Operations: Understanding and Communicating on Production Hours - A Key to Profitability

Addressing a question we received from a listener, Marty Grunder talks about the importance of understanding how hours impact the profitability of a job, how he helps his team understand the impact they can have, and what they do to monitor and manage hours.

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Episode Chapters:

00:00 - Start
00:31 - Why Production Hours Matter: You Sell Time
03:09 - Get Off Paper: The Case for Software Systems
07:36 - The Estimation Standardization Meeting
09:54 - How Grunder Grew from $4.5M to $18M
12:31 - Finding Your Minimum Job Size & Profit Sweet Spot
14:00 - Start Simple: Taking Action on Production Hours

Resources:

Virtual Sales Bootcamp  

Grunder Landscaping Field Trips  

The Grow Group   

Grunder Landscaping   

Marty Grunder LinkedIn  

Stihl  

Show Notes:

Core Principle: You Sell TIME

Every hour you pay for labor needs to be billable vs. unbillable (travel, training, loading/unloading, repairs, shop work). The sooner your entire team understands this, the better your financial performance.

Universal Language: Hours transcend language barriers. Sold for 110 hours, took 130 = No bueno. Sold for 110, took 105 = Bueno.

Get Off Paper, Get Software

Why It Matters:

1. Pay teams to serve clients, not push papers

2. Young workers expect technology - paper systems hurt recruiting

3. Impossible to scale or create sellable business with paper trails

4. Software eliminates human error, provides real-time data

Recommended: Aspire or LMN (far ahead of other landscape software)

The Chick-fil-A Test: Imagine writing your order by hand for someone to read before cooking. That's the inefficiency of paper systems.

The Estimation Standardization Meeting

Grunder's System:

• Every other Wednesday, 3:30pm, standing meeting

• ~20 people (everyone selling OR producing work)

• Review every job from last 2 weeks that went over OR under by 15%

• Aspire filter automatically loads qualifying jobs

Why Review Jobs Over Budget:

• Need equipment to improve production?

• Weather/site conditions?

• Drawing errors or bad notes?

• Capture data for recurring annual work

Why Review Jobs Under Budget (Critical!): Example: Bid 80 hours, took 52 (28 hours under)

• Maybe keep margin this time

• Do extra work or give rebate

• Most Important: Bid ~52 hours next year

Philosophy: When you overcharge, it comes back to you. Find the sweet spot: make money while delivering tremendous value.

Grunder's Growth Story

Revenue: $4.5M → $18M (4 years)

Primary Driver: Better pricing through hour analysis. Knowing specifically what to do MORE of and LESS of.

Key Discovery: Jobs under $7,500 very hard to profit on

• New clients: $7,500 minimum

• Existing clients: Will do smaller work (loyalty)

Meeting Culture

No personal attacks. Professional dialogue. Applaud teams for coming under, analyze why jobs went over, make adjustments, move forward.

Compensation & Equipment Decisions

Best companies tie pay to:

• Job profitability (rooted in hours)

• Hours worked

• Onsite time

Hour analysis drives smart equipment purchases:

• Snow removal sidewalk equipment (justified by hour savings)

• Material handling buggies (through Workers' Comp grant)

Learn From Success AND Failure

Success leaves clues. So does failure. Sprinkle both lessons throughout your company to find patterns and common traits.

Start Simple, Scale Up

Grunder's First System: Dry erase board with green/red circles for good/bad hours. Primitive but it worked.

Today: Same concept using Aspire. The discipline matters more than sophistication.

Action Steps

1. Move to software (Aspire/LMN)

2. Establish bi-weekly hour review meetings

3. Track BOTH over and under performance

4. Record mistakes, adjust, move on

5. Analyze patterns for most/least profitable work

6. Adjust pricing based on actual data

7. Let hours drive equipment investments

Bottom Line: "If you don't know your hours, you're flying blindly." Production hours are where you make your money. Track religiously. Review regularly. Adjust constantly.