New To Running Business, And Need Fuel Advise

topcut

Hello, Can someone please tell me of a website, or how they charge for fuel/travel charges? I have looked through the forums, but I need a simpler answer. My husband owns a concrete cutting business. I am new to running a business, as of a year ago. I believe all of our pricing needs to be reworked, but I will start with baby steps, so as not to intimidate my husband, for lack of better terms. First off, most off our equipment runs off of diesel fuel, whether it be trucks, power units, or generators. We charge a travel charge outside of a 30 mile radius, unless we have several jobs in the area. Our travel charge is $1.50 per mile. I don't know how he has the cost of fuel figured into equipment usage, and I'm sure that the cost has not been reconfigured in years. I know that all the cost of doing business needs to be sat down and analized, but we just can't get to it right now. My husband spends most of his time in the field cutting, and it is hard to make time to discuss the behind the scenes end of the business. Can someone please tell me how to figure in fuel costs, in a basic manner, so I can make some changes to my system now? We are done with our 2 big local jobs, and we are ready to hit the road on our smaller jobs again. We have a long list of regualar customers that we don't want to offend as well, is part of the equation. Thank you in advance!

send_it_all

One possibility would be to figure your average yearly fuel cost and call it overhead. If you pick up the book "Markup and Profit" by Michael C. Stone, you will find an interesting formula for calculating your company overhead and applying it to your estimates.

L. B. Condulet

I wish this was required reading for all contractors.

dirt diggler

I have no idea how much diesel fuel your hubby goes through in a day and there isn't a single soul on the internet who does.

If you're a business owner, you need to really sit down and figure this out NOW.

One tip I can give you ... your "regular" customers will change. I know you're probably worried about raising prices, changing rates, etc. You can't be though. Your "true" following WILL follow you. The others will find someone cheaper

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Thanks in advance!!!

PrecisionFloors

You can't afford to not do it right now! Every day that you do business with out knowing your true costs is a day (potentially) that you lose or leave money on the table.

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Precision Flooring
(772) 237-9900
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Putty Truck

Get a CPA to do it if you can't figure it out. All medium to large size businesses have in-house CPAs for that expressed service.

There are no such things as "regular customers", unless you have a monopoly on the product or service. If I need to raise prices, I darn well will because I'm doing this to make money and lots of it and I'll die trying to do just that.

If my prices are based on costs and profit and seem to be too high for the market, then I either lower my costs or get out of that market. How many retail stores have you seen leave a market because a) costs are too high, b) profit wasn't hitting targets, or c) both a and b?

Conditions beyond our control change rapidly and if you aren't fluid and able to sit down at a moments notice and change with them....owwwwie-ville, all the way, sister.

MattCoops

In your line of trade I would put a travel charge on the estimate itself. That will take care of your gas. All your other expenses are deemed as overhead and you need to adjust your pricing to make your desired profit.

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more

Double-A

Is he buying off-road fuel for his equipment? If not, how much of the annual fuel purchase is for off-road (equipment) use?

Once you know this, you can make some rough guesses to help offset your equipment fuel use, by day, job, whatever. Just divide up that fuel bill and start charging for it.

If he's not buying off-road fuel, he's paying taxes he doesn't need to pay to run his equipment and he might be due a deduction on local/state/federal income taxes. All the more reason to contact a CPA yesterday.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

MattCoops

If you're not doing it already,
keep a vehicle mileage log for each vehicle in your business fleet.

You can get this at Staples, Office Max, or the like.
Dome makes them.

__________________
Matt with Cupan Custom Tile & Paint of Lowell, Massachusetts
Design and installation of ceramic tile and natural stone for floor, wall, and countertops
(978) 601-8774 | cupantile@gmail.com | view tile pictures and more