Seeking Advice (Revised)

[speers90]

Thanks to everyone that responded to my original post, some of them were perplexing but most of the responses were very useful. I think I made a mistake in assuming that I would be able to convey my situation to you, which I don't think I was able to do.

I think what would truly help me out is to find out: What percentage of gross incomes could I expect to keep as net profits for a solo operator that has no debt and a very low overhead, assuming that 100% of gross incomes was from mowing. I freely welcome input from larger lco's but that isn't really the business model that I will be using. Yes, I realize that it will differ from business to business because of insurance and other costs associated with running a lco.

Sample scenario:

- 25 accounts, all on small lots 1/4 of an acre or less which I charge $25 per week. (That equals $650 gross weekly income)
- I have no debt payments so pretty low overhead
- All equipment will be used commercial grade (small walk-behind or self-propelled push, edger, trimmer, & blower)
- I don't really consider normal vehicle expenses a business expense in my situation especially gas costs because I am already driving 90-100 miles a day to and from work, so running this lco in my area would acually probably save me money in vehicle gas.
- I already have all the administrative work out of the way, I have a business entity (llc) already setup.
-I am not afraid to work hard, for my current job I usually come in at between 105% - 120% of production levels that are required to keep the job. I know this because we get told daily what our production levels are.

Finally, I am still going to be moving in the late winter/early spring of 2009 so if I did decide to give this a try I would mostly be viewing it as a learning experience.

Ryan

[willjones4]

Seems to me you want reassurance. You already answered your question. Common sense will tell you that you also need to allow for equipment/vehicle repair fund, insurance, advertising costs, cell phone, eating expense (unless you take a sammich like me), etc. I honestly think you need to just forget it until you get where you're going. Sit back, do your homework-maybe go work for a big LCO and learn that way-jumping out there for one season and moving away is just stupid.

[Albery's Lawn & Tractor]

Well you don't want to hear the truth, so go ahead with your plan. You must know way more then the people giving you info since everyone says doing this for one year is nucking futs!!

[topsites]

I'll give you some basic figures, these can and will vary some, also your first year is unlikely to be realistic in any way...
What I mean is you really try to just survive some kind of way during that time, later it gets better.

But anyhow, roughly speaking:
30% expenses, 30% labor, 30% taxes, 10% profit = 100%

I think I replied to your earlier thread so I won't get into it again, but it does depend also, ultimately on how you decide to set up your accounting... Your percentages can vary for one, but you may decide to do things different.

Here's another method:
Gross - expenses = net
Pay taxes on that.
Then what's left is your profit, from which you pay yourself and whatever, what's left after paying taxes on net in this scenario is yours to do with as you please.
In this case, generally speaking expenses still account for about 33% of gross, then it goes from there.

For solo ops the second method appears to be the preferred way, the first method involves a LOT more paperwork (all tax related) and is usually better suited towards a company with more than a few employees.

[speers90]

Topsites thanks for that info, just to clarify your 30/30/30/10 approximate guideline. In my situation, as a solo lco, my expenses would run about 30% thus leaving me with approximately 70% since I would be the labor. Then of that 70% I obviously have to pay taxes.

Just wanted to make sure because it could be read as you pay 30% of your gross income in taxes which shouldn't be the case?

Albery's - I definately don't know better than you guys, but I'm not talking about doing it for just one year. I want to make a career of it, or at least give it a try to see if it's something I enjoy doing. The reason I re-asked was to clarity what I was thinking of doing because it changed drastically because of the advice I got in the first post. I'm talking about doing what I did as a child and actually go out and push mow lawns. I know some of you must have started out that way either as children or as young entreprenuers.

Sure I have a planned move in a year, but that could fall through. If we do end up moving then I have one year of experience on how to advertise, giving estimates, etc... I view it as an opportunity to learn something about the business first hand that will be useful in my new location if do end up moving.

Merry Christmas,
Ryan

[Dunn's]

Topsites thanks for that info, just to clarify your 30/30/30/10 approximate guideline. In my situation, as a solo lco, my expenses would run about 30% thus leaving me with approximately 70% since I would be the labor. Then of that 70% I obviously have to pay taxes.

Just wanted to make sure because it could be read as you pay 30% of your gross income in taxes which shouldn't be the case?

Albery's - I definately don't know better than you guys, but I'm not talking about doing it for just one year. I want to make a career of it, or at least give it a try to see if it's something I enjoy doing. The reason I re-asked was to clarity what I was thinking of doing because it changed drastically because of the advice I got in the first post. I'm talking about doing what I did as a child and actually go out and push mow lawns. I know some of you must have started out that way either as children or as young entreprenuers.

Sure I have a planned move in a year, but that could fall through. If we do end up moving then I have one year of experience on how to advertise, giving estimates, etc... I view it as an opportunity to learn something about the business first hand that will be useful in my new location if do end up moving.

Merry Christmas,
Ryan

actually I believe 30% for taxes is just about right maybe even more.