# Lets talk margins.

Discussion in 'Business Operations' started by 205mx, Mar 14, 2013.

1. ### 205mxLawnSite Silver MemberMessages: 2,392

Can you guys share some information on what your margins are running?
For 2012
2011?
Projections for 2013?

My margins for 2011 were 43.2%
2012: 39.39%

Goal for 2013 is to get back up in the 40's. I think 41% is a good goal.

Ihad one part time helper. Please post profit margins along with crew size.

This is after mialage in my book.
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2. ### georgialawn88LawnSite Bronze Memberfrom atlanta georgiaMessages: 1,075

profit margins? or profit? very few know what the difference is on here. in fact very few know what the difference is in the country. hell the people running this county does'nt even know what it is

very true

4. ### THORNTON SERVICES LLCLawnSite Senior MemberMale, from Morgantown WV and surounding areas.Messages: 431

Profit

One formula can help anyone better understand profit: total revenue minus total expenses equals profit. For example, let's say a furniture store sells \$500,000 worth of furniture a year and its total expenses to operate the store (rent, utilities, labor, advertising, licenses, merchandise etc.) total \$400,000. Take the \$500,000 in revenue and subtract the \$400,000 in expenses, and that furniture store has an annual profit, also called net income, of \$100,000.

Profit Margin

Profit margin acts as a measurement of a company&#8217;s profitability. It measures how much a company keeps in earnings from every dollar of sales it generates. Unlike profit, which gets measured in dollars and cents, profit margin gets measured as a percentage. To measure profit margin, use the company&#8217;s net income divided by the total sales generated. For example, the furniture store had a net income of \$100,000 and generated \$500,000 in sales. To determine the store's profit margin, divide the net income (\$100,000) by the total sales revenue (\$500,000) and the store has a 20% profit margin&#8212;\$100,000/\$500,000 = 0.20 or 20%.

Profit vs. Profit Margin

The profit margin also acts as a gauge of a company&#8217;s control on operating costs. Using the furniture store example, assume that the store increases its sales to \$700,000 annually; to get the sales increase, the store advertised more, hired more labor to manage the increased customer traffic, rented and remodeled an adjacent space for increased showroom visibility and purchased more merchandise than normal. Imagine these additional expenses increased the company&#8217;s overall operating cost to \$600,000 annually. Looking at the new figures, the company still has a profit of \$100,000 (total revenue minus total expenses) but its profit margin has shrunk from 20% down to 14.3% (\$100,000/\$700,000 = 0.1428 or 14.3%).

Importance

It is important for any company, especially a small business, to understand its profit margin. Increased revenue does not always lead to increased profitability. When a company understands its profit margin, it places itself in a better position to control costs and make effective sales plans to increase revenue.

5. ### jrs.landscapingLawnSite Silver Memberfrom MaineMessages: 2,763

16%, 2 crews with 2 people per crew

6. ### 205mxLawnSite Silver MemberMessages: 2,392

Thank you jrs.

Geeze to the guy explaining profit vs margins... I appreciate you filling people in that don't know the difference... But those kind of guys probably don't know their own numbers.

Jr do you have any ideas of ways to shave that margin to something like 18 or 20 for 2013?

Thanks yall
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7. ### 205mxLawnSite Silver MemberMessages: 2,392

Do people really own businesses and not understand this basic fundamental? LOL. Thanks Thornton maybe this will help someone.
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8. ### jrs.landscapingLawnSite Silver Memberfrom MaineMessages: 2,763

Our numbers could have been better but we had close to 20% of our gross in equipment acquisitions for the last year. Not including those we would be close to 36% profit for the year. This year is looking to be the same way due to an expansion on our snow removal side

9. ### Raymond S.LawnSite Senior Memberfrom MichiganMessages: 996

Complete year we're right at 35%. That's everything...plowing, mowing, fert, trimming, mulch, cleanups, etc. Highest margins for us is snow plowing. Lowest is mowing (I could almost make mowing be a loss leader if I had it cover all of the equipment it uses.) Mowing is a necessary evil though for us. It's what keeps the cash flowing and the guys busy between the other work that makes money.
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10. ### georgialawn88LawnSite Bronze Memberfrom atlanta georgiaMessages: 1,075

37 percent is my profit margin. i dont just spray yards