romexking
Senior Member
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- Marriottsville, Maryland
Rewire said:
Your profit amount requires you to work 10,000 hours a year. When will you find the time to spend all of that money?
$25 bucks a house!
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Your profit amount requires you to work 10,000 hours a year. When will you find the time to spend all of that money?
romexking
Senior Member
- Location
- Marriottsville, Maryland
winnie said:
I can assure you, neither place is a good place to be. Let's say an EC bills about $6000 to wire a relatively small home. If, as the OP stated, they have a net profit after all expenses and overhead was paid, they have a net profit percentage of 4/1000ths of a percent. I don't think that will take you very far. Let's also say that it takes 100 hours to complete a home, if they complete 1000 homes year @ $25 each, sure they made $25,000, but it would at least 40 men to do 1000 homes. Each man would be generating $12 a week in profit! WOW...where do I sign up?
Rewire
Senior Member
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- Lake of the Ozarks
where did I say it was a year?romexking said:
winnie
Senior Member
- Location
- Springfield, MA, USA
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- Electric motor research
romexking said:
And again, I ask how you are defining your expenses and your profit.
Say you are an EC, and have 40 employees in the field and 5 people (including yourself) in the back office. You do 1000 homes a year at $6K each. Your expenses for the year come to $5,975,000. But those expenses include all materials, all salaries (including a comfortable salary for you), benefits, overheads, equipment maintenance, etc.
I claim that such a situation is not a bad place to be. Your company is not growing, but it is in a good steady state, covering its costs, etc. Not bad during a construction downturn.
If a retail store buys a widget wholesale for $100 and sell it for $105, then it isn't doing very well. If a store buys a widget for $50, sells it for $105, but their overheads and costs for making that sale are $54, that that store is doing quite well indeed.
I think, however, that I'll back off on this topic, and stick with electrical theory, rather than economic theory
-Jon
Tiger Electrical
Senior Member
- Location
- Northern Illinois
The problem with running the business so close to cost is that a minor scheduling problem, or minor increase in any of twenty or thirty categories of expenses will turn it into a loss. At $25 a flat tire will turn it into a loss.
Dave
Dave
abe72487
Member
- Location
- Lewiston Idaho
$25 house
$25 house
There is always someone who will do it cheaper. People who consider price alone are the fools easy prey. The sue to be a guy down the street who had the best prices in town until he went of business. Don't sell yourself short.
$25 house
There is always someone who will do it cheaper. People who consider price alone are the fools easy prey. The sue to be a guy down the street who had the best prices in town until he went of business. Don't sell yourself short.
mdshunk
Senior Member
- Location
- Right here.
Just another in a long list of reasons not to rely on new work.
peter d said:CES did both. They laid off when things slowed down, and took work for no or minimal profit to keep the good guys aboard...but they went bankrupt. Maybe that's not such a good example.
CES was run by a very large company from what I hear that decided to just cut their losses and run. The guys showed up to work and found all the locks changed. I did get a couple of their aprons though
romexking
Senior Member
- Location
- Marriottsville, Maryland
Rewire said:
When we talk about profit, we are usually talking about yearly profit. Your parameters of $6,500 per home with 100 hrs, and a $650,000 profit would equate to 100 homes in this time period. 100 homes x 100 hours = 10,000 hours.
Even if that profit is over the 10,000 time frame, well that is pretty good, but I doubt that if we are talking about a $25 net profit on these homes, that anyone is getting $65/hr to wire them.
romexking
Senior Member
- Location
- Marriottsville, Maryland
winnie said:And again, I ask how you are defining your expenses and your profit.
Say you are an EC, and have 40 employees in the field and 5 people (including yourself) in the back office. You do 1000 homes a year at $6K each. Your expenses for the year come to $5,975,000. But those expenses include all materials, all salaries (including a comfortable salary for you), benefits, overheads, equipment maintenance, etc.
I claim that such a situation is not a bad place to be. Your company is not growing, but it is in a good steady state, covering its costs, etc. Not bad during a construction downturn.
If a retail store buys a widget wholesale for $100 and sell it for $105, then it isn't doing very well. If a store buys a widget for $50, sells it for $105, but their overheads and costs for making that sale are $54, that that store is doing quite well indeed.
I think, however, that I'll back off on this topic, and stick with electrical theory, rather than economic theory
-Jon
Yes I suppose it is better than losing money, however it's not much different. There are very few circumstances when a company should plan to have, for all intents and purposes, no profit, and only a company with a large cash reserve will survive purposely losing money, and they must have a plan to return to profitability.
Using the percentages from the above example, does it still sound like a good place to be if a small contractor is only doing 40 homes a year and making $1,000 a year in profit? What many people forget is that a corporation is a completely seperate entity from the people running it, and it, like the shareholders(owners), deserve, and in fact, have a responsibility to make a profit. Sure, there may be times when things don't go according to plan, but a plan to make .004% percent profit is surely a plan to failure.
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