$25 bucks a house!

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bkludecke said:
Satcom; I don't think it's a "one size fits all" world. I keep track of things pretty closely. I'm sure that many people would fail trying to run their business the way I run mine, and I know I would fail trying to run my company strictly "by the numbers". My way of doing things has worked well for me for 30 years now, I make good $, I've been able to put some away for later, I'm happy and my men appreciate working here. I pay $27/hr for my JWs, they have paid health ins, paid vacations, paid holidays and company trucks to drive home if they wish. Life is good.
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No it's not "one size fits all" world. But one thing is the same for all business, if you have no money comming in, you can not continue to pay a payroll account, without incuring debt, unless you have some Magic that works!

If you can meet payroll then your business os not in trouble and a layoff is not necessary, You must have some rare accounts to be able to pay those rates and benifits, not the average electrical contracting business.

My neighbor has 2 men he has been keeping busy for the last 15 or 20 years, one is in a hotel doing maint work, and the other is in a large office complex doing maint ann fit up work, he works for the post office full time, and has the two men jobbed out, that is not your tipical contracting. His men have the same security as if they were working direct for the fortune 500's.
 
Satcom: What I have built up over the last 30 years did not come easy. There have been a great many sacrifices along the way. Fortunately my chief accountant/wife/ book keeper/office manager/girl friend has not bailed out on me yet. We have the reputation of being the best and highest priced EC in our area. We have a great and solid client list. But these days work is very slow so I use some of the "rainy day" money to augment the operations and keep the whole thing afloat until there is more work. In times like these the one man operations can cut prices down to the bone and I've got to finds ways to compete. So I do.
 
Work a skilled trade to make $25 a house. That is sad.

Oh well, at least there's one of these on every corner:

mcdonalds.jpg
 
Been there, done that. Cut prices to the bone to "keep the guys busy" while waiting for better economic conditions.

Problem was (early 1990's) all the other guys out there were doing the same thing: Operating at a loss.

I finally had to fall back and punt, changing the way we did business to survive.

I got to sit on the State Board a few years later and had those same guys come crawling back to us asking to reinstate their licenses after going belly-up and not renewing them. I recognized many names and had wondered what had become of them.

I actually had to recuse myself on one case as he had beat me out of a large commercial project years earlier, and now he was the one who had gone bankrupt!! Talk about bittersweet :mad:
 
emahler said:
hey, i won't make you bankrupt if you don't make me bankrupt:D
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:D I make no promises

Funny aside, if you expect loyalty from me I expect some loyalty from you. :smile:

If you really can't pay the bills, then you have to let me go. It sucks but that is how it is. I have been there and had no ill will at all to the boss, the work was just not there.

If however you lay off good workers just so you do not have to tighten your own belt for a few weeks then I see that in a very poor light.

Nothing motivates a worker more then realizing the company thinks no more of them as a tool to use when needed and put on a shelf when done. :roll:
 
ITO said:
$25 bucks a house! That what these guys are making in profit after it is all said and done. Granted they are paying their own wages and overhead, but only $25 in profit? It made me want to cry.
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$25 dollars profit after wages and overhead could be good if they are paying themselves $80 dollars an hour and have alot of overhead expense now if they only pay themselves $10 /hr and work out of their trunk then it would be sad then again if you do 1000 houses a year that is $25,000 in profit .
 
why would you want all trhe aggrevation, and exposure to liability, of 1000 houses....for essentially no profit?

ITO...does it make sense to you now?
 
I think a lot of business men forget one of the golden rules of business; business is about people and personal relationships. Sure there is another golden rule about making money, and if you don?t follow that one you will go out of business, but to be truly successful it takes people to make it all work.
 
emahler said:
why would you want all trhe aggrevation, and exposure to liability, of 1000 houses....for essentially no profit?

ITO...does it make sense to you now?
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I think it is insane, and it hurts all of us in this profession.
 
emahler said:
why would you want all trhe aggrevation, and exposure to liability, of 1000 houses....for essentially no profit?
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It may be, that some believe they will actually end up with $25000 in profit, most likely the same group, that believe turkeys fly.
Many years ago they built the kendall homes, 1000s at a time, all the contractors were feed the same story, in the end not one of them made a penny, most were lucky to get out with what they went in with. Not every home is built on schedule, and the payment cycle on these jobs usually cost you money. to meet payroll, and expenses.
 
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I find this quite interesting..I am with Bob on this one..Budget was real tight boss calls us all in to a meeting gets out the white board and goes at it..explains everything even his plan of saving it..then explains who's hours are cut and who is taking pay reductions and the whole match..a year later according to plans he has hired everyone back full time, everyone has their wages restored and even got a raise for our efforts in the plan..It is way better when you are respected by your employer and told the truth..If you lay off just so you don't have to endure a little comfortableness then it shows to your employees as well..

I was a contractor long time ago and did not have a real solid game plan after awhile I just told everyone I had decide to quit contracting layed everyone off and went back to being an employee..I am happy and so is my boss..

Oh yea 25 bucks a house I dont think so..
 
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satcom said:
It may be, that some believe they will actually end up with $25000 in profit, most likely the same group, that believe turkeys fly.
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Actually wild turkeys can fly ,had one come through a side glass of my truck a few years back .the question I have is do you pay yourself out of the profit or do you pay yourself first and then what is left you call profit.So if I am paying myself 65.00/hr and I spend 100 hours on a house that would be $6,500 and x 10000 that would be $650,000.00so would you consider this part of the profit?
 
Rewire said:
Actually wild turkeys can fly ,had one come through a side glass of my truck a few years back .the question I have is do you pay yourself out of the profit or do you pay yourself first and then what is left you call profit.So if I am paying myself 65.00/hr and I spend 100 hours on a house that would be $6,500 and x 10000 that would be $650,000.00so would you consider this part of the profit?
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Sorry, we don't operate out of a shoe box, every project has an account, and a budget attached, we track every job for actuals and post the real costs, including payroll burdens.

But you make a good point, some don't understand what a profit is.
 
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So I'm pretty clueless as far as accounting is concerned, but I think that Rewire and satcom are figuring out a critical distinction for this discussion: just what are you calling 'profit'.

1) You account for everything necessary to do the job: the materials, the labor, the overhead, the holiday bonus, the allowance for warranty work, the kickback to ..., the boss' salary, etc., and after _everything_ is taken care of, you've charged $25 more than _all_ of your costs?

or

2) You only account for the materials, labor, and other direct job related costs, and at the end have $25 which has to pay your overhead, your various fixed operating costs, the boss, investors, etc.

In other words, are we being quoted $25 direct profit per house, or are we being quoted the corporate profit after all expenses averaged over all of the houses.

These are two rather different situation. 1) is probably a good place to be; with a good accountant, you will probably have an even lower number to minimize taxes. 2) is probably a damn hard place to be.

-Jon
 
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