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Business Plan - Direct cost of sales clarification needed

Discussion in 'Business Operations' started by whitemat, Sep 6, 2010.

  1. whitemat

    whitemat LawnSite Member
    from Indiana
    Messages: 40

    Working on business plan and need some input. Question goes like this:

    What percent of your sales can be attributed to direct cost of sales? Enter a % for each item in your sales forecast.

    I have the following listed:

    Weed control
    Shrub Trimming
    Spring Cleanup
    Fall Cleanup
    Gutter Cleaning
    Snow Removal

    I was using 30% originally but this has my gross margin % sky high around 70% or more and doesn't seem right nor realistic. I am using units and have to answer these with a percentage. From you who have been in the business awhile, what % do you think i should use as true cost of sales in those areas based on the wear on work truck, lawn equipment, fuel costs, maintenance, etc. I just don't have a handle on this yet and want a accurate number when i take this to the bank. Help?

  2. B Gillespie

    B Gillespie LawnSite Member
    Messages: 170

    Cost of goods sold and property, plant, and equipment should be different categories.

    Cost of sales is exactly that... Advertising, commision, sales staff salaries, sales staff mobile phones, etc.
    Posted via Mobile Device
  3. coopers

    coopers LawnSite Bronze Member
    Messages: 1,223

    I'm dealing with this very same questions.
  4. Mrs. H

    Mrs. H LawnSite Senior Member
    Messages: 708

    A good thing to remember when putting together a business plan is that no matter how "accurate" you think you are, you will be...wrong.

    Not a bad thing, its just the nature of the plan is to help have a good guideline and while its awsome if you are right on target, chances are in a couple of years when you pull it out you will be off.

    Just remeber to be conservative when working out your income predictions and liberal in your spending. If you're going to be wrong, better to be in your favor. (If you predict you'll spend $500 on something and you only spend $375...yey you.)

    If you are using a template, remember that not every question may be pertinent to your situation. Some questions may not add any valuable information to your need. That being said, I don't know the answer to you specific question, but before you rip your hair out over it, decide if it really fits into your overall purpose of the plan itself.

    I hope someone here can help you clarify it better. Good Luck!!

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