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Old 04-28-2013, 10:01 AM
GreenLight GreenLight is offline
LawnSite Senior Member
 
Join Date: Dec 2008
Location: Birmingham, Alabama
Posts: 411
Overhead, Overhead, Overhead. Overhead is what dictates what you HAVE to make in order to even stay in business for the long haul. Every business related expense from band aids and truck cleaning supplies to insurance, power bills, gas, equipment and yearly truck maintenance. Seriously, you should have anywhere from 40-50 overhead factors to bring together.. Even if you have to estimate a bit, pull as many variables as you can into the yearly overhead pool and then you can truly begin to breakdown why you have to charge a certain figure. I include all anticipated labor and salaries into overhead.

Once you have all of that, break down an average of how many TRUE work days are in a year (generally somewhere around 18-20 month if you don't work weekends, holidays and accounting for weather and winter). Once you have total TRUE work days and total Yearly overhead, you can see just how much it costs you to operate each working day of the year. Then realize that in most service industries you will be doing pretty well if a 10 hour work day has 7.5-8 truly billable hours. I took for granted my first year how important overhead was and it nearly cut my throat when things slowed down (which they will come to a screeching halt). The bottom line is, you aren't pulling something out of thin air or based off of what you think is accurate.
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