American Lawn & Landscape

Discussion in 'Original Pictures Forum' started by AmericanLawn&Landscape, Jun 23, 2013.

  1. Stars & Stripes Landscaping

    Stars & Stripes Landscaping LawnSite Member
    from CT
    Messages: 246

    Although I'm not in the business, my suggestion is to have a 5 year plan and a 15 year plan. The reason I plan for 5 years then 15 years is because it keeps you motivated, even helps to have yearly goals so you know you're getting somewhere and have something to strive for. Even weekly goals is my plan, such as "gaining two new accounts a week" or something of that nature? For instance...

    5 Years :
    - Registered DBA & or LLC fully insured to cover current business.
    - USDOT Registration
    - Plow prep (trucks, plows, sanders)
    - DBA Accounts, Tax ID number & such.

    15 Years
    - 2+ Full Crews
    - Yearly Customers
    - New equipment

    I'm sure you get the gist.
  2. Green-Man

    Green-Man LawnSite Bronze Member
    Messages: 1,105

    I want to know as well!
    Posted via Mobile Device
  3. Cody S

    Cody S LawnSite Senior Member
    Messages: 753

    Sent you another PM
  4. Green-Man

    Green-Man LawnSite Bronze Member
    Messages: 1,105

    Send me it as well! Lol
    Posted via Mobile Device
  5. SoCalLandscapeMgmt

    SoCalLandscapeMgmt LawnSite Silver Member
    Messages: 2,156

    Once upon a time I wanted a huge operation too... I still do.... but not in the same way that I once did. In 2002 I was 26 years old and had 10 employees. By the time I was 32 I had over 50 employees. I had 7 maintenance crews, an install crew, three irrigation technicians, two account supervisors a secretary and an outside sales person. I had 26 trucks on the road at any given time. The sky was the limit...... Then it all started to spiral out of control. The economy tanked, we had grown too fast and had huge HR problems, multiple fraudulent workman's comp claims and overhead costs that were unmanageable. I chalk it all up to being young, stupid and dreaming too big. Had the economy not tanked we would have been in bigger trouble. We had some of the biggest losses in the 35 year history of the company between 2008 and 2010. We're a lot smaller now and in a much better position. We dumped the jobs that were unprofitable, laid off about half of our employees and now it's just my brother and I running the day to day operations. The best advice that I can give anybody is the following:

    - Take it slow. Make sure that growth makes sense.
    - Know your numbers. Know what you need to clear just to operate. If you don't know your overhead then you're doomed to fail. You can't just price things based on what you "think" the market will bear.
    - Your employees are your biggest asset and your biggest liability.
    - Get a good accountant, attorney and insurance broker. They will all be invaluable to you at some point or another.
    - There will come a time where you can't do everything yourself. As you grow you need to document your operation procedures and practices so that you can eventually delegate them effectively.
    - Realize that what we do has a very low barrier to entry. Anybody can pick up a mower and throw it in a truck and call themselves a landscaper. Set yourself apart. Get a contractors license, look at some of the industry certification programs, get a pesticide applicators license. These are all things that set you apart from the next guy who thinks he will make it big in this industry.

    I still dream big. I think that you have to. No business survives long term by just towing the line and not growing. After almost 4 years now we're finally starting to look at growing again and are looking to hire an outside sales person. We learned a lot between 2002 and 2008 some of it the hard way but I think that it has allowed us to ultimately be a stronger company.
  6. Stars & Stripes Landscaping

    Stars & Stripes Landscaping LawnSite Member
    from CT
    Messages: 246

    How would you suggest going about doing this? I will be financing a mower shortly to get started and the plan is everything else will be cash. I have a fulltime job, this will be a part time hobby to make some spending cash and plan for retirement (I'm 22). I know most people say figuring out gas usage and mileage, and so fourth - how do you figure those numbers out?
  7. Cody S

    Cody S LawnSite Senior Member
    Messages: 753

    Cost to operate has to do with a number of things. So let's use an example.
    Say you are going to bid a job for the season. It's just a residential acct, but they want mowing & pruning, and they want to pre pay for the season, not just monthly. So, you have to take in a number of things. Say the average "market rate" is $30.00 per cut. You average in 26 weeks of mowing (about what MI is), that equals $780 for an average season, and what the "market price" is. Now for pruning, you have to do it 3 times in the season, and you figure it will take 3 hours by yourself, 2 with one other person, which your market says should be around $100. So that's $300 for the market price. But that's not "your price". So, let's figure out your cost to operate.
    1) Let's pretend it's you and another person working for the sake of this. It is going to take you and another person 30 min each time. You figure in your 26 weeks, and that's 13 man hours per person. You are paying your guy $10.00 per hour, so that's $130. Double that $10 to match payroll, workmans comp, and insurance. So that's another $130. We are at $260 so far.
    2) It's a 5 mile drive away from the rest of your route. 5x26= 130 miles one way. So that's 230 miles to get to the job and back for the season. Your truck gets 13mpg. 230/13= 17 gallons. Times that by the average gas price currently (which is subject to go up at any time), say $3.60, and you are at $61 just for gas to get there and back. Now mower wise, say you use 1 gallon per hour. There are 13 man hours on the job, that's another 13 gallons for the season. 13x$3.60= $46.8. An additional 2 gallons of 2 stroke as well, so that's another $7.20. So for gas, you are at $110 rounded off. That makes our running total to $360.
    3) Maintenance on equip, trimmer line, etc, tack on another $100.00
    4) Pruning. It will take you and another guy 2 hours each time, 2x3 and you are at another 6 man hours. So that's another $120 for man hours + insurance, workmans comp, etc. Another $20 in truck and equipment fuel too. So now that $300 is down to $160 for the pruning.
    5) Your overhead is everything. If you finance a mower, that monthly bill is overhead. It is whatever you have to pay a month to stay in business. Insurance, finance payments, rent, utilities, maintenance, are all overhead. So you need to figure that out as well.

    So, the market says you should be able to bid that job for $780 for the cutting, and $300 for the pruning. For the mowing, we said it would cost you $460 to operate for the season. $780-460 = $320. Now that's your net profit, after taking expenses out. Now remember, you yourself have 13 man hours in this as well. $320/13 = $24/hour. Can you live with that? Will that pay for your overhead? Say your overhead was $XX, and you needed to make at least $30/hour to pay the bills, obviously you would have to raise your price above the "market price" judging by this example. The pruning leaves you with $160 net profit, however you yourself have 6 man hours in it. $160/6 = $26/hour. You're still below what you need to make an hour to break even, so you again would have to raise that price accordingly.

    This is a very small, poorly thrown together example, but it should help you get the idea of what it means to figure out your cost to operate.
  8. Stars & Stripes Landscaping

    Stars & Stripes Landscaping LawnSite Member
    from CT
    Messages: 246

    General idea, sorta confusing still but I will contact you before I'm bidding & quoting. It will just be me to be honest, no one else. I guess the whole deal is if per month take what I need to make to pay the bills plus what I want per hour and add it up? So....

    Per monthly billing cycle on a weekly mow...

    Market Rate : $40.00/ mow
    Overhead : $250/ month
    Monthly Bill : $560 / month

    Did I do that incorrectly? To me that seems rather steep...
  9. Cody S

    Cody S LawnSite Senior Member
    Messages: 753

    You have to factor in what your cost to operate is into your price. So say it will cost you $5.00 to cut, trim, edge, and blow the lawn, and you need to make $35.00 an hour to meet your overhead, then you would charge $40.00 per cut. You can't just take the market rate and then tack on your overhead for one customer. The market rate is a good tool to go by, however it is not what is always right to go by. You need to make sure you are making money on each lawn.

    For example. My bottom dollar mowing price starts at $25. This is low to some people, but it is what my market bears. There are 100's of other landscapers coming in at $18-$20, but they make no money. I had a guy call me and ask for a quote, and he was in a sub I was already in. I knew my costs, and I agreed to a bi-weekly agreement (pointless really) of $25.00. Now, due to watering every week and fertilizing regularly, I am double cutting his lawn. It's at the point now I am not making money, I am just breaking even, which gets me no-where. So, I am forced to raise his rate, or talk him into weekly, or I'll have to drop him.

    What I'm getting at is just because a lawn goes for $XX amount on the market, doesn't mean you will be able to charge that.
  10. Stars & Stripes Landscaping

    Stars & Stripes Landscaping LawnSite Member
    from CT
    Messages: 246

    I'm horrible with math, and I definately need to address my education in this portion of the business... I mean, I can tell you what my overhead would be monthly but I don't know how to address it PER lawn.

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