Wages and payroll taxes paid to and for all employees are labor costs. Businesses have a variety of costs, one of the most significant of which is labor. The landscaping cost is determined by your vision for your new garden area. Landscaping is a broad term that refers to improving the appearance of your garden. Planting, constructing a patio, and erecting a trellis are examples of landscaping. Calculating landscaping labor costs effectively helps ensure you profit from every task you undertake.
The best way to calculate Landscape labor is to evaluate the number of subcontractors working on the landscaping, the number of hours needed for the project completion, and the hourly landscaping labor rates.
Because labor is the largest expense, most firms encounter, knowing how to calculate labor costs is vital if you want to run a profitable operation. Labor costs vary per industry, although they typically account for roughly 60% of overall expenses in most industries. Labor costs might fluctuate depending on a variety of factors both inside and outside your firm. However, there are several factors to consider when determining and calculating landscaping labor costs:
Major Factors Affecting Labor Costs
Worker Availability
When there is a scarcity of landscapers with the appropriate abilities, talents, experience, and education to execute the landscaping chores that an employer requires, the few available landscapers can demand greater remuneration. Employers can start providing cheaper wages when the number of landscapers available increases. Assuming that demand remains constant, this follows the basic rules of supply and demand.
Location
Employers must pay wages that are in line with current living costs. As a result, wages in high-cost-of-living areas are often greater than in low-cost-of-living areas. In the United States, this generally means that salaries in the Southwest are lower, as evidenced by data from the Bureau of Labor Statistics’ Occupational Outlook Handbook for various industries. The cost of living in elite areas is often higher than in rural areas.
Efficiency
In business, efficiency means that a job needs less time or resources to complete, and labor expenses are reduced in most circumstances. A variety of factors can contribute to the efficiency of a landscaping business and, as a result, lower labor costs. Landscapers, for example, will take longer to complete jobs if they continually have to fix the machinery they employ. As a result, employers must pay more to do the same job. Additional inefficiency factors include building layout, scheduling challenges, labor conflicts, and poor managerial planning.
Employer Philosophy
Some employers place a higher value on labor than others. Landscapers are the lifeblood of a landscaping company, so high pay is often offered to increase job satisfaction and recognize the role this plays in job retention, as keeping landscapers over time is generally less expensive than recruiting and training new landscapers consistently. Landscapers are seen as crucial yet disposable or replaceable in most landscaping organizations, especially when the activity does not need a high skill set, and the landscaper supply is plentiful. These businesses do not provide competitive pricing.
Task Difficulty
When landscapers do jobs that are more sophisticated or demanding, they are usually paid more.
Prepared Rates
All landscape companies have prepared rates. The organization will provide you with a set of tariffs outlining the charges per square foot of service as soon as you request one. Landscaping isn’t as easy as you would believe. It takes time to go over the site and develop the ideal layout for what you want. This procedure can be costly since it necessitates much planning, care, and maintenance, all of which affect labor costs.
Material Selection
One of the most prevalent reasons that boosts or decreases your labor cost is the cost of materials. It would be best if you also remembered that a good landscaping business would not succumb to your urge to use low-cost, low-quality products. Instead of just agreeing to all of your requests and providing a sub-par result, good landscaping businesses will prioritize the quality of the end product.
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Legislation
Fair Labor Standards Act (FLSA) is a federal law that governs how employers reward their workers. FLSA specifies what constitutes compensation hours and establishes a basic minimum wage rate. Employers are also governed by state wage requirements in addition to the FLSA. Employers are not allowed to pay laborers less than the minimum wage set by these regulations.
Unions
Because the union sets a minimum compensation rate for its members, the presence of a union frequently indicates that if a company utilizes union labor, salaries will be higher. Unions can keep rates higher by manipulating supply and demand by restricting the number of members.
How to reduce Labor Costs without reducing your employee headcount
The most obvious way to cut labor costs is to hire fewer people, yet layoffs are rarely the best solution for a company. While cutting labor costs may seem like a good idea, keep in mind that when you lose an employee, you lose more than simply the landscaper. Do you lose all the landscaper’s skills, knowledge, and, most crucially, their on-the-job experience? Have you ever considered whether there are other ways to cut labor costs without laying off half of your staff?
Letting off an employee isn’t the only option to save money on labor. Letting an employee go along with their unique skill set only to save the organization a few dollars in revenue would be the worst thing you could do.
Would you like to discover how to save money on labor by using more innovative methods? Here are a few clever strategies to cut labor costs without harming your workforce:
Reduce the number of working hours
Making some previously full-time jobs part-time can save your landscaping company a lot of money. Most landscapers would rather take an hour off than lose their jobs entirely.
Job sharing, in which two part-time employees share a full-time working schedule, is a great approach. Because two or more landscapers are working on the timestamp of one landscaper, this arrangement reduces labor expenses and, if planned properly and performed appropriately, eliminates the need for additional office space, as neither employee will need to utilize the office at the same time.
If done on a broad scale, reducing staff hours by using job sharing may also allow you to minimize your office space. This will be achievable since your employees will be splitting their hours. You will only need half the area you had before.
Give your Landscapers a break
By encouraging your landscapers to take advantage of their annual leave, you invigorate their spirits and save your company a lot of labor expenses.
You can also make the offer more appealing to them by establishing and alternating paid and unpaid leave. This will require using a properly planned roster that guarantees that no part of your firm is understaffed for an extended period, ensuring that business operations function smoothly.
Provide Excellent Training
You not only revive your landscapers’ spirits by encouraging them to use their annual leave, but you also save your firm a lot of money on labor costs.
You can also make the offer more appealing to them by establishing and alternating paid and unpaid leave. This will require the employment of a properly planned roster to ensure that no part of your firm is left understaffed for an extended time, ensuring that business operations function smoothly.
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Reduce Employee Turnover and Increase Productivity
Replacing a landscaper is significantly more expensive than keeping good personnel. So attempt to keep your landscapers happy. Irrespective of what your producing organization creates, you’re focused on generating substantial products or providing exceptional service. To enable a more knowledgeable team, you’ll need to attract the best talent, keep them, and use technological innovations.
Take advantage of cheap labor
When your company’s operations are at their peak, and you realize you need extra hands to help you manage the ever-increasing demand, you can save labor costs by recruiting interns instead of full-time employees who earn full-time salaries.
Employ Technology
When implemented correctly, technology can be a useful tool for significantly reducing labor expenses.
Business owners can automate various operations using computers and the Internet of Things, decreasing the cost and duration of manufacturing. This action alone can help you save significant money that would otherwise be spent if these processes were performed manually.
Tap into the Global talent pool
Cutting labor expenses by tapping into the global talent pool is not only a sensible approach to lower production costs but also a great way to rejuvenate the soul of your company through diversity and new viewpoints.
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Frequently Asked Questions
Why Calculate Labor Cost?
You wouldn’t sign a contract for new office space without first doing the math to see if the monthly rent was within your budget, would you? Similarly, you should not hire a new landscaper unless you have conducted a thorough analysis to see whether the benefits of doing so outweigh the financial cost. Calculating your labor costs will help you find income leakage in your landscaping company.
How Much to Pay an Employee?
The amount you should pay your landscapers is decided by how much similar jobs are paid by your competition. Conduct market research to see how much other businesses in your area and location pay for your hiring position or the type of labor you need.
To learn more on how you can start your own landscaping business, check out my startup documents here.
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Meet Shawn Chun: Entrepreneur and Landscape Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a landscape business owner at a job site, driving down the road or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Landscaping Business Boss: I want to help landscape business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.