Big Time vs Scrubs

Discussion in 'Business Operations' started by dmk395, Nov 21, 2001.

  1. dmk395

    dmk395 LawnSite Senior Member
    from Ma
    Posts: 992

    I was just recently at a bar and who did I happen to run into. Now I am relatively new to this business (22yrs old) and found myself and two other companies in the same bar. One we will call Ed, lowballs people, and Bill runs a top notch operation with all the toys. I just found that Ed charges $25 per man hour (I asked privately) and Bill charges $55 per man hour (I asked privately). Can you guess who has the more successfull operation? Quite a large difference in price, especially since each company has been around for as long as the other one.
     
  2. brentsawyer

    brentsawyer LawnSite Senior Member
    Posts: 663

    Can you also guess which one will be out of business when his equipment fails. At $25 hour, your not making it, with two guys making $400 per 8 hour day and one your paying around $100-125 at minimum then your overhead expenses and the rest will leave you with around $150 probably less is not enough to replace equipment as it waers out, let alone grow, he must have an outside source or at lease I would hope he at least likes his sooooo much to make no money at it.
     
  3. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    it really does not matter what one's hourly rate is when compared to others ..... what matters is one's cost in relation to what the market's cost of living is & what that market price will bare

    once we know what it cost fore us to be in bussiness n Stay there (reasonable profit) ....then what we charge per hour is right in front of us

    the guy charging 55 may have more expensese to cover ....may offer better pay ....have better equip .....paid vacation ....401k plan

    the guy at 25 may have more income ....work like a dog ..... have no business to sell ....time to one's self .....a LIFE outside of work .........n like what brent said .... "be out of business when his equipment fails" ....
     
  4. MLI

    MLI LawnSite Senior Member
    from Ma
    Posts: 464

    I wonder if the guy making $25 per hr pays taxes......and Id bet the guy charging $55 does. Most scrubs stay solo........problem with that is you have to make your money while your body is still young, and hope you never become ill to the point where you cant operate your biz. The older you get , the less likely youll be able to stay in this trade due to physical aspect. Now on the otherhand, the guy with the legit biz, prob has workers on the books, and a foreman. With this type of setup, the money, and the possibilites are limitless. You can remove yourself from the physical part to the mental part without the pains of getting old. I have nothing against solo's, some wish it that way, and some are just starting out(in the build phase), but they must be legit, pay taxes and ins. and at least be in the ballpark when bidding. Otherwise this industry will always be cut-throat.
     
  5. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    "Can you guess who has the more successfull operation?"

    What difference does it make? You do what you gotta do to cover your expenses and bring home the bacon. And in the end, you're the one who's gotta sleep with yourself...
     
  6. Matthew Morgan

    Matthew Morgan LawnSite Member
    Posts: 45

    It is not just about success. It is about quality of life. What kind of quality of life do you want, or are you satisfied with?

    That is the question! Personally I want more. Most of my competitors are comfortable "living in a van down by the river." I am not. I eventually want to come home to a very nice paid for home, nice personal vehicles, (Corvette, toys like that) and be able to travel anywhere at the drop of a hat. I am a long ways from that, but a lifestyle like that is my goal. Most are satisfied with beer money and junk.

    Matthew:jester:
     
  7. dmk395

    dmk395 LawnSite Senior Member
    from Ma
    Posts: 992

    Morgan,

    I think you are right on that one.
     
  8. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    I'm with MM. I second that post.
     
  9. Ric

    Ric LawnSite Fanatic
    Posts: 11,946

    dmk395

    If I understand your question you are asking who keeps the most money at the end of the year????

    My guessestimation from seeing other companies over the years would be ed's lowball. The reason is volume, low quility work, lower wages, easier to hire less experience help, less problems with call back because customer excepts what they get because of the price they get at. Lower over head, high volume and a working class customer base that pay there bills on time and do not complain.

    Bill's top notch is dealing with Pickie Yuppie customers that will beat you up on price and take forever to pay thier bills. Bill has to have nice new equip and chapped lips from kissing ZZZ. in order keep this customer base.

    Ed runs a go-n-blow while Bill is a manicureous. Ed keeps the cheese.
     
  10. are you calling me a scrub?

    I bill all labor at $18/hr. But here's the story behind that.

    I do dammed little of it. I just think it looks good on an invoice to say:
    LABOR RATE = $18 per hour

    That way if some smart assed accountant gets to looking into why their company pays thousands of dollars per month in lawn care, someone can point and say "dunno...labor rate's cheap enough."

    If you think some dude at a gas station is going to reveal the inner workings of his business, then you're wa-a-a-a-y too gullible to be working for yourself.

    People in this business calculate their costs by the hour, then bill by the job. The profit is in how productive you can become.

    If you bill by the hour, you're really not in the lawncare business. You're a day laborer. Maybe even a day laborer who's dumb enough to bring his own tools.

    What is a scrub any way? What Morgan calls scrubs, locally we call them vagrants and put them in jail. Or maybe a scrub is the last guy to under bid you. That's just competition.

    I'd say a scrub is someone who damages the client base. Someone who bids too low to possibly make any profit just to snare a client. Or thru ignorance or greed doesn't maintain an account properly reflecting poorly on the whole industry.

    I was a scrub, once. I worked up a bid for a factory and just to get the account, divided the bid by two. Next year, when I tried to raise my price to what it should have been, they wouldn't budge.
    I lost the account to someone bidding my old price. He went belly up mid season. They replaced him with someone at near the same price. That factory clung to that price for eleven years! Of course the lawn looked like crap too.
    I'd ruined the client, the lawn and several LCO's with that stupid manuver. I'll never do it again.

    Ric has the right idea, that you can't identify a guy as a scrub just because he markets to a different client base. There are high volume LCO's and high quality LCO's.
    I'm in the middle of converting my hi-volume operation to a quality-hi-volume operation.
    I'll keep you "posted" on how it goes.

    Dave
     

Share This Page