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Your Costs As A Percentage Of Gross Income? Please Share!!

 
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Old 02-07-2013, 11:37 AM   #1
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Your Costs As A Percentage Of Gross Income? Please Share!!


I know most won't want to get too detailed on a public board, but I'm interested in how percentages of gross change as a company gets bigger.

I've always tried for the following, which has a low materials cost.

35% LABOR
15% MATERIALS
15% OVERHEAD
10 % SALES COMMISSIONS
5% MARKETING/ADVERTISING
10% COMPANY PROFIT
10% OWNERS PAY OR MANAGERS PAY


We all know everything has to go into one of those areas, unless you know how to get 110% for every job.

So, if you are grossing under $250,000 what are your percentages?

How about $250,000 to $500,000?

$500,000 to $1m?

$1m and up?

Dont have to give detailed numbers about your gross, just the range you are in, and then if you would, detailed % would be great.

I'll compile all the info and averages in a spreadsheet, and report my findings weekly as we add data.
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Old 02-07-2013, 11:40 AM   #2
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


I'm sure this topic has been covered many times...if you search you will likely find a thread that has covered this...

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Old 02-07-2013, 01:05 PM   #3
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


I'm not to privy of posting that on a public forum but I can tell you from experience that there is a happy medium when it comes to growth. Once you go over that happy medium, it's not worth it because you're simply not making anymore than what you were before.
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Old 02-07-2013, 04:52 PM   #4
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


CScalf, I'm sure there is tons of information, I'm not really interested in looking for old info from 2009, I'm more interested in a conversation, or some realizing they have no idea and motivating them to learn more....Sorry if it looked like I'm a n00b, just because I have 8 posts.

Just curious, maybe a better question is, do you know all your costs as a % of your gross? Notice I didn't just say variable costs, or fixed costs, I asked all of them. I find that most guys just worry about the labor and materials, and I wonder how many out there realize that the sink or swim mark in most sized businesses is doubling their labor and materials? What do you think, are most the guys you know figuring their labor and materials, and then at a minimum, doubling that?


Brand, Kind of figured that. There has to be a sweet spot where the actual net profit figured against your time to manage balances out, right? Thats not really what I was trying to figure out, but a lot miss that and think they have to grow to stay alive, don't they?

1st great business book I read 15 years ago, The E-Myth. Who hasn't read that, right?
latest great business book I've read, last week, Rework. Check it out, its kind of the opposite of the E-Myth, but lots of great insight.
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Old 02-07-2013, 05:44 PM   #5
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Last Year $272,000

2 Employees

39% Materials
19% Labor
24% Taxes, Benefits, Work Comp
8% Profit
2% Tools
4% Insurances
4% Attorneys Fees, Accounting Fees, Fees for Business Associations
0% Advertising
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Old 02-07-2013, 05:52 PM   #6
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Obviously these numbers will vary wildly depending on location, type of work perfomed, class of neighborhood worked in, etc. What point, if any, are you hoping to make?
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Old 02-07-2013, 06:43 PM   #7
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Keeyter View Post
Last Year $272,000

2 Employees

39% Materials
19% Labor
24% Taxes, Benefits, Work Comp
8% Profit
2% Tools
4% Insurances
4% Attorneys Fees, Accounting Fees, Fees for Business Associations
0% Advertising
Your labor was just $ 51, 680 for your self and a hand?
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Old 02-07-2013, 07:40 PM   #8
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Littlefield View Post
CScalf, I'm sure there is tons of information, I'm not really interested in looking for old info from 2009, I'm more interested in a conversation, or some realizing they have no idea and motivating them to learn more....Sorry if it looked like I'm a n00b, just because I have 8 posts.

Just curious, maybe a better question is, do you know all your costs as a % of your gross? Notice I didn't just say variable costs, or fixed costs, I asked all of them. I find that most guys just worry about the labor and materials, and I wonder how many out there realize that the sink or swim mark in most sized businesses is doubling their labor and materials? What do you think, are most the guys you know figuring their labor and materials, and then at a minimum, doubling that?


Brand, Kind of figured that. There has to be a sweet spot where the actual net profit figured against your time to manage balances out, right? Thats not really what I was trying to figure out, but a lot miss that and think they have to grow to stay alive, don't they?

1st great business book I read 15 years ago, The E-Myth. Who hasn't read that, right?
latest great business book I've read, last week, Rework. Check it out, its kind of the opposite of the E-Myth, but lots of great insight.
You would probably be surprised to find that the information isn't that old, this topic is brought up a lot...yes i know my numbers, no I don't want to share
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Old 02-07-2013, 07:42 PM   #9
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


5% materials
10% Labor
85% profit
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Old 02-07-2013, 07:44 PM   #10
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Warren View Post
Obviously these numbers will vary wildly depending on location, type of work perfomed, class of neighborhood worked in, etc. What point, if any, are you hoping to make?
I'm not so sure there is one...
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Old 02-07-2013, 10:09 PM   #11
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Jaws View Post
Your labor was just $ 51, 680 for your self and a hand?
I haven't paid myself in longer than I can remember. I sponge off the wife. So just one paycheck
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Old 02-07-2013, 10:10 PM   #12
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Keeyter View Post
I haven't paid myself in longer than I can remember. I sponge off the wife. So just one paycheck
That sucks
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Old 02-07-2013, 10:21 PM   #13
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Keeyter View Post
I haven't paid myself in longer than I can remember. I sponge off the wife. So just one paycheck
is right john!

Holy chit man, you gotta pay yourself...maybe it is time to change pricing...
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Old 02-07-2013, 10:28 PM   #14
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Littlefield View Post
I know most won't want to get too detailed on a public board, but I'm interested in how percentages of gross change as a company gets bigger.

I've always tried for the following, which has a low materials cost.

35% LABOR
15% MATERIALS
15% OVERHEAD
10 % SALES COMMISSIONS
5% MARKETING/ADVERTISING
10% COMPANY PROFIT
10% OWNERS PAY OR MANAGERS PAY


We all know everything has to go into one of those areas, unless you know how to get 110% for every job.

So, if you are grossing under $250,000 what are your percentages?

How about $250,000 to $500,000?

$500,000 to $1m?

$1m and up?

Dont have to give detailed numbers about your gross, just the range you are in, and then if you would, detailed % would be great.

I'll compile all the info and averages in a spreadsheet, and report my findings weekly as we add data.
By owners pay, are you meaning a salary to run the company, but not act as a PM? Im not there yet.....
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Old 02-07-2013, 10:30 PM   #15
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Jaws View Post
By owners pay, are you meaning a salary to run the company, but not act as a PM? Im not there yet.....
Even if you were there, would you sit back or still be a PM?
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Old 02-07-2013, 10:40 PM   #16
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by CScalf View Post
Even if you were there, would you sit back or still be a PM?
Didnt become a builder to sit on my azz
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Old 02-07-2013, 10:43 PM   #17
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Jaws View Post
Didnt become a builder to sit on my azz
So you don't build chairs?


I wouldn't be able to sit still...and imo i don't see accountability if you aren't onsite at least some times
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Old 02-07-2013, 10:50 PM   #18
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


PM is a loose term too.... I dont bag up as often as Id like, but still pretty regular, some times a hole or ditch needs dug, sheet rock packed to the second floor....

I made the mistake of spending to much time in my truck last year and a half, now my two lead guys are ready to go and I can get back in the mix pretty regular. Its been great.

When you are spending most of the time in your truck bouncing from job to job or in the office, the disconnect between you and the crew gets to be bigger and bigger. I didnt like it....

When I injured my hand, it really got out of hand...

Now its at 80% [ apparently as good as it gets] , the games back on

Plus my hands were starting to get soft
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Old 02-07-2013, 10:53 PM   #19
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by CScalf View Post
So you don't build chairs?


I wouldn't be able to sit still...and imo i don't see accountability if you aren't onsite at least some times
I disagree. Some of the better companies I worked for had competent foremen on site and production managers/supers running the foremen. Talking commercial and very high end residental.

Just not the circus I want to run
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Old 02-07-2013, 11:02 PM   #20
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Re: Your Costs As A Percentage Of Gross Income? Please Share!!


Quote:
Originally Posted by Jaws View Post
I disagree. Some of the better companies I worked for had competent foremen on site and production managers/supers running the foremen. Talking commercial and very high end residental.

Just not the circus I want to run
I agree with the commercial part, but on residential I would want to be on site at least sometimes, that's just me tho

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