How do you pay yourself?

Discussion in 'Business Operations' started by lawnagent, Feb 19, 2012.

  1. lawnagent

    lawnagent LawnSite Senior Member
    Messages: 531

    OK i assumed that this question had been asked but my search failed me and after reading 15 pages of threads I decided to just ask.

    I have tried for several years to get clients to pay me x amount a month for 12 months instead of each week when I service their lawn. I guess it is just the area I live in but you get looked at like you are a green eyed martian when you bring it up and declined on the spot. I only have a couple that have agreed to it and to be honest, I didn't follow up because it was such a small number I felt like it wasn't worth doing for 2.
    So if I can't get people on board with that idea, what should I try? I have considered running the math on each account myself, and then using the amount I would have gotten each month only and putting the rest back. Maybe into a separate savings account? I also am working on maybe just paying myself by the hour or by the week. Put the rest back so I can still write myself a check after the season winds down.
    Lastly I want to start putting a percentage into an equipment fund. Whats a good percentage for that. I want a fund I can pay my expenses such as maintenance, repairs, and new equipment purchases. Thanks.
  2. Woody82986

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

    Well as far as the equipment goes, do some math and find a percentage that will help you get to amounts that you need to grow your equipment fleet at a steady pace that reflects the amount of business you have. As far as paying yourself, if you have trouble making money in the winter, then I would set a certain percentage aside every month in a different account so you can draw on that money to get through winter. Don't forget to save money in general too though.
  3. grass-scapes

    grass-scapes LawnSite Bronze Member
    Messages: 1,552

    Poorly. Thats how I pay myself.
  4. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    A weekly salary but it gets turned off in Dec each year and doesn't start back up till were stable again. May is always the target for going back on but some years are easy and others much harder. What ever we feel we have as a profit at the end of the year can be distributed as a dividend but we have our obligations that need to be met as well. And so I need 30k to comfortably get the business through winter start up pay payroll for 6 weeks while waiting for cash to start coming back in and money for advertizing and repairs.
  5. edensgate7

    edensgate7 LawnSite Member
    Messages: 142

    don't live beyond your means....I do 130k in business a year and I pay myself 40 on a bi-monthly draw on my business checking and have enough in the bank to live for a year if I get hurt or something. So many companies live so close to the line that they never bother to create a cushion. I went for years on old equipment and working long long days to build up to where I am. Now I am buying a new piece of equipment every year and paying cash without depleting my reserve. it takes sacrifice to get to that point though. Mabye I will be able to afford health insurance soon lol:)
  6. Five Points

    Five Points LawnSite Member
    Messages: 208

    Good advice, Just what I needed to hear.
  7. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    The way I pay myself is a set weekly salery and benefits based on 52 weeks. I figure it into my overhead same as I would any employees. Each week I also pay myself a commision based on signed install contracts returned that week, the same I would for a sales guy. If business is good, I keep the exra cash, if need be I can invest that personal money right back into the business. I pay myself enough to justify owning my own company, if I wanted to pay myself squat during the winter then I would work for someone else. I also pay myself enough to have a savings incase something happens and business suddenly drops off for an extended period draining the business accounts. Also check into person injury insurance, here in MA I only need to have workmans comp on employees and not on myself, workmans comp is alot more for the owner than it is for employees. It is cheaper for me to carry personal Catastrophic insurance which steps in only when my health insurance doesn't cover something, and has a high deductable to keep the premium low. Basically that is goood for work if I get in an accident and loose a leg or something happens and I can't work again, or even if I get cancer. It's alot cheaper than wc.

    As far as equipment goes I am switching my method of saving for that. Right now the trucks, trailers, and equipment (skid and mini) all were purchased with loans. I would like to get out of that. What I am doing to change it is to figure replacement over X amount of years into my overhead the same I already do with maintenance.

    but to go back to actually paying your self, you have to look at your pay the same you would a truck payment, rent, mortgage, phone, those are payments you figure into your fixed yearly overhead. To many guys look at their pay as a variable overhead such as fuel, where when business is good it costs more, when business is slow and the truck is parked they pay themselves little or not at all.
  8. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Messages: 1,969

    Smart! :usflag:

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