[georgiehopper]

My company has been in business almost 5 years. During this time we have grown as much as is possible with just my husband and I running the company. We do not have any other full time help though we did have a guy we had wanted to keep on but he didn't work out.

We are at a point where we need another good person to help with the business but we have been unable to find anyone to manage or even be a good foreman.

I thought we were paying these guys good money...one was paid $21 an hour another $17 an hour plus we paid health insurance 100%. Neither guy turned out to be a leader and my husband had to constantly supervise them.

Then what seems to happen every year as business starts to slow in the late fall, we start to running into cash flow problems and we have to lay people off. We do not push snow or cut grass...we are strictly design build.

We have been unable at this point to get out of this cash flow crunch rut... The work is there, we just can't get it done quickly enough to keep up with the costs sometimes.

We had purchased a Dingo to take the place of 2 employees and it has worked out well, but we still need another good guy. How the heck does everyone do it? How do you keep the money flowing all year?

[Matt Kulp]

I recomend you take advantage of the Compass discount available on the forum. It sounds like getting the work may not be the problem, operations may be in need of some help. I am from the Northeast also, and it is a common problem in the winter months. It does not matter if you pay a guy $8 or $30 an hour. The employee is not going to work to his/her full ability, unless you have some checks and balances in place in your company. I know it is hard when you are doing most all of the work yourself.

I would recomend to give Rob from Compass a call, and have him explain Compass to you. It may give you a different perspective on your situation. Just my $.02

[John T]

A few quick thoughts. Where have you been gettign your labor so far? Have you considered going H2B for your labor? You could even cut your labor costs with this program if you so desired. At the rates you are paying you should be able to attract quality help. It's just a matter of finding it.

Do you know your costs? Not trying to imply anything here but if you are pricing incorrectly you would be sure to run into a cash crunch. Also, are your spending habits in line with your income?

Are you charging enough? I've read many times on these boards that guys do not pay any attention to what other guys are charging. They know their costs and they charge accordingly. This is great if your prices are at or above market levels. You will not lose money (on a particular job that is). But what if you are charging below market level and not making enough to make a living? What if your overhead is low when compared to other companies and, after adding your profit percentage, your price still comes in way below everyone else? Why leave that money on the table? Knowing market pricing is very important IMHO.

Do you have any sort of bonus system set up and structured in such a way that it encourages the employee to stay on? Are you going to take advantage of the Compass training special that is being offered through this board? It's right in your area and you learn a ton of very helpful and valuable info!

Have you done anything to try to get additional work over the winter? Would you consider snow? Snow is not for everyone and it definitely takes it's toll but if times are tight you gotta do what you gotta do.

[georgiehopper]

Well, we have not used H2B... I don't think we can afford it at this point.

Regarding knowing what others are charging: That is one thing that we do not keep up with. I only know what other companies charge from having worked for them quite awhile back. But I think we are middle of the road from what our customers tell us...though I have had a few say we are too high. I think this may be where our problem lies but I don't know.

We have enough work coming in..even now at this time of year we have steady work with additonal inquiries each day...but we develop cash flow problems if weather stops us for more than a few days...that's why we can't pay to keep a guy on through the winter..the weather will just throw us into a cash flow crunch.

We have a good bit of debt with trucks,equipment, personal property tax, insurance,etc.

We probably need a consultant..but of course, at this time of year, can't afford one.

[rbriggs]

It sounds as though your business is in need of some re-structuring in the operations area. I would also recommend you give Compass Systems a call.
I can tell you that our first winter was a shock for us, do to the slow down. Did you draw out a budgt for the year and incorporate seasonality into your budget? This is absolutely Another idea, that we implemented after our first winter, was to create a second checking account. When the spring /summer busy months arrive, deposit as much $$ as you can afford to in that account every week. Use it as a buffer for the winter months.
We're fortunate that we haven't had to dip into it this year, but just having it allows me to sleep soundly every night.
Just my 2 cents.

[georgiehopper]

One of the things that we did was take $12,000 out of our savings and make a down payment on a house this past November.

I guess if we would not have done that, then things would have been easier. But then, we wouldn't have the house either. The house is going to help business(hopefully) because its got 10 acres and we can store all of our trucks and equipment here and stop paying to rent storage space in northern VA.

We knew things would get tight this winter and we know they always pick up too. Then we go like gangbusters for a few months. I hate the going from rich to poor each year.

Additionally, moving ourselves and the business has proven to be quite an expense in itself. The costs for additional licensing in Maryland are not cheap and even registering the vehicles is not cheap either...we have to pay excise tax on 3 of them.

The Compass classes look promising, but not doable at this time...maybe in a few months.

[cutntrim]

It may be easier to hire attitude rather than experience, and then train the person and allow them to grow into a foreman position gradually. Certainly you are paying a decent hourly wage (compared with my area anyway), so that shouldn't be the problem. Maybe you could look into apprentice hires from a local post-secondary school?

With cash-flow you can either increase income, decrease expenses or both. Snowplowing (although it has some downsides) can provide winter income and take advantage of equipment and manpower you already have. Every business can increase efficiency so I'd look there first. What would happen if you raised prices by even 5%? Would you lose out on all new bids? Probably not, but that added income could be set aside for the offseason or used to pay down debt. A line of credit can help with cash flow for the tail-end of winter when money is tight. Just don't use it like I did in the past (to finance equipment) or you'll just create another monthly payment that has to be paid. $xxxx.xx consultants are expensive, but most publish books that are often only $75 and could help you get some ideas to help the bottom line.

[Bill Schwab]

Whenever I see something that appears expensive, or a significant investment, at one point in my life I told myself I could not afford it yet, and look at literature every year, and that would be that. Rather than ask myself that question, I now ask myself "How can I NOT afford the item?"

As a result our equipment payments have increased, thus overheads, but we laid off 3 employees. I'm not happy anytime we have to do that, but when I look at the equipment payment check going out every month rather than what the government forces business owners to collect and send to them (you have to love government, they feel the average person is too stupid to collect and send their payroll taxes) I do the happy dance. It is like giving our company tens of thousands of dollars in raises every year and we are the same if not a bit more productiver.

What I'm saying is, there are times where you have to stick your neck out more to get another foot ahead of the game.

[Dale Wiley]

How do you keep the money flowing all year?

You move to San Diego, Flordia or AZ.

You don't in Northern climates.

You set your business up to make all money during the season you have and the avaliable hours you have.

Your budget will still incur overhead expenses, but if you recove the correct amount of money during your season, make regular and correct deposits in an operating cash reserve account to cover the overhead expenses in the off season.

Our billable season runs Feb 15 to Nov 31. We need to make ALL our money in that time frame.

Employees in this business know there maybe some winter layoffs. You CANNOT pay employees for non billable time unless you SPECIFICALLY structure the business that way.

PM me your e mail address and I will send you a couple of things that may help you out.

[rbriggs]

These guys make some really good points. IMHO, it's all about budgeting and staying within that budget. If your workload doesn't support your budget, it's time to re-think the budget, or decided where you can make improvements (ie. efficiency, increasing rates, bringing in more jobs, etc.)

[Rick Carver]

Georgiehopper

These guys here are without a doubt the best in our industry,,, I know,,, I've been all over our country and have been helping hundreds of contractors and their operations. I only wish I had more time to be on line here, and keep learning!!!!

I agree with what everyone has already offered to you for info.
I would like to point out that you mentioned above """ We have enough work coming in..even now at this time of year """ could you explain to me, how did you measure or calculate, what is enough work? This may be a big issue and one that I know can be helped with these folks on this site.
Also,,, your original thread starts with """ we have grown our company as much as possible""" I am wondering if you could explain to me how, did you calculate what amount of growth is possible? I have in the past grown my companies without a clear understanding of my numbers. Then I found out that my one step forward was usually cause for my two steps backwards financially.

IMHO,,, you do not need to look for any other top employees right now. You first have to find the reason for the ends not meeting. You can email me anytime and if I can help you I will try.

[georgiehopper]

When I say we've grown the company as much as we can I mean that we are basically at an impass.. for us to get to the next level we need more bodies to help do the work. But the cash flow isnt steady enough all the time to support the help. I don't know if that makes sense or not.

Sometimes I think we're paying the employees too much and sometimes I think perhaps our projects are too small or too detailed and slow things down. During the spring when things are going like gangbusters, we don't have a cash flow problem... new jobs are coming in with deposits as current jobs are finishing up. But all it takes is one lousy week of bad weather and we start feeling the pinch.

I see other companies with 20+ employees and loads of equipment and can't figure out how they afford it... but they also provide maintenance services which we don't.

When I say there is enough work coming in this time of year, I mean that we do not shut down for the winter but have steady installation work. The problem is the weather sometimes stops us for several days at a time, and we start feeling that cash crunch pretty quickly.

In reality, maybe we really DONT have enough work right now to cover our costs, but we don't have the manpower to take on more work either. In the spring, the demand is there, but finding the right employees is a problem.

[Rob Shauger]

It sounds as though you are living/running things off your deposits. A week should not have you feeling a cash crunch or that you are in a pinch.

Do you have a business plan?

Have you laid out your budget for the year?

DO you know how many hours you need to sell for 2006?

What is your available production capacity?

How many weeks a year can you produce income?

How many employees to you plan on starting out with in the spring?

Give us some more info and we will see where we can help you!

[georgiehopper]

* Yes we have a business plan.

* Laid out a budget: No

* How many hours do we need to sell? We have never gone by hours so can't answer that.

* What is our available production capacity? Not sure I know that answer to that one either. Do you mean labor or equipment?

* Weeks a year to produce income: probably around 40

* Employees to start in the spring. 2 plus ourselves.

[Rob Shauger]

Yes we have a business plan.

* Laid out a budget: No

This is going to be crucial!

* How many hours do we need to sell? We have never gone by hours so can't answer that.

OK so lets say you have all 4 of you in the field working a 40 hour work week for 40 weeks in the season (just as an example) you would have 6400 hours of work to sell right??

* What is our available production capacity? Not sure I know that answer to that one either. Do you mean labor or equipment?

See above

* Weeks a year to produce income: probably around 40

* Employees to start in the spring. 2 plus ourselves.