Bam, I took COGS to be what I described and his expenses to be his overhead and salary. If so, 13% is pretty good.
So they are making 40% profit after taking a salary or is their salary taken from that 40%?I know its not apples to apples....not everyone can be an over paid plumber
I know of some prime contractors who charge 40% profit...they are very high end and expect perfection (and they get it)
it would be nice to get paid to just organize the jobs and not swing a hammer...id love it as I get older....
13 is my net profit for year. 30% is my gpm. But yes that is my fear to many employeeshuggytree said:about the only thing that stands out with me is how many employees you have and your sales are only $500,000 im at $525,000 this year all by myself...most remodelers I know have a couple of employees and are in the millions.. the small 1-2 man operations are $300,000-$500,000.....1 kitchen could be $60,000+...so $10 kitchens a year is all you'd have to do to make $500,000..... with my plumbing business id expect $2,000,000+ with that many employees....I know some high end service shops that expect $500,000 per plumber a year I think 13% profit is low also on remodels I like to be at 30-35%, new homes 10-15%
Are your hands busy the whole time? No slow spells where you have too many standing around?13 is my net profit for year. 30% is my gpm. But yes that is my fear to many employees
If the smaller job produces twice the margin I'll take 50I think you should analyze your three tiers of jobs and the associated marketing, closing and adminstrative costs of performing them. It may be difficult to isolate the marketing costs but I would not be surprised if net profit went up when focusing on the larger projects.
Every client you take on is a time leech. Do you want fifty 2000$ leeches or 2 50k ones?
The definition of net profit would be after your salary is paid, not before. The 63k would be after his salary if it's true net profit.$482,000 x 13% profit = only $62,000.
Is that all you paid yourself for an entire year because after taxes and health insurance you are only netting about $800 per week, or $20 per hour.
If my numbers are correct you would be better working for someone else if you can't change your business model.
My opinion is that any business owner who runs a serious business should be paying himself, or earning no less than $2,000 per week and after taxes that is only about $1300 per week. So, you need a profit of about 30% and not 13%.
As for working in the field I am 63 years old and I still work in the field making repairs 6+ days a week. There are several advantages such as I set the pace for my employees and I can keep in touch with the need to make changes for difficulties, prices and work-related issues.
I can't function when working in the office in the daytime because there are too many distractions to stay focused. I can he more productive in the field during the daytime and more productive in the office during the evenings.
40% before salarySo they are making 40% profit after taking a salary or is their salary taken from that 40%?
It is scary to think about how different everyone's "opinion" is on finances and what there definition of profit is.
If you are making 62,000 after you pay yourself a salary I'd say you are doing fine.
Lot of liability for 60k a year imo. One bad job and you could be left with -60k income for the year.Yes net profit is what I took home or could have taken home. Yes it seems small for the amount of sales we did because I now have a office manager and a guy helping me do bids while I watch and manage the field guys. I step in on the big bids and do all the design work for our bigger remodels. My stress level has dropped tremendously and I have been able to be a great family man.
Do you mind me asking what your business model looks like? Do you do the labor just manage the guys?lawndart said:Just a couple of quick observations based off the information you provided: 1. Seventy percent COGS is too high, and will limit your potential for growth unless, you reduce it by 10-20%. 2. Thirty percent GPM is a bit low. Successful businesses usually have 40% GPM's and above. Charging more money for your services will help COGS and GPM improve. 3. Are you figuring your weekly salary into overhead? 4. Based on the above numbers and information you provided, I'm going to assume the 13% net is your salary. 5. How are you putting money away (nest egg) into the company for growth, and hidden expenses? This is what a true net is. Looks like your net is 0%, am I correct?
Totally agree with this. If the 60k+ is your only take home and a normal salary isn't in your expense numbers I would be a little scared. Sorry if I have that wrong! We usually net 10-15% after all expenses and owner salaries. Most of the net has remained in the company for now for working capital, equipment purchases, slush, etc. as we are pretty new and growing our equipment/truck fleet some. If something goes down hill you might be in deep poop.Lot of liability for 60k a year imo. One bad job and you could be left with -60k income for the year.