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  #161  
Old 11-18-2013, 03:50 PM
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Quote:
Originally Posted by milkie62 View Post
So in my situation at say $50/hr,I mow a $100 that takes exactly 2 hrs to mow.I am 7 miles from the site---I live in a rural area.So at even a 40% profit margin that equates to 40 bucks that I throw into my pocket which does not seem like much.I run a 3100Z Ferris and it is a smooth ride.So after an 8 hr day the max I could profit is $160.And I am not considering travel,load and unload times.Granted the other possible 60% should cover mower costs,gas,trimmer string,2 cycle oil,ins etc.How does one increase their profit margin without working crazy hours ?
I work a regular job also ,mowing is a side thin
ng.My base salary is $65k plus benefits.I have made up to $100k with time&1/2 and dbl time overtime.And I do not kill myself at work.
I also have had friends help me on big mulch jobs and cleanups..I have paid anywheres from $15/hr to $20/hr depending on their abillities.How do you guys get good help at and keep it at what some pay,say $10-12/hr ?
When you look at profit, you have to take into consideration all expenses, including travel, load and unload times.

I have good employee retention by having Healthcare, Dental, Bonuses, and throwing company get togethers.
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  #162  
Old 11-18-2013, 04:21 PM
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JimLewis JimLewis is offline
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Quote:
Originally Posted by Landscraper1 View Post
Why doesn't he do I then. My business also grosses about that and I do mainly commercial. If I really wanted to be a solo, I can easily do it.

It's one thing to be nostalgic about when we started out as solo and think back about the good old days, it's another thing to give up the lifestyle you now have, because you gross 1.4 mil.
I agree with that. If he really wanted to go back to being a Solo Op. he could easily do that. Any of us could.

More than likely, it was just a comment he said out of frustration. I know I have had days - even weeks - when I thought and probably even said stuff like that. Sometimes you wonder whether it's really worth it. It's not easy running a company with a lot of employees and hundreds/thousands of customers. It's more like babysitting sometimes. And that can get so annoying sometimes it makes you want to quit. But if you press on, learn how to delegate, how to prevent problems before they come, learn how to take care of employees and customers better so as to prevent them from constantly complaining about stuff, then you can eventually get it to where it's fairly manageable. And to make it better, you can get it to where when challenges do arise, someone else in the company can put that fire out instead of you. It relieves stress to be able to delegate some of the stuff to others. Then, later, when you're taking that tropical vacation or sitting at home in comfortable shorts watching a movie or typing on your computer while all your workers are out working you think back to your comments and think to yourself, "Ok. I guess I won't go back to being a Solo Op. Days like this are pretty nice!" and you press on.

.
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  #163  
Old 11-18-2013, 04:22 PM
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Great thread, I'm no where near 1/2 mil in revenue but I enjoy reading from the guys who are. I have learned a lot from Lawnsite, both from the larger guys and the ones making less than 50k. On the business side though Members running larger LCO's have more experience handling that type of income and the challenges that in itself can create.

I wish there were more threads like this, I agree that the "how much should I charge" or "what equipment" threads are good for a laugh but these threads really help me evaluate where my business could go ......
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  #164  
Old 11-18-2013, 05:15 PM
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Originally Posted by JimLewis View Post
I agree with that. If he really wanted to go back to being a Solo Op. he could easily do that. Any of us could.

More than likely, it was just a comment he said out of frustration. I know I have had days - even weeks - when I thought and probably even said stuff like that. Sometimes you wonder whether it's really worth it. It's not easy running a company with a lot of employees and hundreds/thousands of customers. It's more like babysitting sometimes. And that can get so annoying sometimes it makes you want to quit. But if you press on, learn how to delegate, how to prevent problems before they come, learn how to take care of employees and customers better so as to prevent them from constantly complaining about stuff, then you can eventually get it to where it's fairly manageable. And to make it better, you can get it to where when challenges do arise, someone else in the company can put that fire out instead of you. It relieves stress to be able to delegate some of the stuff to others. Then, later, when you're taking that tropical vacation or sitting at home in comfortable shorts watching a movie or typing on your computer while all your workers are out working you think back to your comments and think to yourself, "Ok. I guess I won't go back to being a Solo Op. Days like this are pretty nice!" and you press on.

.
Well said, Jim.
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  #165  
Old 11-18-2013, 05:23 PM
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Originally Posted by Landscraper1 View Post
Well said, Jim.
Yep, however Jim did get a little long winded in his comment n'at.
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  #166  
Old 11-18-2013, 05:33 PM
StockmanLawnscape StockmanLawnscape is offline
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Quote:
Originally Posted by JimLewis View Post
I agree with that. If he really wanted to go back to being a Solo Op. he could easily do that. Any of us could.

More than likely, it was just a comment he said out of frustration. I know I have had days - even weeks - when I thought and probably even said stuff like that. Sometimes you wonder whether it's really worth it. It's not easy running a company with a lot of employees and hundreds/thousands of customers. It's more like babysitting sometimes. And that can get so annoying sometimes it makes you want to quit. But if you press on, learn how to delegate, how to prevent problems before they come, learn how to take care of employees and customers better so as to prevent them from constantly complaining about stuff, then you can eventually get it to where it's fairly manageable. And to make it better, you can get it to where when challenges do arise, someone else in the company can put that fire out instead of you. It relieves stress to be able to delegate some of the stuff to others. Then, later, when you're taking that tropical vacation or sitting at home in comfortable shorts watching a movie or typing on your computer while all your workers are out working you think back to your comments and think to yourself, "Ok. I guess I won't go back to being a Solo Op. Days like this are pretty nice!" and you press on.

.
Exactly! There are days, like today for example, where it is more babysitting than anything. Especially when you have an employee or two that decide to be difficult all day. But like Jim Said, there are days where you could never imagine being solo again. If you keep learning and developing your business, the rewards are worth it for sure.
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  #167  
Old 11-18-2013, 05:42 PM
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Quote:
Originally Posted by Bumpmaster View Post
Yep, however Jim did get a little long winded in his comment n'at.
Me?? Long Winded???? NEVER!!!

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  #168  
Old 11-18-2013, 05:56 PM
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Quote:
Originally Posted by JimLewis View Post
Me?? Long Winded???? NEVER!!!



http://youtu.be/POPbq--BAvU
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Last edited by Bumpmaster; 11-18-2013 at 06:01 PM.
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  #169  
Old 11-18-2013, 08:21 PM
Tyler259 Tyler259 is offline
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Originally Posted by Marketing Pro View Post

I am interested in growth models. I have a fantastic problem. My ability to market and gain new clients is far beyond the ability of my business to keep up with it AND keep margins high. I noticed a few people mentioned small operations versus multiple crews and larger operations. Specifically a "diminishing return" on labor. Even growing smart (and keeping costs controlled as mentioned above) there are margin obstacles to revenue growth and none bigger than labor. In order to grow through specific revenue thresholds margins have to suffer. I'm getting close to one of these thresholds and have figured out one possible way around it. I'm looking for more. Perhaps you are too? Hope my comments were beneficial to you.
Any comments on this Jim and the other guys? Constantly hearing about barriers to growth, even heard some comments at a Charles Vanderkooi event I went too.

Also remember several threads of guys reaching certain points and having trouble with whats on the horizon. Some failed some sold the biz etc.
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  #170  
Old 11-18-2013, 09:36 PM
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Yah, I definitely agree with just about everything in that statement. It is definitely more of a struggle to keep up with growth than I had imagined. We have grown just about every year I've been in business. But the growth we've seen in the last 5-6 years or so ($1Mil annual sales to $3Mil) was a little faster growth than we had seen before.

At first, as you start to grow, it seems like everything will be super easy as you grow. You sort of run the numbers in your head and it goes something like this:

"Wow. I was bringing home $7,000 a month on my own (gross). Now with two workers, I'm able to to way more accounts and do way more side jobs. Now I'm bringing in $15,000 a month (gross). But my employees are only costing me about $4,000 a month. So now I'm making another $4,000 in revenue, even AFTER I count the employees! This is awesome!......Well, sure, I spent $5,000 on that second truck the other day... And $3,000 on that trailer.... a few grand on mowers and trimmers. But heck! I can afford that. I'm making $4,000 more each month now! I can't wait to get more employees! This is great. Soon, we'll be billing out for $20,000, then $25,000 a month. And most of that will be coming back to me!"

It seems like the employees are making you really good money. And they might be. If you just stopped there and didn't grow any more than that. But for one, it's never quite as good as it sounds in your mind - once you look at all of your REAL costs for the month. Then you realize you really aren't making quite as much as you thought you were. A lot of that is labor, overtime, etc. But a lot of it is in new expenses you now have. New equipment, vehicles, lettering, more advertising, uniforms, more cell phones, a lot more taxes, and the list goes on. For two, there are probably some things that you should be paying for, that you aren't yet. So then those expenses start to catch up to you.

It's easy to be making $20K a month but still having to struggle meeting a payroll of $5k or $6k. Because maybe you have an accounts receivable problem that didn't used to as big of a problem when it was you. If you got paid from some customers late, not that big of a deal, as long as you could make rent or mortgage. If the rest of the money trickled in over time, it was no big deal. But now you have employees who want to get paid ON PAY DAY. And half of the customers you billed out for haven't paid you yet. So something has to give. This is maybe one of your first big challenges. And it can cost you real money if you don't find a way to fix it fast. There are lots of other reasons it could be a struggle to make payroll. Unexpected expenses, forgetting to take certain expenses into account, you're not charging enough $$.... etc.

Then you get that challenge like an employee is showing up drunk or stoned to work. You gotta fire him and take his place until you find someone else. That means you can't be doing whatever you and your crew was supposed to be doing that week. Missed opportunities = decrease in money. So does training the new guy. You take a little bit of a loss that month. No big deal. You're making good money. You'll be back in the black next month.

Next, you start getting threats from your workers that they are going to start looking elsewhere for work if you cannot guarantee them at least 40+ hours a week. Pesky employees! So you realize that now with 3-4 guys you really need to get out and start marketing more, so that you never run out of work for them. So far, it's been pretty easy to keep them busy. But lately there have been a few weeks where they had a day or two off, because you hadn't landed enough jobs. The solution is more marketing and more money spent on marketing/advertising. More money you didn't realize you were going to have to spend. So you spent a little more on extra hours and marketing this month than you had planned. It's all good. Revenues are going up. You can afford it. You'll be making more profit soon.

You finally get that all working, workers are busy, jobs are coming in and that 2001 Ford F250 you bought just broke down. Needs a new tranny. Holy crap! Those things are $2800.00. "You gotta be kidding me!" It's all good. You're making good money, right? Company can afford it. So that month you have an unexpected expense. It's just a one-time thing. You'll be back in the black next month.

Next month you got all the trucks running well, employees are fairly happy, jobs are coming in. But you show up one day to your shop and 2 mowers and some equipment are missing. WTF? Your shop is out in the country, away from traffic. Nobody hardly even knows you're here. How'd they know to steal these mowers? You start to suspect maybe an employee did it or who knows? Fortunately, there were some good lightly used ones on Craigslist. So you're back in business. But it was still $5k down the drain. Fortunately, you've taken corrective measures to make sure everything is securely locked up now. It's just a one-time thing. Buy some insurance that covers you if this happens again, take corrective action to secure everything. And....You'll be back in the black next month.

Next month things are going even better. Went from 4 to 5 employees. But now you need another truck. It's all good. The money is really coming in. So you drop some good change on a truck, trailer, and they can share some equipment for the time-being. You'll buy just what's necessary and maybe the rest next month. But there's thousands of dollars gone. It's all good. Just a one-time thing. You'll be back in the black next month.

Next month comes and nothing goes wrong. You make an extra $5,000 than you had before. "Awesome!", you say, "I love owning my own business." The wife loves it too. Especially this month. She's finally seeing you bring in some decent dough.

Next month comes and you get a call from the Worker's Comp. insurance company. They're asking for an audit. "What? An audit? Don't I pay you guys enough?? What the heck is this? I don't have time for this crap. Don't they know I'm already working 60 hours a week trying to keep this thing running?" Turns out that after you spend 5 hours digging up all the records they want to see, you owe them $4,300 more! "What? How did this happen?" Well, remember at the beginning of the year when you estimated your payroll at $3,000 a month? Because you were trying to get a good rate on worker's comp. insurance? Well, it was actually more like $4,000 a month, wasn't it? Be honest. You know you fudged a little. And so do they. This isn't their first rodeo. That's why they audited you. And now your payrolls are more like $8,500 a month. So you've been underpaying for a while now. That's why you owe. $4,300 ding to your account. But no big deal, right? You're raking in the dough. Besides, it's just a one-time thing. You've adjusted your payments so this won't happen again. You'll be back in the black next month.

Next month comes and business starts to slow. It's fall and all the sides jobs you were doing aren't coming in at quite the same pace. Some of your accounts are starting to cancel and without new ones coming in to replace them, like there were in the spring and summer, your revenue is dropping. But you remember your workers saying earlier in the year that they really had to have 40+ hours. So for a few days this month, you just find some busy work for them. You can't lose your top guys, right? Gotta keep them happy. But all this means you lost a good $4,500 this month. This is starting to hurt.

Now you're beginning to realize that you should have maybe raised prices earlier in the year. But it's too late now. Can't raise prices in the fall. Damn, you didn't realize owning a business had so many surprise costs!!! You still have to make your estimated tax deposits for yourself, you're liability insurance is due, auto insurance renewal policy is due and you know it's going to be higher this year because one of those guys you fired earlier in the year got in a dang accident. You had to move to a bigger shop that's $500 a month more than the smaller one was. You can't believe the cell phone bill was almost $400 last month. "How'd that happen?" Guys are treating the nice uniforms you bought them like they are shop towels and replacements are costing you a lot more than you anticipated for uniforms. Vehicle and equipment repairs are starting to cost you more than you figured it would and leading to down time. You're starting to think maybe you need to buy a back-up truck and get back-ups for all your equipment. How much is that going to set you back? "Damn! I really should have raised prices earlier this year!"

So you some how make it through the winter, layoff some workers, cut expenses dramatically to try to keep a few key workers on and keep customers happy. Then the next year it's more of the same.

It all keeps going like this until you finally sit down and a) figure out your true costs and start charging accordingly and b) start having key policies in place to control loss, make equipment last longer, control expenses and put some key people in place that are really on your team and dedicated to helping you get all this under control.

It's constant learning and correction. Figuring out where you're problems are and taking quick, corrective action. While at the same time trying to figure out how you're going to justify raising your prices to where you're higher than other companies and then finding customers willing to pay those higher prices!

God forbid you don't end up going through a bout with cancer or some other major life challenge, like I have. That just makes everything even more crazy. Fortunately, by the time I had mine, I already had a fairly established company with people to run everything for me for a while, while I had to take some time away and get treatment. (All clear now, by the way. No worries. ) But God forbid anything unexpected in your personal life happens. Because it's already hard enough to keep a business going with total focus and dedication.

It ain't easy. We've had to make big course-corrections all along the way. We made some of the biggest ever this year. As you grow, problems that didn't used to be that big of a deal start to become a much bigger deal. But if you have the right management team in place who are really loyal to the company and dedicated to making it work, you can make it through just about anything. You just have to be willing to be open minded and keep working at correcting the problems, as you begin to realize them. Because there will always be new challenges.

I think some of the challenges we've had could have probably been prevented if we hadn't grown so fast or had been willing to increase prices sooner (to both control growth and to raise profits). Nevertheless, it's been a fun ride. I still enjoy it. And there are times where it's not nearly as stressful and more relaxing too. This year has been a little more relaxing than other years for me. Especially this fall. I got a good sales team and good project managers and a great office manager. So there isn't as much for me to do this time of year other than just relax and watch over it all. Working just 20 hours a week. And 15 of that is just stuff I want to do, like work on the website. So it can have its rewards, eventually. But if you think it isn't going to come with a lot of pain, frustration, surprises, and stress along the way, you're sorely mistaken. Be prepared for that. If you're not, stay small.
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Lewis Landscape Services - Oregon
"kickin' grass and takin' names"


www.lewislandscape.com - Portland Oregon Landscaping Company

landscape design Portland Oregon

Last edited by JimLewis; 11-18-2013 at 09:42 PM.
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