Got one For the Big Guys!

[Scagg Mann]

Below is our scenerio. Assuming we are going to do it some way how would you go about doing it making it fair for both sides.

My partner and I run a business gross yearly about $70,000. We currently have accounts that will net about $160,000+ this year.(bought out another business plus our advertising.) We are going to hire two full time crews. Debt total $50,000 with about $40,000 in assets (equipment trucks).

We have a guy with 15 years experience who would like to partner up with us either as a partner or a manager/head superivisor. He will be bringing with him $11,00 worth of equipment and about $3100.00 minimum worth of accounts. We would basically have three crews running with 8 employees.

How would we set this up? Could this be beneficial to us? He agrees we would make more than him. He wants to earn about $2,000 to $2500.00 a month. run the crew maybe mow one day a week. He would also help on getting new customers and such.

Any advice would be greatly appreciated!!!!!
We have been mowing just the two of us for over four years and are ready to take that big step on developing a big company and take on the extra headaches of running a crew with the trade off not having to mow each and every day.

thanks:confused:

[paradisescaper]

i think you should make him the foreman pay him well. but you really need to go out there and sell and advertise. good luck get that phone to ring

[Tyler7692]

All I've got to say is that you really need to rearrange that debt-to-asset ratio.

And another thing is, in my perspective, the entire partnership is nearly bound to crumble or develop serious faultlines with all of the elements involved in this. More specifically, you can't rely on this outside partner/manager guy you plan on hiring with all the stipulations....

That's my opinion, not being critical to you, just trying to give you some outside advice... for what's its worth.

[AdamChrap]

I look at this and see a disaster scenario. You guys should figure out a way to turn this into a C-Corp.

[Az Gardener]

Putting aside the business structure I don't think your numbers add up... follow along and see my reasoning.

Assuming you will have 7 months of work for your 8 men.
That is 172 hours per man per month (40 hrs X4.3 weeks).
Now only 75% of those hours are going to be billable. This is an avg. you may be less or more,so that gives us 129 billable hours per month, per man.
129 X your 8 men = 1032 billable hours per month.
1032 X say $40 per man hour is $41,280 per month gross.
41280 X your 7 month working season is $ 288,960 in revenue you need to bring in to afford those 8 men
I will add that the $50-60 range is what most on here believe you need to earn hourly to make it so the $40 is low.


Back to the drawing board I think. 3 high salary guys is too many for such a small company and the 15 year guy should be wanting more than 2500 per month and should have accumulated more than 3100 per month in accounts to bring to the table. Do more with less is my advice.

[Stihl036pro]

That's a hard one. Make sure everything is spelled out. I would contact an attorney to have a contract drawn up to make sure all the parties involved know what is expected of them and there is absoultely no questions when one guy is not pulling his weight. Be very careful. Its uncharted waters that can get ugly. Good luck to you.

[Tommy Boy]

You need to have any agreement with the guy in writing concerning accounts he brings in. They become the property of the company and he has to sign a non-compete. See what if he gets 6 months into this thing and says, ok I'm out of here, he takes his equipment and contracts? No way! Must be in writing. The math in original post is flawed, AZ has a great handle on this. Debt ratio is too hig and you have no emergency cash flow for when you lose that huge account. Pay off your debt, bulid capital, Stay small, grow smart!

My two cents worth

[Scagg Mann]

thanks for the advice so far. Update on my original post. The total of around $160,00 in accounts this year is what we will have just the two partners. We planned on having two crews, bringing in between $12,000 to $15,000 each two man crew with a third tech so a total of five employees. The earlier post is pretty close, with adding another partner/manager we would need to net around $42,000 to $45,000 each month for eight months to make it worth it. I figured on average low side of $150.00 income per residential customer we would need about 150 to 175 new accounts if we did this. I thought if we had just the two of us we would need only 75 new accounts which is very reasonable in this area. This new guy could be a great benefit with all his knowledge and being able to run a crew I just don't know if we can grow this big so fast from one year to the next. I open to ideas and will need to make a decision in the next week or so before our advertising campaign begins. Thanks
and this site has been so helpful on a number of topics!!!!!!!!:rolleyes:

[Stihl036pro]

I just went back and read Az Gardener's post again. He is right on with his math. You have to look at it by the billable hour. Start with your profit and build from there. Numbers do not lie, If you have trouble doing business by the billable hour hire someone to do this portion. I am not very good at math but I know how important it is to make sure I am making what I need to make to make it all worth it. I hired someone to due this for my company and it was well worth the money. One of the most important decisions I have ever made.

[Stillwater]

You should read AZ's post about 50 times and confirm your numbers

[TScapes]

I agree, I think your numbers are too low. AZ has a great point and illustrates it well. Another way to look at it is this, I was told a good number to shoot for is one man should be able to produce atleast $50,000 of work. Install numbers are a lot higher, but shoot for that 50k+ per man on a crew. Thus, with your 8 guys working you should produce atleast $400k. This is just a number however. It can be alot higher, but should really not be lower.

[willretire@40]

I agree with the above but I would shoot for $60k per employee but no lower then $50k. In other words you and your partner have not been making enough in the past 4 years. This year looks like a different story. Now you need to hire 2 guys and do alot of selling to keep all four of you busy.

[ford550]

Yeah I have to concurr with my fellow lawnsite brothers. With one of my maint. crews (3 man crew), they will generate $160K gross. You have too many employees for that low of a gross. And with two partners and a third foreman, way too expensive, there won't be anything left and you will run in the red. AZ has a good illustration. Now is the time to have sharp pencils and budgets in this economy.

[MC Handy Man]

I have no personall experiance here however I think that by partnering with the third party it could become a bad situation. The more propretiors on the line will mean more disagreements and fudes. I would say for now, Get him on as a foreman and pay him well, keep him satisfied within your limits.