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  #21  
Old 08-31-2013, 10:22 AM
larryinalabama larryinalabama is offline
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Join Date: Jan 2008
Location: Ragland Al
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Quote:
Originally Posted by M&L View Post
A third off the top seems high to me for a solo guy without debt. I have to ask, Out of that, what is your single biggest expense?
Heres a quick break down of expenses per day.

Truck .80$ per mile x 50 miles = 40$

Mower 8$ per hour x 5 hours = 40$

Handheld and misc = 10$

So basically on a 300$ day expenses are around 1/3.

That's 100$ so I would net 200$ for the day.

Taxes will kill off at least 1/3 of that so in my pocket a 300 $ day is actually around 150$ in real income.

If you don't know your expenses its possible your working for literally nothing.
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  #22  
Old 08-31-2013, 10:24 AM
larryinalabama larryinalabama is offline
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Originally Posted by Vanderhoff Landscaping View Post
So actual net pay for yourself would be roughly 10-15%?
Actual money that you take out of your business is around 50%. I ran some #s in the above post
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  #23  
Old 08-31-2013, 01:53 PM
M&L M&L is offline
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Join Date: Apr 2013
Location: Central Valley
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Quote:
Originally Posted by larryinalabama View Post
Heres a quick break down of expenses per day.

Truck .80$ per mile x 50 miles = 40$

Mower 8$ per hour x 5 hours = 40$

Handheld and misc = 10$

So basically on a 300$ day expenses are around 1/3.

That's 100$ so I would net 200$ for the day.

Taxes will kill off at least 1/3 of that so in my pocket a 300 $ day is actually around 150$ in real income.

If you don't know your expenses its possible your working for literally nothing.
Makes sense to see the numbers.
It seems you drive quite a bit more than I do, and if the operating cost on a mower is that high, Its probably a Z, or a larger walk behind. Or a 300$ craftsman that's trash after 65 hours hahaha (not to say you use one, just to stress the point of buying a cheap item plus repairs plus the cost of a commercial replacement item is always more than just the price of the commercial one.). But for the bigger yards, that's what it takes. My fleet(mainly Snapper's and Tru-cut's), though cheaper to operate, would do no good back east.
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  #24  
Old 08-31-2013, 03:20 PM
larryinalabama larryinalabama is offline
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Originally Posted by M&L View Post
Makes sense to see the numbers.
It seems you drive quite a bit more than I do, and if the operating cost on a mower is that high, Its probably a Z, or a larger walk behind. Or a 300$ craftsman that's trash after 65 hours hahaha (not to say you use one, just to stress the point of buying a cheap item plus repairs plus the cost of a commercial replacement item is always more than just the price of the commercial one.). But for the bigger yards, that's what it takes. My fleet(mainly Snapper's and Tru-cut's), though cheaper to operate, would do no good back east.
Is really suprising how many Lawn fellers have no idea of what their overhead really is.

My mower expense breaks down like this, and is baised on 1000 hours.

4$ per hour in purchase/replacement cost.
2$per hour in fuel
2$ per hour parts and maintance

Im running a Bop 44 duelly that I paid 4k for, and a 48' Toro Grandstand that I paid 4500$ with 80 hours on it.
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  #25  
Old 09-04-2013, 10:06 AM
Blade Runners, LLC Blade Runners, LLC is offline
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Location: Owasso, Oklahoma
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Originally Posted by Bryan27 View Post
Overhead is all the things you have to pay the same amount regardless of how much work you do. Things like truck and equipment payments (even if they are paid for already, their value should be figured into overhead for estimating), rent, insurance, etc. Stuff you own already, estimate its useful lifespan and divide that into its cost of replacement.

Figure your yearly cost for all these things, example:

Truck note $6000/year
Rent $4800/year
Insurance $4800/year
Mowers $3600/year
Hand helds $500/year

Total $19,700 per year in overhead, that's what you need to take in per year regardless of if you even do one job.

Now divide that by the number of days you will work per year, plan for getting rained out, etc. Say 200 working days per year. $19,700/200 days = $98.50 per day in overhead. Divide daily overhead by the number of billable hours you have per day, plan on working 8 hours? $98.50/8 hours = $12.32 overhead per billable hours. Now when you go give an estimate, add your hourly overhead, variable costs, company profit and your pay rate/percentage and multiply that by the number of hours you will take to do the job.

Since overhead per hour is based on your own estimations of number of billable hours you can get in per year, you need to be pretty darn realistic and accurate with that number. Overhead without the sales to support it will eat a business alive. Know your numbers and make a BUSINESS decision when you are taking on more overhead.
WOW great info everybody I really appreciate it. I am currently enrolled in an entrepreneurial bootcamp class and also am taking some marketing, accounting, and business management classes to help prepare me. But yes i know that no amount of schooling will completely prepare me for the real thing. So I will prepare the best I can and deal with issues as they come(because I know they will) and be better for it. Another question how are you guys tracking all expenses? Just through your business accounts or just tracking recieipts, quickbooks, a simple excel spreadsheet, old school handwriting everything down? Just curious as to what works for you guys best.
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  #26  
Old 09-04-2013, 10:09 AM
Blade Runners, LLC Blade Runners, LLC is offline
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Originally Posted by foreplease View Post
Welcome Blade Runners, LLC. That is a doozie of a first question! Interestingly, the answers are among the first things you need to know and understand in order to build a lasting profitable business with fairly predictable (and repeatable) results. How quickly and how well you are able to scale (grow) your business will depend on sales as well as accurate expense forecasting - and the discipline to follow your plan. The more thoroughly you plan, the easier it will be to follow.

There will be expenses you did not anticipate. Try to not ignore or forget any you should have known about. 32vid and Bryan provided good basic lists. To those you need to add something for advertising. The less experience you have the more you will tend to underestimate the annual amount you will spend on advertising IMO. Telephone service is another cost. Administrative costs - let's start with the time it takes you or someone to do all the things to find and invoice work that customers do not expect to see on their invoices - need to be figured in at some wage. Otherwise, after mowing and trimming for 7-8 hours several days a week you will find yourself coming in early and staying late to visit customers, prepare estimates, and send out invoices. Keep in mind people are not going to begin to call simply because you got some equipment and filled out papers at the courthouse

Employees, when you get to the point of needing any, are a huge cost that needs to be anticipated, covered with dollars of sales, and justifiable everyday. It is important to do this legally: withholding and later remitting payroll taxes; paying your part of their FICA; paying for workman's compensation insurance, unemployment taxes. Eventually some of your people will deserve and expect paid time off, which is a cost - one you cannot invoice, obviously, since they are not working during those hours. At some point you may need to provide health insurance (don't forget your own whether it is deductible for taxes or not). Overtime: you will have to pay time-and-a-half for hours worked above 40. You will continually ask yourself if it is better to do that or add more employees, or work more hours yourself. For rough planning purposes, you can assume employee fringe benefits, which are costs to you, will amount to between 23% and 30% of the hourly wage or salary you pay them.

In structuring your fees, think in terms of fixed versus variable costs. Ask yourself which costs you will have whether or not your next estimate turns into a job. Those are fixed costs. Costs you incur only because of the job you are currently doing are variable costs. JC had some good points about determining profitability and planning for it. What you are essentially trying to do is exceed your break even costs by as much as possible with, I'll say it, as little work as possible. Knowing this, every job you take absolutely needs to make a margin able contribution to your overhead.

Now here is the kicker many people do not take into account: if you are clearing 20% on your average mowing job the two ways you make identical progress toward your annual break even point are
1) increase sales by $100
2) reduce annual expenses by $20

Which is easier? Which is more important? They are both important. Neither is easy.
Foreplease, thanks for the indepth info!!!! Definelty things to consider for the long haul!! If you dont mind me asking how long have you been in business and how many employees do you have on average?
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  #27  
Old 09-04-2013, 12:08 PM
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foreplease foreplease is offline
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Location: St. Joseph, MI
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I have had an interest in turf since 1977 thought here have been long periods where it was not my main gig. Turf school grad 1981. I have no employees now and hope to keeping that way.

Have had several businesses over past 30 years w/some overlap
Retail music 10 yrs
Concert promotion and artist management about 9 years
Licensed residential builder specializing in insurance repair work and rental housing lot of that time - many years
Some successful, some fun, some both, some neither.


Some more fun, others more successful
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  #28  
Old 09-16-2013, 07:36 AM
Blade Runners, LLC Blade Runners, LLC is offline
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Join Date: Aug 2013
Location: Owasso, Oklahoma
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Quote:
Originally Posted by foreplease View Post
I have had an interest in turf since 1977 thought here have been long periods where it was not my main gig. Turf school grad 1981. I have no employees now and hope to keeping that way.

Have had several businesses over past 30 years w/some overlap
Retail music 10 yrs
Concert promotion and artist management about 9 years
Licensed residential builder specializing in insurance repair work and rental housing lot of that time - many years
Some successful, some fun, some both, some neither.


Some more fun, others more successful
Thanks for the advice. I was wondering where do you take turf classes at? Like local community colleges for something like horticulture??
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  #29  
Old 09-16-2013, 08:05 AM
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foreplease foreplease is offline
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Location: St. Joseph, MI
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I'm not sure in your area. Mine was at Michigan State full time (more than full) for 2 years with a required placement training work experience in between years. There are bound to be some people from your area on lawnsite that would know where to get started. Some possibilities include: a community college, count extension office, training and seminars put on by professional organizations or industry suppliers, a class to prepare for your state's pesticide applicator exam. If you end up having to piece together your own plan, classes on soils, turf and weeds, chemistry, plant biology are good places to start.
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