Business Guru Required

I run a landscaping company with a heavy bias towards hard landscaping. I have 7 full time staff, 1 being an admin girl and three part timers. I personally think that we all work very hard (at the moment for me it is 4.30am to 7pm every day of the week) and that the quality of finish of our projects is second to none. However, I am running at a loss and the most common thing I hear from potential clients is that although I was the most professional contractor they met and they were impressed by my ideas, portfolio, client references etc.. that they wouldn’t use as we were the most expensive. Now not making any money and being told you are too expensive are not normal bed fellows as far as I am concerned. I am looking for a business guru with exceptional knowledge of the landscaping industry to help me out here. I am sure I can make it work I just needs someone to help me tweak the relevant bits. I am willing to pay. I guess it would suit someone who has been there, done that and got the proverbial t-shirt. I think I need someone who could say hold up you are over egging the pudding by installing that in that way, or your overheads are far too high, or you leave yourself too exposed by doing that…. Any takers???

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Permalink Reply by Charles Langford on May 27, 2012 at 14:58

Geoffrey,

Good point well made, hadn’t really thought about it from that perspective. I will remove the ‘employment’ page from my website. It was an attempt to save some pennies by eliminating the need to spend money with recruitment firms or the likes of Gumtree. However it has yielded nothing so far as perhaps potential employees don’t look at individual companies web-sites that often.

Are people on LJN debating £15 per hour as a charge out rate or as a pay rate. £15 per hour wold cost me £18.10 per hour if you take Employers NI and holiday entitlement into consideration. I charge £17.78 per hour (£160 for a 9 hour day) so quite clearly I couldn’t pay that as I would be operating at a loss even before you took overheads and downtime into consideration! I constantly get told £160 per day is too expensive so I don’t see how I can alter that so it is Catch 22 really.

I could outsource my admin, but I think it would work out dearer. Plus even though my admin girl isn’t fully employed doing admin the idea was that she could also replace me as ‘van weasel’ dropping samples off at clients, collecting and delivering the tools and materials that sadly but inevitably get overlooked by the guys on site etc… the only problem that she wrote of the pick-up truck I had ear marked for her to use! Not having much luck at the moment!

 

Thanks,

 

Charlie



Geoffrey King North Yorkshire said:

Hi Charles,

I think you said, that despite working considerable hours and being very busy and having new enquiries aplenty that you were making a loss.

2 things about websites, people do read them & form an opinion of you and your business, using the right words, photos, etc is critical in getting the right image across, so that your potential customers anticipate your quality of workmanship, your ethics & your cost / charge

thus would you expect a sales brochure in a car showroom to advertise positions within that company? so would your customers expect that on your website

secondly I don't know what the average or reasonable rate to pay is, but you seem to be looking for highly skilled people, so as per the many heated debates on the LJN, where the concenus seems to be that £15 / hr is too low (and I know it would be different for employees), if you're aiming for top quality does the average rate fit that image

better then to keep job adverts totally separate from your online sales brochure, with a link to a different one page site perhaps?


PRO MemberPermalink Reply by Brian www.mibservices.co.uk on May 27, 2012 at 15:08
Charles by changing my 'spectrum of client' i mean i stopped sub contracting to big national companies on the lanscape construction side of my business, i just wont do it anymore. Cutting your cost right now is more importantant than growing your business, you are running at a loss. You have got to cut your staff or you will all be down and out. You cannot go on running with losses. I would down size, regroup and keep going with less staff. Hard decision are not easy to take but if you dont cut costs you will go bust. If your as busy with jobs as you say then you will be able to grow again soon.
You say you are trying to expand the business to maximise against running costs, your running at a loss, stop the expansion plans for now and cut costs, it is the best way forward. If you keep expanding while losing money, where will it end??

PRO MemberPermalink Reply by Craig McGibbon on May 27, 2012 at 18:39

Hi Charles,

I can relate to what your going through - l'm only expanding from 1 man band to having an employee and seeing similar effects that you have described.  

Last year l went on a Business Link Course, provided by Hard Hat Business and was given a book regarding  increasing profits - it has key calculations, ideas etc etc.  You can get the details from the LJN blog l wrote;

http://www.landscapejuicenetwork.com/profiles/blogs/the-financial-h...

I understand this isn't a short term fix but may help...

I also believe Hard Hat Business provide consultancy to companies... maybe worth a days consultancy?!?

Keep us posted... wish you all the best...

Craig


PRO MemberPermalink Reply by Gary RK on May 27, 2012 at 18:47
Charlie, i dont believe I can massively add to this thread as I stopped most of my hardscaping a good few years ago and i only do it know if it interests me, but I do run multiple teams and some of the metrics are the same.

We're not a million miles away and I know the average rate around here (surrey) is more than the rate you quoted and that rate is in use by a lot of hard landscaping firms I know...

Happy to meet for drink at some point for a chat.

PRO MemberPermalink Reply by Gary RK on May 27, 2012 at 19:31

PRO MemberPermalink Reply by Craig McGibbon on May 27, 2012 at 19:50

excellent links Gary

Permalink Reply by David Channon on May 27, 2012 at 20:10



Charles Langford said:

Hi David,

 

Many thanks for your reply. It never ceases to amaze me how helpful people are on this site. I find it really refreshing especially in a society where most people seem to be more and more insular and more and more concerned about their own lot and to hell with everyone else.

We keep daily analysis of ‘downtime’ per staff member as I call it - payroll hours against billable hours. I guess two things make up downtime – windscreen time as I call it (travelling to and from jobs, collecting tools and materials) and over run on projects. I try and keep it as low as possible hence getting up at the crack of dawn to load vehicles with tools required etc.. so I am not paying someone else to do it less efficiently. My business model analysis factors in 10% downtime and I think we stick pretty close to that.

We are flat out and I personally think I need more guys on board to process all the work we have plus this would in my opinion help with exploiting some of the semi-fixed costs of my business. I.e. I rent a yard and the rental charge would be the same whether it was just me operating out of it or if I had 20 guys on board. After a point I would need a bigger yard so hence the semi-fixed tag (or in fact semi-variable).

Just out of interest do you document your charge rates for ‘extras’ in your quotations?

I think your last sentence is really thought provoking.

Many thanks,

 

Charlie

Charlie,

Extras are always documented in detail because they have immediate effects on the progress of the job but also effects on plant, materials, deadlines, work flow and cash flow. What seems easy to the client rarely is. A notebook recording every request may surprise both you and the client when its implications are worked through and then priced.

You seem clear that your yard facilities are not a binding constraint and clear that you don't have enough staff to meet your current work flow demands. It seems to me then that you are under-pricing your jobs.

Try absorbed costs pricing. Work out how much it costs to run your entire operation on an annual basis. divide that by 200 which is roughly the number of working days in a year after holidays, sickness and weather. divide that by the number of front line staff and again by eight working hours a day. That number is your break even hourly rate. if you're working for anything less, you are giving your own money away to clients.

Try putting your absorbed prices up by 15% on basic work and 25% on extras.

Thats what I mean by working on your business. Your employees come to work for you, as and when you direct. Youre the only one who gives direction so its up to you to ensure profitability by working out how to turn their efforts into profits.

Try 100% mark up pricing when your order book is full. Its called f~ck-off pricing because, at that point, you cant afford to take on more base rate customers because you cant service them. If they walk, you've lost nothing. If they say yes, you'll struggle but you'll trouser some real profits.

Hope this helps, good luck

David


PRO MemberPermalink Reply by Phil Voice on May 27, 2012 at 22:38

Charles

I'd be pleased to help if I can.

Give me a call on 0844 2324221.

Phil

Permalink Reply by Susan Gallagher on May 30, 2012 at 21:03

Yeah call Phil!

I sympathise with you, its a hard business, and in this economic climate we can expect our weaknesses to show themselves. Its just a case of addressing them and taking action. If you dont have work for an admin person full time, she has to go part time in my view, hard economic climate calls for tough decisions. Good for you for being so honest. Looks like you do some very tidy work...

Here is a link to an American website I have found useful from a business perspective http://www.lmnblog.com/


PRO MemberPermalink Reply by Phil Voice on June 8, 2012 at 19:00

Good to talk Charles:) sorry I didn't have more time but do call again.

I'm pleased to help but I also think there's some very very good advice above from others too. I think, collectively, we can help you find a solution and eventually lead to a stronger more profitable business (that goes for any other member who needs a little help).

If you don't wish to post sensitive business info into the public forum then pop it into the business group.

Permalink Reply by Fenlandphil on June 8, 2012 at 21:16

Been there Charles and got the tee shirt, I am now operating with fewer staff than I had a few years ago turning out more work and making money.

You need to work out why you are in business, are you there just to provide an income for those who work for you?

Are you working to pay your staff at the expense of you getting paid?

How much is it costing you in interest charges to service the financing of your business?

There is an old maxim as someone like you with a background in accontancy know well, turnover is vanity profitability is sanity.

Can your accountant help?

Can you productise your service?

All businesses have one thing in common you have got to earn and collect more money than you are spending. Look at everything you are spending and ditch anything you can do without, haggle for everything you buy look at the biggest numbers first, a 10% saving on a £50k bill is probably more acheivable than a 100% saving on a £1k bill. Write a survival plan. If you are losing money you need to increase your prices try a few percent for a start and see how you get on.

If you can, find someone trustworthy who doesn't know your type of work but with a sound business background to look over your books. They will ask the silly questions that someone who is familiar with your type of business won't ask and explaining to them why this or that is done will sometimes make the solution apparent to you. 

I hope this helps.


PRO MemberPermalink Reply by Nick @ NM Garden Services Ltd on June 8, 2012 at 21:20

Good common sense advice. Running a business is never as straightforward as one might think!
Fenlandphil said:

Been theree Charles and got the tee shirt, I am now operating with fewer staff than I had a few years ago turning out more work and making money.

You need to work out why you are in business, are you there just to provide an income for those who work for you?

Are you working to pay your staff at the expense of you getting paid?

How much is it costing you in interest charges to service the financing of your business?

There is an old maxim as someone like you with a background in accontancy know well, turnover is vanity profitability is sanity.

Can your accountant help?

Can you productise your service?

All businesses have one thing in common you have got to earn and collect more money than you are spending. Look at everything you are spending and ditch anything you can do without, haggle for everything you buy look at the biggest numbers first, a 10% saving on a £50k bill is probably more acheivable than a 100% saving on a £1k bill. Write a survival plan. If you are losing money you need to increase your prices try a few percent for a start and see how you get on.

If you can, find someone trustworthy who doesn't know your type of work but with a sound business background to look over your books. They will ask the silly questions that someone who is familiar with your type of business won't ask and explaining to them why this or that is done will sometimes make the solution apparent to you. 

I hope this helps.

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