Now I may be seeing where you are at with this discussion. I know several surveyors who are fine over an annual period, but stress out on the month to month (although none of them have been collecting retainers which should be covering the initial outlay on a project).
The best way (my opinion) to address the month to month stress is to diligently save money in order to have something set aside for times when payments aren't coming in the door regularly spaced- also a good idea for when there may be lean times!
When I first started, the irregularity of payments was too stressful for me. I was doing fine, but as my bank account crept downward, I would start stressing. I just buckled down on saving in order to make sure I had something in the bank at all times. I have friends who are gross billing a good bit more than I am, but (if their billing has occurred at certain times) they have to wait for a client to pay them before being able to pay something as small as conference registration and hotel fees. Savings being the difference.
Sounds like you have enough work and proper billing procedures to cover annual expenses, but might want to look into building a savings account that will be a way to provide peace of mind that you won't be caught one month without the wherewithal to cover expenses.
After reading through all of this you don't have a cash flow problem as much as a workflow problem. Raising your prices is not enough sometimes you just need to turn work away if you can't get to it in a timely manner. The flip side of that is sometimes we have to take the small quick jobs to "finance" the big jobs. Meaning one or two quick lot surveys a week will keep the "lights on" while we wait to get paid on the bigger jobs.?ÿ
adjusted gross income.?ÿ I assume that means how much he is paying him self.
How are your daily workflows? How much task/context switching do you do?
When you're in the field, are you answering emails, texts or calls? How about when doing office tasks or research? How many jobs do you have 'active' at a time?
Another curse/blessing of a small shop. Staying focused for very long at a time is a challenge. Everything is important. Getting the correct amount of time shown for the correct client is fun and must be done daily. That 30 minutes on the phone holding the hand of some Nervous Nellie client or contractor needs to be charged against the correct client, which is not the one you were working on when the call came. Twenty-seven times per day spread over fifteen clients.
Thanks to everyone! ?ÿI am going to focus hard on trying to reduce my current workload backlog from 3-4 months down to 3-4 weeks soon with a little help from my friends, here and there.
No, don't work more hours. That's not the work smarter solution, it's the work harder solution.
Maybe sub out the drafting?
Perhaps look at getting a line of credit to smooth out the ups & downs of cash flow. Well managed debt is a positive thing for a business.
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Managing debt, cash flow and other business financial issues take time and energy and are not billable (typically not - there are exceptions of course.)There are people who can help you with this if you're spending time/energy elsewhere, like actually surveying. "CFO on the Go"?ÿ or some such.
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That is sound advice. Pay down as you can to keep the total interest charges within reason and to prevent owing the maximum amount. There is nothing bad about debt so long as it is managed properly.
In my business model, what you're describing is when I would hire; 3-4 months of backlog consisting of repeat Clients with projects of increasing size.?ÿ
Yes sir. ?ÿThe next time I have a 3 month backlog that is sustained for 3 months, I will TRY to remember to reach out to my (recently organized) network of part time helpers.
Brad,
Have you reviewed your efficiency as opposed to cash flow, revenues, or backlog? For the last few years my efficiency (mid-sized firm) runs around a multiplier of 1.5 to 1.75 (1.0 would cover costs (at a 3X multiplier) and anything over is profit before taxes). I switched to this mentality a few years ago in a seminar where the presenter was obsessed with keeping employees at 90-95% efficiency (meaning billable hours) but wasn't focused on working smarter at the same time. So if an employee is working, doesn't mean he is making money.
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I have a PLS under me who had his own firm with his father (also a PLS) who does very very good work (and I know his dad did also), but based on his efficiency working for me he would loss significant money on most lump sum projects (and he has said their firmed lost money, had poor cashflow, and eventually closed).
Your back log and rates seem excellent....So I would question are you actually being efficient? In my example above, the PLS does excellent field work at an acceptable speed, but then will labor over drafting the project for 3-4 days. Is the final product excellent....Yes....put does the billing efficiency rates match up....not close.
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Just a suggest on a different way to look at things.
I think Holy Cow is probably on to something. I would look at how many open jobs you have, ones that you've started while also starting others before completing the others. Sometimes it's necessary because you're waiting on some external situation, like a title problem or preliminary plat approval. But many times it's probably because you hit a rough spot on job C and job E looks really interesting or easier, so you put down C and start E. The problem is that a month later you decide you really need to get back to C and you have to spend several hours figuring out where you left off.
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Unrelated. Some have recommended hiring out some of the more mundane tasks to free yourself up. They immediately went to field work. Why is it that the field work is the thing a surveyor should delegate? Seems like of all we do, field work is where surveying is happening. Personally, I didn't get into this profession to write proposals and answer the phone and make invoices. I do those things so I can keep doing the things I really enjoy which are research, field work, analysis and drafting.?ÿ
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Thank you. One of the perks (maybe it is a curse in this case) is that I enjoy not having to keep track of my time every hour of every week.
Maybe reach out well before you hit the 3 month mark. If your goal is 3-4 weeks (I thought I read that somewhere), then when you get to, say, five weeks, start reaching out. Proactive, not reactive.
This is exactly the question I had...Does Brad keep a time-sheet?
So, you dont bill out at $220 an hour? If you are guessing how long it will take and then do fixed/value pricing, then your actual billable rate might be higher or lower.
Perhaps I misunderstand what you are saying, and you keep track of billable hours, but not the overhead hours. I understand if you don't keep track of every hour, most salaried people do not, but they do keep track of billable hours (for billing purposes).
It's torture reading threads like this.?ÿ I know it's centered around a dilemma but it still makes me wish I could take a stab at running my own shop.