Post a new topic
    6 Replies Latest reply on Mar 21, 2017 6:16 PM by thevideoguy

    What's wrong with my P&L?

    scott7246 Newbie

      Hey Everyone,

       

      I've been running a family landscaping business for over 20 years with my 2 brothers. We are all equal partners and profits are distributed equally. We have always looked at the financials of our company as a whole and just assumed we were all pulling our own weight.

       

      Well this past winter one of us decided to class all income/direct expenses by crew and to calculate gross profit per crew. All overhead expenses were split across the crews by % of total income earned per crew.

       

      This revealed that one brother was generating almost 70% of the income while the other 2 brothers generate only 30%.

       

      Naturally the brother earning the majority of the income feels taken advantage of and unfairly compensated.

       

      I have link to our p&l here.  (Link Removed)

       

      Thought? Ideas? ------ We need to come to a reasonable resolution.

       

      Thanks

        • Re: What's wrong with my P&L?
          lwjim Adventurer

          Hi Scott,

           

          We removed the links to your P&L report as it violated our community standards in regards to personal/confidential information.

           

          Best,

           

          Jim Finch

          • Re: What's wrong with my P&L?
            mggpatt Adventurer

            You are in a tough situation Scott.

             

            On one hand if you just look at the realities and take family out of the equation, the one doing the most work would seem to earn the most return.

             

            Does each brother go out and get their own sales or are you saying that a crew run by one brother is more profitable by trimming expenses or being more productive, more work done in a given time? You can set up production standards and keep track. How are estimates done? Those kinds of number you can use must be part of an estimate. How many plants per hour or sq feet of lawn cut/hour? Travel time. What is one brother doing that the other two are not? Can either brother do the work of any job? How is the work assigned? Does the profitable brother set his own pricing? Maybe the other two just aren't charging enough?

             

            Do the other brothers contribute anything that isn't identified in the P&L like community activity which contributes to sales but not as quantifiable as number might be. Then it becomes a grayer, harder to define formula. Partnerships are always tough. Different partners just can't work at the same level. Some are better than others and the vice versa. What would you think of the idea of the main brother being 100% owner and employing the other two brothers under maybe a long term contract? Maybe now that this disparity is revealed, the other brothers could improve their productivity by copying the practices of the productive one? Give it a year but do the reports every month to see the progress.

             

            Another idea is to split the business up in ways that the work is done best by the person that is best at it. One partner does estimating and support overhead, one sales and one production?

             

            Seeing the actual P&L would help. Too bad this forum structure doesn't allow that. I am not sure how you could still get it to me within the confines of this forum.

             

            Good luck. This is a tough one.

            1 of 1 people found this helpful
              • Re: What's wrong with my P&L?
                SBC Team Guide

                What's wrong with my P&L?Hi scott7246,

                 

                Just wondering about the latest on your situation.  Greg gave you a lot of great feedback. 

                 

                Any chance you could update us?

                 

                Thanks,

                 

                SBC Team

                • Re: What's wrong with my P&L?
                  scott7246 Newbie

                  thanks for the feedback Greg.

                   

                  let me clarify some more.

                   

                  our company is divided into 2 departments -- landscape maintenance and landscape construction. I am running maintenance and my 2 brothers run construction department together. All sales,estimating, field management, scheduling, invoicing, collections, etc. are done within each department. Almost like a business within a business.

                   

                  From a production standpoint all of the crews including construction are performing better than industry benchmarks. Gross Margins for Construction 45% and Maintenance 51%.

                   

                  here is the problem as far as I can see:

                   

                  While the maintenance division has grown to 4 crews and 8-10 employees,

                  Construction division hasn't grown much at all and only has 1 crew of 2 employees.

                   

                  That's 2 brothers together managing 2 employees and generating about 30% of gross profit

                  and 1 brother managing 8-10 employees and generating about 70% of gross profit.

                   

                  Construction Crew generates about 175k in gross profit.

                  Maintenance Crews generate about 435k in gross profit

                   

                  We are paying ourselves base salary of about 100k each and dividing additional profits equally.

                   

                  So the problem is 2 brothers managing construction division are taking out more in salary ($200,000) than they are producing in gross profit. That's before any overhead costs are paid.

                    • Re: What's wrong with my P&L?
                      thevideoguy Wayfarer

                      Hi Scott,

                       

                      Just wanted to chime in here.  It sounds like your business has ton more potential that has yet to be realized.  Big congratulations on your success so far.

                       

                      You're right, there seems to be an issue on the construction side of the business.  My question is- do you feel these brothers are pulling their weight?  Are they busting their butts trying to land new business?  Or are they simply happy to collect their $100k + salary and call it a day.

                       

                      Not everyone has the same level of motivation to succeed.  This can be a very tricky thing to deal with when you work with family, especially siblings.

                       

                      Video Guy