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Raising Capital

Discussion in 'Business Operations' started by derbydon, Oct 18, 2010.

  1. derbydon

    derbydon LawnSite Member
    Messages: 82

    After 6 years full-time in the business I've hit the wall. I have 2 fulltime employees and a bit over $100k in sales. I make enough to get by but I'm not getting ahead. Worse yet, every time I put a little back to expand something comes up...whether it's a busted hydraulic motor for the company or a leaking water heater at home - it's always something. Getting by but not getting ahead.

    As you guys all know to well, right now the banks aren't lending and I'm not borrowing. So I've come up with a "sideways" solution to raise capital needed to add a dedicated landscape truck, new trailer, skidsteer and other equipment needed to grow to the next level. I've accepted a fulltime job with my old employer and am turning over daily operations to my assistant.

    I've gradually eased myself out of running the mowing route since late July. A few minor problems, but that was to be expected. If all goes as planned the lawn care business should be banking an additional $3k a month after picking up an additional worker and other expenses caused by me not being there day-to-day.

    I've got a lot of procedures in place that are working so far (or need a bit more tweaking). Looking for ideas....what am I missing?

    By the way. I'll still be invoicing and scheduling. Bookkeeping is already outsourced. I'll be doubleing up on maintenance/repairs beyond operator checks and service in my "free" time each evening.
  2. wbw

    wbw LawnSite Fanatic
    Messages: 5,998

    Personally I think this is an excellent idea.
  3. Outdoors_Unlimited

    Outdoors_Unlimited LawnSite Senior Member
    Messages: 449

    I'm tossing the same idea around myself. Not quite as big as you are, but its looking tempting.
    Posted via Mobile Device
  4. meets1

    meets1 LawnSite Gold Member
    Messages: 3,850

    Idea shoudl be tossed out if yo ask me. In business for yourself, go back to old employer, and put the business you worked on for 6 years in the hands off your employee's. Sure good employee's are worth there weight in gold but it is your business to either run or die.

    Capital - if you have 2 full time and your (i assume) grossing 100K -I think you need to look at the figures for your rates, employee pay, there time doing X etc. Not to burst the buddle and doing 100K is great but I can see why your needing more capital to go to the next level - but what level is that?
  5. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Messages: 1,956

    Smart move going back to your employer. If it's for the best interest of your business, then congrats. I have heard as a general rule of thumb to invest anywhere from 1-3% of your gross revenue in advertising. Make sure you time this properly, as it could be a big gainer or a big waste. Also, 100K gross seems a little low for 2 employees. Each employee should be bringing in at least 70K a year. Try offering them incentives for new sales--make it worth their while.
  6. wbw

    wbw LawnSite Fanatic
    Messages: 5,998

    The bottom line is that it is very difficult, almost impossible to grow when you have to suck out all of the money to live on. Do what you have to do. Just know that you will have 2 FULL TIME JOBS.
  7. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Messages: 1,902

    Are you running as efficiently as possible? How much money are you spending outsourcing things monthly that a couple late nights or early morning & a saturday couldn't fix?
  8. mdlwn1

    mdlwn1 LawnSite Silver Member
    Messages: 2,443

    Not that it means much, but I was grossing over 200k at that same level. I wasnt making much (by northeast standards)...sometimes rearranging the type of work you do can generate more money per man hour.
  9. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,194

    You are going to quit your company to go work for someone else? Maybe I'm missing something but why not get rid of one of your employees and work your own company?
  10. TheGoat

    TheGoat LawnSite Senior Member
    Messages: 273

    It sounds to me like you need to take a hard look at where your money is going and where you can make cuts.

    If you fail to do this, when you start your other job the "extra" money will find places to be spent and you will be in the same boat you are in now, a year from now.

    Examine your lifestyle and see if you can find some savings there. an accountant, as a rule of thumb for me, should be saving you at least double they charge you in tax savings. if they are not coming close to this you need to do some shopping around for a better one.

    look and make sure you are properly expensing you costs. look to see if you can expense parts of your lifestyle.

    Examine your materials cost and see where you are spending the most money and where you can get less expensive materials.

    Examine your employee costs and if/how, you can make more from your employees time.

    Raise prices.

    Raise your Prices.

    Develop a comprehensive and consistent/persistent advertising strategy. Never stop advertising.

    the goal here is what advertisers call top of mind.
    If I say "cola"

    you probably just thought either Coke or perhaps Pepsi.

    that first though on hearing a description of a product is top of mind.

    you want to make the name of your business pop into people in your areas heads when they hear "lawn service" or "landscaping" and this is achieved through consistent advertising.

    get in your local paper, talk to a local production company about developing a radio add and put it on some local stations.

    talk to local business' about cross promotional opportunities.

    for example, I got a bunch of free gift cards from a new local chinese food restaurant that opened up in my neighborhood. I dig the food and they have great prices. I went in and pitched that people who purchase their lawn care are also likely to eat out more often and the guy gave em to me for nothing to hand out to my customers.
    it gives em warm fuzzies and makes them more likely to talk me up and it ccost me nothing but a little time.

    Coke never said, "ok, we have enough customers, lets stop advertising."

    if people are always calling you can raise prices easier.

    I have more but I'm late for class.

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