Is this totally insane?

[af7850]

I keep pretty close tabs on our competition, market share, etc., and I see that many of them are really pushing to get "bigger"; i.e. bigger chipper, logging truck, loader, crane rental / purchase, etc. All of this equipment enables them to work large jobs much faster, but obviously at a much higher cost.

The funny thing is that, instead of making 2 or 3 times as much money in a day, these guys are bidding cheaper than ever! I know that these guys are able to work the large removals more efficiently than us, but if the $2300 oak removal is now only worth $1700, what's the point of making the extra equipment payments?

So I have been looking at our business, and our pruning work and small / medium climbing jobs are our most profitable work. We are definitely superior arborists, and we can make our best profit per hour actually avoiding the higher ticket "big removal" jobs. Our expenses and overhead are substantially lower on small/medium work, and the daily revenue can still be significant.

Therefore, I am seriously considering downsizing our equipment - maybe a 4 yard truck, 9" chipper, park the bucket truck, run a 2 man crew, and work toward running 2 crews doing only "our type" of work. Hell, I can probably sub out the big removals and still make 10% off the top as the customer's "consulting arborist". See, I'm not interested in getting smaller, just in doing much more of "our type" of jobs, and doing them in a very cost-effective manner.

So what do you guys think? You've all probably been in this business much longer than I have, and I'd like to hear your thoughts on this. I can see that nobody else in my market is trying to grow by going smaller; I just can't tell if thats because I've got an ingenious idea or if they all already know that it's a losing method.

 

[Sbusta]

I think you are on the right track.

Just because you can do something doesn’t mean you should do it.

Find a niche that suits you look for equipment that allows you to do that work in the most efficient manner & specialise.

Down here in NZ we have a lot of contractors doing the same buying bigger gear, I haven’t noticed a price drop yet but it worries me. If a job was worth $300 with 6- inch chippers it’s still worth $300 with 12 inch chipper.

The better equipment should allow them to do more work therefore increase there turnover.

One of the problems is operators not adjusting the hourly rates to compensate for the additional capital so they end up doing more work for the same money with higher costs.

 

[windthrown]

Yah, the equipment overhead can keep you buried in maintenance too. I sold off my Bandit 90 chipper because it was a pain to keep running, and a liability becasue everyone wanted to use it. I finally had to keep it broken all the time, unless I needed it. Same with chainsaws. Lots of chains to keep sharp and bars to true, and parts to order and repairs to make. As for them, they can borrow my beater MS210, and then I throw on a safety chain for good measure, and that is it.

But definately track your best margins and stick to them. You will do better overall. Some bigger places like you mention are just overextended, and they can implode if they do not get enough work (which is whay they may be beating down their bids). My brother and I expanded until we were overloaded, and then backed off. We did not want to hire a full time crew and become managers.

 

[joesawer]

In the mid 90's I was managing a tree service that paid me an hourly rate plus a percentage of the profit. We did a lot of big jobs, but I quickly learned that we made more by doing several small jobs if I scheduled and organized them properly, so that we could get in and out and get several in a day. The downside of this is that it took a lot more time for the bidding and billing than a single large job.
The big equipment is nice and can really speed you up, but Dang it is expensive, and keeps on being expensive even if it is not working.
I have been working for a company that has two big horizontal grinders, a tub grinder, a whole tree chipper, and much other very expensive equipment. They have been featured on monster machines several times. An employ was trying to convince the owner to by another, bigger masticator than the one that he already has. The owner told him that until he has constant demand and some one ready to operate it full time that he would just keep subbing bigger masticator work out.

 

[BC WetCoast]

I think you are onto a good idea. When you find a good niche, then capitalize on it. The skill sets and attitudes between a lot of take down guys (not all) and those who specialize in pruning differ.

I'm not sure if I can word this properly, but I think that a lot of companies go big (lots of equipment) specializing in take downs, because they can replace highly skilled personnel with equipment. And conceptually the job is relatively simple to understand (Yes I know all about the complexities, difficulties and dangers involved in a removal). Most of the take down guys on our crew aren't very good pruners because they don't have the patience and subtlety required.

Getting back to your original question, if it was me, I would keep your bucket if it had a chip box and was paid off. If it is paid off, then using the truck just as a chip truck isn't the end of the world. Having used a variety of sized chippers for pruning jobs, I would always go toward a larger one (especially if you already own it). To me, it is the size of the throat. I don't know how much time I've wasted trying to fight branches from pruning into a small throated chipper. I would rather leave the chipper not running, build up a pile and chip for 5 minutes a couple of times a day, then spend an hour fighting gnarly branches.

I guess what I'm saying is build your equipment to give you the most flexibility without being beholden to the bank.

 

[ASD]

"but if the $2300 oak removal is now only worth $1700, what's the point of making the extra equipment payments?"

we are one of the co's that have and keep getting all the big stuff

and yes we can do it for less $$ then a small co and when they are out doing the $2300 oak removal we are out doing 5 $1700 jobs with the same amount of people !!!! and we work 5 days a week year round and are booked out 3 to 5 months and a lot of the smaller co's in this area are sitting home with no work and about it so do what u think will make u the most $$ and have fun doing it.

 

[treeman82]

When I was in school I was fortunate enough to take a class which was taught by a guy who was CEO of a BIG company out of Boston. One day we took a field trip to his office, and the office of one of his friends. The smaller company employed about 25 people full time, while the bigger company had 80, and is probably up to 90 or 100 by now. Neither company was big on removals. Biggest chipper I saw was MAYBE a 250XP, but for the most part it was 150's, 90's, and a 200 here or there. They even had a fast feed or two laying around. The bigger company had 3? buckets... the smaller company didn't have any. Both focus on pruning, PHC, and planting. Some VERY nice spray rigs. When asked about removals... they'll do smaller - medium sized ones. However when it comes to the big nasty ones, they'll refer somebody else. It's just not what they do. I think the bigger company only had 1 stump grinder. The teacher used to say all the time... that with ALL the equipment he's got access to... the best money making piece of equipment they have is a pair of hand snips. Heck... in a few months they'll be sending 2 guys to prune a boxwood hedge by hand... 2 guys for at least a week. Hand snips.

 

[af7850]

we are one of the co's that have and keep getting all the big stuff

and yes we can do it for less $$ then a small co and when they are out doing the $2300 oak removal we are out doing 5 $1700 jobs with the same amount of people !!!! and we work 5 days a week year round and are booked out 3 to 5 months and a lot of the smaller co's in this area are sitting home with no work and about it so do what u think will make u the most $$ and have fun doing it.

Holy testosterone, Batman.

Ya know, I'm not challenging your manhood, and this is not a pissing contest... so you can put that little thing away now, cause I'm not going to play with it. :jester:

Haha, just kidding with you. You're proud of what you're doing, and thats cool. I almost took you the wrong way, but I read through some of your previous posts and I see that you're a decent fella, and you give some great advice.

I have a question for you: Although you are getting lots of big removal work, you also advertise pruning on your website. By the looks of your site you're not a hack, either.

I understand that a big part of your sales method for big removals involves low prices, but what about the pruning work? I'd be interested in knowing how you price and sell those jobs.

 

[af7850]

I'm not sure if I can word this properly, but I think that a lot of companies go big (lots of equipment) specializing in take downs, because they can replace highly skilled personnel with equipment. And conceptually the job is relatively simple to understand (Yes I know all about the complexities, difficulties and dangers involved in a removal). Most of the take down guys on our crew aren't very good pruners because they don't have the patience and subtlety required.

Its interesting that while price wars in big removals make the work much less profitable for us, I can consistently outsell them on pruning jobs regardless of price.

I only ask for the other guys' prices after I've won or lost the job, and just to see how the competition stacks up. I've routinely closed sales with customers who've already had one or two estimates from these guys, and my prices are often 1.5 to 2 times what theirs are.

Sometimes the customer will say, "Well, you're quoting $800, but XYZ Co. says they'll do it for $550. Can you lower your price?"

I DO NOT concede on price. A change in price only happens with a change in scope, and most people still take us on for a full scope at full price.

Unfortunately for me, I have not been successful in doing the same when bidding large removals.

 

[ASD]

"I understand that a big part of your sales method for big removals involves low prices, but what about the pruning work? I'd be interested in knowing how you price and sell those jobs."

the big stuff is for the removals and land clearing

we also have residential / city trim teems with 2 CA's running that division. on the city and residential trimming work we are not usually the low bidder but we explain to the client that any hack can destroy your tree or they can have a CA over see the work to make shore it gets done right the first time as trees do not grow back like a bad hair cut will

 

[Canyonbc]

"I understand that a big part of your sales method for big removals involves low prices, but what about the pruning work? I'd be interested in knowing how you price and sell those jobs."

the big stuff is for the removals and land clearing

we also have residential / city trim teems with 2 CA's running that division. on the city and residential trimming work we are not usually the low bidder but we explain to the client that any hack can destroy your tree or they can have a CA over see the work to make shore it gets done right the first time as trees do not grow back like a bad hair cut will

This is a huge selling point that i use when i bid a pruning job. I work with a local CA...explain basically the same thing.

the past couple of weeks i have been working on a portiflo showing pictures of properly pruned trees, poorly pruned trees..what topping does etc.

 

[Thillmaine]

Snippy Snippy

"The teacher used to say all the time... that with ALL the equipment he's got access to... the best money making piece of equipment they have is a pair of hand snips. Heck... in a few months they'll be sending 2 guys to prune a boxwood hedge by hand... 2 guys for at least a week. Hand snips."
(This year I think its shearing, they alternate every other year. And its three guys, I am trying to make sure I never even set foot on that property.)

 

[CraneOp1]

but if the $2300 oak removal is now only worth $1700, what's the point of making the extra equipment payments?"

we are one of the co's that have and keep getting all the big stuff

and yes we can do it for less $$ then a small co and when they are out doing the $2300 oak removal we are out doing 5 $1700 jobs with the same amount of people !!!! and we work 5 days a week year round and are booked out 3 to 5 months and a lot of the smaller co's in this area are sitting home with no work and about it so do what u think will make u the most $$ and have fun doing it.

I'm with ASD on this one. I usually have a climber and a groundsman, sometimes 2. And we can get 2 or more priced like this, and it makes for a very good day for my crew and the Co. we work for.:greenchainsaw:

 

[Dadatwins]

I would agree that specializing in what you are good at that makes you the most $$ is the way to go. Quality work at a fair price, with the lowest overhead is the way to go. After 20+ years doing this I always made more $$$ per hour in my pocket doing a few pruning clips with a pole saw to clear a roof and loading a pickup truck, than I ever made on a large scale removal with Bucket trucks, loaders, and chippers with an mini-army of workers. Nice equipment is nice to have and helps with your company image, but working just to pay for it is not the way to go.

 

[John464]

Having the right equipment is priceless. Our biggest expense is labor. If we can cut that time the labor help is on the job in half and to the next job.

Figure is based on being twice as productive in an 8hr work day:
You figure a crew of 4 guys is averaging $20 per hour. Thats $80 x 4hrs =$320. Times that by a 5 day work week. Thats $1600 a week times that 4 weeks in a month. Thats a grand total of $6400 savings in labor costs because you were twice effective as the guy with one 1 ton dump truck and chipper. Do you see the reason why we send the the large trucks, with the big chipper, bucket trucks, spider lifts, the grapple loader, etc etc. to get the job DONE. You realize what kind of equipment you can own with $6400 a month you saved on your labor costs?

I did yesterday 2 120' Poplar removals. Chipped up, logs loaded and sitting having lunch in a diner by 1:00, $2800. After lunch we did a pruning job for $700. 5 guys and the right equipment. This type of production would of taken the guy with the small chipper and 1 ton dump truck 3-4 days to complete.

If you have the workload. Increase your production. You will know when you need bigger equipment cause you won't be able to keep up. You either turn down work and lose jobs by staying small or you invest in your companies growth with the big mechanical advantage.