What is your profit margin?

Discussion in 'Business Operations' started by wolfpacklawn, Dec 9, 2001.

  1. wolfpacklawn

    wolfpacklawn LawnSite Member
    Posts: 120

    Just wondering what kind of profits other lawn mowing business have. Mine is exactly 50% this year. 70k gross income, 35k net. I obviously have a pretty small business, just myself and one full time employee most of the time. I assume that as you add more employees that the profit margin goes down but i'm wondering how much. Please let me know what your margin is and how many employees.

    thanks for any help

    wolf
     
  2. brentsawyer

    brentsawyer LawnSite Senior Member
    Posts: 663

    $70K gross revenues??? Is that after tax income???
     
  3. wolfpacklawn

    wolfpacklawn LawnSite Member
    Posts: 120

    Maybe i'm not using the right term but when I said gross income I meant by that the total amount of money that came in to the business from the work we performed. Do not include any money from loans in this amount.

    Net income would be what I have left for personal use after all business expenses including payroll, payroll taxes, insurance, supplies, equipment purchases, etc.
     
  4. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Posts: 1,415

    you are using the right terms...that is what gross means.

    The question is are you figuring your salary as an expense?

    If not then that is not a true profit margin.
     
  5. Evan528

    Evan528 LawnSite Silver Member
    Posts: 2,144

    No, It seems as if he is doing it similar to I wich probly isnt the best way...but it works for me. My salary is what ever money is left after all business expences are paid. For example.....some months my salary could be 3,000 dollars....others 5,000 dollars. Takes budgeting!
     
  6. Matthew Morgan

    Matthew Morgan LawnSite Member
    Posts: 45

    Only 3 people know mine.
    1) ME
    2) The IRS
    3) GOD

    Sorry,

    Matthew:angel:
     
  7. paul

    paul Lawnsite Addict
    Posts: 1,625

    You mean the IRS knows exactly?
     
  8. MATTHEW

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Posts: 665

    Just got done with the numbers which probably won't change unless we get some snow. 65% profit. Since I am 100% solo, it does include my pay. I do not separate a portion as pay. I just have to be wise about how much I can use and how much I need for those lean months.
     
  9. To determine a true profit margin or return on assets, you need to set up a budget that has your salary in it.

    Profit margin is money left over after all expenses have been paid, including the owners salary.

    You can set your hourly rates fairly easy that way.

    You should always know where you are at in relationship to your budget for the year at any time.

    If your a solo operator, you still have overhead expenses that need to be paid. You have X amount of hours to recover all those expenses, so knowing hours is important.
     
  10. MATTHEW

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Posts: 665

    Yes, but for a solo operator who is non-incorporated, that "salary" number is totally arbitrary. We would still have to pay taxes on both the "salary" and "profits" so why separate them?
     

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