Figuring your business costs (a must read)

[musician/lawnman]

Originally Posted by b18bgone How many accounts do you/people have per truck/trailer 2guys per/week? Hey bud, You are smart to crunch the numbers like this & complete a proper due diligence prior to buying this business. Sounds to me like they may have a bit more overhead than the can afford for one? Hard to say without knowing the specific details.... I currently run a 3 man crew (myself & 2 helpers). One truck, one trailer, 2 zt's, 3 trimmers, 3 blowers, edgers etc.... Typically on a 10,000 sf residential lot, we pull up, one man on each of the 2 mowers, one does front & one side, other does rear & other side. 3rd guy line trims & edges. 1st 2 guys done blow off while the 3rd closes up the trailer. We are in & out in 10-12 minutes, 15 including drive time (yes clustering the jobs together & tightening your route helps the bottom line a ton, but this takes time dude!) I average 28-30 properties a day, currently running 4 full days (9-10 hours per day) if all goes well with no breakdowns, snags, or rain delays. I anticipate next season expanding & adding a 2nd truck, & running each with 2 men on it. I've found 2 man teams to be more profitable, 3 is faster but eats up profit as guy #3 adds slightly more producion than his payroll expense. I just can't swing another full rig right this minute & 2 guys can't keep up so the 3rd is a nessasary expense for me right now.... Growing pains. What are you gonna do right?

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LAWN CARE & LANDSCAPING
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[b18bgone]

How to get lawn care customers - Vol 2

Originally Posted by Steve Jan = how many cuts? Feb = ? Mar = ? Apr = ? May = ? Jun = ? July = ? Aug = ? Sep = ? Oct = ? Nov = ? Dec = ? Im going off of memory right now because I had to return the contracts, and for whatever reason didnt make copys. doh! Jan=1 Feb=0 March=2 April=4 May=4 June=4 July=4 Aug=4 Sept=4 Oct=4 Nov=3 Dec=2 I may have the Nov, Dec, Jan schedual a bit off, I remember there was one month that he only cut once that month. I see where you may be going with the decrease in expences so your overhead would actually decrease in that time frame, so the profit margin would in turn be boosted. I would think (I dont know), that it would be better to run the billing on a 9mo or whatever the cutting time schedual is, so you actually make money cutting any thoughts on that?

[Steve]

Ok now lets check out a chart with the data you provided. You will see how by charging a flat rate for the entire season you would actually have a strong profit start. It would gradually decrease until November and December came to give you more of a boost.



This all can get a little complicated. I am going based on your expenses of $40 per cut. To really make this chart accurate you would need to know your fixed costs each month and then variable additional costs such as if you pay your staff on an as needed basis or not. That would allow you to chart your month to month income and expenses.

I would think (I dont know), that it would be better to run the billing on a 9mo or whatever the cutting time schedual is, so you actually make money cutting any thoughts on that?

Well it seems to me there is only one month when you wouldn't be cutting and that is February.

[OrganicGreen]

Originally Posted by musician/lawnman

Hey bud,

You are smart to crunch the numbers like this & complete a proper due diligence prior to buying this business. Sounds to me like they may have a bit more overhead than the can afford for one? Hard to say without knowing the specific details....

I currently run a 3 man crew (myself & 2 helpers). One truck, one trailer, 2 zt's, 3 trimmers, 3 blowers, edgers etc....

Typically on a 10,000 sf residential lot, we pull up, one man on each of the 2 mowers, one does front & one side, other does rear & other side. 3rd guy line trims & edges. 1st 2 guys done blow off while the 3rd closes up the trailer.

We are in & out in 10-12 minutes, 15 including drive time (yes clustering the jobs together & tightening your route helps the bottom line a ton, but this takes time dude!)

I average 28-30 properties a day, currently running 4 full days (9-10 hours per day) if all goes well with no breakdowns, snags, or rain delays.

If you are doing 30 properties a day ??? How many Clients do you have for the month? how much are you charging each client a day for your service? How many properties a month?

I currently work part time cutting,edging,blowing,debris removal. I make $800 a month With 5 clients. I work 5 days a week, But i only work 3 hours a day max. I charge a flat rate per client once a week, 4 times a month. 5 clients, 5 days a week, $40 for 2 hours of work a day. If you do the math correctly it's $800 a month. Pretty good for working 2 hours a day 5 days a week. Then i have my normal job.

Ok, I crunched the numbers and here is what I found. I noticed that you figured the full price of the equipment. I recall seeing someone else say in this thread or another thread where the person said they replace their mower every 2 years. If we plan to replace the 3 mentioned pieces of equipment every other year you save about $4600 ($4250 for the mower, $150 for the Edgers, and $200 for the blower).

Here are the differences this makes:

Originally Posted by b18bgone

1. $8500 zmower + $1520 in gas + $960 maintance = $10,980 / (.29%)(2000working/hours) = $18.93 per/hr

$4250 zmower + $1520 in gas + $960 maintance = $6,730 / (.29%)(2000working/hours) = $11.60 per/hr

Can you tell me where the $960 in maintenance comes from? Is the equipment tuned up several times per year because of the amount of hours run?

Originally Posted by b18bgone

1. $300 Edger + $190 gas + $60 edge it + $50 maintance + $10 string = $630 / (.36)(2000 w/h) = $.85 per/hr

$150 Edger + $190 gas + $60 edge it + $50 maintance + $10 string = $630 / (.36)(2000 w/h) = $.64 per/hr

Originally Posted by b18bgone

1. $400 Blower + 190 gas + 100 maintance = $690 / (.20%)(2000 w/h) = $1.73 per/hr

$200 Blower + 190 gas + 100 maintance = $690 / (.20%)(2000 w/h) = $1.23 per/hr

Originally Posted by b18bgone;41379[LIST=4

[*]$6720 Truck & Trailer(annual payments) 2006 truck/trailer + $650 taxes + $70 tags + $1800 insurance + $1200 maintance + $12,000 fuel (not sure if this should be here) = $22,440 / (2000w/h) = $11.22 per/hr[/list]

I made no changes in this section.

Do they really go through $1000 per month in fuel average? I think the insurance is kinda high as well. What kind of maintenance is being done for the $1200?

Originally Posted by b18bgone

The companys over head for building rent, office manager, phones, workers comp insurance, professional licences, computers, internet, etc... breaks down to $25 per/hr or $50,000 per/year.

Have you checked to see if all these costs are needed? What is the owner doing? is this something the owner could do to avoid needing a full time Office staff? Is there more than one computer? if so, is more than one needed?

Do the workers have cell phones. If so, could they use a CB radio to communicate with the office if needed? Is more than one cell phone needed?

Originally Posted by b18bgone

All overhead above = $64.73per/hr + $25per/hr admin = $89.73per/hr (to show up)

All overhead above = $56.69 per hour + $25 per hour admin = $81.69 per hour (to show up).

This is only a difference of about 8 bucks an hour but that is some difference.

Originally Posted by b18bgone

Now what Im seeing (and please correct me if Im wrong) is that without taking into account airating/seeding/fertilizing/employee taxes this account is lossing money hand over fist... 34minutes/60minutes = .56% x $89.73 = $50.25 to break even on this job.

I contend that this account costs you $46.29 per mowing, still only making less than $2 per mowing, without figuring in the cost of aerating, seeding, fertlizing, yada, yada, yada... Btw, who provides the seed and fertilizer, you or the customer?

Originally Posted by b18bgone

At 40 cuts annually this contract is bringing in $47.72per/cut or lossing $2.53per/cut not to mention its actually much more factoring in all other cost and potential profit for the company.

At the new figures this account costs you at least $1851.60 per year plus other costs mentioned above. This job is making you only $57.36 per year. If (for the sake of easier figuring) you make the same amount on each account for the year you have now made a grand total of $3785.76 profit for yourself. This is about the right amount for one month with the above mentioned investment and headache.

Did they happen to show you last year's total figures (total expense, total income, etc)?

[Steve]

Can you tell me where the $960 in maintenance comes from? Is the equipment tuned up several times per year because of the amount of hours run?

What do you think the average annual maintenance fee would be for such a mower?

Originally Posted by Steve

What do you think the average annual maintenance fee would be for such a mower?

Average? Consisderably less than that. I, personally, would be happy to service it probably at least 2-3 times for that price. I know it greatly depends what needs to be done and what the specific piece of equipment is.

Here is a nugget for you. I find it takes about 2 times as long and costs about 2 times as much to service a ZTR as it does a tractor type mower. Kinda strange but that is the way it seems to work.

Eli

[Steve]

Here is a nugget for you. I find it takes about 2 times as long and costs about 2 times as much to service a ZTR as it does a tractor type mower. Kinda strange but that is the way it seems to work.

Oh that is fascinating! Why is that the case?

[b18bgone]

Hey Eli,

Thanks for taking the time to look this thread over. We have since purchased this company, and have been focused on turning it around over the past 6 months. We have been able to lower some cost, and increase our marketing dollars. We have increased the company's revenue 30% over the winter by renegociating contracts, and getting new commercial contracts. It still blows my mind to this very day on what it should actually cost to cut a residential lawn. We have recently brought on a landscape designer to help sell some larger jobs, which will bring in chunks of money.

We were getting the maintenance cost from our local dealer. The maintenance of all of the equipment was a HUGE white elephant in the room when we took everything over, stuff was breaking left and right (honestly may have been better off buying all new equipment).

We have noted that the most profitable part of the company is the full landscape installs and fertilization / chemical aps.

I was wondering how you came up with the lower rates on the equipment, is that from depreciation?

Again thanks for taking the time.

[justin_time]

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Originally Posted by Steve

Jan = how many cuts?
Feb = ?
Mar = ?
Apr = ?
May = ?
Jun = ?
July = ?
Aug = ?
Sep = ?
Oct = ?
Nov = ?
Dec = ?

This kind of sucks for me, I only get about 6 months of actually grass cutting.. the rest is winter or fall.

If the summer is good like last year, I usually start mid May and finish 1st week of October. Then I could promote fall cleanup for the rest of Oct. then Nov, Dec, Jan, Feb, and March is winter so yeah.

I am trying to get myself a bigger truck so I can do some plowing in the winter time so I can afford to pay for school and other bills