What is your Profit Margin?

Discussion in 'Business Operations' started by landscaper22, Nov 9, 2007.

  1. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    Just wondering where all of you stand on profit margin. The end of the year is almost here...Just curious about the numbers if anyone wants to share.
    I'm at 59% as of the end of October. Had a good year. I didn't have any major purchases.
    I would like to see input for the larger and smaller LCOs to compare. thanks in advance for your input!
     
  2. YardPro

    YardPro LawnSite Gold Member
    Posts: 3,563

    sorry, but i don't think you actually had a 59% profit.

    for PM you DO not include YOUR salary, etc.........

    to have a 59% profit margin you would have to have numbers in line with these...

    if you gross $100K/year, you still have $59K in the bank AFTER paying all your bills, help, and YOURSELF......

    59% is pretty much unobtainable
     
  3. lawnman456

    lawnman456 LawnSite Member
    from ct
    Posts: 90

    59% is pretty good if you didn't buy anything but it seems high
     
  4. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    That is after paying all my bills. Well I don't pay myself a salary. The profit is my salary. I know it is high, and I can hardly believe it. Last year it was in the lower 40 percentile. But I have had very little help this year, so salaries were low. And yes I have taken a beating working with very little help. I have taken out for all salaries, ins, payroll, materials, even mileage, all expensies. I have no reason to make that number up. I'm sure it will not happen again, but I'm pleased. (well the year is not over yet either)
    Two years ago I bought a truck, and only showed a $3000 profit for the year. Last year I didn't have as many major expenses, but did buy a lot of equipment. Also I had two employees last year vs. one this year. This year I have only spent around $1500 on equpment.
     
  5. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    The bar is really set low in the industry... Just because you point to your truck and say there is my motorcycle does not make it so.

    Profit is the money left over after you and everyone else has been paid, along with all the other expenses. You didn't make any profit, you made a low wage and since you have not yet paid taxes on the money you have earned you didn't even make as much as you think you did.

    I should probably be more PC about explaining your error but it just kills me to hear statements like yours. Doesn't the English language have any meaning? Most importantly I want you to get this and start charging the correct amount of money so you do make a good wage and have some profit for growth.

    To answer your question about profit it is all over the map. To sell a franchise operation I am told you need to consistently show a minimum 28% profit margin. That is very tough to do in our industry. Most bigger contractors of all trades consider 10% to be a good number but it is a moving target. It all depends on your volume 10% of a 100 Million per year in volume looks pretty good. Not so great if you only did 130-K in volume. Aim for 20% and hope to do 10%. But first and foremost pay yourself a minimum salary at least 55-K and run it through a payroll service and have the tax's taken out.

    Personally I don't worry so much about profit as I do about my salary. I would prefer the business pays me well and supports growth and breaks even or even looses a bit of $$ so I don't have to pay tax's. A good tax guy can make you at least as much as a good laborer can.
     
  6. lifetree

    lifetree LawnSite Fanatic
    Posts: 5,370

    This explanation is correct !!
     
  7. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    We are having an unusually good year and are at 31.46%. And yes, that includes all salaries and taxes.
     
  8. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    Geee...Sorry for bringing this up...Maybe I should have asked this....

    Your expenses are running what percent of your gross business income for the year so far???? Pre-tax, pre-whatever else...I know this is pre-tax, and I guess it would vary alot based on if you are a INC, sole prop, etc..

    Althogh if you pay quarterly taxes some of that is already factored in those numbers as well...Would it not be..? This is the case for me..I have paid estimated tax for 3 quarters.

    But is that not sort of like a before tax profit margin? Not a final figure by any means. After I pay a visit to my CPA in January my final % will be a little lower.
     
  9. Mrs. H

    Mrs. H LawnSite Senior Member
    Posts: 708

    Don't EVER be sorry for bringing stuff up and learning from it.

    I had no idea. I learn a lot of stuff from watching posts like this one! :)

    THANK YOU!
     
  10. FCPWLLC

    FCPWLLC LawnSite Senior Member
    Posts: 352

    These guys are just trying to show you your error in business math. If you didn't include your salary in those numbers, then you really aren't at 59% pm. Since we don't know your gross, I'll just use the $100k as example gross and the mentioned $55k for a salary. With those numbers... you'd be at 4%. after subtracting your $55k salary. Knowing this will help you to adjust pricing or expense management.

    Hope that helps.
     

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