ECN Forum Forums General Topics of the Trade Business Related Discussion Something from nothing... How to build a bussiness?

Maybe you would have been better off saying it needs the entire service replaced from the beginning. Do the whole service, have inspection, know everything is all good, make less trips, and make more $$.

The 2nd job it should be more like $500 material, at least $125 labor, and maybe $40 service call. For a total of about $665. Maybe more if that is the only income for the day.

Old person or not you need $$ to feed your family too. If you want to do charity work that is great. But know the differance between a paying customer and labor donation. If it is a donation then it can be a tax credit. Everyone elce is making money off this deal (supply house, gas station, hardware store) why should you do it for almost free.

Why do you figure to the ten-thousanth of a dollar ($0.0001)? For small quanities it makes no differance. Why not round up to the dollar (after you figure material MU). For total price you could round up to $5 or $10 and it will not break most deals.

Tom

I no longer show a materials mark-up for two reasons:

Sales tax increased...

I have to make up 6% of whatever difference between what I pay and what I get for materials, so no mark-up no sales tax. (Tax paid upon purchase).

A contractor - a very successful one- refused to pay my mark-up. Period. I guess if it works for her... (?)

People like to argue about prices, and will make me put in used old crap from a box in the garage if I leave it up to them for materials... If I charge the mark-up, they want to supply instead, then all hell breaks lose... I'm sure you have been there...

The only way to have control of the materials is to sell the idea that they are getting them cheaper through me than they can themselves. It makes sense to them... Contrators discounts and such, which I don't even get... I have too low of volume sales.



[This message has been edited by sparky66wv (edited 03-13-2005).]

Invoice #3

Troubleshoot and Replace Main Circuit Breaker

Materials Used
Quantity-Description--------------------------------------Cost Each------Amount
1-----------Circuit Breaker 2 Pole 100 Ampere GE---------30.3300---------$30.33
1-----------Penentrox Oxidation Inhibitor----------------0.9936------------$0.99
-----------------------------------------Subtotal--------------------$31.32
---------------------------------------Sales Tax 6%----------------$1.88
------------------------------------Total Materials-----------------$33.20
Labor
Time In---Time Out-Hours---Date---Rate--------------Total
18:30--------19:30----1--------3/8/05---$25.00----------$25.00
14:00--------15:00----1--------3/9/05---$25.00----------$25.00
---------Total Labor---2-Man-hours------------------------$50.00
----------------------------Sales Tax 6%----------------$3.00
--------------------------------Total Labor---------------$53.00

---------------------------------Total Amount Due------------$86.20

*One Hour Minimum Charge per Visit Consumer Sales Tax is required on Labor for any Work involving repairs, troubleshooting, or otherwise unable to qualify as Capital Improvement work.

----------

OK, why the minimum charge here?

Job was refered by a friend whom I purchase firewood from... my main heating source. I owe him $50 for the last load...

The dwelling was rented by his daughter and I'm billing the landlord... whom I don't know and there's no love lost by charging full, and all the net will go to my firewood debt, so I needed $50.

I doubt I see the money for a while, anyway.

So, I'm +$72.47 on paper, but I need about $140 for the bank monday morning or two more checks bounce which means I need $200 by Tuesday moring in order to be a $0 for the past week...

We'll ignore Friday for now... I got about 6 hours in... so another $150 for the week but it isn't at a billing stage yet, probably Tuesday before I'm done.

I'm not going to mention how behind on my bills I am... Oops, I guess I just did...





[This message has been edited by sparky66wv (edited 03-13-2005).]

If I was in your shoes I would charge as much as I could. Invoice #3 $250 is probibly not unreasonable for an after hours emergency call. The trouble is the work is done. If you did not talk prices for this job yet you could have problems collecting a fair amount.

"A contractor - a very successful one- refused to pay my mark-up. Period." If your talking about a GC one way they make more money is by beating down the subs prices. No problem just tell your supplier you will not pay a MU to them. You might try that with everything you buy.

It does not make it easy if you need seperate labor & material for state taxes on the bill.

"People like to argue about prices"
Sometimes it is how you sell the job and when you give them prices (before of after). It sounds like the customers beat your prices down so much your in the poor house. You have to stand firm on a price and be ready to walk away.

So what if you have to charge the customer sales tax. You still need a material MU to pay for your time picking it up, extas, waist, warrenty, etc. Unless you jack up you labor rate to make up for it. I don't know what you spent on material last year but wouldn't it be good to have about 30% of that in the bank right now.

It sounds like you are affraid to charge the customer any real amount of money. You need to work on this.
Tom

[This message has been edited by Active 1 (edited 03-13-2005).]

LK,

When I owned a convenience store, my mark-up was usually 30%, and I paid sales tax (retail) on the 142% (roughly) of the wholesale price.

The way I understand WV tax law:

Now if I buy an item for $10 + $0.60 Tax from BGE, and sell it for $15, I'm really selling it for $14.15 + 6% tax, which is $.85 in tax and I owe (or am fraudulent for) $0.15 in Consumer Sales tax.

Labor other than Capital Improvement is another issue.

[This message has been edited by sparky66wv (edited 03-13-2005).]

I've posted almost the following before almost verbatum but here it is again:

Operating costs for a one man operation. Note, these are "real" costs:
1. A good family medical program - $700 per month minimum.
2. Vehicle, gas, ins., payments, depreciation, tires, tune up, repairs, etc. - $670
3. Office supplies including stamps - $30
4. Acct and attorney, if and when needed - $50
5. Magazines and books $40
6. Business taxes - $100
7. Telephone - $50
8. Cellular phone - $100
9. Travel & entertainment - $50
10. Seminars and Trade Shows - $125
11. Uniforms - even just jeans and shirts - $45
12. Small tools - $15
13. Software and upgrades - $30
14. Marketing & Advertising - $200
15. Office Equipment depreciation - $75
16. Liability Insurance - $300
17. Workers Comp OR Disability insurance - $125
18. Bad Debt - $100
19. Guarantee work $100
20. Future Capital Expenditures - $100
21. Owners draw ($1000 weekly) - $4333.00
22. Bookkeeping - ($150 per week) $650

That comes to about $7950 per month. Anything less and you're kidding yourself. Divide that by about an average of 32 "production" hours per week at 46 weeks for a total of 1472 man hours per year, or about 122 man hours per month. Divide that $7950 by the 122 hours and you get $65 per hour - COST of doing business. Add the profit you want.

The overhead cost items listed above are far from being excessive, but are realistic as to the true cost of operating, it you want to treat yourself as a legimate business owner. I don't see how anyone can operate without charging anything less than a minimum of $70 per hour.

Charge that and you still don't get the paid sick days, vacation days, paid holidays, pension or 401K, or any of the other perks you had when you just had a job.

http://www.masterplumbers.com/utilities/costcalc/

Try this link for cost and overhead to come up with an hourly rate.

Here is the labor rate calculator I use. Click on the download link if you have MS Excel. http://nosecrets.com/Download.htm
If you are honest with the numbers (like number of hours booked per day) you will come out in the $50/hr range. The $60/hr is probibly more realistic but still being on the minimum side.

Here is the WV tax information: http://www.state.wv.us/taxrev/taxdoc/tsd310.pdf

A lot of EC work would go under capital improvment and would not be taxible to the customer.

Tom

One thing I have learned is that running a business is NOT buying a job.
Virgil you are buying a job cheaply. If you do not start running a business and at least doubling your labor rate and adding markup to your materials you will always be broke.
Thing like taxes, social security, insurance, vehicle costs, telephone costs, housing and office costs are always going to take money from you. You have to add them to every hour you work. Also look at pay rates for other licensed holders in your area. What would you have to pay a licensed employee to actually do the work without you personally bieng there? You should at least double that for your own salary. If you feel you canot do so, it time to work for some one else.
Buying a job usually causes a business to fail. You will never be able to build a big enough financial cushion to cover the slow months we all have, let alone the sudden emergencies that almost always come at the worst time.
You are smart enough to see this, now act on it please.

You probably think you're providing a good deal to your customers and that's your strategy. It doesn't work. To charge such low prices, you have to hurry, use cheap materials, rush to get to the next job to get the next paycheck, you probably won't be able to come back for free and provide the occasional warranty work that needs doing, your customer will become the enemy because every minute spent talking, every time they want a change, it cuts into the little bit of time you have to do their job. The NEXT job will always be the one that will make you money but it won't happen. You'll end up hating what you do an if you're stubborn like me, you'll do it for years anyway.

I speak from experience. I made lots and lots of business mistakes, charging too little was one of my first. It took me almost 3 years to finally learn that if I charged more, I would be happier, make more money, and provide a better product and service. Others were telling me but I wasn't ready to listen until I was almost broke and trying to figure out how to buy gas for my truck to get to the next job.

Don't judge your customer by your pocketbook.

Those that dont buy won't buy no matter how low your price is and those that will buy don't have any idea what it costs anyway so whatever price you give is the right price.

You don't want the customer that is interested in price only. They know they're buying junk and are unhappy with the purchase from the moment they sign the contract.

Double your labor rate and markup materials by 100% on small stuff and 50% on stuff over $50. Give away the 10 cent screws for free, if you loose half your customers you're still making more money and at least you'll have more freetime.

And then take the time to provide great work. That's the secret to success. Great work. Your new customers who make enough to afford you will recommend you to their friends and if you can survive until that happens and keep doing great work, you'll survive.

Just my humble opinion from my own experience.