I am curious what others profit margin goals are per employee. Or maybe a rule of total sales a tech needs to wash to make it make sense. I want to hire a tech this year, but I am concerned I would price myself out of the market. Do any of you have advise or experience in this area? Thanks
to replace yourself, as a helper, or as an additional revenue center? There probably isn’t a ton of difference in reality, but the number crunching takes an emtirely different track depending.
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Additional revenue. But your question brings up a good point I hadnt fully worked out. I would like him to take about 25% of my jobs off my plate to free me up a bit. So I could dig into the marketing deeper and work on systems.
Creating a job for myself was fun for a while. Im ready to learn how to own a business now.
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Owner / operators have a lot of hats to wear; outside sales, inside sales, marketing, bookkeeping, equipment maintenance, purchasing supplies, estimates, scheduling & washing to name a few. Any hat you put on means the others are being neglected. It seems feasible to me that the costs of hiring a tech to do the washing could be offset by increasing productivity while focusing on wearing the other hats. Adding a second rig & trading my work boots for loafers has been tempting for a while.
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This is why you always pay yourself as a technician, then separately as the owner. It makes the number crunching of replacing yourself a lot simpler. If you’re making $20/hour as a tech, and $xxx/week in owner income, then you know you can hire a tech for the $20 (or $20 net of employer taxes at least), and should still get your owner portion, so you know when it makes sense to do that.
If you’re looking at added revenue, then I assume you’re looking at added equipment (and the maintenance and fuel costs that go with it). Does it create/add to your storage needs. What does the added revenue do to you in terms of insurance, etc. What is the revenue increase, does it yield you as much in added owner income as you’ll give up giving up 25% of your own jobs? or will it in short order with you focusing on marketing & systems?
Put down all the things that you do know, and conservatively approximate those that you don’t, and see where that shakes out. Then you have goals to work towards in terms of sales goals and such as you do that role more.
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This is exactly it!
This makes perfect sense, thank you!
Thanks, I appreciate this advice
I know this is old at this point, but our breakdown is 30% employee pay, 40% expenses (including taxes and other employee benefits, 30% “profit” aka what I pay myself. If we are within ~3% of those numbers in any given month we are confident things are running smoothly, and of course always happy when expenses go down and profit goes up.
So you don’t pay yourself more than an employee?
Sure, if I had 1 employee that is how that math would work.
That means you pay your employees more technically? All they do is clock in and out, but you have to find jobs, get the accounting done etc etc. Then on top of it, work as a regular tech.
Do you have 1 helper or a few? I’m new to all this, just curious. Thanks
I don’t do any of the labor in my business anymore. I have 15 employees, and their pay comes out to 30% revenue. Expenses come out to ~40%, and I pay myself ~30%.
Assuming they all work the same and complete the exact same amount of work: our business does $2,600,000 in revenue, each employee makes $52,000, and I make $780,000. Our annual expenses are $1,040,000.
Does that help?
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Ya, that helped big time lol. I completely misunderstood everything. Thanks for the patient break down. How long did it take you to grow to this size? If your done with questions i also understand.
All good man. We’ve been in business just over 10 years now, and I hired my first 2 employees after being in business for 2 years and 1 month almost exactly. When I hired them things were running (relatively for the size of the business) hot, so I was able to offer them full time work most of the year and step away from the labor side except for the busiest parts of the summer. I’ve been completely out of the field for ~5 years now and plan to be almost completely out of the day to day operations in the next 4-5 years.
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In the 40% does that include any admin help, ie book keepers, or sales, etc?
Yes on admin, bookkeeping and sales are on me at the moment but the associated software costs are in that 40%. Once I step away from those roles in the next few years we will adjust for the additional overhead.
You’re doing all the sales or do you have some sales guys?
I am doing all the sales and bookkeeping (wife helps also) at the moment, which if I wasn’t I wouldn’t have much to do. I do have folks that answer the phones and that can do follow ups, scheduling, etc.
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