what time of the day do you start making money?

Discussion in 'Lawn Mowing' started by 1MajorTom, Jan 26, 2007.

  1. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,074

    In one of the trade magazines, there is an article, that asks, "what time of the day do you start making money?"
    It's an interesting article, one that covers FIXED and VARIABLE costs, and shows you how to come up with the figures that your business NEEDS to know.
    How many of you know your actual costs, how many of you have actually sat down and broke everything down?
    Who can tell me what the difference is between a fixed cost and a variable one? Yes I know the answer, looking to get a discussion going that can help us all.
     
  2. Total.Lawn.Care

    Total.Lawn.Care LawnSite Senior Member
    Posts: 841

    I guess I was the wrong person to be the first one to see this being that I am also an accounant. I know my costs. I am not all that concerned between Fixed Costs and Variable Costs per hour or per account, I base averthing on about $15 cost per hour. Of course, that goes up on the days I have a helper, but then my productivity doubles, but my cost only increases marginally.

    Fixed Costs - Cost you will have on a regular basis, regardless of the amount of work. Included in this would be your Mowers, Trimmers, Truck, Trailer, Advertising, Insurance, etc. Sure, these also can flucuate based on your work, but some are set for a year, regardless fo work, and others you can set based on your budget. They can be maniputaled a little, but that falls into the business management.

    Variable costs - Cost that vary directly with the amount of work you have. Fuel Costs, Mower and other Equipment Maintenance, Labor (can be divided into both catagories as well), Back Ofice Costs (Billing Materials, stamps, etc.), phone costs, things like that. These are harder to judge and usually you need to take an average of several months worth of expenses in these catagories, then build a % in relation to your Gross Sales to determine an estimated variable Cost ratio.

    Once this is done, it makes budgeting a bit easier. You plug in your Estimated Sales for each month, plug in your Fixed Costs for each month, then drop in your %s for the other variable items, and you have a pretty close budget. Sometimes your %s can get screwed based on a catestrophic event, like the loss of an engine or other major failure in a primary piece of equipment. These factors can be explained and pinpointed when looking at a screw in varaible costs and adjust your % excluding those major items if needed.

    I will stop here, or I will end end up reciting all of Accounting 101 & 102. But at least this is the basic Idea of all fo this and can made building a budget alot easier.
     
  3. TURFLORD

    TURFLORD LawnSite Senior Member
    Posts: 834

    I've never really figured it out to the penny. I have a good idea of the big stuff as far as fixed costs go. Variables are going to depend on what work comes in. It takes money to make money. Variables can be a whole other discussion. As with most of us in this service, I base my prices on what the market will bear. Being solo, this system works well. Costs are low, profit is usually high. Maintain good credit and don't bet the ranch on new equipment.
     
  4. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    LOL I just got the magazine, and figureed that was what you were refering to.

    I actually have no idea, never really sat down to look at those numbers, I usually look at the day as a whole. I can tell you that certain days are more profitable than others. But what time? I have no idea.
     
  5. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Posts: 2,128

    According to my tax records and book-keeping I should start making money at 11:34 AM. Ok, I'm kidding. I really have no clue right now. I am however in the process of gathering all my data nd pounding the numbers this year to see what I comeup with. My days of random data collection are over. My goal is to keep documentation on everything this year. I finally dicided not to be lazy or lax about that stuff anymoe once I realized I can really learn and grow from that knowledge.
     
  6. lawnpro724

    lawnpro724 LawnSite Silver Member
    Posts: 2,201

    We start a 7:00 am so I would say around 10:30am or so. I have never figured it out by the hr but I do figure my cost/income at the end of every day when I enter everything into Quick Books.
     
  7. J&R Landscaping

    J&R Landscaping LawnSite Fanatic
    Posts: 5,096

    What magazine was this article in?
     
  8. Duekster

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

    I have not figured mine out to the penny either but I know I have it covered.

    I keep Burden separate from OH.
     
  9. John Gamba

    John Gamba LawnSite Fanatic
    from ct
    Posts: 10,812

    12:01am :)
     
  10. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    DIRECT COST: costs of doing business are those expenses that happen because labor was applied, equipment and vehicles were put into action, materials were used and work was done.

    Direct costs are usually easy to document and predict when you know how much time a project will take and what equipment and materials will be needed.

    INDIRECT COST: costs that follow with direct labor
    · Payroll taxes
    · Employee benefits & Insurance
    · Fuel consumption
    · Depreciation
    · Repairs and other on-the-job costs.

    Payroll taxes, benefits and insurance can be easily estimated
    Indirect costs related to equipment are tougher to predict.
    Fuel consumption can vary greatly
    Repairs are often unexpected.

    OVERHEAD COST: expenses that support the operation of a business.
    · Rent for facilities, utilities, advertising, property taxes, storage, insurance on buildings, office expenses and other "behind the scenes" costs that in some cases take place simply because time went by.
    · Take place even when no work was done.

    Direct costs happen when work is done and labor is applied. The workers come in to work, and as soon as they turn the key in the ignition, direct costs and indirect costs follow them and stay with them all day.
     

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