CLIP Lawncare And The Shrinking Effects Of H-2B
Recently an “old time” customer asked me how CLIP Lawn Care, LLC in Maryland was doing. I responded, “Terrible!”.
It has been a tough year and a half.
Right before the elections in 2016, Congress neglected to pass the “Returning Worker Exemption (RWE).” This excluded all returning workers from counting towards the 66,000 H-2B visas that were issued each year.
I don’t have the exact numbers but by some estimates that reduced the number of H-2B visas from 280,000 to 66,000. CLIP Lawn Care (CLC) has been using H-2B workers for the last decade or so.
When we found out that we were not getting our workers from Mexico, we scrambled to find local workers. As April 15 approached, we were staring down 550 lawns and five inexperienced workers to do the work.
It became very apparent, very quickly that we were not going to be able to fulfill the needs of these customers. We ended up “firing” 200 customers to pare it down to where we could manage.
Combating H-2B With CLIP Software
I hope you never find yourself in this type of situation, but if you have been recording times in CLIP, at least you will be able to cut down knowing that you can get rid of the bottom tier of your customer list.
See, with the Job Costing Report, we know how many dollars per hour every customer is worth. In printing the report, sorting by dollars per hour, we see the lowest ones at the beginning with the higher ones at the end of the report.
With this information in hand, it became “easier” (as much as losing customers can ever be “easy”) to lose the customers because we knew that we were raising our average dollars per hour for the company, even though the company was getting smaller.
This year we had to shrink a little more, but it has been a bit better than last year. At the time of this writing, we are not sure if we will get any H-2B workers this season, but at least we know that our dollars per hours are higher than they were.
We have moved from an average of $46/hour to over $50/hour. Because we pay on the piecework system, our labor costs are controlled, and that has been a life-saver for us.
A Worse Fate
I had heard of many companies that just went out of business when they did not receive their H2B visas, while countless others had to shrink as we did.
We have always promoted good records in CLIP. If you record every minute on every job, you will have the dollars per hour. In our seminars, we talk about how this can lead to extreme profit. Because of our recent experience with the H-2B problems, I realize that it is just as crucial if you find yourself in the situation of having to shrink your company.
Imagine how hard it would be to “fire” customers without knowing which customers are your best ones? You would be in survival mode with chaos all around and not knowing if you are causing more damage to your company by getting rid of valuable customers!
We have lived through this, and we continue to recommend that you use CLIP2Go or CLIPitc and have your workers record every start and stop time as they work through the route. You never know when you will need the information to survive! Be prepared for any eventuality, even the bad ones!
What have we learned?
A few lessons have become clear:
1. Basing a significant part of your company on a government program that can be taken away in a minute is a wrong business model.
2. Knowing your dollars per hour is crucial to a thriving business, but it is also critical to a surviving business at times.
3. Gathering information from the field workers is always the best way to do it.
4. Always keep your overhead low; you never know when you will need to shrink.
Let us know if you have had similar experiences. Life is always changing, isn’t it?!