So now we’re going to get to the next step; how do we actually do the job costing?
This is probably the easiest topic, but it’s the main thing you will need to determine which customers to keep and which to let go.
The best way to come up with your job costing numbers is to have CLIPitc.
With the CLIPitc app, your guys then can enter their start and their stop times with the play button. Everybody has to have the app, and they have to have a smartphone or tablet.
We have a new app in development that won’t require you to be continuously connected to the internet. If you have spotty coverage in certain areas or something we got you covered—even if AT&T doesn’t.
That’s coming very soon.
Every morning you send the information out from the website. With CLIPitc it’s already there, it’s already online. Your crew will log in and select which crew they are from the options in the app. They will then hit the “start button” on the job. It collects their time cards and all the notes and to-dos are there for them to see.
When they’re done with the job, they hit “stop the job.” This process entirely replaces route sheets if used properly.
We know how much you’re charging for that job and how much that job is worth. We know now how long it took and we know how many folks were on the crew. Using all that information, we can boil it down and say “here are the dollars per hour.”
What if you’re installing some very expensive Chinese tree of some sort? Well, if the tree costs $600 and you’re only doing $100 worth of labor, the labor is what you’re selling. The labor is what’s important.
In the job, there’s a field called “material cost.” You set that material cost at $600 tree and then CLIP will automatically understand that if you’re charging $700 for the job, $100 of that is your job costing $100 of that is your man-hours. And if they do it in one man hour, then you’ve made a $100 an hour.
How does the Job Costing Report help you?
Like we talked about a couple of weeks ago, it helps you to rebid for the next year and do your contracts. The other way it helps you is by guiding you along in the process of figuring out who your best customers are.
In the last blog, I was talking about how we decided to do more townhouses because they’re money makers. We also have figured out that the customers that we have that are getting the”Mow It Make It Green” deluxe package. Those are more profitable than the customers that are getting the bi-weeklies.
I hate bi-weeklies. I really can’t stand them.
We look at this Job Costing Report, and we make sure that every one of the jobs, even the bi-weeklies, are raised to make it worth doing the job. I think this year our hourly rate is $55 per man per hour. At $55 per man per hour, we will do bi-weeklies, we’ll do anything, as long as we’re making that amount of money.
That automatically leads us into the directions that are most profitable for us, and we find out that the “Mow And Make It Green” actually works even better.
How else does Job Costing help us?
A couple of years ago Congress shut down the H-2B returning worker exemption. We were using a 100% Mexican labor in our lawn maintenance company all of a sudden, I’m staring down 550 lawns to be mowed and I have no experienced labor.
How in the world am I supposed to maintain 550 lawns every week with that type of labor or no labor at all? It’s impossible.
So we had to cut our customers and went from 550 customers down to about 300/325 customers because that’s all we could handle. The guys that we had hired did not get the work done the same way that our Mexican labor had done it.
The Job Costing Report tells us which customers are the lowest on our list and those are the ones we fire.
Limited H-2B changed the game
We took the ones that were making us the least, even if they were over our threshold, which at the time was $45 an hour. Even if they were giving us $45 per man per hour, they were not giving us the $55 we needed. So that’s where we were able to cut. I had confidence that I could still pull the year out even though it was going to be difficult.
My goal is to make about 30 to 35 percent profit per year, which includes the salary of my general manager.
I’m used to minimal management because I trust my people, but of course, all that changed when we didn’t get our Mexican workers. I had to involve myself to the point where I was going out and fixing lawnmowers until we were able to hire a mechanic to do it for us. But I know that with the Job Costing Report I we are getting the top dollar. We keep the best clients and fire the ones who run lowest on the list.
We pulled the year out with zero profit and a slight loss, but it could have been so much worse.
If you want a tutorial for Job Costing in CLIP or a hand in getting it done, head on over to our Help Center.