Charts & Graphs - Where does the money go

[brantmacga]

'07 marked the end of year 1 of my company (wasn't an entire year). Pulled up the pie chart in the banking software to see where it all went and this is what came up (pay attention sidework guys ):

Materials: 38%
Labor (includes comp, taxes, and MY paycheck): 38.8%
Business Expenses (includes licensing, permits, etc. .): 5%
Loan Payments: 4.6%
Insurance: 2%
Taxes (occupational tax, tags, etc. .not income tax): 1.5%
Remaining 10.1% goes to various expenses like fuel, service, and leftover cash.

Mid-november to mid-december, the employee labor (excluding mine) was the largest chunk of the pie. What was said earlier about a steady income?


This is a very small company so my stats my be way off from larger shops, or small shops that actually figured out how to run a business .
Anyone else want to share how theirs adds up? Areas of improvement?

 

[stevenj76]

38% materials

38% materials

man, are you buying alot of arc fault breakers or what??

or is it those higher kaic circuit breakers on the commercial end?

 

[brantmacga]

no and no. right now its me +1. i'm looking for ways to cut material, one of which i have already found, but i'm not getting the best deal on my distrobution equipment. my cpa rebates are miniscule because i don't buy a lot of it. when i first started, we were 100% residential. last 3 months have been 50-50 on resi/com, but i expect that number to drop to about 70-30 in '08. also, i get terrible deals on QO stuff because i'm setup for homeline (squareD). apparently you can't have both.

 

[Pierre C Belarge]

I am guessing, but it is an educated guess...you know much more about your new business than most ECs do. The percentage who are paying attention to those details in not very high.
Good for you and good luck as you and your business grow.

 

[brantmacga]

i shall do my best. i will say being able to look at numbers like this in detail gives you the ability to pinpoint where you need to make changes. figuring out how to implement said changes seems to be the hard part. thanks for the encouragement though. i appreciate it.

 

[Pierre C Belarge]

You are welcome.

 

[satcom]

I can remember our first year, the real shocker was the truck payments, and truck operating costs, they the one that darn near killed up was the workers comp audit, turned out we were not ready for the audited payments due, the next year we paid in more up front.

Don't be shocked when you find out how little of the money is yours, out of every hour worked, what you cet to keep is a small amount.

 

[hardworkingstiff]

I can remember our first year, the real shocker was the truck payments, and truck operating costs, they the one that darn near killed up was the workers comp audit, turned out we were not ready for the audited payments due,

I think the WC audit is an eye-popper for just about everyone the 1st year. I remember saying, "I owe you HOW MUCH?!" So you get a lump sum adder from last year and next years premium down payment is based on the higher number too. A double-whammy.

 

[Dennis Alwon]

To put this in perspective. Starbucks spends more money on insurance for employees than they do on coffee. I heard that on NPR a few months ago.

 

[romexking]

If you are doing commercial work, your numbers are just a little high, if you are performing residential, they are extremely high.

 

[Tiger Electrical]

If you charge more for your labor, your material % will decrease. I'd take the high material percentage as an indication that you're not marking up material enough, or that your labor rate is too low (or your productivity is low). I don't know what normal is, mine was 20% last year.

Dave

 

[brantmacga]

If you charge more for your labor, your material % will decrease. I'd take the high material percentage as an indication that you're not marking up material enough, or that your labor rate is too low (or your productivity is low). I don't know what normal is, mine was 20% last year.

Dave

Yes i just raised labor rates on commercial and service within the last 30 days.

Thanks for that info.

If you are doing commercial work, your numbers are just a little high, if you are performing residential, they are extremely high.

are you talking about the material percentage also?

 

[emahler]

If you are doing commercial work, your numbers are just a little high, if you are performing residential, they are extremely high.

for service work...for installs not so much..

service should see his materials down in the 15-18% range...

 

[romexking]

for service work...for installs not so much..

service should see his materials down in the 15-18% range...

Eric,

you're right, the material costs for service work should be considerably lower. For new commercial construction, 35% in material was a relatively consistant number for me building mostly new restaurants. It might be different with different structures, but that was our niche.