Anyone ever had problems with payroll and cash flow?

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

  1. Charles

    Charles Moderator Staff Member
    Posts: 7,866

    Look at your net income if you didn't have to pay a helper vs your personal expenditures. I agree with those that suggest you are not netting enough money to have a helper. You're just going to have to do all the work until you get that net income up. Make sure you are charging what it takes to run a business .
     
  2. dllawson

    dllawson LawnSite Member
    Posts: 172

    BW, one very important question has not been asked. Do you charge by the visit, or do you have monthly contracts? If you are charging by the visit, as others have stated, your rates are too low and/or your expenses are too high.

    However, if you mostly have year round accounts then it is normal to experience negative cash flow this time of year. With monthly contracts you bill the same amount each month, but you are probably making more frequent visits in the summer. This is magnified in July and August because you have to cover an extra week of payroll from the same amount of income. The good news is you will be more profitable in the winter, so be sure to put back some cash for this time next summer.
    ______

    In either case, you need to make it through August. The best thing you can do is to sell a couple enhancement jobs to generate some extra profit for the month. Propose small improvements to your existing customers without children. (They will not have back to school expenses.)

    The next thing to do is manage your labor. Make sure to keep your worker under 40 hours. You will have to pick up the slack, but the last thing you need is overtime right now. You can also offer your employee some time off over the next few weeks.

    A final step is to tighten up on all non essential expenses. What can you do without for a month or two? What purchases can you put off for another month?

    In the long term, think about Seabee's advice on benchmarking and creating a budget.
     
  3. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 12,108

    In all sense of reality, this question does not even belong in this thread. Or forum.

    He could be mowing 1 account that takes all week with a batwing mower and tractor or he could be doing 60 per day with push mowers.

    It has absolutely nothing to do with his problem, because there are too many variables.

    While all these could be true, they could all be false as well.

    The OP could be making plenty of net--true net--the kind of net that is left over after all expenses are paid including labor--and still be experiencing cash flow issues.

    It appears that not many people understand the importance of positive cash flow. Profitable businesses can go under due to negative cash flow and unprofitable businesses can continue to operate if they have positive cash flow.

    Should be interesting to see where this goes.

    You mean grossing, not netting. Net income is what is left over after all expenses are paid. If you're paying labor out of net income, you don't deserve to be in business.
     
  4. Aleman

    Aleman LawnSite Member
    Posts: 204

    I agree 100% percent Mark. You took the words right out of my mouth.
     
  5. Charles

    Charles Moderator Staff Member
    Posts: 7,866

    I said net income with no employee figured in.
     
  6. 94gt331

    94gt331 LawnSite Bronze Member
    Male
    Posts: 1,693

    Payroll can be a challenge for me at times. It allways works out though week to week. We are allways busy but we do small jobs and we have to move around alot to be able to meet payroll. Overall you have to know how much you need to make a day with your helper to cover your expense and payroll. Set your daily goal and as long as you cover that goal everyday you should be able to pay him just fine every week. Other thing's can make it a challenge sometimes, slow paying customers and equiptment that breaks etc and mess things up sometimes, but if your going to have a employee it's wise to build up a safty net account to have backup money for slow times or bad weeks.
    Just amagine larger crews of 10 or more guys totally different than just 1 or 2 guys think about how much money they need to make daily just to make it.:waving:
     
  7. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,094

    Okay...well I think it does sir. It's a leading question...as in leading to what type of the accounts he has/what size?

    Thank you though...
     
  8. PlantscapeSolutions

    PlantscapeSolutions LawnSite Silver Member
    Posts: 2,979

    Once you start to have employees you need to give your accounts a second look. You can be inefficient and solo and still make money. Once you start to have employees it really exploits any inefficiencies you have. More employees only multiplies the inefficiencies and puts you in the red even more.

    You need to know the time it takes to mow all of your properties as well as the drive time. You need to figure out what your cost is per man hour to operate and how much per man hour you need to be generating to cover your workers payroll and still take home your desired amount.

    I had to get rid of some properties as me head count increased. Even at an ideal and efficient company with increased crew size efficiencies increase and this can't be helped. Things like travel time labor multiply and this can be helped. The most efficient crew is a crew of one usually.

    Hopefully you can benefit from the increased output from adding the the second worker and it will greatly exceed the loss in efficiency.
     
  9. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,307

    You aren't kidding about that. Iv been in the trade 25 years this is my 11th in business and we are coming the the conclusion that we can not make any real money with employees. My data shows I make a small profit sometimes break even most time and loose my shirt some times with employees. The more work the worse it gets.
     
  10. Southern Heritage

    Southern Heritage LawnSite Member
    Posts: 169

    Well I'f I understand this right you plan on not having employes. So let me ask you this. What is your retirement plan. What will you be doing when your 50. You can only make so much by yourself. I couldn't see how that would be enough to support you the rest of your life.

    That's why I think the comment you made if I understand correctly is the dumbest most incorrect comment I've read on this sight. Yes I made $50000.00 -$60,000.00 when I was solo with part time help. I now have a bunch of trucks and bunch of employees. Yes it's a night mare a lot of the time and it takes a lot of money to operate but I make a Hell of a lot more money. I have to be more careful with my money but I do make more.
    If you broke even because you have employes only a few things could be the case. You can't run a business
    You don't or didn't need employes.
     

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