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Profit Margins

Discussion in 'Starting a Lawn Care Business' started by Heath, Oct 28, 2005.

  1. Heath

    Heath LawnSite Member
    Messages: 27

    Is there anyway for a beginner to figure profit margins? I have mine at 29% after crunching numbers. That is 40 residential clients at $25 each, close to home to lessen drive time/ gas $$, 1 hour per job since I am flying solo. Is 71% of my gross income realistic for expenditures on equipment maintenance, gas, advertising, etc?


    Ready to kick Corporate America in the a$$ and get to real work!!:realmad:
  2. Full throttle lawn care

    Full throttle lawn care LawnSite Member
    Messages: 151

    Sounds like you figured it out already? explain how you did it.:dizzy:
  3. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    A basic rule of business is:

    1/3 for expenses.
    1/3 for taxes.
    1/3 for you / labor.

    It never works out quite like that, just a guideline but I would start to concentrate on reducing expenses as you will need the extra money to pay taxes. It's what I've been doing since day 1, reducing expenses... Don't worry, it gets better with time, I've had it before where my labor was 75% :)
  4. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    I did notice something... IF your 71% expenses includes taxes, then you're closer than I thought but it wouldn't hurt to see if you can shave another 5 or 10 percent off the expenses, as this is one way to increase your profit. In the end, a company should have a fund that grows somewhere around 5 or 10 percent per year's gross so if you grossed 30k for the year then there should be somewhere between 1500 to 3000 left over after ALL is said and done (you got paid, everything is paid, sigh, yes taxes too).
    good luck

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