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what percentage should be profit

Discussion in 'Lawn Mowing' started by wrestlingcoach, Sep 3, 2004.

  1. wrestlingcoach

    wrestlingcoach LawnSite Senior Member
    Posts: 251

    what bottom line profit percentage should be profit in a week or for a year for a company only running a crew?

    The owner is absolutely doing nothing at the job sites


    what should be the pure profit?


    minus hourly rate
    minus matching employer funds
    minus workers comp
    minus liab insur
    minus % of maintenance
    minus % of office supplies
    minus gas
    minus what other expenses





    for
    percentage


    also could any body else answer for just a solo guy doing all the work what is the % of pure profit for a company. I want to compare to my last few years without a crew.
     
  2. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    Alot depends on you and your expenses.
    How much do you want to make per year?How much is your workmans comp?
    What kind of equipment do you have,maintenance schedule,gas prices,advertising,etc.,,?
    I don't think anyone can give a basic percentage because our costs vary across the country as well as our wages.
    I'm was trying to make $30 per hour.Not much for a business owner.I figured in all my expenses(forgot some and estimated some) and came up with about $50 per hour,by myself,to make that much.That's without giving the company any profit.I decided to give the company half the profit (15 per hour) and myself 15 per hour.Still not much for a business owner,but I have money in the bank for maintenance,new equipment,advertising,insurance,etc.,,(my overhead)
    Best thing I could do was to work backwards.Start with an yearly salary,then figure out my hourly pay.Then figure up all my expenses(some estimated) and tack that on to my pay.
    With that method,I think when it comes time to hire employees I will have to raise my prices very little in order for me to make money,the business to make money,and pay employees and the expenses that go with them.
    Also,I had hoped to hire two workers in two years time.Ain't gonna happen.
    So,I'm constantly revising my goals,going over rates,looking into different marketing stratagies,advertising,equipment,services,etc.,,
    Like other business',I expect to have ups and downs.Good years and bad.So,I have to keep an eye on profits and try to keep money in the bank.
    Talked to a cabinet shop owner in June.Things were slow for him.He'd been in business 40 years.Now,he's the buisiest he's been in 40 years.Funny how two months can make so much difference.
    We can get one big landscaping job and cover an employees fee for the year and the rest would be gravy.Or we could not get any new business and have to close shop.
    Only thing I can do is my best and hope things work out.Hopefully it'll work out for you too.
    (Sorry for the long post)
     
  3. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    Oh,one more thing.Part of the equation is what price you can get in your market area.If you're charging $60 per hour,but people in your area are only willing to pay $40,then your profit will go down,because you'll have to lower your prices to get business.You'll have to look at some things a little closer and try to cut costs where you can.
    The only way to find out what your market will handle is to start at a price(the benefit of business ownership),see how much business you can get and then adjust it from there.(the downside of business ownership)You may have to lower prices to get business or you may have to increase your price if you're overloaded.
     
  4. wrestlingcoach

    wrestlingcoach LawnSite Senior Member
    Posts: 251

    i KNOW THAT EVERY THING IS DIFFERENT IN THE US

    MY 2200 SQ FT HOUSE IN OKLA IS APPRAISED AT 150,000 W/ A ONE ACRE YARD
    BUT IN BOSTON OR CALIF IT MAY BE WORTH QUARTER OF A MILLION

    BOTTOM LINE WHAT HAVE YOU EXPERIENCED AS YOUR BOTTOM LINE PERCENTAGES OF PROFIT???

    LAST YEAR OUR PURE NET PROFIT FOR THE YEAR WAS RIGHT AT 40% THAT WAS WITH TWO PARTNERS DOING THE WORK ONLY


    THIS LAST WEEKS PROFIT FOR THE CREW WAS AT 29.7% MINUS ALL THE EXPENSES AND ESTIMATED COST PER DAY FOR LIAB INSUR / MAINTENANCE AND SO ON

    are THESE GOOD NUMBERS????
     
  5. mastercare

    mastercare LawnSite Senior Member
    Posts: 289

    I'm running solo right now, and can give you some rough number of how we run.

    As a solo op, I don't "pay myself a wage"....the profits are simply mine to keep. And, this number could vary significantly depending on any major purchases you've made that havne't been paid off yet....or if you're using equipment free and clear.

    Making payments on all the tools necessary for a 1-man show, my overhead is roughly 35% on cutting, leaving a 65% profit.

    On other stuff such as hedging, leaf cleanup, and labor intensive jobs, with no real equipment expenses, I would say that overhead is down to about 15%, leaving an 85% profit.

    None of this includes my brand new truck, which also serves as a personal vehicle. Also, I don't pay myself a wage. The profits are just mine to keep.
     
  6. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    Heck yeah those are great profits.Any profit after paying employees and overhead is good.Leaves ya with money for new equipment if the need arises.Sit on the money and build it,just like ya would a savings account,for those days when you're workload slows down.
    I kinda doubt you're really making that much profit though.You've had to have left something out.
    For example:The average profit margin for the S&P 500 is only 7 percent.
    Microsofts profit margin is at 31 percent.
     
  7. scott in the soo

    scott in the soo LawnSite Member
    Posts: 121

    i try and reach for 40% profit after all my expenses are paid and i have paid myself.. my own labour rate is 35/hour...
     
  8. lsylvain

    lsylvain LawnSite Senior Member
    Posts: 777

    hey all,

    this is the first time I have posted in over a year I think. I sold my biz and moved to FL. Still thinking about starting back up or taking on a new venture.

    As a solo operator with some temp help for the bussy season I usually made about 80 - 85% profit overall including depreciation etc etc etc. But I was also billing $110 per hour on a 9 Acre appartment complex and $90 per hour on a 5 acre car dealership so those two bumped my % up quite a bit.
     
  9. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    With those profit margins,you won't be in business long.There is an acceptable amount that can be charged.First guy to come along and undercut your prices will get the job.Where will the profit margin be then?
    The only reason Microsoft has such a high profit margin is because they have NO competition.I doubt that anyone on this message board is the only LCO/Landscaper in their area.
    If you truly have (after everything is deducted) a profit margin of 40-80%,then you are pricing way too high.
    Hell,GM doesn't have a profit margin that high.
     
  10. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    Just to make my point,take a look at GM's net profit margin for 2003.
    We can use this same table,adjusted to our costs and operating expenses,taxes,etc.,, to come up with a true net profit margin.
    Look up things like profit margin calculators ,net profit,gross profit,etc.,,
    there are formulas out there for the taking to help you determine this.
    The lawn care and landscaping part of business is easy when compared to actually running the business.That's why financial advisors,marketing consultants,advertising managers,and all make money.
    http://www.hoovers.com/general-motors/--ID__10640--/free-co-fin-annual.xhtml
     

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