Register free!
Search
 
     

The Green Industry's Resource Center


Click for Weather
Reply
 
Thread Tools Display Modes
  #11  
Old 08-29-2013, 07:18 PM
Green Acres Green Acres is offline
LawnSite Senior Member
 
Join Date: Dec 1999
Location: Kansas (Shawnee Area)
Posts: 316
How would you figure overhead on a new company? Say your wanting to start doing fertilization and weed control. Your overhead needs to be spread out per customer or per sqft etc. But if your just starting and have no customers yet but have the equipment, insurance, licenses etc. Where do you start to figure overhead?
__________________
Visit us at: www.greenacreskc.com
Reply With Quote
  #12  
Old 08-29-2013, 07:56 PM
JCLawn and more's Avatar
JCLawn and more JCLawn and more is offline
LawnSite Platinum Member
 
Join Date: Sep 2009
Location: MI
Posts: 4,961
Quote:
Originally Posted by Green Acres View Post
How would you figure overhead on a new company? Say your wanting to start doing fertilization and weed control. Your overhead needs to be spread out per customer or per sqft etc. But if your just starting and have no customers yet but have the equipment, insurance, licenses etc. Where do you start to figure overhead?
Try to read what I said in my post on the last page and see if it makes sense because I kind of accounted for it. You need to run your business now like you would in 5 years or else your going to up everyones prices and they won't be happy.
Reply With Quote
  #13  
Old 08-29-2013, 09:29 PM
Green Acres Green Acres is offline
LawnSite Senior Member
 
Join Date: Dec 1999
Location: Kansas (Shawnee Area)
Posts: 316
Quote:
Originally Posted by JCLawn and more View Post
Try to read what I said in my post on the last page and see if it makes sense because I kind of accounted for it. You need to run your business now like you would in 5 years or else your going to up everyones prices and they won't be happy.
I understand what your saying. I'm thinking in 5 years from now I should atleast have 300 spray customers and would just take my overhead and split up over them. I would figure most lawn would be 8k sqft average. I would appreciate any feedback and if I'm in the right mind set. Thanks
__________________
Visit us at: www.greenacreskc.com
Reply With Quote
  #14  
Old 08-29-2013, 09:33 PM
JCLawn and more's Avatar
JCLawn and more JCLawn and more is offline
LawnSite Platinum Member
 
Join Date: Sep 2009
Location: MI
Posts: 4,961
Quote:
Originally Posted by Green Acres View Post
I understand what your saying. I'm thinking in 5 years from now I should atleast have 300 spray customers and would just take my overhead and split up over them. I would figure most lawn would be 8k sqft average. I would appreciate any feedback and if I'm in the right mind set. Thanks
Ya your spray would factor into so much a sq ft and your equipment would go into a hourly rate.
Reply With Quote
  #15  
Old 08-29-2013, 09:41 PM
larryinalabama larryinalabama is offline
LawnSite Fanatic
 
Join Date: Jan 2008
Location: Ragland Al
Posts: 10,896
Im a DEBT FREE SOLO OPERATOR, expenses vary but generally my expenses are about 33% or 1/3 of income.

Then the gooberment gets another 40% in income taxes which would happen if you had a regular job.

Hope that helps
Reply With Quote
  #16  
Old 08-30-2013, 10:04 PM
Vanderhoff Landscaping's Avatar
Vanderhoff Landscaping Vanderhoff Landscaping is offline
LawnSite Senior Member
 
Join Date: Feb 2013
Location: North Jersey
Posts: 301
Quote:
Originally Posted by larryinalabama View Post
Im a DEBT FREE SOLO OPERATOR, expenses vary but generally my expenses are about 33% or 1/3 of income.

Then the gooberment gets another 40% in income taxes which would happen if you had a regular job.



Hope that helps
So actual net pay for yourself would be roughly 10-15%?
Reply With Quote
  #17  
Old 08-30-2013, 11:30 PM
herler herler is online now
LawnSite Gold Member
 
Join Date: Apr 2012
Posts: 3,614
You have no customers means you have no overhead because a business without customers isn't a business.
Reply With Quote
  #18  
Old 08-31-2013, 02:31 AM
M&L M&L is offline
LawnSite Member
 
Join Date: Apr 2013
Location: Central Valley
Posts: 245
Quote:
Originally Posted by larryinalabama View Post
Im a DEBT FREE SOLO OPERATOR, expenses vary but generally my expenses are about 33% or 1/3 of income.
A third off the top seems high to me for a solo guy without debt. I have to ask, Out of that, what is your single biggest expense?
Reply With Quote
  #19  
Old 08-31-2013, 09:22 AM
foreplease's Avatar
foreplease foreplease is offline
LawnSite Bronze Member
 
Join Date: May 2008
Location: St. Joseph, MI
Posts: 1,255
Welcome Blade Runners, LLC. That is a doozie of a first question! Interestingly, the answers are among the first things you need to know and understand in order to build a lasting profitable business with fairly predictable (and repeatable) results. How quickly and how well you are able to scale (grow) your business will depend on sales as well as accurate expense forecasting - and the discipline to follow your plan. The more thoroughly you plan, the easier it will be to follow.

There will be expenses you did not anticipate. Try to not ignore or forget any you should have known about. 32vid and Bryan provided good basic lists. To those you need to add something for advertising. The less experience you have the more you will tend to underestimate the annual amount you will spend on advertising IMO. Telephone service is another cost. Administrative costs - let's start with the time it takes you or someone to do all the things to find and invoice work that customers do not expect to see on their invoices - need to be figured in at some wage. Otherwise, after mowing and trimming for 7-8 hours several days a week you will find yourself coming in early and staying late to visit customers, prepare estimates, and send out invoices. Keep in mind people are not going to begin to call simply because you got some equipment and filled out papers at the courthouse

Employees, when you get to the point of needing any, are a huge cost that needs to be anticipated, covered with dollars of sales, and justifiable everyday. It is important to do this legally: withholding and later remitting payroll taxes; paying your part of their FICA; paying for workman's compensation insurance, unemployment taxes. Eventually some of your people will deserve and expect paid time off, which is a cost - one you cannot invoice, obviously, since they are not working during those hours. At some point you may need to provide health insurance (don't forget your own whether it is deductible for taxes or not). Overtime: you will have to pay time-and-a-half for hours worked above 40. You will continually ask yourself if it is better to do that or add more employees, or work more hours yourself. For rough planning purposes, you can assume employee fringe benefits, which are costs to you, will amount to between 23% and 30% of the hourly wage or salary you pay them.

In structuring your fees, think in terms of fixed versus variable costs. Ask yourself which costs you will have whether or not your next estimate turns into a job. Those are fixed costs. Costs you incur only because of the job you are currently doing are variable costs. JC had some good points about determining profitability and planning for it. What you are essentially trying to do is exceed your break even costs by as much as possible with, I'll say it, as little work as possible. Knowing this, every job you take absolutely needs to make a margin able contribution to your overhead.

Now here is the kicker many people do not take into account: if you are clearing 20% on your average mowing job the two ways you make identical progress toward your annual break even point are
1) increase sales by $100
2) reduce annual expenses by $20

Which is easier? Which is more important? They are both important. Neither is easy.
__________________
Michigan PABL
Reply With Quote
  #20  
Old 08-31-2013, 10:06 AM
clydebusa's Avatar
clydebusa clydebusa is offline
LawnSite Bronze Member
 
Join Date: Feb 2010
Location: Tulsa Oklahoma
Posts: 1,642
Take some business classes.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump





Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Copyright ©1998 - 2012, LawnSite.comô - Moose River Media
All times are GMT -4. The time now is 05:48 AM.

Page generated in 0.07155 seconds with 7 queries