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Expanding Business

Discussion in 'Business Operations' started by Mrs. Landscaper, Mar 23, 2002.

  1. Mrs. Landscaper

    Mrs. Landscaper LawnSite Member
    from PA
    Messages: 6

    May be a difficult question to answer, but any advice would be appreciated. How difficult is it to expand a business from a 2 person operation (owner & 1 worker) to the next level-say 2 more employees? Hubby's situation: jobs keep coming in. He does no advertising at all - just word of mouth, so the work is there. Works longer days and weekends to keep up when necessary. (Kids & I would like to see him during the summer tho!! :)) He is a perfectionist and would have a hard time not being directly involved on the job. How do you other small businesses do it??
  2. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    First off...he will have to learn how to delegate. If he cannot do that he may as well not grow. If he truly has to have his hands in everything(just like the rest of us!) it will be hard but he must learn.
    He will also have to learn to accept that the "guys" won't do it exactly like he does. That will result in some loss of perfection. The clients might complain a little, he might be unhappy about that but if he wants to grow it will happen. Cannot get around that.
    He will have to get used to doing paperwork and talking on the phone / radio.
    Lastly, but not the last thing, just tired of typing....he will have to get used to the larger paychek. That's the toughest part!
    Good luck, I'm sure with a wife like you that cares, and helps, he will do fine!
  3. heygrassman

    heygrassman LawnSite Senior Member
    Messages: 509

    If he is worried about Quality, do a follow up survey after a job.. There are tons of services out there that you can use. If you get large enuf, hire a QC person. He is going to have to let the production side go and focus on sales/marketing/image and operations.

  4. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Messages: 870

    If he's a perfectionist, it makes it more difficult.

    The next logical step would be to have 2 guys mow (or other production) and your husband to work by himself doing detail work, customer service and such.
  5. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    If work is too easy to come by maybe he could charge more and do less and then have more time for family. Willing customers would still have the same attention.

    Also You can just say No to more business. We say no all the time to debt, drugs, alcohol, chocolate cake, crossing the street with out a parent, not running red lights etc. Saying no isn't that hard after the first time. Actually feels kind of good and way better than fussing over how am I gonna get all this done, keep everyone happy etc.
  6. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Messages: 870

    You say no by raising prices. :)
  7. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    Another landscaper (operating a $3 mil plus operation at the time) said to me when I mentioned being too busy, "You're not charging enough."

    Let price weed out some of the potential customers. If you'r already charging top dollar and you'd feel guilty about charging more and it's all coming to you word of mouth (what a problem!), then sure, hire one more person. Expand slowly and ad only at the pace at which you're comfortable. Wait until the new person is trained to meet your standards and then hire the next. Go slowly if control is needed. But it sounds like one of two things, turn down more work one way or another, or hire people to fill the demand.
  8. Mrs. Landscaper

    Mrs. Landscaper LawnSite Member
    from PA
    Messages: 6

    Thanks for all the input! He does turn down some jobs, I just meant that he is a hard worker doing quality work, honest, reliable etc. He is considering going to the next level (hiring maybe 2 more guys). I guess my question should be... is hiring just 2 additional guys, buying another truck, extra equipment, additional paperwork, etc... worth it, or do you have to go much larger to benefit financially? How do you small guys do it? (or should I say "small businesses" :blush: )
  9. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    You're going to find a tough growth point. You experience it along the way at various times. Just going from a one man operation to a two man operation is a jump.

    To justify the move to four guys means that you have to keep making your sales and profit goals. Adding new equipment will mean a significant investment in capital. As well, as the business grows, your husband may not be able to spend as much time actually doing the work. He'll be training/managing the other guys and selling work to keep them busy. Early on this may only be 20% to 30% of his time, while he can work the other 70%. However, this will be a big deparature from his normal routine.

    Where sales for two guys before might have been $100 to $120 K, now you'll need to turn $200 plus K if you add two new employees, assuming they're just seasonal. $50 K per guy isn't a lot. If you're able to pull $70 to $80 K plus per guy (or 2,000 hrs), you're moving in the right direction. So making a jump by adding two guys means almost doubling the business, if not more so. You will naturally have more overhead with four guys. Just adding people to add people may not be wise. Just make sure you're meeting your profit goals.

    As well, as you begin to add employees, some productivity will drop as you get used to the new systems and methods of operating at a larger size. You'll have to carefully examine your pricing to make sure you are recovering all of your overhead and profit requirements. Do you have money for benefits (which they may ask for or "require" to stay with you), uniforms, employee manual, etc. As you begin to grow, so will the expectations of yoru employees to some degree.

    You'll really have to spend time thinking about standards, training, systems for managing the new employees, and on and on. You'll be constantly learning and never figure it all out up front. Just prepared for the investment you'll have to make to grow. I think it's worth while - so good luck with your business and growing it.
  10. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    here is a quick check:

    if both these guys make 30k that is 60k
    if your GROSS profit margin after wages,supplies and related is 45% which is quite normal. (this ought to open a can of worms!)
    then you do an extra 200k worth of work
    gross profit would be 90k
    I would say this would be about the bare minimum to consider doing to make it worth it.
    If your NET profit margins are around 20%, again quite normal (more worms)
    You would make around 40k extra.
    Can you do another 200k with 2 more guys? I can in the irrigation biz, but can an LCO? I don't know, help us out lawnlad.

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