Expanding Business

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

  1. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    When I'm using numbers as a generality I shoot from the hip a little. My numbers certainly are not where I want them to be, and we're only pulling $70 K per 2,000 man hours, or $35.00 per hour across the board. The number is way too low for us to keep operating our business in this fashion. For the same 2,000 hours my goal this next year is $42 to $45 per hour with some changes we're making. For comparison sake, how you calculate the cost per hour to get a true cost for an apples to apples comparison means setting the same accounting standards. Since we aren't all on the same page, my $35.00 may be $30 or $40 per hour with someone else's formula.

    We dont' want one revenue source propping up other services that might be lagards. We have not yet separated out design and installs from maintenance - as two separate businesses. We are taking snow plowing into another company so that snow does not prop up the landscape numbers. As we disect our numbers some more, this might be eaiser to define on tighter terms after we've made a little more accounting progress.

    Regardless, my goal this year would be $85,000 plus per 2,000 hours (one full time year round employee), less material costs, for landscape installaiton and maintenance. We don't have high material costs, but it's easier to get your true revenue by looking at your revenue wihtout "artificially" raising it with materials - so I back the materials out thereby focusing on labor hours.

    Next year if we meet our goal, that number will be getting closer to $100,000 per employee. Efficiency, organization, etc. will allow us to make the goals. Keeping in mind, profit has to be in place all along. Just trying to do more with less with increased profits. Isn't that the game we're all in?
  2. heygrassman

    heygrassman LawnSite Senior Member
    Messages: 509

    Tony.. are you including owners pay/withdrawl increase out of your numbers. Net profit margins in the 20's seems high from what i am hearing.. dont want to take this conversation off course.. curious on the numbers
  3. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    hey grassman......owner's salary is included before the margin was quoted....but owner makes peanuts....

    disbursments are usually the profits..........

    yes 20% would be a little high and I shot from the hip a little.......it is actually a little less.....sometimes a lot less....depends of course on lots of stuff that we don't need to disclose, right?

    point was...you have to do more business to cover the new guys salaries than just the amount needed to cover their salaries. some guys think "well this guy is going to cost me 30k so I need to do 30kmore in business to justify him being hired. That is simply not so. Same thing happens when guys buy equipment or new trucks. It is a trap that we have all fallen into and I was trying to help the MRS.

    Good luck!
  4. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    In other words, he will have to 'manage' and operate like a business instead of working for wages (albeit good wages now)...

    It's really a tough jump for some people, and one that take planning. But it can be done.
  5. hlgmoney

    hlgmoney LawnSite Member
    Messages: 57

    I have a question for you guys,
    I'm trying to really expand my bus and was wondering what a realistic goal in gross $ would be. You hear about these co's turning millions of dollars a year. Do any of you have a set up like this. What do the owners of most of these large co's bring in?;)
  6. heygrassman

    heygrassman LawnSite Senior Member
    Messages: 509

    Tony.. Thanks for the clarification.. I agree totally with you. I did not mean to digress too much off topic. This business plan has me seeing numbers in my sleep. I will be "accounting" the same way that it appears that you are.. thanks for the thoughts..

    I agree, if you are only covering salaries and burden with bringing in new employee's, why bother..

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