Properly Managing Growth

Discussion in 'Business Operations' started by McFarland_Lawn_Care, Jan 12, 2013.

  1. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Messages: 1,445

    I'm just looking to get a little feedback. The business has been growing steadily but most of my profit from the previous year gets used up by financing startup the next season. I don't have a big problem with this, but I'm trying to put a bunch aside for saving and emergencies but I always have to dip into it the next season to pay for up front costs. Some of you guys who have doing this a long time, what percentage growth do you shoot for? 20%, 25% 30% 35%? Just hard to turn away available work =D. Last several years we have grown 44%, 119%, 46% respectively. Any wisdom or advice will not fall on deaf ears. Thanks so much!

  2. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Messages: 4,358

    Just had a class on this by the van koolie guy that has some books out etc. His number was 20% growth was healthy any more you start having cash flow issues due to buying equipment, etc. He has a hardscape/construction background.

    Another number I found interesting is to have 10% of expected sales in cash and another 10% in a loc or cash. Another words if you do $300k a year in sales you should $60k laying around otherwise cash flow issues arise.

    I personally did 20% growth 5 yrs straight and 110% growth this year (buying a biz). I'm 98% maintence lawn and snow. Never had major cash flow issues but money was tight at times. I think this was mostly due to being heavy maintence and the size of the company.

    If your growing its going to be hard to save. If you want to save or reduce debt just stay your size for a couple years to ready yourself for more growth.
    Posted via Mobile Device
  3. 94gt331

    94gt331 LawnSite Bronze Member
    Messages: 1,718

    Jason I deal with what your going througn every year. Basically with really no income at all over the winter except some part time work and waiting for snow work if we actually get any i usually burn through at least 15 grand over the winter, it's depressing I know. I've been coming to understanding this is how's it gonna be for me for the rest of my life. Things I have been doing are trying to save more each sping and summer and lock more money away in cd's so I try to not touch them over the winter. Overall I save say $30 grand in the end of season by the end of winter i be down to say 15 grand but then the next year i be up to 40 grand then at the end of following winter i be down 25 grand as a example. So I try to grow my savings each year by alittle. I keep trying to figure ways to keep cash flow going for me through the winter without snow work. Let me know if you come up with any ideas for me! I'm going to sell firewood next winter allready got stocked up for next year. I would like to get some year round contracts also. The problem I have when winter hits and I don't have anything to do, I want to go spend some of my money I have to make next season better. It usually allways works out the same.
  4. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    We went through the same problems as you last year will most likely face them this year. Expanding to multiple crews was our biggest hurdle, purchasing new trucks/equipment to meet the demand cut into the bottom line but will more than pay for itself in the long run. 20% growth is a good number, but I know where you're coming from not wanting to turn down good paying guarenteed work.
  5. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Messages: 1,445

    Hey, thanks so much guys! I guess the best plan is to keep growth to 20-25%. I think I will put together a whole package/plan for expansion capital and have it on hand. If it looks like we are growing a lot this year or a big opportunity comes along to take on a bunch of work, I will be prepared and can apply for more capital if needed to purchase more equipment etc instead of dipping into savings so much. I know paying interest sucks but it's not that bad, especially when you have tons of work waiting.

    I really appreciate everyone's advice on experience.

  6. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Messages: 1,857

  7. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Messages: 1,445

    Thanks.....I'm calculating financial ratios to get a good understanding of where we are at and where we are headed.

Share This Page