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Know your business…Track Everything

The following is a great article from our friend Tim Robinson, Operations Manager for R & R Lawn Care.

Ok it time to start the year end horror. Preparing for next year, supplies and materials. This can be good if done properly.

Do you track materials you purchase throughout the season such as mulch or fertilizer?

If not, you should, and here’s why.

In order for you to grow your business you must set realistic goals and here is how you can achieve those goals. If you are not tracking how much product you purchase how are you to know how much or how little to buy for the next season? If you do know your one step ahead and then you should set a goal and prepare for it. This means what you bought in product last season you should increase 20-30% each year until you reach your customer base goal.

Knowing how much materials used on a job/customer will help you for the next season, making you more efficient and raising profit margins. In turn growing your business.

Setting goals gives you the incentive to attract more customers. Be realistic when setting these goals, some call it baby steps I call it setting a customer percentage increase (CPI). With out tracking how are you to know if you are growing or not. Most that do not track will never make it in business. 80% will fail in the first 3 years of business.

I track everything, fuel, cell phones, mulch, ferts, weed control, right down to the pants we purchased. I can tell you how many ‘Moon Shadows” we bought last year and these are our trade mark plant. Total 46 I can tell you how much we spent on pavers and wall block on each job. This comes from job costing or known as job material tracking.

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Why is this so important, well lets say First it is profitable when taking your books to the accountant, because if he/she has a shoe box full of receipts and has to go through them to sort it all out just to do your taxes, you just lost money because their going to charge you for the extra time it took them to figure out what is what.

Second, again how are you going to be profitable in not knowing how much material you used and cost of it, and how are you going to set your CPI to that service.

Even more important you fine extra money in the bank and you think wow we are doing great, think I can afford that new Z turn or that new mini skid-steer I was wanting, so off to the bank you go and the first thing the loan officer ask is I need 2 years of tax returns and a P & L. Oops you didn’t track or do proper basic bookkeeping and now your P & L looks like, well I don’t have to say it. So now you go back looking at them saying well this is what I came up with on the P & L, here’s the total amount of jobs we did and here’s where we paid all our bills and here’s what we got in the account so I guess this is my profit. This might work but I personally don’t care for a might, I am more of a yes/no, right/wrong type of person, no grey…don’t have room for it.

When you are presenting yourself at the bank as a business owner you should at the very least appear to be professional and have proper basic accounting practices. This means just because they have known you at the bank for some time doesn’t mean they know what kind of business person you are when it come to handling business finances. Saying it and doing it is two different things. You’ll find most bankers are like Missouri, the “Show Me” state.

Bottom line is proper accounting practices and keeping up to date with them will make you more efficient and profitable for time spent. If you are spending 3-4-5 hours a day just doing paper work and trying to catch up on the accounting then you need to work on time management. Proper time management can be beneficial to everyone especially the family. Set a time schedule and stick to it. I set one of 8am-6pm M-F and Every other Sat 8am noon after that I don’t work on business stuff.
Time Management will be another post.

If you lack the accounting skills to be proficient, then check with your local library for free computer classes in accounting.

Good Luck,

Tim Robinson
Operations Manager R & R Lawn Care

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4 Right Steps = For Steps in the Right Direction

When you walk on to a potential clients property to put together a quote there are many things to pay attention to. The following is some of the areas I have learned to pay attention to.

1. Know how much to charge per square foot. You need to make sure that you are in fact making money. Walking onto a property and guessing the size and giving quotes without measuring is not a good idea. Take the time to measure the square footage of the maintenance area; lawn areas, bed areas. You will then know how much fertilizer to apply, exact pricing for overseeding, etc. Plus, it really adds a professional touch.

2. When quoting lawns, remember to take note of the trimming. You can have 2 identical lawns areas, but if one has 4 edged garden beds in it, they are going to take longer to maintain. Even if it only takes an average of an extra 5 minutes to do, over 28 cuts it can add up to 2.3 hours of work you are not getting paid for. Again if you do that on multiple properties it WILL add up.

3. Pay attention to lawn area access. Make sure your equipment can fit through gates, between houses and in tight spots. You don’t want to quote a property based on using larger equipment to find out you need to push mow.

4. Know your business costs. All too many times business owners just come up with prices out of the air. You need to know your general overhead, specific overhead, cost of good sold and competition pricing to find out what you are going to charge. Make sure to do monthly ‘Profit and Loss’ reports to stay on top of budgets. Finding out at the end of the year that something wasn’t right is the wrong time to find that out.

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Put Together a Job Jacket

The Job Jacket
The job jacket or folder is a file folder. It is created once the job is sold. The folder and its contents stay at the office and never leave it. All originals are photocopied from this folder and copies are used in the field. If any documentation is lost in the field, it can be replaced by copying the original in the job jacket. The cover of the job jacket lists the project name, address, phone/ fax numbers, contact persons, list of payments made with dates and information specific to the job. The file contents include the items listed below.

1. Job proposal, and drawing-A copy of the signed proposal or quotation with a drawing of the job. The proposal is not given to the job foreman. However, the drawing is given to him to guide layout and construction.

The drawing is easiest to read and estimate quantities from it if drawn on graph paper to a convenient scale. The owner/customer should sign the drawing as part of approving the proposal. The proposal and drawings can be used to clarify the scope of the job if questions arise. It can be useful in keeping the crew or owner from making any unauthorized changes. Changes orders are kept in the folder as well.

2. Maps-A map photocopied from a city map shows the exact location of the job site and environs. Maps should also show where dump sites are located, as well as places for purchasing pavers, base, bedding sand, and other materials required for the job. Copies of these maps should be issued to the foreman and given to drivers going to the job. Besides company employees, drivers can include those hauling away materials, and those delivering base, sand, pavers, and other materials. Some companies are using GPS to find sites plus track vehicle mileage and travel times.

3. Job Sheet- This gives essential information for the foreman to organize the job. It includes information on the materials, laying pattern, and edge restraints, plus any special requirements of the job. The exact format will vary with the preferences of the contractor. These forms can be modified by the contractor to suit particular needs. The foreman generally completes the job sheet as a way to plan the job.

4. Daily Time Sheets-These are for recording all labor and materials for each day of work on a given job. Each worker is responsible for completing a job sheet at the end of each day. The foreman completes his and collects the completed sheets from the crew. Each labor operation has a code or number so that each can be tracked. Materials have code numbers as well. These codes are essential to tracking job costs.

5. Job Cost Sheets for Materials and Labor -These are provided by the estimator. This information is used by the foreman to complete the Job Sheet. The Job Cost Sheets tell the foreman what materials and labor to document during the job. The estimated list of materials, labor functions and hours are provided by the estimator on the sheet. The actual amounts consumed are written by the foreman. The functions of labor, number of hours, and materials consumed are transferred from the daily time sheets by the foreman. If there are additional labor functions, hours, and materials consumed, these are entered by the foreman on the Job Cost Sheets.
The Job Costs Sheets for Materials and Labor indicate what is expected from the foreman to complete the job. They are not intended to evaluate the performance of the foreman. The completed sheets are a tool that tell the estimator how well the job was estimated.

Copies of the items 1-5 listed above should be kept in a clear plastic holder, carried in the foreman’s or job superintendent’s vehicle. The information should be on the job site at all times until the job is finished. All sheets, i.e., the daily time sheets and job cost sheets are returned to the job jacket at the office by the foreman at the end of each day.
Other items that belong in the office job folder include job cost estimate sheets for labor and materials, the estimate pricing summary sheet, actual vs. estimated job costing sheet, material order forms (company purchase orders), and copies of checks issued as payment for the job.

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