Profit Margin

Discussion in 'Lawn Mowing' started by gilllawnservice, Apr 22, 2003.

  1. gilllawnservice

    gilllawnservice LawnSite Member
    Posts: 20

    Most lawns we currently handle are about 25 to 30 dollars worth of work. I'm curious to know what some of your margins are. I in some cases have pretty much low balled customers just to get work since I'm in my first year but I'm struggling with the Profit margin and overhead thresholds.

    I would like to set at least 25 for overhead and about 7% Profit Margin if possible.

    If you are willing to share I would appreciate it.

    Thanks

    GLS
     
  2. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Posts: 949

    What is your overhead? Do you have employees? Are you considering profit to be excess money after you pay yourself?
     
  3. gilllawnservice

    gilllawnservice LawnSite Member
    Posts: 20

    I probably should have elaborated just a little for a full picture.

    I do not have employees however, I do disperse 10 percent of net earnings to my son.

    My forecast called for about 25 (not easy to do with all services) per job in overhead. Based on my calculations I should be able to pay off all of my equipment and operating expenses and turn a small profit this year. However, that figure may need to be adjusted if the anticipated revenue is not reached. That is a concern right now however, the season is still quite young so I'm watching and taking every chance to secure revenue opportunities.

    I do not pay myself as it is not in my budget this year. All net profit will be reinvested into the business.

    Your information will be most appreciated.

    GLS
     
  4. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Posts: 949

    I am not exactly sure if you have a full schedule or not but if you don't than your overhead per hour cost is going to flucuate. Example: Say you pull in $1000 gross in 3, 8 hour days and you figure that you have about $300/week in expenses. Well that is $12.5/working hour of overhead that you must consider. As your schedule becomes more full and efficient the overhead will slightly go up but the overhead rate/hr will go down. This touches on the other thread that is being discussed right now on buying equipment before you have the work or after. If you go buy a $8k mower and $30k truck you may be paying $700/month on the items and you best not be letting them sit around a couple days a week not making you any money.
     

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