How do you control cost

[Jeff 232]

I have all my figures for 2005 tallied up and I go do my Corp taxes with accountant tomorrow. 2005 has been a great year I did over double of what I did last year and percentage wise I saved money this year on expenditures(

Last year I spent alot of money on chems & parts and I said last year I wanted to save or figure ways I can save on my biz cost.

I was wondering how you all watch what you spend and how you save

Some of the things I did this year were

Try to control chemical use and spending

1)I use to waste some chems and I tried to control that alot better this year and did. Told my employees to be careful for spillage, bought containers with spigots less spills. Used to have some buckets with who know what in it, so we labeled alot of buckets and drums. I stayed on them about waste

2) Changed some chems - I used to use a high dollar surfactant Barlox for roof cleaning. I found just a little dawn in roof mix does the same job.

3) Found a local distributor for some of my chems to save on shipping. Oxalic I now spend $42 for 55lb bags compared to $80 a bag plus big shipping cost. My citrus cleaner I use on many house & building washes I found the the same chem for many $$$ less and no shipping

4) Buying in bulk almost always save a ton

5) parts - buying in quantity and shopped the net, getting alot of stuff from WaterCannon usually the best prices.

6) Buying better quality stuff, Guns I went to sutner, they definitly last longer than the cheaper ones I was buying

7) Trying to maintain equipment better. Common sense stuff like changing oil more often, I used to just top off oil for months. Greasing things more often. Iused to let thing go quite often until they broke or just werent 100%

8) Estimating - been tring to group them into 1, 2 or 3 days, less traveling, less gas

9) Advertising- I used to do quite abit of residential advertising, now I do much more targeting of commercia work PM's HOA's Etc and I just about dropped most of my residential advertising, except Yellow Pages which is geared to both Res & Comm.. I still am in 2 residential newsletters, but they are very cheap and still bring in many jobs

10) Have had problem in past months with lost or broken equipment . More equipment was lost in the past 6 months then in almost the past 5 years. I got on my employees about it. I hammer it in their heads now. Plus I got them to sign a paper stating if you lose you pay. Its worked, nothing missing in over a month

I'm really trying to save $$$ by watching what I do and my employees do. I have a long way to go and alot to learn, but we are getting better.

How do you all control cost

JL

[John T 744]

What I did was for one I bought a few thousand Dollars worth of Sealer at a trade show in the beginning of the year and right there I saved at least 30% because of the bulk buy. I also bought a ton more Chlorine and did away completly with any Citrus cleaner housewash and Jomax. I did have to buy a special house wash when I did this condo complex because Chlorine/bleach was not allowed to be used and they had to approve the cleaning chemical thru the MSDS sheets.(What a pain that was).

I also didn't advertise at all this year in the local papers cause I had so much repeat work and of course I still had my display add in the yellow pagers so that was a few thousand saved right there.

Of course now the down side...I spent about $5000 in advertising for the GutterFilter and thats showing to be a bust and I don't expect to recoup that much back.

And now the killer..I had to go off and spend $40,000 on a whole new set-up and by the time I sold off a few items to offset that cost I still owed $20,000 and poof there goes the money saved..

[John Doherty 126]

I think one thing that is critical is maintaing your books. I kept mine updated once a month, so I had an easy snapshot of costs, etc.

If you do this it's easy to come up with a 'unit cost' per job, the unit cost includes everything, insurance, equipment, labor, etc. If you always know what things cost, you can react quickly to changes.

John

[bforbis 14]

Jeff,

Great post and ideas. I tried to look at phone usage vs cost and adjusted minutes that I was paying for. That helped as well. I am looking for other areas to target to reduce costs for this year.

I really think mine were high last year when I look at the bottom line.

I am not sure what would be considered good, but i am looking at % of each expense catagory (overall) compared to Gross . Then look at each job to see where I went wrong/right!

Does anyone else have a particular method for analysis?

What do you think the percentage of each catagory was compared to your Gross income?

1) Fuel cost

2) Repairs

3) small tools

4) New equipment Purchased

5)Advertising

6)Chemicals

7)insurance( WC, GL,)

8)Payroll

9) Misc.

10) Job Mat'ls (stains, sealers etc)

[PressurePros 248]

The thing that can kill me is sticking to a budget. When I lay out my expenditures I always think I have enough allotted for each quarter. Then along comes someone offering to save some money on 100 gallons of sealer and I jump on it. Boom blown budget. I have gotten better with that.

You have to look at expense versus return. If you save 5% on something by buying in bulk and it takes you all season to use it up you really didn't make a wise investment. You could have left your money in the bank and probably earned a better rate.

[Ron Musgraves 240]

You have to look at expense versus return. If you save 5% on something by buying in bulk and it takes you all season to use it up you really didn't make a wise investment. You could have left your money in the bank and probably earned a better rate

I can agree with that, On that note I would also like to warn when buying chemicals in Bulk be careful of the shelf life. Strippers can loose strength. This can cost you more labor. I know distributors dont want to hear this thats why I become and unpopular guy.

Very good subject.............

[Beth n Rod 1,279]

How do we control costs?

Evaluation, training, time sheets, mileage register, regularly maintain equipment, buy in bulk as possible, plan, structure, establish check lists, protocols, regulations, delegate responsibility, ensure accountability and even keep inventory.

These all have a part to play in helping us to control costs and they all come under frequent evaluation and modification for the changes that come out of the field. It is all part of keeping the reins held loosely but not letting go. Power washing and wood restoration in particular are very hard to get a line on cost structures in relation to demand. No two jobs are alike and that makes it erratic for lack of a better word.

Scheduling and estimates are the hardest to do when trying to control costs.

Rod!~

[Littlefield 65]

Easiest place for me to lose money? Labor. Keeping a grip on extra hours spent having someone with me just driving while getting supplies, balanced with not driving out of my way to drop someone off and get them working. Between labor and materials as far as COGS, labor gets me much more than materials. On to overhead...I try to keep office overhead down to 12% or so, checking monthly. Equipment repair and purchases, small ones, less than 5% of gross.

[Littlefield 65]

I just realized that much of my control comes in with what I don't do. I don't have a shop, though I'd love one. Haven't upgraded my truck, althugh I'd love to, and only buy new stuff now, when I need, not want it. No more justification for why I can have a new toy, its will this pay for itself today....

[JFife 14]

hey Rich,

what do you consider as "office" expenses for the 12%?? Is that phones, adv., or what all does that entail?

[Littlefield 65]

phones, truck, gas for truck only, paper, ink, liability ins, ummmm, no advertising, thats a line item by itself, ummm, I think thats it for now..

[Jeff 232]

Easiest place for me to lose money? Labor. Keeping a grip on extra hours spent having someone with me just driving while getting supplies, balanced with not driving out of my way to drop someone off and get them working. Between labor and materials as far as COGS, labor gets me much more than materials. On to overhead...I try to keep office overhead down to 12% or so, checking monthly. Equipment repair and purchases, small ones, less than 5% of gross.

LABOR thats a BIG ONE. I now have one guy come in 15 - 30 minutes before the others, he fuels up, loads stuff as needed etc. And when I can I'll have the guys meet me at the job sight if its easier or in between my house & theirs, That can save me some money.

What I also do is buy them lunch so they dont have to leave the job sight, becuase sometimes it 15-20 minutes just to get to a fast food place. The most I spend on one guy is $2-$5 but I know this way it will be only 30 minute lunch. Plus unlike food, restuarants for biz meetings that you only can write of 50% of the cost, when your buying meals for workers to keep them on the job sight its 100% tax deductible. I didnt know that until I asked my accountant months ago

I still find myself taking a worker to do stuff like a quick estimate or stopping buy Lowes or something theirs been times Ive paid worker extra 1 or 2 just becuase it was easier than dropping them off at the end of the day

Labor is a tough one for sure

[bforbis 14]

There is a significant value in retaining a trained person and avoiding having to retrain someone. LABOR or managing labor is a big variable that has to be watched. I understand that if it takes longer to drop someone back at the job vs. taking them with you on an errand.

Someone that knows what has to be done next or will take the iniative to realize and act on what needs to be done can really make a difference.

Jeff, that is a good watch out for biz lunches, did not realize that, assumed deductable either way...Thanks for pointing that out!

I spend a lot of time traveling form one to the next, so I really try to plan and group jobs in locations. I may wait a day or two to get three together and spend all day and half the night working in one location vs. several trips.

(depending on what needs dictate)

[Jeff 232]

Well the numbers are in and some of my cost cutting has paid off My profit through my paycheck and what I can draw off corp profit Im just under 40% of overall total. Wow Im surprised. My accountant was pleased for me also .

I told him all the trouble I have with paper & computor work and after tax season Im going in with him & his wife and we are going to get most all finacial straight from personal to biz. I told him I needed help and he offered

Maybe next year will be even better

2006 BRING IT ON, I'm ready

JL

[steve r 14]

Well the numbers are in and some of my cost cutting has paid off My profit through my paycheck and what I can draw off corp profit Im just under 40% of overall total. Wow Im surprised. My accountant was pleased for me also .

I told him all the trouble I have with paper & computor work and after tax season Im going in with him & his wife and we are going to get most all finacial straight from personal to biz. I told him I needed help and he offered

Maybe next year will be even better

All I know is PM's have been calling me endlessly this past 1 1/2 weeks there are so many projects Im looking at and will get a great percentage of them I may have to sub or at least greatly expand

2006 BRING IT ON, I'm ready

Everybody it looks like all the PM's are getting ready for the upcoming season get out there and sell guys & girls

JL

One thing that might help is have a business acct an a personel account .pay yourself first

[John T 744]

I'm doing my taxes Tomorrow with my accountant..Since I pay so much taxes here its nice to try to get a few of those bucks back.....Me and the IRS have this relationship where I pay them a ton and then they pay me a few peanuts at tax time:)