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wrestlingcoach
09-03-2004, 09:48 AM
what bottom line profit percentage should be profit in a week or for a year for a company only running a crew?

The owner is absolutely doing nothing at the job sites


what should be the pure profit?


minus hourly rate
minus matching employer funds
minus workers comp
minus liab insur
minus % of maintenance
minus % of office supplies
minus gas
minus what other expenses





for
percentage


also could any body else answer for just a solo guy doing all the work what is the % of pure profit for a company. I want to compare to my last few years without a crew.

NickN
09-03-2004, 10:39 AM
Alot depends on you and your expenses.
How much do you want to make per year?How much is your workmans comp?
What kind of equipment do you have,maintenance schedule,gas prices,advertising,etc.,,?
I don't think anyone can give a basic percentage because our costs vary across the country as well as our wages.
I'm was trying to make $30 per hour.Not much for a business owner.I figured in all my expenses(forgot some and estimated some) and came up with about $50 per hour,by myself,to make that much.That's without giving the company any profit.I decided to give the company half the profit (15 per hour) and myself 15 per hour.Still not much for a business owner,but I have money in the bank for maintenance,new equipment,advertising,insurance,etc.,,(my overhead)
Best thing I could do was to work backwards.Start with an yearly salary,then figure out my hourly pay.Then figure up all my expenses(some estimated) and tack that on to my pay.
With that method,I think when it comes time to hire employees I will have to raise my prices very little in order for me to make money,the business to make money,and pay employees and the expenses that go with them.
Also,I had hoped to hire two workers in two years time.Ain't gonna happen.
So,I'm constantly revising my goals,going over rates,looking into different marketing stratagies,advertising,equipment,services,etc.,,
Like other business',I expect to have ups and downs.Good years and bad.So,I have to keep an eye on profits and try to keep money in the bank.
Talked to a cabinet shop owner in June.Things were slow for him.He'd been in business 40 years.Now,he's the buisiest he's been in 40 years.Funny how two months can make so much difference.
We can get one big landscaping job and cover an employees fee for the year and the rest would be gravy.Or we could not get any new business and have to close shop.
Only thing I can do is my best and hope things work out.Hopefully it'll work out for you too.
(Sorry for the long post)

NickN
09-03-2004, 10:44 AM
Oh,one more thing.Part of the equation is what price you can get in your market area.If you're charging $60 per hour,but people in your area are only willing to pay $40,then your profit will go down,because you'll have to lower your prices to get business.You'll have to look at some things a little closer and try to cut costs where you can.
The only way to find out what your market will handle is to start at a price(the benefit of business ownership),see how much business you can get and then adjust it from there.(the downside of business ownership)You may have to lower prices to get business or you may have to increase your price if you're overloaded.

wrestlingcoach
09-03-2004, 11:20 AM
i KNOW THAT EVERY THING IS DIFFERENT IN THE US

MY 2200 SQ FT HOUSE IN OKLA IS APPRAISED AT 150,000 W/ A ONE ACRE YARD
BUT IN BOSTON OR CALIF IT MAY BE WORTH QUARTER OF A MILLION

BOTTOM LINE WHAT HAVE YOU EXPERIENCED AS YOUR BOTTOM LINE PERCENTAGES OF PROFIT???

LAST YEAR OUR PURE NET PROFIT FOR THE YEAR WAS RIGHT AT 40% THAT WAS WITH TWO PARTNERS DOING THE WORK ONLY


THIS LAST WEEKS PROFIT FOR THE CREW WAS AT 29.7% MINUS ALL THE EXPENSES AND ESTIMATED COST PER DAY FOR LIAB INSUR / MAINTENANCE AND SO ON

are THESE GOOD NUMBERS????

mastercare
09-03-2004, 11:26 AM
I'm running solo right now, and can give you some rough number of how we run.

As a solo op, I don't "pay myself a wage"....the profits are simply mine to keep. And, this number could vary significantly depending on any major purchases you've made that havne't been paid off yet....or if you're using equipment free and clear.

Making payments on all the tools necessary for a 1-man show, my overhead is roughly 35% on cutting, leaving a 65% profit.

On other stuff such as hedging, leaf cleanup, and labor intensive jobs, with no real equipment expenses, I would say that overhead is down to about 15%, leaving an 85% profit.

None of this includes my brand new truck, which also serves as a personal vehicle. Also, I don't pay myself a wage. The profits are just mine to keep.

NickN
09-03-2004, 11:48 AM
Heck yeah those are great profits.Any profit after paying employees and overhead is good.Leaves ya with money for new equipment if the need arises.Sit on the money and build it,just like ya would a savings account,for those days when you're workload slows down.
I kinda doubt you're really making that much profit though.You've had to have left something out.
For example:The average profit margin for the S&P 500 is only 7 percent.
Microsofts profit margin is at 31 percent.

scott in the soo
09-03-2004, 12:26 PM
i try and reach for 40% profit after all my expenses are paid and i have paid myself.. my own labour rate is 35/hour...

lsylvain
09-03-2004, 01:12 PM
hey all,

this is the first time I have posted in over a year I think. I sold my biz and moved to FL. Still thinking about starting back up or taking on a new venture.

As a solo operator with some temp help for the bussy season I usually made about 80 - 85% profit overall including depreciation etc etc etc. But I was also billing $110 per hour on a 9 Acre appartment complex and $90 per hour on a 5 acre car dealership so those two bumped my % up quite a bit.

NickN
09-03-2004, 02:12 PM
With those profit margins,you won't be in business long.There is an acceptable amount that can be charged.First guy to come along and undercut your prices will get the job.Where will the profit margin be then?
The only reason Microsoft has such a high profit margin is because they have NO competition.I doubt that anyone on this message board is the only LCO/Landscaper in their area.
If you truly have (after everything is deducted) a profit margin of 40-80%,then you are pricing way too high.
Hell,GM doesn't have a profit margin that high.

NickN
09-03-2004, 02:52 PM
Just to make my point,take a look at GM's net profit margin for 2003.
We can use this same table,adjusted to our costs and operating expenses,taxes,etc.,, to come up with a true net profit margin.
Look up things like profit margin calculators ,net profit,gross profit,etc.,,
there are formulas out there for the taking to help you determine this.
The lawn care and landscaping part of business is easy when compared to actually running the business.That's why financial advisors,marketing consultants,advertising managers,and all make money.
http://www.hoovers.com/general-motors/--ID__10640--/free-co-fin-annual.xhtml

Sean Adams
09-03-2004, 02:54 PM
First, I think a search on this topic would bring up some great information from discussions in the past.

Second, I will never tell anyone they are doing something wrong because everyone has a different way of doing things.....but if someone is talking about profiting 40% and above, that is impressive....considering that probably means they are getting a great hourly rate, truck and equipment paid for, insurance rates are very low, no building to lease or rent, etc.... I'm not saying it is not possible, but if you look at the grand scheme of things (taxes, fixed expenses, variable expenses, etc...) profiting over 40% is something most people who know their numbers and thier business cannot say.

It simply leads to the question of management....if you are a solo op and do $80,000 a year and can pocket $40,000 when everything is taken care of, not bad....but if you could manage a business with employees and produce over $250,000, pay yourself a salary, and maintain nice profit, your business has the option to grow.....

jerryrwm
09-03-2004, 03:43 PM
[i] ...........
If you truly have (after everything is deducted) a profit margin of 40-80%,then you are pricing way too high.
[/B]

While the numbers may not all add up, I have never told anyone they price their business too high. If someone can get that kind of money for their services, Hooray for them!

One thing I might caution them is not to bank on that money on a regular basis as there may be someone slide in and undercut them. I mean, someone could come in and price the apartment cpmplex at $100.00/hr and the car dealership at $85.00/hr, and there goes the business. And the new guy is happy as hell because he is making damn good money.

I never fault someone who is successfully making more money than I am. That's what we are all trying to do. Get the most return on our investment of time and services.

Now the nimrod who is giving the services away is the one that should be berated. That doesn't do any good for the industry.

NickN
09-03-2004, 04:54 PM
Jerry,
That nimrod may be closer to a fair market value or he could not know his costs,but 40-80% net profit?That's over pricing unless you're the only game in town.If not,then someone can come in and make 30% profit and you'll lose the business.It won't stop until the price can't go any lower,while the company maintaining the account is still making a profit.So if 10% profit is as low as anyone is willing to go,that's the rate you'll get.
All boils down to supply and demand.Lots of LCO's means less demand and lower market values.More homes or less LCO's means higher demand and higher market values.

Geoffrey
09-03-2004, 05:26 PM
NickN, I usually agree with most of your posts but not here. One guy, with low overheard can make 40 plus profit but not a larger income. But I believe it's true that the larger your company is the smaller your profit margin i.e. 1 guy making 65% profit margin takes home 50,000.00 a year when an owner of a 1.5 million company with a 10% margin takes home 150,000.00. Just what I've seen.
Geoff

NickN
09-03-2004, 05:49 PM
Geoffrey,
That is a business owner who is taking home all of the profit.The poster asked about net profit,which is what "the business" makes after all expenses and salaries are paid,including the owner.
edit:You have to keep business and personal income seperate.If not,you'll never know what you truly made as a business.

jerryrwm
09-03-2004, 06:23 PM
Originally posted by NickN
Jerry,
That nimrod may be closer to a fair market value or he could not know his costs,but 40-80% net profit?That's over pricing unless you're the only game in town.If not,then someone can come in and make 30% profit and you'll lose the business.


Nick, I understand supply and demand very well, and use it to my advantage whenever I can.

I also said that the nimrod could come in and lower the price and then the first would be out of the business, and then the same could happen to the nimrod and so on and so on.

I also said the numbers might not add up to someone else's way of figuring. But if someone calculates that $100.00 minus all direct cost, indirect costs, overhead, depreciation, insurance, labor, whatever,etc, comes out to $20.00 then I think the profit might be close to 80% gross.

But what I don't see is your reason for saying that he is over priced. Based on what? Your area and situation? My area, bobbygedds area? The fact remains that he was paid the rate he quoted, the customer apparently felt his services were worth that amount, and therefore it is good business. I have never turned down an offer of more money than I want in any situation when it comes to business. I try to see how much I can get for a job, regardless of what it is. I have not made it a practise to see how cheaply I can do the job. Because every dollar that I leave on the table is one that comes right out of my pocket. It cuts into my profit.

For example. I test backflow devices around the area. In one town I charge $55.00 to do the backflow certification test which takes all of 15 minutes. (For you hourly rate guys, that should equal about $220.00/hr right?) In another town just 15 minutes up the road, the going rate is $70.00. Now, I am perfectly happy when I make the $55.00, but you can bet your aZZ that when I go to the other town I'm wearing the $70.00 hat. Is that supply and demand? I think so. If someone comes into that town and begins doing the tests at say $55.00 I have two choices - 1. I can lower my price to get the work, or 2. I can quit going to that town. But until that time, I am not going to tell those people that I will do it for the same price as I do in the other town.

Again I am here to tell you that it is not right to tell someone they are making too much money. The customer will ultimately be the one to tell when the price is too high.

wrestlingcoach
09-04-2004, 12:17 AM
will any body come out and say their net profit for last year was XX% ???
2003 = 43.5%
2002 = 35.7%

T.E.
09-04-2004, 12:49 AM
wrestlingcoach, I will respond because I'm in your area. I work in Claremore and Tulsa. Just TODAY, this morning in fact I spoke with my accountant and so far for the year I'm at 57% net profit. I asked him his opinion of that %, and was told not too bad.

Don't know if the % numbers you posted in your last thread are for solo or a crew if a crew I'd say pretty good either way not too bad. IMHO

Soupy
09-04-2004, 02:51 AM
For a Solo Operation the percentange of profit is much higher because your biggest expence (payroll) is eliminated.

You can't compare apple to oranges, there is to many variables. A fortune 500 company might only profits 7% but they are dealing in volume, plus that percentage is after the major players have set aside a beefy salary for themselves.

Geoffrey
09-04-2004, 06:12 AM
NickN and Soupy are right sorry no numbers here wrestlingcoach but an interesting thread all the same.

Geoff

NickN
09-04-2004, 07:25 AM
I gotta play catch-up today,so I won't have much time to respond,but my point is,I bet none of you are counting all the time you spend researching,billing,handing out fliers,etc.,,Those are billable hours that have to be deducted from your net profit.
Also,you have to depreciate ALL of your equipment.Doesn't matter if it's paid for or not.It still depreciates.So a $10,000 mower you paid cash for is still costing you $4000 the first year,$3000 the next,and so on.Same is true for trimmers,edgers,vehicles,trailers,etc.,,
Don't believe me.Try selling one of them after a year.
Just trying to shed some light on things.
Look at KMART.They never made much of a net profit.As long as they were expanding,it didn't matter,but when they stopped opening new stores,it caught up with them.

NickN
09-04-2004, 07:52 AM
I'll tell you why he's too high if his real net profit is that much.He's not going to build his business.He may have a few accounts that pay great,but he's not matching his competition in pricing.Any competitve market(and I think we all agree that it's pretty competitive doing lawn care) is not going to have a high profit margin.
If you have two car dealers next to each other,one sells at 30,000 and the other sells at 25,000,the one selling at the lower price(as long as he's selling at fair market value) is going to get the business.Doesn't matter if the other guy has a nice showroom or not.
Ford and GM are both having to offer rediculous rebates becuse they've lost some of their market share due to overpricing.$6,000 rebates on 2004 vehicles.Sounds like they overpriced the vehicles to start with if they can offer that much and also built too many thinking people would pay $6,000 more.
If we want to be competitive and grow our business,this is something we have to look at.We also need to know what our competitors are charging.We can find our fair market value slowly,over time by checking our estimate to sales ratio or we can check on competition pricing.
Happens all the time.Don't think that the local hardware store isn't going and checking Lowes prices.

NickN
09-04-2004, 07:55 AM
Oh yeah,Sean,PM me for my email address and I'll let ya know where to send the check.:D

coastallandscapesolutions
09-04-2004, 08:57 AM
I agree with NickN. Figure out what your time is worth then start adding expenses and any other cost. Then add 10% for things you don't know about. FIgure out how many hours you are going to work and the break it down into an hourly figure.

As a footnote, we did a major restructuring this year, name change and all. When we did we took our average hourly rate from $31 to $45. Before we made this change we were struggling to get additional accounts. Now that our rate is higher, we have more business then we can handle right now. We have stopped all marketing at this point.

People sometime feel that if they are paying more that they are buying more professionalism and quality. Out margins have jumped and this is turning out to be the nest year we have had since we started in 1999. Our profits are up three fold.

We also have been more selective with our jobs we accept. If a residential account calls and wants their grass cut every 3 weeks and they have a "man" that will do it for $20.... we tell the customer to go for it and have a nice day. Our target market for residential in the middle of the road house. The people who are working two jobs and 2.5 kids and don't have the time to take care of the yard but wnat to keep up with the Jones.

Here in Myrtle Beach our worst customers are the ones that are on the ocean in the million dollars houses. We go to court with them to collect on fees more then anyone else. So this year we walked away from that market. That has helped us alot.

Bottom line is what do you want to make and what is your target market going to be. When figuring that out, look at the ones that will pay you and be the most effective use of your time.

GrassBustersLawn
09-04-2004, 09:49 AM
I gotta agree with NICKN too. Anyone that says they've got 80%profit CAN'T BE FIGURING IN ALL THE EXPENSES!!!

Mike

NickN
09-04-2004, 10:14 AM
One last explanation and I gotta hit the road before the rain hits again.I think this will clear alot of things up.
1.You buy a $10,000 mower.The life expectancy is 5 years based on the number of hours you use it per year.
2.So,you count off 2000 per year for the cost of the mower.
3.Well,that mower depreciates $3000 the first year.Meaning if you sold it,you'd get $7000.
4.That means the mower cost you a total of $5000 the first year.2000 for purchase,3000 for depreciation.Not including interest if you financed.
5.The next year year you deduct another 2000 for the purchase,but it declined in value another 2000,so you need to deduct $4000 for that year,and so on.
Same with your trimmers,vehicles,trailers,etc.,,
That's one part of finding your net profit.
That's also why accountants have jobs :D

Mr. Magpie
09-04-2004, 10:33 AM
I didn't read this whole post, but my solo operation profit after all expenses (which only include a $750 mower, $200 used b/p blower, $260 used 40cc wacker, $500 hedger/edger, minor repair and maint. costs (oil, filters, blades, ect.) and personal dual purpose truck........ no insurance, workers comp or license, nothing like that) is about 85-90% over the course of a full year (~$1,500 per month). That is not including tax payments.

The life of my equipment is good, marketing is really cheap and easy and I have no business expenses related to my truck except gas (15 miles a week) and mileage depreciation. I pay no one. If something breaks, I simply replace it. I work whenever I want. Pretty nice gig for me down here. My two buddies do the same thing.

Mr. Magpie
09-04-2004, 10:52 AM
Btw, I didn't depreciate my equipment to get the 90%. I am a Finance major and understand all that baloney, I just see applying that to my personal business as being absurd. I know I will never sell any of my equipment after I use it, they last so long relatively that I just junk them for parts or keep them as backups. No need to carry a depreciation account along with my profit account. Just spread out cost over life (mower 2 years, as is, no repairs). Maybe I am being unreasonable, I don't know.

And marketing is a measley $40 per 6 months for business cards and $180 to disperse those out to doorsteps (or I can do them myself). They ALWAYS have a positive inflow of cash. The last $240 I spent on marketing about 6 months ago I have made back about $4,100 and have retained 9 total clients. I'm still getting calls from that batch.

Mr. Magpie
09-04-2004, 11:08 AM
You know, I have noticed this on this board and in this very thread: people take their personal experiences and their frames of reference and apply them to everyone. Those of you making statements doubting guys who make big profit: are you considering the region those guys are in? There are lots of things to consider. I personally believe it is possible to make 100% for a long time. Move to a good area, maintain and protect your equipment well, use a personal truck, be smart, don't screw up your business relationships with clients and dealers and work hard and anything is possible with lawns. If you guys want, I can give you detailed specs of my business and my brothers and my friends'.

For instance, my friend has a route he does every two weeks (for the past 1.5 years) in which he does 17 lawns (average $27 per cut minus hedges) and only drives .9 miles. This stuff is out there guys, just recognize it. Call out the BS'ers, but give credit where it is due.

My business is only 11 months old, I only purchased 5 accounts (which I no longer have) and I make about $1,500 a month profit working only 9-10 hours a week. And that's with me being extremely lazy with marketing. It's all about location, I live in THE BEST PLACE IN THE WORLD, literally, for lawns. It's not me, it's my location.

NickN
09-04-2004, 03:00 PM
oops.Too big of a hurry this morning.Should have subtracted instead of added.
$10000 mower -2000/year = 8000
3000 depreciation -2000 = 1000 actual depreciation
Sorry,Mr Magpie.It doesn't matter if you plan to sell or not,you're equipment still depreciates and counts against NET PROFIT.

MacLawnCo
09-04-2004, 10:48 PM
Ken and Magpie,

neither of you believe you (the owner) needs to deduct the cost of their wages/salary to get a true picture of the net? we are talking about business net income right? thats completely diferent from personal take home salary, you know.

lets try this example. (please understand im playing the devils advocate)
well shucks, the only expenses i have this month are gas. That must mean that im somewhere around 93% net. Oh, but wait that hasnt accounted for my hourly cost, the equipment hourly cost, the general selling and admin expenses, and on and on i could go.

in a nut shell, its essentially useless to discuss net since maybe 1% of those on this board accurately know how to compute it.

Dwan
09-04-2004, 11:10 PM
I figure my net profit is what I have left over at the end of the year that I can spend on myself. in 22 years it hasn't been much but latly it looks good. now if I sell all my aqusitions it will be real good. how do you figure it then? net profit for the first 20 years has been in the red but if I was to sell out now it would be in the 7 figures. So with a little paperwork you can make the bottem line anything you want.

Turfcutters Plus
12-06-2005, 04:05 PM
For a Solo Operation the percentange of profit is much higher because your biggest expence (payroll) is eliminated.

You can't compare apple to oranges, there is to many variables. A fortune 500 company might only profits 7% but they are dealing in volume, plus that percentage is after the major players have set aside a beefy salary for themselves.
Amen Soupy!:cool2:

Jpocket
12-06-2005, 04:43 PM
A smart solo will always have a higher profit margin than a crew. Off the top of my head as a solo id say im turning a 70% profit this year which is a great margin. With a crew without the owner working you'd probaly be in around 20-25% if your doing everything totally legit and by the book. Now if your doing it kinda legit then you should be around 45%. If the owner worked on a crew id expect you to be around 40%

muddstopper
12-06-2005, 04:54 PM
It doesnt matter if your equipment is paid for or not, if you are not dedcuting some of your profits to allocate for equipment replacement or purchases, you are not accounting for all your expenses and therefore not figureing your profit correctly. Dont belive me, wait until you have to replace a mower and see how that effects your income that month. If you are not paying yourself a wage, again you are not figureing your cost correctly and your profit numbers are off. Just because you use $100 worth of materials and charge $200 for the service doent mean you have a 100% profit. The time it took you to do the job is worth something. I think some of you are confusing net with profit.

Jpocket
12-06-2005, 04:55 PM
Jerry,
That nimrod may be closer to a fair market value or he could not know his costs,but 40-80% net profit?That's over pricing unless you're the only game in town.If not,then someone can come in and make 30% profit and you'll lose the business.It won't stop until the price can't go any lower,while the company maintaining the account is still making a profit.So if 10% profit is as low as anyone is willing to go,that's the rate you'll get.
All boils down to supply and demand.Lots of LCO's means less demand and lower market values.More homes or less LCO's means higher demand and higher market values.

It doesnt have to be that way, take myself for examole: My yard is paid for (in the family for 50years), all trucks are paid for except my personal truck, all equipment is paid for, Liability and health ins. is about $4,000 per year.
Everything else I buy is for me to use Fuel, oil, and parts, so that keeps the cost to a minimum.

GrassBustersLawn
12-06-2005, 08:47 PM
Hey wrestlingcoach

Best INFO I've seen on this topic is from Kevin Kehoe (industry consultant). He also has a website (Kehoe.com??? do a search) with different info. He has been doing a roadshow class for GRAVELY for the last couple of years. If he comes to your area I HIGHLY RECOMMEND seeing him. Gravely puts it on for FREE. I've seen him 2 times. He also sells a book ($50) that I think is valuable. It has benchmarks for different levels of profitability. It also tells how much an owner should be taking for SALARY & Return On Investment. All good stuff to know to compare your OPERATION to others.

Mike

GrassBustersLawn
12-06-2005, 08:49 PM
I agree with MACLAWN in post #31.

Mike

bobbygedd
12-06-2005, 11:01 PM
Ken and Magpie,

neither of you believe you (the owner) needs to deduct the cost of their wages/salary to get a true picture of the net? we are talking about business net income right? thats completely diferent from personal take home salary, you know.

lets try this example. (please understand im playing the devils advocate)
well shucks, the only expenses i have this month are gas. That must mean that im somewhere around 93% net. Oh, but wait that hasnt accounted for my hourly cost, the equipment hourly cost, the general selling and admin expenses, and on and on i could go.

in a nut shell, its essentially useless to discuss net since maybe 1% of those on this board accurately know how to compute it.
yea but, WHO CARES what "the business" made. would you rather have YOUR SALERY BE HIGHER, or the "business" net higher? YOU ARE THE BUSINESS . what is the point behind, keeping "your" salary lower, to make the "business " net higher? do you really want to make "the business" look spectacular? then don't draw a paycheck all year. your "business" will do great, but "you" will be homeless.

olderthandirt
12-06-2005, 11:24 PM
Did not read the whole thing but what costal said is what I've been trying to say for yrs
As a footnote, we did a major restructuring this year, name change and all. When we did we took our average hourly rate from $31 to $45. Before we made this change we were struggling to get additional accounts. Now that our rate is higher, we have more business then we can handle right now. We have stopped all marketing at this point.

People sometime feel that if they are paying more that they are buying more professionalism and quality. Out margins have jumped and this is turning out to be the nest year we have had since we started in 1999. Our profits are up three fold.

I'll repeat it again - A rolls royce and a yogo will both get you where your going but thers a lot of people that will pay for a ride in the rolls becouse they like it and to show off to the neighbors, it lets the world know they have made "it"

hoyboy
12-07-2005, 10:59 AM
yea but, WHO CARES what "the business" made. would you rather have YOUR SALERY BE HIGHER, or the "business" net higher? YOU ARE THE BUSINESS . what is the point behind, keeping "your" salary lower, to make the "business " net higher? do you really want to make "the business" look spectacular? then don't draw a paycheck all year. your "business" will do great, but "you" will be homeless.


Try selling your business. I promise you, the buyer will care. This is a huge mistake that many small companies get themselves into. Thinking short term and not long term. Saving a penny now only to cost themselves a dollar down the road.

This really catches up with companies that try to take cash "under the table." Great...they saved a few bucks now. But when it comes time to sell their company (and EVERYBODY sells eventually, or at least wants to realize the value of their business in some way) they can not show a substantial profit. A buyer is ONLY interested in profits...pure and simple. That $1 that he saved on taxes a year ago is going to cost him $5 the day he sells his company. Not a good investment.

Dan

olderthandirt
12-07-2005, 11:06 AM
Try selling your business. I promise you, the buyer will care. This is a huge mistake that many small companies get themselves into. Thinking short term and not long term. Saving a penny now only to cost themselves a dollar down the road.

This really catches up with companies that try to take cash "under the table." Great...they saved a few bucks now. But when it comes time to sell their company (and EVERYBODY sells eventually, or at least wants to realize the value of their business in some way) they can not show a substantial profit. A buyer is ONLY interested in profits...pure and simple. That $1 that he saved on taxes a year ago is going to cost him $5 the day he sells his company. Not a good investment.

Dan

Excellent point !!!!!!!!!!!!!!!!!!!!!!!!!

adam71234
12-07-2005, 03:17 PM
Great points here. I love a thread over a year old.

Back to the question - what is your profit margin? More specifically, I would like some comparisons on ALL different size and type LCOs. Here is the info that would be most interesting and helpful to study.

What is your total gross?
What is your salary out of the gross?
What is your profit after taking everything out? (You may or may not take a dedicated salary out but both numbers are needed)
What work do you do within the LCO?

Some of this info is secretive and you may not want to disclose it, and I understand this. But if you let us know some or all of it, I (and I'm sure many others) would appreciate it. As for me, I'll tell anyone our business, even if our numbers are plain embarrassing, and as you will see - they are.

======================================================
Our gross for 05 will be about $38,000.

I do not take a dedicated salary.

The profit - which is gross minus labor, insurance, taxes, fuel, maintenance, advertising, office supplies, workers comp, depreciation on equipment (truck, trailer, mowers, handhelds..), and other miscellaneous - will be about $3500. This will only be about a 10% profit and that includes my salary.

My work involves running most of the office end, training employees, managing everything, and putting out fires. I do very little and normally none of the day to day maintenace.
======================================================

Before comments come, I would like to explain our situation a little bit and say that I understand that our numbers stink. The LCO was a part-time solo gig up until this year. With a family and full time job, we decided to start a crew to handle the work. We have made mistakes and continue to work through them, but as we grow we have a chance to do better. I will also be handing over more of the office work to an employee next year. I feel like our main problem is that our gross is too low for the overhead needed to run a crew.

Anyway, back to the topic. I would just like to see the numbers from an informational standpoint. I love to see how everybody else kicks my butt.

Thanks,
Adam

bobbygedd
12-07-2005, 04:06 PM
Try selling your business. I promise you, the buyer will care. This is a huge mistake that many small companies get themselves into. Thinking short term and not long term. Saving a penny now only to cost themselves a dollar down the road.

This really catches up with companies that try to take cash "under the table." Great...they saved a few bucks now. But when it comes time to sell their company (and EVERYBODY sells eventually, or at least wants to realize the value of their business in some way) they can not show a substantial profit. A buyer is ONLY interested in profits...pure and simple. That $1 that he saved on taxes a year ago is going to cost him $5 the day he sells his company. Not a good investment.

Dan
so you suggest, that over the life span of my business (30+ yrs perhaps), that i take a very low salary, so that the business net looks better, so that when i sell it (if in fact i ever do) i can get a few bucks more for it? wonderful advice, thank you

adam71234
12-07-2005, 04:43 PM
On the salary versus profit issue, I think that both are essential to know. Whether buying the business or just for the knowledge, they're basically the same thing to the owner. The question is how many hours and what type of work does the owner do for that - salary + profit.

As for "under the table", just report everything...

hoyboy
12-07-2005, 05:09 PM
so you suggest, that over the life span of my business (30+ yrs perhaps), that i take a very low salary, so that the business net looks better, so that when i sell it (if in fact i ever do) i can get a few bucks more for it? wonderful advice, thank you

I didn't say that. Try reading it again.

MacLawnCo
12-07-2005, 07:15 PM
to Adam,

if you want to compare numbers with other in the industry, mouse over to www.landcarenetwork.org , go to their book store and purchase a copy of their operating cost study. I think the 2005 issue is out now or will be shortly.

To Bobby:

you are obviously an owner/opperator. You prove this with your thought process. If you ever want to move beyond that, you need to learn to think like a businessman. Oh, and a formal education wouldnt hurt.

scott's turf
12-07-2005, 08:35 PM
I only made 5% net. That is after paying myself $30/hr and keeping track of all time spent working on the business, billing, repairs, etc. This was a bad year for us do to moving the business and giving up a lot of customers. I am usually at 10-15%. I have a FT job though and only work when my worker(s) need a little help in the spring. It would probably be around 30-40% I imagine if I was solo. But then again maybe not because I only pay my workers $14/hr.

biglawndog
12-07-2005, 10:39 PM
[QUOTE=wrestlingcoach]i KNOW THAT EVERY THING IS DIFFERENT IN THE US

MY 2200 SQ FT HOUSE IN OKLA IS APPRAISED AT 150,000 W/ A ONE ACRE YARD
BUT IN BOSTON OR CALIF IT MAY BE WORTH QUARTER OF A MILLION


Try 1 mil

hoyboy
12-08-2005, 07:32 AM
$250,000 in California is called down payment money.

Jpocket
12-08-2005, 08:03 AM
to Adam,

if you want to compare numbers with other in the industry, mouse over to www.landcarenetwork.org , go to their book store and purchase a copy of their operating cost study. I think the 2005 issue is out now or will be shortly.

To Bobby:

you are obviously an owner/opperator. You prove this with your thought process. If you ever want to move beyond that, you need to learn to think like a businessman. Oh, and a formal education wouldnt hurt.

Watch it Einstein, there is more than one way to skin a cat.

adam71234
12-08-2005, 08:33 AM
to Adam,

if you want to compare numbers with other in the industry, mouse over to www.landcarenetwork.org , go to their book store and purchase a copy of their operating cost study. I think the 2005 issue is out now or will be shortly.

Appreciate the book info.

Maitland Man
12-08-2005, 08:36 AM
So I have time to post. Bobby, you are clearly an owner/laborer. Understand that anyone can pay 30 bucks or so to get an "occupational license" and get basic insurance, and call themselves a "business." I don't mean this offensively at all...it works, and money can be made!!

A true business will pay it's owner their deserved salary for time into the business. Whether it's a solo or a larger business. I think adam71234 has a solid grasp of the realities of running a business. I'm here still learning....but I know a couple things.

Raking a yard with your free rake and stuffing the customers cans and garbage bags(that you knocked on the door to get)full, and leaving on the curb...take that example. You get paid 200 bucks from Martha to do this. It takes you 8 hours. Hmmmm $25 bucks an hour:D You are the laborer, business manager, salesman, and customer relations person. For $25.00 an hour! I really don't like that picture. ..and it was all done "unprofessional". Might matter to some...might not. I'm betting it would in my thoughts of running my business for 8 years.

or

You make the original contact, or send one of your trusty workers out, pay three guys to work as a "system", because being a businessman-precedures are in place, and they knock it out in an hour at their $9.00hr rate(which is really costing around $14 or $15 with all the fun "extras." They use bags, tarps..whatever in the yard, maybe dump them somewhere for free(if so lucky)...use a blower..... So.....$70-$120 later with your fuel costs and extras... hopefully you made money for yourself, and profit surely for your business....:dizzy:

...Then there are the times that the new guy breaks a sprinkler some how with a rake!?!, they break a rake, or have a reason why something didn't go right..


I"ll stay with paying someone to tell me that stuff.:cry: Less "profit" for the business, but I keep my salary, sanity, and the business runs smoother.:waving:


.........my dimes worth.

Dennis

walker-talker
12-08-2005, 10:01 AM
if you want to compare numbers with other in the industry, mouse over to www.landcarenetwork.org , go to their book store and purchase a copy of their operating cost study. I think the 2005 issue is out now or will be shortly. Is the 27 page book really worth $100?

wrestlingcoach
12-10-2005, 09:34 AM
Has any really answered the question, Yet.

What is the % of profit for running crews? The true profit -not including owner draws.

Maitland Man
12-10-2005, 12:06 PM
Should be 20%...usually ends up being about12-14%. (Sick days, equipment mistreatment....all the unforeseeable crap that DOES happen.) Accountant says shoot for 25%.....be happy with 20%. This is after budgets are met for taxes, new equipment funds, EVERYTHING! That'd be the ideal profit percentage.

Dennis

PMLAWN
12-10-2005, 12:36 PM
I try for 10%.
As of last year we did not profit.
This year it looks like about 8% if the checks come in before Dec 31.
If I work (field)I get paid $15.00 per hour as it is the highest pay scale. To pay more would push jobs into the red. (jobs have been sold with 15 as a top figure)

I do not get paid hourly for office work. I do collect a salary.

True business management will shoot for 10%. It is a very popular cap rate.

My numbers are true numbers that any CPA will concur with.

MacLawnCo
12-12-2005, 10:51 AM
The true profit -not including owner draws.
That is NOT TRUE PROFIT! Im tired of dealing with ignorant business people like yourself. Talk to me when you figure out what profit is.