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CFD192
03-31-2010, 09:02 PM
I am in need of some help!

Here is my situation. I right now have 10 yards totaling $500 a week. All this yards are done by myself with once a week help(roughly $80 payout). I get several odds and in with these yards mulch and etc.

My question is right now, I have just started, gotten my sole prop. and haven't purchased insurance or any of my permits and licensing. I have been offered a business for $10,000. With the business comes an additional 26 yards($900 to $1000 a week), trailer, ZTR mower, two weedeater and leaf blower, and several misc tool. This business is about an hour from where I live, so roughly I can make two trips on one tank of gas. I have a friend who lives there that has another mowing business of his own, with that, he would give me his 8 yards($350 a week) if I employeed him.

So the scenario is what other operating costs would I have? Does anybody have a rough figure of want liability insurance a month, permits, fuel for travel and mowers, workers compensation and if they thought this would be a good decision or should I just stick with what I have and try to expand in my hometown? Also is there any other costs that I might be forgeting or ones that I could do without? Do I need workers compensation or not?

Here is all I got so far trying to figure: Hire my friend as foremen of the one crew at $15 an hour, and add on one employee with him for $9. Then have a helper with me at $10. 16 hours of work for a split of 22 yards per crew. Weekly income $1850- employee payroll of 544= $1306 a week. So what I am asking is, of that 1306 what else should I take out: Maintenance price?, insurance? and what else? If anybody could provide me with some monthly break downs that would be great!

JP Landscaping
03-31-2010, 10:05 PM
out of those $10,000 how much is for the lawn contracts and how much is for equipment?

are those lawns under contract or no contract?

to those 1306 you need to subtract your overhead which is different for everyone but for sure your insurance, payroll expenses, self employment tax(about 15.3% from net income), license fees, gas, maitenance for all equipment, depreciation of equipment, Advertising, administration expenses (time it takes you to do books)...etc.

I think that you can get way more than 26 customer's with $10,000 to invest.

I would suggest instead of buying, to expand on your own. Print out 3000 professional looking door hangers and pass them out door to door. Hire help if you need to pass them out. with this, I think you can gain those extra 25 or so customers and this can be done with less than $500

good luck though

Steve
04-01-2010, 03:49 AM
Here is my situation. I right now have 10 yards totaling $500 a week. All this yards are done by myself with once a week help(roughly $80 payout). I get several odds and in with these yards mulch and etc.

Here is all I got so far trying to figure: Hire my friend as foremen of the one crew at $15 an hour, and add on one employee with him for $9. Then have a helper with me at $10. 16 hours of work for a split of 22 yards per crew. Weekly income $1850- employee payroll of 544= $1306 a week. So what I am asking is, of that 1306 what else should I take out: Maintenance price?, insurance? and what else? If anybody could provide me with some monthly break downs that would be great!

When I look at this, I see a simple business going towards a messy direction.

My view is you would be amazed at all that can go wrong with such a plan.

First off, why is he selling the business? How are the properties priced? You might find out that they are underpriced and he is losing money. When you go there to start servicing them, you may realize you need to increase the prices to make a profit and the customers may drop you.

The place is an hour away?

What is about this plan that is enticing to you?

What have you been doing so far to get the customers you have now and how much do you feel you spent to get them?

$10,000 is a lot of cash, so I do wonder where you would get the most bang from your buck.

Tell me some of your thoughts on that.

CFD192
04-01-2010, 06:32 AM
Right now, I paid $3500 for the yards I have now, which is 10. In the area I live, there is several lawncare businesses and I have done some advertising and haven't received any customers. Competetion is pretty tight here. The other one has the 26 customers, has the equipment, and the gentlemen is a good friend of the friend of mine. He is aged and ready to get out of the business due to age(60 years old). His yards are over priced compared to mine, in my eyes. I price most of mine at $35 and he has several same size yards at $55. Plus there is several other yards in that area that are up for bid and other yards that my friend said another person is trying to get rid of. I am personally not into alot of advertising. Don't know!

jasonw
04-01-2010, 12:40 PM
I would very quickly run away from that deal. It sounds like a deal but people dont generally sell profitable businesses. Sounds to be like something is up. I also just did the math. Not including anything ells you would need to deduct like maintenance and gas and insurance and taxes and the million other things if you go about the plan as you stated it below you would be making $12.25 per hour for yourself and putting nothing back into the business. If you like me use the 70/30 ration you would be making $2.42 per hour. Can you pay your bills with that. I reread and double checked my math and as far as I know its correct. You take your 1850 per week subtract you payroll which equals a total of $34 per hour time 8 hours a day times 5 days per week. what you come out with is your weekly revenue. Divide that by 5 days per week and then by 8 hours per day, then subtract the 70% reinvestment and you come out to a take home pay as the business owner of $2.42 per hour. The good news is you may not be taxed on such as small wage, the bad news is you would be better off flipping burgers. My best advice is be very very careful about hiring people you dont need. I did that and tossed away far to much money on payroll. My employ sat pretty all winter while the business struggled. Now he is still on lay off and I have no plans to call him back to work until the business can support it.

CFD192
04-01-2010, 07:33 PM
Jason,

Not to sure about your math. I would only be working my employees a total of 16 hours in a week! one crew at $15 an hour ($240/week) and $9 (144). My crew would have myself and one other person at $10 an hour(160)... bringing the employee payout to 1306 left... So 1306 by 4 weeks $5224 a month. Out of that I estimated $200 insurance, $600 fuel/maintenance, $800 a month for taxes, bringing my new total to $3600 a month income for myself. 3600 / 4 weeks = 900 divided by 16 hours equals 56$ an hour or slightly less than that if you count hours for payroll and such!

Steve
04-01-2010, 08:16 PM
I have done some advertising and haven't received any customers.

What kinds of things have you done thus far?

I am personally not into alot of advertising.

Why do you feel this is the case? Do you find yourself handing out business cards to everyone you know? Do you let your neighbors all know you are in business?

If you like me use the 70/30 ration you would be making $2.42 per hour.

Can you tell us how you came up with this theory? Why does 70% need to be re-invested?

jasonw
04-02-2010, 01:32 AM
Jason,

Not to sure about your math. I would only be working my employees a total of 16 hours in a week! one crew at $15 an hour ($240/week) and $9 (144). My crew would have myself and one other person at $10 an hour(160)... bringing the employee payout to 1306 left... So 1306 by 4 weeks $5224 a month. Out of that I estimated $200 insurance, $600 fuel/maintenance, $800 a month for taxes, bringing my new total to $3600 a month income for myself. 3600 / 4 weeks = 900 divided by 16 hours equals 56$ an hour or slightly less than that if you count hours for payroll and such!

That comes out to 16.8 per hour after reinvesting into your business. Dont be fooled. Without a reinvestment it will be doomed for failure, Its only a matter of time. What kind of employees are you getting for 16 hours per week? Hopefully you are not attracting poor work ethic that will hurt your business. I made that mistake by hiring a family member who well lets be honest was a lazy *** and figured he was getting paid by the hour so the more hours he took to do the job the more he made. Needless to say he is no longer and employee. I averaged $140 per hour last year when I worked but work was sketchy, not daily or stable at all and a good share of my cash went to a worthless employee and the latest greatest shinny new equipment. I am taking a different approach this year. I guess you can say live and learn.

jasonw
04-02-2010, 01:34 AM
That comes out to 16.8 per hour after reinvesting into your business. Dont be fooled. Without a reinvestment it will be doomed for failure, Its only a matter of time. What kind of employees are you getting for 16 hours per week? Hopefully you are not attracting poor work ethic that will hurt your business. I made that mistake by hiring a family member who well lets be honest was a lazy *** and figured he was getting paid by the hour so the more hours he took to do the job the more he made. Needless to say he is no longer and employee. I averaged $140 per hour last year when I worked but work was sketchy, not daily or stable at all and a good share of my cash went to a worthless employee and the latest greatest shinny new equipment. I am taking a different approach this year. I guess you can say live and learn.

BTW almost forgot. I would not even mow my own lawn for $16.80 per hour. Aim higher.

jasonw
04-02-2010, 01:38 AM
What kinds of things have you done thus far?



Why do you feel this is the case? Do you find yourself handing out business cards to everyone you know? Do you let your neighbors all know you are in business?



Can you tell us how you came up with this theory? Why does 70% need to be re-invested?

Steve. My first job in the area where I live was at our local Radio Shack. The owner of the store was a very accomplished business man and a good friend of mine. He explained the 70/30 split to me. Its one of the only things I remember from way back then but basically he said for a business to survive you MUST reinvest profit back into the business to grow it. Other wise you are spinning your wheels. A fail safe number is 70/30 meaning 30% of every dollar is your take home pay and $.70 from every dollar goes back into the business. It is then used for payroll, taxes, rent or lease, paying back creditors, buying inventory and saving for growth. The ratio can be changed of course as a service business is not the same as a retail business. If you are like me you have no creditors so maybe 60/40 will work, who knows. I still with the 30/70 because I really dont care and dont miss the money I am reinvesting. You see I am not in this to spend a buck to make a buck. There are some principles in business that are the same no matter what the trade. We have all seen in this very forum what happens when some of the basics are not followed. I am very guilty of it as well. If you ask me the 70/30 ratio is one of those very very important principles.

CFD192
04-02-2010, 09:09 PM
Jason,

My group of "employees" aren't full time and we never plan to be! We as in the four that would be working are full time career firefighters looking for something to do on the side to make some extra cash. I did found out more information....Talked to the gentlemen instead of the heresay deal. he has 20 yards and he ranges from 1200 a week to 1500, because he has some that are ever other week. So there is $300 more per week than I expected. 2007 Gravely ZTR mower, two leaf blowers, two hedge trimmers, and a trailer...I even got names of a few people he mows for and gave them a call, and they said everything was good. My only down fall now is the travel time, able to fit in with our work schedule, and the fact of if purchased, how many people would actually keep us! Thanks for your inputs, helps when you can see things from the outside instead of your own( we all tend to be greety and don't take a close look at things.

Chris Biser
Biser Lawncare and More

Steve
04-03-2010, 04:38 AM
Chris as a local firefighter, can you do things with your community such as local park cleanups or something where you can get media attention. Get members of the community involved and help spread the word you own a lawn care business?

I would think you would have an amazing social network that you could harness and market to.