Is This Right?

[weezerguy]

sat down today and figured up all my costs and its kind of scary. Just wondering is this right? lawn care rate [all where figured under a 960 hour season] truck: 6000- 6.25/hr trailer:1000- 1.04/hr 2 trimmers-400-.42/hr 2 blowers-600-.63/hr advertising-50/month[600 for year] - .63/hr equipment maintenance [1000/month][6000/season]- 6.25/hr 2 push mowers-400- .42/hr gas-300/month- 1.88/hr rider mower 42''-1500-1.57/hr total: 19.09/hr company growth profit- 10,000/season-13.89/hr hourly rate-25/hr subtotal-57.98/hr

[picframer]

Lawn care business tips

In short no your numbers are way off, costs should be amortized over the life of the equipment, you have basically set up numbers on what you can do in a given period and expect to be debt free within the first year with a profit, this would never fly as a business plan.

__________________
Andy
Halifax, Nova Scotia

[jasonw]

Where are you getting a riding mower that will last for $1500? I paid about $2,500 for mine and its still bottom of the line. Anyway you should get a copy of Business plan pro. Its a cool program to help figure out a business plan.

[robgee05]

Originally Posted by jasonw

Where are you getting a riding mower that will last for $1500? I paid about $2,500 for mine and its still bottom of the line. Anyway you should get a copy of Business plan pro. Its a cool program to help figure out a business plan.

I would probably say avg out the the costs over three years and add that to your $25 hr rate. Your obviously not making near $25 if you subtracting costs. If you are using a 1500 mower and its residential, consider a more realistic commercial model, or at least a decent used one. You might not get 960hrs even in on season out of a consumer grade.

[Steve]

The thing I wonder about when figuring out your costs is this.

When you amortize the cost of a mower over the length of it is expected life.

Say $6000 over 3 years would be $2000 a year.

After that period of time, you are most likely going to have to replace the mower and take on another $6000 for another 3 years.

So if this is the case, how important is it to amortize when creating a budget like this? How many pieces of equipment are going to last past their amortization period?

[picframer]

Originally Posted by Steve

The thing I wonder about when figuring out your costs is this.

When you amortize the cost of a mower over the length of it is expected life.

Say $6000 over 3 years would be $2000 a year.

After that period of time, you are most likely going to have to replace the mower and take on another $6000 for another 3 years.

So if this is the case, how important is it to amortize when creating a budget like this? How many pieces of equipment are going to last past their amortization period?

It's a numbers game, depending on the value of the equipment amortization here for tax is 1 to 5 years. Can my equipment last longer than 5 years? The tractors and excavators no question, 10 to 15 as I take very good care of them and I buy top of the line, trimmers, blowers etc. I would say 3 to 5 years.

In accounting what is your goal? if to see if you are making a profit a lot of factors go into play, if for financing the numbers game is totally different as is for tax.

[MAKLawnCutter]

IRS likes to see a growth every three years, as a new business, you arent expected an INCOME (+) within the first 5 years... which is also your DO or DIE period. IF you arent composed enough as a business in 5Yrs, pack it up or work harder.

I estimated to MAKE a business profit on year 4, if im lucky and see a .33+ increase yearly, which isnt bad, by year 4 ill be upto 3 trucks-loaded, 7 FT employees, 4PT employees and the wife being the company secretary to save some change... Seeing as i am still an independent L.L.C. There is NO RUSH to go full corp! I kind of like being strapped for money tho, makes me realize every time i leave a property, i better NOT get a call back, i cant afford the lost time.

Never aim for the heavens when you can barely see the sky.

Matt

[Steve]

Seeing as i am still an independent L.L.C. There is NO RUSH to go full corp!

What do you feel is the difference? Do you feel being an llc limits your ability to grow?

What is your view on being a full corp?

[jasonw]

Originally Posted by robgee05

I would probably say avg out the the costs over three years and add that to your $25 hr rate. Your obviously not making near $25 if you subtracting costs. If you are using a 1500 mower and its residential, consider a more realistic commercial model, or at least a decent used one. You might not get 960hrs even in on season out of a consumer grade.

Where do you get that figure? I use a consumer grade one rated at a usable life of 2500 hours and thus far I love it. Someone who would get less than a thousand hours from one is clearly not caring for it properly.

[robgee05]

Originally Posted by jasonw

Where do you get that figure? I use a consumer grade one rated at a usable life of 2500 hours and thus far I love it. Someone who would get less than a thousand hours from one is clearly not caring for it properly.

No offense my friend, but call me when you get to 2500hrs, without replacing the whole motor tranny and deck of the thing. More realistic you may get 600-1000 hrs out of a residential machine.. Anyone with more mechanical experience here like to join in. You can still make $$ with the residential model. If you get 1000hrs out of it @ $1500 your cost to purchase is only $1.50 hr. Where as a $6000 machine you get 3000hrs out of will be $2 an hour. But surely better productivity out of a commercial model. Im a firm believer in starting small with what you need. But I highly doubt youll get 2500 hrs out of a resi model, with out a total rebuild which would cost you more then the mower new. But if you put away $5 and hour with the resi, youll save enough for a new commercial model in no time. LOL