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Increasing accounts what is the real cost?

Discussion in 'Business Operations' started by Drew Gemma, Jul 13, 2006.

  1. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Posts: 1,511

    I have a chance to add 50 nice accounts the guys is about my size and has been doing this for about 15 years. The route books money all that is their but how much more will my overhead increase by doubling the number of accounts. I know labor will go up, fuel maint. but how much will my profit really increase is getting that much more work worth it.
  2. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    I don't know how much work 50 accounts are in your world but I am assuming its a full time route. If that is the case it sounds good. Assuming the guy was making a profit similar to yours, your total profit should at least double.

    Your true overhead shouldn't change at much. How much extra time will it take to do the billing? Will your phone bill go up because of the new route? How much extra postage? See my point? The cost of overhead to do the additional accounts is insignificant.

    Your expenses, fuel labor etc. will go up but they should be offset by the increase in revenue. If you can tie the new route in together with your existing route by just adding additional labor using one truck that is even better.

    Unless you have to rent more space for the truck and equipment it should be a no brainer.

    SDNCLAWNCARE LawnSite Member
    Posts: 232

    I don't care if it was 100 accounts you ALWAYS look at overhead. You don't want to get yourself working for nothing. I would agree that most of the time you are going to make more money, but you have to look at the big picture before jumping in with both feet.

    Look at Mileage, Gas, Time Study's, Equipment use, Size of Accounts, Pay per Account, etc.
  4. GreenDragonLandscapes

    GreenDragonLandscapes LawnSite Member
    Posts: 16

    Your fixed overhead (rent, phone, etc) should somewhat dilute due to the increased volume. In other words, if you do not have to rent more space, it will be the same whether you have 5 or 50 accounts.

    Your variable overhead (invoicing, postage) will track to the new volume. 5 accounts...5 invoices 5 stamps. 50 accounts...50 invoices, 50 stamps.

    All this assumes you are not operating at full capacity. If you are at full capacity before taking the new accounts, the picture changes i.e. new equipment, crews, larger storage space to accommodate the new eqpt. etc.

    So, it depends on your particular situation.

    Hope that helps,
  5. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Posts: 1,511

    I am thinking one 3 person crew could handle the 100+ accounts 95% residential. in and out so only increase would be another trimmer, another mower of some sort. The route will spread into my current route. just be a 5 day must to get all the mowing done.

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