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Way OT...Buisness ideas....

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Sparktrician

Member
Ok. I know some of you guys run your own buisness. What do you shoot for as far as profit margin...I know this differs from different buisnesses, like tractor dealer to grocery store. I am a Electrical contractor, and shoot for 20%. I would just like some input.... By profit, i mean cut and clear, actual money in company pocket after all expense paid, including my wages....
 
I"m in the pesticide/herbicde business, both sales and application. We had a target of 20% at the years beginning, which would be outstanding. We are at 6% so far. Fuel and Glyphosate prices have killed us. At least we are not in the red, lots of folks are going under.

John
 
Get into the buckthorn eradication business. Learn all about it, and start looking for business, you"ll have clients for a very , very long time
 
I'm not a business operator so all I'm going to do interject some foods for thought.
Years ago my career job was with a regulated utility. Their 'return on investment' was regulated to nine and one half percent.
Something of more current interest is oil company profit. A couple weeks ago I flipped to some business show discussing the subject and one economist said most of the oil companies were realizing about seven to nine per cent profit on sales.
Within a week Exxon announced quarterly profits of twelve billion dollars! What the newscasters and comedians didn't say was that was on sales of $138 billion or eight and one half percent
One last nibble for thought. While discussing prices in a management seminar the question of prices was kicked around. The consensus of the group was, "Prices should be all the traffic will bare."
 
Contracting is competitive enough that you'll probably price yourself out of the market if your bids build in a 20% profit plus wages (especially if you're talking union- level wages). Profit margins tend to settle around 10% max, because if you can consistently get more, the competition increases to take up the slack. One of the beauties of capitalism.
 
In my "real" business, I shoot for 8-13% all in after payroll, other controllable and non-controllable...my proforma is for 20%, have gotten there with a few stores but never with them all at once. Product Margin is running about 22%, with labor about 52% per transaction (before expenses but after cost of goods sold).

With the farm...what's "profit"? Ran one in year 3 as a result of an outstanding sponsorship deal for our riders that was also picked up this year- otherwise it's break even at best, because we generally turn any profits into additional fixed assets. If I ould convince the wife to sell some livestock rather than to buy it, we'd be in high cotton. As it stands, we are accumulating assets rather than $$$.

As far as the breeding operation- Memory Lane Farm's rider breeding program has been far more productive than it's Appaloosa program :) but don't call the wife a broodmare!
 
i graduated from the 12th grade( 40 yrs ago). but sometime i have a hard time understanding what the heck you guys are talking about!but anyway it takes me forever to type anything on this new fangled gaget
 
I remember in apprenticeship school a book saying the electrical contractor made between 5 and 6% profit.If thats the case they would close up and put the money in the bank.Once I was loading gangboxes onto a job and the contractor was moaning and saying Im losing money on this job.I told the guys put the stuff back on the truck.He says " what are you doing" I said" if your losing money then dont even start the job." " Oh no I didnt mean it like that"
 
Hi Sparktrician ,, I would be thrilled with 20% in todays market ,, But I can not pay for Farms and New trucks with that knid of Margin , in todays economic Climate ,(nafta and free trade with china has put everyone around here in the home repair biznes competing for the same 10 bucks !!,,, go to he( ) ,, !clintooon!!!)
Thanx to My Son who has really stepped up to the plate .. We still do Home Improvment,I started in 74 while in h-school ,, Thru the 80s and early 90s we thrived on 30% margin ,, Back in those daYS i USED TO WORK CICLES AROUND 4 GUYS AND HAD 2 OTHER CREWS GOING IN THE SUMMER MONTHES . and LUVED IT !!!. nO WONDER iFEEL LIKE i AM HALF sHOT AT 50, breathin problems .. Cant Type worth a hoot either ,
Bottom line ,The more folks you have on the payroll the more You will have to increase Your prices , Proved that to myself every summer ,, always thought We were doing good til I met All expenses ,, The only Security THAT YOU WILL EVER really HAVE IS YOUR ABILTY TO PERFORM ,, Best Wishes , Jim
 
I work for an interior finish trades contractor--drywall, metal studs, acoustical ceilings, etc. I try to mark up between 18 and 20%. But hard times bring everyone out of the woodwork. A small munciple office renovation has 13 general contractors bidding, each with their own favorite sub. What are your odds?

The market should be wherever you can make the most money and still get the job. Companies that take work too cheap ruin it for everyone. My boss is a fool. He'll bid a job at 2-5% knowing they'll retain 10% until the job is finished. Those margins just aren't enough cushion if something goes wrong or material prices increase.

Larry in Michigan
 
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