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Old 02-19-2009, 04:40 PM
bobw bobw is offline
LawnSite Senior Member
Join Date: Oct 2006
Location: Calgary, Alberta
Posts: 813
Originally Posted by coolluv View Post
Ive got a question. How did your overhead get so high? Could you explain?

How does your overhead get so high? It goes like this:

You start out small... you run off your cell phone or maybe have a seperate line in your house. You store your equipment in your garage. Your overhead is very small...

You grow... you have enough work to START up a second crew.. so.. you buy another truck and some more equipment. But that's a lot of cash.. so you finance some of it. Your overhead just went up.

Well.. two trucks, two trailers and a bunch of equipment. Can't store all of that in your garage... now you need to rent some storage space. Your overhead just went up again.

But things are looking good... lots of contracts, the phone keeps ringing, you sit back and think that maybe you should think about a third crew. So you get yet another truck, trailer, a bunch more equipment, hire a few more guys. Your overhead is getting pretty big now, but no worries, three crews running generates a lot of cash flow.

So you're sitting there with three crews, a bunch of payments on equipment and trucks and storage. Pretty scary, except that the phone just keeps ringing. How on earth can you work and answer the phone all the time? So you promote a guy to run your original crew and you become the boss man that runs things. Not bad... you got a bunch of guys running around making you money. The phone keeps ringing so there's more work out there. But.. when you gave your truck up to the original crew to get around... so off you go to the dealer and buy yourself a nice shiny truck to drive around in so you can do estimates, schmooze customers and check up on your workers. Your overhead just went up again.

So... how does your overhead get so high?
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