what profit pecentage deems a successfull business?

[juniorc82]

I was just curios after all expense , depriciation , etc would you guys consider a business to be successfull? I was talking to a buddy in the restaurant biz and when he told me the margins it really made me feel for him, and how cut throat his industry was. I know that from my experience as an assistant retail manager in a past life that if any business cAn sustaib 20% profit that was great. I talked to a service master franchise manager and he told me they would consider 10 - 15% profit a good year. For a small 1 - 3 truck company what would be thw industry average for both sustaining marginal profits that keep the ball rolling and realist numbers on a really well ran highly profitable business?

 

[ACE]

There is allot more to it then net profit %. Your company could be doing allot for you before you net profit like 401K, Health, Life, Company vehicles, Business Travel, Meals and entertainment. As your Gross goes up net % is going to go down to around 20-30%. Who Cares as long as you are being will compensated for your time.

 

[juniorc82]

As I continue to invest in my business I have put little away for retirement and would like to at least know what I have built is worth somthing. To be worth anything more than my vehicles and equipment I have to have a business that makes sense on paper in case I ever consided to sell it. Some days I feel great about how I bid my work and other days I feel like I take a beating. If I ever want to be more than a chuck in a truck I am gonna have to lock down the business end of things. I know people who in my opinion where some of the most talented cleaners I have ever came across who really sold them selves short because they never really got serious about cleaning up the business and admionistrave end.

 

[ACE]

Yea, it's hard to run the bussiness when it's running you 12 hour days on the truck.
Here is how I see it:
1. Get the sales volume up close to 200K
2. Get mostly off the truck and start running a business.
The catch is that I have to make money every month because this is the sole family’s sole source of income.

 

[Shane Deubell]

I was just curios after all expense , depriciation , etc would you guys consider a business to be successfull? I was talking to a buddy in the restaurant biz and when he told me the margins it really made me feel for him, and how cut throat his industry was. I know that from my experience as an assistant retail manager in a past life that if any business cAn sustaib 20% profit that was great. I talked to a service master franchise manager and he told me they would consider 10 - 15% profit a good year. For a small 1 - 3 truck company what would be thw industry average for both sustaining marginal profits that keep the ball rolling and realist numbers on a really well ran highly profitable business?

Super tricky subject for micro businesses like most of us, the question is 10-15% profit with an owner salary or without? and how much?

The best thing you can do is separate your compensation for work as an O/O (say put yourself on commission of 30%) and profits of the business as a separate entity. Or for small to mid size put yourself on a fixed salary of say $50k a year and keep company profits separate.

Plus any owner benefit like health ins, dental, life, cars, gas cards, useless family members etc.

My former boss had a net margin of 8% BUT 4 family members with car leases, ins, gas cards, health, dental, salary, etc so the owner benefit was closer to 20%.

 

[mirf]

Very hard to answer as asked. But if you are taking care of a family of four with a stay at home wife, $30,000. or more right there You seem to be doing alot right. If you
are serious about selling in 5 years or so talk to a business broker and get advice on what you are doing and may want to change.

 

[juniorc82]

Im talking about after paying my self a wage. I was also curious because what if you wanted to set up another service in another town and hire a manager , you would have to have some sort of an idea what kind of numbers you would need to have to be sustainable and profitable

 

[ACE]

I would think 18-20% average would be a good benchmark. Anything less and you might not make it through a few bad months. Even if the business ran as a passive income (and it never will), you still have skin in the game having signed personal guarantees on tens if not hundreds of thousands of dollars in equipment loans.

 

[Desk Jockey]

It's been several years since my last SFS (need to go to the new format) and at that time Chuck had a benchmark of 30% back Return To Owner. Now that was salary & benefits, draw, vehicle etc all taken into account.