We literally are just starting and recently turned on our machine for the first time. However, going into this, we’re committed to following the Profit First system by Mike Michalowicz.
We plan on offering roof washings, soft washings, surface cleaning, window cleaning, and gutter cleaning. Seeing as our fixed overhead is pretty low at $500/mo, including insurance, vehicle, etc. what’s a good TAP for Profit, OP, Tax, and OE to start?
I was thinking: 1% Profit, 34% OP, 15% Tax, 50% OE
Keep in mind, we really don’t want to go backwards ever on Profit and would like to scale as quickly as possible.
Also, just for our clarity…what does one do if we suddenly had a $5000 month right out of the gate and have $2500 leftover in the OE account. Do we just carry that forward, dump it into marketing or what?
I don’t know what TAPs are, but if you’re trying to scale quickly why wouldn’t you add another line item? Scaling: Marketing to double book the calendar so you need another tech or a second or third machine so you can put someone behind it.
So for example only, If you pressure wash a house at $100 (don’t do that. Way too low)
$1 goes to profit.
$34 goes to you.
$15 goes to taxes.
$50 goes to operating expenses (probably too high by the way)
This is probably more realistic unless you do more window cleaning and gutter cleaning than the other two things then you’re probably close-ish.
Per $100, in my experience breaks down like this:
$20 goes to taxes and licensing even with deductions
$15 goes to operating expenses
$65 is profit. Take whatever you need for owners pay from that.
Or split off another 5% for marketing and another 5% for scaling. Whatever.
I live on about $1000 a month personally, but I understand that’s not typical. No debt and $600 rent is atypical.
$5000 out of the gate might be tough, but I don’t know what your market is. Also, that being said $1000/day solo isn’t unreasonable if you cut out window cleaning and gutter cleaning. The profit margins are pretty dang high everywhere but Florida.
Living on $1000 a month with $600 for rent? Are you a monk bro? You gotta have some eatin’ money in there. LOL
My numbers are in the same realm as what you are talking about
18% OE, 12% Tax, 5% Profit, 5% Equip. expenses, 60% Owner Pay. Probably need to adjust it a little. I find in my case I need to adjust up or down a little based on a upward or downward trend in monthly income. I think that the operating expenses are a little low.
For course out of the owner pay I take money out for the winter and savings etc.
That’s about it. $1200 a month is high for me. Our rent is actually $700 so that $600 includes utilities and my phone in my half. We don’t have cable. Shop at Aldi. No notes on the trucks. I’m a huge tightwad. Lol.
Good for you. I am at $2k and I thought I was doing things on the cheap. Of course I have a little one, so that does eat up a few bucks. The more stuff I get rid of the happier I seem to be.
Joe
You haven’t given us nearly enough info. Are you a one man operation, what type of equipment you running, how many employees, if any. What part of the country you’re from. how much competition in your area, how big an area you’re trying to cover(fuel can be a pretty big expense) etc
All fair points, but this is super fair. I don’t really venture outside of 20 minutes of downtown KC much anymore. I bet @Innocentbystander pays an above median salary in fuel costs alone…
I’m specifically looking for input from those that have implemented the Profit First system into their accounting. Thank you for the feedback so far, though.
