Friday, January 6, 2012

Hey Grinder Guy, how can I increase profits next year?

Original Post December 1, 2011

The past few years have been trying times for all, but blue skies are ahead.
Winter is a good time to review the past year and the upcoming season.
How can you reduce costs and increase profitability is dependent on each business, but I can give you a few ideas of what to look for.
You cannot compare year to year without comparing something tangible.
Some companies track costs well, but if you don't, compare yards out the door to total costs.
Are you going up or are you going down
The profit or loss doesn’t matter in this situation, they will take care of themselves, but you need to know where you are going. It doesn’t matter if you hired a new secretary or 3 new operators, what went out and what did you spend makes it pretty simple.

Here are 6 ideas to consider and put into your shoes:

·         Repair and Maintenance
Probably your number one issue. Breakdowns are bad enough, but it's the downtime and overtime spent catching up that cost you real money.
1.      Buy a grinder wear parts package and get a discount and replace everything on your time. Chances are that you will find other needs while replacing these items.
2.      Call your clutch manufacturer for advice on checking clutch wear and maybe get a courtesy visit
3.      Audit your colorant usage- How much color did you buy? Subtract how much do you have left? Then divide by number of yards sold. That will give you average lbs. per yard rate. Check with your Colorant Company for industry averages.
4.      Call your Colorant Sales Representative and have them calibrate your colorant scale and pump while checking over your Matt Steward of Colorbiotics says worn color machine blades cause a lack of efficiency. Your Representative can check machine wear for you also. George Midlik of Amerimulch said that his company handed out numerical push button counters and stop watches to machine operators last year so that they could track bucket counts per minute and per barrel and prevent any color usage variation before it happens. Get your operators one.
5.      Service engines and hydraulics- If you are close to your 1000 or 2000 hour service, do it early when you have time rather than in the middle of full production season.

·         Equipment Utilization
Are you utilizing your equipment to its full potential? Double shifts? Split shifts?
Get into other businesses. Drywall Recycling, Shingle Recycling or Food Waste Composting for example.
Or are you using your equipment too much?
Reevaluate that low margin product that is wearing out your equipment.
Remember, Screen More Grind Less, and why haven’t you called me yet?
Replace that old technology like your old shaker deck with a star screen in soil or mulch. Push of a button and you can go from ¼” to 1 ¼” with the same machine.

·         Products
Create or add at least one new product next season.
1.      Maybe a high dollar product like a new mulch color of your local sports team
2.      A low dollar wood fuel product to get rid of your dirtier materials
3.      Screen the fines out of your mulch to save colorant usage and weight and sell the fines to a pellet plant or use them in a new potting soil mix.
4.      Offer onsite grinding or screening services.
5.      Add a retail yard.
Just don't add a product that will cannibalize one of your other profitable products.

·         Automate something
1.      Convert something to electric. Grinder, Screener, conveyors, something. There are Hybrid pieces of equipment on the market now.
2.      Screen 2 products at once
3.      Grind into a screener
4.      Add a conveyor and use the wheel loader less.
Conveyors are cheap and come to work every day and they don't have to have Obamacare.
Push a button and it is working.

·         Advertise
1.      Local TV advertising is relatively cheap and their market info is very accurate.
2.      Donate product to local schools and sports complexes
3.      Sponsor local garden radio show
4.      Team with local landscapers and supply all their needs

·         Review the Ask the Grinder Guy Articles of the past year
1.      Screen more grind less. Why haven’t you called me yet? I can screen your 1st ground product to a perfect size at rates greater than your grinder can produce. So why are you double grinding? Do you like losing money?
2.      Did you check out your used wear parts like we told you to?
3.      Replace your stationary shaker deck in your soil or mulch system with a star deck for peanuts and reduce your costs enough to buy the entire Plantation.
4.      Can you use a slow speed shredder instead of a high speed grinder?
5.      Can plastic and stone removal help you?

I hope you had a successful 2011 and look forward to helping you be more profitable in 2012.
Have a question? Want to save money and build your business?

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