Economics of Adding a Crew

Discussion in 'Business Operations' started by hurryrainscomin, Aug 24, 2013.

  1. hurryrainscomin

    hurryrainscomin LawnSite Member
    Messages: 10

    Situation: Schedule is full and I've been turning away new business.
    I am considering hiring for the first time, but the numbers tell me it's a good amount of hassle for not a huge benefit. Here are the numbers I have.

    Gas 13%
    Taxes-all 11%
    Crew expense 52%
    Owner % 7%
    Insurance 3%
    Equipment 14%

    The current 59% that comes to me drops to 7% if I begin to hire.
    I have a good amount of depreciation expense holding down my federal tax bill, but combined, I expect tax/equip to approximate the combined 25% going forward.

    From what I see, if I add 2 people and add 40 residential accounts, I can only take $2 - $3 per invoice for myself, or $80-$120/week net increased personal benefit, much of which would be off-set by additional payroll paperwork and equipment maintenance.

    Adding employees would let me quote more and larger mulching and fall clean-up jobs, so one question is, how much revenue beyond just new accounts have others found in their experience as they add workers?

    What have others found as they went from solo to adding crew, both in net dollars, as well as your satisfaction of running a business?
  2. MasScape

    MasScape LawnSite Senior Member
    Messages: 258

    Get a part time person or full time person just ton speed you up. Add as needed. I wouldn't jump into a full another crew right away. Once you and your helper are overwhelmed then consider another for a whole another crew.
  3. Lean_Mean_Green_Machine

    Lean_Mean_Green_Machine LawnSite Member
    Messages: 18

    Like the post above me said, only add 1-2 people at a time. That way you can gradually increase your number of accounts and/or number of invoices. If you do it correctly, you should be able to grow to a full crew without losing much revenue at all. Just try and keep your numbers as balanced as possible!
  4. 94gt331

    94gt331 LawnSite Bronze Member
    Messages: 1,718

    Very good homework. Sounds like you might have answered your own question allready. I have employees and there are advantages but if you are making good money right now and paying your bills fine consider just staying where you are unless you want to grow in size, some days i want to go back to just having 1 employee but will wait and keep working at it for now.
  5. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    I did it this year, the business grew substantially, but I didn't add a maint crew I added a design install crew, the margins are much higher on that side of the business, and the operating cost aren't as high, IE: No mowers to buy and keep fueled up and maintained. It worked out well but the weather here hasn't been as cooperative so it kinda sucks for the moment.
  6. seabee24

    seabee24 LawnSite Senior Member
    Messages: 619

    My take on "adding a crew"

    well are you going from 1 crew to having 2?

    Employees in general create work, and can be a lot of problems. Even the good ones will still create more work for you to do just related to having them on your pay roll.

    Im my mind, I did it the wrong way. Here is what I suggest to possibly be a better way than what I did.

    Never "add a crew" you can "add new employees" and if so I would do it 1 or 2 at a time. take the time to train them, or put them on a crew that has trained guys already. I was in a position that I had to get 2 new guys right at the start of the season. I sold a lot more work.. Problem was the "experienced guy" wasn't able or ready to handle 2 new guys.

    So if your solo...add a helper, wait a month or 2 then add a second. at some point add a 3rd guy. start 1 or 2 days per week letting them go out by themselves. If they are successful, then add a 4th guy. and at some point you will be able to subdivide into 2 smaller crews and keep the pattern going.

    I would advise, REALLY do your math 2 or 3 times on everything before hiring. Take into account your ability to "float" the necessary pay roll and other expenses. I found out the hard way when I had accounts that I thought were profitable and once I added employees they became less and less profitable. What myself and 2 helps do in 1 hour, seems to take a crew of 3 guys 90 mins.-

    Have all your equipment ready to do this before you hire. I got guys and then I bought the shovels after we started...I already lost money not having the necessary tools at that point. Get the shovels, mowers, what ever, then get the guys.

    Every in-efficiency that you have will be exploited 5 fold. If you take 15 mins at a gas station that turns into over an hour of pay roll. IF you don't know where spare parts or tools are, if you don't have spare parts or enough of them, same problem. What I would do is track your labor and any current employees labor for 2-3 weeks. Make a list of all time spent doing something other than being on a job site mowing or planting. That means every fuel stop, every part run, every drive to supplier, break downs, down time, time to change blades. After making that list attack each item and find ways to prevent or minimize it, like I said 15 mins of your time will cost you 75 mins of their time.
  7. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    All great points seebee! I made a lot of the same mistakes, I would hire one P/T guy at a time, and work him into your system slowly. If your thinking about next season go ahead and prepare now, like seebee said get your tools in place also. I know it's been discussed on here quite a few times but from what I've experienced a three man crew is less efficient than a two man crew, maybe it was the three I had but I've stayed at two this season, and that was headache enough.
  8. seabee24

    seabee24 LawnSite Senior Member
    Messages: 619

    Two man crew is the most efficient, but the problems occur when 1 of the 2 needs time off or calls off. For that reason I'm using a three man crew. Larger companies in my area use a 4-5 man crew, I belive it's because if someone calls off it doesn't have a big impact on getting the work done for that day. I'm considering using a 4 man crew next season
  9. BAMSLandscaping

    BAMSLandscaping LawnSite Member
    from MD
    Messages: 19

    Agree that 2 man is the most efficient and profitable but your absolutely right about the pains that someone calling out last minute will cause which is why 3 men is great. I used 2 men for mowings and 3 for cleanups and such and it worked well. Also, consider hiring a bunch of part-timers and tell them all you have a "starting lineup" based on their performance. The competition alone turned the duds into stars and the losers naturally find work elsewhere.
  10. underESTIMATED

    underESTIMATED LawnSite Member
    Messages: 130

    I love it when people like you add creditibility to the knowledge on this site.

    Thank you for writing this. Very informational!

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