in spring of 2009.

mrusk
08-17-2008, 10:43 PM
My sales are up this year. You know why? Because I work harder for the sale then other companies.

Some of the jobs I am doing this year took 8-12 months of talks before the trigger was pulled. When customers are not ready to pull the trigger I make sure they do not forget me. I call or stop by their house every month until we close the deal.

stuvecorp
08-17-2008, 11:17 PM
I kinda welcome the 'big slow down' as it is thinning the herd big time. Last year was very slow for me, I am up some this year. Almost all the work has been referrals or coming back to work for past clients. I sold off my snow removal stuff and got myself out of the hole, or at least very little payment wise.

PaperCutter
08-18-2008, 11:40 AM
My sales are up this year. You know why? Because I work harder for the sale then other companies.



Can I get an amen?

Mike33
08-18-2008, 07:34 PM
DVS excellant thread. I am a 3 man construction company. I have a 30x40 pole garage at my home for a shop. My 2 bobcats, hydro-seeder, mini x is paid for. My company is debt free. Am i going to go buy a new fancy dump truck, bobcat, etc. Hell no. I have been saying this for sometime. This year will divide the men from the boys real quick. We are busy comfortable, not like the last few golden years and my profit margain is down slightly but what the heck. I knew this was going to be a tough year and i planned for it. With my company debt free i can be very competive bidding and get the work. I would sooner work for a little less than not work at all. I pay after every job my material bill 30 days i don't care for , your actually holding someone elses money and can bite you. I watched 1 of my competion rack up a very large material bill and could not pay for it because he chose to make truck payments. We didn't have the new yard installs this year like before, but the SRW has been great since 2 of the fly by nites went belly up. As i stated my profit is some down due to fuel, etc. but in reality im still making good money what more can you ask for. I feel next year will be better, and the election will have a lot to do with it.
Mike

PlatinumLandCon
08-18-2008, 08:18 PM
Hehehe there's no sign of slowing up here:cool2:


P.S. All materials are paid upfront for me so I can go home with the final cheque and know its all mine (to a certain extent).

Mike33
08-18-2008, 10:08 PM
But you don't have George Bush as president either.
mike

mrusk
08-18-2008, 10:27 PM
People so easily forget how quick the economy bounced back after 9/11. For years we had a booming economy under GWB. We have a slow year and everyone is so qucik to point fingers.

Summit L & D
08-18-2008, 10:29 PM
People so easily forget how quick the economy bounced back after 9/11. For years we had a booming economy under GWB. We have a slow year and everyone is so qucik to point fingers.

True words.

mrusk
08-18-2008, 10:30 PM
True words.

????????????

Mike33
08-18-2008, 10:33 PM
Very easy to point fingers at a man who is getting rich off of oil. Im surprised he didn't declare war on Russia. Kuwait should of been the 51 state but George was to busy trying to do something his dad couldn't do. Besides getting richer, all yea the big check really moved the economey. How many wall and paver jobs can we do for $600.00?
Mike

Summit L & D
08-18-2008, 10:38 PM
People so easily forget how quick the economy bounced back after 9/11. For years we had a booming economy under GWB. We have a slow year and everyone is so qucik to point fingers.

????????????

Easy there buddy....I was agreeing with you.

mrusk
08-18-2008, 10:40 PM
Very easy to point fingers at a man who is getting rich off of oil. Im surprised he didn't declare war on Russia. Kuwait should of been the 51 state but George was to busy trying to do something his dad couldn't do. Besides getting richer, all yea the big check really moved the economey. How many wall and paver jobs can we do for $600.00?
Mike

Mike how many walls did you build in the last 8 years? How many machines did you buy? How many new trucks? You even built a nice new house. Seems like the bush years were good for you.

clcare2
08-18-2008, 10:56 PM
One nice thing is that if you need equiptment, there is alot of quality stuff out there for some good prices.

DVS Hardscaper
08-18-2008, 11:03 PM
I had a feeling after I hit the post button that this would get political.

I knew the day Bush was elected that exactlyy what is happening - would happen. He did not get my vote.


regardless, it is what it is.

Spend wisely guys. Winter is coming, if you think it's slow now - wait till the end of January!

Paver Gangster
08-19-2008, 12:05 AM
DVS tips are sound. Charles Vanderkooi has an excellent write up in a recent Hardscape magazine where he says the key to survival is to cut costs, but keep good people, and that is sound advice because you want those good people on board when business bounces back again. Laying off good people or trying to replace good people with mediocre employees who will take less really isnt cutting costs.

I will add one more piece of advice: GET YOUR MONEY. Mark my words, the #1 reason a business goes out of business is negative cash flow. No cash coming in, you simply cannot run. The biggest challenge I am seeing out there right now is getting paid. Dont accept excuses. I know times are tough for some customers, but you will go out of business while they are spending the money they owe you on something for themselves. Hire a collection agency if you have to but dont let customers off the hook.

PatriotLandscape
08-19-2008, 05:14 PM
We are up from last year and we were rocking until about a week ago. Not sure how but my guys started tearing through the backlog and banged out a bunch of work. I was freaking out running into a 1 month log. Luckily the phone started ringing. I was really freaking out for a few days.

We just moved the business out of our home yard to a bigger offsite yard. That was a big change still waiting to see how it goes.

Mike33
08-19-2008, 05:42 PM
Mike how many walls did you build in the last 8 years? How many machines did you buy? How many new trucks? You even built a nice new house. Seems like the bush years were good for you.
You know , i have to back down on this one. You made a good point. I have been very fortunate but i worked my ass off doing the work and getting the work. I shouldn't have got political here wrong place for it. But last point is i voted 2 for George. I was first to blame him on the fuel deal, and tired off the war. I have lived good under the Bush admin. I really feel we are going out of the reccesion and things will be better next year. 1 thing that we are faced with was these bad loans made hurting the housing market, which we all know trickles down to us. I did less new yard installs this year than i ever had.
Mike

SOUTHERNGREENSCAPES
08-19-2008, 09:43 PM
blame the news. if they were not in the middle east, we would not have been for long either. if they didn't spew propoganda about housing market and fuel prices, we would all be a litttle happier. they are not to take all the blame, but really...what do they report on that helps us to have a better day. i don't care who shot who, and who can't pay there house payment. my tv stays on better programming like "House" and "Bones." LOL

mrusk
08-19-2008, 09:49 PM
Mike33 I did not mean to fire back at you too hard. But i just do not think that there could be anyone out there that was better off 8 years ago then they were now.


Man I am so much better now then I was 8 years ago! I was a freshmen in HS 8 years ago. Now I have a big business and lots of equipment. I can't complain.

Mike33
08-19-2008, 10:09 PM
Mike33 I did not mean to fire back at you too hard. But i just do not think that there could be anyone out there that was better off 8 years ago then they were now.


Man I am so much better now then I was 8 years ago! I was a freshmen in HS 8 years ago. Now I have a big business and lots of equipment. I can't complain.
If i knew you was such a young **** i would of really give you some crap:laugh: I grew up during vietnam era and had family members not so lucky. I'm afraid this war is going same way. I just don't feel there has been a war neccessary since WW2. Back to the thread i'm sure some locations in our country has been affected for our work we do different than others. I have been very lucky this year as i mentioned earlier of how i operate my business. But i do agree that this was not the year to go seek more debt in up graded equiptment. I was actually thinking about replacing my 02 bobcat 185 with 1800 hours if i have a good winter plowing snow. But looking at the money i have spent in needed repairs ( heater motor, lower chain case and wheel clyd. replaed ) im going to keep it and hopefully pay some down on my home.
Mike

DVS Hardscaper
08-21-2008, 10:20 PM
See here, Mike33 is talking about paying down his home over buying a new machine.

And ya know - I grew up in a farming community. And thats how most farmers think. They run that old tractor till she wont go any more. If a truck has a bald tire they use that tire until it literally blows apart. (no, I'm not promoting maintaining and operating unsafe vehicles). I'm simply pointing out that isn't the main reason why we work so hard is so that we can always have a roof over our head?

It just blows my mind that so many contractors seem to forget about why we're working! They'd rather keep warm roofs over the heads of the manufacturers and bankers!

Mike33
08-21-2008, 10:45 PM
Yep, i know im a redneck. I know how farmers operate you hit that perfect. My point was i really dont need any equiptment. My 07 bobcat has 420 hours, 02 185 less than 2k, 03 331 mini x 2k hours. Bobcat 185 i have put around 3,500.00 in to besides needing a tire its in good condition. I am going to buy a new landscape rake for my 220 my old 5a is getting pretty rough. But i can handle 7k. My main ambition is to pay off my home with in 2 years and if i have some good plowing this year i can do that. I keep my equipment in good condition realizing business can not operate with junk, but im not going to go out and buy new machine to say look at me with new machine. When the time arises to turn the machine i will do so.
Mike

kootoomootoo
08-22-2008, 05:20 PM
Mike33 I did not mean to fire back at you too hard. But i just do not think that there could be anyone out there that was better off 8 years ago then they were now.


Man I am so much better now then I was 8 years ago! I was a freshmen in HS 8 years ago. Now I have a big business and lots of equipment. I can't complain.

BUT you live with your parents. Playing a different game to most of us.

mrusk
08-22-2008, 05:32 PM
BUT you live with your parents. Playing a different game to most of us.

Umm I don't live with my parents Koo amd havn't for a year and a half.


My business continues to grow regardless of the economic condition of the country.

kootoomootoo
08-22-2008, 07:30 PM
Umm I don't live with my parents Koo amd havn't for a year and a half.


My business continues to grow regardless of the economic condition of the country.

Why wasn't i informed.

Mike33
08-22-2008, 10:12 PM
Big difference huh!
mike

DVS Hardscaper
08-22-2008, 10:22 PM
I WISH I stilled lived with my parents. Those were the good 'ol days!

Mike33
08-22-2008, 10:25 PM
No they really sucked, i grew up as a preachers kid.
mike

mrusk
08-22-2008, 10:48 PM
Why wasn't i informed.

Koo You don't get the rusk newsletter????


Redgardless of where I lived my business has always increased termendously. That main reason is ME. I am doing alot of big jobs this year. Other guys are starving. All these jobs I am doing now started out as lead LAST Year. The people were not ready to pull the trigger then. But I did not give up on them. I stayed persistant. I called them or stopped by there house every 30 days. Other companies would of giving up. Not me.

You need to work hard for your sales. I turn down a ton of work. If I have no interest in the job I turn it down. Then I spend my time on the clients I want. And it work. We should have 250% growth this year.

DVS Hardscaper
08-23-2008, 09:53 AM
I really enjoyed the peanut butter pie recipe that was in this quarter's Rusk-a-roni Newsletter!

However Ruskaroni, ya know, I been in this bidness for many years. I ain't seen it all, but I seen alot.

I have also seen MANY contractors come online and gloat about their small companies as if they are king of the world.......only to end up owing their suppliers alot of money and only to end up getting their trucks and equipment repoed.

Lets not forget that hardscaping is a facit of the construction industry.

Construction is the 2nd riskiest industry to be in.

The likelyhood of any of us failing are high (based on stastics for the construction industry). Chances of those that have no college education failing are even higher. And this is because in colleges and universities they teach you to look at the overall BIG picture and they teach you to aim high.

Success is surely something to be proud of. But choose your words selectively, as you never know where you may end up 2 years from now.

http://www.peterborough.ca/Assets/Images/Finance+$!26+Tax/Past+Due.jpg



.

zedosix
08-23-2008, 10:04 AM
Success is surely something to be proud of. But choose your words selectively, as you never know where you may end up 2 years from now.

http://www.peterborough.ca/Assets/Images/Finance+$!26+Tax/Past+Due.jpg


.

Its an age thing!:rolleyes:

mrusk
08-23-2008, 03:32 PM
DVS- Dont worry. I have been reading your post for years and have been listen to them! I keep my overhead low. Only have 1 machine payment. No truck payment. No yard or shop. No managers.

I know everything I have could be gone in a instant, so I am very careful with whatever debt I assume.

DVS Hardscaper
08-23-2008, 05:36 PM
Glad to hear your're printing out my posts and hanging them around your office RUSKARONI!

PlatinumLandCon
08-23-2008, 05:40 PM
DVS- Dont worry. I have been reading your post for years and have been listen to them! I keep my overhead low. Only have 1 machine payment. No truck payment. No yard or shop. No managers.

I know everything I have could be gone in a instant, so I am very careful with whatever debt I assume.

Good points. No payments allow you to chill out for months and make nothing... and still survive. People that are lease happy need to keep cranking the $$$ just to pay for equipment.

mrusk
08-23-2008, 05:59 PM
Good points. No payments allow you to chill out for months and make nothing... and still survive. People that are lease happy need to keep cranking the $$$ just to pay for equipment.

LOL Chill out for a month and still survive?!?! I can chill out for one month Februrary!


You can do that at your stage of the game. If I chilled out for a month i'd have to find new guys after that. Unless I feel like paying my guys to chill out with me.

There are alot more bills in a business besides equipment payments.

tcalb2
08-23-2008, 09:59 PM
DVS Hardscaper, I can't believe you only pay $475 for inside storage. I'm getting robbed, I pay $400 here in RI for outside storage.

PlatinumLandCon
08-23-2008, 10:41 PM
LOL Chill out for a month and still survive?!?! I can chill out for one month Februrary!


You can do that at your stage of the game. If I chilled out for a month i'd have to find new guys after that. Unless I feel like paying my guys to chill out with me.

There are alot more bills in a business besides equipment payments.

Well that wasn't my point exactly... I sorta meant the chilling out being forced by the economy, not your choice.:drinkup:

tthomass
08-23-2008, 11:50 PM
DVS Hardscaper, I can't believe you only pay $475 for inside storage. I'm getting robbed, I pay $400 here in RI for outside storage.


I'm paying 11 cents per SF for a 10,000SF lot that I share with someone else. Its got gravel and a chain link fence but thats about it. Awaiting an auction next month to change all of that, I hope.

Bull
08-24-2008, 01:32 AM
I also agree with most of you on taking the conservative route in managing our business and what I mean by this is learning how to get the most from a dollar. It almost becomes addictive and also fun when you find ways to make something last a little longer and so forth. I recently made big adjustments to my business. I had over fifty lawn accounts which I sold to another LCO whom I have become good friends with. I was able to get the equivilent of five months income from these properties as payment and considering the time of year it is and the current drought situation I believe it was the right thing to do. This now gives him over ninety accounts and allows me to focus on the landscaping portion of my business and he also gives me the landscaping from the accounts that I just sold him. I was at the point of having to purchase two new ztr's next season. I kept all equipment and will now sell what I don't need but keep enough to do a few properties if the need arises. Most of my jobs landscaping stay under the 12k range but that is fine because I can usually knock them out rather quickly with myself and one employee. It feels so good now to enjoy the financial freedom this decision has brought me. As for buying equipment I have most things that I need to do the majority of my jobs and I have a great rental facility just down the street so you won't see me making any equipment purchases any time soon. I do have a shop which is on main street in our town that cost me $300.00 per month plus utilities but at that rate it is a steal. In all honesty when the sun sets at the end of the day there are only a few things that really matter. 1) God 2) family 3) fulfilling my role as a father and husband 4) providing a satisfactory job for the client at a reasonable price 5)putting a decent profit in my pocket 6) and maintaining a good reputation within my service area - for years now this has proven successful for me so if it isn't broke don't fix it.

DVS Hardscaper
08-24-2008, 05:56 PM
DVS Hardscaper, I can't believe you only pay $475 for inside storage. I'm getting robbed, I pay $400 here in RI for outside storage.
I am seriously considering building a shop (a pole building) on my land at my personal residence. I have had the plans and the surveying done for years now, which is a requirement from our county.

Last week I called our county zoning dept to find out what is required to operate a landscape business on the property. Well, because I exceed the minimum amount of acreage required, they told me I'm more or less good to go, we just need the engineer/surveror to show on the property plat where employees will park! I have been putting it off because I thought I needed adjoining property owners to sign off on it (I do not get along with the old man who's property adjoins mine), but turns out I don't need anyone's signatures.

I can build a shop and finance it for 10 years. Payments will be about 1/2 of the rent we're paying now. On the other hand - our current shop is located centrally to our work area, which saves fuel and employee windshield time.

Mike33
08-24-2008, 08:52 PM
I had a nice pole buiding built material and labor 16k. 30x40 2 12'w 10' high garage doors, 1 side entrance. Metal is 2 tone burg and tan can send pic if you want. This was shell though no inside finish or concrete. Or if you any skills build it yourself pole buildings are pretty simple. 3 guys could build it in a week or less.
mike

Lawnworks
08-24-2008, 09:14 PM
Koo You don't get the rusk newsletter????


Redgardless of where I lived my business has always increased termendously. That main reason is ME. I am doing alot of big jobs this year. Other guys are starving. All these jobs I am doing now started out as lead LAST Year. The people were not ready to pull the trigger then. But I did not give up on them. I stayed persistant. I called them or stopped by there house every 30 days. Other companies would of giving up. Not me.

You need to work hard for your sales. I turn down a ton of work. If I have no interest in the job I turn it down. Then I spend my time on the clients I want. And it work. We should have 250% growth this year.

Do you make any money? Great... you do big jobs... but if it takes you a year do to a 100k job....

DVS Hardscaper
08-24-2008, 09:41 PM
I had a nice pole buiding built material and labor 16k. 30x40 2 12'w 10' high garage doors, 1 side entrance. Metal is 2 tone burg and tan can send pic if you want. This was shell though no inside finish or concrete. Or if you any skills build it yourself pole buildings are pretty simple. 3 guys could build it in a week or less.
mike


Mike, how long ago was that built? What you described is pretty much the same as I want to do, although, I think mine is planned for 36x40. I have 2 overhead doors planned, 1 side entry door, and I think 4 windows, two tone. Although....the price is around $23,000. not including concrete. Did you use a local company or one of the national pole building companies? 16K sounds like a BARGIN! I just need 4 walls and a roof. I don't need insulation or any of that jazz.

And yep - I have been pondering building it myself.

Mike33
08-24-2008, 10:21 PM
I used Kauffman Metal in Bedford Pa. around 2 hours from you. Yhey are mennonite and would probably travel that far to build one. Or at least get the metal from him he is the dist. in our area for the metal. It was built in jan. 07 i shopped several places and got several different prices, then i said im going with cheap guy because if you know any thing about a pole building how bad can you screw one up. Then i found out this guy was the dist where everyone else had to buy there metal from him making him cheaper. So even if you get someone from your area check around they are easy and i cant see someone actually messing 1 up. My buddy did 1 with sky lights sounded little salty but you cant belive the lighting in day time no need for lights even if there is a cloud in sky, I only poured concrete on 1 side last year because of parking trck equiptment in it. I might finish it next year but there was no need this year since i only park eqpt. and supplies in it. I did run a water line in from my house since i was doing my yard at time. If you wanted to come up and look at it you know your only 1.5 hour away. Try a search for Kauffman metal i dont have a # handy.
Mike