Knowing Your Numbers for Estimating

by Katie Petersen | Aug 2, 2022 | Business Strategy | 0 comments

Knowing Your Numbers for Estimating

Written by Joseph Toppi

Business is a game of numbers! It doesn’t matter the industry, this universal law is true. As a business owner, it is vital to the success of your business to know, with clarity, certain business numbers.

In a recent release from the US Department of Commerce, it stated that up to 96% of construction and contracting companies fail in the first 10 years. The top four reasons they noted for this failure rate were: insufficient cash flow, charging too little, lack of agreed upon payment schedule, and insufficient number of profitable sales.

These top four reasons can be avoided at the estimating stage… if the one doing the estimating knows their numbers!

For this week, we are going to first start by looking at the purpose and outcomes of estimating, then look at the numbers to know during estimating so that you don’t become one of the statistics.

What is the purpose of estimating?

Many people think that the purpose of estimating is to get a job. Unfortunately, that is not the purpose of estimating, and the reason so many experience one – or all – of those four issues listed above. The outcome of estimating is getting, or not getting, a job. But the purpose is to recover the costs (the materials, labor, equipment, and job specific costs), recover the expenses (the company’s overhead), and get paid (make a profit) to do the work.

One of the biggest reasons businesses fail to be profitable is because they don’t know what, or how much to recover. We are going to look at the five numbers that every business owner MUST know to be profitable in their estimating:

Employee Costs

How much are the employees costing the company? There are many costs associated with employees that are far above their base wage. These costs are divided into three categories: payroll contributions, employee liabilities, and employee benefits. If a business owner doesn’t know what their employees are costing the company, how do they know what they are charging is enough? Knowing the exact costs of employees is the difference between profitability and insolvency!

Crew Costs

This plays a different role than just knowing individual employee costs. When looking at a crew, there are other costs that come into play, such as: project management and downtime. Generally there is a project manager that is associated with a crew. How is the project manager’s cost to the company recovered? The best way is to recover it proportionately with the time they spend with that crew. The second is downtime. Every crew experiences downtime – time that they are being paid for, but not billable to the client. How are these costs recovered? Typically there will be a percentage that will be added into the crew costs.

Equipment Costs

Equipment is essentially for most companies, but most companies are not recovering the costs that come with equipment. If you are running a business with at least one piece of equipment, you are actually running two businesses: an operating business and a rental business. Think of it this way – if you did not have the equipment, you would have to rent it. If you rented the equipment, you would charge the customer the rental fee. So why are most businesses not charging the customer the “rental fee” on their own equipment? If the customer is not paying for it, then who is? Knowing what equipment is costing a company per hour and per day allows the company to start recovering those costs.

Job Costs

With every job, there are other costs that the company incurs. They might be dumpsters, permits, dump fees, porta-potties, travel, or a whole number of other items. When estimating, it is important to ensure that these costs are accounted for.

Mark up

I want to start this section by addressing three things: 1- mark up is not the same as margin! They are two totally separate things, and they affect the numbers very differently. 2- mark up is not a random number that is added to costs to cover “uh-ohs”, contingencies, overruns, and hopefully profit. Mark up is intended to recover overhead expenses and include profit. 3- mark up is not the same for every company. It is unique to each company, based on their overhead expenses and the profit the shareholders want to make.

It is important for companies to have an overhead budget figured out, so they know how much it takes for them to essentially “break even”. Much like we talked about with employee costs, if a business does not know their overhead, how will they know if they are going to recover it, or better yet, how do they know if they are going to be solvent? Once a company knows what their overhead is, and the amount of profit they want to make, they can easily figure out what the mark up needs to be (to add to the costs of the job) to ensure they are recovering these items.

Knowledge is power! If a company takes the time to figure out these numbers, and starts to implement the formula of recovery in their estimating, they can ensure their future is profitable. It will be the difference between being part of the 94% or the 6%.

If you would like any more help with your sales team, our Thrive Sales & Marketing Package includes four hours of direct one-on-one sales training. For more information, reach out to an ArboRisk team member today!

3 Ways to Dig Deeper on Sales Calls

by Katie Petersen | Aug 2, 2022 | Business Strategy | 0 comments

3 Ways to Dig Deeper on Sales CAlls

Written by Eric Petersen, CIC

Many of you probably already have heard me talk about the 4 Knows to a Yes in the past. If not, check out this previous article, that I’ve written on that topic. For this article, I want to go more in-depth and focus only on the first “Know” – Know the Why.

To start, remember that the most important objective in a sales call is to get an understanding of the emotions that will ultimately drive the prospect to make a decision. At ArboRisk, we call this the prospect’s “why”. Once you have an understanding of their why, you will be able to walk through the remaining “Knows” and close the sale.

Below are three strategies to dig deeper on a sales call to truly gain a better understanding of the prospect’s why. Discuss these during your next sales meeting to help increase your sales team success rate.

1. Ranking 1-10, then “Tell Me More” – Directly after the prospect tells you what they want you to look at, you should immediately have them rank the importance of their situation on a scale of 1-10 with 10 being the most important pressing issue in their lives right now. Follow up that ranking with the simple phrase, “Tell me more” to learn why they gave it that ranking. The answer they give you will help you understand how to best service them and therefore win the sale.

2. Restate, then 3 Why’s. – A simple yet effective way to understand the prospect’s why, is to restate what you heard the prospect say and then ask a few probing questions. If what you say back to them isn’t what they really mean you will have the chance to correct yourself and truly understand what they are looking for from you. After you restate their request and they agree that is what they are looking for, then you should dig deeper by asking ‘why’ at least three more times to uncover the true emotion behind their request. As an example…

Sales Arborist: I heard you say you wanted to have the honey locust removed in your backyard, correct?

Prospect: Yes, that’s correct.

Sales Arborist: 1st Why – Why do you want it removed?

Prospect: It drops too many branches.

Sales Arborist: 2nd Why – Why do the branches bother you?

Prospect: I do not want to continually have to pick them up.

Sales Arborist: 3rd Why – Why do you care if the branches are on the ground?

Prospect: My grandkids come over and play every Tuesday and I want a clean space for them.

It might not go that smooth in real life, but you can see how you get to the actual emotion of why they called you. Now you can directly solve their problem and offer other solutions to help them have a great backyard for their grandchildren to play in.

3. What’s your vision for your yard? – We have an entire article devoted to this question, but it’s such a great way to learn about the prospect’s why that I wanted to make sure and mention it again. This question opens up conversation much broader than just focusing on the original service request and can lead to future work or simply a better customer relationship once they hire you.

Hopefully those three simple strategies will help your sales team dig deeper with their prospects and connect more on an emotional level with them to win more sales for your company. If you would like any more help with your sales team, our Thrive Sales & Marketing Package includes four hours of direct one-on-one sales training. For more information, reach out to an ArboRisk team member today!

Developing Your Business Culture Using Flashlights and Mirrors

by Katie Petersen | Jul 12, 2022 | Business Strategy | 0 comments

Developing Your Business Culture Using Flashlights and Mirrors

Written by Kevin Martlage

In previous articles I have written about using flashlights and mirrors to help develop your personal leadership skills and the leadership within your organization. The concept is simple and helps you review leadership ability by using two different tools: a flashlight and a mirror. The mirror is used to help you see and reflect on those things as the leader you are doing to grow, sustain, or detract from the impact you are making on your team and organization. The flashlight is used to help those you are leading see a unique perspective or point of view when it comes to their ability to help grow, sustain, or detract from their leadership ability and impact. As a leader it is important that you are using both to help enhance your leadership, while also leading and coaching your team to enhance theirs. Using the two tools together can help you and your team grow while building trust using intentional communication which are both fundamental building blocks of any supportive and successful business culture.

To build a successful business culture using flashlights and mirrors you must first identify what a good business culture looks like so you can then assess how you are supporting or detracting from those goals. Throughout my 30-year career I have had the opportunity to collaborate with some amazing teams and in some amazing business cultures around the world. As a leader it is difficult for me to pinpoint exactly what made one business culture better than the other, however, there are common themes that seem to stick out when I think about the ones that were most supportive. If I were to hold the flashlight up to all the business cultures and environments I have worked in during my career the following strengths would be evident:

Roles and responsibilities were always well defined
There was clarity around what is wanted or needed from each other
There was an elevated level of trust among all parts of the organization
Everyone pursued solutions that were mutually beneficial
People did what they agreed to do
Information was timely
Communication was open and honest
People admitted to and took responsibility for their actions
There was timely and constructive feedback
There was proper and appropriate confidentiality
I felt empowered and trusted to make decisions within my scope of responsibility
I was asked for my input when appropriate
I had access to training and development
Values and principles were followed
Opinions were shared constructively and never negatively

If you look at the items listed they can be combined into the following themes:

Shared Values
Intentional Trust
Transparent Communication

As a business owner if you can hold up your ‘culture mirror’ and say that you are actively living up to and supporting your personal and organization values, are building trust with your team, customers, and stakeholders, and doing so with clear, consistent, and transparent communication you could probably say your business culture is supporting the growth of your organization. In addition, if your employees can say the same thing about you and the organization, you are heading in the right direction. If you cannot say that regarding all areas, that is OK, it just means that you might have opportunity to gain experience in those areas as a leader and organization.

If you do not have your business culture identified or outlined as an organization, that is OK. However, I would strongly recommend that you take time to identify what good looks like and the specifics of your culture that you are trying to build and support. There are many ways to do this including looking into the New Heights Package offered by Arborisk Insurance or to take the free Culture Assessment being offered this month. Both will provide you a high-level perspective on potential areas for business culture enhancement. Whether or not you do either, it is important to start to discuss, build, and document what good looks like for your organization.

Once you have built your ‘business culture mirror’ by identifying what good looks like, it is time to bring out the flashlight and see what specifically is enhancing, sustaining, and detracting from your culture. The easiest way to do this is to simply ask your employees. Ask them their thoughts on how defined and effective they feel the business culture is in your organization. You can develop your own questions or use some of the following questions to begin the conversation:

What do you feel are our core values as an organization?
Do you feel supported in your personal and professional development?
Are there any areas of the organization you would like to find out more about?
Do you feel like my communication to you is effective?
Do you feel like you are properly informed regarding the direction of the organization?
What are you enthusiastic about within this company? Do you feel supported in that passion?
What are you passionate about outside this company? DO you feel supported in that passion?

There are hundreds of questions you could ask, but the most important thing is that you are asking them to help shine the light on opportunities and specifics of what is important to your employees. As these conversations continue, you will start to shine the light on those areas of opportunity where you can further align your leadership approach and business culture with the expectations of your employees. Through frequent, transparent, and intentional communication you will also build trust among the team and within your organization which will help to ‘power the flashlight’ as you continue to identify, build, and assess the right business culture for your organization.

If you are interested in learning more about how to identify, build, assess, and nurture your business culture, please feel free to take our culture assessment which can be found at the following link:

Company Culture Assessment

Once completed, a Thrive Consultant will review the results with you and develop a high-level action plan of next steps.

For additional help with growing your company, contact a member of the ArboRisk Insurance team! If you’re looking to improve upon your communication skills or want to help one of your key team members develop personally, sign up for the Thrive Leadership Development package today! Additionally, if you find it difficult to find or keep quality employees, check out our Thrive Hiring & Recruiting Package.

Remember, Peter Drucker once said, “Culture eats strategy for breakfast.” What are you doing to identify and develop your business culture as you provide your organization the opportunity to advance and surpass the strategic goals of your team?

Entry Level Driver Training

by Katie Petersen | Jun 7, 2022 | Safety | 0 comments

Entry Level DRiver Training

Written by Eric Petersen, CIC

Effective February 7th, 2022, the federal government put into effect certain requirements for new drivers looking to obtain their Commercial Driver’s License (CDL) called the Entry Level Driver Training (ELDT) mandate. The goal of the ELDT is to standardize training of new CDL drivers across the country to help make the roads safer for all to travel on.

While the focus of this mandate is geared towards the trucking industry, tree care companies that have CDL drivers and vehicles are affected by this as well.

So, how does ELDT affect your tree service?

First off, ELDT is a federal mandate to ensure all new CDL drivers (or drivers looking to add another CDL endorsement to their current license) receive training on the same topics, however, it is important to note that each state may have their own way of implementing the ELDT mandate. Remember, the individual states are the entities who approve and issue the commercial driver’s licenses. So, your first step is to check with the state that your driver(s) will be licensed with to understand their take on this mandate.

The training is broken into two distinct parts; Theory (written/classroom) and Behind the Wheel (BTW). The theory part has thirty one topics ranging from basic commercial vehicle operation to non-driving activities like post-crash procedures. For a list of topics visit Samba Safety’s ELDT page. The BTW portion has two components with both range driving (closed course) and public road driving. The pre-post trip inspections are typically taught during the range driving and the practical experience of being on the road with the commercial vehicle is done within the public road training.

A driver can do either part (theory or BTW) first, however, they cannot apply to take their physical CDL exam until they have been registered in the Training Provider Registry (TPR). Once they are listed on that national database, then they will be able to take their physical exam to obtain their CDL. From the conversations that I’ve had on this, how new drivers get into the TPR can vary from state to state, so check with the state your driver will be licensed in for specifics.

That is the basic framework for the mandate, however, if you’ve dug into this in any manner, I know you have more questions, so I’ve compiled a sample of questions that we have received from tree care companies on this new mandate.

Can I still train my drivers in house? – Yes, you can, however, your driver will need to be registered in the Training Provider Registry (TPR) showing that they have completed ELDT before scheduling their physical exam to obtain their CDL. How they get registered in the TPR will be state specific.

Are there online resources to help with training? – Yes, there are a number of vendors who are selling online packages to help employers do in-house ELDT. As an example, JJ Keller offers online material to help companies train in-house. They have a Trainer manual ($129) plus online courses ($1,413 per person) for all topics. A quick google search of ELDT materials will produce many options for you to choose from.

Do I need to register as a training school? – If you want to be able to do only in-house training for your new CDL drivers, then yes, you’ll need to have at least one registered instructor and be listed as an approved Training Provider (school). Again, check with your state on what the specifics are to do this as each state may differ.

How many training hours are required to comply with ELDT? – The ELDT language does not specify the number of hours for training the theory (written) part or behind the wheel. They only require that the driver can pass the written test with 80% proficiency and pass the physical exam. How many hours of training it takes to get that done is up to the training provider.

How do I record training hours? – There is no guidance or specific format to track training hours, only that you must track the hours spent on each section of the training.

For more information on the ELDT visit the Federal Motor Carrier Safety Administration’s FAQ’s.

If you need help with driver safety and/or fleet management, contact ArboRisk to learn more about their Thrive Risk Management Safety Package!

Coffee with a Cop: Traffic Violations

by Katie Petersen | Jun 3, 2022 | Safety | 0 comments

Coffee with a Cop – Traffic Violations

Written by Jim Skiera

Do you know what specific traffic violations are more likely to get your employee(s) pulled over?

The initial thought for this article was to talk to an officer about reasons drivers are stopped while driving vehicles commonly used by tree care companies (chip truck, bucket truck, dump trucks with trailers, etc.). We also wanted to find out what violations cause officers to tag vehicles out of service. Out of service violations become very costly for the business when you add up fines, repair bills, court and legal fees, and downtime that leads to lost revenue.

To gain insight I spoke with six different officers from multiple police and sheriff departments in the Denver metro area. I started each interview with the same question:

Of the commercial vehicles that you’ve pulled over in the last month/quarter/year, what suspected violation caused the pull over?

The consistent answer from each of the patrol officers was they don’t treat commercial vehicles and drivers any differently than passenger vehicles. The officers I spoke with stated they primarily look for drivers of any vehicle committing the moving violations that regularly cause serious accidents and injuries.

The top five infractions that are most likely to get a patrol officer’s attention and get a driver pulled over are:

Speeding: by far the top violation that gets drivers pulled over is speeding. More than 40% of all traffic stops are related to speeding. It is also the number one reason for serious accidents. Statistics show for every 100 speeding tickets issued there are 14 fewer auto crashes and five fewer auto accident-related injuries.
Visible Equipment Violations: Broken or inoperable lights, broken or missing mirrors and other inoperable safety equipment required for drivers to communicate with or see other drivers on the road.
Cell Phone Use While Driving; Distracted driving is unsafe driving.
Following Too Closely or Improper Lane Changes: These two violations cause accidents by not allowing for proper braking distance and or response time of other drivers to safely avoid collisions.
Hazardous or Erratic Driving: Failure to stop, swerving in and out of lanes, drifting over the centerline, etc. are signals that a driver may be impaired, possibly under the influence of alcohol or drugs, falling asleep at the wheel, or texting while driving.

The first officers I spoke to were Patrol officers of which traffic stops are one of many responsibilities of theirs. When they do make a stop, the time spent with each driver is limited and they are not trained to do commercial vehicle inspections. They have limited experience with tagging vehicles out of service. Following one of my interviews, it was recommended I speak to an officer that performs roadside commercial vehicle inspections if I wanted information on why vehicles are tagged out of service.

I eventually was introduced to Deputy Chad Davey of the Douglas County Sherriff’s Office. Deputy Davey is responsible for Commercial Motor Vehicle Inspections in Douglas County. He sets up mobile inspection sites around the county, on county roads and highways and all commercial vehicles are required to stop to be inspected before they can proceed.

Officer Davey follows an inspection protocol that is used for all inspections. The first part of the inspection is about the driver. He checks for current and proper license, vehicle registration, insurance, drug or alcohol use and driving logs. The second part is a complete vehicle equipment inspection.

Question: What is the most common infraction you see with tree care related commercial vehicles during roadside inspections?

Answer: Deputy Davey said he could not specifically say there was a “most common” issue with tree service trucks. He said inspections are comprehensive and he has inches of paperwork of violations. Check the Commercial Vehicle Safety Alliance (CVSA) website of North American Level 1 Inspection procedures.

He did give a few examples of common violations he finds with tree and landscape vehicles pulling trailers. The first is nonfunctioning electric emergency trailer brakes. Two things are common, one the battery for the brakes is not working, or the brakes themselves do not engage when tested. He said it’s common for drivers to just check to make sure everything is hooked up, but they don’t check to see if the emergency braking system works. Deputy Davey said probably half the drivers he meets during inspections don’t know they need to test the trailer brakes.

Another common violation is breakaway chains that are damaged from being dragged or are not rated to accommodate the weight of the trailer. He said chains on trailers get damaged. If an inspector sees the chain is worn more than 1/5 its diameter it’s a problem. He also said when chains are replaced, they need to be replaced with chains of the same rating, and often are not.

Question: What can a driver do to avoid being pulled over and having their vehicle tagged Out of Service during an inspection?

Answer: Roadside Commercial Vehicle Inspections are mandatory so you can’t avoid being pulled over. What you can do is limit your chance of being tagged out of service by performing daily inspections, completing inspection reports, maintaining your driver’s license and certificates and other required documentation, and keeping vehicles in safe working order. Have required documentation stored somewhere it is easily available when asked for by the inspector.

Another recommendation for business owners is to include training about what is included in roadside inspections, so drivers understand what the inspectors are reviewing during an inspection. This should be specific to the vehicles employees are using and the state, federal and local restrictions for those vehicles.

Managing the risks for your business is an ongoing task. One area of significant risk is with your fleet and the drivers using the vehicles in that fleet. Preventing incidents that cause damage, injuries, and costly downtime requires commitment by all involved. It starts with the owner providing well maintained and properly operating equipment then complimented with qualified and licensed drivers trained to use and maintain the equipment efficiently, effectively, and safely.

If you have specific questions about roadside inspections, contact your local law enforcement department. They can assist with inspection checklists and regional laws and regulations. If you need help with driver safety and/or fleet management, contact ArboRisk to learn more about their Thrive Risk Management Safety Package!