Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 20 of 52 Posts

·
Accidental Painter
Joined
·
2,292 Posts
Discussion Starter · #1 ·
As I expand, and get more "hands off" I need to figure iut what to pay me for doing nothing.

As I am setup to do high volume, low pricing I rarely cross the $1500 mark for one job. Just an idea of the size of work I do.

Right now I have everything setup as percentages except the hourly guys (2 man crews).

Example: $300 job takes 2 men two hours (leave shop, setup, work, breakdown)

Now at $25/hr/person (taxes, wc built in) thats $100 in labor.

Saleman will be given 20% total job costs/per job. So 20% of $300 in this case. So thats $60 for that job. However, that each time we do that job. So if we do that job 3 times that day, the salesman in charge of that customer get $60/job.

So, on a 2 hr job at $300, i deduct 160 for payroll leaving $140 leftover. At this stage, I haven't been paid. However, I haven't touched anything yet. The company overhead is roughly $70 for that job. Leaving $70 for profit.

I was thinking of snagging 40% of profit for my salary. Is that a high number?
 

·
Super Moderator
Joined
·
24,787 Posts
My math, perhaps flawed, $28.00 in your pocket.

At that almighty rate....charge away....:thumbup:

You doing 20 plus of them jobs per day?...:whistling
 

·
Registered
Joined
·
102 Posts
Driftweed said:
As I expand, and get more "hands off" I need to figure iut what to pay me for doing nothing.

As I am setup to do high volume, low pricing I rarely cross the $1500 mark for one job. Just an idea of the size of work I do.

Right now I have everything setup as percentages except the hourly guys (2 man crews).

Example: $300 job takes 2 men two hours (leave shop, setup, work, breakdown)

Now at $25/hr/person (taxes, wc built in) thats $100 in labor.

Saleman will be given 20% total job costs/per job. So 20% of $300 in this case. So thats $60 for that job. However, that each time we do that job. So if we do that job 3 times that day, the salesman in charge of that customer get $60/job.

So, on a 2 hr job at $300, i deduct 160 for payroll leaving $140 leftover. At this stage, I haven't been paid. However, I haven't touched anything yet. The company overhead is roughly $70 for that job. Leaving $70 for profit.

I was thinking of snagging 40% of profit for my salary. Is that a high number?
How much volume per year?
 

·
Registered
Joined
·
102 Posts
Driftweed said:
As I expand, and get more "hands off" I need to figure iut what to pay me for doing nothing.

As I am setup to do high volume, low pricing I rarely cross the $1500 mark for one job. Just an idea of the size of work I do.

Right now I have everything setup as percentages except the hourly guys (2 man crews).

Example: $300 job takes 2 men two hours (leave shop, setup, work, breakdown)

Now at $25/hr/person (taxes, wc built in) thats $100 in labor.

Saleman will be given 20% total job costs/per job. So 20% of $300 in this case. So thats $60 for that job. However, that each time we do that job. So if we do that job 3 times that day, the salesman in charge of that customer get $60/job.

So, on a 2 hr job at $300, i deduct 160 for payroll leaving $140 leftover. At this stage, I haven't been paid. However, I haven't touched anything yet. The company overhead is roughly $70 for that job. Leaving $70 for profit.

I was thinking of snagging 40% of profit for my salary. Is that a high number?
Also you are figuring your salary wrong. You need to incorporate a salary to pay the owner/ yourself as part of the overhead as part of a percent and also account a profit for the company. Any profit left over for a job is for the company to use to get better jobs down the road.
 

·
Administrator
Maker of Fine Sawdust
Joined
·
55,774 Posts
A salary is a fixed amount of pay per year. There are bonuses and such that can increase your pay per year. Just figure out what you want a year and then that is what you pay yourself.

If you do better than expected give yourself a well deserved bonus.
 

·
Banned
Joined
·
1,907 Posts
Dridtwee, lets talk. About a year ago you where not able to keep yourself busy. You where straying from your business model and targeting homeowners for painting with an ad in the paper. Now you are talking about not only work crews but a salesperson or a few of them. Are your crews in house, subs or a combo? How many crews do you have right now? Who provides the trucks and tools to the crews?

I know what I can make in the field by myself in a year. When I bring on an additional guy I loose some of my time to build but get his time so more work gets done. That being said my income better go up or I should have stayed alone. When you have done this enough times that you have no time left to work but your income is left in tact you have successfully left the field.
 

·
Accidental Painter
Joined
·
2,292 Posts
Discussion Starter · #9 ·
Thanks for the clarification on salary. I just figured I'd pay myself a commision like the salesman. x%.

I'd be happy at around $300k salary, but lets be real, that aint happening this year or next. So a percentage until then would fit better.

This has been an interesting year so far. 10 month in and I have refocused. The first half the year I expanded too quickly. Hired two guys and I was the salesman. Three months of 12 hr days/ 7 days a week and i burned out my employees. I overbooked them, and wasn't ready for the fallout. So I liquidated, and regrouped.

This time I am approaching better prepared. I have a payroll, accountant, lawyer, insurance guy, & financial planner guy. After TONS of meetings with all those people I have a better, more scalable pricing structure to accomodate expansion.

2 months ago, I started anew by testing the waters working solo. Since then I have picked up enough work to justify making the leap.

The pay scales have pretty much been set for everyone but me. Hourly guys start at $10 and get monthly raises topping out at $15/hr. I will be waiting on obamacare to evaluate how I will do health insurance. After 1 year they will have 1 week vacay/ roth 401k with employer match up to 5%.

Salesman will get 20% as stated earlier. Paid 500 biweekly as a draw against their monthly commision check. Typical here is 15% but we do small $$/ high volume, so I adjusted it.

I have branched from single occupancy (house) rental rehabbing into the multi-occupancy dwellings (apartment complexes). I have gone from flipping 1 house a week to 1 apartment a day. Nothing my company does is highly skilled.

Part of me feels greedy for taking that 40%. Although not much now, it can scale to be a massive number.
 

·
Accidental Painter
Joined
·
2,292 Posts
Discussion Starter · #10 ·
Morbid: you are saying that I should incorporate say $100k salary for me into the overhead, then gi e myself fatter bonuses? Oor would a % be better?

someone asked about volume: The goal is in 10 years 500k in volume/month in total sales nationwide.
 

·
Registered
Joined
·
102 Posts
Driftweed said:
Morbid: you are saying that I should incorporate say $100k salary for me into the overhead, then gi e myself fatter bonuses? Oor would a % be better?

someone asked about volume: The goal is in 10 years 500k in volume/month in total sales nationwide.
100k salary is unrealistic at this point IMO. When I started I paid myself a yearly salary of 40k that was part of the overhead plus sales %/ hourly if on the field.

I asked about your volume of work as to be able to maintain 1 office staff full time it requires a substantial amount of volume produced a year that i think you won't be making in your first few years.
 

·
Accidental Painter
Joined
·
2,292 Posts
Discussion Starter · #14 ·
I offer Two services: maint make ready, & painting.

I know 2 guys should be able to paint 4 units/ day and another crew should be able to make ready 2/day. So that come to 20 units a week for the painters @ min of $300/unit & 10 units/week make ready @ min of $400.

$6k/week painting $4k week make ready. 1 salesman 4 people. $10k/week total sales.

Anticipated max volume initially. Right now I am at $1200 week running solo working sun-thurs & doing sales on friday (meet & greet, pitching, bidding, etc.)

The hope is by initially hiring 1 salesman, & a 2 man crew to do it all. Then expand to a 4 man crew once the volume incteases. After that it will stand as 2 separate departments as most complexes prefer to use their maintenance guys for the make ready.

Yes I have 1 month salary set aside for the hourly guys for when I pull the trigger.
 

·
Super Moderator
Joined
·
28,925 Posts
I dont have any experience in rehabs, except for my own rentals.

I have increased my salary by 50% in the last 4 years. I pay myself about 30% more than my lead guy (s) .

Its all in what you can afford.
 

·
The Finisher
Joined
·
1,396 Posts
I need 6k a month to cover the family expenses. If my business could not support this, I'd be working for someone else. Your salary should be a fixed expense when calculating overhead, along with health benefits, and retirement.

At the end of each quarter I evaluate what's left over, and either pay myself a nice bonus, or reinvest it back into the business.

Pretty simple if you ask me.
 

·
Banned
Joined
·
1,907 Posts
I offer Two services: maint make ready, & painting.

I know 2 guys should be able to paint 4 units/ day and another crew should be able to make ready 2/day. So that come to 20 units a week for the painters @ min of $300/unit & 10 units/week make ready @ min of $400.

$6k/week painting $4k week make ready. 1 salesman 4 people. $10k/week total sales.

Anticipated max volume initially. Right now I am at $1200 week running solo working sun-thurs & doing sales on friday (meet & greet, pitching, bidding, etc.)

The hope is by initially hiring 1 salesman, & a 2 man crew to do it all. Then expand to a 4 man crew once the volume incteases. After that it will stand as 2 separate departments as most complexes prefer to use their maintenance guys for the make ready.

Yes I have 1 month salary set aside for the hourly guys for when I pull the trigger.
Is $1200 a month your total sales? If your business is doing $62,400 a year for volume and you are thinking of hiring a salesmen you are out of your mind. What is left over after your material and business expense? It doesn't even sound like you pay yourself $25 an hour.
 

·
Accidental Painter
Joined
·
2,292 Posts
Discussion Starter · #19 ·
My company buys no materials.

Septembers total sales $7k, october projected to be 7-10k while I expand.

Today alone I will be talking to the local EHA, go to a complex and paint 3 units ($900) & then do 1 make ready ($400) solo.
 

·
Registered
Remodel
Joined
·
31,190 Posts
Your salary is part of MG&A overhead. As far as how much to retain for your company, that depends on your target cash on hand for any given growth stage, as well as what's required to fund your growth.

Keep in mind, this is something of a low barrier to entry business, so you can expect to go 5 years and then have to start over - that's a risk you take on, so you need to be compensated for it.
 
1 - 20 of 52 Posts
Top