Category Archives: Blog

Hiring “A” players

A couple weeks ago, we terminated our worst guy. We were in such a hiring frenzy for heads this spring that we were taking on anyone that would show up. This resulted in us hiring some less than spectacular players. When things finally slowed down, we noticed our worst guy was generating a charge rate of $17 an hour for us. This didn’t even cover our costs of having him do the work!

So we pulled the plug. Once he left, another “C” player quit. Again, we never should have hired him. He was barely making us money and generating a ton of complaints from customers. We were better off not having him- wish we had just hired a good guy from the start!

Another guy, maybe a “B” player but had some issues, quit on us for a $20 an hour job as an internship as a carpenter. So now we are short handed.

But what we noticed, was that we are now left with all A players! Fantastic! No more customer complaints, and we are making money. Finally. Phew!

Reflecting, what were all common red flags on the guys that sucked that quit or were fired? THEY ALL COMPLAINED! From now on, anyone who complains we are getting rid of right off the bat.

I was talking to my brother the other day about finding people. He recently found a couple good guys. When I asked him where he found them he said indeed.com. He was paying for the ads- I currently run free ads. I thought it was expensive, but he made the point that our people are worth investing in! If we had not hired and trained and lost these 3 guys we hired this spring, we would have a lot more money in our pocket had we hired good people to begin with.

So next year we have to make sure we have the resources on hand for recruiting, making sure we get in the best people.

What happened this year?

I was recently gchatting with my friend who asked me why I have only been compensated $4000 this season so far (end of August of 2015!).

It has been so busy, we really haven’t had time to reflect on what happened. Now that things have finally slowed down, I figured out why:

In summary, all our equipment broke this year, partially due to having a bad mechanic last year and putting off last years problems to be fixed this year. We planned on finding a new mechanic this year to save money on repairs, but could never find the right person. On top of all the repairs (30k to date), we bought trucks.

On top of all that, we grew very fast and hired a bunch of unskilled labor and didn’t have the administrative resources (production manager) to train them properly.

At the same time, we switched up our payroll system from commission to hourly, which since the season did not go as it planned, amounted to each employee getting 20 hours of overtime a week.

We bidded new jobs very competitively to try to grow and things just went unchecked because we were all so busy! My field Manager, Office Manager, and I were all putting in 70 or 80 hour a week so obviously we had no extra time to monitor important things or get organized.

I think it is to be expected that if a company is growing aggressively, there is going to be a smaller (or no!) profit margin.

To recover for this season, my plan is to sell off a bunch of our old assets such as our Bobcat and old dump truck. This will provide us with the cashflow we need to start next season. We are also going to come up with a way to get money earlier from our customers, such as switching to contracts and payments starting before the season starts.

Hourly versus fixed prices services

For the most part, we have always provided services for a fixed price. As that is what the customer usually wants- how much is it going to cost me to get this work done? They don’t usually want to her per hour- if you give them that, then their next question is “how long will it take?”

This is fine in most situations- you want your lawn cut? Well, I can see your lawn and I can tell that if I cut it on a weekly basis, it will take me X amount of time. At the end of the day, the customer is paying for your time. Whether you give them a fixed price, which is just an estimate of the amount of time it will take you, or an hourly rate, at the end of the day you are pricing them based on how much time it takes you or how much time you think it will take you.

This fixed price model only works if there is a clear scope of work and you can accurately figure out how long it will take you and what materials will cost you.

In the past, we have given customers a quote on a price for weeding their garden beds. That would be fine if you were to weed them right that moment and you knew exactly how many weeds there were at the time of doing the weeding. However, in reality, you have no idea how long it will take you to weed the garden beds 3 weeks from now in the spring when the customer wants the work done. Last year, this hurt us quite a bit and we would bid a customer for one hour of weeding and spend 4 hours there with two guys which obviously is not a sustainable business model.

This year, we said, “well, we are going to charge the customers an hourly rate whether they like it or not”. With this mind set, we figured well if they don’t want to pay hourly, we just won’t do the work and that’s fine with us since it probably would have been done for a loss anyhow. If they did agree to the hourly work, we would be ensured that it would be profitable work for us.

What would you know, but everyone agreed to hourly weeding. And there were very few complaints- even when the guys spent an entire day weeding their property! We no longer could lose on the weeding jobs.

From here on out, we are going to bid other jobs that do not have a clear scope of work, such as pruning/gardening at an hourly rate. This way, we can’t lose.

Where to find good labor help

This year, with our growth, we had to hire a lot of people. Unfortunately where we live, there is a not a big labor pool to pull from for physical labor jobs.

So what did we do? We scrapped- hired crappy people, whoever we could get, whom many of were not hard workers and or did poor quality work.

First we tried Craigslist- this brought in some applicants, many of whom had criminal records or were no shows.

We tried putting out flyers at the university by us- no calls.

We tried a Facebook ad- I think we got one or two calls but was not a great resource.

We tried the local university job posting board- we got one good guy from this.

We went to the Department of Labor and conducted interviews- we picked up two guys who initially seemed great, but one ended up claiming a workers comp injury which we are still fighting and the other got fired because he was too slow and dishonest. One guy we picked up is a little “off” but desperately wanted to get back to work and has proven an asset to us.

We tried Indeed.com- this was our most valuable resource. We picked up several applicants from here.

This fall, we recognize that finding people was an issue. The next route we are going to try and have hope for is a temp agency. We have used them before- and pulled in mostly bad employees but used one or two good ones too. We figure this happens with the guys we hire anyway- but this way we know we can call and there is always someone on hand. Since the agency keeps them busy all the time, they have more people and a bigger pool to pick from. We are able to buy them outright if we want to keep them for a few thousand dollars- or we can hire them through the agency as long as we’d like for $15 an hour. $15 is more than we pay our other guys, but if he is immediately productive its better than hiring a shitty guy for $10 an hour plus $2 in payroll taxes and having him lose us money.

So the temp agency is our next approach we are excited for- I will keep you posted how it works out for us.

Working on the business, not in the business

This year has been a very tough year financially. Along with many unexpected large equipment repairs, our labor costs also rose.

Along with our aggressive growth, we also made many changes which were amplified by the growth.  The biggest downfall was changing the guys from commission pay to hourly.

The hours got out of hand, and we experienced a ton of overtime as well which we never had to pay out in the past so was an entirely new consideration.

I have always been pretty good about working on the business and not in it. Unfortunately this year, though, we never found a legitimate mechanic so I ended up taking that position myself.

We also were desperately in need of a production manager but we didn’t think we could “afford” to have one.

Truth be told, we couldn’t afford NOT to have a production manager. We had a bunch of unskilled labor that was not trained properly which ended up giving us inefficient crews who dragged out overtime and created customer complaints which created more admin time etc. If we had had this position I think it would have more than paid itself off with the labor savings, as well as freeing up our sales guy’s time to do more sales.

But the biggest thing- like I said above- is that the fact that I was too involved in the business this year created consequences for the company and me. My effort and time was saturated by day to day operations so I overlooked the big picture. Not until now, mid August, have I had a chance to rewind and realize what happened to the entire season. I worked more than I have in my life but ended up with less in my pocket than I did when I used to work half the hours.

Red Flag Customers

When doing landscaping or any business, you are going to have the easy customers and then the difficult customers. The easy customers are the good ones and are the ones you want to have.

The difficult customers are not worth working or. They will give you a hard time and maybe not even pay their bills. You will wish you did not work for them, which is why it is good to have an idea of red flags to look out for when picking up a perspective client.

One thing is that they do not follow your rules. For example, if you tell them you need your credit card on file to get started, and they tell you no they want to pay by check, this is a red flag. You should have you’re guard and and be cautious working for them.

Dictating the start date and/or demanding a certain timeframe. Again, this is the customer trying to tell you how they want the job done. You should be telling the customer how you want it done and they should be agreeing to your rules or you do not need or want to work for them. When you are getting started you may be tempted since you really want the work, but in the end you will probably wish you did not work for them.

Not willing to make a deposit. The deposits are there to protect the contractor and obviously not in the homeowners interest. However, taking the deposit ensures that the customer is serious, and also makes them front the cost of the materials on the project so if you do get burned, you get burned less. So they should also be willing to give you a deposit.

Micromanaging. When you are hired to a do a project, they should leave you to do your thing. If they start micromanaging and telling you how to do it, what tools, or what materials, then you do not want to work for them.

Benefits of new equipment

Since I started the company, for the most part I have always purchased used equipment. I have searched craigslist autotrader you name it. Each year I have tried to purchase one new truck for around 5 or 10,000 dollars and this worked in the beginning.

The trucks would break down occasionally, but with only one or two crews, it wasn’t the end of the world. I could figure out a way to get it fixed. It wasn’t too stressful and there wasn’t too much down time.

Since we have grown, the repairs have become such a headache it is almost unmanageable. Not just the trucks but everything- Everything seems to be broken. It is more than I can handle alone, and mechanics are generally unreliable. Building the company has enough challenges without equipment- people, scheduling, customers, weather.. I don’t need another variable of what equipment is working and what equipment is at the shop.

Besides all theses factors, it takes considerable time to shuttle equipment around to get fixed and creates downtime for the crews of which we have to pay them, as well as making us appear unreliable to our customers.

Equipment repairs also hurt our cash flow. For example, a new dump truck financed is roughly $700 a month. If we have to replace a rear end in a truck like we did this spring when cash flow is already tight, thats $4000 out of pocket on the spot that we can’t plan on!

For this reason, I am working on a replacement schedule for all equipment. For a long time, I have been replacing weed wackers every 2 years. This is the end of their warranty period and they usually start to have problems after this amount of time. We use them hard and they get beat up.

Commercial mowers- I am starting to lean towards about 3 years. Our 3 year old machines had electrical problems and needed new starters.

Trucks- I would like to keep at about 5 years. I think after this you start to run the risk of needing some repairs.

On top of all these clear benefits of new equipment (cashflow, reliability) there are also other factors such as image (clients see you driving new equipment) and tax write offs. I got slammed for the first time this year with a $1800 tax bill and had I instead just purchased a new truck- that $1800 would have gone straight into the new truck.

One, Two, or Three Man Crews

This is a common conversation in landscaping. Should I operate with one, two, or three man crews?

Well there are several ways to look at it and no 100% right answer. The biggest factor is going to be drive time.

For us, for example, we have some very tight routes. The less drive time you have, the less time you are going to lose to driving.

On our routes that are further away, there is more drive time. So we choose to send a  one man crew. Lets look at it this way.

The area is 30 mins away. And driving between the accounts may add up to 1.5 hour onto the day that he is not mowing a lawn. So for one man, we are paying him for 2.5 hours that he isn’t producing work: half hour there, half hour back and 1.5 hours between lawns.

If we added a second guy onto this crew, they are now both sitting in the truck for all that time. So the wasted, unbillable time is 2.5 x 2 or 5 hours wasted per day!

If you are working at condominiums, or big commercial places, where you are there all day, less time is wasted since you don’t have to spend time in the truck driving between houses. You can even have the other worker meet you at the job site, that way you don’t have to pay them for ANY drive time! So as you can see, the more drive time you have the less it makes sense to add additional crew members.

On the other hand, obviously  a two man crew will get more done in a day than a 1 man crew. So this should also be a consideration. If you do not have the equipment resources to send another crew out separately, you may have to stick them in the same truck. They will still make you more money over all, but less marginally per dollar produced. So with one man you might produce $800 in a day, and with two men you might produce $1200 in a day. You will make more off the $1200 with two men, but you would make a smaller gross profit on the work completed because of you higher labor costs due to wasted man hours sitting in the truck.

Finding Help

This spring, finding help has proven to be a much larger challenge than in the past.

In the past, simply putting up ads on craigslist has worked for us. This year we have had to go a little further.

We have found that the quality of leads on craigslist is pretty poor. Have to filter through all the criminals, unreliable, and poor attitudes.

We also tried putting up a sponsored ad on our facebook page- we got a couple leads from here but they fell through.

Indeed.com has proven to be a great source of applicants; we did the sponsored ads so had to pay a few bucks for it (but we did receive a free $50 credit signing up).

We have also flyered the cars in the lot at the local college here- no go.

I went to our local department of labor which was helpful- we picked up 2 employees from here so will continue to take this route in the future, although I do think we just got lucky. The 3rd guy was a homeless guy that hadn’t had a job in 2.5 years. The other two were just recently unemployed.

We are beginning to offer a $200 incentive for referrals by our employees of an employee that stays with us for 6 months or more.

We are also looking into the H2B visa program for immigrant workers. This has proven to be a pain in the ass, complicated government program. But I will keep moving forward with it and see how it works out.

Lawn Care Advertising

 

Through my small businesses I have tried many different approaches to advertising. I have tried the following methods:

Keep in mind that using more than one method of advertising has building benefits. I have read that a customer has to see 7 of your advertisements before they act on it.
For example, people may not always call after seeing my truck drive past them or parked in front of a client’s house with my phone number on it.  However, after seeing my truck in front of someone’s house, my business card at the bike shop, and people wearing my shirts around town, they will probably be more inclined to call me over “that other guy.”