Profit Amount?

Discussion in 'Business Operations' started by Firebrigade, May 16, 2012.

  1. Firebrigade

    Firebrigade LawnSite Member
    Posts: 12

    This is my first year maintaining lawns professionally and I know I've bid several of the properties too low. However, after running my numbers I found that I'm still well in the black, but making a profit of only around $8 per hour. My question is how much profit do you veterans generally accrue per hour?
     
  2. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    What are you including and excluding in the profit?

    10% is a very good profit provided you are including fair wages, including for yourself, overhead and equipment plus interest and inflation in your cost. If you are including all those things ( all cost) , 5% is a fair profit in this economy.
     
  3. Firebrigade

    Firebrigade LawnSite Member
    Posts: 12

    I couldn't tell you the percentage off hand, but my situation is somewhat unique in that I haven't started to "pay" myself yet. My main profession is being a firefighter, so thus far all the money I make mowing that's not an expense has been reinvested into the business in the form of savings. Basically if I did pay myself I'd be making roughly $8 per hour. This amount is well below what I'm after.
     
  4. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    That is not profit then is it? Profit is what you make from taking the risk and making the investment, not your labor.

    Think about paying someone else.... then what would you make from the investment after expenses. That is the profit. You could not pay someone 8 an hour to do the job.

    Much less, why invest that money to get a job that pays you what you make at a fast food joint without an investment.

    You would be better off investing that same money in a CD or stock market and then taking a part time job instead.
     
  5. Firebrigade

    Firebrigade LawnSite Member
    Posts: 12

    Well OBVIOUSLY I plan to make MORE than that Duekster. Just like the stock market, I took a risk investing in my own business. I chose to put that money into a venture I could hopefully control more than the stock market by some good ole fashioned American hard work and dedication.

    OBVIOUSLY I'm new to this business, and I'm far from having it figured out, but thats's the beauty of entrepreneurialship. I have the chance to fail or succeed based more upon my own actions rather than the actions and reactions of others, just like every other company on the stock exchange, and probably a vast majority of the users on this site.

    Apparently you've forgotten what it's like being the owner of a fledgling company, or never really knew to begin with, because you could've answered the question as to "why do it?" on your own if you had any idea what you were talking about.
     
  6. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    No I have not, but I wanted to make sure we were discussing the same thing.

    I understand why you did it too. However cynical I was being, I think maybe you got my point. If you work for free then you can count the $8.00 hour profit.


    What is fair profit for the risk you are taking? It is going to be different for everyone, this is where we talk about a built up rate. What could I make elsewhere? Do I want to make that plus inflation? You build up all these various factors and your risk tolerance for your investment and determine the fair profit % you want to make.

    My point about hiring someone is a valid point! You have this equipment, it needs to run to generate your equipment. Just assume you have to hire someone to run the equipment and all you did was sales, grow the business and the adminstrative work.

    What would you need to make off the guy you are paying 10.00 and hour to cover the company share of employement taxes? And to pay you a little something for your sales, and back office work?


    No one invest their money for free and no one works for free. Both of those things need to generate a fair about of return independent of each other. Even if your equipments is paid for, then you are charging for the cost of the next replacement piece of equipment at the anticipated future price.Yet we see it happen all the time in the this industry. Two people suffer, the guy who invested his savings and not properly charging then ultimately goes out of business and his competition.
     
  7. Mikegyver

    Mikegyver LawnSite Bronze Member
    Posts: 1,810

    If it makes you feel any better we charge 30.00 a hr per guy or 60/2 guys. Does not matter if its running a mower or digging a ditch...we charge the same rate. So far its gone over well and I plan on raising it to 35.00 later this year or early next year.
    Mike
     
  8. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    What are you charging or averaging per man hour?
     
  9. Andover Landscape Co.

    Andover Landscape Co. LawnSite Senior Member
    Male, from Lexington,KY
    Posts: 572

    Take about 9-10% of your total earned revenue for the year and divide that by total hrs worked for the year and that's about average. $8.00 sounds sky high. Or your overhead is not calculated correctly.
     
  10. Andover Landscape Co.

    Andover Landscape Co. LawnSite Senior Member
    Male, from Lexington,KY
    Posts: 572

    Take about 9-10% of your total earned revenue for the year( if you dont this number then stop mowing and jump in a chipper) and divide that by total hrs worked for the year and that's about average. $8.00 sounds sky high. Or your overhead is not calculated correctly. Or you don't understand what actual profit is.
     

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