overtime, over an extended period of time can hurt. But there are still situations where it is the best option. The limiting factor that we all have is time, and we can not take a percentage to the bank. So if you take $1000 to the bank, that’s better than taking $999 to the bank. If your priced right OT might impact profit per hour, but you should still be profitable on those OT hours because your overheads (rent, insurance,...) should be covered in the first 40 hours, so they disappear.
there is a cost to roll a truck down the road, a labor cost to load that truck each morning. If working 9 hours per day rather than 8 results in a bottom line of $1 more, then it’s worth it.
if your demand seasonally changes, the cost of advertising alone to find a new employee, may cost more than a short term fee month period to just pay out OT.
the only way to really know is to run a business model test and run the hypothetical math. Simulate buying, plating and Insurance for another truck on the road, another cell phone, and paying another driver.
let’s say your crew is working 50 hour weeks, 3 guys making an average of $16 per hour. In one month they might have 120 hours of OT. We don’t care about the standard labor amount because you would pay that anyways. So all we really care about is the extra $8 per hour x 120 hours per month. This is $960 in overtime. $960 per month is going to be cheaper than putting another truck on the road, especially if it’s only for the spring season.
Thanks, that makes sense, sometimes a separate set of eyes makes all the difference. Good point with the seasonal aspect of it too.
I think everyone that works in this industry accepts that overtime hours are going to be necessary, however there is a fine balance. I wouldnt get caught up in weekly or even monthly margins, we put more weight on quarterly reports, that way things have a chance to balance out.
Not to nick-pick but the example you gave would actually be $8 per hour PER CREW MEMBER (assuming they are all on overtime). So you are paying an extra $24 per hour x 120 hours per month = $2,880!! Thats a nice truck payment!!