Transition to self employed (wages etc)

[Jonny69]

7 hours ago, benedmonds said:

If you would have quoted £900 to do that job you would NOT be competitive on price. Some one was willing to do it for £450.

 

I don't see how anyone could have done more  quickly (except with more men).   No access for bigger machines, 10 inch chipper to process brash would have kept pace with the 2 groundies dragging..   Logs humped out by 2 guys while stumps ground out.. Return to yard at end of day with 1 truck full of chip and the other logs.. 

 

I think we may be missing each others points. The price of the job has no relevance. You were suggesting that the other guy was to cheap, so I suggested maybe someone would think you were to cheap. 

 

You then did some maths and realised that was the case! Which is what my first post was alluding to. 

 

Pricing has nothing to do with being competitive. Apple, Bentley, Rolex, Farrow and Ball etc are all excellent examples of this. I'd never pay £90 for a tin of paint, but someone obviously does!

 

What I was suggesting is that putting in a price that breaks even for the sake of getting the job is a complete waste of time and no business can sustain running like that. Loads of business owners will say its all about expansion and thinking they will take over the world. 20 years on still driving the same battered pick up and have multiple stress related illnesses. 

[benedmonds]

37 minutes ago, Jonny69 said:

I think we may be missing each others points. The price of the job has no relevance.

What I was suggesting is that putting in a price that breaks even for the sake of getting the job is a complete waste of time and no business can sustain running like that. Loads of business owners will say its all about expansion and thinking they will take over the world. 20 years on still driving the same battered pick up and have multiple stress related illnesses. 

I don't get why you think the price has no relevance..   I was using it to demonstrate that £200 a day is not feasible day rate to pay a freelance climber in my area if you want to be competitive ..   

 

My pricing should cover a wage (some would say modest) for me and the other director, it should cover replacement kit etc. so the business should be able to sustain running exactly like that..   

 

We have to run multiple teams if we want to take a wage while not actually doing much invoice-able work. We are getting older and don't want to have to climb trees every day. It might not work, but if you don't try you will never know...

 

I agree the safest structure and probably more profitable in the short term (and sometimes more desirable) is owner operator team.  But... that has a limited life span....  

 

I don't deny that running multiple teams can be challenging and the rewards are not guaranteed... But, there are better exit strategies,  there is a small possibility that the business could be sold, where as owner operator business are really only worth the tools..  The other option which I think preferable is  putting staff in the place to do all the real work, while being able to pick and choose what you want to do into old age...   

 

 

 

[Bloom]

'The Sunday Times reports that under a complex (perverse) incentive system, Heathrow is encouraged to spend as much as it can on developing the site. Heathrow’s investors earn returns based on the size of its “regulatory asset base” (RAB), under a formula set by the CAA.  So the more the airport spends, the more its owners can earn. It gives an example of £74,000 to cut down 3 trees, which is at least 20 times the normal price'

 

The other side of the coin.

[Gary Prentice]

They must have been real big trees!

Edited March 24, 2018 by Gary Prentice

[Jonny69]

13 hours ago, benedmonds said:

I don't get why you think the price has no relevance..   I was using it to demonstrate that £200 a day is not feasible day rate to pay a freelance climber in my area if you want to be competitive ..   

 

My pricing should cover a wage (some would say modest) for me and the other director, it should cover replacement kit etc. so the business should be able to sustain running exactly like that..   

 

We have to run multiple teams if we want to take a wage while not actually doing much invoice-able work. We are getting older and don't want to have to climb trees every day. It might not work, but if you don't try you will never know...

 

I agree the safest structure and probably more profitable in the short term (and sometimes more desirable) is owner operator team.  But... that has a limited life span....  

 

I don't deny that running multiple teams can be challenging and the rewards are not guaranteed... But, there are better exit strategies,  there is a small possibility that the business could be sold, where as owner operator business are really only worth the tools..  The other option which I think preferable is  putting staff in the place to do all the real work, while being able to pick and choose what you want to do into old age...   

 

 

Be a bit careful thinking your business will be worth something, if it doesn't run without any input from you then its not worth any more than the assets. Also you'll want to be turning over a fair amount of money for someone to be interested. Selling a business which is involved in an unskilled service industry is always going to be difficult because its so easy to set up yourself.

 

The right climber is worth whatever he/she wants to charge. If they are really good at their job then being competitive with their price is not relevant. If they can knock out a job in 1/2 the time of one of your climbers, then they are worth more than double what you currently pay climbers. They will save more money than they cost, you can knock out twice the turnover in a day/week. 

[Treeation]

1 hour ago, Jonny69 said:

Be a bit careful thinking your business will be worth something, if it doesn't run without any input from you then its not worth any more than the assets. Also you'll want to be turning over a fair amount of money for someone to be interested. Selling a business which is involved in an unskilled service industry is always going to be difficult because its so easy to set up yourself.

 

Would disagree that treework is an "unskilled service"

 

[kevinjohnsonmbe]

4 hours ago, Jonny69 said:

then they are worth more than double what you currently pay climbers. They will save more money than they cost, you can knock out twice the turnover in a day/week. 

Agreed, but it has a caveat:

 

This would be true if measured against a straight 8-4 / 9-5 (whatever) metric but doesn't hold up against a job & knock model (which is potentially more likely with contracted in personnel (particularly climbers))

 

A full time employed 'team' (by whatever definition) will rarely be as cost effective as a more flexible model where the job is priced according to its component input costs unless the 'team' is fully engaged in £ earning activity for the full duration of their employed day 5 days / week (and lets be brutally honest, that's rare from PAYE staff.)

 

I've experienced this from both sides of the coin.  If I go to climb for someone else, I want to know what the job is in advance and agree the number of days / £ per day required.  If I were to finish early, that's my hard work, sacrifice of a break etc that has presented me the option to FO home early. 

 

On the flip side.

 

I had a climber come help me a couple of years back, I'd over estimated the time required for the 1 job and we were done by midday after a not too demanding morning (that had earnt the days money.)  Since I had another ½ day job in hand we agreed to slip onto that 1 as well.  The day rate was the day rate and it was something like a 09:30-16:00 day in total so about what you might expect for a days work.  I think that guy got the hump because, in his perception, I'd made double the money expected for that day....  In hindsight, I could have tipped him off with a bit extra £ but, to be fair, I'm not on the stingy side with my hire-in rates to start with.  I did have some more opportunities for him but he never returned my calls....  c'est la vie!

 

I guess the point I'm trying to make, as regards an appropriate price for the subject trees in the previous photo's, is that it will never be possible to be competitive if you are fixed by the input cost of a 3 man team where others might be using 2, or even 1 man for the same task.

 

The answer, in my estimation, would be then to not be fixed by the number of people required for any job, make the manpower fit the task, not the other way around.  

Edited March 24, 2018 by kevinjohnsonmbe

[Jonny69]

7 hours ago, Treeation said:

 

My definition of skilled or professional is at least a Bsc, Masters, PHD or being chartered in your field. Spending two weeks felling and climbing a few trees is definitely not the same. Which is why the barrier to entry is so low and businesses aren't worth much. Two weeks training, a transit van and one phone call to an insurance company and you can be working on any construction site/school/council in the country. 

[Richard 1234]

[WesD]

15 minutes ago, Richard 1234 said:

 

That’s a very deep and thoughtful post, I agree with you entirely