Dividing Sections of your Biz

Discussion in 'Business Operations' started by Guido, May 28, 2001.

  1. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    Does anyone here divide and track the different sections of their business seperately? Like Maintenance Division, Irrigation Division, Etc?

    I notice a lot of the companies I read about like doing this because they can see which part of their business are bringing in the most profit, and why or why not. Does anyone keep seperate records for different parts of their company? If you do, you still file as just one company, right?
  2. GroundKprs

    GroundKprs LawnSite Bronze Member
    Messages: 1,969

    Always a good idea to track all areas of revenue. Know revenues and costs for each type of service or product you are providing. Only way to determine where you are really making money. Detailed data is the only way to make intelligent choices down the road. Larger business with actual separate divisions may trade manpower or equipment at different times of year, and the receiving department would be charged (on the books at least) for the equip/labor loans, while the lending dept would be credited.

    I sell basically maintenance services, and don't want to oversell. Our data over the years shows that 15% of gross revenue is extra requests from clients, outside the contracted work for the season. This could be a landscape modification, or simply an aeration on a property that is not contracted for aeration. These extras take 10% to 11% of total time. So we know not to sell more than 89% of time available to please the existing clients.
  3. parkwest

    parkwest LawnSite Senior Member
    Messages: 678

    Only if you are trying to run a successful business.
  4. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    We separate the different areas of our business into divisions (commercial installation; design/build; maintenance; irrigation; deck/hardscapes; snowplowing; SMG). We track each division's numbers independently - and have a full "combined" set of books that are the legal representations of the entity that is 'the company' for tax and financial statement purposes. Once it's set up, it's easy to maintain as long as everyone knows what to do and separates the labor and revenue streams. We feel that it's the only real way to identify problem areas so we can concentrate on those areas to raise the profitability to an acceptable (or target) level.
  5. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    Thats exactly what I was talking about. Sounds like the best system for larger business'.

  6. Lanelle

    Lanelle LawnSite Bronze Member
    Messages: 1,361

    When tracking a division, do you figure overhead separately as well as expenses and income? Seems like some divisions would have higher overhead than others.
  7. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    We take our total overhead costs and then assign a percentage to each division..... it's not real scientific.... we sit around the conference room table and hash out what percentage we think is fair to all. Someone is always unhappy. And the percentages are not equally split either. We base it upon total revenue and some "feel".

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