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Discussion in 'Lawn Mowing' started by PROCUT1, Feb 18, 2009.
I'd suggest the moderators make this a sticky at the top. This should be read by everyone.
That is when I realized that the average profit off of a $30 lawn was about $3 if everything went right.
That was gross profit. Meaning profit after just the direct costs to do the job, not including overhead.
So obviously if you looked at that, you can see once I figured in my enormous overhead, I was dead.
It was hard because my houses were so close. i had the perfect route.
Once I calculated the numbers, I would have almost had to double prices in order to cover the expenses, and have a reasonable profit.
Assuming a crew of 2 can cut a $30 lawn in 15 min, your overhead per hour was over $120. Wow! I know that is kind of a simple way to look at it, but I'm just trying to understand how your overhead was so high. If you needed to nearly double your prices to make a profit, then your overhead was somewhere around $230 an hour. Again, Wow.
Can you explain?
Do you understand now WHY I insist on driving an older, used truck?
Do you see why I about faint in dismay when I see these guys here on LS talking it up about the 2004-2009 models?
Hell it must be nice, I drive a '95 that cost me 4 thousand paid for in cash,
the truck before that was an '86 and I just got rid of it 2 years ago.
My first truck was a 1974, I think, the '95 is my third one and it's the nicest.
Just as an example, a lot of my stuff looks older, and a bit wore out, but cost is the reason.
But the best part
It used to eat me alive, watching the guys with their new shiny crap and crews.
And to listen to the guys here, even now, talking BIG...
Oh, and I'm the scrub.
Then the customers, some like to looking down on me because of that, too.
They just don't know how that feels either, you know what it feels like from your side of things,
then the whole lot wonders why I get so angry some days, why they should try it from my side.
But one day...
Someone on here said something a bit of time ago, it helps me a lot, and it stuck.
Debt looks beautiful from the outside.
The way the expenses got so high....
Commercial buildings are very expensive here for space.
The cheapest shop I could find was $1500 a month.
A commercial phone line runs over 100 a month.
Commercial internet 100
Electric for the office and shop was about 300 a month
For the size operation I had, you need more vehicles than just the ones working.
I have a truck, the supervisor has a truck. Plus the crew trucks. Plus a truck for a spare. Plus a dump truck or 2.
Commercial high coverage auto insurance is much different than your personal policy.
Each truck is about $1000 a year. Plus registration costs etc.
Cell phones for the crew.....They run 300-400 a month.
With that many customers you need someone in the office full time for the phones billing etc.....So there is about another 1200 a month in "non production" payroll
The supervisor who does the mechanic work, estimates, and everything not directly related to mowing, plus fills in on the crew, etc etc.....He is not directly in production either....Theres another $2000 a month.
Workers comp is crazy high in new york. Comp for the employees was about $16,000 a year. Yes Sixteen thousand.
Dont forget matching payroll taxes. All guys are paid on the books legally.
One truck payment at 600 a month.
Liability insurance was about 6000 a year.
Thats just a sample. We didnt even get into any debt or loan payments. Didnt get into any company credit payments.
Didnt get to my salary, which wasnt great.
Didnt get to health insurance, lawyer or accountant fees.
or the dumpster for the shop....another 100 a month
We also didnt get to equipment and truck maintenance or repairs.
Didnt get to supplies. weedwhack line etc
Keep adding..........its crazy...
Now, many of those things you can probably save a few bucks here and there and that counts. But at the same time, you cannot save enough that it would work.
Now look at those expenses and think how many of those you can eliminate by working out of your house with one or two trucks and a couple of guys.
How many customers did you have?
The guy with the two truck operation out of his house will have very little overhead compared.
No shop or office rent.
No additional utilities
Probably wont need an office person.
Most likely he will have his trucks on a personal auto policy. Huge savings there
Start going down the list and see how many things a "stand alone" company has to pay for that a home operation doesnt.
You can pick each one apart. But I assure you, the numbers are not exact, but I did do everything I could to cut expenses before it got too bad.
I even got rid of the office person, replaced with my wife, and got rid of the supervisor.....'
But still add up whats left over.
Its a lot of $30 lawns.
If someone invests the time and money into a business and cant afford to buy a new truck if they want it. Maybe its time for another line of work?
One of the reasons I stay solo or at least one other person helping me. In my 17th year and enjoying everyday!!
Its all in timing.
You can afford a new truck.
You will be able to afford all new trucks and all new equipment.
Its just a matter of doing things right in the beginning.
Its about avoiding the temptation and the rush to sign your name while business is growing.
Doing it smart you will get everything you want.
I personally want a $200,000 a year personal salary. I want a farm. I want my wife to drive whatever brand new car she wants. I want a great business with new trucks. I want a nice facility.
And thats what Im working towards.
Thats my goal in this business.
But there is the right way to get there and the wrong way to try to get there.
There is no large, successful operation I know that didnt involve a lot of sacrafice and tough decisions early on.
Making the right choices in the beginning will open up everything you want.
And. If you cant write a check for the full price of a new truck.......Then you cant afford it. Period.
I want a new truck. Right now, my business is making monthly payments into an account. Once the money is there, then I can go write a check for it.
Heres the really fun part........The part that Im excited about.
When I have 35-40 grand in that account.
Will that look better in the bank, or in my driveway? Thats a choice I will have to make.
Maybe a 2 year old 18,000 truck in mint condition will look better?
Who knows. But It will be a great feeling to have.
It will feel a lot better than the 2 year old F-350 fully loaded 4 door diesel with 60,000 miles, with a 600 payment, and a 25,000 balance thats sitting outside my office door right now.
And you know what?
The thrill wore off a long time ago.
I have 12 trucks. And I dont feel any different driving my truck, as I do any of the others that i own outright.
What a good feeling it is to know that the trucks are MINE. If there is no work, they will still always be MINE. I dont have to worry about them getting taken if i cant make the payments.
Not only should this be a sticky, it should be required reading in order to become a member of LS.
Good read PROCUT and even better advice.