PDA

View Full Version : Growing pains - Would love to learn from someone else's experience!


guitarman2420
05-04-2011, 08:33 AM
I've been in business @ 4 years. We've grown @ 40-50% every year. Revenue growth isn't my problem - expense control is. The problem is I'm making less and less money with every account I sign and every employee I add. I've estimated my overhead, which is 26%, I've shopped mulch prices, insurance, etc; but my labor is killing me! During Mar - June my labor is approaching 60% of what I bring in. It seems every day I have to make a choice - either keep my word regarding the things that are promised in the contract or try and cheat the client by not living up to the terms. Mulch is a good example - all the agreements say 3"; but none of my competitors install more than a 1/2"! I would love to hear from those of you who have been in the business a while and have grown their companies from one man operations to multiple crews and can relate some of the lessons they learned.

I have @ 400k of revenue, 4 trucks, 4 trailers, 2 z-turns, 1 wright stand on, 2 walk behinds, the normal contingent of string trimmers, etc. @ 60 residentials & 8 commercial/townhouse communities, which results in @ 60/40 split. We work Monday - Friday 7-5 and try and use Saturdays for make up days when it rains. Myself, one operations manager, 2 crew leaders & 7 crew members

ashgrove landscaping
05-04-2011, 08:50 AM
Having employees will suck you dry plus all of the insurance!! You could cut your insurance down by getting rid of two trucks and two trailers. Seems a bit much. Change your configuration of trailers to make it work. It's easy to see why you not making more money with all those trucks and too many employees. 60 accounts and 8 townhouse communities can easily be done with two crews including yourself. Which means you having only 3 employees. If mowing is all your doing basically, and mulching I guess, I think you are way over staffed and probably paying them too much money with those fancy titles. Remember that less is MORE.

guitarman2420
05-04-2011, 08:54 AM
Two of the townhouse communities are large @ 150 units. It takes a 7 man crew 1 1/2 days to mow & trim & weed it. Also, my wife is a landscape designer - we bring in @ 120k in projects, such as plantings, etc.

nobagger
05-04-2011, 08:57 AM
I've been in business @ 4 years. We've grown @ 40-50% every year. Revenue growth isn't my problem - expense control is. The problem is I'm making less and less money with every account I sign and every employee I add. I've estimated my overhead, which is 26%, I've shopped mulch prices, insurance, etc; but my labor is killing me! During Mar - June my labor is approaching 60% of what I bring in. It seems every day I have to make a choice - either keep my word regarding the things that are promised in the contract or try and cheat the client by not living up to the terms. Mulch is a good example - all the agreements say 3"; but none of my competitors install more than a 1/2"! I would love to hear from those of you who have been in the business a while and have grown their companies from one man operations to multiple crews and can relate some of the lessons they learned.

I have @ 400k of revenue, 4 trucks, 4 trailers, 2 z-turns, 1 wright stand on, 2 walk behinds, the normal contingent of string trimmers, etc. @ 60 residentials & 8 commercial/townhouse communities, which results in @ 60/40 split. We work Monday - Friday 7-5 and try and use Saturdays for make up days when it rains. Myself, one operations manager, 2 crew leaders & 7 crew members

You have 400K in revenue off of 60 accounts? Are your town home communities multiple housing counting as 1? IDK, sounds like you might be heavy on the amount of employee's needed for 60 accounts. Again its tough to figure because one of your town home communities could take a full day to do with 2 crews. This is the problem when you run multiple crews and I'm fine running a small crew of 3. Do you or are you able to check on the crews during the day?, even if you were to be the boss and crack the whip a bit to speed them up, saving even a 1/2hr a day of labor between 7 guys is huge. That would add up to several thousand dollars at the end of the year.

hackitdown
05-04-2011, 09:01 AM
It sounds like you have 11 people working on your 60 residential accounts and the equivalent of 40 in commercial work if your 40/60 split is correct. I'm small, but I have 3 people (me and 2 workers) working on 50 residential, 1 commercial (17 accounts per guy working). You have 11 people working. That is one guy for every 9 customers. You are generating $36,000 per employee per year. Maybe you should be closer to $50K per.

I mulch at 3 inches only on a new bed. If you are going over an old mulch job, 1 inch is fine. Especially if the customer wants it mulched yearly.

nobagger
05-04-2011, 09:12 AM
Two of the townhouse communities are large @ 150 units. It takes a 7 man crew 1 1/2 days to mow & trim & weed it. Also, my wife is a landscape designer - we bring in @ 120k in projects, such as plantings, etc.

I kind of thought that might be the case. Our 51 unit condo place is a bit of a PITA to mow, bottom half is all 21" work, one side is on a steep hill and all 50 yards x15ft wide on the upper half is all 21" work. 3 guys, mowed, bagged, trimmed, edged and blown off 3.5-4hrs tops. But again its tough to say without seeing your properties. It still sounds like labor is too high. Even after doing this large complex you still have 3.5 days to mow 60 some accounts. I would think you would be able to mow those accounts with 2-4 guys.

topsites
05-04-2011, 09:27 AM
I'd start cheating already, and not just the clients but try and balance it out, look here
you're taking a loss, why should it be just you taking it, spread it out evenly between
yourself, the clients, and your workers.

That's what I would do, that way everybody shares the burden some.

Last but not least, your problem is a likely indication that your prices are a bit too low.

guitarman2420
05-04-2011, 10:02 AM
I appreciate everyone's feedback. It helps to have people trying to help you out rather than saying, duh . . . I think we are too top heavy - I try and generate sales and run the office and I have an operations manager who is trying to maintain quality and keep all the equipment going. One thing I have not been able to figure out is seeing companies working their crews from daylight to dark - the overtime would seem to be a killer; but when you do the math of having less employees and less equipment and overhead, maybe it makes sense. The other problem that I have is if I drop 1-2 crews and trucks is how to keep the revenue flowing for the landscaping project work? I make more profit on that work; but in VA, you have @ 4 months a year to do plantings, etc. You can't build a constant revenue source from that. I try and build my constant revenue around the lawn maintenance and use the other for gravy - but I do recognize the labor & insurance (overhead) is way too high.

Also, what do you guys do about damage at townhouses, etc.? Do you cover all storm door damage? That seems pretty straight forward that if you broke it you fix it; but now I have a client that wants us to fix vinyl siding that on the bottom edge is nicked by the string trimmers.

thanks,

Monster Lawn Care
05-04-2011, 11:22 AM
Maybe if you drop to 2 crews and add part-time / seasonal help every year for installs, etc. You could get with a temp service to provide the seasonal labor, plus they'll handle most of the employment paperwork headaches.

I think if your guys damaged the siding, you're responsible for it. I think you should crack down on that kind of stuff with your guys.

Sounds like you've built up a great operation, kudos to you.

willretire@40
05-04-2011, 11:52 AM
Looks like you need an office girl. Operation manager should be doing some cutting and landscaping. You should be out helping cut if the guys get behind. You need to only have 3 man crews. On your residential accounts if under 3 acres then you should only have 2 man crews. Trim back the employees and then see how much can get down.

I would have the 60 res accounts set to one crew tues-thursday. Then have that same mowing crew doing landscape or commercial work on Monday.

Just look at your numbers and see where you can shave $500 a week. Your not making any money so be tight with your budget. What do you have to lose anyway?
Posted via Mobile Device

WildLake
05-04-2011, 02:01 PM
your income to employee ratio is half of what we do, but we are more of the sun to sun down type of company but that is efficent for us. buy the time summer gets here we work between 40 and 50 hrs/week. seems like you have two times the crews,trucks,etc for the same revenue. your prices may be low and causing this or your crews too big. I find that 3 men for residential and 4 for commercial works best, any more and guys slack off. also, if your guys break it, you fix it. no reason to be busting up sideing. it happens but very rarely.

guitarman2420
05-04-2011, 02:23 PM
A couple of things - I tried the you break it and you fix it and got my hand "slapped" by the labor folks :nono:- you can fire someone for it; but you can't force them to pay for it. As far as pricing, I've gone to $50 an hour for T&M charges and try and figure $50 an hour for my contracts. On townhouses, what are most of you charging per unit? It seems the magic # to get business here in VA is @ 21-22 per month per unit.
Wildlake, I don't understand your sun-up to sundown # of 40-50 hours - that would result in a lot more hours than 50 - do you just work them 4 days?
Also, my operations manager keeps telling me that a 2 man crew for your larger residentials leaves no opportunity for weed pulling, etc, unless you have the 2 man crew do everything else and then spend 10 minutes or so pulling weeds.

guitarman2420
05-04-2011, 02:47 PM
It looks like I have 2 trucks too many. I'll need to keep the two larger trucks that are capable of snow plowing and hauling people. That leaves me with two trucks to sell. Any of you had any experience with how to divest of vehicles that you owe more (@ 4k each) than they are worth? Call the finance company? Craig's list?

Monster Lawn Care
05-04-2011, 02:58 PM
Are you a member of a Credit Union or small, community bank? I'd go sit down with them and tell them you'd like to sell your truck for as much as you can and borrow the difference on your signature. I got into debt when I was young and had steady paychecks from Uncle Sam. This is how I got rid of a truck I didn't need and paid too much for cause I was a dumbass when I was younger. Well, more of a dumbass than now anyway.

WildLake
05-04-2011, 03:23 PM
When I said "you break it, you fix it" what I really meant was your guys break it, you pay to have it fixed.
As far as hours, currenty my guys are working 10-12 hrs/day and even working on rainy days to stay caught up but once we get closer to summer and the mulching, annuals, and inch per day of grass growth is over with, we ussually end up working around 40-50hr for remainder of the season.

WildLake
05-04-2011, 03:26 PM
Yeah< I'm with you, I don't really think two man crews are very efficient. Atleast not for my properties. It almost seems like 3 guys get the same work done twice as fast as two.

hackitdown
05-04-2011, 03:50 PM
A couple of things - I tried the you break it and you fix it and got my hand "slapped" by the labor folks :nono:- you can fire someone for it; but you can't force them to pay for it. As far as pricing, I've gone to $50 an hour for T&M charges and try and figure $50 an hour for my contracts. On townhouses, what are most of you charging per unit? It seems the magic # to get business here in VA is @ 21-22 per month per unit.
Wildlake, I don't understand your sun-up to sundown # of 40-50 hours - that would result in a lot more hours than 50 - do you just work them 4 days?
Also, my operations manager keeps telling me that a 2 man crew for your larger residentials leaves no opportunity for weed pulling, etc, unless you have the 2 man crew do everything else and then spend 10 minutes or so pulling weeds.

If you are getting $50/hr per guy for 40 hrs, with 9 guys generating billable hours, that would be billing $18K per week. If you work 40 weeks, you would be at $720K, or 35 weeks would be $630K. Something is off.

guitarman2420
05-04-2011, 04:24 PM
The key word in my post is "I've gone". I have 2 year agreements that I am still servicing at my lower rate and no one is able to bill out at a full 2,080 hours a year. I am in the middle of converting accounts and I am billing out any new clients at the higher rate. In any industry, if you are able to bill out @ 1,280 hours a year you are doing excellent.

willretire@40
05-04-2011, 04:48 PM
If you have full service customers then i can see 3 man crews. Only problem is if they slack for only 30 minutes out the day doing nothing then you have 1.5 man hours that you can't bill for. What does your operations manager do and what type of office work are you doing? What scheduling software are you using?
Posted via Mobile Device

guitarman2420
05-04-2011, 04:56 PM
The operations manager presently does maintenance (on equipment), qa, helps me with projects and kicks butt. My wife does the office work, along with the landscape design. Presently I'm just using Outlook for scheduling. I use the task function and e-mail it to my crew leader. I've looked at different products; but so far have not found one that seems to work for my size operation. I used to sell maintenance software. I'm really picky because once you spend the time to convert to a program, you become wed to it for a long time. I'm hoping to select a good product next off-season. I am very conflicted whether I want to own the software, or use the "cloud" system where you never own it; you just "lease it".

willretire@40
05-04-2011, 05:09 PM
Where do you think your business is suffering? I ask that because normally we know what the problem is but we tend to ignore it sometimes. It can really only be a fee things. Not charging enough, too much debt, or to many employees, and/or not following a budget. Imo
Posted via Mobile Device

guitarman2420
05-04-2011, 05:25 PM
Because of too many vehicles, debt is an issue. I think it's already been established that I have too many employees. "Besides that, Mrs. Lincoln, how did you like the play"? :)The good new is that it's correctable; but I can't sit on it any longer to let it work out. BTW, we have a rainy day here, that's why I'm playing on the computer today!

Texas Lawn
05-04-2011, 05:38 PM
Here is why your company is not doing well:

-very low revenue for 4 crews and 9 people

-you dont make enough money to have an operations manager

-you have too many people in your company. You dont need that many, i guarantee it.

-Your overhead is too much because you have 4 trucks but dont have the revenue to justify it

I know its easy to sit here and say all that, but it seems like you are running a very inefficient operation. You dont seem to know your numbers because if your labor is at 60% it didnt happen overnight. Good luck

guitarman2420
05-04-2011, 06:40 PM
Dear Mr. Texas Lawn, I've had responses from @ 20 people today, and yours is the only one that seems to have an air of arrogance about it. The WHOLE reason I posted the question was to recognize I don't have all the answers although I do know my numbers - I PLANNED to invest in my business and grow it quickly - I'm 58 and I don't want to do this when I'm 70, so I PURPOSELY built it quickly and PLANNED to lose some $ upfront to grow the top side or revenue. @ 20 people today have responded with good natured help and it takes one person to sound like a know it all. Good luck to you too!

Texas Lawn
05-04-2011, 06:49 PM
How was I suppose to know that? Im sorry if I came off as if I knew all the answers, Ill be the first one to tell you I dont. You asked for help and I gave it to you. When it comes to business and money, I dont sugar coat and Ill agree that comes off arrogant, but thats not the idea. I do wish you the best of luck in business and hope it all works out. I would argue about knowing your numbers because of how high your overhead is and how much you are paying in labor, but I guess if that was on purpose, its ok.

guitarman2420
05-04-2011, 06:53 PM
Thanks for the clarification. I'll be the first to admit that I'm more of a "salesy" guy and I'm trying to learn to better manage the day to day operations. That's really why I hired the operations manager, who is a close friend; but I have learned the hard way (losing my shirt) that I have to have my hands and nose in the middle of everything. I was spoiled because I was in another service business for over 30 years where I managed professional service technicians. My apologies:cry:

Kelly's Landscaping
05-04-2011, 09:36 PM
Every one seems to jump on the trucks but you didn't list their sizes years or even if you own them outright. I have 4 trucks I run 2 crews I have 3 trailers I have been getting the pieces in place to equip a 3rd crew. I own my trucks but am upgrading in a few days to a brand new one and we will eliminate the smallest pick up. But I stand by owning that many as you need back ups and things break and the older they get the more often they break. Never thought id want a back up trailer till an axle snapped last summer and left one with 3 wheels for a week before I could get the parts. Needless to say we were really behind that week. As for the trailers they don't cost you much to hold them the truck insurance covers them and our taxes on them are like 60 dollars a year each add in registration and less then 200 a pop. Your not going to solve the problem with that modest gain.

My trucks have 500 k insurance and cost me about 1100 a year each to insure add in the extras and less then 2k each a year to own em. Repairs of course are extra as are the tires but they are gona wear the same rate regardless how many trucks you own.

Which brings us to employees you your wife and your manager. For the most part do not perform the actual work being billed for you all have your roles but you 3 cost more then you bring in. Your manager sounds very good the issue is what are you paying in salary for you 3 even a modest 30k or so a year times 3 of you is over 100k when you add in all the little taxes and fees we pay. That leaves 300k roughly for the remaining 9 guys and all gas all materials and all repairs and upgrades.

9 billable guys at 400k your guys are bringing in 44,444.45 a year each that's 15k a man less then my guys. If you add in your wife you and your manager that number gets real ugly. Now your down to 33,333.34 a year each so the problem isn't the equipment its the dead weight and I mean no offense. At the very least your manager ought to be running a crew himself and running the companies daily issues and you need to step in to some of his roles like doing the errands dropping off broken stuff picking up repaired stuff grabbing loads of soil and mulch what ever you can do to keep the jobs running smoothly. Next the Ot it does hurt but it is part of the trade just try to work it so you only have what you need i.e. try to keep the crew leader hours under control since they make the most but feel free to work the new guys cause they make the least in fact its a great idea to run the Saturday jobs yourself. You won't add to the cost and your get the benefit of getting the most done you can out of each week. Bottom line you need to get your average income a year per man up past 55k or your never gona make much.

guitarman2420
05-04-2011, 10:05 PM
Thanks for a great posting. :) If we continue at the level we are today with our project revenue, we may be @ 500k by the end of the year; but who knows what the summer and fall will bring with the gas prices. In my old career field, medical service, we had to bring in @ 110k per FTE. The trucks are 1 2003 F250; 1 2005 F250; 2011 F250; 2008 Nissan Titan and 1999 Chevy Tahoe. We owe something on everything except the Tahoe.

mattfromNY
05-04-2011, 10:36 PM
Just a couple points I would throw in from my own experiences: Running less guys on crews, but more hours each (dipping into overtime in the busy times) will generally cost you less overall than trying to keep more employees paid full time all season (Ex: 2 guys making $12.00 each, 8 weeks at 60 hours + 20 weeks at 40 hours= $32,640 <straight pay, overtime pay over 40 hours for this example, not figuring taxes,etc>, whereas 3 guys at straight 40 hours for those same 28 weeks= $40,320)
-Also, I am not afraid to invest into more efficient equipment when necessary. My thoughts are that if I find a great employee, I will equip him/ her with whatever it takes to make them the most efficient as possible. I would rather burn out a good piece of equipment than a good employee, any day of the week. Good equipment is easy to find, good employees arent.