Create a Landscaping Invoice for Supervision Effortlessly

Landscaping invoice for Supervision

hey everyone my name is mike andes i'm the founder of augusta lawn care we have over 80 locations around north america but today i'm talking about my first location and how i went from working 70 to 80 hours a week making barely 50 000 a year to where now i work on that business one hour a week and literally made last year in distributions over three hundred thousand dollars in distributions in addition to the salary that i took from that first location how long how how did that happen honestly it's something called p for p pay for performance and what i want to talk about today is why it works and that is very simple and that is before a project starts i know exactly what profits i'm going to make on that job so how is that possible what if it rains or if there's bad weather and what if something someone gets stuck gets a piece of equipment stuck regardless of what industry you're in if you're in the home service industry this is absolutely imperative for you to implement and use because look what happens let's just let's just say i'm doing a mulch installed job okay i'm talking about landscaping but this works for any home improvement business any sort of time when labor is involved and let's just say that you know on this molten installation i'm going to have uh i'm also going to a clean up do a property cleanup so let's do a plus a cleanup okay now i'm not going to go through the entire estimate what i'm going to write out but what i am going to show is like what's the costs and how much profit do i make on this job okay well first and foremost let's assume that we need eight yards of bark okay i'm just gonna do bark mulch and also we're gonna do a clean up so we're also going to need let's just say a pickup one pickup of debris so we're gonna pick up fill up one entire pickup of debris with a bunch of branches leaves weeds and from the cleanup of the property then we're also going to charge this customer let's just say uh 10 hours okay so this is pretty standard how you figure out the estimate for a project and you say okay well i'm going to charge 60 per hour so therefore i'm going to charge 600 for labor i'm going to charge one pickup of debris let's just say uh let's just charge 50 okay and let's charge eight yards of bark and we're gonna charge forty dollars per yard bark 40 times eight is 320. so literally this is how you could create an estimate say okay well we got 370 so like to me 970 is going to be the total quote price that i'm going to give the customer for this job to be installed now the problem with this is that what if this crew gets the job and it takes them 20 hours to do the job well let's break down the numbers okay so let's assume first of all that they get it done in 10 hours and we and let's just say it costs us let's just say 25 per hour for these employees including taxes and all the rest of our actual cost so let's write our cost down here so the cost on 10 hours is going to be 250 dollars okay ten hours times twenty five dollars per hour i pick up debris let's just say it cost us twenty five dollars to actually dump the debris at the dump and the next thing is eight yards of bark let's just say we're charging them 40 but it actually costs us uh thirty dollars per yard of bark so technically we're actually only getting we're only you know cost of this is gonna be eight times thirty which is two hundred and forty dollars all right so we've totaled that up our total cost is gonna be 515 so what we can do is take our price that we are charging the customer 970 subtract out 515 and we're going to get a total of 455 so that is going to be our profit 455 now this would be great if that's always what our profit was we just know right off the bat 450 what's the big problem here is we're not confident that the 250 is actually what we're going to spend in labor because what if what if this job all of a sudden the crew is taking a bunch of breaks they little you know lollygag they go to the the supply yard and just sit around for an hour and it actually takes them 20 hours okay so now instead of 10 hours it's going to take them 20. well what happens now now the cost of our labor went from 250 now went all the way up to 500 and 500 okay so went from 250 or 10 hours at 25 per hour now it's at 20 hours that's 500 now all of a sudden i'm i'm taking out another cost of 250 bucks and i'm only making 205 on this job two hundred and five dollars and you're like well that's not too bad you're still running like a you know 20 profit margin well not really because this is gross profit i'm not taking account all the overhead insurance fuel i am losing money on this job i can guarantee you that okay and so this is the biggest problem with home service businesses is we don't know what our labor cost is going to be it's always a hope we cross our fingers and hope that they get it done on time we cross our fingers and hope they show up and have a good day we cross our fingers and hope they don't stop at 10 gas stations take 46 smoke breaks and take a siesta for two hours in the middle of the day and this happens so there's two things you can do one you give them more time but that inflates the cost of the customer and you might not be able to sell the jobs that price so what do you have to do you're going to take you're going to eat this you're going to literally take a job where you're charging the customer 970 dollars you went and did an estimate in the whole nine yards at the end of the day you're making 205 dollars in gross profit which means after overhead and all the rest of it you will lose money this is why you're losing money in your landscaping business this is why you're losing money in your fencing business your construction business your janitorial business because you have a certain amount of hours that you're budgeting for every job and it's not consistent sometimes it takes them shorter sometimes it takes them longer and your your profit margins are all over the place we went from literally 450 in profit to 200 like half of our profit just got eliminated because the crew took their time lollygagged took a bunch of breaks and i don't blame them because in the hourly model the longer the job takes the more money they make so why not make a system where the shorter the job takes the more money they make because the shorter the job takes the more money the business makes so align your ambitions with the ambitions of the employee what that what that does that mean that means i'm gonna give them a percentage of this number no matter what they're going to get a percentage of that 600 so what does that mean that means regardless of how long it takes them to do this job they're going to be getting exactly the same amount of money so for example we budgeted ten hours on this job and we charge the customer six to six hundred dollars but what we know if we have p for p if we give them a percentage of the labor revenue and we say right off the top okay you know what we're just gonna go ahead and give one third of the the revenue to the employee no matter what what does that mean two hundred dollars okay that's one-third divided by three right there we're going to give one-third of the labor revenue to the employee what that means is regardless of how long this job takes they're getting two hundred dollars you say well that's horrible you're trying to make them work harder whatever no now what's gonna happen is they're gonna show up at this job and figure an efficient way to do things and guess what this employee's gonna get done in six hours thinking the entire done job done in six hours because they're efficient they're staying on task they're not taking a bunch of breaks they're not on their cell phone sending snapchat they get it done in six hours guess what they get two hundred dollars they literally just made over thirty dollars an hour because they were efficient they stayed on task they got to their job site they didn't allow the gig around the shop and drink coffee for 30 minutes before getting out of the shop so they're rewarded for being more efficient they're rewarded for cutting out waste and the business makes more money and furthermore what's really cool is i know exactly what my profits are going to be on this job regardless of how long this job is going to take regardless of whether or not the employee has a good day or a bad day regardless if it's raining or if there's equipment failure or whatever it is i know at the end of the day my costs on this job are going to be not push not you know approximately but exactly 465 which means i know without a shadow of doubt that i am going to make exactly 505 in profit on this job now if the crew gets it done in four or five hours great if it takes them 12 or 13 hours doesn't matter they're making the same amount now of course i'm going to make sure they have a base pay i don't want if it takes them 20 hours i'm going to have to probably pay a little bit more because we have a base pay a floor per hour that they can't make less than but if they want to make a lot of money if they would be super efficient i want to align that goal with them making more money therefore the business makes more money and we both have the same goal and objective not the employee trying to make the job go longer so they can get an overtime and and get time and a half and burn cash with the business but now everyone's incentivized to get this job done as soon as possible because at the end of the day this amount is fixed instead of having a variable percentage that goes to a job of labor you know well sometimes 20 of our of our costs go to labor sometimes 50 of it goes to labor well why not just fix that number i'm going to give a set percentage of my labor revenue to my employee regardless of how long the job takes and therefore it's up to them to figure out how to do that job more efficiently and more profitably all of this is explained in complete detail for completely free if you go to p4psoftware.com training it's great this is a book i wrote it's literally the e-book is 99 cents i think it's like 18 or 19 if you buy the hardcover it's available on audible it explains all of this in very fine detail all the details behind p4p which stands for pay for performance and if you go to p4p p4psoftware.com training all the videos will explain exactly how to do it completely free and furthermore you can actually book a call with an accountant that works at p4p to go over your numbers and figure out how you can implement it for your business it's completely free so i highly recommend go check it out go to go to the website brad is the name of the cpa that works with me and we onboard and try to help business owners convert their business from hourly over to p4p so what they can do is fix the amount of labor revenue that is given to the employees for wages and they can have a very consistent and predictable profit margin on every single job and know their profits before the job even starts regardless of weather regardless of feelings or emotions and they don't have to micromanage the employee because the employee is the one that's managing the clock and trying to get that job done as efficiently as possible so they can maximize how much they're actually making i'm mike andy's i hope that was helpful check out p4psoftware.com training for more information