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Some thoughts:
It is always difficult to sell quality in a recession when everyone else is competing on price. You will never win everything you tender for anyway. Whether you like it or not, you are in part competing on price.
You might consider looking at the ratio between actual hours on site to be invoiced and available hours. It is possible to for employees to be busy without being productive.
You might consider basic pricing for jobs and higher margins on the almost inevitable changes the client makes during the course of works.
It is likely that payroll is your biggest expense and full time staff with not enough work to justify their presence is a quick way to a loss. If you can't get the workload to fit your staff then you've got to trim the staff to your workload.
Its tough at the top and you get all the shit decisions to make but they work for the business, you work on it.
You may have read my last comment posted yesterday, http://www.landscapejuicenetwork.com/forum/topics/hi-everyone?id=20...
and I think it could be partly true in your case.
There are few landscape companies that run with the staffing levels you have – and survive for any length of time. To be honest if you are still losing money working the hours you say you work, then something is drastically wrong. I have always worked on the basis that if we can’t make it pay working a 42.5hr, 5 day week, then we are in the wrong business.
Do you have targets, deadlines on jobs or are you a perfectionist that will stay with the job until it is ‘second to none’? Maybe your ‘let’s make it perfect’ attitude has transferred to your employees and they use it as an excuse to take their time. Are you their mate, are you a hard task master or a mix of both?
Maybe it is simply a question of your pricing being wrong. Do you know your outgoings and how much that is per man hour? Are your employees consistent with their output. Are you pricing at the rate you personally lay paving – which I bet is 25% faster!
So many questions and a hundred more I could add, but all basic stuff that if you sit down quietly for a day you would probably come up with the answers yourself. Deep down we usually know where the problems lay, but doing something about it, now that’s another matter but it is something you must do with some urgency.
Hi Charles,
I would agree with John, your website could do with a major overhaul, it just does not sell you. And advertising positions on your site stating pay would be no greater than £9 per hour, that's not an image I would want to portray.
John www.acegardenservices.co.uk said:
Does your staff work constant overtime on jobs ?, if so thats where your profits are being lost. NO business should be working constant 16 hour days and loosing money. Although my line of the industry is different from yours, the decisions to be made are basically the same with any industry. Staff will generally always be your highest cost. Lets be blunt, your business needs to loose staff at this time in its life. Have a serious look at your wage bill and slice and dice till you have your best squad in place. One thing that i made a huge mistake on was this, i kept saying to myself, god i need more work in, the business isnt turning over enough money. The reality was i was doing a lot of the WRONG type of work and my running costs were too high. Cutting running costs, changing staff contracts and stopping doing the wrong type of work has turned my business round no end. If you rent a business unit or yard, re-negotiate the rent, if your staff are working constant long hours during the summer, change their contracts to an annualised hours one. Next one to look at is vehicles, are they doing what you really need them to, if not change them or change how you use them.
Thee most important thing to do when heamoraging money is to CUT COSTS QUICKLY and make some not so popular decisions to keep the business afloat.
Take the step back, sometimes you just cant see the woods for the trees. Gid luck for the future.
Hi John,
I may well get shot done in flames for saying this but as far as I am concerned the web-site is the least of my problems at the moment. I completely appreciate that it is the first port of call for you guys and many potential clients (and I do appreciate the significance of this) to gain an insight to my business however I have greater problems at the moment. I, as many just stuck up a web-site a few years ago and it has been static since. I really do appreciate that it needs updating and tweaking but it is not top of my ‘to do list’ at the moment. Once again I appreciate that I am leaving myself open to ridicule here and the inevitable comment 'well that is not surprising based on the content etc....' but my website is not a primary new business avenue at the moment – that is not to say that I don’t want it to be. If I was struggling for new business enquiries then it would be higher on my agenda but at the moment I am struggling to keep up with new biz enquires.
Out of interest what do you mean by the ‘jargon’ is not quite right? As per your advice I will approach Phil and see if he is prepared to help me.
Many thanks John, I really appreciate your input and everyone else’s.
Charlie
John www.acegardenservices.co.uk 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
David Channon said:
Hi Colin,
I feel your comment on the other ‘thread’ is probably one of the most insightful things I have read / heard in a long time. I feel I am exactly in that position of losing control. I know I need to make a choice, scale back operations or grow the firm and as you point out I am stuck in the middle at the moment. I have thought about scaling back but don’t really want to. A lot of people won’t believe me when I say this but it is not only a monetary decision. i.e say I ran a team of three I would always be constrained in terms of earning by the amount of work we could process however have 30 guys on your books get the formula working and you know by adding another team you should earn an extra x. I am not saying that I am not ambitious, but there are other motivations behind growing the business. I want to build a business that is free of the bureaucratic shackles that so many organisations have. I want to grow a business that the employees are proud to part of, I want them to be proud of the end results of their labour and I want our clients to be delighted with the level of service and quality of finish they receive. I see so much crap out there that it pains me. Little old ladies ripped off by unscrupulous so called tradesman, quality of finish on jobs that make me think that my 3 year old nephew could have done a better job etc.. etc…
I think I may have answered your question – yes I am a perfectionist. I was brought up being told ‘If a job’s worth doing then it is worth doing well’. Also it seems to me that every time I have attempted to be less than perfect I have been pulled up about it by a client. I have seen jobs where other tradesmen have butchered a paving slab trying to cut it round a down pipe for instance or fobbed a client off with some old guff and then I get pulled because one piece of feather edge is 2mm higher than the next bit! I believe that you must aim for perfection otherwise you will never achieve anything near it!
Each team leader gets a ‘project management’ sheet for each job outlining the critical path for the job as a whole and the labour and materials assigned to each individual task. If they finish ahead of schedule and I am satisfied that the finish is of the quality is up to my standards, no corners have been cut and that all my tools are accounted for, cleaned and stored correctly then they get a bonus equivalent to a days’ pay for each day they are ahead of budget.
I would say I am firm but fair with my staff. I am not matey with any of them, but equally if one of them was to come to me asking for a day off with little notice then I would try and accommodate them for instance. I let them know if things are not up to scratch or if I am not happy. Different management techniques work for different employees though. Some need a good kick up the proverbial others need to be encouraged.
I am a complete data junkie. I know my outgoings etc…. with intimate knowledge. To put it in perspective I know exactly how many nails and how much they cost for each bay of feather edge fencing we install. Back ground in accountancy! I know my guys are not as quick as me but I factor this into my estimates. We have an experience database which tells me that so and so can lay x bricks a day, lay x paving and erect x fencing. That said on the one hand you can’t go to a client and say we will be more expensive than this other contractor because we can’t lay as many bricks in a day as their dedicated brickie… however there is no point in my pricing my guy at 1000 bricks a day if he can only lay 500 as it is me that loses out, not the employee or the client.
Many thanks for your thought.
Charlie
Colin Hunt said:
Hi Geoffrey,
Many thanks for your response.
£9 an hour based on a 45 hour week, 52 weeks of the year is £21k a year. I think this is a fair wage. If you look at Anders Plus web-site it seems to be in line with the market average for my geographical area.
Once I have factored employers NI and holiday pay £9 an hour actually costs me £10.86 per hour. Once you then take into consideration overheads and downtime there isn’t much mark up based on my charge out rates.
I appreciate that this might be a discussion better had behind closed doors so to speak so I can move this thread or you could message me directly but what do you think would be an hourly rate that you would want to portray?
Many 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?
Thanks for your response.
What do you mean by your ‘spectrum of clients’?
I guess annualised hours contracts helped you, as a predominately maintenance company, as I would imagine from November through to February you had a lot of ‘non income generating’ hours as I call them? I am not sure if this would help in my case as I have always kept my guys busy all year round. Granted there have been some sticky moments but I have always found income generating work for them each and every week. I have bent over backwards to make this happen and maybe have taken on less profitable work to ensure that they have work or had then splitting logs etc.. at my yard which should yield an alternative income stream once they have seasoned and we sell them. I can see that annualised hours would safeguard me against having 7 guys on the payroll and being hit by three weeks of snow when we couldn’t work, not sure how it would help on a day to day basis though of reducing downtime if this was what you were suggesting? With annualised hours do you split the payroll evenly over the year? I.E. are they effectively banking hours over the summer months to endure they still get a full pay packet in the winter months?
As you mention one of my main problems are jobs running over. I know that it is possible to process the work in the time I allow and quite often I go onsite just to prove to myself and my staff that I am not being unrealistic. Then as soon as I leave them to their own devices it all goes to pot again. However clients always comment on how hard by guys work.
I understand what you are saying about the running costs but I come at it from a different view point. I am trying to expand my business to maximise the running costs I have. For instance I don’t have time anymore to process timesheets, do the book keeping, run the payroll, invoice clients etc.. so I employ an admin girl, full time, to do this – with hindsight I should have taken someone on part time but the deed is done now. Now in my opinion she doesn’t have enough to keep herself 100% busy. However if I had more guys on board then she would have more paperwork to keep her busy. Along the same lines if you have one vehicle it costs you the same to insure, tax and MOT it if you have one guy sitting in it rather than 3 guys. Granted the fuel costs might increase marginally as a result of the extra weight. So I would rather exploit all of the semi-fixed / semi variable costs to their maximum rather than operate a cost cutting exercise. The problem being that you can’t just go for operating two teams one day to four the next day, you have got to generate the extra work and possibly inject more capital into the business which is difficult to do if you are trying to grow the business organically whilst making a loss!
Vehicles are a nightmare as far as I am concerned. I have two pick up trucks, two panel vans and a tipper. In my opinion each hard landscaping team needs a panel van as effectively a mobile tool room and a tipper to get materials to site if / when deliveries don’t turn up. I am currently researching Boss Cabins / Ground Hog cabins as an alternative to panel vans. As that way on a large job they can be towed to site, parked up on the road (with relevant licences if required) or on a client’s driveway. They would not require road tax, insurance, Mot’s, servicing and would last longer than a vehicle and have a cheaper initial cost. In addition then my guys would always commute straight to site reducing downtime.
Thanks for your input.
Regards,
Charlie
www.mibservices.co.uk said:
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