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View Full Version : Profit Margin?!?


haybaler
03-06-2007, 08:14 PM
ok, I did a search on this and found some great threads, but nothing to answer this question. What is a good realistic number to shoot for in terms of Profit Margin. I've heard that a very well run restuarant in a good location can make 20% profit. I only made 5% last year, but I invested heavily in equipment. I want to set a goal this year, but what is realistic?? 10,15%? I want to be able to look at a job and figure the cost and then ad and certain % profit. what's the magic no.? please help me.

Tim Wright
03-06-2007, 08:18 PM
30%

Tim

haybaler
03-06-2007, 08:33 PM
wow, that sound high, But this is why I asked the question, I'd love to hear other people's thoughts.

haybaler
03-06-2007, 08:39 PM
Ok, so I was just reading through the "how much do you want to take home in a day" thread. sorta what I had in mind, but people are going all over the place talking about how many hours in a day and saying "as much as possible" or just picking numbers out of a hat. I want some cold hard figures here. this isn't rocket science and it's not chance either. we need to know what were making and what we should be making.

ECS
03-06-2007, 09:08 PM
Last year was roughly 16.5% of my gross after taxes.
That is lawns, Snow, Caretaking and some other services I do for my customers.

Az Gardener
03-06-2007, 10:20 PM
I agree 30% is a good target number. Franchise businesses wont even consider an operation that is not at least 20% You can survive at the lower numbers but to have the freedom to grow the business you need to be higher.

Flow Control
03-07-2007, 07:36 AM
I want to be able to look at a job and figure the cost and then ad and certain % profit. what's the magic no.? please help me.

Are you maint. or install?

supercuts
03-07-2007, 07:40 AM
for my year end figures we were about 30% too.

haybaler
03-07-2007, 07:44 AM
Are you maint. or install?

both. I assume hardscape construction is higher profit than lawn mowing, but I want to hear numbers from everyone.

Flow Control
03-07-2007, 07:48 AM
take us through your bid thought process when bidding a new install, say 20K sq ft lawn and (25 yards of topsoil 10 yards of mulch for beds) and 3k in bushes, regular shaped lot, no grade issues.

How much did you have in new equipment last year $$ ??

bullethead
03-07-2007, 08:05 AM
30% - really? I think it would be great to make, but I have never been able to get remotely close to that. I shoot for 15% but usually shake out around 8-10%. Perhaps my cost structure is too high, as I do not feel I can raise prices much more due to competitive pressures. Our main revenue stream is from high-end residential design/construction (60%), with the balance from maintenance.

For your 30% guys, what percentage of Total Revenues is your Salary?

haybaler
03-07-2007, 08:22 AM
take us through your bid thought process when bidding a new install, say 20K sq ft lawn and (25 yards of topsoil 10 yards of mulch for beds) and 3k in bushes, regular shaped lot, no grade issues.

How much did you have in new equipment last year $$ ??

ok maybe I should have just made this thread a poll ? instead, I just want a simple number. to answer your question I would normally try to figure out how many man hours and how many tractor hours it would take, ad that up then figure material cost +markup. but I want to instead ad Up all my actual cost for the job and then ad a set profit to that. so say the job would be 5000 in materials and payroll +20% =6000

haybaler
03-07-2007, 08:23 AM
about half my gross income went back into equipment.

Flow Control
03-07-2007, 08:23 AM
Perhaps my cost structure is too high, as I do not feel I can raise prices much more due to competitive pressures.

I think a lot of owners feel the same way about cost structures and competitive pressures. Myself there is no way that my communication bills should approach 8K a year, there has to be ways to reduce my overhead without effecting the way the business runs. I am reviewing every bit of overhead this winter and already have eliminated somethings and changed others and have a projected savings of 6-7K of otherwise wasted money in my eyes. With the new construction market taking a huge dip in my market (we are 80% new construction and 20% service) I know all about competitive pressures. We are a irrigation only company and I figured if I raise my prices by $200-$300 per job then even if I sell 1/3 less I will make close to the same amount after figuring the extra non-tangible costs with the additional work and I am trying to get more into the custom work anyway so I am pretty optimistic I will be able to sell the extra couple hundred without much of a problem.


For your 30% guys, what percentage of Total Revenues is your Salary?

Excellent point... I run a regular paycheck for the entire season and take the left over money and invest back into the company and or receive a bonus check. This year I am giving myself a raise and have looked at the books for the last 3 years before decided what a fair raise would be.

rodfather
03-07-2007, 09:02 AM
15 - 25% is average for this industry

bullethead
03-07-2007, 09:05 AM
Excellent point... I run a regular paycheck for the entire season and take the left over money and invest back into the company and or receive a bonus check. This year I am giving myself a raise and have looked at the books for the last 3 years before decided what a fair raise would be.[/QUOTE]


Without giving a specific dollar figure, what percent of your Revenues is your annual base salary (excluding bonuses)? Mine has been 5% - 8%.

Flow Control
03-07-2007, 09:24 AM
Mine is around 6% of gross, I bid new jobs with a target of 20% after overhead.

Team-Green L&L
03-07-2007, 09:27 AM
Profit margins on services rendered are 28% for us. Retail is 33%. Restaurants gain 20% because the volume of sales is always higher than any other market. If you bought equipment, those expenses are coming out of your profit margin at POS (point of sale), but should increase the margin within 3 years (if you work the equipment).

bullethead
03-07-2007, 09:51 AM
[QUOTE=Team-Green L&L;1739347]Profit margins on services rendered are 28% for us. Retail is 33%. QUOTE]

NET PROFIT before taxes? 28- 33%, really?

Do any of you 30%'ers have sales greater than $1 million annually? I'm floored by the large percentage. From my other life (as a CPA), I rarely saw financial statements of companies that were in these ranges and usually those that were had some type of proprietary technology or other barrier that allowed for higher profitability.

salandscape
03-07-2007, 02:47 PM
25% last year, shooting for 25-30 % this year. My salary, paid weekly all year will account for 16% of gross sales. If I hit my numbers I will bonus out at year end.

supercuts
03-07-2007, 04:18 PM
30% was after monthly payments on all equip not paid for , indcluding 2 z's, kubota, truck, as wells $10k fuel, $10k medical, $5k ira's, bus inurance, and everything else. we are 95% maintance

haybaler
03-07-2007, 04:59 PM
30% sounds high, I think i'm gonna go for 20%. I think it must depend on what region your in also. but thanks to everyone that gave me a number.