Lawn Care Business Forum Lawn Care Business Book Lawn Care Business Blog Lawn Care Software
Home Forum Contract & Flyer Templates Blog Software Videos Podcast Calculators / Estimators Store Mower Review Design It Yourself Lawn Business School

Go Back   GopherHaul Landscaping & Lawn Care Business Marketing Forum > Business > General Business Discussions

General Business Discussions A place to talk about general business discussions.

Key Figures To Know


General Business Discussions

A place to talk about general business discussions.
Reply
 
Thread Tools Search this Thread
  #1  
Old 09-22-2004, 10:36 AM
Phil Nilsson
Guest
 
Posts: n/a
Default

Key Figures To Know
By Phil Nilsson, Green Industry Consultant

Business owners tend to view their company operating results as something to be completed at year's end. Their financial statements, tax returns and other key business documents are covered annually to analyze how a business did from a historical perspective.

Although a year-end analysis is important, the problem lies in not knowing what is happening in the business over the short term. Also, once-a-year analysis does not give an owner time to turn his or her business around midyear if results are lower than expected.

What an owner needs to do is fill the gap of once-a-year reporting with
short-term reporting. Short-term reporting, or key figures, indicates how a business is doing for a month, week or even a day. Key figures tell owners over the short term if a company is on track to fulfilling long-term goals without going through the expense or formality of preparing financial statements.

KEY FIGURES: THE BARE MINIMUMS..
The numbers we're after to measure short-term results need to be easy to obtain, apply and understand without doing endless research and without investing a lot of time. If you know one or two key figures as bare minimums, you can often fill in the blanks to the others. How often you want to know this information is up to you, but when I was in the landscape business I used to run tallies every day.

What was I looking for? ... What did I want to know? *
I looked at sales, labor costs, direct costs, overhead and projected profit. At the end of each day, it took me about 15 minutes to figure out the results of that day. After figuring the daily results, I then transferred the information into a logbook. This book would eventually contain the outcome of each production day for an entire year.

Certain assumptions about the key figures had to be made to avoid the time and expense of actually looking at accounting records. Nevertheless, if you have two figures - sales and labor hours - that's all you need to get started filling in the blanks. This is generally true because certain expense categories "follow" along in ratios or percentages as a rule when compared to sales and labor costs.

THE THINGS YOU SHOULD KNOW.
Daily production or billable sales "created."
Direct payroll costs for the day.
Direct overhead costs for the day on daily labor.
All other overhead costs for the day, assigned to that one day.
Profit for the day.

This may seem like a lot of trouble to go through to get the key figures, but it is not very time consuming. To do get these answers, all you need is the sales figure and the payroll hours for one day. The rest of the numbers will fall into line by ratio. We want to know how much sales we did for the day and how much it cost to do those sales. Log all these numbers, run a year-to-date in your logbook, and you'll have a cumulative picture of where you are.

FINDING THE NUMBERS TO USE... *
The daily payroll part is easy. Figure how many hours your employees worked and the average hourly pay to get the total payroll for that day. Enter this into your logbook. Sales for the day represents what was produced in billable work. If jobs are not billed because they are incomplete or in process, estimate the percentage of completion.

For fixed contracts, spike out known sales values for portions of the work completed such as mowing, pruning, edging and so on. Direct overhead costs are assumed to follow payroll costs and hours. Get this "hourly figure" by analyzing your financial statement to draw conclusions and come up with an hourly cost on average. Direct overhead costs are costs that happen because you did some work and "engaged" other expenses. When an employee comes to work, certain expense categories follow him or her around during that day - fuel, depreciation on equipment, supplies used, insurance on the vehicle, repairs to equipment and more. Those costs can be visualized as "on the road" costs or "at the job site" costs. All other overhead costs such as rent, utilities, advertising, general overhead and administrative costs can be visualized as "back at the shop" costs.

General overhead expenses are those that are not identified or related to payroll hours. They happen and cost you whether you have business activity or not. Split these out separately and come up with an estimate of the total production hours you expect to have for the entire working season. Yes, as you go along during the year you may have an increase or a decrease to production hours as new work comes in, but it's the best number you have at the time, so work with that number. As more than projected production hours go up, general overhead costs per hour go down, and vice versa.

THE END RESULT... *
You will know how much sales you had for one day and what those sales cost the company to know what the profit was for the day. You can then figure out how much you have made for the season to that point and compare that number to where you thought you'd be at that point. Isn't that what you want to know?
Reply With Quote

Stop guess-timating. Learn how to estimate and make money! $$$
Mow Time Estimator Lawn Care Price Estimator Mulch and Topsoil Calculator Snow Plow Estimate Calculator


  #2  
Old 09-22-2004, 03:50 PM
Steve's Avatar
Steve Steve is offline
Administrator
 
Join Date: May 2003
Posts: 37,948
Rep Power: 10
Steve has disabled reputation
Default

Lawn care business tipsLawn Care Business Book
Thanks for the great information Phil.

Find more information http://www.nilssonbooks.com/
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote
Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump

» Recent Threads
  RatingTitle, Username, & Date Last Post Replies Views
Is it too late?
Cpadgett
Yesterday 09:10 AM
Today 02:08 PM
by Cpadgett
2 45
Firefighter gone Lawn...
Firehouselawn@hotmail.com
03-10-2016 04:50 PM
05-27-2016 08:17 PM
by J.A.S.LawnService
7 9,674
help with sole...
greenbuds
03-24-2016 12:21 PM
05-27-2016 12:20 PM
by Wolf4dk
3 9,413
Whats up??
Cpadgett
05-27-2016 10:57 AM
05-27-2016 10:57 AM
by Cpadgett
0 24
To mow weekly or Biweekly
WarriorLandscapingCAN
05-11-2016 04:09 PM
05-26-2016 04:45 PM
by lawngawd7
9 335
Help a Brother Out -...
Hedgemaster
01-23-2012 04:19 PM
05-26-2016 04:34 PM
by Crossett73
91 33,720
Hello from Alabama
pruzilla
05-25-2016 01:20 PM
05-26-2016 08:14 AM
by pruzilla
2 60
Hello from Centreville!
Daveylawns
05-23-2016 09:04 AM
05-24-2016 04:08 PM
by Steve
1 77
Laying new grass, Sod...
WarriorLandscapingCAN
05-23-2016 10:07 AM
05-23-2016 08:41 PM
by Steve
1 65
I need some aeration...
rootytalbot
08-14-2015 12:32 PM
05-23-2016 09:06 AM
by Daveylawns
10 3,782
Prolin
rmccutchan
05-21-2016 04:53 PM
05-21-2016 06:36 PM
by rmccutchan
2 83
Upgraded to a new mower
Stevenor92
05-17-2016 08:17 PM
05-20-2016 07:08 PM
by Stevenor92
8 215
Intro
LaraRahmani
05-18-2016 02:54 PM
05-19-2016 02:43 PM
by Steve
2 118
Best Push Mower You Have...
markty
05-14-2016 03:46 PM
05-18-2016 07:34 PM
by Stevenor92
4 193
New mower!!!!
Stevenor92
05-18-2016 03:46 AM
05-18-2016 06:39 PM
by Stevenor92
2 122
Say Hello !!!
Steve
03-19-2007 11:18 AM
05-18-2016 02:59 PM
by LaraRahmani
1,249 435,009
Stupid idea?
hopolb33
05-13-2016 11:25 AM
05-16-2016 11:22 AM
by Steve
1 166
Planting SKYBOUND CEDARS
FrankieeLawnz
05-13-2016 03:59 PM
05-16-2016 11:21 AM
by Steve
1 148
Edging Fad...
Tree geek
05-10-2016 11:29 PM
05-15-2016 11:12 PM
by Tree geek
2 197
Business Overload
Chilehead
05-06-2016 09:27 PM
05-13-2016 11:15 AM
by Steve
11 407
Hello from great state...
Cel1980
05-11-2016 09:00 AM
05-13-2016 11:07 AM
by Steve
2 171
Did this job free to...
JJand M Lawncare
05-02-2016 02:33 PM
05-11-2016 03:54 PM
by JJand M Lawncare
10 443
How to tell Cust. to...
GeeGood
04-09-2008 09:55 PM
05-09-2016 07:08 PM
by JJand M Lawncare
16 5,533
Echo SRM 230 trouble.
Jack Rabbit
05-08-2016 06:16 PM
05-08-2016 11:22 PM
by Just for Cuts
1 157
Toro ZTR Issues
rsanchez1203
05-06-2016 09:27 PM
05-07-2016 10:26 AM
by Steve
2 184
Correct way to quote a...
WarriorLandscapingCAN
05-02-2016 11:52 AM
05-03-2016 10:59 AM
by Steve
1 303
» Popular Tags
advertising become an entrepreneur best mower be your own boss break business education business help business management contractor hacks deck lift dethatcher edging entrepreneur entrepreneur education estimates free lawn care fuel problems fuel pump half moon blade hydro increase customers jjandm lawncare landscape landscape design landscaping landscaping design company landscaping richmond va landscping lawncare lawn mowing lawnservice lowering grade marketing mulch new business planting plowing raising grade residential lawn care richmond va richmond virginia lawn care roundup safety scag snowblower snow plowing snow shovel solo solo backpack sprayer start a business start a lawn care business start business start up swzt toro timecutter tree tree pics tree service video walk behind what to charge work from home
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 03:22 PM.


(C) 2011 Riggs Publications - Terms of use & Privacy Policy

All times are GMT -5. The time now is 03:22 PM.

(C) 2011 Riggs Publications - Terms of use & Privacy Policy