Archive for December, 2008

Budgeting for 2009

December 17th, 2008
by Chris Oakley | No Comments »

I read a good article the other day. It was written by Kevin Kehoe. He is a business consultant (Kehoe & Co.) located in California that frequently works with landscaping businesses. Here is a copy of his article:

There are two rules for managing in a tough economy: Control the things you can control, and minimize the risks of things you cannot. You must do both.

For example, you can control (increase or decrease) your costs. Your decisions drive this number. But you can only minimize the risks of revenue disruptions and/or revenue creation because your customers ultimately control these factors. Your actions only influence this number.

  • Start with cost control. Eighty percent of your costs are related to staffing, equipment, insurance and rent. You have some leverage in controlling insurance and rent, but you have a lot more clout with staffing and equipment expenses. In a down market, you must downsize these costs and stretch these resources more thinly than you might like. If revenues do not materialize — or if they’re taken away by competitors — you will wish later that you had made some tough cost-reduction decisions upfront. Tighten your belt now for 2009.
  • Minimize the risks to your revenue streams. The chief risks are low pricing, declining customer budgets, insufficient new sales activity, and slow and late renewals. Your customers will be looking for lower pricing and/or more value in 2009. They will want you to save them money. If you do not find them a path to savings, they will find someone who will. After you make your 2009 budget, refine your pricing model. Reducing costs will help with pricing by lowering your burden and recovery markup rates.

You must be proactive in meeting with your customers to restructure your service deliverables and to better help them meet their budgets. Develop several service and pricing options for their consideration. This may mean delivering less-than-perfect landscapes to some of your customers. But it is better than losing the revenue.

  • Stay in front of your customers. Get out of the office and talk to them often. Start your renewal process earlier in the year, especially with your biggest customers. Talk with them frequently enough to address their changing economic situations. Customers appreciate flexibility and ingenuity even more in a tough market. Relationships still matter, but they are based more on mutual economic realities.

2009 is going to be the toughest year yet in grounds maintenance. My clients are experiencing this already with falloffs in enhancement sales and with price negotiations on renewals. Construction has had its two worst years in a long time, and the pain is about to spread to our industry. Don’t get caught. Act early. It’s too late to close the door when the cost and revenue horses already have galloped out of the barn.

Non-owned Vehicle Coverage

December 15th, 2008
by Chris Oakley | 1 Comment »

Non-owned vehicle coverage also known as employers nonownership liability is an additional coverage offered on a commercial auto policy. Sometimes employees may use their personal autos to run errands for the business. This opens up a liability exposure for the business that can be protected by adding non-owned vehicle coverage to your commercial auto policy. Therefore if an employee is involved in an accident, driving his car and running an errand for you, your company could be held liable for the accident. I strongly recommend adding this rather inexpensive coverage to your policy.

If you would like to receive an auto quote please click here

Hired and Borrowed Auto Coverage

December 9th, 2008
by Chris Oakley | 1 Comment »

Hired and borrowed auto coverage can be added to your commercial auto policy. This additional coverage provides protection for autos hired/rented/leased/borrowed by an organization and used in the business’ operations. With this coverage any liability for injury or damage to others that is a result of a hired or borrowed vehicle may be covered. If you have not added hired and borrowed auto coverage to your policy you want to make sure you purchase auto insurance from the rental place to cover the vehicle you are hiring.

If you need to get a commercial auto quote for your business please click here.

If you are already a current client without the addition hired and borrowed auto coverage please contact us if you would like add this coverage to your policy. The additional premium is very affordable for the coverage.

Late Payments

December 5th, 2008
by Chris Oakley | No Comments »

From past business experiences I have discovered that quite often late payments for bills or invoices are not only accepted late, but they are also usually not penalized. Many companies see late payments so frequently that they expect people to be late. Whether the general acceptance of this model should be embraced or not is another debate for another article.

I am posting this article to serve as a warning and also provide awareness to the fact that insurance companies do not support this model. Insurance companies will and often do cancel customer’s policies for late payment. With the current economic state of our country many business owners are just looking to stay afloat and stretch their dollar farther. This mentality has recently caused many business owners to be late in their insurance payments.

Every month our agency receives a stack of cancellation notices from insurance companies because of late payments by clients. Sometimes the company will reinstate the insured after receiving full payment, but sometimes the insurer will not reinstate the policy. This is a dangerous game from business owners to play. The more frequent this game becomes the less likely the insurer will be comfortable reinstating the policy. It may also result in increased premiums for upcoming years if the insurer is still willing to accept the risk of insuring the company.

Workers Comp Exemptions in Florida

December 3rd, 2008
by Drew Roberts, CPCU, ARM | No Comments »

Many landscapers in Florida approach us to ask how they should properly file workers’ compensation exemptions for their owners and officers. They also want to know what this means and how it will effect their business. These are great questions and the majority of our landscaping clients make the decision to exclude their owners and some officers from workers’ compensation coverage.

An individual that is an officer of a corporation can elect to be exempt from workers’ compensation coverage. This will exclude the officer from recovering workers’ compensation benefits, but by doing so, the individual may remove their payroll from the total payroll that is used to compute the premium. Many employers choose to be exempt on their workers’ compensation policies to save money on their premium. If the individual meets the requirements below, then they can file for exemption using the following forms:

Non-construction industry corporate officer:

  • - The corporation must be registered with the Florida Department of State, Division of Corporations.
  • - The applicant must be listed as an officer of the corporation in the records of the Florida Department of State, Division of Corporations.
  • - There is no limit to the number of corporate officers eligible for exemption
  • - There is no application fee

Construction industry corporate officer:

  • - The corporation must be registered with the Florida Department of State, Division of Corporations.
  • - The applicant must be listed as an officer of the corporation in the records of the Florida Department of State, Division of Corporations.
  • - The applicant must own at least 10 percent of the stock of the corporation as evidenced by a stock certificate or in the case of an LLC a notarized statement attesting to the minimum 10 percent ownership.
  • - The applicant must list all certified or registered licenses issued to you.
  • - A $50.00 application fee is required.
  • - No more than three officers of a corporation (including LLC) or of any group of affiliated corporations (including LLCs) may elect to be exempt.

For landscaping businesses, you will need to file the exemption as a non-construction corporate officer unless you install landscapes and use the 0042 class code for your workers’ compensation insurance. If that is the case, your business is classified as construction and you will need to pay the 50 dollar application fee with your exemption.

Here are the exemption forms:

Online Exemption Form

Download the Exemption Form

Download the Exemption Form Instructions

Download the Form to Revoke an Exemption

Changes in 2009 Florida Work Comp Rates

December 1st, 2008
by Drew Roberts, CPCU, ARM | 5 Comments »

In 2003, a major reform was made to the Florida workers’ compensation system. At the time, Florida had the highest rates in the country. One of the major aspects of the reform was to cap the amount plaintiff lawyers were able to charge for their work in a workers’ compensation case. This changed when a recent court case was ruled in favor of removing the cap. As a result, there is the potential for the new 2009 Florida workers’ compensation rates to be increased to reflect the change in the system.

Just before the Thanksgiving holiday, the National Council on Compensation Insurance (NCCI) sent a proposal to Florida’s Office of Insurance Regulation regarding a change in the new rates. The proposal requested an average increase of 8.9% on all the classification codes in Florida. They also proposed that this change goes into effect on March 1, 2009.

The workers’ compensation filing by NCCI will be discussed on December 16th. We will keep you up to date on any decisions made in that meeting and how this will affect your landscaping business. This could have a large effect on your workers’ compensation rates for your 2009 renewal.

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