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Anyone ever had problems with payroll and cash flow?

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

  1. 94gt331

    94gt331 LawnSite Bronze Member
    Posts: 1,692

    I do full service lawn and landscaping services. I have a crew of Myself and3 fulltimers around $300,000 a year in sales and working with a %17 profit margin, everyone needs to know there margins in order to answer this important question.

    Another thing I ask myself is I think my profit margin would be higher if I worked solo honestly. But We do alot of landscaping and I need help for the heavy labor etc. This buisness seems to have little profits on each dollar your guys make you. Just got to operate lein in debt and work efficient. Guys slacking get rid of them. I talk to my wife alot about maybe going back to solo with a part time guy. I could make a decent living on my mowing accounts. I guess I enjoy the rush right now, but the older I get, only 31 right now but still some day might want to slow down with the employees. Good luck everyone!:waving:
  2. 94gt331

    94gt331 LawnSite Bronze Member
    Posts: 1,692

    Another great piece of advice from Will p.c. Everyday in the landscape field is different. You might have 2 guys working a day and hit $700-900 mowing and the next day things don't go right and they make $300 barely covering payroll let alone your truck and expense payments. These factors happen alot and when you have more guys working the more risk for failure. Sad fact I can produce about as much mowing by myself most days as my crew of 2 guys can. But sometimes we just need help to get the work done.
  3. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,257

    How about you give us a good, detailed explanation of why size and what type of accounts has anything to do with cash flow?
  4. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,257

    Net income has nothing to do with cash flow. A medium or large company can gross a million and net $100K and still have cash flow issues.

    TruGreen, back in the day, had cash flow issues every spring. They'd dip into their line of credit for $1 BILLION every year. But they were profitable at the end of the year.

    You have some valid points about efficiency, but again, how does that relate to cash flow?

    The OP needs to answer seabee's questions and determine if he really has enough work for 2 people. Until then, all these other questions, speculations, guesses, etc are confusing the issue.

    This is basic business, and if you don't understand cash flow vs net profits vs gross, just subscribe to the thread and don't attempt to give any "advice".
  5. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    The OP said "cash flow issues" , not profitability issues

    Granted he might not know the difference between the two.

    If he truly has a cash flow issue. He may or may not be profitable. But his current problem is caused by him having to pay out his labor and bills before he is paid. Solutions are

    1. Get paid sooner from multiple methods
    2. Save money in an account to help with float time
    3. Reduce amount you pay out
    4. Change the terms of when your payouts are due

    If he has a profitability issue and is having cash flow problems because of not being profitable

    1. Don't charge enough
    2. Charge enough per hour but are in efficient
    3. Bid jobs too low
    4. Have high direct costs
    5. Have too high over head
  6. CL&T

    CL&T LawnSite Senior Member
    Posts: 493

    As seabee24 says, are you really having cash flow problems or is it that you just don't generate enough income for two people?

    What I am getting from this is that you hired an employee "to help you" and that's not the way it works. If you hire someone to help you do your work, now you have to split your income with him. You use an employee to generate MORE income by enabling your business to handle more and larger accounts. An employee that simply helps you get things done quicker or easier isn't doing a thing except cost you money.
  7. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,095

    Because what I started with was a leading question...time to provide valuable/helpful information without all the critiques. Don't take it personal bud. Lets help one another out.

    Have a great evening Mark.
  8. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,257

    So was mine, but you didn't follow. Let me help.

    Tell me how these scenarios are different and help the OP with cash flow.

    The OP has 5 customers, large commercial and it takes 1 day each to service them. He grosses $100,000 per month. Billed at the end of every month.


    The customer has 500 customers, small residential and he services 100 per day and grosses $100,000 per month. Billed at the end of every month.

    Now, in detail, please explain why size and type of accounts has anything to do with cash flow.
  9. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,095

    Trying to get 500 customers to pay on time, every time is a lot more difficult than 5 customers; that speaks a lot to cash flow.

    I have more answers if you want Mark.
  10. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,257

    Wasting monitor ink.

    I'm done until something intelligent comes along.

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