Expenses

[Joe Newton]

It's not that we're not producing income, we're competitive but not cheap like some firms out there.

My original question was to people who run businesses and how they have managed to cut expenditure in certain areas. To get some tips.

 

 

So what kind of kit do you find to be replacing the most. Obviously chains/fuel/oil are all budgeted for, but if you're replacing ropes etc more frequently than needed that'll add up. You should easily get a year out of ppe. Climbing kit should last longer than that, same as rigging kit. If machines are regularly breaking or getting replaced you'd need to look at why.

[TIMON]

Thanks guys. I know it might seem like we're not getting very far with this thread but you've given me some good questions to ask myself.

[Treeation]

Hi ty, well done for being part of such a worthy project . Sounds like your running costs are pretty fixed so maybe think about charging a bit more and also look at other income streams. Have you explored selling on seasoned wood? If you have plenty of hands on deck could be a nice income supplement. I have a branch logger for my business that helps to improve profit margins by converting non conifer or leafy brash quickly into netted bags that retail as kindling for £5 a bag to public which goes hand in hand with amy firewood business. Or if im converting on site to a customer I chrage £2 a bag. The machine can convert upto 45 bags an hour with 2 guys running it. Bags cost 20p and an hour running the machine uses about £2 of petrol. The other great thing about this approach is its very resourceful way of brash management and you can generally leave all the converted brash on site that saves time and hassle.

[gooseflight]

As said, it's a bit of a guessing game, but two things:

 

1. Insurance -- have you shopped around and bought hard to drive premiums down?

 

2. Residential costs -- are you on top of variable costs like utilities? Have you implemented energy saving measures where possible.

[matelot]

tbh, unless you're willing to post your annual accounts I cant see you getting much useful feedback...

[TIMON]

tbh, unless you're willing to post your annual accounts I cant see you getting much useful feedback...

 

 

I was asking people how THEY had been able to save money in different areas of expenditure. I wasn't inviting people to analyse our finances. Just trying to pick up tips from people who actually run their own businesses and have experience in this area.

[agg221]

Some general thoughts from a non-arb business.

 

To succeed, in steady-state you need to maintain a balanced flow through a sales pipeline to delivery (and payment!). If you are growing, you need to increase capacity at whichever step(s) present the barrier.

 

At the beginning of the pipeline, you have awareness (advertising in one form or another) which creates opportunities. You then have enquiry handling and conversion, finally delivery.

 

If you break it down like this, can you identify where the bottlenecks are, and where you are over-capacity? If you don't have enough enquiries to allow you to feel comfortable, ie you need to convert too high a percentage, then you are better off investing in advertising. If you already have more enquiries than you can reasonably convert and are failing to even consider them properly, you can scale back on advertising. The same principle applies along the chain.

 

Once you know where the bottlenecks are, you can consider what is the most cost-effective way to relieve them. The same applies to areas of excess capability - just because something breaks or wears out you don't need to replace it automatically. Consider whether the business is changing direction first. There is also a time factor here - if you need a quick boost on orders then a lot of flyers/phone calls may help but if you are OK for the moment then you can cut costs in the longer term by building up a reputation and relying on word of mouth and repeat customers.

 

It's worth bearing in mind that quality as well as cost will ultimately make or break you. You can't compete with two men in a white transit with some blue polyprop rope, so you need the right balance of quality and price-point. Lower price-point will probably secure more volume, but on a lower margin. If you need to keep a larger team busy then this is probably more appropriate (it seems like you are already in that bracket if you are doing a lot of back-garden work with poor access). This isn't of itself a bad thing - you just need the right kit for the market you are addressing so if you haven't considered this you may already have some surplus items (sell off on Arbtrader?).

 

However, get any of the steps out of sync and you can damage your reputation very quickly - people get annoyed if you say you will turn up and you don't - that may be that you don't turn up to quote because you have too many jobs to quote for, or you don't do the job when promised due to equipment failure. Your fault or not - the customer is always right, certainly when they are telling their friends about you.

 

Alec

[TIMON]

Some general thoughts from a non-arb business.

 

To succeed, in steady-state you need to maintain a balanced flow through a sales pipeline to delivery (and payment!). If you are growing, you need to increase capacity at whichever step(s) present the barrier.

 

At the beginning of the pipeline, you have awareness (advertising in one form or another) which creates opportunities. You then have enquiry handling and conversion, finally delivery.

 

If you break it down like this, can you identify where the bottlenecks are, and where you are over-capacity? If you don't have enough enquiries to allow you to feel comfortable, ie you need to convert too high a percentage, then you are better off investing in advertising. If you already have more enquiries than you can reasonably convert and are failing to even consider them properly, you can scale back on advertising. The same principle applies along the chain.

 

Once you know where the bottlenecks are, you can consider what is the most cost-effective way to relieve them. The same applies to areas of excess capability - just because something breaks or wears out you don't need to replace it automatically. Consider whether the business is changing direction first. There is also a time factor here - if you need a quick boost on orders then a lot of flyers/phone calls may help but if you are OK for the moment then you can cut costs in the longer term by building up a reputation and relying on word of mouth and repeat customers.

 

It's worth bearing in mind that quality as well as cost will ultimately make or break you. You can't compete with two men in a white transit with some blue polyprop rope, so you need the right balance of quality and price-point. Lower price-point will probably secure more volume, but on a lower margin. If you need to keep a larger team busy then this is probably more appropriate (it seems like you are already in that bracket if you are doing a lot of back-garden work with poor access). This isn't of itself a bad thing - you just need the right kit for the market you are addressing so if you haven't considered this you may already have some surplus items (sell off on Arbtrader?).

 

However, get any of the steps out of sync and you can damage your reputation very quickly - people get annoyed if you say you will turn up and you don't - that may be that you don't turn up to quote because you have too many jobs to quote for, or you don't do the job when promised due to equipment failure. Your fault or not - the customer is always right, certainly when they are telling their friends about you.

 

Alec

 

 

Thanks Alec, that's good stuff to look at. Useful info.

Timon

[Stephen Blair]

A very simple rule To follow , and your whole team has to as well is

Look after the pennies and the pounds will look after themselves ,

[matelot]

I was asking people how THEY had been able to save money in different areas of expenditure. I wasn't inviting people to analyse our finances. Just trying to pick up tips from people who actually run their own businesses and have experience in this area.

 

Fair enough, but when our accountant sends us our family companies annual accounts it's always interesting to see how areas of income and expenditure have changed over the years...

 

Perhaps you could give some of your expenses to see if they seem high to other arb firms? It's possible you are paying too much for things like insurance (my dad managed to save himself £10k a year on a building he owned by changing insurance broker)?

 

One thing you wrote, that surprised me, was that you said you spent a lot on flyers? It strikes me that a couple of thousand flyers shouldn't cost that much to print and you could deliver them when tree work is rained off?

 

Anyway, thumbs up from me. It's good you give addicts a second chance.