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  #1  
Old 07-03-2012, 09:16 AM
RBatten RBatten is offline
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Location: FL
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Maintenance Labor %

I have looked far and wide for an average labor cost %. I know here in FL we earn our money in the summer and make our money in the winter so I was wondering what kind of labor % I should be shooting for in the summer and winter months.

I want my labor costs as low as possible but I can't see running 30% labor in the summer months. You end up working the guys like dogs and most will tire and quite. Then it cost more money to hire and train new ones.

We had a great spring with lots of projects and design install work, but now that summer is here, the projects have dried up and my labor costs are rising fast.

If you are willing to share you numbers with the group I'm sure that we can all improve our businesses. I don't go out and mow yards myself. I do have to help sometimes when things get really backed up, but as a general rule I don't spend time on the truck. So all the solo guys or owner operators out there, calculate an hourly rate or salary for yourself that meets industry norms and let us know what kind of % rate you get.

Right now I'm basing my rate on Maintenance work ONLY, and I'm coming up with between 35-45% depending on the week. Lots of rain, labor goes up. Hot and dry, labor goes down. I want my business to be profitable on Maintenance work alone so that all the extra stuff, mulch, sod, and misc plantings is all gravy and increases my profits. I don't want to depend on the project work to make a profit.

There you have it. Lets see your numbers!

Thanks for all your help. Have a great 4th!!
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  #2  
Old 07-03-2012, 05:52 PM
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jvanvliet jvanvliet is offline
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I know what my daily & hourly nut is during season; I use the same numbers off season.
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  #3  
Old 07-03-2012, 09:44 PM
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Landscape Poet Landscape Poet is online now
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I can not help you with the crews but will share my info in hopes of at least giving you some possible help.

I am solo with a assistant. My payroll runs me about 14% on the maintenance portion of things. This does NOT include my salary of course but rather just my payroll being paid to my employee.

So in theory, if I added another employee to take my place I would be running in the 28% to 30% range assuming that production would stay at the same pace.

It should be noted too that I generally pay my employee for a full 40 even during the winter months for scheduled weeks even if we do work a full week as I figure he has expenses he needs to cover too and keeping him satisfied is in my best interest.

I think you have the right idea in making sure your maint side controls your income you rely on, sod, installs etc are then just gravy as you said. This is the way I have always done it and it works for me.

Hope that helps,

Mike
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Old 07-03-2012, 09:51 PM
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Patriot Services Patriot Services is offline
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Bear in mind most medium/large operations layoff the majority of their staff come winter. Seasoned guys understand this and don't mind working like dogs in the season knowing they will get a 2~3 month layoff in winter.
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  #5  
Old 07-04-2012, 08:16 AM
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jvanvliet jvanvliet is offline
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Labor is my single biggest expense, followed by fuel, fleet maintenance and repairs. I don't know how you can possibly cut labor to as low as 14%. My labor cost lock stock and barrel (taxes, insurance, etc) is about 47% during season and about 30% off season (off season we furlough 30% of our crew).
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  #6  
Old 07-04-2012, 10:11 AM
RBatten RBatten is offline
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jvanvliet, I don't know how large or seasoned your operation is but I have a question about your WC and Unemployment tax. Right now I'm paying the initial rate for unemployment tax which works out to 2.7% and then you add it the WC at roughly 3.5% and then Med & SS at 8.5% you call that roughly 15% on top of actual payroll. So assuming your numbers are roughly the same, how are you keeping actual wages at or below 30%? I know sales fixes most issues but with the pressures of fly by night lawn companies how do you compete when there are guys out there willing to service properties for less than $20 per service? Even commercial bids we have done, and lost, are going to companies that are willing to do billable work in $10-15 range. I can't understand how these companies are making any kind of money when I work on a billable rate of $35 per hr and still struggle to turn any meaningful profit. I know this is a low margin service business but how do some of these companies grow so large and still stay in business?

I know that Villa & Son's is a good example of how NOT to do it and it seems that there are 20 more operations just like them. Am I missing something?
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Old 07-04-2012, 11:32 AM
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Florida Gardener Florida Gardener is offline
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Quote:
Originally Posted by RBatten View Post
jvanvliet, I don't know how large or seasoned your operation is but I have a question about your WC and Unemployment tax. Right now I'm paying the initial rate for unemployment tax which works out to 2.7% and then you add it the WC at roughly 3.5% and then Med & SS at 8.5% you call that roughly 15% on top of actual payroll. So assuming your numbers are roughly the same, how are you keeping actual wages at or below 30%? I know sales fixes most issues but with the pressures of fly by night lawn companies how do you compete when there are guys out there willing to service properties for less than $20 per service? Even commercial bids we have done, and lost, are going to companies that are willing to do billable work in $10-15 range. I can't understand how these companies are making any kind of money when I work on a billable rate of $35 per hr and still struggle to turn any meaningful profit. I know this is a low margin service business but how do some of these companies grow so large and still stay in business?

I know that Villa & Son's is a good example of how NOT to do it and it seems that there are 20 more operations just like them. Am I missing something?
Your billing your guys out at $35/MH and are having trouble turning a profit??
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  #8  
Old 07-04-2012, 06:25 PM
RBatten RBatten is offline
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I'm not having trouble turning a profit, Im having trouble turning a MEANINGFUL profit. My margins are low. I know that I need more volume, as my fixed costs are high. Being a small operation with excess capacity, I know that I have room for growth without having to shell out large quantities of money. At this point I could add another 5-7K per month in maintenance before I would need another crew on the road. My main concern is how to compete with companies that are charging 10-15 per MH. I don't see how anyone, even a solo operator could make a living billing that. Even $20 a MH seems like a waste of time. Even working 60 hrs a week would only gross $1200 per MH, BEFORE expenses. With commercial auto, WC, unemployment and every other expense there would be less than 2-3% left.

Companies don't grow to 5mil billing $20 per MH so what am I missing?
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  #9  
Old 07-04-2012, 06:41 PM
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Florida Gardener Florida Gardener is offline
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Quote:
Originally Posted by RBatten View Post
I'm not having trouble turning a profit, Im having trouble turning a MEANINGFUL profit. My margins are low. I know that I need more volume, as my fixed costs are high. Being a small operation with excess capacity, I know that I have room for growth without having to shell out large quantities of money. At this point I could add another 5-7K per month in maintenance before I would need another crew on the road. My main concern is how to compete with companies that are charging 10-15 per MH. I don't see how anyone, even a solo operator could make a living billing that. Even $20 a MH seems like a waste of time. Even working 60 hrs a week would only gross $1200 per MH, BEFORE expenses. With commercial auto, WC, unemployment and every other expense there would be less than 2-3% left.

Companies don't grow to 5mil billing $20 per MH so what am I missing?
Well, your leaving out a couple of things. A company only has to pay WC if it has more than 3 employees. So your solo to 4 man company doesn't have to pay WC. I pay $90/Mo. to cover my truck and my trailer....not sure how much your paying.

Nobody is making money at $10-$15/MH. Even if your paying a guy $8/HR under the table, your making $7 off of him at the most, which is garbage. $20/MH sucks too. The going rate here is $25/MH. I shoot for $30-$35. If it's just me, $50/HR.

A lot of the big companies here, IMO, make very, very little money on the maintenance. IMO, they make the money on mulch, installs, etc. I don't see any point to not make good money on EVERYTHING you do, just as you said. I can go make more money elsewhere, so breaking even on jobs, or barely making money on maintenance so I can "get the extras" is not something I am willing to do.

The big companies that are making that kind of money are either billing out properly, or working on very large volume. The 2 biggest guys on this board that I know of(Jim Lewis and AzGardener are not billing out at $15/MH).
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  #10  
Old 07-04-2012, 06:46 PM
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Florida Gardener Florida Gardener is offline
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What fixed costs are high that you have??
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