Yeah but having a fixed amount of money in your expense account forces you to be more frugal and make better decisions on spending
Typically late Nov through mid April, plus a week or two in late Aug/early Sep.
2015 I was booked up 'til shortly before xmas, and even had a sizable job booked in January (before the place burned down )
thanks Alex, sounds like you’re including the 4 weeks vacation in the slow time too
cant wait to run some stuff in this format
This is a great thread. Thanks for the recommendation for Profit First I’m halfway through the book. This is what makes wcr so great.
It’ll be interesting to see how everyone does on their projections end of the year… I feel like I’ve been lacking solid financial plans each year for my business.
I’m revisiting this topic because of a second business i’m starting in a different state. I’m sort of a silent partner in this one, it will be largely solo owner/operated (this season at least, until we lay the groundwork to start scaling a bit).
looking for recommendations from any solo guys who are using profit first, as the TAP’s are quite a bit different than what i’m using for my main business. anybody have suggestions?
I’m not using the ‘profit first’ system, per se. But my earlier comments in this thread outline our overall budgeting for a solo setup. Feel free to PM me if you think more specifics would be helpful to you.
i did read back over your posts, alex (some of the very best in the thread by the way) and that was good stuff. i was hoping for a few other responses to get an aggregate idea. one question- are you a corp or operating as a sole proprietor?
Still operating as a sole proprietorship. We may look into LLC or something similar to see if we can save on taxes.
Caleb, I am sure you already have thought this through, and have a plan. But I would ask myself, and I am just thinking out loud. Where can you help the new start up cut expensives? Where can you use what you already use or have? How much money are we going to be putting into marketing? Are we pricing the jobs like a well established firm or a brand new 0 experience window washer? (The leaner the expensives for the start up the better.) What is the fair wage for the owners? And how much does the other partner need for living? What are the long term goals? Are your goals and your partners goals the same? What profit do we need for success? What are we going to do with the profit? Taxes (15%) and labor (30-35%)are pretty fixed.
If I were to start up again with a silent or angel partner, I would break it down like Alex did. Figure out what I need to live and go backwards from there. If both partners are all in on growth, and willing to live a Ramseyian lifestyle, the Owners Pay % could be next to nothing until a client base is estalbished. Then slowly ramped up from there. Or up to 35% if I wanted to live comfortalby.
You would pay the other partner for the labor like an employee (30%) setting up an easy transition for when you do hire more help. Then pay out the portion of Owners Pay, his ??% to pay for his lifestsyle, plus your ??% of ownership. I would guess a I would want to be a 75%-90% owner. Assuming this is a start up, you may take a bigger owners % in the begining as a mentor/coach and smaller as the other partner takes on/over more rolls in the business.
So after kinda talking it out, I would break it down:
25% Owners pay
and eventually flip the Marketing % with the Expensives %
So at 15% Ownership you make just under $0.04 plus eventual profit allocation for every $1 sold.
You partner would make $0.51 per $1 sold.
Wow this is some interesting stuff. This grasshopper has some reading to do tomorrow.
Currently on the “make lots of money and everything will get paid” model. Definately time to rethink that. Thanks.
Great post @mattolmschenk thanks. i’ve been running through different scenarios for structure for the last couple of weeks.
the numbers you posted are similar to what i was thinking of. i was leaning toward just taking a flat percentage of profit over a set number of years as my only compensation, as opposed to taking a salary out of the owner’s pay category. but i could flip that, take a salary out of owner’s pay, and a smaller percentage of profit. that may make more sense as it would provide greater incentive for the operations side to be profitable. you make some good points that i’ll consider.
I’ve been meaning to thank you for starting this thread. You doing so caused me to re-read the book, and we are following the program. We have a couple of new accounts at a different bank collecting profit each day. It’s a great system.
This post was flagged by the community and is temporarily hidden.
I read Profit First back in December and implemented the program February 1st. I am an LLC filing as an S-Corp to save on taxes. Here are my allocations as of right now.
Operating Expenses 30%
Owner’s Pay 45%
At the end of the quarter (March 31st), I will adjust to these allocations to:
Operating Expenses 35%
Owner’s Pay 35%
I am basically a one man show right now, but sometimes my brother helps me on big jobs and I pay him out of the operating expenses. What are y’all thought on this. We also provide pressure washing and gutter cleaning, but window cleaning is the cash cow right. Next year I want to add another van. How should I got about paying the other van operator. I was thinking 30% of each job, how does this sound to you all? Thanks!
Your percentages are almost exactly as mine and we are about the same size but I have a full time and part time employee. I’m also LLC S Corp starting this year.
I think it’ll be good to adjust percentages as you go through the year. So far I really like the twice a month 10th and 25th to work on it. It’ll keep me committed to consistent financial work and will keep me on the ball. Before it was just throw checks in the bank when I had a chance and pay myself when I felt like it.
I learned so much from this thread, thank you guys so very much for spending your precious time teaching others how to do things different and/or better!
We all must keep moving forward and together we can grow even stronger!
Thanks as alwayS WCR!!
Bro, i would like to say thank you, along side of You!!
I have yet to look at this thread and it’s amazing.
Btw, that looks yummmmmmy
he talks a lot about “shit” in his book “The Toilet Paper Entrepreneur”
I’m setting the goal of paying myself $75,000 in 2017. Once profit first is successfully implemented, you can then precisely calculate exactly how to earn the pay you want.
My TAPs are:
Profit: 20% ($30,000)
Owner’s Pay: 50%. ($75,000)
Tax: 15% ($22,500)
Exp: 15% ($22,500)
For this to happen, I now know that the business needs to gross $150,000. (in order to pay me 50%, $75,000)
From there, I know exactly how much I need to earn each month and each day!
Off Season: 4 months, December-March.
On Season: 8 months, April-November
$/month: $150,000/8mos = $18,750/mo
Number of days I want to work per month:
- (52wks/year) / (12mo/yr) * (8 working months) = 34.5 working weeks
- I want to work 2days/wk so… (2 days/wk) * (34.5 working weeks) = (69 days) / (8 mos) = 8.6 days/mo
How much to earch each day:
- So I need to earn ($18,750/month) / (8.6 days/mo) $2,180/day
- Goal: 3 jobs/day, $727/job.
Number of jobs I need per year.
- Minimum target jobs/year: (3 Jobs) * (69 days) = 207 jobs.
So how do I make this much money as easy as possible? Pressure washing and Roof washing - targeted advertising with SendJim and Facebook Ads.
What about windows & gutters? They’ll be inevitable and gutters are still very profitable. Window cleaning is by far the lowest $/hour job that requires the highest skill, but I have a large window cleaning customer base. So I’ll hire someone just for this work. If I meet the goals of my house and roof washing, windows and gutters will just be a bonus.
Mike Michalowicz’s other books are a gold mine also - “The Toilet Paper Entrepreneur” and “The Pumpkin Plan”
You mean 2018 correct?
That’s a great goal!
Profit first is a great concept has long as you implement the system.
My question would be with your current customer base and targeted marketing is 3 jobs a day (2days/wk) “REALLY” possible at your target price?..