Austin Gray: Welcome back to the OWNR OPS Podcast. I'm your host, Austin Gray, and in this episode, I'm hosting Garrett Williams again. Garrett is from GNM Outdoor Services up in Minnesota. They do excavation, landscaping, and snow removal. Garrett and his sister have built this business from zero all the way up to about $5 million in revenue. We had him on the podcast earlier; it's one of the earlier episodes. So if you haven't listened to that one, go check it out after you listen to this episode because we get into his story and kind of how he built the business.

In this episode, we're going to go over some more specifics related to, well, I was asking him questions related to sort of like where we’re at in the growth phase. Last year, we did about $650k in revenue. We're looking to break the million mark this year, and so I wanted to pick his brain on, "Hey, how do you think about delegation? How do you think about roles and responsibilities? Org chart, who needs to be where, what roles do they need to be handling in order to grow?"

We also get into, at the end of the episode, a crash course on excavation bidding. Garrett kind of runs us through how they think about overhead and how they build that out on each of their projects to maintain profitability so that they have a healthy company moving forward. This one was a fun one, so stick around for the whole episode. If you like this kind of stuff, please make sure to like and subscribe. If you're listening on YouTube, like, follow, and leave us a five-star review on Spotify or Apple.

Without further ado, let's jump into the episode.

Real quick, I wanted to share with you two agency partners who have helped me grow Bearclaw Land Services. Striker Digital manages all of our SEO services, and they've got us to number one on Google for specific search terms within our local service business. Cedar Digital Consulting manages all of our social media and YouTube, and they make it very simple for OWNR OPS like myself. All I have to do is go take photos and videos in the field, upload those on my phone to a shared iCloud album very quickly, and they handle everything else from there. They edit and they publish. I don't have to worry about it. I can focus on growing my business.

So if you're looking for SEO services, check out Striker Digital. That's stryker-digital.com. And for social media, check out Cedar Digital Consulting. That's cedardigitalconsulting.com.

Garrett Williams: For us, it was really easy because I've always been… I wasn’t at first; I used to be afraid to talk to people and like, I’d be, like, nervous talking to people for no reason. So I learned early on, okay, I have to be able to become more outgoing, more personable. So I just started talking to everyone everywhere I went, and after, like, a year, I got to a point where I enjoyed it.

So for us, delegating certain tasks when we started was really easy because Marina is a whiz at anything paperwork—any permits, any tax stuff, uh, insurance, payroll. She's had like seven to eight years of experience doing that for other large construction companies. The best thing about her is her attitude. She has the "get it done, figure it out, no matter what" attitude.

So that’s naturally what she does. Anything we come up to say we don’t know what we’re doing here, we weren’t business, we weren’t entrepreneurial experts when we started. We didn’t know anything; we just started out. Every time we came to an obstacle, we figured out what we had to do to overcome it and then moved on.

Um, so it was easy for us because I was always outgoing. I’m obsessed with the work and like the field work, talking to customers, lining stuff up, figuring out issues on the job. So like if she was another me, it would have been really tough because then we would have always been trying to do things, you know, butting heads, going back and forth.

But I've always been kind of the front, and she's been, you know, I've always been the front of the house, she’s been the back. And you know, without both, you got nothing. Um, but it was easy for us just because of our personalities and the experience that we had. I had all the field experience, managing the guys and that outgoing, you know, sales, where she’s more like she’d rather send you an email than talk to you in person. That's just how she is.

You know, if we still go do lunches and whatever, but if she could pick what she had to do, you know, she’d rather send you an email, while I would way rather not send you an email and I’d rather just call you.

So it just worked out good for us that way, I think. And that is key if you're going to have a partner is to try to find someone that’s really good at everything you’re not. And that’s kind of how we are. I like doing the stuff she doesn’t like doing and vice versa, so it works good.

Austin Gray: Yeah, and whenever you brought your brother on, what were the responsibilities you immediately gave to him?

Garrett Williams: So he was in the field for like three years, I think, doing the work as a foreman basically. And then, uh, he got to a point where he was like, I love the work, but I don’t really want to run, you know, the same machine for the rest of my career. So we were at the stage where we needed someone just to do operations, which is to walk around with the guys on the job in the morning, show them everything they need.

So basically, he gets the foreman on site everything he needs from equipment to material. Um, if we got to get something moved, we got to call another contractor and we got to move a gas line or something, then he’ll handle lining that up.

Basically, it’s his responsibility to take the job from start to finish and then do a walkthrough with the customer when they're done, make sure they're satisfied. And then usually, he gets a residential job and gets paid then. If there's any issues, like he’ll resolve them with the customer or the foreman. So he basically gets the work done.

He started with us in July of 2017, and then he started working with us in Spring 2018. Then it was like 2021 when he started doing pretty much just operations. And he’s always been here; he always worked really hard. So he became a 20% owner on January 1 of 2023.

Did you grant equity or did he have to buy?

Austin Gray: Um, we basically gifted it but with conditions, like he can’t sell it. If he ever wanted to move on, he would basically have to give it back. Um, there’s, you know, there’s a million ways you can draw something like that up on your operating agreement and stuff. So we drew it to where, you know, it worked for us.

Garrett Williams: Cool. Um, last question here on organizational structure. The reason I'm asking this is because we're putting some tires in place right now, and our business is very similar to yours. It's project-based.

Um, you've got field operations, you've got office tasks, you’ve got sales and estimating. Um, so can you give me like a quick rundown of your current organizational structure? Meaning, who are the key leaders and what are their, like, one, two, maybe three main responsibilities?

Garrett Williams: Yep. So I think, um, you know, you always gotta have a job description for each employee, and you gotta have, you know, detailed responsibilities. Like you said, you can't have 10 people doing one thing and everyone just assuming everyone else is doing everything.

You know, you gotta have very specific, hey, your responsibility is to get this done every day and this, you know, by the end of the week, whatever certain task. Um, but I think certain times if you do like I think job titles, you know, some people like a big job title, you know, I'm CFO—I'm what?

I think we try not to be too strict with that or like, you know, like that’s not my job. Like we don’t do that. We’re all here to get the work done.

If the guys in the field have questions about the project or the scope of work, the sales guy is going to go out there and explain it to him or figure out any question. It’s not like once he sells it, he’s never going to touch that job again. I always tell him, if you do your job right, if you do everything good, you won’t need to.

But, you know, there’s certain times things come up.

So basically what we have, me, Marina, and Jameson are basically the owners. Jameson does all the operations. If there’s a quick easy change order, he’ll do that, um, you know, if they’re already on a job and they want to add, you know, 20 feet to the wall, so he’ll go out there and, you know, type it up and make sure it gets approved before we do the work.

Um, and then Marina is in the office, primarily in the office, and then she handles everything back in with insurance, taxes, payroll, a little bit of operations, not a ton. And then, um, you know, I do, you know, what needs to be done.

I do some sales with people I've known and worked with since the beginning. Uh, it depends on kind of my schedule, how much stuff I have going on. I absolutely love working in the field. If I can go work on a job for a day, it’s like a day off; it’s like a vacation.

Um, but I’d never get to do that hardly—rarely. And like me working in the field now isn’t really the best use of my time because there’s so much more I can be doing. I can be reaching out to customers; I can be nurturing relationships we have with large general contractors.

Like, it’s not the best thing for the business, but it’s kind of the best thing for me, if that makes sense.

Um, so I do a little bit of it, not a ton. Um, but yeah, I’m kind of the very tip of the spear, just keeping things going forward and whatever really needs to be done, whatever's struggling, whatever is lacking, is picking up that slack wherever that is that day.

Um, like I was saying earlier, I am very fortunate to not be in a position where I have to be here hours a day, and if I do anything different, then I have to do it after hours.

Like, I kind of do what I need and want to do throughout the day. Um, so that’s kind of where we’re at. Then we have two sales guys, and like you were saying, you're considering, or you hired a guy to do sales.

What we did is once I got to a point where I was just buried in meetings, trying to do four or five meetings a day plus five other things, plus some operations, and everything where I was doing a full-time sales job plus trying to do a bunch of other stuff, which worked for a little bit, but I’m like, I can't do this forever.

So we interviewed three or four estimators, hired one. We’re super fortunate; an absolute gem. His name is Michael. He'll work literally around the clock, seven days a week when he needs to. Very teachable, very, lots of integrity, great guy.

Um, so I spent three months training him. And now, uh, what works really good—and this is what I was going to recommend to you—is teach him everything you know about sales, and then let him, like, he does 95% of the work.

Once he has the quote all in and done, then I’ll just go through and spend five minutes to just go through everything, make sure he didn’t miss anything, make sure it all looks good.

So instead of me spending three hours on that, now he spends three hours on it, and I spend five minutes. And we’re just, we quote seven to eight jobs a day now, and I'm only spending half an hour to an hour on them, and he's putting all the time.

Like that’s where I think, like the next step for you is let him do all the work and you just double-check it and make sure it’s good and it’s how you would do it, you know what I mean? But you didn’t spend three hours on it; you only spent 15 minutes.

So like, that’s been huge. That was a big step. And now, actually this spring, he’s having to work too much to keep up—like he’s having to work until 8 or 10 p.m. every day, which he does.

I’m like, “Michael, I don’t know if you can do this forever. If you ever start a family…" like he does it; he loves it. But we have him work for another estimator, so we’ve been training a guy over the winter. His name's Dan; he's really good.

He’s been getting into more sales, so now this year, him and Michael are kind of pegged together on everything he’s getting trained in. And then this year we’ll have Michael and Dan doing, um—they’ll both be doing full-time sales.

So we have the, you know, the work and the capacity and the leads coming in to keep them both busy for at least 50 hours a week. So kind of that’s what we always done is get enough work for that P—that's what we do.

I don’t know there’s a million ways to do it, but get enough work for that position, at least like 30 hours a week for it, and then hire it, and then manage up to go because you don’t want them standing around having to look for things to do.

But yeah, we’ve done it.

Austin Gray: What kind of compensation have you set up for sales and estimators? Is it base salary plus commission?

I've talked to a lot of different people on this, and everyone seems to do it a little different. It depends a lot on the employee and what they want to do.

Um, and our business is super seasonal. You know, our busy season is like this year will be March to, you know, through October, maybe a little November. Um, once you get to October, the bidding slows down because you don’t have much time to do more work that year.

There’s still some going on, but the busy bidding season is like March to October.

Garrett Williams: Um, yeah, there’s—I know some people are all commission. Some people are just salary with whatever. But, uh, what we’ve done and what’s worked for us is a base salary.

It’s like—I think it’s around, I mean depending on what you're doing—like $50,000 a year, $60,000 base salary, and then 1% commission on commercial jobs. You know, big jobs they’re going off the plan; it’s $100,000, $200,000, $300,000 they're spending on it.

Um, and then 30% on like residential or, um, some builder stuff. So, it works—they have the base salary kind of for the winter, um, and then the commission for, um, other like residential stuff.

And how that works is on our quotes; when someone signs and approves, they make a 25% deposit on, say, a residential job. And after 14 days, that deposit is not refundable.

If it’s like a life situation and something drastic happens, we’ll give the deposit back, but after 14 days, technically then it’s not refundable.

Um, so then once they sign and approve, make the deposit, after that 14 days, then they get their 2% commission. Also, you pay it out after the deposit is paid.

Austin Gray: Okay, yeah, go ahead. Um, I know some companies—I was just talking to a concrete company where they do commission based off what the profit margin is on the job. You know, once the job’s complete, we did 30%, so they get 10% of that or whatever.

Um, and we thought about doing that, and it probably works, but our thing is, you know how it is, if it rains, say it rains and then everything’s muddy and the guys work a half day, and it ends up taking longer and you end up doing less.

Like there’s things that happen in operations that are completely out of the estimator’s control that could drive the margin down.

That’s not really on them, you know? It's not their fault that it rained and that the guy, you know, blew a hydraulic hose. You know, stuff happens, and you just don’t do as well as you’d like to on a job. Say you shoot for 30 and end up being 10, so it’s not really, you know, their fault, I guess.

So that’s kind of why we’ve always just stuck with a percentage of the overall job versus like a higher percentage of the profit. Because you don’t want them bidding work for cheap just to get it, and they’re getting a ton of commission, and then you’re doing the work, and it’s tight.

So, you know, it has to be that happy medium. They got to be getting the work for what you need it for and what it’s worth, which is why, you know, you want to double-check the quotes.

But you want to have a really good structure for them. We have—we have spent years developing a spreadsheet that has everything we need on how we bid everything.

So they’re not guessing anything; they’re not hoping for the best. They have everything broken down to the biggest variables—time of how long it's going to take because our labor is more expensive than anything else.

Um, so we have it broken down to where it’s easy for them to bid it. Two days, okay it’s that much in labor, and then they have material—30% markup on the material on residential, 10% on commercial.

And we have it very laid out to where it’s not rocket science, you know? Like just about anyone could learn it. The biggest piece is being personable, being able to talk to people, and then keeping up really good communication—people have questions, getting back to them right away, um, getting quotes turned and burned—getting them done. So that’s the biggest thing.

Austin Gray: Cool. All right, we're at the half-hour mark here, so thank you for sharing that. Um, let's—can we jump into excavation bidding?

Garrett Williams: Sure. Okay, so I want to kind of give you a little background on bidding. You know, I started really young doing the work, like—when I, you know, when we started this company, I had about seven years of in-field hands-on experience.

So like I knew how to do the work; I knew how to run the excavator; I knew how to run the skid loader. I knew how to—I knew how to work with my hands; I knew how to build stuff; I knew how to tear stuff apart.

Um, but I didn’t know anything about bidding because I never did any bidding. You know, I was never given that role. I was never, you know, when I was young, I didn’t really care. I just—I just loved doing the work. I’d work 12 hours a day and I’d love every second of it, so I didn’t know anything about bidding.

So when we started, I had to figure it all out on my own, which I watched a ton of videos; I asked a ton of other companies on how they do it. And I didn’t have a single clue how to bid a job. I knew how to do the job; I didn’t know how to bid it.

So I lost a lot of money from learning—learning how to bid. I lost a ton of money. People say like, “Oh, you know, my college education was 50 grand.” It's like my education of doing this in the field was like 500 grand. No, it—it wasn’t that much, but the key thing is job costing is huge.

Okay, I bid a job; I think it's going to take two days; it’s $10,000. I go do a job, and if I don’t job cost it very closely, I have no clue how it went.

You try to run the numbers in your head; yeah, okay, that was that; I think we did pretty good. No, you have to have it all on paper. You have to have every expense categorized.

Because if you don’t know what you actually did, then you have no idea what to bid the next one. You know, if I go job cost this one, and okay, everything went good, but it was still like 8%. I want to be at 20! Well then, okay, I got to raise my labor—I got to do something here.

So, if you’re not job costing—it’s my opinion, but if you’re not tightly job costing, you’re never going to be able to bid accurately because you don’t really know what the stuff costs and you don’t know everything adds up, and you can’t keep track of it all in your head.

I guarantee it. I thought, “Oh yeah, this or that.” I thought this looks good, and then Marina would put it all on paper, “Here’s our cost.” And I would always try to look and see if she had something on her that wasn’t on the job, and no, they’re always accurate.

And I’d be like, okay, this or that. And then, you know, for a while, they weren’t as good as what we hoped. So I basically had to figure out estimating by trial and error and by bidding thousands of jobs.

Um, we were on I think like 900 and some jobs last year, and we have about a 15% close rate. So they would bid three, something, three to four thousand jobs a year.

Um, the last, like, probably three years, and before that was a little less. But so a ton, ton, ton of bidding. But basically what I learned is do job costing. And then, figuring out your overhead is huge.

Uh, we break everything—we don’t do stuff by the hour because there are only so many billable hours in a day. If your crew works 10 hours, you don’t have 10 hours of billable time, unless they meet at the job, and that usually doesn’t happen.

They meet at the shop or they have to go pick stuff up or a machine breaks down; now, you’re not getting billable hours. So we do everything by the day; it’s just how we do it.

So we break stuff up by how many working days in a year, and that’s how you have to cover your overhead. So figuring out your overhead is key.

Um, we didn’t make any money until we figured out overhead. Our first year, I think—I made a video on this a while ago—like our first year we got to the end of the year, we had no money. The bills were barely paid; the winter had no money like, “Where’d all our money go?”

We like $260,000 in revenue, and we're like, “Well I don’t know, but it’s not in our bank account. It went somewhere.”

Um, because we didn’t do any job costing; I was still learning how to bid. We weren’t doing any job costing; I was kind of just—it had the whole thing in my head, and it was just like you can’t—that doesn’t work.

You have to be on paper; you have to be able to track it. You have to—if someone asks me, “What was your percentage on that job?” If you don’t have a sheet showing the job was $10,000 and we had this, this, this, and this as expenses, then you don’t really know. You’re kind of just guessing, and that’s what we did.

So then that winter after our first year, then we really—hey, we got to figure something out. There’s no point in you being in business just getting to the end of the year with no money.

And that’s how I think a lot of companies are, honestly. There are some that figured it out, but there’s a lot that just happen—they’re just so busy doing the work and with other things, they don’t really sit down and take the time to figure out their overhead and what they actually need to charge.

And then a lot of it is in your head too. You think, “Oh no way that someone’s ever going to pay for that.” You know, I’m sure you’ve dealt with that. You type up a bid, and you put it all together: “Man, $80,000 for this backyard wall!” Like, “Who's going to spend that?”

And you send it, and they don’t even ask a question, and they approve it. And all great, and you get out there and, “Oh, that’s another $10,000-20,000.” Like that stuff happens; it’s all in your head.

You have to basically—I tell our sales guys, you have to not worry about how much money the customer does or doesn’t have; you have to just give them a number that we need to make money, and they have it or they don’t. Whatever.

Like the work is out there; people have way more money than you’d ever imagine, and people want to spend it with you.

It’s like if you do a good job, you have great communication, you have integrity, and you stand behind your work, like you’ll get jobs that you would never thought possible.

Like we have people spend $200,000 in their yard on stuff they don’t need. It’s like, “Who would ever think?” But people do.

Um, so that’s what we’ve done—figure out your overhead. And then we break it all down by the day. And then material, I’d say, is probably the easiest thing depending on the job.

But accurately measuring your material, always adding like 10% overages for some scraps and throwaway—whether it’s pipe, whether it’s boulders, whatever.

Um, and then breaking it down, figuring out your labor cost per day for, and then overhead, and then putting it all together. Uh, we shoot for most jobs; we shoot for like 25% to 30%.

Um, sometimes it goes down to you do the job, your job cost; sometimes you only have to do 10; sometimes you do 40. But overall, last year we averaged like 17% on everything. If you set an average on everything—like at the end of the year, we were at 17% profit; that’s net after all the bills are paid—overhead, insurance, you know, everything said and done is 17%.

I don’t—I don’t really like that people say, “Oh, we had, you know, a million gross profit.” To me, that doesn’t make any sense, because who knows what your bills are? You might have ridiculously high insurance because you have crazy drivers, and then, yeah, you had a million gross, but you only actually took home 100.

Like, I don’t really care about gross profit; what do you make after all the bills are paid—not before all the overhead expenses are paid. What’s your net? That, to me, is what matters.

Austin Gray: Yes, agreed. So your 17% net profit after all your overhead was paid out?

Garrett Williams: Yep. Yep, that’s everything said and done. I mean, like, to throw a gross number doesn’t make sense because no one knows what your bills are. You probably don’t even know what all your overhead bills are if you don’t have it well tracked.

So, like, yeah, it’s net, and so we shoot for like, you know, 25. But some commercial jobs, if they're really competitive, 10 to 15%. Um, we try to never go below 10—10 is cutting it. If anything goes wrong, it takes a little longer, it ends up at five, and it’s not even worth it. No job is worth doing for free.

Austin Gray: Yeah, for sure. When you say, uh, when you just throw out the numbers 25 to 30%, are you stating that after your labor and material is paid, you’re shooting for 30% on top of that to cover your overhead and then have a net profit of 17%?

Garrett Williams: No, so, uh, we shoot—the goal is for net 30 on everything after labor, overhead, and material—everything is paid for.

Um, and that’s basically like best-case scenario. You know, when you quote a job, you kind of envision the whole job in your head. Like, hey, I need this material, I'm going to need that equipment, it’s gonna take me four days, and then you get out there and, you know, stuff comes up, and you do your best, and you work a little longer days to get her done in that amount of days.

But you know, best-case scenario on every job, if everything goes perfect, we make 30%.

And some we do—we make 30, some make 40. Sometimes everything just goes perfect, seamlessly; everything, guys work hard, they work quick, the end result is perfect, we get paid right away, and we make 45%.

Sometimes that happens; and other ones, you have a rain day or two, a hydraulic line breaks, and it costs them two hours or three hours by the time they got them fixed.

And then, you know, it is really dusty and had to sweep the road multiple times, and then it ends up being 10%.

So there are so many variables in this industry. When you go build a boulder wall or you go do excavation on a new bank, there are so many variables.

It’s unreal. There’s traffic; it’s busy; the trucks are slower that day, or there just happens to be an event right next door and there’s just people everywhere, and everything takes five times longer. Like that stuff happens all the time in the real world, and you just got to figure it out.

You’ve got to roll with it, and those are the variables of those little things. I don’t go back to the customer and say, “Hey, this or that. We got to charge you more.” Everything we do is lump sum. We say we're going to do X for X price, and that’s what we do.

So that—sometimes it works great; sometimes it doesn’t. It’s just kind of the nature of the beast. And in my experience, people hate whenever you’re giving them an open-ended budget on, um, you know, I know some guys specifically in the clearing, like forestry mulching industry, just charge an hourly rate; nobody wants to know an hourly rate.

Um, if you said we’re gonna charge $300 an hour, it’s like people start crapping their pants.

Anyway, yeah, $300 an hour is expensive to most people, and then whenever you can’t give them an exact timeline, um, we tried that a little bit at the beginning, but like lump sum has worked well for us as well.

Okay, so have you defined your overhead as a percentage yet?

Garrett Williams: Yes, so there’s a chart that I saw that was really good. It's like your labor—so like your material should never be more than, I think it’s like 32%. Say you do a million dollars well, and this depends on the industry, because I know some industries are so material-heavy, while others are more like service.

If you’re just like trimming trees, you know, you don’t have a ton of material; you have some dump fees, and you have your equipment—you don’t have, you know, ten loads of boulders there.

So there’s no perfect sequence for every business; that doesn’t exist. I think it’s more of like business dependent.

Where it’s like what we do, like there’s a pool company and they started right away and did a couple million, but they had like 5% profit because the pool—the pool alone, you know, a $100,000 job, the pool alone was 50, and then the concrete was 15.

And like there’s so much material and everything’s like—they have a little labor and so much material.

So like that percentage is just so irrelevant. Like they’re like 60% material and little labor; you know it’s a big fiberglass pool—you dig a hole, throw it in, put concrete, you're done.

It’s just so much material, little labor. So there’s no perfect sequence.

But if you’re like 33% material or less and then 33% covers labor and overhead, then you’re left with around 30% profit. That's kind of like our goal. So like total revenue—if your material, labor, and overhead is about 70% less, you know, then you’re doing all right.

That’s kind of what we plan for is 33, 33, 33.

Austin Gray: That makes sense.

Garrett Williams: Yeah, um, one thing on hourly work, this is just my opinion, but we’ve done hourly work, like, same thing when we started—I don’t know what, maybe hourly is the way to go.

So we’d do, you know, hourly grading. “I’ll come grade your yard, $200 an hour, however long it takes.”

And we did that for me like the first year, year and a half. Um, but now we realize we don’t do a single thing hourly now. I can’t stand hourly work to be honest because yeah, like you said, you give them a number $200 an hour, like, “Oh, that’s so expensive.”

But yeah, I have a $100,000 skid loader, a $150,000 excavator that I'm using here.

And then, so my thing is, it just doesn’t work for one thing; you as a contractor, you're never going to make more than $200 an hour if you’re charging and you’re never going to make more than that.

You’re going to estimate 20 hours; it takes 25 and then someone—someone is really upset because, “Oh, we clocked out at 5, your guys actually rolled out at 4:45,” whatever.

So like, honestly, I don’t like it. I think you’ll barely ever cover the bills if even that because you're never gonna make double that with that machine.

If you're only charging $100, you’re never going to get $400. You know, as you told someone it’s $400 an hour, like it’s not gonna—so it just like, I feel like it just caps yourself. Like you’re never going to do better than that.

And then when it breaks down, then what? You know, who's paying for it? Then you’re working—you’re on the job for four hours fixing it and you’re only billing four hours that day; you’re not even coding your bills.

So like there—there’s so many variables. What we do is we’ll do this scope of work for this much, regardless of what happens.

Sometimes you win; sometimes you lose, and in the end, it balances out.

And we do it right, and there’s no—no one cares how long it takes when they’re paying $20,000 for a job. They couldn’t care less if you’re there for a day and a half, two days, or a week as long as the end result is what you said it would be.

And all the details are perfect, and you did everything right—you know? You put a foot of sand underneath the slab of the house and you did it.

As long as you do everything that you say you’re going to do, then time doesn’t matter. Get in there, get it done as quick as you can, and move on.

We give our foreman incentives, so we bid everything by the day: “This job’s three days, this is two, this is eight days.” The foreman know that going into it, and when they get the jobs done, um, on the estimated days, then they get an extra $200. Sometimes they get easily, because it’s been, you know, a little long and everything went great.

Um, and other times they struggle to get it, but so it gives them incentive to put some pep in their steps.

Austin Gray: Okay, thank you for sharing that. Can we jump into the specifics here?

Garrett Williams: Yeah, so I was gonna—I had a job. So I know this is one, like, excavation job that’s all over the country: digging basements. Go to a neighborhood; there are 60 lots, and there are 60 basements to dig, and it’s in the city, so there’s, you know, sewer, water connects, you know, it’s stubbed in off the main on the road so it’s, you know, 20 feet into the lot, dig the foundation, come back when the concrete guys are done, backfill it, run the sewer and water in.

Um, so I have the numbers here. This is a builder—a really good builder, just down-to-earth guy—been doing it for 20 years, lots of integrity, pays right away; like, awesome builder.

Um, I know—all the big nationals, like Lennar, Pulte, DR Horton—do you have any of those builders in your area? Like, nationals that just build huge neighborhoods?

Austin Gray: No, we don’t.

Garrett Williams: Because we’re in a—yeah, most of our developers are all local guys. Nice, that’s good.

So this is kind of like production excavation of basements because I know most people have this kind of, you know, every—anywhere in the city, I guess, like any big Denver I’m sure you have this.

Um, so this is kind of like our numbers, and, uh, it’s super competitive; it’s super tight. Most people want to do it because not a lot of management— you have 50 basements to dig, you know, one a week throughout the year with that one builder, it’s just bam, bam, bam, hey, go here, now go off the set of plans.

It’s not a lot of management; it’s not rocket science; it’s just digging dirt, you know, it’s moving dirt a small amount but a lot, you know?

It’s kind of to do that scale to be—to make money at it, but so this is one—it’s five minutes from my shop. It’s a great builder to work with. There are some lookouts and there are some slab on grades.

This one is a slab on grade; it’s a little mini twin home. It’s, uh, 3,400 square feet in the ground; it’s four-foot footings. So it’s not that much digging; it’s just strip off the black dirt, dig down for the four-foot footings, and you're good to go.

Um, a really good guy—this is like the variable. I don’t think most people realize the difference in operator efficiency. I can go here—I’ve done a bunch of these—so I can go here, and I can dig this thing by myself in three hours with the same machine, you know, the 140 and a skid loader.

I can go dig this thing; I show up there at 7 a.m., be out of there by 11 just me. And then you send two other guys there that have done several, you know, quite a few too, and they’re done at 2.

It’s like—and they have two guys—that is the difference; some, you know, the operator basically just knowing what to do, keeping a really quick pace, bam, bam, bam, not on their phone, just getting it done.

Like that’s a matter of three man hours versus, what, 11? Uh, 3, 6, 12 hours? Like that’s a huge difference, you know? 12 man hours versus 3; you know, two guys for six hours or one guy for three.

That’s a massive variable there. Um, so to be good at these, to make money, you got to be really quick. You gotta—you gotta be quick in and out, but this is a 3,400-foot-in-ground slab on a grade at the twin homes, so you’ve got to run two sets of sewer and water in one on each end.

But we have these at $11,400.

Do you have any copper service out there, or I guess if you haven't done a lot in the city, is it poly water lines?

Austin Gray: Yeah, is it copper or poly?

Garrett Williams: Yeah, poly.

Austin Gray: Yeah, poly is the best.

Garrett Williams: So this one is—it's old-school city; there’s still copper, so it’s a little more of a pain to deal with; you know, you got to flare the ends and hook up, so it’s a little more of a pain.

But this is how we break down a job like this. This is competitive. This is like 12% margin—everything goes pretty good; maybe 15 max.

Uh, but we have it at $11,400 and we have labor at $6,700, and the copper at $1,300, PVC at $1,200, and the rock—rock, you know, four inches underneath the living spaces at $2,190.

So it depends a lot on your area on what you're paying for your rock, what you’re paying for your pipe.

I think as the contractor, you need to do your due diligence to not shop around and take the guy at a dollar or less all the time, but you need to check all your local resources and make sure you’re getting the best deal—make sure that you’re over here selling it for $20 a ton while this guy’s selling it for $35; is it any different? Is it any better?

You know, make sure that you’re getting the best deal in your area so that you can basically transfer that to the customer to be competitive; you know what I mean?

Um, so that’s kind of where we’re at with this. It’s, you know, $11,400 total, and you know, we spend half a day digging it; we have it planned, and then a day to do the backfill and the hookup; that’s a full day.

Um, and then we’ll make about 15%.

So what we do is basically how we bid every single job. Like people ask, “How do you bid a job?” My answer is the same every single time: take your material, typically mark that up 10% on a commercial job, 30% on a residential, and then add about 10% overages because you always have some extra.

Austin Gray: You had about cut out there a bit. We’re having a little bit of Wi-Fi struggle, so can you state the percentages again on commercial and residential?

Garrett Williams: Yeah, so on commercial, we mark material up about 10%, and then residential about 30%. And you want to plan for like at least 10% overages. If you have 100 feet of water line, you know, you want—you want to charge 110. That’s what we do anyway—120, depending on the role and everything else.

So about 10% overages make sure you have a little extra, then charge 30% extra for material—charge markup and then 10% on commercial.

And then this is how we bid the job; every job is the same. We have our daily rates for each crew. The excavation crew is a little more because they have heavier equipment than a landscape crew that has a skid and maybe a mini skid and a truck and a trailer.

So we break it up by the crew, but our daily overhead for like landscape, which includes labor overhead and about 30% profit on all that, is $4,200 a day.

And then, so you have that $4,200 a day plus any material. Um, so if you have, you know, if we’re just going to grade yard, all the materials on site, which would be one day grading yard, it’s going to be $4,200 bucks.

And that covers our overhead, labor and then, like I said, 30% profit on that. So this excavation job, if it’s going to be a day and a half—half day to dig it, and a day to backfill and hook up—that’s how we have it all—all the material—all that’s marked up 30% because it’s residential.

And then we have a day and a half of labor, so I think the excavation is like $4,500 or $4,600 per day for overhead and labor and then profit, so it’s that, you know, times 1.5.

So as long as everything goes close to according to plan, then you do all right; your bills are covered. But for everyone that—that varies so much.

Like I know a guy who’s just starting, he doesn’t have any bills, doesn’t have any overhead, he doesn’t have very much equipment, runs out of his house, has a truck, has a skid; like for him to charge the same, like he would make a killing, but he’s not going to get done as quick.

He doesn’t have the backend, you know, scheduling and the backend power, so like, you know, he’s not as efficient, but he can also do it for less.

There are so many variables. For us, maybe we can do all right at that, but for you, if you’re union or you have bigger equipment, like you got to charge double that.

So don’t—I would say don’t really go—don’t take other people’s numbers and plug and play into your business unless it’s the same but more in like a different area. Everything—there are so many variables, so you got to figure out what you're paying your guys, what your insurance is.

If you have an office, you know, charge accordingly for your numbers; not, you know, someone else.

But it’s kind of the same sequence. You know, if you have a truck that costs $100,000, divide that payment— divide that amount and the fuel and the maintenance you’re going to have for the year.

Say that truck’s going to cost $30,000 that year; divide that by the working days that you’re going to have on a job. For us, it’s like we plan for seven months, so we, you know, it’s $30,000 that year, divide that by seven months, 20 working days a month, and that tells you, okay, I need to charge whatever—it’ll be $80 bucks a day for that truck on the job.

And that’s how we figure it all out. And it’s the same with everything: your office, your insurance, however much your insurance is—10,000 or 150,000 a year.

Divide that by how many days you’re working, and charge that. And that’s how you figure it out—the same exact sequence for every fixed bill that you have.

Austin Gray: That make sense?

Garrett Williams: Got it.

Yeah, yeah, totally makes sense. So that’s how we do it; that’s what we’ve learned.

Um, when you put an hourly rate, like you said, it gets to be so high, and then they nickel and dime on time and everything else. So that’s why we’ve always just done lump sum, and we have no issues.

No one ever says, “Whoa, it was $20,000 but only took you two days.” Like, no, no one—they don’t care.

They don’t care if it takes a week; they don’t care if it takes two weeks and you don’t make any money on it; they just want the job done.

They’re paying X to get X, and it works out.

Garrett Williams: I do know, like, it is tough because, like, you're paying our guys hourly, but we’re getting paid lump sum, so when it takes longer, that’s how—you know, we’re not getting any more money. It takes longer.

So, um, that’s where sometimes it just—sometimes stuff happens. You know how it is; you little underestimated; you plan for everything to go too good, and it takes a little bit longer.

There’s a flat tire on the way, then you didn’t get there until 9:00 instead of getting there at 7:30, and then they blow hydraulics, and then they misread the plan, and you got to rework 10 feet of this wall or something.

Like that stuff happens in the real world, and it just comes right out of your profit because you’re not going to charge more money because of that.

But like I said, in the end, you can’t just look at one job and say, “Okay, we got to charge double.” Like you look at several and you look at averages, and okay, at the end of the year, we did 18%.

It’s not perfect, but that’s good, and now we know, you know, we have to base our variables, labor; we’ve got to charge a little more or add a little more time.

And like if you think it’s going to be a half day, you know, most of the time, charge a full day because by the time the guys get cleaned up and get back to the shop, it’s 3:00 p.m.—you’re not gonna go to another job at 3:00.

So, um, whenever you’re doing—

Austin Gray: Well, thank you for sharing this, by the way.

So on your excavation bids, you're not including anything for final grade in that bid—it's literally just the dig and the backfill?

Garrett Williams: Yes, so I know most of the time, the majority of the time, they are going to want a final grade.

You know, we backfill, and we get pretty close to finish grade anyway, but then this particular builder, uh, sometimes their site guy will just—we get the grade close; like we get it within a few inches.

Um, and then sometimes their site guy will come and just spread a little black dirt and do like the finish grade.

But typically, typically they do want a finish grade included, and that’s how, like, you dig it. And then that could be six months later, even a year later, or sometimes, you know, three—three months later if they really bust it out.

But usually for a small residential around here, we don’t really target finish grading because, like, most guys will do it for like a thousand bucks a year; it’s a couple hours a guy in the skid to get dialed in.

So if we do go back and do them for this particular builder, I think it’s about a thousand bucks, and we try to line like three, four, five of them up at once and just go through and do them all.

And then, you know, one guy in a skid, maybe two instead, and that’s it. So this particular one doesn’t include final grade efficiency-wise, um, because you’re pouring foundation walls on this, right?

Because they’re pouring—they’re basements, concrete guys are—yeah, these particular ones are just slab on grade, so it’s just a footing and like a 42-inch, uh, wall.

Oh, it’s like an 8-inch footing and then a 42-inch wall and then a slab; that’s all.

Okay, whenever, like efficiency-wise, as an excavation contractor, this is the thing that, like, I’ve put a lot of thought into, and this is the reason why we haven’t jumped into it yet.

Um, I’m not saying I’m opposed to it; it’s from an efficiency standpoint. How do you manage that lag time for the concrete guys? That's—like, what do you do with your equipment?

Garrett Williams: Yeah, that’s a great question. And this is exactly why everyone has an excavator—one that doesn’t need a permit to move.

Because the quickest I’ve seen is like a week; you know, if you dig it on Monday, you might be able to come back the next Monday if it’s, you know, if the guys are really quick and they’re there Monday afternoon when you’re done digging it, or first thing Tuesday morning; you know, that happens.

Like, we’re still finishing up digging one corner and they already started in the other sometimes, which is great because we’ll be back quick.

But basically, if you're busy— I mean, you show up with the ideal world—you show up with a truck, a dump truck, and a tag trailer or a tractor trailer with a step deck, and you roll up, guys dig it, and then load it back up and go to the next one.

That’s ideal.

Sometimes, some of these neighborhoods where this—what a lot of guys are; if it’s a big neighborhood—like I said, 50 to 100 houses—they’ll dig one and go right down the street, backfill, hook up, and go dig another.

I know some guys that just like live in these neighborhoods in the summer, like these massive ones. Like, I just interviewed a guy that’s—that’s what he’s done for five years—production excavating; he has two or three neighborhoods, and he’s in those all summer long.

Um, because they’re doing so many. For us, we don’t do that big; we don’t do a ton of big production.

We have builders that do, you know, 10 to 20 houses in a neighborhood a year, and then we do some customs.

So it pretty much boils down to roll up, dig it, load it back up, go to the next one.

Um, the only way the excavator is ever sitting there is if we’re slow, if we don’t have anywhere else to be with that machine or whatever.

But typically, it’s pull up, unload, and then, you know, do the job, load it back up, and go to the next one.

So depending on timing and everything, but in the busy season, that’s typically what we do.

So that’s why, like everyone runs an excavator that’s like 20 tons or less because you don’t need a permit to move it; it’s just quick in and out.

Austin Gray: Yeah.

Um, the challenge with the excavation business around here, in my opinion, is all our homes are custom.

They want, like, exhibition contractors here to fulfill everything. You dig it—most everything is septic, so like you bid it as a whole package, right?

Garrett Williams: Yeah, we do quite a few, and those, we love. Because like, uh, when we just did, it was a big walk-out, um, and it's a five-acre lot. Those we love because there’s so much more work there.

We go in there, we clear an acre, we haul away all the stumps, we put all the tops in the pile and they burn them.

We do a long driveway—you know, like this is an $80,000-$100,000 job depending on, you know, what your material is and where it’s at.

But like one we just did is like, you know, $60,000. And it was clear—clear an acre, you know, not super heavily wooded, but you know, decent amount of trees, and then, um, you know, dig the base.

We come back, backfill it, do the grading on rock in the living areas, build the driveway, do the septic.

So like those we like because there's so much more in one spot.

So something like that, you’d go and try to do as much as you can the first time. And usually, you know, do the septic when you come back to backfill.

Um, but those like those are nice because there’s a little more room for those. Like the production home, everything’s so tight, custom home.

I found around here there’s a couple of builders that build three or four a year that we work with that are nice ’cause like they’re willing to pay a little more.

They know they’re getting a good service; they know that we’re going to be there when we need them.

They’re not just like, “Okay, we’re doing 100 of these, so can you lower your price $1,200?” Like that’s how the production is; it’s so tight where this is more kind of bid it for what you need, and you’re willing to pay for it.

So we love the one-off custom homes around here; it’s a lot of lakes. You know, Minnesota, we have like 12,000 lakes, so it’s a lot of custom homes on the lake.

There’s not too many production homes on the lake, so there’s a lot of that around the lakes that we’d like to do. It’s better; it’s easier to make 30% on that than a production, you know, neighborhood.

Austin Gray: Yeah, no doubt about it.

So what you know now, um, about running the business you run, would you rather come and do all the service associated with that one home versus a hundred of those track homes in production?

Garrett Williams: Yeah, it really comes down to personal preference because personally, I don’t like the production because it’s not about quality.

It’s really not about quality. It’s not about doing a nice job, keeping the street clean, having a nice construction entrance; it’s about getting in and out of there as quick as you can.

There’s no attention to detail; they don’t—they don’t rake in any of the corners; they just throw the rock in.

They just—they just throw everything everywhere and leave it all; they don’t sweep off the sidewalk. Like these guys, because they’re not making enough; the builder isn’t paying for good quality service, so they’re not getting one.

I drive to these neighborhoods and it’s just like wow, like this stuff is—it’s a disaster. It’s so dirty; it’s so messy; it’s so there’s no attention to detail, basically.

It’s like run in and out and go to the next one, like that’s how it is.

So with the custom home, it’s a totally different ball game, so I would say full service, um, I think is good because it helps the—for like the custom homes.

It helps the builder; he doesn’t want to get someone he doesn’t want to ask the concrete guy to do the rock or have to get another guy for the septic or he doesn’t want you to dig the basement and have someone else build the driveway.

Like I think I would say full service is works good for us on those custom homes, and it works good for the general as well, just, uh, kind of getting a package deal and not having to work with three guys and just work with one.

Austin Gray: Yep, understood. Okay, well, we’re at the hour mark; I’ll wrap this up here.

Um, anything else you want to share on that before I stop the recording?

Garrett Williams: I would just say I can’t stress enough about job costing—tracking your fuel, tracking your time.

Like we track all our guys’ hours and categorize it to each job, so they have to—You know, they clock into each individual job that they’re on; they have to put daily progression notes, and at the end of the day, so we can track, you know, if that was a good—if they met their daily goals, why, what we got to improve on, what happened.

So just job costing is crucial because the only way you know what to charge is if you know exactly what’s costing you, and if you're not job costing, you don’t really know everything that’s costing you.

You don’t know when it all adds up—your fuel and your insurance and everything all adds up. So you need to know what that is, what job cost pay close attention to the work that you’re doing, how much it’s costing you and then you’ll know how to accurately bid going forward.

So spend a little bit of time; it’s not rocket science; it’s just putting together all the expenses, adding it on, you know, a spreadsheet; you can do it in Jobber; you can do it anywhere.

So just figure out what’s costing you, and then you’ll know what charge and be profitable because none of that stuff is worth doing for free for any amount of time. I mean, you got to—you’re in this to make money; you have to be able to afford a mistake; you have to be able to afford, you know, equipment that works.

So you got to be charging accordingly; otherwise, it’s just not going to work long term.

Austin Gray: How do you guys do it?

Garrett Williams: You do it in Jobber?

Garrett Williams: Um, Jobber has a feature we’ve looked at; we haven’t done it yet. We basically do it on like an Excel spreadsheet.

You have the total; you take everything from the job, all the total, all the material, and then you take all the receipts and put in the actuals—okay, we estimated this; this is actually what it cost.

Um, and then, you know, you have a percentage at the end. Who's responsible for that?

Marina does that.

Um, she what she usually does is you don’t have all of your expenses in until sometimes a week or two later or even a month. Like, you know, you go buy a bunch of pipe and sometimes they don’t send the bill for three weeks.

So you got to make sure you have all the expenses there, but she gets basically all the receipts and then categorizes it all to there.

So we usually do it like once a month for like the previous month’s work, if that makes sense.

Austin Gray: Okay, sounds good, man. All right, I’m gonna stop the recording.

Garrett Williams: Thanks!

Austin Gray: Thanks so much for doing this.