Net profit percent

Discussion in 'Business Operations' started by turfman59, Dec 18, 2001.

  1. turfman59

    turfman59 LawnSite Senior Member
    Posts: 801

    Hey fellow owners

    Just wanting to know what typically is an industry average for LCO on the mowing end of the business. what is a good average on NET PROFIT after depreciation, Labor, and all other direct or indirect expenses. ONLY answer if you have a CPA that follows general accounting practices. This question is directed toward only Mowing and co,s that specialize in Mowing. Where are you at Hoss 65 or Lawn god father!!!!!!! Break out that P&L statement.
    Turfs UP!!!
     
  2. I don't specailize in just mowing, so I'll have to get my CPA to break it down for me. I'll try on my own, and we will compare numbers.

    Do you want for just mowing?

    Or all assosiated with it?

    Fert
    Spray
    Mulch
    Aeration
    Seeding
    Dethatching
    ETC........
     
  3. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Posts: 870

    Forgive the cynacism:

    If you know your profit margin, then you do not specialize in mowing.



    In all reality, I would surmize most guys who know their exact profit margin, on a consistant basis, properly accounted, do not specialize in mowing. In fact many companies mowing can be a "loss leader" or certainly not the profit center.

    In many cases, guys who just mow don't really have any real profit, they just give themselves a job.
     
  4. MATTHEW

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Posts: 665

    What else can you add to that? Well said, Kent Lawns.
     
  5. Albemarle Lawn

    Albemarle Lawn LawnSite Bronze Member
    Posts: 1,544

    Including yourself.

    Money above and beyond your normal salary.

    I agree with Kent that it is quite possible to merely give yourself a job!

    Ken
     
  6. KDJ

    KDJ LawnSite Senior Member
    Posts: 325

     
  7. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Posts: 1,415

    You are cutting lawns every week for 52 weeks?

    Those numbers are very skewed.
     
  8. I have to agree with Alan.

    I do that that in 32 week mowing season.
     
  9. Lanelle

    Lanelle LawnSite Bronze Member
    Posts: 1,361

    To get an idea of profits for various size maintenance companies, check publications by ALCA and some of the trade magazines. This will give you a larger sample to look at while comparing your company's performance with others of similar size.
     
  10. I had a few email asking to explain what loss leader is.

    Shrude example of what a loss leader is.

    Usualy standard contractors get around 30%-35%

    We are not standard contractor when mowing is involved, due to the demand for repatative (cutting every week) visits. The more you go to a job to work the less you make for that paticular job. Sounds funky but that the way it is. So you offer other services that yeild a higher profit margin. Like the ones I gave. Mowing they call a loss leader because it is highly laborous task, and once you start to hire employees and run several mowers you expences go up dramiticly

    Let say you are mowing $100,000 gross in grass in a 32 week mowing season. Now that's 2 guys in a crew. May take 2500 hours or more to do that. Divide that and you get $40 per an hour. Now that leaves you with about 20% after all expences
    so you are looking at $20,000. Just ruff figures

    Now you take all the extra work you do for the customers, that yeilds a higher margin.

    Now you apply fert which after supplies and expences you get a 40%-50% profit margin. The guy is on the job less time and genreates a higher yield, also it gets done less, so primium prices are in order. The less visits for other jobs you do for a customer the higher yeild you can get. That some what of a summery of what a loss leader is. Which means the more extra work you can do. The less the particular job is done, like mowing, the higher the profit margin can be. Less labor, less visits = higher profit margin.

    The reason for this is, you mow the customers to have the privilidge of preforming the other services you provide. Which means you keep busy so your not sitting around waiting till you can do the other job.

    Basicly you are giving your self a job (which is mowing) so you can preform the other sevices.

    Now this is ruff, and if any one can explian it better go for it, or if I'm wrong on anything. It is not easy for me to explain.
     

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