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$100 an hour....

Vito

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you guy have no clue if you work for less you will never go anywhere. just saying. I lucky I clear $35.00 a hour even at those rate. the co must grow and all over head has to be paid.1/3 to the co. 1/3 to the van and supply fuel and so on. and 1/3 to me. at that rate in time you will grow and enough to employed a another van and so on.
 

Vito

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this rate only apply to someone who can put the work out at a reasonably amount of time. if you are slow forget it, you will lucky to make 50.00 per hour or less you can only get so much for cleaning carpet. JMO
 

Vito

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this goes for any trade even in building trade, if you take 12 hour to do a job and another tech can do it 6 hours who making more money. this is the same in ever trade no matter what.
 
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How important is this number. Do you really do it?

Sometimes I have jobs where I do $100 an hour or even more and sometimes I may only get $50 an hour.

At the end of the day my daily goal is $500 for the day and I usually end up somewhere between $300-$600 for a day when I work. Of course there are days I don't have any work so I am not claiming to do that every day.

So how important is that magic number of $100 an hour?

Hey Todd, Chris Stinnett here with Centric Cleaning..

I work in pairs, so i definitely agree on the $100 an hour goal. My daily goal, when I bring out my truckmount is to make at least $500.. Sometimes I fall a little short, sometimes I make 1k easy.. I run a full service cleaning company, so we have branched out a little further than all the typical Carpet Cleaning services some companies offer.. Through the slow months, like right now its freezing cold outside, most customers for some reason would rather touch out carpet cleaning till spring, simply because its cold.. So our other services do help us maintain that $500 goal, it all evens out!
 
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dmreed4311

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Not trying to knock you as your business model seems to work for you. I don't see any mention of vehicle maintenance or insurance (liability or vehicle). Also as much as you do your own maintenance you still need to factor in parts and also replacement costs for van and other equipment at some point.
As Todd Stated I was just listing some of the things that are big expenses for other guys that are minor for me. I carry plenty of insurance and have a large emergency fund already in place. enough to buy whatever I want or need. I own two TM/ van combos and I will never need a new TM because the ones I have will last till I retire. I just replace components as they die. I'm not an equipment junkie like some of the guys on here. I did buy a new to me van last year and I payed cash.


Insurance is such a low cost it makes me wonder why guys focus on it so much. Vehicle maintenance is another thing that is such a small part of the puzzle I give it little thought. I know this thread is old but I forgot all about it.
 

Responder

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As Todd Stated I was just listing some of the things that are big expenses for other guys that are minor for me. I carry plenty of insurance and have a large emergency fund already in place. enough to buy whatever I want or need. I own two TM/ van combos and I will never need a new TM because the ones I have will last till I retire. I just replace components as they die. I'm not an equipment junkie like some of the guys on here. I did buy a new to me van last year and I payed cash.


Insurance is such a low cost it makes me wonder why guys focus on it so much. Vehicle maintenance is another thing that is such a small part of the puzzle I give it little thought. I know this thread is old but I forgot all about it.
That makes sense.
 

Dennis Anderson

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As Todd Stated I was just listing some of the things that are big expenses for other guys that are minor for me. I carry plenty of insurance and have a large emergency fund already in place. enough to buy whatever I want or need. I own two TM/ van combos and I will never need a new TM because the ones I have will last till I retire. I just replace components as they die. I'm not an equipment junkie like some of the guys on here. I did buy a new to me van last year and I payed cash.


Insurance is such a low cost it makes me wonder why guys focus on it so much. Vehicle maintenance is another thing that is such a small part of the puzzle I give it little thought. I know this thread is old but I forgot all about it.
Hey, just curious. Take your expenses for all of last year. Easy to do if you use like a separate debit card for your business expenses. If you don't use Quickbooks or anything like that, use your bank statements. (I simply added up my monthly expenses for each month x all 12 statements) and divide it up by the hours you worked last year. That will give you a rough estimate of your break even point. (I'm working on something more scientific using Scott Warrington's Excel spreadsheet, but currently it's a work in progress). From what I've gathered so far, I expect I'll be somewhere around the $150 mark that I'll need to make per hour. Up significantly from where I thought I needed to be at. Yikes!
 

dmreed4311

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Hey, just curious. Take your expenses for all of last year. Easy to do if you use like a separate debit card for your business expenses. If you don't use Quickbooks or anything like that, use your bank statements. (I simply added up my monthly expenses for each month x all 12 statements) and divide it up by the hours you worked last year. That will give you a rough estimate of your break even point. (I'm working on something more scientific using Scott Warrington's Excel spreadsheet, but currently it's a work in progress). From what I've gathered so far, I expect I'll be somewhere around the $150 mark that I'll need to make per hour. Up significantly from where I thought I needed to be at. Yikes!
you need to make 150.00 an hour to break even?
 

Spazznout

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Hey, just curious. Take your expenses for all of last year. Easy to do if you use like a separate debit card for your business expenses. If you don't use Quickbooks or anything like that, use your bank statements. (I simply added up my monthly expenses for each month x all 12 statements) and divide it up by the hours you worked last year. That will give you a rough estimate of your break even point. (I'm working on something more scientific using Scott Warrington's Excel spreadsheet, but currently it's a work in progress). From what I've gathered so far, I expect I'll be somewhere around the $150 mark that I'll need to make per hour. Up significantly from where I thought I needed to be at. Yikes!
You did something very wrong dennis.

Not trying to be an ass here.
You must have messed up somewhere in your calculations.

You do NOT have 150 dollars an hour worth of expenses.

Its just NOT possible.

So your daily fixed and variable costs to do the jobs to cover your fixed costs = $1200 per day or $6000 per week or $24,000 per month or $288,000 per year.

That is what 150 an hour looks like.
 
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Spazznout

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Here @Dennis Anderson
from the second page of this thread.
I break down all of the numbers you need and where to put them in the formula to figure out your monthly gross needs to reach the break even point.

Let me first say I am NOT the best with words.
So if something I say does NOT make sense please speak up and say ..............."WTF are you trying to say hillbilly"

I hate the $100 dollar an hour number for many reasons.
The first is that it is an arbitrary number pulled out of a hat ... Its dangerous to try to run a business with numbers pulled out of a hat.

The second reason is it makes business owners think about their businesses in the wrong way.
It makes owners look at their path to profit in a linear fashion instead of cumulatively.
It creates a lot of problems as cleaners are chasing a made up number that means nothing, instead real consistent numbers that lead to profit.

What do I mean by linear and cumulative???????
Linear is the $100 dollar an hour method. You either pick out an arbitrary number out of a hat OR preferably you sit down and figure out how much an hour you need to make to pay all fixed and variable costs and then a good profit margin on top. Then you aim yourself at that target number and you shoot like an arrow towards your goal. In a linear fashion.

This leaves you only taking jobs that will get you to 100 bucks an hour. You feel bad if you dont get to that number and you are unsure if you are making money, or even successful..............l.


What do I mean by cumulative??????

This is the way you will find most businesses run their operations and basic model they use when working future projections on profitability.

First you have to understand your Fixed Costs.

fixed costs
noun
plural noun: fixed costs
  1. 1.
    business costs, such as rent, that are constant whatever the quantity of goods or services produced.

Fixed costs also includes Insurance payments, TM loan payments, advertising etc......

So this is how much money you have to bring in each and every month to stay in business.
All other expenses for your business are expenses generated by actually going out doing jobs.
These are called Variable Costs.

noun
plural noun: variable costs

Second you need to understand what a Variable Cost is.

variable costs
  1. 1.
    a cost that varies with the level of output.

Variable costs include; Gas, labor, ware and tear on equipment(depreciation), Chemicals etc.
The expenses you generate actually completing each job.

@Dennis anerson I know you like real world examples, and I am writing this post with you in mind so here goes.

I will NOT posts an actual PnL....... but here is a rough synopsis of my numbers from last year in the example below. Make sure you understand exactly what fixed costs and variable costs are or what I say next will still not help you understand your profit. If you do NOT understand how to figure out YOUR fixed and variable costs please ask here or in PM and I will help you.



Monthly Fixed Costs

Shop rent.................................................$0 (use my 2 car garage and a parking pad for 3 vans)
TM Loan payment.................................$0
Van Loan Payment................................$0
Commercial Auto insurance 3 vans.....$680
business insurance.................................$438
Marketing ..............................................$3840
Electricity/water...................................$300

Monthly Total........................................$5258

So to keep my doors open every month I MUST bring in at least $5258 to break even and be able to pay for my Fixed Costs.

Now for Variable Costs per job

Cost Per Job

Labor........................................$47
Gas............................................$8
Chemicals.................................$2
equipment replacement.........$1
Maintenance on van/TM.........$.50

Per Job Total costs.........................$58.50

Ok ..................so now I know each month I need to bring in $5258 to cover all my expenses for the month, and while doing the jobs to get to that break even number it will cost me an additional 58.50 to pay for the expenses on each and every job.

Now here is where the cumulative part comes in.

I like using Job Averages as a goal post. Notice I said Average. Tracked per day, week, month and year. You will find this is a very good number to track for many reasons. First off it is consistent when tracked over time. You can see how you are doing with up-sells. You can see if a certain ad drove higher job averages than normal. You can see how efficient your employees or you yourself are working. Nearly everything in your business can be measured up against this number. It does NOT matter if you are an O/O or a multi truck operation.

To figure out your job average

Take the number of jobs you did last year and divided by your total sales (the amount of money you took from customers)
This is your per job average.

Last year my companies job average was $292. (We do a lot of Duct cleaning so this will be higher than most CC only)

So to cover my Monthly fixed costs I needed to do 18 Jobs (18 jobs X $292 job average = $5256)
And then an additional 4 more jobs to cover the Variable costs on doing those jobs (18 jobs X 58.50=1053 divide that by job average of $292 =3.6 so round to 4 more jobs)

So that means I needed 18+4 = 22 completed jobs to break even each month.

After I completed 22 jobs each Month, every job that my company did was profit after I paid for my variable costs of $58.50 to complete the job. So with my $292 dollar job average minus my 58.50 in costs per job, I made $233.50 in PROFIT for each completed job each month after 22 jobs.

This is where I will not be sharing all of my numbers and using an example.

Last year I had 2 vans average which is accurate.
Lets pretend each van did only 15 jobs per week each so 30 jobs total for the company per week or 120 jobs per month. We know from above I needed 22 jobs to cover my fixed costs each month from the above calculations. So 120 jobs per month minus the 22 to cover expenses = 98 jobs that give us $233.50 in Profit per job. $233.50 x 98 jobs =$22,883 in profit per month.

What if you did 20 jobs per week per van.

20jobs x 2 vans =40 x 4 weeks =160 jobs.
need 22 to cover fixed costs. 22-160 = 138 profit jobs
138 profit jobs x $233.50 profit average per job = $32,223 in profit per month

So now the goal becomes how many jobs can we complete and maintain our job average. This is how a company can offer a $99 dollar 4 room deal. They only need to do so many jobs to cover their fixed costs. Once they get those expenses paid each month, everything after their variable costs for each job is pure profits.

This way of looking at your business is best for the "high end" o/o and the multi truck company and everyone in between.

Job averages
completed jobs
those are the numbers that matter when looking at your business finances and establishing where you are. Once you establish that it allows you to have a way to measure if you are reaching your goals. Be it better upsells, higher job averages, etc which all leads to a better profit. That is because your Fixed and Variable Costs do NOT change on you. They are a consistent you can measure against.

If you start looking at your company in these terms it will be easier to understand where you are and how to get where you want to be as then it will be as simple as I need to do 10 more jobs this month to make the money I want.
 
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dmreed4311

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Ok spaz, I did your formula
MonthlyFixed Costs

Shop rent.................................................$0
TM Loan payment.................................$0
Van Loan Payment................................$0
Commercial Auto insurance 2 vans.....$254
business insurance.................................$104
Marketing ..............................................$190
phones...................................$130

Monthly Total........................................$678

So to keep my doors open every month I MUST bring in at least $678 to break even and be able to pay for myFixed Costs.

Now forVariable Costsper job

Cost Per Job

Labor........................................$0 I do the work not sure what I would put here
Gas............................................$8
Chemicals.................................$4
equipment replacement.........$1
Maintenance on van/TM.........$.50

Per JobTotal costs.........................$13.50

My job average was 123.00 last year.

What does it all mean?
 
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awratchford

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Ok spaz, I did your formula
MonthlyFixed Costs

Shop rent.................................................$0
TM Loan payment.................................$0
Van Loan Payment................................$0
Commercial Auto insurance 2 vans.....$254
business insurance.................................$104
Marketing ..............................................$190
phones...................................$130

Monthly Total........................................$678

So to keep my doors open every month I MUST bring in at least $678 to break even and be able to pay for myFixed Costs.

Now forVariable Costsper job

Cost Per Job

Labor........................................$0 I do the work not sure what I would put here
Gas............................................$8
Chemicals.................................$4
equipment replacement.........$1
Maintenance on van/TM.........$.50

Per JobTotal costs.........................$13.50

My job average was 123.00 last year.

What does it all mean?
it means you have to do at least 7 jobs at your average to hit break even, then out of every job past break even you should profit about $110 per job.
 

shane deubell

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Becomes confusing sometimes because we are talking about 2 different things.
ACTUAL cost and BUDGETING long term.

If your truckmount is paid for then you dont have any actual cost today. BUT you will someday and should be budgeting for worst case.
Not to mention an o/o should have a fixed cost of $1k month for retirement and disability insurance, health insurance.

Even if you dont have it today right now you want to work it into your long term pricing model so you can afford it WHEN that day comes.

We just seen with Ty, life can change in an instant. BUDGET for it.
 

Dennis Anderson

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You did something very wrong dennis.

Not trying to be an ass here.
You must have messed up somewhere in your calculations.

You do NOT have 150 dollars an hour worth of expenses.

Its just NOT possible.

So your daily fixed and variable costs to do the jobs to cover your fixed costs = $1200 per day or $6000 per week or $24,000 per month or $288,000.
You did something very wrong dennis.

Not trying to be an ass here.
You must have messed up somewhere in your calculations.

You do NOT have 150 dollars an hour worth of expenses.

Its just NOT possible.

So your daily fixed and variable costs to do the jobs to cover your fixed costs = $1200 per day or $6000 per week or $24,000 per month or $288,000.
Becomes confusing sometimes because we are talking about 2 different things.
ACTUAL cost and BUDGETING long term.

If your truckmount is paid for then you dont have any actual cost today. BUT you will someday and should be budgeting for worst case.
Not to mention an o/o should have a fixed cost of $1k month for retirement and disability insurance, health insurance.

Even if you dont have it today right now you want to work it into your long term pricing model so you can afford it WHEN that day comes.

We just seen with Ty, life can change in an instant. BUDGET for it.
The way a successful businessman taught me, you should have all the benefits figured in that you would have working for someone else, so vacations, disability insurance, health, retirement, I even understand the owner of the company can cover himself in worker's comp. insurance as well. Don't shoot me, I'm just the messenger.

In DmReed's list that was given to him, I don't see a line item for a vehicle?? It looks like he has a vehicle that is paid for, but shouldn't he be figuring in something each month for replacement or depreciation?
 

Spazznout

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The way a successful businessman taught me, you should have all the benefits figured in that you would have working for someone else, so vacations, disability insurance, health, retirement, I even understand the owner of the company can cover himself in worker's comp. insurance as well. Don't shoot me, I'm just the messenger.

In DmReed's list that was given to him, I don't see a line item for a vehicle?? It looks like he has a vehicle that is paid for, but shouldn't he be figuring in something each month for replacement or depreciation?
Correct Dennis. Mine was an example. Not a complete exhausted list. Everyone's list will be different. For example, I do NOT include health care as I have coverage via my wives work. So that line Item is NOT in my budget.

You have to sit down and figure this out for your particular situation.
Its gonna be very different for everyone.

I still stand by my earlier post though.
You do NOT have 150 dollars an hour in costs.
 
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Dennis Anderson

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Ive had custy's when handed a bill say ... Wow $350 in only 2 hours, you MADE $175 an hour. My reply is " That is NOT all profit ... lots of overhead comes off that $350.
They still scratch their head and think... ya , fuel , a little chem big deal.
Unless that custy runs a business of their own.. they really don't understand the true cost's of STAYING in business.
I find that a lot with people that have worked for someone all their lives. They hsve no concept, always have just been handed a check.
 

Dennis Anderson

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Let me first say I am NOT the best with words.
So if something I say does NOT make sense please speak up and say ..............."WTF are you trying to say hillbilly"

I hate the $100 dollar an hour number for many reasons.
The first is that it is an arbitrary number pulled out of a hat ... Its dangerous to try to run a business with numbers pulled out of a hat.

The second reason is it makes business owners think about their businesses in the wrong way.
It makes owners look at their path to profit in a linear fashion instead of cumulatively.
It creates a lot of problems as cleaners are chasing a made up number that means nothing, instead real consistent numbers that lead to profit.

What do I mean by linear and cumulative???????
Linear is the $100 dollar an hour method. You either pick out an arbitrary number out of a hat OR preferably you sit down and figure out how much an hour you need to make to pay all fixed and variable costs and then a good profit margin on top. Then you aim yourself at that target number and you shoot like an arrow towards your goal. In a linear fashion.

This leaves you only taking jobs that will get you to 100 bucks an hour. You feel bad if you dont get to that number and you are unsure if you are making money, or even successful..............l.


What do I mean by cumulative??????

This is the way you will find most businesses run their operations and basic model they use when working future projections on profitability.

First you have to understand your Fixed Costs.

fixed costs
noun
plural noun: fixed costs
  1. 1.
    business costs, such as rent, that are constant whatever the quantity of goods or services produced.

Fixed costs also includes Insurance payments, TM loan payments, advertising etc......

So this is how much money you have to bring in each and every month to stay in business.
All other expenses for your business are expenses generated by actually going out doing jobs.
These are called Variable Costs.

noun
plural noun: variable costs

Second you need to understand what a Variable Cost is.

variable costs
  1. 1.
    a cost that varies with the level of output.

Variable costs include; Gas, labor, ware and tear on equipment(depreciation), Chemicals etc.
The expenses you generate actually completing each job.

@Dennis anerson I know you like real world examples, and I am writing this post with you in mind so here goes.

I will NOT posts an actual PnL....... but here is a rough synopsis of my numbers from last year in the example below. Make sure you understand exactly what fixed costs and variable costs are or what I say next will still not help you understand your profit. If you do NOT understand how to figure out YOUR fixed and variable costs please ask here or in PM and I will help you.



Monthly Fixed Costs

Shop rent.................................................$0 (use my 2 car garage and a parking pad for 3 vans)
TM Loan payment.................................$0
Van Loan Payment................................$0
Commercial Auto insurance 3 vans.....$680
business insurance.................................$438
Marketing ..............................................$3840
Electricity/water...................................$300

Monthly Total........................................$5258

So to keep my doors open every month I MUST bring in at least $5258 to break even and be able to pay for my Fixed Costs.

Now for Variable Costs per job

Cost Per Job

Labor........................................$47
Gas............................................$8
Chemicals.................................$2
equipment replacement.........$1
Maintenance on van/TM.........$.50

Per Job Total costs.........................$58.50

Ok ..................so now I know each month I need to bring in $5258 to cover all my expenses for the month, and while doing the jobs to get to that break even number it will cost me an additional 58.50 to pay for the expenses on each and every job.

Now here is where the cumulative part comes in.

I like using Job Averages as a goal post. Notice I said Average. Tracked per day, week, month and year. You will find this is a very good number to track for many reasons. First off it is consistent when tracked over time. You can see how you are doing with up-sells. You can see if a certain ad drove higher job averages than normal. You can see how efficient your employees or you yourself are working. Nearly everything in your business can be measured up against this number. It does NOT matter if you are an O/O or a multi truck operation.

To figure out your job average

Take the number of jobs you did last year and divided by your total sales (the amount of money you took from customers)
This is your per job average.

Last year my companies job average was $292. (We do a lot of Duct cleaning so this will be higher than most CC only)

So to cover my Monthly fixed costs I needed to do 18 Jobs (18 jobs X $292 job average = $5256)
And then an additional 4 more jobs to cover the Variable costs on doing those jobs (18 jobs X 58.50=1053 divide that by job average of $292 =3.6 so round to 4 more jobs)

So that means I needed 18+4 = 22 completed jobs to break even each month.

After I completed 22 jobs each Month, every job that my company did was profit after I paid for my variable costs of $58.50 to complete the job. So with my $292 dollar job average minus my 58.50 in costs per job, I made $233.50 in PROFIT for each completed job each month after 22 jobs.

This is where I will not be sharing all of my numbers and using an example.

Last year I had 2 vans average which is accurate.
Lets pretend each van did only 15 jobs per week each so 30 jobs total for the company per week or 120 jobs per month. We know from above I needed 22 jobs to cover my fixed costs each month from the above calculations. So 120 jobs per month minus the 22 to cover expenses = 98 jobs that give us $233.50 in Profit per job. $233.50 x 98 jobs =$22,883 in profit per month.

What if you did 20 jobs per week per van.

20jobs x 2 vans =40 x 4 weeks =160 jobs.
need 22 to cover fixed costs. 22-160 = 138 profit jobs
138 profit jobs x $233.50 profit average per job = $32,223 in profit per month

So now the goal becomes how many jobs can we complete and maintain our job average. This is how a company can offer a $99 dollar 4 room deal. They only need to do so many jobs to cover their fixed costs. Once they get those expenses paid each month, everything after their variable costs for each job is pure profits.

This way of looking at your business is best for the "high end" o/o and the multi truck company and everyone in between.

Job averages
completed jobs
those are the numbers that matter when looking at your business finances and establishing where you are. Once you establish that it allows you to have a way to measure if you are reaching your goals. Be it better upsells, higher job averages, etc which all leads to a better profit. That is because your Fixed and Variable Costs do NOT change on you. They are a consistent you can measure against.

If you start looking at your company in these terms it will be easier to understand where you are and how to get where you want to be as then it will be as simple as I need to do 10 more jobs this month to make the money I want.
It would seem to me that doing an example such as the $99 deal is going to increase your variable costs. I just finished doing my varisble and fixed costs for the first time. Now I know why everything is soooo expensive in the stores and why prices keep increasing. The cost to produce a service or to produce goods is outrageous!
 

Swede

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Price issue is extremely important to the company. It is important to increase company profit margins while giving the customer a good ROI. This is done through quality and best practices. Keep in mind that low prices and discounts cut into your income and good profit margins go directly to the bottom line. Price is important!