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Discussion in 'Lawn Mowing' started by BRET, Jul 10, 2000.

  1. SLSNursery

    SLSNursery LawnSite Senior Member
    Messages: 458

    Bret - I understand where you are coming from, and can only offer the following: Some of the replies base profit on different numbers than the ones which are relevant. For instance, a business run by a sole proprietor is not really making 70% unless the owner draws nothing. In other words, to replace that person might cost $40,000-60,000 per year, and there goes the profit. I don't say this to get anyone mad, its just the fact. If any of those sole proprietors wanted to work for me, they would request that amount of money or more based on their perceived ability. I sense that in your case, as is mine, the business is an entity, enhanced by our presences, not only dependent upon us. While I am not in a position yet to up and leave, the work could certainly continue without me. For the past couple of years though, the workload has required an 'all hands on deck' feel at our shop. <p>It also should not matter how much money other people charge - large company or small. We review our hourly charge all the time to make sure that it fits our overhead and costs. This way, I can purchase new equipment when we need it, and it will fit into our system. We often explore leasing, rental purchase, and financing in order to keep our taxes down, and leave as much money as possible in the business. Get a handle on all of your annual costs and expenses (look at stuff with a magnifying glass, don't assume you spend x dollars for equipment each month). Once you determine the amount you spend per man hour add your desired mark up and then you will have trouble convincing yourself to continue taking low profit margin jobs. In addition, you will free up time to pursue the more lucrative portion of your operations. We keep plenty of 'bread and butter' commercial maintenance at the rates we want to get because lately there is so much to choose from. Then we try to manage the man hours appropriated to each job in order to maintain the predicted margin. From there, the more lucrative landscaping, tree, pesticide, etc. work develops. <p>One last note. I found that we used to assume that since we owned an item(like a backhoe, Truck, mower, or even weedwacker), there was less cost associated with that item. This was a mistake. If you intend to own and maintain new(er) equipment, you need to carefully factor the costs of these items into your per hour calculations, or your equipment costs calculations. <p>----------<br>Phil Grande - Soundview Landscape Supply - http://members.aol.com/slsnursery<br>Ivy League Landscaping - http://members.aol.com/scagrider
  2. thelawnguy

    thelawnguy LawnSite Silver Member
    Messages: 2,411

    &quot; For instance, a business run by a sole proprietor is not really making 70% unless the owner draws nothing&quot;<p>I think you meant to say &quot;solo operator&quot;. A sole proprietor may have many employees (not saying its good accounting practice, but its done) and LLCs can be solo operators as well.<p>Heres the big plus for solo operators(also can be a big downside): since the solo operator IS the business, whatever is left after expenses is profit-70% 3% whatever. But the downside is, say something happens, death injury et al, there goes the business all thats left is whatever the equipment is worth. I know that, if I died today, by the time things got sorted out there would be no customers left to sell just a trailer full of used equipment to haul to the auction.<p>Bill
  3. ProMo

    ProMo LawnSite Bronze Member
    Messages: 1,468

    I almost went under last winter wife had a baby no insurance my largest job all souls church and cemetery in sanford decided to drop us after 8 years (probably a good thing from what they would pay)etc etc i was at a last resort and went to Bill Phagans seminar spent my last dime to attend and was amazed at the mistakes ive made he looked awfully familiar turns out that when i was going to an electronics school in tampa i worked for him,He had a huge company doing some really nice commercial propertys anyways i still havnt implemented a lot of his techniques etc was ready to write my first contract and my printer died ive been busy working on my costs time it takes to do things etc but my existing customers are impressed with the changes i have made and im going to get some time off for same or more pay was servicing my resis 51x a year going down to 42 max ive told this to most of my customers and so far they accept it.Went to see bill again last week to take my spray test now to pay for it with everything breaking but i believe he saved me from certain doom. Ive been mowing lawns for 20 years 10 on my own but never learned the art of running a biz special thanks to Bill Phagan http://www.greenindconsulting.com
  4. CSRA Landscaping

    CSRA Landscaping LawnSite Bronze Member
    Messages: 1,232

    There's something to be said for working smarter not harder. One guy with the right equipment can run a neat, tidy, and profitable business. Two guys (one owner, one well-payed employee), both quailty-conscious, with the right equipment, can do some serious damage. More than five can't seem to find the cord to start one weedeater before 10 minutes is up.
  5. Russo

    Russo LawnSite Senior Member
    Messages: 287


    We deal with the multifamily ( apartment ) market here, and you are not the only one scratching your head.

    $50 man/hour is unheard of for such work. The problem is that the competition is fierce because one monthy mowing bill is worth as much 100 residential in one drop of the tailgate. Generally, $30 a man/hour is closer to reality and most Managers of these properties decide their budget for landscaping on a "per door" basis. Meaning that if it's a 150 unit complex, they expect to pay X amount per door. $10 = $ 1,500 monthly landscape budget. Thay will actually say to you when you give them a quote," Hey, that's $13 a door! That's way too much". It's a rule of thumb that has turned into an industry standard unfortunatley.

    So you are right on when you say that "they won't pay that much". Right now, the multifamily market is working in reverse: IE, the Manager/Owner decides on a budget for landscaping and then choses a landscaper accordingly. There are exceptions, but this is the general rule.

    Also, these managers change every couple of months and the new one always says " Lower your price or you are gone. I've got 3 bids lower than yours." It's a rough market, and one basket that you don't want all of your eggs in.

    10% is cool, but you got to do that couple million in work a year to run at that percentage and still make some cheese. We run 14 crews, 12 mowing and 2 landscaping. It is truly a myth that the bigger you get, the lower your expenses.
  6. smburgess

    smburgess LawnSite Senior Member
    Messages: 467

    Strange how people think......

    ALL my clients know what I charge per manhour. Always felt this was the way to do business, never had a problem.
  7. robert payer

    robert payer LawnSite Senior Member
    Messages: 282

    When it comes to man hour rates, daily revenue, or lawns cut per day many peers in the industry will flat out right lie. If you are getting $30.00-$40.00 per man hour consistently in the Cleveland area you had better be something special and have select clients. Hand pick your clients wisely. Professionals want to employee professionals. Had a unique client tell me the other day in business conversation say " If you wanted to double my price it would be paid with out batting an eye. If you trippled my price fair value would need to be determined"

    Guys, can you let me know what the quote "With out batting an eye" really means?
  8. RMDoyon

    RMDoyon LawnSite Member
    Messages: 230

    "Without batting an eye" means that he literally wouldn't even blink if you doubled his price.
    Its an expression meaning that a shocking act wouldn't phase someone in the least.

  9. CLM1103

    CLM1103 LawnSite Member
    Messages: 75

    "Without batting an eye" is southern for"I don't care"

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Messages: 665

    When I think of $/per/hr, I consider the entire day. Not just time on the job. Prep time can kill ya. Drive time can kill ya. A burnt engine from a lazy employee will kill ya.

    I always say " don't tell me how much you make... tell me how much you spend". The bottom line is the only # that matters.

    I will assume that most posters here are the owner/operators. What matters is the money you take home. If you are losing money per hr on any job, you might be better off to trim the job and the extra help. You might impress someone by your gross figures, but look at what you have to deal with.

    Generally, the bigger the company, the lower the profit margin. The larger the headaches.

    I don't see any reason that you cannot achieve $50/hr on your work provided that you run efficient equipment, hire competent help, and ONLY take on jobs worth the time.

    Good luck.

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