Anyone ever had problems with payroll and cash flow?

Discussion in 'Business Operations' started by bwanderson79, Aug 9, 2013.

  1. bwanderson79

    bwanderson79 LawnSite Member
    Posts: 60

    I started this business a year ago as a part time business while attending college. This summer I have gone full time with and now have one employee who has been helping me since mid-June. I am finding that meeting payroll puts a financial strain on the budget. I depend on this income to support my family and I only bill my customers at the end of the month. I pay him $10/hr, which is the standard rate in my area.

    My question is how do you guys deal with payroll and cash flow issues? Any advice in these areas would be appreciated. Thanks.
     
  2. Jaybrown

    Jaybrown LawnSite Bronze Member
    Posts: 1,160

    Advertise and get more work. Hand out a ton of flyers. Minimum 5000
     
  3. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,301

    Negative cash flow will only be exacerbated by more work.
     
  4. Sounds like maybe your not ready for an employee now.
     
  5. Southern Heritage

    Southern Heritage LawnSite Member
    Posts: 169

    Make more money or drop your overhead (employee, loans etc)
    I will say this no matter how big you get. Employees will always be your biggest payment.
     
  6. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,095

    Yeah this might be true...how many properties do you maintain on a weekly basis, and what equipment are you using?
     
  7. cpllawncare

    cpllawncare LawnSite Silver Member
    Posts: 2,659

    Either your overhead is too high, your not charging enough, or you don't have enough work yet for a full time employee, I made that mistake last year had to cut my full time guy back to part time for a lil while until I got more accounts, I learned very quickly NOT to cut for $25 a week it's $50 a week min, three years of solo cutting was enough! it's time to hand the reigns over to the young guns.
     
  8. Vecchio Lawn Care

    Vecchio Lawn Care LawnSite Senior Member
    Posts: 905

    My cousin maintains 40+ properties a week including two 6+ acre lots by himself. When he gets behind I help him out to get caught up. Usually once a week or twice a month. I wouldn't want a employee until I absolutely need one.
     
  9. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    Well answer this question so I could better advise you.

    Which best describes your problem.

    A. You pay your helper once a week or every other week, your customers pay you once per month. When your customers pay up, you can make payroll easy. When its the end of the month, pay roll is tighter. Some weeks its easy to write the checks and others its harder. but comes and goes in cycles. If you add it up on paper you don't have a problem and show a profit?

    B. doesn't matter how they pay you. You constantly seem to be broke after writing payroll regardless of the time if month?


    If your problem is "A". Then either save money to float you better, look into how you pay for other expenses and float time, can you bill weekly? Auto charge credit cards? Can you pay out helper every other week? Or re arrange the pay date to work better with your cash flow? Remember just because the pay period ended, does mean you have to pay up that day. You get 6 if you want to set that as a policy

    If your problem is more like "B". You have money, you write payroll and then your broke again, always, every week. Your problem is you don't charge enough, pay too much for direct labor or have overhead expenses that are too high

    I myself was surprised when looking up industry bench marks. While so things can be changed slightly, you would be surprised when looking at the % of where you should be spending your money and by how much it is. It said plain and simple 8-12% mangers salary. Thus sell a half million a year in work and if all you do is mange you should expect a salary of 50k per year. If you need more than that to live, then you have to sell more, cut other expenses or pick up other "jobs" like being on a crew or being a mechanic.

    If you sell 100,000 in work you should expect to only take home 10k as a manger. You might also take home 16k more because you are also a labor. And maybe 5 k as a mechanic. But this is how you should try and set a budget.
     
  10. 123hotdog

    123hotdog LawnSite Senior Member
    Posts: 481

    I have one helper. I pay him $10 an hour. I have 65 lawns and some of them are big hoa's. I work hard six or seven days a week. On the larger properties with not allot of weed eating, I don't take him. I limit him to the hard stuff with allot of weed eating. He also runs a walk behind and is learning to run a stander. He works 3 to 5 days a week. My labor rarely gets over 12% for the week. Of course that's not counting me.
     

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