A SECOND YARD, AND WHAT IT COSTS FIRST.
Opening a second yard or office adds fixed cost immediately and revenue later, which means the overhead rate in your bids is wrong from the day you sign the lease until somebody recalculates it. The cash side is harder than the overhead side. A deposit, a buildout, duplicated small tools, a manager on payroll before there's work to run, a second insurance schedule, and stock on the shelves are all spent before the location bills anything, and then the first job it wins still has to run a full billing and collection cycle. It also needs its own cost coding, because a second location sharing cost codes with the first one is invisible in every report you own. The test worth answering before any of it's whether the location wins work you can't serve today, or moves work you already have into a more expensive place to run it from.
The reason this decision goes wrong is that it gets evaluated as a growth question and it behaves as a working capital question. Owners look at the market the new yard opens up, and that part is usually a sound read. What nobody prices is the eight or nine months where the location is fully staffed, fully leased, and partly utilized, funded out of the cash the first yard generates. A second location doesn't fail because the market wasn't there. It fails because the business ran out of patience and cash at the same time, in month six.
WHAT IT MEANS.
A second location is a second yard, shop, or office, and financially it's a block of fixed overhead that starts the day the lease is signed, against revenue that hasn't been won yet.
There are good reasons to do it and drive time is the best one. If crews are burning an hour each way to reach a market, or if material is being trucked past a competitor's yard to get to your own, a second location buys back real production hours and reduces cost per job. That's a genuine operational return and it can be measured before you commit to it.
The reasons that don't hold up are just as consistent. A second yard opened because a lease became available, because a key person wanted to run their own operation, or because a single large customer asked for local presence is a fixed cost commitment made on a variable input. Customers move, and the lease doesn't.
WHAT THE SECOND ADDRESS DOES TO THE NUMBERS.
The overhead rate is wrong from the day the lease is signed
Overhead recovery in a bid is calculated from a cost base, and a second location raises that base immediately. Every bid submitted at the old rate after the lease is signed is priced without the lease, the manager, the second insurance schedule, or the utilities in it. The work still gets won and the cost still gets paid, out of margin, on jobs that never carried it.
The cash goes out months before the first invoice comes in
Deposit, buildout, duplicated tools and small equipment, initial stock, and a manager hired before there's work to manage are all outflows with no billing behind them. Then the first job from that location has to be performed, billed, and collected, which is another cycle on top. Owners model the annual cost and skip the sequence, and the sequence is what breaks the account.
Nothing is coded to it, so nobody can tell whether it earns
If jobs from both locations share the same cost codes and the same overhead pool, there's no report in the business that can separate them. The owner ends up deciding whether to keep it open based on how the second yard feels, twelve months and a lot of money after the decision that counted. Location coding is a setup task that takes an afternoon and it has to happen before the first job, not after the first argument.
WHAT IT LOOKS LIKE IN DOLLARS.
Take a lease at $3,500 a month, which is $42,000 a year. Add a yard manager at $75,000, which runs about $96,000 fully burdened. Add $8,000 of additional insurance, $6,000 of utilities and security, and $12,000 a year for the duplicated small tools and equipment the second yard needs to function on its own. That's $164,000 of new fixed cost per year. It exists in full from month one, whatever the location bills.
Take a deposit and first month at $7,000, a buildout at $35,000, tools and equipment at $60,000, initial stock at $25,000, and three months of the manager's burdened pay before the location has billable work, which is $24,000. That's $151,000 out the door before the first invoice is issued. If the first job then bills 30 days after it starts and pays 60 days after that, the outlay is being funded by the original yard for most of a year.
Divide the added annual overhead by your own gross margin as a decimal and you get the added revenue the location has to produce just to carry itself. On the $164,000 above, a business would run that division against its own margin, and the answer is almost always a larger revenue number than the owner expected. We don't publish a margin figure to put in that division, because gross margin is specific to your trade and your revenue band. Use yours, from your own last twelve months.
WHAT GETS DECIDED BEFORE THE LEASE.
The full added fixed cost gets built into the overhead rate, and the new rate goes into the bids that go out the week after the lease is signed. This is the single cheapest correction in the whole decision, because it costs an afternoon. It also stops every job won during the ramp-up period from absorbing cost it was never priced for, which is where most of the loss on a second location really happens.
Deposit, buildout, equipment, stock, and payroll go into the 13 week cash forecast on the weeks they will really be paid, and the first collection from the new location goes in on the week it will really be received rather than the week the work starts. What comes out is the low point, which is the number that decides whether the business can carry this at all. Most owners have never seen it before they commit.
Every job, every piece of equipment, and every overhead item gets tagged to a location from the first day, so the second yard produces its own revenue, its own direct cost, and its own share of overhead every month. That's what turns a twelve month argument into a twelve month report. It also lets you see the drive time saving you opened it for, which is usually where the real return sits.
What the location has to produce by month six and month twelve gets written down while everybody is still optimistic, along with what happens if it doesn't. A commitment with a defined review is an investment. The same commitment with no review is a fixed cost the business carries for years because closing it would be an admission. Writing the test down before opening is what keeps that decision available later.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
