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View Full Version : what does your 2 man crew gross a year


jeff_0
06-12-2003, 11:13 PM
I've been in business for myself for 2 years now.. well this is my second year. And i hear that after 3 year that's when you really start making a profit.. i have 30 contract now and it's bring in about $1000 a week cutting grass. I wanted to know for those who have experised having a 2 man crew full time after 3 years what type of income is it bring in total gross... I was hopeing by my 4th year that i'd be grossing about 100k.

LAWNGODFATHER
06-12-2003, 11:26 PM
First year I had full time mowing crews out I was just over the $100k gross and I was on it.

I think I am avg. $4500 a week per a crew now just for mowing and we get atleast 32 cuts in a year.

LawnMowerMan2003
06-13-2003, 12:54 AM
100K gross sounds really good, but what I'm curious about is how much the net is, after expenses and taxes, if you don't mind sharing. I'm wondering how much I'll have to gross to take home $30-$40K a year.

brucec32
06-13-2003, 07:29 PM
Whoooo Hooooo! Someone's been hitting the Budweiser tonight!

smburgess
06-13-2003, 10:29 PM
It's a question that know one here can answer for you. It depends on YOUR overhead and YOUR profit margins. The crew here on Lawnsite run the whole gambit, from "man with mower" to regular landscape maintenance companies - all with very different overhead and profit margins.

Brendan
06-13-2003, 11:41 PM
Try using the one third rule. ie one third of the total turn over.

1st third = operational wages third. If your are labouring or labour/ supervisor include the market value of this role that you are performing plus all the other operational employees.

2nd third = office wages & all other expenses third. Includes worker comp./ superannuation/ other leave expenses/ machinery/ vehicle/ office/ insurance/ etc/ etc. If you are just supervising or managing then include the market value of this role in this section as well as all office & managers wages (employees who's work is not directly charged to the customer, ie non operational).

Final third = should be the net profit third.

Tax then is added to the total which should be the amount that you charge your customers.

Service industries such as Accountants & Lawyers try to operate like this.

It takes a good business manager to keep each third to 33.33%.

My profit margin is well below 33%, but over the past 2 years I have managed to creeped it up a little each year. My goal is 30 to 35% profit in 2 years time.

Here are a few things that I have learned as my business has grown:

- Most employees don't work as hard as the owner.

- 2 employees don't work twice as quick as 1 employee. They tend to work slower.

- Most employees don't look after the equipment as well as you do. Nor are they as resourceful when it comes to break downs.

- as the business grows so does the % of the 1st & 2nd thirds at the expense of the profit third. This happens because you change from being an operational employee (chargable) to office employee/ manager (non chargable) and because of the additional equipment which you need for all the additional employees.

I hope this helps.

Brendan.

tiedeman
06-14-2003, 12:40 AM
our first year I think that we only grossed around $52,000. But of course I was in the red that year as well.

LawnMowerMan2003
06-16-2003, 03:58 AM
Thanks. That sounds like a good place to start from. I'm a little confused about the taxes as well. I realize that most of your costs should be deducted, but shouldn't you take self-employment taxes and social security for youself into consideration as well? Last time I looked up the numbers I thought that added up to around 40%, although I could have been wrong.

Brendan
06-16-2003, 07:25 AM
LLM2003

[QUOTE]but shouldn't you take self-employment taxes and social security for youself into consideration as well?

Are self-employement taxes like income tax or something else?

My business is incorporated so as I' m an employee of the company, it deducts income tax from my wage as well as the other workers and pays the tax to the government.

The company pays company tax on net profit less depreciation. The advantage of the business being a company is that in Australia companies pay a lower tax rate than individuals. At this stage the my business only considers net profit (before income tax) as a percentage of turnover , aiming for the final third or 33%. To have the net profit (after income tax) as a % of turnover at 33% would be fantastic!!!!

The other tax the we have is Goods & Services Tax (GST) which is a value added tax which is added to the end of all invoices. The rate is 10% so a lawn costing $50 has $5 GST added & the customer pays $55. I have no control over this tax, therefore it doesn't show in my annual turnover and is not considered when determining profit.

As for social security, I'm not sure what it means, over here in Australia the employer has to pay for 4 weeks annual leave, 17% annual leave loading (meant to make up for regular overtime which the employee would be missing out on while on holidays), 2 weeks sick leave, and 13 weeks long service leave after 10 years of continuous employment (read extra long holidays). These benefits get paid to full and permanent part time workers. Then all employees including casuals get an extra 9% of their pay as superannuation. If these are the social security expenses then they should be considered in the 2nd third.

Here is a few more gems of business wisdom.

If being in business was like playing a game of chess, then "Cash Flow" is the queen piece. Without cash flow your pretty well up the proverbial creek. But you probably know this already.

The king chess piece is "The Ratio of Net Profit To Turnover". And I think this is what you were referring to in your original post.

You want to know how much profit you will make with a turn over of $100,000. Well this depends on your business's net profit ratio. Each business is different, there are industry benchmarks which will give a range of % say 12 to 25% net profit before tax/ after tax..... ,what ever, for a given industry. These benchmarks may be difficult to source out. Try industry associations, accountants or maybe even the tax office.

Now I should explain my term the king chess piece. Remember that the king gets the gold. The clever he is the more gold he gets to keep.

For example: Business A; has a turn over of $100,000 & net profit ratio at 20% and makes $20,000.

Business B; turns over $80,000 but has a net profit ratio of 25% then it makes $20,000 profit.

In the next year both businesses have $200K turn over with the same profit ratios:
Bus A; $40,000 net profit.
Bus B; $50,000 net profit.

If you have a low net profit % then need a large turn over to only make it worthwhile. But if you have a high net profit % then a smaller turnover makes it worthwhile and as T/O grows the better it gets.

The trick to maximising your profit ratio and therefore the gold is to:

1). minimise your expenses,
2). increase the amount that you charge,
3). decrease the time that you are on jobs,
4). decrease lost time./ Increase charge out time.

I read threads all the time about; less time behind the windscreen, dropping low paying customers, raising charges, whether to buy new or 2nd hand equipment, buying more reliable or faster machines, etc. All of which, whether knowingly or unknowingly, are questions aimed to maximise the net profit ratio.

As for your original question; what turn over and net profit to expect if you grow the business? I cannot answer that. But I can tell you that I had the same questions about 3 years back when I was a sole operator and the only way I found the answer was to set some goals and give it a go.

If you can cut the expenses by a few %, increase your charges a few % and be more efficient with your time on jobs then your profit will increase and it may be more beneficial for you to remain as a sole operator. And if after all this you still want more.... then grow the business.

Brendan.

LawnMowerMan2003
06-16-2003, 09:14 AM
Thanks for the advice. I understand the basic principles, just not sure what to expect, making it difficult to set my goals. I may just have to figure it out as I go.

Sorry, I didn't realize you were in Australia or I wouldn't have asked you about U.S. taxes.

jeff_0
06-16-2003, 06:27 PM
anyone else grossing that type of money with a 2 man crew.. and how long did it take you..

JimLewis
06-17-2003, 01:06 AM
My first two-man maintenance crew grosses me $133,860 per year. Our 2nd 2-man crew grosses 108,900. First crew works 5 days per week. 2nd crew only works 4 days - that's the difference. The 2nd crew is more profitable because they don't get much overtime. Hence, as soon as we get a 3rd crew going, they will take one day from the 1st crew. Then all crews will have max. profitability.

Those are firm numbers and I can back them up with spreadsheets that spell it all out if someone REALLY feels like they have to challenge me.

But basically we get that from doing an average of 20 landscapes per day - all close together in the same neighborhood. Each day equates to an avg. of $2240 or so per month. That's year-round money too.

jeff_0
06-18-2003, 05:54 PM
how long did it take you guys to be able to gross over 100k

KenH
06-18-2003, 08:26 PM
Originally posted by jimlewis

Each day equates to an avg. of $2240 or so per month. That's year-round money too. Can you explain this please. Thanks.

bobbygedd
06-18-2003, 08:52 PM
a perfect example of how much u have to gross to make a decent living. as jim lewis stated, his two man crews bring in about $240, 000 a year. $100, 000 of that probably goes to pay the 4 men, leaving $140, 000 for the additional overhead. my guess is, after all is said and done, he could probably write himself a paycheck for around $70, 000 a year. its a decent living, but not great. just goes to show you u need to gross alot, to make a decent living.

JimLewis
06-18-2003, 11:42 PM
quote:Originally posted by jimlewis: Each day equates to an avg. of $2240 or so per month. That's year-round money too.

Can you explain this please. Thanks.


Sure. As I said before, these crews do approx. 20 yards per day. Some days 15. Other days as much as 25. Each yard is a different rate but an average is about $115 per month. $115 x 20 lawns = $2300 per month.

These are just averages. I have a spreadsheet that totals up the actual real dollars for each crew for each day of the week. For instance, For work done on Mondays, Crew 1 makes a total of $1775 per month. For Tuesdays, Crew 1 makes $1625 per month. Wednesday's efforts for Crew 1 bring in makes $2535 per month. For Thursday's efforts, they make $2810, and Friday's efforts are $2410 per month. So it's different every day. And so are the hours. But - on average - they bring in $2200 or $2300 per month for every day that they work.

As for the "year-round" part - we charge a flat fee year round. We come weekly March-October and bi-weekly throughout the winter. Not every visit in the winter involves mowing. But the client still pays the same in December as they do in June.