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How to pay employees

Discussion in 'Employment' started by joshman108, Jul 5, 2011.

  1. joshman108

    joshman108 LawnSite Member
    Messages: 86

    Ok. So im entering my freshman year in college and im looking to expand my business, but there are so many things I don't know. You'll probably see me around asking lots of questions in the future but Ill just start with one.

    Say I have a crew doing their thing. Do you pay them by the job or by the hour? I figure it could go either way. :confused:

    And is it even worth it to try to run a business doing residential? I don't see any big companies doing this, which I figure either increases my chances of success, or is a sign I shouldnt try it. Because your standard yard is $30. Does that leave enough profit margins? Or is it better to focus on commercial?

    Thanks! Im just looking for wisdom.
  2. Patriot Services

    Patriot Services LawnSite Fanatic
    Messages: 14,231

    Keep it simple. Pay by the hour. Piecemeal usually ends up in corners getting cut or falling below minimum wage and overtime guidelines.
    Posted via Mobile Device
  3. joshman108

    joshman108 LawnSite Member
    Messages: 86

    thanks! I appreciate it
  4. willretire@40

    willretire@40 LawnSite Bronze Member
    from VA
    Messages: 1,389

  5. straightlineland

    straightlineland LawnSite Member
    Messages: 46

    who is going to keep an eye on things while you are at school? handle problems/complaints? or do quality control checks? just curious...I would suggest hourly but i dont know how you are gonna make sure they are not milking the clock. just my opinion
  6. Brown & Co.

    Brown & Co. LawnSite Member
    Messages: 134

    I've recently been thinking a lot about this issue particularly. I pretty much started the same way. AND started with residential now Im about half and half. i completely wish is was all commercial. My problem and maybe someone can add some of their experiences as well and some possible fixes...Starting off as a company cash flow is a tough one...well...it defiantly is when your residential clients end up paying a month late...your then having to foot their pay check as the owner for at least their first month working with you...and only a month if your money management skills are savvy. I would have not made it through the first month if i didn't know how to turn $5 to $20 and $20-80, and so on. I was able to just squeak by. I think this is when most owners get burnt out with their business.

    Perhaps hire that first guy under the impression that you have and will continue to pay them BUT you cant pay them until the client that THEY performed service for pays you.

    I dont think its right to do it that way though...when you screw with a mans paycheck all hell can and will brake out.

    Yes for those exact reasons you stated...Profits are greater because the NEED ALL the services performed, AND performed regularly or it will cost even more than that at a later point in time for all the over growth. Plus the usually pay on time and in full no questions asked.... the problems with them is that it will take longer to approve of a quote due to the chain of command that most companies put in place. ALSO the LARGE corporate companies often take up to 3-6 months to initially pay because of that chain of command and all the cross checking, forms or external monetary fund expenditures and the like. Some need time stamped photos before and after if they are off site construction and contract companies.

    As far as profits go its only more profitable because they need more services more often...if you dont have the labor force that will be your first limitation do doing commercial. The price per service never changes...because its the same thing (residential vs commercial) just more of it so you either supply for laborers to finish in the same amount of time... or the few guys you have work longer .... T&M Time and Money.

    But so yeah ...if anyone could help out with what they did in that first scenario I'm sure it wont only be helping me but many others as well.
  7. MR-G

    MR-G LawnSite Senior Member
    Messages: 479

    first get your cash flow somewhat positive....start by having all new accts open a "billing acct" with you...what this means is they pay with a credit/debit card each month, cut or whatever the agreement..also at the start of service a deposit in the amount of the first month is required.....(this covers your costs for month 1) at the end of month 1 ( or on the 1st day of month 2) you then run their card (you have on file) for the month 2 payment...their reciepts from the creditcard co. are their reciepts from you...hence no paper billing or postage...there are many ways of handling this type of billing..and its not for everyone...we have lost new bids due to it...however...i promise you that each and EVERY acct. we have is always current....we wait for none of our receivables.....oh and yeah..the credit card co. charges us a small fee...but its worth every penny...at 700 accts...its the only way....hope this helped....good luck.
  8. MR-G

    MR-G LawnSite Senior Member
    Messages: 479

    you will typical want to have next 2 months payroll already in your operating account....its a hard road to get there...but if your going to succeed its a must....and i dont mean being able to cash advance your credit cards to do it....has to be real ( interest free money)...and that will require time to build up that savings...see my next post for an idea of how we do it...lol (not the tv show)
  9. Brown & Co.

    Brown & Co. LawnSite Member
    Messages: 134

    Yes set yourself uP a business plan...to include growth, expenses, startup cost, and all the other normal business plan stuff. Thank you for that great input it certainly would have been very beneficial to me starting up. I unfortunately had big eyes and a big head with great ppl skills and business grew so fast that I couldnt keep up with my local demand. Well I did actually keep up for the most part.
    Posted via Mobile Device
  10. fireMagic

    fireMagic LawnSite Member
    Messages: 1

    We are currently making some pay changes in our landscape and sprinkler divisions. Our time clock is now refered to as an ATM machine. Our profit margins are running between 26-35% gross, thats not bad but factoring our OH, we are now feeling some pinches. We have some very talented crew that we feel we can get to perform better if we offer them a flat rate per job based on the sale and let them determin there profits per hour. It get tricky when they have to fix something or its done wrong and they blame it on the designer not detailing something. Everyone is hourly right now, and I plan to keep our Maintenance division that way untill I can impliment a plan for them. As for the Residential Vs Commercial... its all about routing and drive time between yards. Our maintenance division is only 14% of our business and we do about 60% residential 40% commercial. I feel Maintenance is a cash flow/non-profit business. We purchased Isuzu Box trucks, had them painted our fleet color Screaming Yellow with graphics all over. Our cost did go up but having these rolling billboards has definetly made a diffrence. Good luck with your business. Danny

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