How many big guys on here?

Discussion in 'Starting a Lawn Care Business' started by joshman108, Aug 1, 2012.

  1. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,304

    I'd kill myself before Id do something that foolish. 30-50k in equipment is either going to blow a huge hole in your savings or your looking at 1000-1500 a month in payments. Then comes fuel repairs insurance and registration and property taxes a bunch of other nickle and dime things that add up quickly. Then there is the crew lets assume 2 men each will expect 25-30k a year plus then there are the costs of employing them and in my case its plus 20% so now your looking at 90-100k a year. So you need to find them a lot more work since you can not justify going through all this to lose money or break even. But most companies here see 5-20% profit margins yes there are some solo guys who count there income and claim much larger but employees tend to drive that number down big time. So say your profit from a crew was 10% how much do you need them to gross before you pay off 50k to outfit them? And mind you those are your numbers my set ups are 80k plus. If you were grossing 100k a year off the crew and had a 10% profit it would still take you half a mill gross and 5 years to break even.
     
  2. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    MAn, I really dont see how you afford it. Most insurance is based on hours worked. over time is a KILLER. and the numbers to start up another crew is a killer too. WE mainly run ford F250's I let my personal truck flow down hill But right now a new one is 56,000.00 and the hireing process WOW.

    We estimated a helper at 10.00 Per hour, to get him hired and on the job is around 3,000.00 and then as you know it's a gamble. if he stays or if he's good......

    We do larger areas. we can get about 4 to 6 done in a day. ususally we send 2 men 2 ztr's and hand held equ. our trucks run at 6 to 8 mpg.

    and then people are bitching about waht we charge.

    I noticed round up had increased by 45%. in the last 2 years. and our utilitys have went up. WC is not tooo bad.

    it's getting tough out there....
     
  3. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    you may not know this, But most people are paying 51 to 54% in taxes.
    it's simple. take the avrage working man. go look at his paycheck. he's taxed for his income, then he's taxed for his. SS. then he's taxed on local and county. now he takes this money and he pays his morgage/rent. now he pays tax on this,,,,, if he ownes his home then he pays taxes on this proptery. now he go to store and purchases a what ever, he pays tax on it. then he get fuel he pays tax on it. now he put's some in bank. the interest if any is taxed. lets say he puts what he can in a ira. he's taxed on it.

    this is right at 51%. it's simple math. however noone is going to tell you this. you have to do the math for your self, simply becasue your sit, is diffrent than mine.....
    you have to do your own math.

    confussed, We dont have any 1/4 acer lots in my area. the last ZTR i purchased was 12,000.00 if you purchase two of them that's 24,000.00 now you need a truck. ya have to follow DOT restrictions. so this means 3.4 ton. that's about 10,000.00 now we need insurance in it. that's 1 to 2 a year. now we need employees that's 18,00 ph for lead man 10.00 for helper. now we need blowers. line trimmers. and such. and trailer.
    now we need another office employee for the book work.

    my estimate may have been kind of low. now that I break it down.
    again. prices will diffre by area. and as you know. WC and insurance is based on how many hours ya work. so all of the insurance goes up.

    We turned them down becasue we simply cant get to them. and YES. starting a new crew is costly.

    I was looking for diffrent insurance just this summer. it took me about 1 month. to do this. it took 1 man out of the work force. cna you afford one man off for a month ?

    again not sure about your operation, But we pay taxes 15 times per year. seems lately all we do is taxes.....


    Best of luck
     
  4. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220



    you may find that foolish. but we only purchase NEW. ZTR's are right at 10,000.00 A unit. and yes we use the right off. " Of corse " and you are RIGHT SPOT ON......

    this is my issue. it's VERY costly to add another crew.....

    thanks for post
     
  5. NOVAMowing

    NOVAMowing LawnSite Member
    Posts: 42

    Thanks for the replies, guys.

    @ Kellys - Your numbers are based on full-time labor through the season. The 20 lawns would not be close to full-time work. I should have clarified my frame of thinking....

    Given the original post and the conversation about costs of expanding, I should have explained better, when you can break even on your investment over say, your 5 years, and you are trying to expand, thats when you pull the trigger and set up the crew.
    As far as your model to recoup your investment... at a 10% profit margin on 100K I am covering my payments and insurance on financed truck, trailer and mowers. So to profit 10K a year on a 50K investment seems pretty good to me. Especially since your 10% profit margin does not factor in assets that are being paid off.

    @bohiaa - Im not sure what an employees personal property, sales or income tax has to do with your bottom line. I completely understand reasons to not expand due to life factors. But when it comes to business factors, company taxes on another crew ought not affect that decision. If you are paying company taxes, your company is making money. If your company is making money, you SHOULD be earning profit.

    Personally, I would expand at a break even point for a crew. Just my 2 cents. Thanks for the info.
     
  6. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220



    Yea You have to remember were all in diffrent areas. and this means there will be diffrent cost of living prices. and such. Also. in our area, we do mainly larger areas. I think the largest Residential is 10 acers. and then there many 5's and such.......

    it's not an issue of NOT making money. money is tooo easy to make it's the expanding part that hit's a person hard.


    best of luck and thanks for the post
     
  7. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,304

    35-40 hours a week to mow the list times 4 men so it can be 160 man hours. The extras cost us in several ways one is if we want to use our current employees it puts them into OT either that day or a mowing day doesn't matter how its scored its OT. And with all the costs of employment it costs us 25-30 per hour depending who it was getting it. So the labor costs are more instead of 150-200 a day its now 250-300 a day for a typical day per man. But the income is less, with lawns we have a very tight list 150 plus of the lawns are in our home town and with in 5 miles of our base. So when we do lawns 800-1100 a day per crew is the norm. But the extras mulching trimming seeding hell even clean ups generate much less per man per day. So mowing is 400-550 a day per man the other stuff is often as low as 300 per day per man. Yes we charge more per hour for it but its got longer drive times and since its not the norm it always causes loading issues in the morning and start times suffer. It's almost like you need to start from scratch and retrain them each time you switch gears.

    The solution isn't one I want but have put into place today which is to bring in a part timer for Monday and Tuesdays and use the other guys only on mowing days. This will not make them happy but will cut labor costs by over 1000 a month. Still the extra work pays less but at-least the labor costs are better controlled this way. Now if we add more lawns and increase our out put by adding a day of mowing and increasing the daily amounts we do as well with added crew sizes. In that case the OT isn't such a bad thing since at-least your paying on high income days only. One of the painful issues I have this year is only one guy has is drivers license and hes the higher paid guy which means any time I want to take 2 trucks I have to use the higher paid guy and pay hundreds a week in OT to him some times ($500 just in OT). Everyone always wants more work but few here every stop to think is it the right kind of work or will any work do.
     
  8. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,304

    I was speaking too the 60K potential income when I called it foolish to invest it was under those limiting circumstances.
     
  9. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,716

    I know of one company near me who has over 30 employees. They gross over 5 mil per year, have nursery, install, irrigation, landscape lighting, mowing, fert, and plowing divisions. Thinking over the logistics of a company that large makes my head spin. If this is where you want to be make sure you find REALLY good people to help you make it run smoothly. IMHO 30+ employees isn't "reasonably big," for what we, do its huge.
     
  10. TX Easymoney

    TX Easymoney LawnSite Platinum Member
    Posts: 4,070

    no offense, how are you outfitting your trucks?--i asssume $56k is for a truck and trailer--

    I've bought 2 diesel 2500 Chevy, longbed, 4 door for around $36-38 out the door-we don't get power locks, or windows, just a work truck, tool box $650
     

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