Adventures with Lyrical: Buying a Business (REPOST)

Tarrant_sl said:

It depends really, the kid from the sound of it may get bored easily and being stuck in just sales may not be enough for him eventually, he may very well need to be in some sort of leadership or mentorship role at the point where he's ready for that type of responsibility. (assuming he takes to it, some just can't.) Nobody wants to be stuck and feel like they can't advance....though if you make a comision structure for him to advance into that may alleviate some of it.

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Yup.

Tmac47_sl said:

Question.

What sort of commission strategy do you have setup for your sales reps?

I'm in the process of creating a ladder for my own sales people to create incentive, but to also reward them for investing in the company. I have a base salary set and want to take a percentage of the monthly gross for commissions.

I'll give an example:

If we average $300,000 in sales every month, we gross $21,000 as a company (7%). That's roughly 5-10 sales per month, depending on the job. I'd like to give my salesperson 5% of gross for reaching that goal.

The trouble I'm having is scaling that pay, considering for every $20,000 increase in gross, we have to add a new employee. I'd also like to give bonuses for overachieving.

My dad has worked in the same industry for 25 years and at one point was doing about $100,000/month gross, but their commissions were setup in such a way that it hurt their bottom line when they hit these levels. He has since strayed away from this type of structure, but I've convinced him that it's necessary and that there's a better way to do it.

Tarrant, your input is also welcome.

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I'm paying 7-8% of gross sales. Industry average is 10, but we have lots of large customers that have been with us for decades. Our average job is probably double the competition's, because we have the equipment for the bigger jobs. Obviously, there are only maybe three companies that can handle a 100k job. Also, we don't layoff, in another company, 10% of zero dollars for four months is zero.

Szeth_sl said:

Lyrical, without doing a ton of work what would your ballpark figure be for installation/upkeep of a fairly basic par three golf hole at someones personal residence. Basically installation as the big cost, as weekly it would only need 1 precise trim and possibly irrigation.

Don't put too much time in, but you were my first thought of who may know an estimate.

Edit: no fairway to speak of... just about 25 yard diameter roundish green. 10x10 foot square for tee box, and if we're getting crazy maybe a small sand trap offset in front.

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No idea, as we don't do that.

So my Manager calls me up, and asks me point blank if YB is going to take his job. He sounded a little sensitive and I had to spend 15 minutes reassuring him. My Manager, with his certs, gives the business a halo effect, and is an asset to the company. My Manager spent a lot of time putting YB in his place and told him he's not ready to be a Manager. He basically told him off.

Pretty much everyone feels threatened by YB. It's an interesting dynamic. I've told my Manager that the other guys just don't have the necessary people skills, and that he needs to use YB to help him. Sales are up 1/3 this year, and will keep growing next year. At this rate, he's going to need the help. Our backlog of work is just under 120k, that's an all time high. And I just decided to go balls deep on the 10 pm news, which is going to make a big splash. It's the highest rated news in the area, and has three to four times the ratings of the timeslots we are currently on. What I'm trying to sell him on is that he's going to need YB to keep up.

Everything has smoothed over with YB. My plan of sending him in whenever the guys need help has worked. Instead of seeing him as taking over, they see him as someone who is there to make their lives easier. The complaints have stopped. My Manager felt threatened by him, I told YB to take him out to have a beer and tell him he's there for him. And every time my Manager complained about how busy he was, I'd remind him he'd be busy by double without YB. He's now telling me he realizes that. So YB has been accepted by the team. But as an Assistant Manager? It will be awhile. Once he gets his certs, it will make it easier for me to explain it.

We are having an all-time high month in sales for non-emergency work. We've done 150k in sales in a month, but that was emergency work. At our current pace, we should do just under 100k in service fees, and all of that is routine maintenance work. It could have been higher, because we just hired another guy (to go behind the crews and clean up). That frees up the crews to not have to do clean up and be productive. Things are going great, but we are pushing the point of needing more equipment at 50k a pop. Alot of this is that I've steadily raised my ad budget. It was 500 a month, and now it's 500 a day. But it's worked, as sales are up 50% over the last two years, and it forces me to higher more people. No one wants to hear that we are booked until October, they want their work done now.

Tarrant_sl said:

I hope you didn't drop the lawsuit against the gate douchebags.

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When I fired that guy for being an idiot, I think my odds of winning went from 90% to 15%. There was no way around it, he sat in my office knowing that the main phone line wasn't working and cost the company at least $10k. I know he didn't damage the gate, because he had witnesses. But I guarantee you, he'd flip in court just to get back at me. I'm not running the risk of losing 5k to replace the fence. Simply put, I have an 85% chance of paying out 5k and a 15% chance of winning 2k. Before then, I considered this to be a slam dunk of a case.

I just won a case yesterday against someone, so it evens out. But I'm not going to court when I know I'm not going to win.

Tarrant_sl said:

what was the case you won?

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It was $550 for some idiot who thought he wasn't going to pay on a signed contract. It didn't go five minutes before there was a ruling in my favor.

15k in approvals today!

Tarrant_sl said:

I hope you didn't drop the lawsuit against the gate douchebags.

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When I told the Insurance company that the guy who was in the truck was fired and pissed at me, they settled with the customer. They didn't want to risk me spending $3k defending myself in court, and ending up with a $10kish bill for 3k in damages (3k for the gate, 3k in attorney's fees and then paying the customer's legal fees).

It is what it is. How much do I want to pay to say that I was right? Part of the settlement was that I'm agreeing to no wrongdoing or blame.

Tarrant_sl said:

Bah.

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What would happen if I lost the case, and didn't do what the insurance company told me? Would they pay the claim? I'm telling you that when the guy was fired, we probably went from a 90% chance of winning to a 15% chance. Both sides had been lawyering up, and I was looking at spending more in legal fees then the gate cost. It was my idea to call the insurance company and get them involved, pushing for a settlement. Because I could tell how we were doing that it was going to be like M.A.D. (Mutually Assured Destruction). They get nukes, so I get nukes, so they get more nukes, and so on, until everyone is screwed.