Have you read the article in PRO magazine??

Discussion in 'Lawn Mowing' started by GarPA, Oct 13, 2002.

  1. GarPA

    GarPA LawnSite Silver Member
    from PA
    Messages: 2,585

    Well have to admit I only browsed the article where the guru talks about we "mom and pops" have to have sales of at least $300,000 to make a "decent living".....hmmmmm....like I said I was standing at the mailbox paging thru it so maybe I missed his point...anyone else read it yet?
  2. Richard Martin

    Richard Martin LawnSite Fanatic
    Messages: 14,699

    I haven't read it but I would imagine the author lives in Silicon Valley. The average house there is over 1 million.
  3. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    Maybe their spouse likes to spend a lot of money...lol
  4. CMerLand

    CMerLand LawnSite Senior Member
    Messages: 393


    The article your talking about is from Charles Vander Kooi and talks about when adding pure overhead positions to your company as it grows. What hes saying is that up to about 300,000 in sales mom and pop are running the whole operation, paperwork, estimating, job crews, billing etc.

    When you get above that point in sales you need to add someone to the company that will not produce any actual work but become a pure overhead cost, such as an office manager. This persons entire salary must be costed into the jobs because whether you work or not their salary must be paid.

    Now as far as the decent living part, hes referring to how much money your "profiting" from your company, and a 10% pure profit is somewhere around the average. So for 300 K your talking about a "profit" of $ 30,000 AFTER all other expenses are paid, INCLUDING your salary for the hours you put in. These other expenses should also include your shop property, health insurance package, a good retirement accounts and all your taxes paid at the end of the year.

    To many people in this business think they are making alot of money because their bank accounts and pockets are always full. But the fact is they are usually, just buying themselves a job and acting as a money pump in the business, where it all flows through them. After 3000 hours of work a year they see 30 or 45K dollars hitting their tax form at the end of the year and think they are doing alright for themselves, but have no money left in the bank, no health insurance and no retirement fund. They bought themselves job because they could have earned that working for someone else without all the headaches and stress of owning their own business.

    And then for the ultimate surprise, they say thats okay I've got equity in my business that I can sell when I get out. Guess what?? Your run down equipment, your client list and your beat to death body arent worth much when the time to sell comes. So theres no piece of property to sell that the company owns, no retirement package, and no longer the possibility to sell your body for dollars and then after all those years in business you realize that you didnt make a "decent living."

    Everyone who reads this needs to look closely and honestly at themselves and now wonder "Are you making a decent living??"

  5. MLI

    MLI LawnSite Senior Member
    from Ma
    Messages: 464

    Mom and pop operations start to max out around 300k. At that point the profits can be around 20%-30%. As you add to your labor force, and buy equipment to get to the next leval(say 300k-600k) the gross is up, but the profit margins will shrink. Its fair to say that some companies operating in the 300k region.....make more money than some of the larger grossing companies. Remember...its not what you gross in sales, but whay you end up in your pocket end of year! The flip side of this......is the guys that gross more...although profits had shrunk...will have a company thats worth more to a buyer possibly, and probably have removed themselves from the grunt work...to just running the biz.
  6. 65hoss

    65hoss LawnSite Fanatic
    Messages: 6,360

    CMerLand--I commend you on your great post.
  7. kppurn

    kppurn LawnSite Senior Member
    Messages: 426

    Well put CMerLand- something for everyone to think about.
  8. Guido

    Guido LawnSite Silver Member
    Messages: 2,087

    Couldn't have said it better my self! Great post to read if you need (or maybe don't think you need) a wake up!
  9. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Messages: 1,912

    CMerLand .... Hit That One on the Head !
  10. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I'm with you. The numbers put out by guys like Vanderkooi, Huston and some others are not hogwash. These guys have met thousands of contractors over the years, seen their books and operations and are right on target. They speak from experience, not from theory. Any one not familiar with them should get familiar if your in business full time and for the long haul.

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