I brought this topic up two years ago...........just check'n to see if any of you out there are hitting this mark.
Like to know what your figures are........if you're up for sharing that kind of information.
Thanks
Posted by James Donahue (Member # 3624) on :
Please don't hate me for being too sarcstic or political, but given enough time, the dollar will devalue to where even part time shops are making 100 G's.
Seriosly though, NO. Not quite.
Posted by Doug Allan (Member # 2247) on :
$95,282 as of today. I hit 100K the last 2 years & I can not say too much about cash jobs in a public forum... but some of them are a little hard to keep track of sometimes I cruise in after 9 or 10 most days, & spend at least an hour more then I need to on this board every day... but I finished an install at 6pm & had a client wanting a rush van graphics job for tomorrow, so I met with him for an hour tonight... need to spend a few more hours tonight doing up some photo mock-ups & have to come down tomorrow at noon to finalize the design & measure his new truck. I just designed his logo & will be doing 3 trucks, but he has a photo shoot scheduled for Sunday at the beach with all his new kayaks & needs one truck lettered right away.
Sorry to drift off topic there, but my point is, I have become quite a slave to this business to do 100K in sales. I am 99% a one man shop, but my wife has helped one or 2 days a month when the weeding stacked up too much. I also pay her to come on installs sometimes to do some help I don't really need because i never see her otherwise. I'm not complaining & am pretty happy about how things are, but wanted to be honest about the sacrifices I make to hit that mark. Without a doubt, after lazy mornings, letterville breaks & other shop goof-off time, I'm sure I still average over 50 hours a week to make get that much work out.
Posted by Doug Allan (Member # 2247) on :
we're talkin sales right? (not income )
Posted by John Martin Robson (Member # 1686) on :
Doug......thats good to hear, right on. Very interesting too. Your work style is similar to mine, however I have not been spending much time here in Letterville. I spend the weekday mornings with my daugther, so I don't really get into gear until about noon. I don't have a significant other or any hired hands, other than the odd job.
I just hit $97480.00 as of today.(yes sales)I'd say we're on par.
I probably work 40-50 hours a week depending on the season.
At one point I thought 60-70 thousand would be my yield point, but every year for the past 5 years my sales have increased substantially and it doesn't appear that it will let up. The economy is good and the opportunity/potential is great.
I think I need help..........thats my next post.
Posted by Miles Cullinane (Member # 980) on :
i think he is talking income Doug. probably stems from Chip Carters' book about how to make 100K takehome a year.
i am bidding on a job at the moment that could bring in $3500 a week for 8-10 weeks. if i could get that year round i would be hitting the mark. Posted by Ray Rheaume (Member # 3794) on :
I hit the $110K mark in sales a few years ago and remember well what "being a slave" felt like.
Little sleep, long work hours, and a very bad attitude by the end of the day. (Stressed out to beyond my limit.)
In the long run, despite the money, it had higher costs to both my health and personal life.
The $100K one man shop is possible if that is the goal you set, and more power to you should you achieve that goal.
For myself these days, the greater goals are to enjoy my time at work and set aside time to enjoy those other things in life that I find happiness in. (especially beatiing the tar outta my drums... )
Off playing with my inner child...bye bye! Rapid
Posted by Rick Beisiegel (Member # 3723) on :
We exceeded last year sales by August 1. However profit is still the same....what's up with that?
Posted by Dave Grundy (Member # 103) on :
John..If you mean gross income...yes, I have hit it a couple of years ($120-140K each). As the result of a single large contract in each year.
(Thank you valued customer!!!!!! )
I don't know if I could handle it every year though. My butt was dragging for a long time after each of those contracts.
Average year for me is $60-80K.
Posted by Joey Madden (Member # 1192) on :
Money, ya do this for money, ohhhhhhh no wonder I'm so happy Posted by Jay Nichols (Member # 2842) on :
Some people here do this much on one invoice, it's like asking 'how big is a 2 bedroom house?'
Physical and mental stamina of 30something and a burning desire to push one's limits! How many miles of brush strokes did you lay last year? And what about all this boat lettering cash? Any endeavor has it's own set of rules and the knowledge you gain as you ply your craft becomes experience that allows you to operate in an ever more efficient manner. More important is the question of revenue generated vs energy expended.
One thing's for certain- if you are bustin ass hard enough to do six figures, you are livin with it, baby. So, then what is doable for you and how long can you live comfortably with it? For me, when a business is going warp speed, it's like a big screen display right behind my forehead, aimed at my mind's eye-- planning, planning, planning. Fatigue will set in if not managed properly- efficiency is king.
It helps to be in a market that has a supply of potential repeat customers with healthy budgets. High volume jobs can help the batting avg.
Over a four year span in the mid-90's, as a retail sign shop I estimate with cash jobs thrown in, 80-120/yr with the occasional helper. Back in late 70's my numbers were much bigger, but that included wonderful world of advertising, where one could actually be paid for design and typography. Anything was possible with a phototypositor, process camera, opaque projector and letraset catalog. but I digress...
I'll just be over here, playin ...
Posted by Si Allen (Member # 420) on :
Been there, done that, but never again! Just not worth it!!!!!!!!
Back before computers, I was approching those numbers, (would have been well past that, with today's inflation),BUT I was averaging 15 hours a day! That's a LOT OF BRUSHSTROKES...and nearly ruined my health.
Getting up, going to work, and back to bed, late at night, is not a very good lifestyle! I thoroughly enjoy the sign biz, but I also enjoy doing other things too!
Posted by William DeBekker (Member # 3848) on :
Closet I made was 85k but I agree with the work to death Im hoping to get this new shop to around 55k to 60k a year.. Comfotable range and can screw off without feeling guity...
Posted by Jon Aston (Member # 1725) on :
Hi Gang.
Care for a slightly different perspective?
How about "work smarter...not harder"? I realize that this is a bit of a cliche, but bear with me...
I don't know enough specifics about each of your respective businesses or business skills...so it's important to understand that most of what I am about to say is based on general observation and experience in serving the sign industry at large.
For starters, sales of $100K per employee (in this case there's only one) is about average, in my experience. Very successful shops are typically in the $150K per employee range, but this is more rare in one-person shops. I think it important to stress that $150K per employee is a realistic goal, however.
That being stated, sales revenue is only one measure. As Rick's experience is demonstrating, you can work like the devil to grow sales --perhaps offering discounts in the hope of building volume -- and still not come out ahead. What's worse(?) is that you still have to produce all of the extra work to support those sales without gaining any benefit. Ultimately, more sales revenue is not a good reward for extra time and effort...only more net profit is.
I think the real question to be answered, therefore, is "How can I make my business more profitable". I know that -- from me -- everyone is expecting a punchline like "Get yourself a Gerber EDGE"...but even I don't believe that simply buying a new piece of equipment and learning to operate it efficiently is enough to ensure your success.
The answer, my friends, lies in strategic marketing....
The typical commercial signshop nets a profit in the range of 10-11% of sales. I firmly believe that by implementing proven strategic marketing practices, the typical commercial signshop can increase net profits by 50%...but only if the signshop owner(s) are prepared to commit to the process.
Strategic marketing isn't a "magic pill"...it requires discipline. If you don't have the necessary discipline but want the results, hire someone with the knowledge and skill to help you...a strategic marketing consultant.
Strategic marketing requires that you develop a strategic marketing plan...and a strategic marketing plan requires that you begin with establishing "SMART" Strategic Goals and Objectives.
Strategic Goals are long-term...say 3 years out (or more).
Strategic Objectives might be defined as "smaller" goals that bring you incrementally closer to achieving your Strategic Goals.
"SMART"is an acronym...
Simply stated and Measurable Strategic goals and objectives must be quantifiable to be measurable...Sales revenue in dollars, gross profit in dollars and/or percentage, net profit in dollars and/or percentage. If they're quantifiable and measurable, you can manage to them.
The "ART" in "SMART" is that these Simply stated and Measurable goals must be Attainable within a Realistic Timeline. Setting unrealistic goals and objectives defeats the purpose. A timeline is an essential discipline.
As you're developing your strategic goals and objectives, don't become too hung up on getting them right, right off the bat. Successful plans evolve. They're dynamic. They're adaptable to unforeseen change. The important thing is to have a plan, to keep it SMART, to review it and measure your progress often.
Once you have "roughed in" some strategic goals and objectives, there are a variety of proven, successful marketing strategies, tools and tactics that you can consider implementing...
Market Analysis...
Everyone's heard the term "market segments", right? Segmenting the market is a way of breaking it down into smaller, clearly defined categories (segments) in order to make analyzing (and understanding) the market easier. There's no right or wrong way to do this...as long as you are seeking to understand your opportunities or relative fit (or some other purpose...like improving your overall profitability) within certain segments.
Segments are most often groups of customers with common needs or interests but can be defined by other means such as product/market application. Segments can be analyzed (and understood) with further segmentation.
Start with what you know -- your own customers (sales analysis)
For example: You might start with classifying some of your customers as "commercial" and others as "industrial" to see if you can determine if one segment is more profitable than the other...in order to focus your resources on the target group that offers the biggest bang for the buck. Within both "commercial" and "industrial" you might segment further by the types of businesses or by the size of business (1-5 employees; 6-10 employees, and so on). Which of these segments are more profitable? Why? Which are less profitable? Why?
Good market analysis requires asking a lot of questions in order to find some direction from the answers.
Narrowing your Niche...
The first tenet of strategic marketing is that "You can't be all things to all people"...everybody's heard that phrase but many small businesses fall into the trap of trying to be all things to all people...without even realizing it. It's understandable...start-ups need to survive and will take on any work just to survive. Economic recessions often force established businesses into the same "M.O.". The problem is that it becomes habitual...even addictive.
If you're running a well-established business, you need to question the necessity of doing less profitable work...fighting competitors over business on price, for example.
Like all addictions, quitting "cold turkey" is likely to end in failure (so I'm not advocating it). What you need is a strategy for gradually moving away from less profitable work into more profitable work. Your market analysis gave you direction. Now you need to narrow your niche and focus on developing those more profitable market segments so that you can let your competitors continue to fight over the less profitable opportunities.
Micromarketing and Key Account Management...
Marketing can be defined as recognizing a widespread, unfulfilled need for products or services and establishing a means of delivering those products or services for profit. Successful marketing means doing so for the greatest possible profit...or, put another way: for the greatest possible return on investment.
Micromarketing is marketing on a customer by customer level...one customer equals one market. In practice, what it means is understanding the business goals, objectives and needs of each customer. In the case of commercial signshops, you might further define this as developing an understanding of the market communications goals, objectives and needs of the client. You may call yourself a signshop, but you're in the market communications business.
The purpose of micromarketing is to focus on developing your opportunities and maximizing sales with each existing client. The reason this makes good sense is that the cost of developing new business with existing clients (who already know and trust you) is negligible when compared to the cost of attracting and developing new clients and (even more expensive) new markets. Understanding each client's market communication goals, objectives and needs gives you the opportunity to develop and provide the most effective solutions...maximizing sales and profit with the client in the process.
Because you can't be all things to all people, micromarketing is most effective when focussed on Key Accounts...those customers who you've identified as offering you the best opportunities for growth, or who are already your "bread and butter" accounts (Sales analysis will likely reveal that 80% of your revenue comes from 20% of your clients...this is a good place to start). A deep understanding of the needs of these customers and providing them with effective solutions strengthens your competitive position and makes you less vulnerable to price-oriented competitors.
Consultative Selling and Conceptual Selling...
Sales is a function of marketing...an important function. Selling is a skill that can be learned (and mastered) by anyone.
Consultative selling is simply an extension of those sales skills...an important extension. Professional, consultative sales people may have learned certain techniques that help them lead a customer to a sales agreement, closing the sale...but there's no trickery in it...and there's never any attempt to sell someone something the don't need. In a way, consultative selling can be viewed as executing a micromarketing strategy: Understanding need and selling a solution.
How many of you get out there and make sales calls...visit customers at their locations...get a tour...look around...ask lots of questions? Consultative selling is really more about asking questions and analyzing needs than it is selling.
Conceptual selling resonates on a slightly higher level. Customers don't always know what they need or understand the alternatives available to them. The "concept" they're working with might be too narrowly defined. Help them "think outside the box" if you can and you will create vastly different opportunities for them and for yourself.
In all types of selling, your success will be determined by how well you prepare (sales planning) how well you present and how well you close. If you haven't already, go take a professional sales course or two. If you invest in your skills, hone them with practice...you can expect improved results. No different than hand-lettering or gilding...think of selling as another craft.
Value added, pricing strategies...and a better bottom line...
Anybody can make signs. Anybody can make them more cheaply, and sell for less. Anybody can provide good service. Why should someone pay more for your signs? Is there additional value (and benefit) to the customer in choosing to buy your products and services for a premium?
In my experience, many commercial signshops don't fully understand the value added they offer their customers. Without fully understanding the value they add, they can't effectively communicate the reasons that will allow a customer to justify paying a premium price. This leaves them vulnerable to lower-cost competitors and discounting that results in lower profit margins.
SWOT (another acronym) analysis is a useful tool for many things; on many levels. By identifying (in writing) and evaluating your competitive Strengths and Weaknesses, you can better understand your Opportunities and the Threats to your success.
Your competitive strengths will almost always point to value added. Try to think of them as value added "features" of doing business with you -- and list a corresponding benefit to the customer. For example...
STRENGTHS
Killer design skills -- Signs that attract attention...plus customer receives value of unique image in building their brand
Product knowledge -- Choosing the right materials for the application... customer get best value for money without affecting quality / durability
Complete the process for weaknesses...then begin to evaluate how your Strengths can create opportunities for growth and what Threats exist as a result of your weaknesses. This will help you in developing strategies and plans to fully exploit your opportunities and to "shore up" your weaknesses.
SWOT your own organization from your customers perspective. SWOT your competitors...can you use any of their weaknesses can you use to your advantage? SWOT your supply chain partners...what suppliers give you the best value? SWOT your customers...how can you help them develop new opportunities or defend against threats?
Once you've got that all in perspective, how will you set pricing? The accepted industry standard of materials costs times "X" is a BIG part of the profitability problem in this industry. Published pricing guides don't really have any relevance, as far as I'm concerned.
Offering your customers options (tiered pricing) and using a system (Such as EstiMate software...a Letterville merchant!) are -- in a nutshell -- the best approaches (sorry not to elaborate...I'm afraid that I've run out of steam...and time).
Finally, strategic marketing is an excellent foundation upon which to build your overall business plan. For example, it can help you plan equipment acquisitions with lucid vision and help you achieve greater return on investment faster.
So what are you waiting for?
If you've read this far, then some of what I've said must resonate with you. Why not get cracking with your strategic marketing plan today?
If you need help, I'm leaving ND GRAPHICS in January to run my own business as a strategic marketing consultant to small businesses. I plan to stick around Letterville and my company (MARKETING PARTNERS) will become a merchant just as soon as I can afford to. Until then, feel free to drop me an e-mail or a private message...and if you're so inclined: Wish me luck!
[ November 22, 2003, 05:44 PM: Message edited by: Jon Aston ]
Posted by Bob Burns (Member # 268) on :
Jon, yuou CAN'T be makin too much money...all your time is spent on posting! Posted by Rick Chavez (Member # 2146) on :
WOW Jon, What a great response!! I am employed myself, but I have seen huge numbers with shops that have employees, I worked for a truck lettering company that did 1,000,000 a year, with 7 employees, a design firm I worked at did 7,000,000 with 13 employees. One thing I noticed as that they had a niche, and worked very smart. Most one man shops have never had the luxury of working in so many places as I have, but Jon has pretty much summed thier success up in that thread, I think it's very possible to hit 100k without as much effort as has been said, if you can establish a formula for that success. Bein that I am working toward my own full time shop, I can't see doing it all by myself, but I think I can apply all these things to my new venture (if I can break away from my current job)
Rick
Posted by Jon Aston (Member # 1725) on :
Thanks Rick...and good luck in making a break into your own business.
Anyone care to SWOT Bob Burns? Posted by John Martin Robson (Member # 1686) on :
Bump......I like this topic.
Jon is right about the "work smarter not harder" principle. I think this can apply to everyone in this business.........even the "crusty diehard fundamentalists maverick letterheads".
"work smarter not harder" That is exactly what I set out to do, and you don't have to comprise quantity (hours worked) or quality (workmanship).
I really don't think I worked too much harder this year. I've just slowly changed the way I think, and then acted accordingly. And you know I still think I’m undisciplined and lazy at times.
I realized there are a lot of variables when it comes to talking strictly sales. But generally speaking more sales should mean more money in your pocket. I make no bones about it, I want more money in my pocket.
It will be interesting to see where that jumping off point will occur……….when I say “do I expand” or say ok “this is enough I can’t take on anymore” .
I bet some of you have been in this position………..yes?
Posted by Robert Larkham (Member # 2913) on :
Screw all that work, it would take away from my time on the river whitewater kayaking. My only advice folks is this is not a dress rehersal it's real life. Take time to smell the roses as you never know when your last day is. I had an Uncle who made millions until they found the tumors two days after retirement. He lived about three months after that. I could use more money like most but will not put aside the finer things in life. SYOTR(see you on the river)
[ November 22, 2003, 04:10 PM: Message edited by: Robert Larkham ]
Posted by Ray Rheaume (Member # 3794) on :
WOW! I hope that was something you already had typed up, Jon.
Very informative and well worth the reading. Rapid
Posted by Jillbeans (Member # 1912) on :
Hi John. I work about 40 hours a week from April to July, then about 30 hours a week August-October, then take a huge nose-dive from November to January where I am lucky to get 15 hours a week, then it picks up in February and March to about 30 hours a week again. I work from a home office & garage. Every year I increase my income. Last year I made about $29,000.00, but after expenses it was more like $12,000. I have enough the pay my household bills and buy food, but that is about it. I have credit debt because in winter, this one big factory who does not give materials deposits always orders a lot of signs. They pay on a 30-90 day basis, and by the time I finally get the money I use it to buy food. I try to bid according to the Sign Writer's pricing guide, but most of the time I feel as if I'm making signs in order to buy more vinyl. Some days I just want to throw in the towel and get a real job. I am not complaining. Working at home has enabled me to be here with my kids all the time. It's just that sometimes I think that there has to be a better way. This year I did price things out better. I learned to ALWAYS get a deposit. I charge separately for logo design now when I used to just include it as part of the job. So we will see by January if this has helped. Otherwise, I may just get a job at WalMart as a greeter. You asked! Love- JILL
Posted by KARYN BUSH (Member # 1948) on :
obviously i have made my share of mistakes...and i know what my weaknesses are...i'm a terrible delegator...i spend too much time/stressing with tiny details that probably no one but me notices...and i work too much. with that said i'll be lucky to do $75-80k this year...call me greedy, but i don't feel that's enough for as much as i work/stress over things. and yes i know that's my own fault but i have taken some steps to making things better...such as upping my prices, and slowly learning to say no. i do believe this is a tough business to be in...mainly because there's many parts of it that are great, but there are also the sucky parts that have to get done. i also think it's hard being a one person gig because it's not easy knowing every aspect...designer, cnc router operator, edge operator, plotter operator, production person, good customer relations and bookkeeper...and doing it all at once. what can i say? somedays i love it & somedays i wonder what the hell i've done to my life. Posted by old paint (Member # 549) on :
The typical commercial signshop nets a profit in the range of 10-15% of sales i dont know where you get that figure but your way off!!!! if i was only making that profit...i would be better off flippin burgers at micky dees. iam an old SIGN PAINTER, i remember days when my expenses for material was less the 10-15% of my total income!!! also when i painted ALMOST ALL THE MONEY charged for the job....was MY PROFIT!!! i still paint...every chance i get, reason being i make MORE MONEY vs. time and materials then if i did it in vinyl!!! i just completed a job the and the client wanted it all HP VINYL, and i told him right from the get go....it was gona cost him $250 JUST FOR VINYLS. he said ok. the job took more time then if woulda painted it, plus the $250 material(i dont eat vinyl cost). i got it done and billed him for 12 hours labor(just applying vinyl)@ $30 an hour. so the total job was $610.00.(he is also a repeat client this is vehcile #3 ive done, and hes got another for me to do)i also told him i woulda painted it and had it done in 2 days, and it woulda cost him $400!!!! i worked in auto parts for 15 yrs. and they work on a base of 27% profit MINIMUM!!!! anything more is added bonus money. as ive gotten into vinyl and lookin back at my bookeeping i keep seeing my expenses for material INCREASE and the price of signs sold decrease with more competition in the market. no iam no where near 100k.....iam ok with what i do make.....but my profit margin is way past 10-15%!!!!!!!!!!!!!
[ November 22, 2003, 05:19 PM: Message edited by: old paint ]
Posted by Jon Aston (Member # 1725) on :
We're talking NET PROFIT (after expenses), OP...not gross profit.
We're also talking averages...which means some are higher (congratulations!) and -- sadly -- some are lower.
Have a look at the latest Signs of the Times annual "State of the Commercial Sign Industry" report if you need to verify my comments.
It doesn't really matter whether or not you "fit" the typical average anyway.
My question is: how could you be (even) more profitable?
How could you have sold those jobs for more? For example...Vehicle graphics done in reflective will give your customer up to 40% more advertising impressions. Maybe they would have paid 40% more if you had given them that option. One thing is for sure: if you don't offer the option, they're never going to buy it.
What other graphics could you offer the same customer to help them accomplish their marketing communications objectives?
Couldn't you charge a higher rate than $30 per hour? You're (I assume) a skilled craftsman with many years of experience.
My point is that if you want better results (sales and profit), you might need to consider trying something a little different.
[ November 22, 2003, 06:10 PM: Message edited by: Jon Aston ]
Posted by Ron Carper (Member # 999) on :
I'll net 115,000 on 200,000 in sales for the past year, one man shop, 50 hrs. week, 3 weeks vacation a year. Work smart and make every minute count, it's not that hard. That's 2500 hrs. a year, at $80 hr. gross (including materials).
Posted by roger bailey (Member # 556) on :
O.P, Jon means 10 to 15 % net profit AFTER the expences such as your paycheck, the govt.s check, the material bills, etc.
Another thing, you told the customer you could have done his van in paint in 2 days?
I really hope you would be able to do that van in vinyl in one afternoon!! See, thats how to make money with vinyl "fast".
Roger Posted by Rick Beisiegel (Member # 3723) on :
My first inclination was to agree with Bob Burns..enough posting already, who reads this stuff!? Then after reading the posts that followed, I went back and read it. Great advise for any size shop.
I think we tend to want a drive-thru remedy for low profits, then whine about how others are stealing our work or our copywrites. But the bottom line is it comes from within us and our abilities.
Thanks Jon!
Regards,
Posted by Jay Nichols (Member # 2842) on :
Allow me to clarify a bit... if you are producing 100k a year solo at 30 hrs/wk then I think that might be living large, but it's always relative- good in Wrightsville Beach, but poverty level in Newport Harbor. Jon's point about working smarter was exactly what I was talkin about... 10-11% profit is the extreme low end of the totem pole as far as I am concerned, but, along with his other numbers, are generally in line with what I hear is the 'norm' for shops these days, but I'm fairly sure I'm not normal. I'm a 'hands on' kind of person and I've always preferred controlling as much of the production process as possible because I know how I want a job to work and what I can handle myself and what I can do to get there, and wearing all the hats I care to and brokering those I wont/cant/etc in terms of serving the customer. I enjoy being a one stop shopping center- once I get a customer, I hope I can get him to call me for everything graphic forever. Before I learned about things such as 'capital investments' and other high finance dance steps, the best year I ever had was the first year I ever hired a CPA and he called me 3 days after I piled my year's worth of receipts on him (organized by month, of course) to tell me I had operated at a 62% profit margin for the year...
work smart, know which jobs make you real $$$ and learn to zing em. always remember that it is the designer's job to make it work and figure out how to do that with at maximum benefit to you- because it is business, and artistic and creative types (many on this board) can have probs in this area. big bucks come from big jobs or big volume, it's that's simple. love what you do, and make love to that job you are doing this week if it feels good for you- carve it, sand it, paint it with loving care... because that's the real fun-- the payoff of creating something from your imagination and having it come to life under your fingertips whether you are holding a quill or a plasma cutter. if you are covering your expenses and have enough to live a life you enjoy then what else? one very cool thing about this biz is the inherent self-promotional aspect of it-use that to your advantage at every turn. I personally have always enjoyed the fact that no amount of bullsh*t will make an ugly job look good. If you are a potential customer, give me a chance to prove it and you're mine!
Posted by Mike Pipes (Member # 1573) on :
I don't need to gross 100K.
If a "typical signshop profits 10-11% of sales" that is a sad, sad situation to be in. That means $833/month goes into the bank. That is simply pathetic and in no way acceptible, even if that is after everyone else gets their cut of it. 160 hours of work (if you only do full time) and you get $833 to show for it, OP is right, may as well get a job flippin burgers!
I personally feel a profit margin of 30% is a better target for a one-man shop. At least if you can gross $75K you'd still get to keep $2000 of it after expenses and taxes each month, which is a hell of a lot better than busting your ass to hit the 100k mark and only gettin to keep $800.
Working smarter not harder is the key.
Jill, I've been in your position, basically using up all the cashflow to get jobs out, and not having anything left.. it sucks. Think about concentrating on just design work, or outsource production so you arent forced to use the money on materials. By not doing production you're giving yourself more time to concentrate on making sales... or find a sales person and offer commissions only. A good salesperson will bring in plenty of work for you, a lousy salesperson doesn't get a commission if he doesnt get results.
On the topic of marketing, it's all about relationships.
Direct mail may work, but getting out of the shop and meeting people, building relationships and familiarity will work better. I guarantee you people will choose someone who've they've personally met, talked with, shook hands with and had eye contact with over someone that dropped a card in the mail. Get out of the shop, go into town.. browse a local store or something wearing a shirt with your logo.. pick a store where you know the owner might be working on the floor. Be seen. I have to admit it's easier for me because my targets can be found on the beach and in internet forums, but I'm always visible, always present, always approachable.. ie: I'm friggin everywhere!
Once you have a sale, it's not final until money has changed hands, and sometimes it's not final after that either - don't be afraid to attempt upselling your customers. You can add quite a bit of profit to your jobs by suggesting simple things that cost you hardly anything, like effects on lettering, but improve the job immensely. I recently nearly doubled the price of a graphics kit by suggesting airbrushing on the vinyl. It didnt cost any more in vinyl, the screen ink cost is virtually negligible it's so low, and there may have been an extra 30 minutes in production for doing the airbrushing and cleaning up. Just think, I was ready to run the guy's credit card and be happy with $180.. but I called the guy first to confirm, suggested "some really cool airbrushing" (my exact words to him) in a casual tone.. he agreed and it was not a hard sell. We're both happy. Posted by David Wright (Member # 111) on :
Do you people understand profit and the other points of Jon's? After you pay yourself a wage, pay for your equipment et al, then you want the extra called "profit" just for being in business. Use that for future expansion, retirement, or new toys. Profit is not what you have left over after you bought yourself a can of One Shot and a cup of coffee.
Jon, I printed out your post. Excellent thoughts and ideas. Hope your new venture works out well.
You know, it's been my experience that when someone like Jon talks, it is better to ponder and think about what he has said and how I might better myself. Of course, some just run their mouths off, on and on forever, never learning crap.
Posted by Dan Sawatzky (Member # 88) on :
We're not a one man shop. I often work alone but also employ up to 4-5 other people when we have a big job.
But by the same token, I don't put in a 40 hour week either, week in and week out. We don't maintain regular business hours. When I'm on the road or I have a big job there's no such thing as a time clock.. we put the peddal to the metal and go! The important thing is to get home again where I like to be the most. Our new shop will allow us to do much more prefabrication at home with kless time on the road doing installs.
This type of off again/on again schedule makes my 'work' time shorter and allows me much more time to do my own stuff. It's our type of freedom.
Because we specialize in a very narrow market with little or no competition we can charge just about what we want within reason. Charging these significant fees allows us the freedom to put our all into each piece we do without the need to cut corners in any fashion. It also allows me to take on the work that appeals to me the most and simply turn the rest down. Being in demand also allows me to insist on the creative freedom I need to do my best work too!
We exceed customers expectations on each job we do. And this builds our reputation which brings us better and better jobs in the future.
By doing so we deliver excellent value to our customers and still maintain wonderful margins of profit which we need to keep in business and maintain the lifestyle we enjoy.
Depending on the type, number and size of jobs we take on in any given year we can easily earn $250,000 and up without too much effort.
I would consider this past year a great year for business ! Next year promises to be better already!
-dan
Posted by Doug Allan (Member # 2247) on :
I mentioned my shops sales averaging around 100K plus some cash jobs.
What I also think is worth mentioning is a lesson I got from the a copy of the book "Rich Dad, Poor Dad" loaned to me by my daughter.
When I read how it is his opinion that "one can usually count on making more money on real estate over time, then they could ever earn on the job no matter how hard they worked" I started paying attention.
My (now) wife & I couldn't find a decent cottage to rent under $1000 when we wanted to move out of this very rustic shack we were living in off the grid. We couldn't afford $1000 anyway, so I built a loft over my office in an industrial warehouse. Slaved away building up the business, hardly saving, but investing a lot more in the growth of the business. (due to rent savings)
Anyway, after reading that book, I checked out my credit which had been terrible the last time I checked.I was literally shocked to discover that thanks to this business, (paying all old debts, & handling new ones properly) I had virtually erased 15 years of complete dissregard of financial responsibility.
$15K downpayment got us into a 1/4 acre lot with a house & cottage. I rent out the house, & pay the remaining $600 on my mortgage to live in what really is like a dream house to us. Based on an appraisel this year, & all indicatons from comparable sales, we have accumulated over $100,000 in equity already, probably closer to $150K
So, I think there might be some others out there that might benefit from taking that step.
Posted by Jon Aston (Member # 1725) on :
Great posts Dan and Doug!
Dan's business is a shining example of the benefits of narrowing your niche.
Doug's post is a great reminder that your business is really just a means to an end (Talk about "smart" goals!)...and that managing it well just gets you there sooner.
Posted by roger bailey (Member # 556) on :
Jay, I think the 62% profit was "gross profit" not "net profit", but then ,maybe I'm wrong and we all need lessons from you.
Roger Posted by old paint (Member # 549) on :
you all need a lesson other then listen to jon, who doesnot work in the trade other then as administrativly! mikeys right...if your makin 10-15% net profit your the ones who need to work smarter!!!! if i dont make 30% or more I DONT WANT THE JOB!!!! now yes i use INTERMEDIATE VINYL and i dont throw much away. yes i could have charged more then $30 an hour for the job i did...actually i did...but it doesnt show on the bill!!!! i billed for 12 hours....like roger said.."i hope you can do vinyl faster" to make more money.and roger you dont know what i had to to..to apply the vinyl to this truck, and if anyone person coulda done what i did on that van in less time then i coulda painted ..they must be the worlds greats paper hangers. i buy vinyl from the one who sells it to me at the best prices, i make sure i add all the vinly i use into the jobs....and make sure i tack on at least a 40-50% profit above and beyond what i will have in the job!!! you guys continue to make 100k and only get 10-15% ill make less gross but ill have 30-50% of it in my pocket.....like i said in the 1st post....when i painted only i made 60-80% net profit!!!
[ November 23, 2003, 02:22 AM: Message edited by: old paint ]
Posted by Sonny Franks (Member # 588) on :
Thanks, Jon. An excellent post and I have no doubt you'll do well in your new endeavor.
Posted by Steve Shortreed (Member # 436) on :
My understanding of profit, at least in the corporate World, is the money left over after all expenses are paid. These expenses include all salarys and bonus' paid to the company's ownership.
I don't think Joe is considering or avoiding some important costs. Is your business supplying you with medical insurance? Is there a building fund? Would you be prepared if a government auditor walked in tomorrow?
This is serious stuff. I know from experience that lack of proper pricing and business savvy can result in working insane hours. The associated stress and financial hardships will eventually affect our health and family relationships.
I'm always talking about only listening to advice from people that have or are doing whatever your dream is. When it comes to running a profitable sign business, I'm not the guy to listen to. We are fortunite to have a few in Letterville that meet the criteria above and are willing to share what they have learned. Don't stick your head in the sand!
Posted by Ray Rheaume (Member # 3794) on :
I think the one factor on this topic that needs mentioning is "business image".
I have no doubt that many here have skills and experience in this trade, and, like Steve, I long felt I just didn't have a head for business.
Over the last few years, how I appear to my customers as a business person has been VERY high on my list of priorities. I've never been too worried about the quality of the work since most of my customers over the years had been very forthcoming with compliments and even the ocassional tip. I have a couple of basic principles I use that have made a marked difference this year. Several posts that were presented here on the Letterville BB are the foundation of it.
"You're known by the company you keep"...
After years of slinging paint on race cars and developing a solid base on it, I found myself "stereotyped" to a certain degree. Although potential customers liked the work I was producing, many did not call because they thought that race realated vehicles was the only kind of work I did or wanted to do.
The eye opener as to how bad it was affecting my future goals was hearing that several people simply would not call between March and June under the assumption that it was my peak season and I was not available. Those people had bigger wallets and weren't afraid to use them. It wasn't money on the table. It was money that never got to the table because the image I had developed. My niche was my ball and chain.
I raised my labor rate 25% and almost immediately weeded out the "bottom feeders", but found that those customers I had not seen before were now the ones taking the open days on the schedule...at better hourly rates and with higher end work to produce. Althogh my overhead has increased, my hourly wage has increased with it proportionately.
The other principle is..."If you build it, they will come." As has been mentioned in other posts, "Location" is important, as is travel expense.
In prior years, I would average between 50 to 60 thousand miles a year traveling out to jobsites, picking up materials and supplies, and other business related trips (never leaving the New England area). Last summer I re-fit my shop and stuck to my guns that I would concentrarte on "in house" work and lower my travelling expenses on business. A real test of how effective it would be was the spring rush of race cars. In 10 years, only 28 of the over 300 cars I've done were lettered in my shop. Less than 10% overall. In the last 2 years, 32 of the 41 cars I've done were produced here at my shop. A 60% cut in traveling time and expense. A better example of how that has effected my overhead is that nearly all my work these days is produced here at home and my current business vehicle (2 1/2 years old) still has under 50K on the odometer. (My last car is till sitting in the yard with 141K on the odometer and a blown engine!)
I do have a different look at location than a few here might. I've always felt that I could do better financially in a more metropolitan or suburban area, but those markets also have higer cost of living expenses and their own set of competitive markets. Quality work will attract customers to your location, and often they will cover the distance to hire you based on that quality. You can get the big market work without sacrificing the lower overhead and cost of living you have in more rural locations.
Your work is not "out there", but in you. As long as you can make a profit, be happy in your lifestyle and truly enjoy what you do in your "business" life...well...it could be worse.
Rapid
PS: Steve, ocasionally "heads" do pop up talking about how they run the business aspects of their sign shops. I have many of them to thank since coming here... Posted by Jon Aston (Member # 1725) on :
Great post Ray!
I didn't pick up on it in your first post in this discussion -- but you certainly are "working smarter, not harder"...doing business on your own terms. Your customers must have accepted the changes you "imposed" because they recognize the value of your work. From the sounds of it, you must be quite a bit more profitable now, too.
OP: ...ah, never mind.
Posted by roger bailey (Member # 556) on :
O.P., one more try; The shops doing 10 to 15% , that means AFTER they paid themselves (like you) and there was still a profit of 10 to 15% (called net profit).
You get your share out of the gross profit, which is anywhere from 40% to 65% of the price you charged for the job!
comprendo?
Roger Posted by David Wright (Member # 111) on :
Jon and Roger, will quit posting your little lessons and listen to OP. There's a wealth of knowledge he is trying to teach us on what not to do.
Posted by Jay Nichols (Member # 2842) on :
Some very insightful stuff there, Jon, thanks. That's the kind of post that I love about this board. Best of luck in your new venture! Mike's point about relationships and Rapid's view of image are very important in my world-- if you present your image as first class, then you can command first class prices; and, if you learn to build relationships and 'read' your customers as you are speaking with them, over time you learn to hit that sweet spot on price on most of your quotes. Nothin makes me feel worse than knowing I left money on the table. I feel that way a lot less now than I did twenty years ago. (basic principles of salesmanship combined with repetition, er, years of experience)
Roger, I was in another world back in the days of those magical numbers, as I mentioned, it was the world of advertising and I happened to get lucky at a crucial point. That is a very political arena, with neverending deadlines from hell. drove me to distraction after a few years. I realized the same energy required to produce creative and art direct an ad or print piece is also necessary for good sign design. it's the lettering, I was always in it for the typography and when Gerber introduced the signmaker it rocked my world. I knew it like an epiphany the minute I first heard about it, I dropped my quills and I never looked back. enough about me.
I think anyone that adheres to generally intelligent business practices and has a year or three of hands on should expect 30-40% from a retail operation assuming a halfway decent location. Someone with at least 7-10yrs of doing anything would hopefully have learned how to cut the right corners to enhance that number a bit.
Posted by Mike Pipes (Member # 1573) on :
Tell ya what guys, if you want to boast about 10% real profit that's fine, and I'll be happy with my 30% profit margin doing less work.
To me, personally, $833/month or $10k/year isn't enough profit to grow a business, at least not at the rate I want to grow.. One plotter, a computer and new seats of software will completely drain your year's profit if you're only getting 10% of 100k. I know that's why people lease equipment, but I personally like knowing I actually own all my business assets... just my personal thang cause I like knowing if things go sour, I can sell off all my junk and pay the bills.
My business pays its own bills, it pays my personal bills (which I figure into business overhead), it pays for retirement funds (oh yes, I'm only 27 and you better believe I'm stashing it away), it pays for everything, then I add a personal salary on top of that, take care of the taxes and after all that I still have 30% going into the bank. I can produce these numbers because the ratio of my overhead to my sales is rock bottom - remember I have no leases to worry about, I own everything I use in my business. I work from home so all the recurring monthly bills are low. I don't fall into the trap that other people have of having low overhead so they pass the savings on to customers. I also live a pretty simplified life now, having already played the material object obsession game in the past so my personal income is modest, not excessive, yet enough to put some away for the future (like buying or building a house).
I am money-driven. I love creating, dont get me wrong, but first and foremost I have a living to make and dreams to achieve, and for me the shortest path there is making as much money with the least amount of work as possible (working smarter, not harder).
I like knowing if I have a slow month, or a big unforseen expense, or some other unexpected hiccup there's going to be some cashflow or other obtainable assets to smooth it out.
I don't want to be in the position of taking money from my personal account, taking food from my own mouth, or cutting my own salary, so the business can pay its bills. I prefer to operate at a higher profit margin to be sure and prevent that from ever happening again.. and it doesnt mean screwing customers or only doing the highest paying jobs, it simply means you make the most of each job, reduce your costs as much as possible, and maintain a reasonable workload that doesn't stress you out to the point you miss deadlines or alienate customers.
**Edit**: Oh yeah, I do a lot of R&D in my biz in developing new stuff and basically playin around with different materials, so higher profits help with the cashflow to pay for that stuff until the tax deductions kick in at the end of the year.
[ November 23, 2003, 02:55 PM: Message edited by: Mike Pipes ]
Posted by roger bailey (Member # 556) on :
Heres what Jon and I were trying to make clear, forgive me for being redundant David;
NET PROFIT- $15,000.00 (usually a fund to grow buss.)
If this is way off, show us the figures your doin?
Roger Posted by old paint (Member # 549) on :
i guess you all is smarter then me....but i like being the dummy that i is.....your not talkin net profit you talkin reinvestment capitol back into your business...10-15% is ok for this...MY NET PROFIT is what i got left after i pay material, expenses of runnin the business. gross profit is want i make before expenses. i do simple money in money out bookkeeping not carlton sheets method.
Posted by Rick Beisiegel (Member # 3723) on :
lol to OP...I see both sides! Simplicity has a beauty all it's own. High profile is cool too, but the net profits tend to be lower. Why? Because you advertise more and are more prone to being hit up for donations, because of their high visability.
Posted by Jillbeans (Member # 1912) on :
Well, according to Roger's post, a net profit of $12,000 for me wasn't too bad then! And I agree with OP...paint is always cheaper and much more FUN! (and with the time one takes plotting, weeding, masking, equal in time to vinyl, creates more trash, and is not good for my soul like painting is) love- JILL
Posted by jimmy chatham (Member # 525) on :
i make 5% profit. if it cost $100 i sell it for $500 5% works for me.
Posted by Mark Rogan (Member # 3678) on :
I just opened officially in June of this year. Right now, I'm so poor I can't even pay attention!
Mark
Posted by Gavin Chachere (Member # 1443) on :
net profit= sales-taxes-YOUR SALARY-expenses&materials Net profit is NOT what you can steal and jam in your pocket when the job is done and unfortunately i think most people here want to see it that way. They mean after you get paid for the job,then you pay the tax man,your supplier,your helper,your bills&rent,incidental expenses and some salary to yourself you should have some % left in the bank so that the buisness can survive another day and you can pay all those things next month when its slow instead of chewing fingernails and rushing thru the next job and not seeing a dime for it b/c it had to go solely to one of your bills. If you sell a $500 job,the materials cost you $50 you do not now have $450 to stuff in your pocket.....50 to material,your share is 120 since you spent 2hrs working on it at 60/hr,5 goes toward your phone bill,15 to gas and elec,10 for taxes,30 toward rent,30 to your employee and 10 for incidental operating expenses. That leaves you with $230..and no i have no idea what % of 500 230 is i just made it up....THE $230 IS YOUR NET PROFIT,IT'S WHAT YOU HAVE LEFT AFTER ALL YOUR BILLS ARE PAID. its what enables you to operate after every job and not be paralyzed in limbo waiting for the next $.80 to come in and allows you a cushion to be able to pay your bills and yourself next month when things are slow instead of shooting for a wing and a prayer,it also enables you to have money to buy/replace equipment,a new vehicle etc. If you pay close attention to that formula you'd be surprised how you can still be getting a salary/compensation all the time even though the buisness is technically not making a dime. As far as %'s....all depends on your sales numbers....10% of your sales may not be equal to 2% of someone elses.
Posted by Mike Pipes (Member # 1573) on :
quote:Originally posted by roger bailey: Heres what Jon and I were trying to make clear, forgive me for being redundant David;
NET PROFIT- $15,000.00 (usually a fund to grow buss.)
If this is way off, show us the figures your doin?
Roger
Roger, that's exactly how I'm reading the numbers, and I'm stickin to my guns from my previous post. Then again I am not your average sign shop, I'm in a completely different market.
If you're producing work using methods you have down to a science, sure, those numbers are alright. If you're like me and are always getting into new things that require new materials, new tooling, new setup and new training it's nice having bigger numbers because there is a LOT of waste in R&D. It's just like every post here where someone wants to get into CNC Routing.. ya gotta have the money for the equipment but you gotta have an equal amount to spend on materials and training that are just part of the learning curve.
Posted by Madman (Member # 4308) on :
Hi all... been lurkin' for a long time here and this thread really caught my attention. I really appreciate everything that you all are saying. I know that for me... a lot of times I have to break my daily business down to my basic goals... What Jon posted is extremely valid... even though I hate acronyms and think that they're created by yuppies with MBA's to impress other yuppies with MBA's.
As for the original post of the 100k shop and breaking down goals as proposed in Jons post.... Here's how I see it...
Leave behind the net/gross debate for a minute... There are 2080 hours in a "normal" 40hr/week work year. In order to gross 100k in a year AND have a "normal" schedule/life... you have to bill out at an average of $50/hr. Now figure in administrative time to do your books, place orders, design, sales calls, travel, etc. When I first started, I was running my ass off looking at jobs, quoting, over-designing and couldn't figure out why I was barely breaking even for so much work. Then I realized that my actual production time in a 40 hour week was really only about 12 - 15 hours... I changed my ways. At only 15 hours a week actually producing... I would have to charge about $130/hr to make the 100k mark! Now what I'm trying to do is look at each individual job, cut out a lot of the grab-assing and produce 25 billable hours a week and average $65/hr doing it (that'll put me somewhere in the mid $80k/yr range). I'll simplify a design, upsell a customer, let the answering machine screen my calls... whatever it takes to bust ass and become more efficient without sacraficing quality. One of the things I like to tell customers... "You can have it good, fast or cheap... pick two 'cuz you can't have all three"
I've been doing signwork full-time for a year and a half now... (been in design field for 18 years)...business has grown most every month and I'm on track for just under a $60k gross year in my first full year. Break down your hours and look at your money... I'll never understand how anyone can cry that they work 80 hours a week and can't make any money. You're either not working smart enough or you're living above your means.
Just my opinion... thanks for the great board
Posted by Jon Aston (Member # 1725) on :
Great first post John!
Sounds like we're on the same wavelength.
I'm not an MBA or a "yuppie"...but I do like acronyms if they serve a useful purpose! SWOT is a useful abbreviation and SMART is "sticky" (hard to forget).
Posted by JohnHurst (Member # 4308) on :
Thanks Jon!
I didn't mean to come across like I was calling you a yuppie or being derogatory in any way. I don't think you took it that way either. After learning to gild and paint when I was 16 I ended up at an art school... then ad agencies and corporate design departments then finally my own agency. At the ripe age of 29 I was billing myself out at $125/hr and was being flown all over to give seminars on unser interaction and small business web integration. I had 3 employees and my agency was knocking down a modest 4k to 5k per week... all out of the comfort of my basement! A divorce later and it was all gone... Now I get to do something for myself that I think is fun!
Enough of that... I got to thinking some more about this and how my experiences guide my actions. The first and biggest mistake I see a lot of one man shops make is that they don't consider themselves their greatest asset. If you had employees, you would carefully plan out their days until you had formed succesful daily habits with them that would capitalize their time into profit... it's hard to think of yourself as your only employee... but you have to coach yourself and develop the succesful habits that will form your business. I appreciate the post about "pigeon holing" yourself into being seen as a race-car lettering guru... once you broke that habit/image... your profits increased. We have to treat ourselves like our own employees, capitalize on our time and at the same time be the best boss we've ever worked for.
OK... call me sybill Posted by Doug Allan (Member # 2247) on :
quote: If you had employees, you would carefully plan out their days until you had formed succesful daily habits with them that would capitalize their time into profit... it's hard to think of yourself as your only employee... but you have to coach yourself and develop the succesful habits that will form your business.
WOW! That speaks to me like it is the best advice I've heard yet about improving my profitability! I waste a lot of time & rationalize that I work so much, I need to waste some time like a "break" In reality, I would much rather lump all those "breaks" together & spend them at the beach or at home with my wife... but I've got into this habit of being the hard-working shop ownwer that rewards himself with the luxery of wasting time at the office when I can sneak some free time in between committments. On the other hand, when I have a little help from someone... I bend over backwards to maximize their time even though I can get 3 or 4 times as much done with my time.
Thank You for an excellent observation, worded just right to get through my justification & rationalization filters.
Posted by KARYN BUSH (Member # 1948) on :
this is a great post...and doug, that was a great quote..too bad i suck at delegating. i think alot of us make the same mistake and rationalize the same things. spending too much time stressing over jobs, bending over backwards to meet someone elses "no notice" deadline. my phone has only rung about 12 times today and 5 were fellow letterheads...i love those days! it's the 30+ phone call days...mostly customers asking way too much from me when i'm in the middle of painting, routing, cutting/weeding vinyl or designing. that's when i stress and don't like it....and yes i'm much better at screening my calls..gotta love caller id. i still don't think i could do 100k by myself, unless i fell into some easy routing or edge jobs that were repeat. until then i'll keep plugging away... Posted by Checkers (Member # 63) on :
From what I see here, most of us really don't have a business, we just created a full time job for ourselves. That may be fine for some of us, but, if you want to take a vacation or retire and not worry about money, it's time to start listening to the great advise offered here. Here's some rhetorical questions... Are you collecting a regular paycheck? Do you work holidays or weekends to make ends meet? Do you get paid vacations? Does the company pay for your health and/or life insurance? Do you have an IRA? If you're not at work, does the business still function without you? After all the bills are paid at the end of the month, is there any money left over in the checking account (profit)? If you want to retire, will there be any value in the business in order to sell it? I ask these questions because I feel that this is what running a business is all about. I'll admit, I work for someone else and the steady paycheck is very comforting. However, like others have mentioned, it's not guaranteed. That's why we are asking these same questions and more here. We are making changes to make sure the business succeeds with or without us. If you're going to invest your time & effort into your business, you might as well do it right.
Havin' fun,
Checkers
Posted by Gene Uselman (Member # 2508) on :
This is a great post! I don't think anyone has mentioned Chip Carter's book- Make Your Sign Business Successful. I know this has been hashed over before- but if you cannot get 25 good ideas from this $25 book- you are not able to read! Just one great idea that I got from the book is- Take a few minutes to organize one thing every day- at the end of a month, it is incredible how much you will have accomplished. Gene
Posted by Mike Pipes (Member # 1573) on :
Brian, ya forgot two important questions:
If your business dies for a month, maybe two, is there enough money to carry all the expenses through the slump, without cutting your own salary?
After you reinvest your profits (or venture capital) back into the business by learning new skills or buying new equipment, is there still some money left over?
I'm no MBA either but it doesn't take one to identify a losing proposition. Put all your numbers onto paper so you can see it in writing. You own the business so don't let the business own you, and the mentality that you're OK giving up income because you don't have to work for anyone else, is not OK. You start your own business to make money for yourself, so get to it.
Minimize costs, maximize profits.
Posted by Ray Rheaume (Member # 3794) on :
Mike,
I think you eluded to the real point of many of these great posts...
NET INCOME
That is the amount of money that you have left after all is said and done at the end of the week...your paycheck. It's probably not too hard to figure out how much NET INCOME you make, and it is why we are in business in the first place. Running the business has costs and reinvestments, but unless you have some money left past that, you're working for the business, not yourself.
Rapid
[ November 26, 2003, 12:05 PM: Message edited by: Ray Rheaume ]
Posted by Jeff Green (Member # 3508) on :
Right here and now, after fully reading and absorbing these posts, I really want to thank everyone adding to this post. I have been on my way to starting something myself, and after reading these posts, it has really help clarify a few things, and understand what makes a successfull business.
Thanks! Posted by Doug Allan (Member # 2247) on :
No I think he is referring to NET PROFIT on top of net income. That elusive concept that more simplified bookkeeping (like OP's and mine & many others)disregards.
I think there is a wealth of good business advice here, & that concept is near the top of the list, however I also think if someone doesn't have a set salary, & just takes whatever money is not needed to cover overhead that could be fine too.
Like Brian said, a lot of us just created a job for ourselves, & are not really stepping into the true role of business owner. I know my design & sign production skills will continue to grow, & I challenge myself to aquire better business skills as well, over time, but I'm also very happy with my current "job".
I had the background & training pointing me in a direction of "sign planning" & environmental graphic design along the lines of the type of work Rick Chavez posts about, but I found myself on a small island where there is little to no demand for that type of work & ended up building up a quicky sticky type of business for myself.
I guess I'm attempting to make the point that having had "jobs" doing this type of work on someone elses clock (& rules)& for meager pay, owning my own business (job) is over 1000 times more rewarding & at least 10 times more profitable, & when I started it I had only one tenth the knowledge of the sign craft I have today (thanks to mostly Letterville)& no knowledge of business.
Over the years I've seen posts critiquing newbies for taking jobs they didn't already know how to do, or for having shops that didn't produce signage on the grander end of the scale. Now posts that may be just encouragement to raise the level of business sense, but in some ways seem again like a critique of those already jumping in and doing something before possesing the advanced experiences of a seasoned veteran.
I mentioned the book "Rich Dad, Poor Dad" The same author wrote another book that teaches the same concept of a business owner being able to walk away from the business & still make money. Thats all fine & dandy, but like many of the posts on this thread, making money is not the only factor. We all have to do something with our time & hopefully with our talents. The satisfaction of having a skill & a passion for a craft that we also get paid for, (enough to pay the bills)is an acomplishment in itself.
I'm all for building wealth & saving for retirement, but by no means do all other "jobs" offer that, so if mine doesn't yet... well I will hope to see that facet of the self employed experience grow alongside my design & production skills.
Posted by Gavin Chachere (Member # 1443) on :
Doug I think alotta people feel it's criticism on posts like this for the same reason they get a mental block on the net profit/income issue....all those things assume you're paying yourself regularly along the way.....although you know as well as i do, to the overwhelming majority of people here if they sell a $500 job,thats what they made. Sure,they paid the supplier $50 for what they needed when they were picking it up because they had no choice but the other $450 gets pocketed until the next job comes in and then when rent,ins,etc comes along its a big surprise and it gets to be a tougher and tougher nut to crack as time goes on and its a very hard habit to break....face it you feel you did it,so you're entitled to it all,it's hard to seperate that feeling from billable hours. If you're working it as part time or a second income b/c you have a working spouse you can prob get away with it,but if it's your primary source of income its a huge mistake. Combine that with the fact that more often than not here we judge who we think is successful or not by how a job looks,how many magazines they've been in and how much we want to do the same kind of work...none of which is any kind of guarantee you're gonna be able to pay your bills by following step. Thats not condeming or criticizing anyone,its just stating facts,its not a secret that most people here and in professions like this would much rather focus on the creative side than the buisness side,which unfortunately becomes the most impt side after you've been in buisness more than 3wks and there comes a point where you have to make a choice to do so despite the willingness to believe and listen to people blow smoke here about what it is they say they do. I know its also sacrilege to mention but you'll get far more as a small buisness owner out of the series of Guerilla Marketing books than you ever will from the make 100k/year book,the ideas are extremely easy to implicate and work very well.
heres the off topic part: Doug..if you read any of the Rich Dad series check this link out http://www.johntreed.com/Kiyosaki.html i read 3-4 of em but after coming across this guy in a real estate investment newsletter and seeing a couple of articles on the guy in Forbes,the wall st journal and investors buisness daily this kinda puts a diff spin on him,esp since i found out he willingly lied about his service record.
*edited cuz this window opened twice*
[ November 26, 2003, 04:49 PM: Message edited by: Gavin Chachere ]
Posted by Mike Pipes (Member # 1573) on :
Ray,
Actually I haven't eluded to anything that wasn't already mentioned in this thread, just debating what's considered an acceptible profit margin.
If someone says "My shop has 100k in sales every year and my profits are 10%/$10,000." to me it means $90,000 of that goes flyin' out the window to overhead, their own salary, employee salaries, the tax man, etc etc.. which is $7500 per month. They get to keep $833/month.
Then November and December roll around and sales drop like a rock because nobody is buying signs with the holidays, and sales wont pick up til February when everyone else recovers from putting themselves into debt.. you still have $7500 in costs to cover each month. Hypothetically, let's say your sales for November, December and January are 50% of normal - that's $12,500 in sales during a time period when your costs are $22,500. Remember a one man shop has no employees to cut loose.
You are $10,000 short in covering your costs for those 3 months.. OOPS! Incidentally, that's a whole year's profit.
What to do? Do you give up a year's profit in order to keep the business open? Hmm, that would mean you'd have to have the previous year's profits still in the bank which means if you spent it on new equipment you're sunk. Well, if you're paying yourself a salary of $50,000, you could just give up your salary for a few months and solve the problem... 'cept that your family would like to eat, and not have to use candles for light and heat. Maybe you could drain your personal savings for the sake of keeping the business open? Hmm.. not a good idea and the wife would not like that.
Posted by Doug Allan (Member # 2247) on :
Gavin, I enjoyed checking out that link. I would probably be very interested in reading some of the Guerilla Marketing books. (Is John T. Reed the author of those books?)
I've often said, when referencing RDPD in conversation, that if I had seen his infomercials before reading his book, I would never have read his book at all. One quote I liked from your link was this one, where he is critiquing the folks that credit RDPD with, at the very least, making them think about their finances. (like me)
quote: I think these “made me think about finances” comments are inarticulate at best and dishonest at worst. What is really going on is a lot of people are schlepping along doing a half-ass job of managing the financial aspects of their lives. Rich Dad Poor Dad slaps them up side the head and tells them to clean up their acts. That’s good, but the book goes on to deliver a pack of lies that make getting rich seem much easier than it really is and make education sound much less valuable than it really is. Basically, people want to get rich quick without effort. Kiyosaki is just the latest in a long line of con men who pander to that naive longing.
I happened to need a slap upside the head, & since the book was given to me by my daughter, I felt somewhat obligated to at least give at a look. I got a beneficial "slap" & any praise I give the book is due to getting a slap I needed. I could have gotten it many places, including here, but that happened to be where I got one noteworthy slap that I feel has encouraged me to clean up my act. I would still completely agree that "Kiyosaki is just the latest in a long line of con men who pander to that naive longing" (of the get-rich-quick crowd)
If I want to check out one of those Guerilla Marketing books, which one do you suggest for starters?
Posted by Dave Cox - That Sign Guy (Member # 3517) on :
quote:Originally posted by jimmy chatham: i make 5% profit. if it cost $100 i sell it for $500 5% works for me.
except thats actually 500% profit...
5% would mean it costs you $100 and you sell it for $105.
Posted by Doug Allan (Member # 2247) on :
actually Dave... that would be 400% profit, but I kinda think Jimmy just left off a couple of 's to keep us guessing!
Posted by Gavin Chachere (Member # 1443) on :
Reed didn't write any of those books,from what i understand he was a baseball coach and real estate agent that lost a good deal of his shirt trying out the no money down type guys methods that became all the rage,and when he questioned a few as to how much property they acquired with the methods they were selling he couldnt find one that actually was successful doing it then he kinda went on a mission to disprove all their BS. The guy who wrote all the Guerilla Marketing books is Jay Levinson,I would start with the first one i guess, i read guerilla marketing and mastering guerilla marketing b4 i read any of the others,you could even hit a book store and flip thru to see which one intersted you beyond the first one.
Kiyosaki...like i said i read 3 or 4 mostly b/c they were quick reads and got disappointed when i realized he double talks alot and just really lends his name to the series after the first book. I think he does deserve credit for getting alotta people to think about the issue who otherwise wouldnt but he cant ever seem to agree with himself.
Posted by Ian Stewart-Koster (Member # 3500) on :
Guerilla Marketing (mostly) and Ogilvie on Advertising did more for me than any other books on the subject. I still can't remember who I lent them to. Will have to go & but Levinson's one again! I still believe you then have to add your own interpretation or twist to everything after that- that's important. Kiyosaki's first two books mentioned above I enjoyed as story books, but my comments would only replicate others comments. I didn't mind his 'Do you have to go to school to be rich & happy' that I was given years before RDPD came on the scene.
quote: One of the keys to success in business is holding your costs down and getting good value for every dollar spent
best wishes
& I'm a looOOoongish way off 100k!
[ November 26, 2003, 10:26 PM: Message edited by: Ian Stewart-Koster ]
Posted by Curtis hammond (Member # 2170) on :
Hm lots of interesting stufff here. Ive read Gurilla marketing and gurilla marketing attck. really good stuffs in there, Also rad jay abraham and robert middleton and richard spring. All great marketing studies.
Net Worth, Net income and net profit
Net Income means how much you got in yer wallet at the end of the week.
NetWorth is taking a few of them dollars outa yer wallet and puttin them into yer dresser and keepin it there.
Net profit could be the same as what you put into da dresser, But it really means how much did you make after materials for that job.
All different terminology.
an ol' Cajun term.... If you aint puttin a few of dem wallet dollars into da dresser . then you aint doin nutin.. If u can tput a few 'o dem wallet dollars into da dresser then you might as well go fish.
Posted by Kent Smith (Member # 251) on :
I work 5 1/2 days a week, 10-12 hours by choice so that I can set a pace that is not a killer. In memory of Jack Rumph who died in June, making a profit is a matter of knowing how to operate the business side of your business. We top out at close to 2, one side or the other each year and will do so this year as well. That with no production employees but two support staff. I have been working smart always and can enjoy the business without the typical money woes. My Mom had been a comptroller and infused our business with fiscal awareness, a tradition that Judi continues. If you have taken Judi's seminar, you know our system which is time tested.
Posted by Rick Beisiegel (Member # 3723) on :
I read an interesting book: The E Myth Revisited by Michael Gerber. It mentioned that if you do not control your business, you don't own a business, you own a job. I highly reccomend that book for any shop owner who used to work for someone else, and decided to go on their own.
[ November 28, 2003, 05:10 PM: Message edited by: Rick Beisiegel ]
Posted by David Wright (Member # 111) on :
How's that for a coinkydink Rick? Just bought the E-Myth Revisited today.
A relevant passage right from the start refers to successful business people always questioning whether they know enough and strive to know more. The unsuccessful are always defending what they know and don't want to look farther.
Just in this thread alone there are few people here that reflect both ways of thinking.
Posted by John Martin Robson (Member # 1686) on :
A young businessman here mentioned the E Myth book to me........I'll check it out.
I'd be the first to admitt that I own a job more than a business.
I got into this business by default. The fellow I started working for packed his bags after me being there only 5 months (neither of us new anything about this business). I saw an opportunity, I didn't have much choice, starting a business was like creating a job....that was just over five year ago.
With what I know now..........I could be moving my job closer to a business.
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