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View Full Version : the right way to figure cost


DiSantolandscaping
10-16-2011, 05:56 PM
whats the right way to figure your cost when just starting out? Is it better to do it monthly or yearley? and how do you estimate total hours youll be working in a year if you dont know for sure? and besides rent insurance and stuff what do you figure in to this cost?

DiSantolandscaping
10-16-2011, 06:18 PM
ok so i took my rent cell cable insurances gas food added some to vehicle repairs ad some for new equipment. came out with 26916 per year divided that by 2080 hours per year thats 40 hours a week for 52 weeks. i dont work that much yet but i figured its a start, and i came out with 13 bucks an hour for over head. does that sound about right toyou guys? or did i do it wrong?

Kelly's Landscaping
10-16-2011, 07:24 PM
Food is personal not business so that doesn't belong in there and is the rent a shop or your home? So you need a personal budget and a business one now as for the business do it monthly. Don't get to concerned about the per hour as you said your starting out so the term feast or famine is going to become more clear to you. Your do well in spring probably hit 50 hours plus a week then the mulch and seeding jobs will drop off and being so new your not going to have a ton of pruning so by summer your going to be starving. By fall it will pick up and your have another wave of to much work and then your be starving again come winter. What matters is knowing what you need to have to make it through each month so you may have a decent amount of cash on hand after the spring but need to hold onto it cause the bills don't stop coming in when things get lean so knowing what the monthly bills are will help you have 3 months on hand.

Then there are all the little things guys forget licenses registrations property taxes P.O box rent Bank fees stamps and office supplys. There are plenty I just forgot about I am still hit to this day with ones they just invent to nickle and dime us to death some more. I'll give you this your brave Id hate to be starting in year 4 of the Obama recession but if you survive your be ready to expand when hes gone.

ernieknows
10-16-2011, 07:39 PM
you will have to separate your personal expenses from your business expenses. . Cable and food are personal, so NO. Equipment maintenance is business. With your truck insurance and fuel are business only to the extent of your proportional use in the business. . Say your records show that you drive 14,821 miles in a year, 6,782 are recorded as business use.
6 782 / 14 821 = 0.457593955 About 46 percent of your carefully recorded expenses for the truck are deductible.
Your truck, like your expensive ztr, will last more than one year. These fall into capital asset classes that will depreciate on a declining value. And to make it more difficult if the above numbers are true you can only write off about 46 percent of that truck depreciation.

sound like fun? this a business owners responsibility
1 Set up a separate bank account
2 Keep daily records
3 IF YOU HAVE NO RECEIPTS YOU HAVE NO DEDUCTIONS.

Use an invoice book(s) with sequentially numbering to keep records of your business income

DiSantolandscaping
10-16-2011, 08:18 PM
ok thanks guys, so most of the stuff ill be buying next year starting in jan or feb so ill save every single recipt starting jan 1 because i know that thats when the new tax period begins. What ill do is keep track of my mileage by doing a start and stop for every job i travel to and from, as well as estimates i go do to and from. and if i need to go get supplys for a job. Just for the hell of it i added in hiring one guy at 12 per hr and added 30% to that per hr for taxes, wc, and so on. So that made my overhead 30 per hour so if i charge 40 per hr with two guys i can still make 50 per hr. thanks again.

Kelly's Landscaping
10-16-2011, 08:28 PM
Mileage is one way and I do not use it the other is to record all repairs and expenses on the truck or trucks the reason I opted not to use it is because its one or the other and if you have an older dump truck like I do that sees use for fall its better to claim the real repairs then the 2000 miles a year it drives. Now as for the equipment that's not and expense those are assets you need to at least find an account to help you understand the difference and how he wants them recorded. Anything under 500 my accountant doesn't care about they can be an expense which makes sense I only get one or 2 seasons out of trimmers these days. But big ticket items have depreciation schedules like my new $60,000 ram 4500. Much to learn and figure out such as what your business is going to be set up as and that makes a huge difference.

lawncuttinfoo
10-20-2011, 10:03 PM
It's the 'wrong' way to do it but just get like 5 quotes and take the average and go from there. Fast way to start, but could be dangerous, thier costs may be a lot less than yours. If you get lucky and don't lose your pants, you just skipped a lot of hard work, well at least postponed it till later since sooner or later if you want a real business you have to know your costs.

32vld
10-21-2011, 10:36 AM
ok thanks guys, so most of the stuff ill be buying next year starting in jan or feb so ill save every single recipt starting jan 1 because i know that thats when the new tax period begins. What ill do is keep track of my mileage by doing a start and stop for every job i travel to and from, as well as estimates i go do to and from. and if i need to go get supplys for a job. Just for the hell of it i added in hiring one guy at 12 per hr and added 30% to that per hr for taxes, wc, and so on. So that made my overhead 30 per hour so if i charge 40 per hr with two guys i can still make 50 per hr. thanks again.

I don't know who is willing to pay $80 to have their lawn mowed that only takes one hour.

You have to start doing estimates of costs. Example, gas, guess how much gas you will use a week. Say two tanks, $50 a tank@$100 week / 40 hours = $ 2.50 an hour for gas. Break everything down into weekly then hourly costs.

Also need to factor in an hourly replacement costs for all equip, trailers, and trucks. Example, a new truck. If you think your truck will last ten years, and a new truck will cost $35,000 then you need to take the number of weeks worked per year. Now some LCO are able to do work 50 weeks a year some 40. We'll use 50 weeks.

10 years = 500 wks, $35,000 / 500 = $70 a wk / 40 hr = $1.75 hr

Payroll. You don't take all the profit as salary. You and your employess have to have a salary cost figured. Then you have to figure your personal costs to determine how much salary you will need to be paid.

Profit is what is left after all costs have been paid. Profits are for business growth and expansion and employee bonus'.

guitarman2420
10-22-2011, 04:57 PM
The most important thing is try and find out what it is actually costing to have yourself or any employee out there doing work. There is a temptation to think that your costs are minimal, just because it's you doing the work. I started a thread over in the business management section about this very issue because its hard to come up with an actual cost of doing business - gas - taxes - permits - commercial pesticide license -business license - vehicle costs - debt - the list goes on and on of what it actually costs to run a business on a per hour basis. I don't think you can look at it on a monthly or annual basis. The closer you break it down into smaller parts - what does it actually cost you to drive your vehicle down the road and drop the trailer gate in someone's yard. If you don't know the answer, you don't have all the information you need to survive. I guarantee that some of your competition knows EXACTLY what they can do their service for and make $.

White Gardens
10-22-2011, 05:16 PM
In your first year you should really be more concerned with making money and gaining accounts.

Yes you need to have a basic idea of your over-head, but everyone's situation and business model is different. What it comes down to is you need to really keep track of your expenses for the year and that will give you an idea of what it cost per hour.

Ultimately it will take you multiple years to get a good average of what it takes to operate per hour.

,,,

guitarman2420
10-22-2011, 05:32 PM
Yes, it's hard to come up with your overhead, etc; but it only takes a few moments when starting a new business to have a good month and march into the local truck dealership and buy the new top of the line truck and effect your profitability and overhead for the next 6-7 years. I see it all the time. That's the point I'm trying to make - know what your costs are and your expenses. Many of the new people in the business don't take the time to analyze things. Just my thoughts.

Kelly's Landscaping
10-22-2011, 09:02 PM
Yes, it's hard to come up with your overhead, etc; but it only takes a few moments when starting a new business to have a good month and march into the local truck dealership and buy the new top of the line truck and effect your profitability and overhead for the next 6-7 years. I see it all the time. That's the point I'm trying to make - know what your costs are and your expenses. Many of the new people in the business don't take the time to analyze things. Just my thoughts.

Love to hold off on replacing one of my cutting trucks but the costs have been killing me for 6 years now and we have looked the other way were talking 30k in tires and repairs not including anything else like fuel or insurance. Sometimes being cheap is expensive. So for that reason as much as I hate the thought of payments on a 2nd new truck at once that seems to be my only option as I'm looking at another grand in repairs this week already called the mechanic tonight. On the other hand we bring in 30k a month so 2 payments wont kill us but if your just starting out and hoping to get 1 k a week don't even think about it.

guitarman2420
10-23-2011, 06:59 PM
Hey, I'm not saying that we shouldn't buy new trucks. You clearly have a handle on your business and are making good decisions based on cash flow analysis; but we all know that if a person is not used to running their own business, especially when starting out, that it's easy to run up too much debt and cripple your ability to grow down the road. I've lived through that mistake myself in regards to capital equipment. Some people grow quickly; others take longer; but there is no substitution for good planning and analysis.

coolluv
10-24-2011, 05:08 PM
Love to hold off on replacing one of my cutting trucks but the costs have been killing me for 6 years now and we have looked the other way were talking 30k in tires and repairs not including anything else like fuel or insurance. Sometimes being cheap is expensive. So for that reason as much as I hate the thought of payments on a 2nd new truck at once that seems to be my only option as I'm looking at another grand in repairs this week already called the mechanic tonight. On the other hand we bring in 30k a month so 2 payments wont kill us but if your just starting out and hoping to get 1 k a week don't even think about it.

Its called stepping over a dollar to save a dime. I love when new guys say well my truck is payed for so, and my mowers are paid for so I have little overhead.

I would love to buy my stuff where they buy theirs. You know the fairy tail land where everything last forever. You figure a used truck the same as a new truck. You either make payments to the bank or you make payment to the mechanic. Not to mention down time and towing cost and paying guys to sit on the side of the road, or lost revenue for the day or week etc.

New or used it cost the same and should be figured the same.

Dave...

clydebusa
10-24-2011, 06:32 PM
Love to hold off on replacing one of my cutting trucks but the costs have been killing me for 6 years now and we have looked the other way were talking 30k in tires and repairs not including anything else like fuel or insurance. Sometimes being cheap is expensive. So for that reason as much as I hate the thought of payments on a 2nd new truck at once that seems to be my only option as I'm looking at another grand in repairs this week already called the mechanic tonight. On the other hand we bring in 30k a month so 2 payments wont kill us but if your just starting out and hoping to get 1 k a week don't even think about it.

30k,, :hammerhead:

Kelly's Landscaping
12-07-2011, 11:16 AM
30k,, :hammerhead:

In fairness it wasn't all at once what happens is this you got a vehicle that's worth say 10-15k and then the brakes all need to be replaced. Your not going to scrap the truck over 1k so you pay it then the fuel injection pump goes but other then that shes paid for so you pay it. This happens year after year with my 99 ram 3500 you get her back everything's great then 6-10 weeks later another 1-2k item goes mean while you need the cutting truck back on the road the next day so you have no option but to pay it. Its only when you start looking at the repairs over the years you realize its constantly 5k a year plus. And so even though atm she is running good we have already made up our mind she has to go its just a matter of time before she screws me again.

coolluv
12-07-2011, 11:32 AM
Ive done it my self, not to that extent. I spent over $8,000 in 3 years on a vehicle and didn't realize it until some south of the boarder dude pulled out in front of my wife less than a 1\2 mile from the house and totaled it.

Insurance company gave me peanuts for it and to top it off I just put brand new tires on it. Looked back at all my receipts and dam near crapped myself. Just like you said, fuel pump goes and then you notice the injectors leaking so you replace the whole nine, rail, injectors, pump.

Then the water pump goes and you notice the radiator has a small leak. So rather than wait you end up replacing it all. Brakes same thing. New rotors,brakes, wheel cylinders etc. It adds up fast.

I had all the oil leaks fixed and on and on. Before it got totaled it was dam near new.

I learned my lesson. Anymore I trade up when they get to that point. You save money in the long run. Like I said with new or old you either pay up front or you pay later but it all evens out in the end.

So you figure your cost the same, new or old. Just because its paid for don't mean $hit.

Dave...

meets1
12-07-2011, 12:03 PM
Trucks are needed but I have bought new his last time around - guys don care. Hit the tailgate, sides gets dents, interior is always dirty. Sure we talk, we clean trucks but yet no one knows who did this or that. But I usually have ran our trucks o 150K with little fan fair of expense. I have put a new water pump in and now I think head gasket is going on the oldest truck which we"ll fix cuz were at the 110K range. Other than that - I have never touched that truck since new.

coolluv
12-07-2011, 12:44 PM
Trucks are needed but I have bought new his last time around - guys don care. Hit the tailgate, sides gets dents, interior is always dirty. Sure we talk, we clean trucks but yet no one knows who did this or that. But I usually have ran our trucks o 150K with little fan fair of expense. I have put a new water pump in and now I think head gasket is going on the oldest truck which we"ll fix cuz were at the 110K range. Other than that - I have never touched that truck since new.

You should have vehicle inspection reports done daily. Before they leave and when they come back. If something is not reported then someone gets fired.

Poor management, lack of paperwork and no fear of God IE. the owner, is the cause of equipment damage.

They will keep bending you over if you let them.

Dave...

guitarman2420
12-07-2011, 05:03 PM
Have any of you come up with a good way of disciplining employees, except for counseling, firing, etc. for not taking care of vehicles, equipment, callbacks, etc.

I'm holding the crew leader responsible and making them personally go back for callbacks and being responsible for cleaning trucks, but of course you have to pay them for the callback, if they are hourly.

Any ideas would be appreciated.

Kelly's Landscaping
12-07-2011, 05:49 PM
I would love to buy my stuff where they buy theirs. You know the fairy tail land where everything last forever. You figure a used truck the same as a new truck. You either make payments to the bank or you make payment to the mechanic. Not to mention down time and towing cost and paying guys to sit on the side of the road, or lost revenue for the day or week etc.



Dave...

I totally agree with the fairy tail land paid for part all things break down although I so seldom have even been towed Usually I can limp to the mechanic I would say its 1 in 20 issues perhaps even less then that where I am left needing a tow. Iv even had 2 transmissions go but once we unloaded the truck or unhooked the trailer we were able to drive to the mechanic.

I think there is a sweet spot though where for a short while perhaps 2-3 years after the payments have stopped that you have a truck with virtually no repair costs. Something I hate about buying used trucks and I have bought 4 of them is they always cost way to much for their year or they have insane miles on them for their year. Which is why I have opted for new we tend to only put 6-8k miles a year per truck. Meaning around year 4 I'll have them paid off but only have 25-35k in miles where as my extended warranty was 7 years 60k miles. Which should give me a few cheap years before the cycle begins again. The thing I really love about my new truck is the size 4500 its quite rare then add in 4 full doors and the fact its not white and I expect it to keep a very high resale for when I decide to upgrade. You see 20 year old 3500 dumps here still fetching around 10k.

guitarman2420
12-07-2011, 06:12 PM
You must have really compact routes to only put 4-6k on a truck per year. We are putting @ 16-18k per year. What's your secret?

Kelly's Landscaping
12-07-2011, 07:42 PM
We have just under 200 accounts and its only in 4 towns with over 150 of them in our home town. Also we do own 4 trucks so we are able to spread out the miles. But atm I have 3 very high mileage trucks and were working out plans to replace all of them in the next 3-4 years. If we replace our 2nd cutting truck that just leaves 2 support trucks a 89 gm dump and a 98 1500 ram pick up. Which gives us a truck to go do little shopping runs and stuff like the P.O box and our old dump for nasty stuff like brush jobs and she has a leaf box on her 6 months of the year. But we only put about 2500 miles a year on the gmc and they aren't cheap I have replaced so much on her I am running out of things to go bad.