WHAT IS YOUR..NET/NET..

[joe harper]

For all you owner/operaters ...with 5 or less employees...

SIMPLY: after EVERY expense that is business related.."not the electric bill @ your home ect"


FOR EXAMPLE...On a $200.00 Invoice ? What is your "TRUE PROFIT"...30%,20%,10% ?????

 

[Larry B]

-15%

 

[joe harper]

I HAVE HAD ALOT WORSE.... :shock:

 

[joe harper]

This thread is not to compare profit margin's.......

I want to generate some discussion....on WATCHING the #'s...in this economy it is
more important than EVER....I have spoken PRIVATELY to some members that are
struggling...

Most are under CAPITALIZED...and could use some ADVICE from some of the senior
members on this board.....There is a lot of chatter about making a $100.00 per hr...
IMHO..."IT IS NOT WHAT YOU MAKE....IT IS WHAT YOU KEEP"...

Although ..I give Ken Snow crap sometimes...I would be willing to BET YOU...just about
any amount you want! That he has complete control of his cost ....almost to the penny !!!! What his true cost & true profit is on any givin job..AT ANY GIVEN TIME !!!!!!

In an operation of his size...He can DRAW a HANDSOME 6 figure salary...Just on what
he SAVES in controlling waste & duplication !!!!!!

A little PHYSICAL DISAPLINE....Goes a long WAY in any ECONOMY....

Soooo...Maybe some guys can CHIME in with some cost cutting IDEAS....

 

[Ken Snow]

Joe ~ to add to your clarification I would suggest counting a reasonable salary for the owner if he/she operates in the business too. Often people mistakenly say I make 80% profit, but that includes their income, sometimes they take it all.

Pre-tax Profit is the money left on the books after all expenses etc have been deducted (don't forget non-cash items like depreciation etc).

This is the income that can be used to fund further growth, invest for your or your families future, bonus yourself, donate to charity, pay taxes on, or a combination of all.

Ken

 

[XTREME1]

each month is different and I haven't had a true number with my end of the year spending sprees. When I do my projections I use 65% a month on all fixed costs and inventory.

 

[dealtimeman]

i am guessing but i think mine is around 60%. but it might be as low as 40%.

 

[joe harper]

Thanks Ken,

very important info....

HOW ABOUT SOME APROX...NUMBERS FOR NEWBS TO CHEW-ON ????

Q. At what # do you leave your existing job ...to start your own Biz ?
A. If you are making 25k per year (after taxes)...You will need to generate 75k in the new biz..
And you have enough money saved... that you can go 6 months with NO income.

Q. When do I park the PORTY....& Buy a Truckmount ?
A. When you have enough biz .... That you need to increase production...
And are willing to raise your prices to support the the new investment. 100k year gross

Q.When do I move to a two truck operation ?
A.Add more labor 1st....Run the 1st truck a min of 60 hrs a week...EVERY WEEK...
If the 1st truck is not grossing more than 150k per year ...you don't need a 2nd truck.

Q. What is a reasonable amount to pay myself as a salary ?
A. The 1st 3 years...Should be a MAX of .....30% of your gross sales.



I believe these #'s..are reasonable...May vary along the lines of your lifestyle & demographic.

 

[XTREME1]

Sometimes things don't hit the ledger so the 33% may be a little low for SOME guys. Well atleast from what I've heard.

 

[Larry B]

I think the area you serve at this time will play a big part in what you net. Our area has slowed way down and when the hours drop off the employees slow down to boost there hours. A year ago We would have been in the 62% - 68% net off each job and now its down to the low 50% range and some days lower. I have talked to guys that say they are still turning the same money this year but my guess would be its lies. Carpet cleaners all around us have started doing other things to fill in for the loss of carpet work.

 

[joe harper]

Matt & Larry...

Your margin's are realistic & HONEST...you both seem to have a good GRASP on the #'s.

BTW I feel for you guys in the HARD HIT northern manufacturing areas.....


Have you guys noticed your compeditors SLASHING their prices ????

It is usually what happens...But "They have to EAT!!! "

We are fortunate... that we are able to weather STORMS like this....

This was not always the case...One of the worst mistakes I made was to LOWER
MY PRICES in a simalar economy..years ago...

It takes YEARS to RAISE your PRICES after you have given your SERVICE away !!!!

"NEVER AGAIN..." I have found that your can OFFER, the clients an additonal service,
such as Teflon @ discounted rate.....ONE TIME ONLY....and not have to reduce your price's.

They are willing to pay the same price as last year.....They are just looking for an additional
VALUE !!!!!


BTW They are DROPPING out of business "LIKE FLY's here"
Although this is SAD...some of these guys...needed to be WEEDED-OUT.!!!!

 

[dealtimeman]

my net is high because everything i own both personal and biz ( with the exception of my superduty) is paid off including all credit cards. i have only been carpet cleaning three years but i have been in the janitorial biz for nine years. at the begining i had all my eggs in one basket and lost a large contract and went from making 16,000 a month to making 800 a month, i will never do it again and now have diversified and have multiple ventures that produce a steady flow of income. my main income is my janitorial company, which has very litlle overhaed and is basically a service company that i net about 60% of the income and just maintain the accounts thru good honest and personal customer service. the janitorial pays all the bills personal and biz related. then my water damage pays for my biz expansion and all my other interest as well as builds my retirement account. i also have a an autoparts location service company that has a autoglass installion division, that pays for my trips and other stuff i blow money on. last year when everything was slow i started a roofing company with a friend that was laid off from his roofing job and that pays for all my toys. it is really easy (concept wise) to make money and keep overhaed to a minimum and that will maximize your net inturn leaving more in your pocket. same thing brian does with carpet cleaning i do with glass installs and roof jobs, i write out the quote and agreement and sub it out to a bonded sub at about 40- 60 percent. contracting work out to most will not make you rich as most service companys will not make you rich but it will provide a steady income with nice work schedule.

 

[tmdry]

my net is high because everything i own both personal and biz ( with the exception of my superduty) is paid off including all credit cards. i have only been carpet cleaning three years but i have been in the janitorial biz for nine years. at the begining i had all my eggs in one basket and lost a large contract and went from making 16,000 a month to making 800 a month, i will never do it again and now have diversified and have multiple ventures that produce a steady flow of income. my main income is my janitorial company, which has very litlle overhaed and is basically a service company that i net about 60% of the income and just maintain the accounts thru good honest and personal customer service. the janitorial pays all the bills personal and biz related. then my water damage pays for my biz expansion and all my other interest as well as builds my retirement account. i also have a an autoparts location service company that has a autoglass installion division, that pays for my trips and other stuff i blow money on. last year when everything was slow i started a roofing company with a friend that was laid off from his roofing job and that pays for all my toys. it is really easy (concept wise) to make money and keep overhaed to a minimum and that will maximize your net inturn leaving more in your pocket. same thing brian does with carpet cleaning i do with glass installs and roof jobs, i write out the quote and agreement and sub it out to a bonded sub at about 40- 60 percent. contracting work out to most will not make you rich as most service companys will not make you rich but it will provide a steady income with nice work schedule.

Nice I know a little bit of roofing. Do you guys have all shingles there or tile roofs as well? I worked in central/south fl for many years as a supervisor for a few roofing companies. Permits were always a bitch, we had just one guy hired to pull permits.

 

[dealtimeman]

here in my neck of the woods mostly shingles and you do not have to pull permits for roofing, at least here you dont.

 

[Brian R]

Profit? What's that?

Since I changed my company I was on the negative side and knew it would be.

I had to take 2 steps back to make 10 or more steps forward. I had some capital to work with to make it happen so it didn't put me in a cardboard box or anything.

After paying myself (not very much still) and everything esle..I am still not seeing a profit.
This is mainly because of the investment in my marketing that is a monthly reaccuring issue.

As I build, I see the lite.

I recently hired my little brother to do sales, pre inspections, errands etc. so that was supposed to set me back...but it kept me about even really because he is paying for himself.

As he gets better and keeps up the good work etc I see it pushing us over the top.

I need to be at 20% profit to be where I want to be.
This is only because my pay...as will some others...will increase as the revenue increase.
I need to be able to invest that 20% back in order to grow each year exponentially.