PDA

View Full Version : Increasing $$$'s per year


1MajorTom
07-21-2004, 12:05 PM
I was just wondering if there is a percentage or a general idea how much a business should increase their profits each year.
I just compared last year to this year and we have definitely brought in more money. However, we also spent more money year to date. We are still ahead though. I'm wondering what is a good percentage for a small business to increase each year?
Thanks,

Trevors Lawn Care
07-21-2004, 01:12 PM
I dont have a percentage figured out, but i always want to be increrasing PROFITS each year. Of course the more you make the more you spend, but i still would like to bring in say 10-20% more each year.

For me being a small show, next year i am looking to at least double say 50% or more.

trevor

LwnmwrMan22
07-21-2004, 01:34 PM
At least 1000% :D

Actually, next year I'm hoping to net about 5%. It used to be better in the past, when companies and people were getting bonuses left and right, but things are starting to come around again.

I guess some people would say this is a bad economy since they aren't growing the business by 20-40% every year.

I look at it as a good economy, I have no one stiffing me for work, I can still get a "raise" each year. My wife is a state employee and she's getting a smaller "raise" than I am this year.

BSDeality
07-21-2004, 01:43 PM
it takes money to make money unfortunately. Luck and economy is also dependent. just recently i have given out 3 job proposals totallying about $30k. if i get one, two or even all of them this will be a great year for me. it'll still be a good year if i don't get any of them also.

chevyman1
07-21-2004, 02:23 PM
companies that retain double digit growth are considered successful so that's how they gauge it. Trevor, what kind of mowers will you get to grow that much>? why do you use such small stuff now? I'm just curious how a 44 and 33 can be so profitable

Team Gopher
07-21-2004, 03:39 PM
Hi 1MajorTom,

Just as a point of reference, this site (http://www.entrepreneur.com/business-coaching/programs/detail/1,6921,316325-2,00.html) claims they can help you "Increase your income 25 to 50 percent per year" by following their procedures.

Trevors Lawn Care
07-21-2004, 04:26 PM
Originally posted by chevyman1
companies that retain double digit growth are considered successful so that's how they gauge it. Trevor, what kind of mowers will you get to grow that much>? why do you use such small stuff now? I'm just curious how a 44 and 33 can be so profitable

I next year i will be able to switch from the 44z to a 52/54" z, and from the 36" WB to a 48" WB. Right now we work three days 6 hours per day. We can add an addition 50 jobs before we are maxed out. That is how i plan on doing it.

Trevor

LwnmwrMan22
07-21-2004, 05:09 PM
It always looks good on paper.

"Man, all I have to do is get twice as many lawns and I'll have twice as much money."

Lawn-Scapes
07-21-2004, 05:59 PM
I'm not sure what the answer would or should be but if you do not plan to add employees then I would imagine the percentage should be low. I mean once you're maxed out (with high profit clients) and you are as efficient as you can be then I would think the most you could increase each year 3-5% for cost of living. No?

Jodi.. Did you bring in more money because of more clients or are you getting more money from same clients you had last year? Are you working more hours compared to last year?

Glad things are going well for you! They are for me too.. so far. Fingers crossed for the rest of the year!!!

Expert Lawns
07-21-2004, 06:02 PM
My profit has increased 100% from the day I started!

bobbygedd
07-21-2004, 06:46 PM
here's the question: did you increase your profits by being more efficient, by replacing low profit services with more profitable services, by eliminating low profit accounts and replacing them with higher ones? or, did your profits increase, because you are simply doing more work, and putting in more hours?

LwnmwrMan22
07-21-2004, 07:30 PM
The original post was stating there was more money coming in, but there was also more money going out, BUT they were still ahead of last year.

That statement makes me believe that it was talking about %'s, or else obviously you're ahead of last year.

If it's a percentage, I personally don't believe you can add employees and INCREASE your profit margins 20-40%, UNLESS you increase your equipment as well.

i.e. If you're doing a 3 acre house with a 21" push mower and it takes you 4 hours, but you get $100 for it, that's $25 / hour.

Now you can add an employee, and get it done in 2 hours, and now you're at $50 / hour, but you lose $40 because it costs you $20 / hour to run a guy, with another 21" push mower.

Now you buy a 44" walkbehind and you can do this job in 1 hour, and the other guy trims, but now it's costing you $50 / hour for the other guy and the equipment, but you're able to do more yards.

The more yards part of the equation is where your profits can jump, but not as quickly as they could back when someone was starting out. If you're running around with that 21" push mower in your trunk, there's very little expense.

Then you see the grass is greener on the other side of the fence, and you just start adding more and more expense, to make more money, to buy more stuff to make more money, to buy more...... :)

Like it was stated earlier, you have to spend money to make money. Just like playing Blackjack / Poker.

But then again, why am I preaching to the chior on this thread, everyone that's posted on this thread knows all this already.

1MajorTom
07-21-2004, 09:49 PM
Originally posted by Lawn-Scapes
I'm not sure what the answer would or should be but if you do not plan to add employees then I would imagine the percentage should be low. I mean once you're maxed out (with high profit clients) and you are as efficient as you can be then I would think the most you could increase each year 3-5% for cost of living. No?

Jodi.. Did you bring in more money because of more clients or are you getting more money from same clients you had last year? Are you working more hours compared to last year?

Glad things are going well for you! They are for me too.. so far. Fingers crossed for the rest of the year!!!


No, not more clients, we lose some every year due to moving and death, so any new ones we pick up are usually just to replace the lost ones. We always stay right around 92 to 97 customers each year. However this year, the ones that we picked up have been really good, and real close to existing clients which really helps. No, the hours haven't increased, matt always works the long hours in the spring every year. Since we are basically solo (hey, I don't really count matt says, lol), I was just wondering what everyone else thought was a good percentage to increase. Cause eventually we can only become so efficient, and there will be only so much room to increase (without employees).
Glad to hear things are going good for you too Tom.

1MajorTom
07-21-2004, 09:52 PM
Originally posted by bobbygedd
here's the question: did you increase your profits by being more efficient, by replacing low profit services with more profitable services, by eliminating low profit accounts and replacing them with higher ones? or, did your profits increase, because you are simply doing more work, and putting in more hours?

The last couple of years we have become pretty efficient, maybe this year we got a little more efficient, hard to say.. Yeah, got rid of some low profit accounts, and replaced them with beter profit ones. The hours have not increased.

HOOLIE
07-22-2004, 12:25 AM
Originally posted by bobbygedd
here's the question: did you increase your profits by being more efficient, by replacing low profit services with more profitable services, by eliminating low profit accounts and replacing them with higher ones? or, did your profits increase, because you are simply doing more work, and putting in more hours?

That about sums it up for me. I was showing my wife our numbers relative to last season, and she was surprised to see we are making about the same money with a few less customers. Plus, I've knocked about 8 hours off my work week. I dropped some of my worst accounts, replaced them with more profitable ones. And now with a Velke, I knock 5-10 minutes off each lawn.

PMLAWN
07-22-2004, 03:40 AM
A lot depends on the size of you company now. A new business can expand very easy with no new overhead. Also two ways to expand- Total $ in and Total profit. It looks like you are at about the max that you can be as a "solo" If you are both putting in about the most time you can than the only way to go is to work on Profit. And because you have been at this a few years I don't think you can see to much growth there. That is saying that I think you are running a well run business now. I also believe that for a solo oper. to grow in $ in you will have to have workers. While that should bring in more money and more total $ in profit I think that you will see a drop in % of profit. There is no set answer as the more you grow the more you must invest. When you invest you will see a sudden drop in profit which will build back up till you reach the most efficent use of that investment. At which time to keep growing you will have to reinvest and so on and so on...
As you do this each investment will net a smaller % of income against the total income.
The best answer is- What are you capable of handling and what are you comfortable with. Most mid size companys look at around 10% as an average rate but if you need to make a large investment in employees and you are not comfortable with that than you may be close to your max. Only you can plan your future and now that I have said a bunch of nothing and it is 3:30 I will stop and go to bed.