Assumptions: 1. Ability to mow 4 yards per hour. Eagle Lawn Care is currently able to mow 2 yards per hour by John Wingfield supplying the labor. John is currently using a push mower with a cutting width of 21 at a top speed of 2.5 mph (walking speed). Theoretically, by adding an employee, mowing 4 yards per hour could be achieved. However, John realizes that no one will be willing or able to work as hard and efficiently as himself. John is counting on only being able to mow 3 yards an hour with an added employee. In order to meet the business plan production rate of 4 yards per hour, John will add a total of 2 employees. In addition, Eagle Lawn Care will purchase 2 new mowers capable of a cutting with of 32 to 36 at a top speed of 7 mph. Theoretically: this could increase the number of yards to 6 per hour. Currently, unloading/loading of equipment and travel time takes approximately 3 minutes per yard. Careful planning of each days mowing schedule will be required to keep drive time between yards to a minimum. Eagle Lawn Cares total marketing area only takes a total of 7 to 8 minutes to drive from one end to the other. 2. Frequency of mows per month. No mowing will take place during the months of December, January and February. During the month of March, only 2 mows per month will be necessary due to limited lawn growth. The marketing plan calls for 60 yards to be under contract for the month of March. The month of April will require an additional 20 yards to be under contract being mowed once a week. The months of May, June, July, August and September call for a total of 120 yards per week to be mowed once per week. As lawn grown slows during the month of October, only 60 yards mowed 2 times per month is forecast. The month of November indicates only 40 yards mowed 2 times per month (mainly leaf removal). 3. Revenue per yard. Eagle Lawn Cares average charge per yard is $25.00. This price is below the $30.00 average cost of the competition. This will initially be used to increase Eagle Lawn Cares market share. Excellent customer service will be the key to maintaining the customer base. 4. Gas per mow of .5 gal. During the summer of 2003, Eagle Lawn Care has carefully measured the amount of gas required to mow its marketing target 70 X 120 lot. This amount has averaged .5 gallons of gas per yard. The cost used for the 2004 projections is $1.75 per gallon.
Work the plan from a slightly different angle. What you're really doing is adding value to labor hours with your equipment. How many available labor hours do you have during a season which are billable or productive? A foreman will work more hours than a laborer on the crew as they will have more paperwork, equipment maintenance and odds and ends to care for relative to other crew members. They will also be less billable. If you carry a foreman year 'round, that will increase their nonbillable hours. An example might be: If you have 8 months x 4 weeks x 40 hours = 1280 hours. Your foreman might work 1500 hours (hypothetically) and your laborers between 1100 and 1300 hours. You have a total of 3900 hours of payroll. Assuming you are 85% billable (15% of your payroll hours are spent driving, performing equipment maintenance, training, etc.), you'll have 3315 hours of time to sell. On average that is 103 hours per week available for working on customer properties, or 34.5 hours per man. How much work can you produce during that time frame? If you set a revenue goal of $50.00 per man hour (hypothetically) you're looking to makes sales of $165,750. Your current mowing equipment will not allow you to achieve the production rate to meet your current growth goals. You will need to increase sales and increase capacity, or reduce your expectations. Perhaps you consider a capacity scenario of one full time and one part time worker. Use the partime worker to fill in spot labor during heavy times during the year. Not all of your hours will fall evenly over those 32 weeks. Map out the months where you'll need additional part time help when spring grass is growing or fall leaves need to be cleaned up. Also consider the influence of overtime and how that additional expense to meet your production needs will affect your budget. In this example, your sales goal of $166,000 over 32 weeks means a weekly goal of $5,188, or $1,040 per day for the three man crew. If you can mow 20 lawns per day at $50.00 each, you'll make your goal. If not, what other services can you offer? Keep in mind this will average out. Services such as thatching or aerating may offset general labor such as weeding which will yield a lower return. You are right to assume that just because you can mow 2 lawns in an hour that two men will no necessarily be able to mow 4 lawns per hour. Adding that third man at this time probably is not in your best interest. Try adding a more efficient piece of equipment like a 36" or 48" mower. If your properties will accept the larger machines, go with the most productive (read largest, quickest) piece of equipment you can afford. This will be better than adding another high cost laborer with an inefficient piece of equipment. With new equipment you'll the devleop new labor/production standards to figure out how to bid your new properties maintaining your sales goals.
Awesome. Thanks! I never looked at it in the way of buying more productive equipment versus hiring another employee. Over time that piece of gear will return more than an extra employee would provide.
Your right a bigger faster mower will get more done then an extra employee, and you wont have to pay your machine an hourly rate, (except for depreciation which I hope would be less then $8-$10 an hour )
