what percentage of gross is reasonable?

[mcgruff]

As a solo op who sometimes has a "helper", is it unreasonable for me to expect a 35% net of my gross after all taxes and insurance is paid, fica, fuel, wear and tear of equipment and truck?
what else did I miss?
I dont need workers comp for a solo I was told. :usflag:

[bohiaa]

no, and you may want to ask your self ?

would I be willing to take 20% for this job ?

your employee will take around 20%, if you sub somethign out you can expect to only take 20%.

were in the process of keeping our comp. busy, and taking 20% of what they make keeps them busy, while we get the jobs.

once you start keeping the numbers you may be shocked.
however remember that an employee WILL MAKE YOU MONEY.

with 2 guys 2 Ztr's were at 700.00 plus and minus 50.00 a day.
of corse this is before everything is taken out.

as far as WC. you will have to check. here in Texas we can have as many as 5 employees with out it.

Best of luck

[mdlwn1]

It depends on how good you are at managing money as well as your quality vrs others. I maintained a 45-50% on Gm for 5 years with about 50 full service (mulch, chem, cut, everything) accounts. Things like route density are HUGE as far as gross margin. As you get bigger...like lets say Brickman (lol) you would be super happy with 10-15%. Think of it this way...you need to find a way as a solo to hit 40-50% gm. This should be your main goal....period. If you cant find a way...keep trying....or give it up.

[mcgruff]

thanks for the replies, All my lawns are in one community, so I have a super tight route.

I will have to crunch the numbers and see what i am at.

I will pm you both with some more questions.

thanks

[mcgruff]

the whole reason i said 35% was b/c somewhere on lawnsite, i thought I read about a guy who claimed he was netting 35 % and the guys flamed him and said no way was 35 % possible.

But then again, maybe I read it wrong.

Been trying to find the post ever since. :hammerhead:

[Ryall Landscaping]

the whole reason i said 35% was b/c somewhere on lawnsite, i thought I read about a guy who claimed he was netting 35 % and the guys flamed him and said no way was 35 % possible.

But then again, maybe I read it wrong.

Been trying to find the post ever since. :hammerhead:

I would imagine that nearly anything's possible, really. If you were a 1-2 man operation like myself, with an extremely low overhead (basically, fuel - can't get insurance as I'm 17), you could net probably 80% at least, whereas if you were a large company with a crew you may only get, say, 20%, where if you had 5 crews you might only make 10% of it.

[ferris09]

My question to you is this:
What do you mean net? Your net or your company's net? The reason I ask this is, are you putting any money back into the company?

Example1 : You gross $1,000 a week, your overhead is $500 therefore your company nets 50%. If you pay yourself that $500 your net is 50% but your company nets 0%. If you continue to operate in this fashion you will never grow your company as it does not make any money and has no way of growing (buying/replacing new equipment).

Example2 : You gross $1,000 a week, your overhead is $500, you pay yourself (should be included in the actual overhead of your company) 35% ($350) that leaves your company with a net of 15% ($150).

You should have in mind what you are worth and how much your company is worth. You should always put money back into your company so it can sustain itself and grow and not rely on your net to pay for major repairs and or purchases.

[mcgruff]

Ferris,
thanks for your reply.
I mean your example #2. The company needs to net money as well to grow.

How much do I need to set aside for the company? what is the average I should keep for my wage?

thats what I was trying to get at, thanks for clearing it up for me. :drinkup:

[ferris09]

In that case then it is up to you to decide what you want to pay yourself. Keep in mind that it should be realistic. It would be easier to assign the amount in percentages as opposed to a dollar figure, if you assign your salary as in example #2. The key is to be consistent in the way you do it regardless of the dollar amount grossed. The dollar amount would vary due to the amount of business, you could always pay yourself a performance bonus at specified times.

[mdlwn1]

It depends on how good you are at managing money as well as your quality vrs others. I maintained a 45-50% on Gm for 5 years with about 50 full service (mulch, chem, cut, everything) accounts. Things like route density are HUGE as far as gross margin. As you get bigger...like lets say Brickman (lol) you would be super happy with 10-15%. Think of it this way...you need to find a way as a solo to hit 40-50% gm. This should be your main goal....period. If you cant find a way...keep trying....or give it up.

I feel like an idiot...I mean to say net profit instead of gross margin. Gm's on maintanence should usually be 40-60%. Net profit as a 1 truck with a helper can easily hit 50% if you try hard enough.

[mcgruff]

ok......... thanks for the response.

[shovelracer]

the whole reason i said 35% was b/c somewhere on lawnsite, i thought I read about a guy who claimed he was netting 35 % and the guys flamed him and said no way was 35 % possible.

But then again, maybe I read it wrong.

Been trying to find the post ever since. :hammerhead:

It is possible but you cant do it forever. I have been steady at around 25% for a while. My raises come by increasing gross. Last year however I netted 34% and here's what it took. I had to fire 3 guys then replace them all myself. It consisted of 5:30AM till pitch black darkness 7 days a week for 5 months. All remaining time was spent sleeping, eating, and doing the paperwork. I had no life what so ever. At the end of the year I had lots of cash and to energy no spend it. I did it because I was furious at the BS that was going on with employees, and was not able to find a suitable replacement. The rest of the reason was to remind me what I got myself into and to never want to do it again. Solo I grossed just under 200K with 3 workers for 4 weeks of the season, but I dont think I could do it again. So it is possible, but you wont live long. One day I will go back to solo, but only when I'm ready to retire.

[mcgruff]

so your saying that you netted $68,000 that year but damn near killed yourself right?

34% of 200,00 is $68,000

[shovelracer]

Something like that a little less. Yes that is net from the business to me. So that doesnt include the nice chunk the feds took from me personally. Depretiation and a good accountant is your friend.

[mcgruff]

I agree with that