Service company profits and investments

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mannyb

Senior Member
Location
Florida
Occupation
Electrician
question is for people who manage or own service type work. I have a class and its asking these questions. its a make believe company so there is no right or wrong answer but would appreciate answers from people who own businesses.

how much money are you committed to parts inventory?
what is rate of return on money if you do stock inventory?
how do you decide which parts you should purchase and inventory?
buying new vehicels or save cash for parts inventory?
do you have to pay investor (yourself) for money you invest?
 
mannyb said:
question is for people who manage or own service type work. I have a class and its asking these questions. its a make believe company so there is no right or wrong answer but would appreciate answers from people who own businesses.

how much money are you committed to parts inventory?
Click to expand...
In a fully stocked service van at today's prices I guess 5-7k in rolling inventory cost

mannyb said:
what is rate of return on money if you do stock inventory?
Click to expand...
Thats a good question, if we sell a connector or something for 2X what we paid for it, but it bangs around in my van for a 18 months before I sell it and some will get lost or broken, it would be hard to figure the annual rate of return on that.
 
If I don’t use a part in two months, it’s inventory on the truck may get reduced, if it doesn’t get used in six months, it may get deleted to a shelf in the shop.
Depending on the type of service work you do, you may have anywhere from a couple hundred in testing equipment, to several thousand. (I keep about $4000 dollars worth, because of the type of troubleshooting I do, commercial and industrial is much more expensive to do than residential)
 
I do not track my inventory tightly but here are my answers.

how much money are you committed to parts inventory? A: Do not have a dollar figure.
what is rate of return on money if you do stock inventory? A: Wild guess would be cost*1.13/time in truck*inflation*convenience/gas
how do you decide which parts you should purchase and inventory? A: Based upon which parts are used regularly and even irregularly.
buying new vehicels or save cash for parts inventory? A: I like to save cash.
do you have to pay investor (yourself) for money you invest? A: Wondering if that might be considered in ownership stock of company
 
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