PDA

View Full Version : What size company is the most profitable????


Five Diamond Lawns
01-23-2004, 12:42 PM
A question for you larger companies (or those small ones who were once large)

At which level were you the most profitable?

As an example:
I did well by myself and with some part time help. Then at 1.5 full time employees the profit sucked. Now with 2.5 full time and 2 trucks it's looking better.
:confused: :confused: :confused:

kels
01-23-2004, 12:47 PM
how do you figure a .5 full time employee, by the way this is a good thread.

Five Diamond Lawns
01-23-2004, 12:50 PM
20 hrs a week.

I guess I could have rephrased that:blush:

2 full time
1 part time

WeatherMan
01-23-2004, 01:26 PM
I have as Follows:
1 Landscape designer (Me)
6 Crew members
1 Foreman
1 salesman
1 bookkeeper/secretary
1 plastic Surgeon (my Wife) she fixes all the dumb stuff I do to the body LOL
:D
So there is 10 employees including myself ,11 if you count the wife.

I say the bigger you are the more profit coming In. I started solo 5 years ago and made around 20k now 5 years later I make in the 6 figures.

This year we are going to change a bit and just do Landscape and water garden installs and get out of the maintenance side. so I'm sure I will see a good size cut in the income this season. I am starting my little brother up by giving him all of our maintenance accounts and selling him some equipment.

Best of luck to you

lawnman_scott
01-23-2004, 02:04 PM
profit per person was best with 2 employees. per employee was less with 3 employees, but made more money overall.

PLI1
01-23-2004, 03:54 PM
I feel a lot of your profitability depends on what kind of businessman you are. There are a lot of people out there who could not handle having lets say for example 20 employees. It takes some doing handling multiple crews, keeping employees happy, making sure all of the equipment is being maintained, balancing the books, keeping all the bills paid, meeting with customers, preparing estimates, delegating work you no longer can do to someone you know you can trust and so on. If someone can handle all of this without a sweat for the most part, then the bigger you are, then the more$ you'll probably make. If not, then having a few employees or just yourself may be the way to go. Right now I have 6 employees not including myself and I am content. I know I could make more $ with a few more, but I like to fish, golf and vacation once in a while. With the setup I have now, I can get away once in a while and not worry too much. I have good employees and the work gets done whether I'm there or not. Quality of life is important to me, more than making tons of $. I live in a nice house, my wife doesn't have to work and I'm no debt besides the mortgage on my house. Thats good enough for me.

Avery
01-23-2004, 04:05 PM
Easy question to answer. Look at examples in the business world. Do you think UPS would do as well as a solo operator or as they are now? Or say Food Lion....one store vs. thousands. Bigger you are the more you will gross. How much of that you get to keep depends on how well you manage your business.

rodfather
01-23-2004, 04:59 PM
It's simple...really.

Solo x hourly rate = X dollars
Solo + Employees x hourly rate = X+ dollars

Do the math.

mtdman
01-23-2004, 05:07 PM
Gross is a lot different from profit, and profit was the question asked. Personally, I don't know, I am going through growing pains as well. I know that I personally believe that I couldn't handle a whole lotta employees or the responsibilities of a large company. I would like to grow, and I know the more I grow the more I have potential for grossing. But at the same time, I don't want to be the McDonalds of lawn care. That's just me.

I've heard so many mixed opinions on this. I guess you have to do what you are comfortable with.

NCSULandscaper
01-23-2004, 05:44 PM
I think you would have the greatest profits, not gross with you and 1 other employee. Sending 2 employees out would cause too much down time by them talking to each other. Since you are there controlling the situation the whole time, there is less of a chance of wasted time.

By having lots of employees and having a high gross figure, what good is that when you have no profit. As far as im concerned gross means nothing to me, i want profit figures.

bastalker
01-23-2004, 06:18 PM
All depends on close ya are to the illegal employees. If yer real close, then you can hire a bunch of em, pay em nothin, and get all that money yerself....

Then ya can get real big!!!:rolleyes: :rolleyes:

lawnman_scott
01-23-2004, 07:52 PM
Originally posted by rodfather
It's simple...really.

Solo x hourly rate = X dollars
Solo + Employees x hourly rate = X+ dollars

Do the math.
wouldnt that be solo X billable hourly rate = Xdollars vurses
(solo+employees)Xbillable hourly rate=Xdollars+dollars

you will make more money per man hour working alone, but more working with an employee, but less per hour

you work 40 hours at $50 per hour = $2000
you and jimmy work 40 hours at $40 per man hour =$3200, you pay jimmy $400 and you have $2800 left. your ahead $800.

J&R
01-23-2004, 08:02 PM
This was said a long time ago. Would you be better off if you worked for 10.00 hour or had 100 working for you making 1.00 hour off them.

Tony Clifton
01-23-2004, 08:04 PM
Gross Means Nothing To You? Would you rather gross 100,000 with a 30% profit, or gross 3,000,000 with 10%, or even 5%? I personally would have a lot more fun with the 3,000,000.00 company but that is just me. However I feel PLI1 hit the nail on the head, it just depends on the type of businessman you are.

tiedeman
01-23-2004, 08:06 PM
Ok, this is how it was for me. When I was small I had money in my pocket and less worries. At FIRST when you get big I lost money because of the transition, but after the 2nd to 3rd year of being bigger I have made more money being big than a one more operation.

The Happy Gardner
01-23-2004, 08:10 PM
Lets not discount these problems that mainly apply to larger operations

- cash flow
- not being able to be as choosy with your accounts
- accounts receivable problems

Tony Clifton
01-23-2004, 08:15 PM
Happy Gardener, great point, but I feel that the 3 problems you pointed out are the same with all companies on a proportionate scale. For example 1% of your billings will never be paid etc. Also, in my area, the larger companies are the ones that are able to be selective with their accounts. I do realize this differs depending on local market. GREAT THREAD

UNISCAPER
01-23-2004, 08:39 PM
First of all, if you can't make a small or even a one man operation profitable, you will never make a 10 or a 100 man operation profitable.

As long as you know your numbers, keep a sharp pencil and have a great crew(s) to bring the work in on the hours budgeted per job, you can then grow to where you want to grow to. When you are small, you can (may) see net margins of 35%. As you grow, you can see that decrease and if you can hold a 15% net, after all salaries are paid, you win. Size means delegation and letting go of some control. Ask yourself if you are ready to do that as you reach each phase.

It works for us this way, others may have a different take...

NCSULandscaper
01-23-2004, 09:22 PM
Originally posted by Tony Clifton
Gross Means Nothing To You? Would you rather gross 100,000 with a 30% profit, or gross 3,000,000 with 10%, or even 5%? I personally would have a lot more fun with the 3,000,000.00 company but that is just me. However I feel PLI1 hit the nail on the head, it just depends on the type of businessman you are.


Well lets say you gross a few hundred thousand a year, but you only profit a few thousand, what exactly have you accomplished, nothing at all. The only figure you need to worry about is that profit number, that percentage reflects on what you have really done for the year. I dont know about the rest of the people on here, but i have very high profit percentage by getting supplies cheaper, getting the hourly rate i deserve, and managing my money well enough to show something for my hard work. Sure it woul dbe wonderful to do $3,000,000 gross a year, but if you dont manage your company right, that figure is absolutly worthless.

bayfish
01-23-2004, 09:25 PM
Originally posted by Avery
Easy question to answer. Look at examples in the business world. Do you think UPS would do as well as a solo operator or as they are now? Or say Food Lion....one store vs. thousands. Bigger you are the more you will gross. How much of that you get to keep depends on how well you manage your business.

Bingo!...
I worked for UPS for 25 yrs. in management, they have work measurement for every job and someone to hold workers accountable. Like us, they only sell service and cost control is key.

J Hisch
01-23-2004, 09:31 PM
Small business always need the employee's before they can really afford them so of course they take some of the profits away for a while. But in the long run the more you can handle the better.

Turfdude
01-23-2004, 09:38 PM
I believe that there is no ONE correct answer to this question. There are too many variables. Account sizes, equipment sizes, routing, etc... THe more "lean" you can run your crews, the more profit there is. Generally for residential mowing w/ lawn sizes 1 acre and less, a 2 man crew is the most profitable. FOr your commercial/industrial and apartment complexes, there is more of a need for a 3-5 man crew. For landscape work, generally 3+ men are needed. Again it all depends on the task and other variables above to answer this question.

landcruiser
01-23-2004, 10:37 PM
This is a very interesting thread to me in particular. I am an unemployed mechanical engineer in the DFW area. I buy/sell commercial mowers in the meantime just because I love mechanical equipment, I love to mow and I need the money. But trading equipment is simply not consistent enough to make steady profit. I have seriously thought about trying to get some yards to mow to make use of the equipment that I seem to always have sitting around but I DO NOT want any employees. I just wonder if I can make any money by myself mowing?

UNISCAPER
01-23-2004, 11:00 PM
Landcruiser:

You can make a ton of money cutting lawns. Most people I know began as a one man band, then decided to expand. WE no longer do lawn maintenacne, as with all the illegals working for $15.00 a property with no insurance out of the back of their Toyota or Nissan we could not profit and I got sick of trying to justify why we charged $100.00 for that same time they did.

We do nopthign but design build, installation, and have an irrigation maintenance route starting up in a few months.

You may change your mind about employees, particularly if you get the right ones... The key is to never ever lower your prices, know your numbers and what it takes for your business to turn it's entitled profit, and always pay yourself first, Bid work as though you have employees and the labor burden associated with them. Don't fall into the ego trap of getting accounts. Get them at your price or walk. Let the whack and hacks duke the lowballing out amongst themselves....

Flex-Deck
01-23-2004, 11:35 PM
Landcruiser - you can make a lot of money mowing - by yourself.

Avery
01-24-2004, 12:31 AM
Originally posted by Flex-Deck
Landcruiser - you can make a lot of money mowing - by yourself.

Until you get too old/too tired to do it or you injure yourself and miss an excessive amount of work thus causing most of your clients to drop you. Sure when all goes well you can make good money solo. But all does not always go as planned. No security in being a solo operator.

Jimbo
01-24-2004, 01:59 AM
Good point Avery!

Uniscaper- Thats one sad short story. I have a feeling that the area I am in is starting to feel the pinch as well. This past year I have had to deal with more than the average amount of low bidders. Im going to have to do some studying and get out of the maintenance end of it unless these losers can start to understand the concept of over-head and charging accordingly.

Oh, I forgot. There is no overhead when you work out of your car, keep your mower in your towhouse living-room, your shop is your basement, you have no insurance, pay no taxes. You get the point. Bitter, no Im not bitter.

Problem is I like the maintenance end of it. Darn shame thats what it is.

Mikes Lawn Landscape
01-24-2004, 06:01 AM
Originally posted by Avery
Until you get too old/too tired to do it or you injure yourself and miss an excessive amount of work thus causing most of your clients to drop you. Sure when all goes well you can make good money solo. But all does not always go as planned. No security in being a solo operator.

Avery a lot of the advise on this forum is questionanble at best but, I am going to take that advise to heart.

Thank You

upsondown
01-24-2004, 06:56 AM
I think this is one of the most puzzling questions to answer because there are so many variables... but the questions was........most profitable - and I interpret that to mean NET not GROSS. I own 3 different kinds of companies and I know first hand and all too well - your net profit is dependent upon many factors - one being - what kind of business manager you are - always scrutinizing your expenses (pinching every penny) - and what kind of employees you have. In my region - we find it extremely difficult to find quality workers - plain and simple. Yes there are tons of a certain nationality of workers to be found - but by the time you weed through the illegals and drunks - you have some pretty thin pickins. The kind of workers a company employs and sends to your customers is reflective of your values as a business person (in my opinion). I for one would rather yield a lesser net profit, employ quality employees, pay my taxes and be able to sleep at night - knowing that I have a company that my customers can trust - and that I believe makes my companies - priceless from what I witness of others on a daily basis. Thanks for letting me voice my opinion.

David Haggerty
01-24-2004, 07:53 AM
Originally posted by Avery
Until you get too old/too tired to do it or you injure yourself and miss an excessive amount of work thus causing most of your clients to drop you. Sure when all goes well you can make good money solo. But all does not always go as planned. No security in being a solo operator.

There's no security in anything. If you get laid up in a hospital from a car wreck or something, you're going to have problems no matter what job you had.
Most of the farmers I see are white headed old men. Their kids all move away to other careers, and they still farm.
If they can do it, so can I.
I figure the added risk of having an accident is more than offset by staying active and healthy working outdoors.

The only security is financial security. I personally can do better solo. I'm probably the world's worse business man. But I can operate a mower. Some people can build a better nest egg using employees. I'd have lost my shirt trying, and been worse off than I am now. Most new businesses fail. Doesn't sound too secure to me.


Dave

Tony Clifton
01-24-2004, 09:48 AM
Some great points have been made. I have to agree that the most profitable company would be a solo operation, however, you can make far more money with a bigger company that grosses more even though the profits may be far less. I also like the point Avery made about getting hurt and not being able to work etc. I have seen that happen before and it sucks. Sure there are plenty of people out there that can do this kind of work forever, but there are plenty who cant do to health problems etc. Like several people have said, it all boils down to what kind of businessperson you are.,

UNISCAPER
01-24-2004, 10:05 AM
I thnk that the key to sucessful low stress is employees, how muchj you will invest in them, and what they will do to send your company message. The whack and hacks seem to just hire whoever, as price is what drives thier markets. The turn over is horendous, and that is what they settle for.

If you want to grow a mangement team, then you need them to understand exactly what your customers are looking for, and what to expect. Pay your key people well, treat them like the people with the same dignity you deserve, and as they learn, and grow and expand thier boundries, yuor company will flourish.

Remeber three key things. Keep your ego low...It does not matter what Joe Blows mow and Go has for accounts, how big he is, or whatever. What matters is your bottom line.

Don't get caught in the trap of the customer telling you if you do his for X, he will refer you to all of his freinds. GEt your price, then give that customer a gift certificate or commision, but don't give away on promises of gettign more.

Know your numbers. It does not matter how much Juan Valdez and his heard of Columbian coffee pickers charge, it matters that your net is protected by charging what your business is entitled to get for your services.

Service is not a commodity.

sgreanbean
01-24-2004, 10:07 AM
We do 80 mil a year in bus with a net profit of around 30%. we have 1200 employees. this year we are looking at 100 mil. with same amount of workers. The pres drives a escalade with 24 inch spinners from West Coast Choppers. The car is fully automated
(will open a door at vioce command)! He started with a shovel 30 years ago and still has the shovel in his office. His goal is grow to be the number 1 in the world. Remember this is one guy who started this, he puts on his pants the same way we do. So with smart planning, you can grow to be the same. It all depends on what you want out of life and how hard your willing to work for it. He want a fully automated escalade!
As far as what size is the best? You can make money at any size, it just depends how much you want to make!

Royalslover
01-24-2004, 11:10 AM
Avery, I respectfully disagree with your lack of security theory. Anyone who gets seriously injured could lose their job unless they're a desk jockey. It's just a part of life. Most people working for large companys have a much better chance of losing their job due to downsizing than I do of losing my job due to injury.
As for financial security; unless we have a serious depression must of my customers would be horrified at the thought of having to mow. And if you have a fair number of residential accounts, you're generally not going to lose more than 4or five a year.

burnandreturn
01-24-2004, 12:54 PM
I studied Economics in college after four years this is what one of my professors said to me:

Now that your head is full of all these idea's and knowledge this is what a degree in economics is really about. "The watermelon theory." Displaying all the appropriate yearning for enlightenment I asked, "please explain".

This is the study of economics. Two men had a truck in Florida. They bought watermelons for $1.00 apiece. Loaded them on their truck and drove to New York. Sold them for $1.00 apiece. They then added up their expenses and realized they lost money. The one fella asks the other, "what are we gonna do?". The answer,"Get a bigger truck!!!!!"

The fallacy of this business plan is obivous, but many companies seem to think volume is everything.

Handling money is not the same as making money.
Redundency in employee's is necessary when you venture out from a one man show. If you are dependant on other people to get the work done and this person doesn't show up, is hurt, etc. etc. and you can't do the work your business suffers along with you. If you have more work than you can complete by yourself and want to get bigger on a businesslevel , try to get big enough to have enough employee's to fill in the gaps if one or more employee(s) doesn't show or can't work.

Alway's remember everyone is replaceable!! even yourself, and you want yourself to be replaceable.

Avery
01-24-2004, 01:47 PM
Originally posted by Royalslover
Avery, I respectfully disagree with your lack of security theory. Anyone who gets seriously injured could lose their job unless they're a desk jockey. It's just a part of life. Most people working for large companys have a much better chance of losing their job due to downsizing than I do of losing my job due to injury.
As for financial security; unless we have a serious depression must of my customers would be horrified at the thought of having to mow. And if you have a fair number of residential accounts, you're generally not going to lose more than 4or five a year.

That is fine. I do not expect everyone to agree with me. Most probably do not. Just saying that I could sit home and not work another day and my company would keep going. I can (and do) take several long vacations a year and while I am gone the work is getting done. A solo operator cannot say the same. I have seen solo's fail time and time again because they sustained a serious injury or became too old to do as much as they once could.

And the best part is when I am ready to give this business up (if ever) it will attract serious buyers. A solo operator simply cannot do the volume to make his business marketable.

DennisF
01-24-2004, 01:53 PM
The physical size of a business has very little to do with profitability. General Motors is the largest manufacturing concern on the planet and their gross margins exceed 100 billion dollars annualy, but their profit margins are very slim (3%-5%) they claim. If you and I had to survive on 5% profit margins we wouldn't last long.

Economics 101 classes teach that the most successful business entities all have two very important elements in common.

1. A healthy demand for the service or product of the business.

2. A very low cost structure.

These two elements allow the sucessful business to charge high prices for their service/product, while holding the cost of doing business to a minimum.

NCSULandscaper
01-24-2004, 01:54 PM
Originally posted by Avery
Until you get too old/too tired to do it or you injure yourself and miss an excessive amount of work thus causing most of your clients to drop you. Sure when all goes well you can make good money solo. But all does not always go as planned. No security in being a solo operator.


That is very true, if a solo operator does get injured then he will suffer. The same goes for large company owners too. What would you do if you and your main ace were injured, do you have backups ready to continue your business along smoothly?

Even a solo operator can survive ok with a injury. Its all about money management. Keep enough money saved up for such an accident, enough to survive on for a few months. You may lose customers, but its nothing that cant be gotten back.

MWM
01-24-2004, 02:05 PM
As morbid as it may sound, all workers are replaceable. Drive thru a cemetery sometime. They all worked somewhere sometime. Do you think the busines went out because they died?

Lux Lawn
01-24-2004, 02:28 PM
Avery

I agree the solo guy has a harder time I know several of them and they never get a day off if there sick they can't afford to take a day off because then there a full day behind and have to play catch up all week and vacations forget it.I have one employee now and I am hoping to hire one more in the spring to give us more flexibility so me and my employee can take more vacations.
I just have to make sure we have enough account to justify hiring somebody.I don't want to hire someone just to hire someone.

Five Diamond Lawns
01-24-2004, 02:36 PM
OK! So far I want PLI1's life:blob2: :blob2:

I don't want to be a solo operator even if some of you think it's a good idea.

Only problem is every time I go through a growth spurt I seem to go through an unprofitable few months.:confused:

What is the target size??????

PLI1 says 6 full time employees

Avery
01-24-2004, 04:52 PM
Originally posted by NCSULandscaper
That is very true, if a solo operator does get injured then he will suffer. The same goes for large company owners too. What would you do if you and your main ace were injured, do you have backups ready to continue your business along smoothly?

Even a solo operator can survive ok with a injury. Its all about money management. Keep enough money saved up for such an accident, enough to survive on for a few months. You may lose customers, but its nothing that cant be gotten back.

I am facing that exact situation right now. Maintenance crew leader quit several months ago. Install/irrigation crew leader is out of work with three slipped disks. Five crew members have quit in the past couple of months. If my company was not as large as it is I would be in serious trouble. I have enough knowledgeable people remaining on staff that I can work through this. It has meant that I have had to return to the field and do some work, which re-enforces my statement that solo is not the way to go. Been a long time since I had to do any of the work. It is pretty much killing me. Back is aching, dead tired at the end of the day. No way I can keep up the pace that I once could. I plan to be back up to full staff long before the cutting season starts.

mowinmoney
01-25-2004, 11:03 PM
A lot of good points. It's hard to compare a small operation that is happy where it is and probably has a great routine. Each year they know what to expect and probably don't have to spend that much on growth. Just enough to keep up with inflation. They get to the point where they can pick and chose which jobs they want and get rid of the lowest profit accounts. It will probably be difficult for them to increase their profit without upgrading equipment, or using new innovative techniques. Once they have maxed their resouces they will have trouble increasing $'s of profit.

A company that is trying to grow or is large and trying to get larger most likely will experience higher cost due to more employees(turnover), less efficient routines each year with new properties that they have to cut there teeth on. It's easier to control and cut cost with a none growing business than it is with a fast growth company. Once they have reached there goal in sales though, they can turn it into a cash cow and then the %'s will increase. Just my experience from another business I owned in the past

Five Diamond Lawns
01-26-2004, 11:45 AM
My experience in this industry, as well a another, is you need to have a target size.
Getting to that size is rarely that profitable then once your there the profit will build season by season.
Example:
A friend (who got me started in the business) stayed solo for 5 seasons with just some part-time help. Because of this, his accounts got closer and closer to each other and smaller and smaller. As the next door neighbor asked him to take over their maintenance he would drop someone 15 miles out.
During the same time I was trying to grow taking what ever I could, including the ones he dropped. Currently he can do close to 50% more work than me in the same amount, THAT SPELLS PROFIT:D
There's some days he only moves his rig a couple times and mows 14+ lawns. :confused: :confused:

The moral of this long winded story is I believe you need a target size, once you reach it you can fine tune your accounts to become more profitable!

:blob3: What do you experienced companies think is the best size?:blob3:

prizeprop
02-19-2004, 12:56 AM
IT'S JUST NICE WHEN YOU HAVE DEPENDABLE EMPLOYEES AND YOU SEND THEM OFF TO DO THEIR JOBS FOR THE DAY. THEN YOU DO A COUPLE ESTIMATES,HEAD HOME TO DO SOME OFFICE WORK AND BY 1 OR 2 O'CLOCK IT'S TIME TO GO FISHING! ALL THE WHILE YOUR NETTING AT LEAST TWICE AS MUCH AS YOU WOULD BE IF YOU WERE SOLO. SURE THERE'S DAYS YOU GET STRESSED BUT THE TRADE OFF IS WORTH IT. MATTER OF FACT MY FOREMAN RAN MY BUSINESS FOR ME THREE YEARS AGO WHEN I WAS IN THE STATE CORRECTIONS ACADEMY FOR 16 WEEKS, MONDAY-FRIDAY, I COULDN'T'T COME HOME UNTIL THE WEEKEND. I WAS FORTUNATE, JUST PAY YOUR HELP WELL WHEN YOU FIND SOMEONE GOOD AND DON'T BE AFRAID TO GET WHAT YOU DESERVE FOR THE WORK THAT YOU PERFORM.SOLO'S GOOD ESPECIALLY IF YOU HAVE QUALITY ACCOUNTS, BUT IF YOU SNAP A WING, SAY GOOD BYE.THERE ARE RISKS IN EVERYTHING YOU DO IN LIFE, JUST TRY TO LIMIT THE RISKS THE BEST YOU CAN.

Turfcutters Plus
03-08-2004, 03:10 PM
I'm solo,sometimes 1 helper.Could'nt be happier.Larger business NEVER appealed to me.I make plenty,and save plenty.But you gotta really love working,and i do.I'm sending my choice of help through temporary service this year.Yee-ha!No more workers comp,IDES,Matching social security,payroll,blah,blah,blah.As i get older,simply get more help.You don't need a bigger operation to cut stress.Just be smart and very efficiant.Don't take more than you can handle.

Turfcutters Plus
03-08-2004, 03:12 PM
Ditto to five diamond lawns.That's exactly what i do.

GarPA
03-08-2004, 04:12 PM
Great thread...one of the best I;vd seen here in awhile.
I struggle also with "growing pains". WHat concerns me the most, is finding reliable grunt workers year after year. Lets face it, even at the high end of the range, the pay we offer our grunts is not very good.

I dont worry so much about being able to obtain new business and mange a larger business, so much as I worry about not being able to live up to the very thing that has made us suceessful thus far...exceptional quality and reliability. So if I cant retain good worker bees, then I lose the the reason for our success, accounts dwindle, we start to cut corners, and before I know it, we're in a death spiral.

imho, the number one problem for many of us being able to grow a bigger business, is the relatively low wages we pay for some of the hardest work there is in the blue collar trades. I pay better than most of my competition and I still have problems getting reliable help.So if I were to buy the equipment to run 2, 2 man crews, I'd better be damn sure that they show up everyday for 9 months or I'm sol

MLI
03-08-2004, 05:13 PM
The way I look at it....ya have 2 ways of going about building a business. 1)suck all the money outta the biz...keep overhead low...collect as much money as you can up front and invest in realestate,mutual funds, or stocks.....maybe all the above, but bottom line your not constantly buying new equipment...just buying the essentials. Run the biz lean as possible, and dump as much $$ as you can at a young age into investments...that componding interest on your investments will make you very wealthy long term. 2)Keep throwing $$ into the business and create something that will be sellable in the future, but realize youll be sacrificing profits from today for an uncertain tommorrow. Also many headaches come along with growing a business...many.....many...issues!. Right now im somewhere between the two of these roads...havent quite figured which road to take.:rolleyes:

GRT
03-08-2004, 05:31 PM
There sure is a lot of critical thinking going on here; it's refreshing to see!

As for the original question, it was too ambiguous to give a definitive answer. Are we talking about percentage profitability or overall profitability.

As for overall profitability, if you are growing and your overall profits are decreasing, you need to re-evaluate your growth strategy. From there, the amount of profit you retain directly correllates to your business plan.

Percentage profitability is much more in difficult to take in; by taking into account all of your clients, workers, direct and indirect costs, etc. you can figure out your percentage profitability. If your percentage profitability is decreasing as your business is growing, that means that you are not staying in line with your original money making methods. If you can keep your percentage profitability the same or increase it as you grow, you are an excellent businessperson. Remember, it's best to segregate every avenue of our business to analyze profitability from all angles: snow removal, turf maintenance, and landscape (for me). Determining your percentage profitability on each venture helps to better define where to allocate your resources.

I suppose the best lesson we can take is the more you analyze your income, the better you'll understand what you're doing wrong and what you need to change to become more profitable. I hope this was helpful.

Geoff

ChicagoLawn
03-08-2004, 06:28 PM
Profit = Value of your business!

If I understand this post correctly, we are in business not just employed............... right?

In my opinion to be in business is to be in a constant stretch, continually growing, expanding, learning, up and down... falling or running ONLY moving forward (never backward).........opposite of stagnation, always exciting!

Our business' are to be grown for eventual sale (or at least systemitized for optimal transistion if sold) thus the sale of our business(or current value) will create our personal wealth. Did I miss anything?

To invest in your business is to invest in yourself....... how do you view your abilities as an asset to your company?

Do you choose not to invest/grow your business because of a lack of profitability or just no faith in what the future holds?

I have gone through the same constant questions (running through my own mind) and still do every single time I bid our next project............. will this job fit my profitability benchmarks to take my company forward? If not I look away and continue the search. Profitability is in direct relation to attitude!

ChicagoLawn

GarPA
03-08-2004, 06:41 PM
WHERE THE H--- HAVE ALL YOU CRITICAL BUSINESS MINDS BEEN HIDING FOR THE LAST FEW YEARS!!!!!!

IT is soooooo refreshing to have a thread that digs into the buisness, of business. Man this is what we need more of here.

I even saw one of you use the word "benchmark"...last time I used that word here I got like 2 replies....refreshing to see some sharing of business strategy

little green guy
03-09-2004, 01:44 AM
I agree with GarPA, it's nice to see that there acually are some guys on this site that acually know soemthing about buisness, I was starting to lose hope. (not that I do but I'm learning)

The way I look at buisness is just like Chicagolawn. Every step you take should be a step forward. The way I am driven is to set goals an acomplish those gaols, then when I am done with them I make new goals, always growing, but you should grow wisely. I set gaols as to how much I want to gross, but I also say, out of my prjected gross I want to profit xxx out of that.It's so easy to just keep grossing more and more while loseing track of your profit. As you grow so does you overhead and it's easy for your overhead to outgrow you. You need to always know your #'s. I also agree with chicagolawn about looking at jobs as far as making a profit and do they fit into what you want to be making. It's not how many jobs you have but how much you are profiting from the jobs you are doing.

I also agree with what Avery said about everyone in a company being replacable. I am currently having some issues with a key person and am learning that a buisness should not be built so that when one person is pulled out, the buisness falls, rather if someone is pulled from the picture the structure still stands and I think that goes for the owner too. I want by buisness to be able to run even without me there.

As far as what size buisness is the most profitable, I don't know if there's realy a right answer to that. I think it realy depends on how the buisness is set up and the people involved in the buisness. Some companies may be most profitable in the 200k-300k range while other companies may be more profitable in the 200mill- 300mill range. I think it's how everything is stuctured and how managment is most comforatable. Every situation is different and even just because you have a high gross dosn't mean your acually making a better profit. I think the only way to know that is to always have a good handle on where you #'s are.

That just my take on stuff.

brucec32
03-09-2004, 02:57 AM
I have said it before and will say it again. You have more potential to earn getting bigger. There is an area somewhere between solo and "big" where it's probably not worth the trouble, but you have to go through that to reach the goal of a bigger company.

But it's my opinion that there are better ways to make a living if you are willing to put the investment in time and commitment and deal with the stress and worry of a bigger operation. This is hardly an innovative groundbreaking industry. And it's not like you're running a Hooters restaurant in terms of "fun on the job" potential.

PRO PROPERTY CARE
03-09-2004, 08:35 AM
I have been pondering this same thing. I have talked to a couple of other companies in the area. They are 1 to 3 man operations.
They all said the same thing. They tried bigger. They made a little more money, but with bigger came bigger problems.
It seems 1 to 3 man operation is ideal.
But that doesnt mean larger won't work. It just seems to mean larger operation means larger concerns, larger headaches.
Its 6 of one, and half a dozen of the other I think.
my two cents
chow:cool: