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  • #16
    Rob,

    Reflecting on this post now, was this more of a question on how much you should be paying yourself or how much profit you should be making per job?
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    • #17
      Quote[/b] ]Reflecting on this post now, was this more of a question on how much you should be paying yourself or how much profit you should be making per job?
      Well I don't really know how much I should be paying myself. I take a withdraw or paycheck every month enough to cover the bills and other misc. expenses and leave the rest in my bus. acct. for things like if the truck breaks or whatever. Also for other business expenses. My acctountant told me since I am a sole proprietorship business I don't have to do that but I like to keep the money seperate.

      I think everyone here is going to have different income levels because we are all at different stages in our business. When I think of how much I am making I have it stuck in my head as a hourly figure because before May of this year thats what I was working for. So I am always comparing my income to that. Just in my first year its been more than I was making even as it has slowed down. We'll see as Jan. and Feb. go by.

      Isn't a bonus of running your own business after it matures the income you can draw off of it. If it is successful.

      I'm not sure if I answered the question or not.
      Rob
      Green Image Lawn & Landscape

      \"If you don't feel the same way about Friday nights as you do Sunday nights, then you are not doing the right thing.\"

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      • #18
        Quote[/b] (FourSeasons @ Dec. 18 2007,9:25)]
        My acctountant told me since I am a sole proprietorship business I don't have to do that but I like to keep the money seperate.

        I think everyone here is going to have different income levels because we are all at different stages in our business. When I think of how much I am making I have it stuck in my head as a hourly figure because before May of this year thats what I was working for. So I am always comparing my income to that. Just in my first year its been more than I was making even as it has slowed down. We'll see as Jan. and Feb. go by.

        Isn't a bonus of running your own business after it matures the income you can draw off of it. If it is successful.

        I'm not sure if I answered the question or not.[/QUOTE]
        Rob one thing I see in this statment is what your accountant told you, now please beleive, this is coming from 20+ year of being a business owner with degrees in MIS (Management Information Systems), ACCOUNTING, SMALL BUSINESS MANAGEMENT I am not saying I know more or I am better than anyone else Im just backing up my statement with experience and education. BUT, "I would find a new accountant". It dosn't matter if your a sole-proprietorship, INC or a LLC you should always keep business sepereated from personal. He/She is right you don't have to keep it seperate, but it is best you do. I know this from fact, in 1993 I was audited by the IRS for a 103k discrepancy a customer did not issue the 1099 and I clamed the income on my taxes and in the books with out the 1099 and the customer reported the 1099 so RED FLAGS where popping up everywhere and in 1997 I was audited again for red flags. In 1998 I changed to a LLC, totally seperated business from personal and I was never bothered again. These audits stated because a large jump in income (PROFIT)from one year to another and not seperating business from personal. I congradulate you on wanting to keep it seperate. This has been a good topic for me because it has hit home in how I learned a hard lesson from the school of hard knocks and the IRS. This audit thing is the whole reason for changing and keeping seperated, if it isn't, then there is room for question, if this should ever occur. So stop the questions before they are asked when it comes to business owners and the IRS.

        I know this is kinda off topic but I had to try and explain in more detail about accounting and the importance of it. All of this will show you how you can get your "PROFIT MARGIN" easier by using good accounting and why you should.

        Thanks for starting this post.
        Tim

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        • #19
          Tim,

          Do you have any suggestions as to how much a newer lawn care operator should be paying themselves?
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          • #20
            Quote[/b] (Team Gopher @ Dec. 19 2007,9:42)]Tim,

            Do you have any suggestions as to how much a newer lawn care operator should be paying themselves?
            Well the 1st thing I would have to ask is how many customers do they have are they full or part time at the business. 2nd how much have they figuered for expenses, truck pymt, fuel, etc. total the expencses + the revenue = amount company made less purchaes (your pay).
            3rd. figure your living expenses all of them on a monthly basis, add together all income (pay checks from other) subtract house hold expenses from house hold income will tell you how much you need to live on.

            If the mount needed to live on is less than the business amount earned your ahead of the game. so from there the first year I wouldnt put any strain on the business or your home life, this is VERY hard to do getting started. So only take what is needed to cover homelife bills if it is less. Set money aside when your able for the RAINY DAY, and beleive you me there will be those days. You arnt alone in the feast and famine days, EVERYONE goes through them tough it out and be sure to stick to the savings schedule you make for your business and DO NOT TOUCH IT for anyother reason than what it was created for.

            Example; We have 5 different business accounts, NOT counting PAYROLL, 1 for rainy days, 1 for equipment new & repairs, 1 for business expenses, 1 general fund, 1 petty cash.

            Note; you can move money from the general fund to any account that might be short for monthly expenses. there may be a time that you think you have to but it can always be worked out where you don't, SO DONT TOUCH IT if it is there for a reason. This is called BUILDING a Business

            Now to answer your question Steve, Don't take more than is required to cover household expenses the first year or 2 then you can revaluate your business earnings and adjust how much money you pay yourself.

            Sorry I got a little windy there.

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            • #21
              No, Tim... not windy... informative... I love reading your posts... I always learn something new!

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              • #22
                I guess another big part of this discussion is about keeping your expenses low.

                How big of a deal do you find this to be?

                How important is keeping your expenses low vs showing off to everyone that you seem to be going great guns?
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                • #23
                  Quote[/b] ]I guess another big part of this discussion is about keeping your expenses low.

                  How big of a deal do you find this to be?

                  How important is keeping your expenses low vs showing off to everyone that you seem to be going great guns?
                  I think when you are a newe business owner all expenses need to be kept low as possible. I don't pay on any of my epuipment. I don't have all brand new stuff but I don't need all brand new expensive stuff yet.

                  I used to get emabarrased in my little s-10 but I could care less now. It does the job and brings in good money. I'll buy a new truck in a couple months cash. Nothing fancy just what I need.
                  Rob
                  Green Image Lawn & Landscape

                  \"If you don't feel the same way about Friday nights as you do Sunday nights, then you are not doing the right thing.\"

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                  • #24
                    Quote[/b] (Team Gopher @ Dec. 20 2007,4:47)]I guess another big part of this discussion is about keeping your expenses low.

                    How big of a deal do you find this to be?

                    How important is keeping your expenses low vs showing off to everyone that you seem to be going great guns?
                    That is the hardest part of the whole thing steve, keeping your expenses low, your just starting and there is alot of upfront cost that you will never recover, so the first year or two you may not show much of a profit but you made it throught the tough times so this is a big deal to everyone just starting. If the average man/woman goes out and starts a company he/she is doing it on a shoe string budget. So keep cell bills down to minium and schedule your jobs in low milage routes even if you have to move a mowing day on someone.

                    and yes there is always going to be the Nickle Millionaire at any business and they never last, and if they do its a bigger suprise to them than to anyone else. EVERYONE goes throught the feast and famon thing I did I have and I know what it is like to have little to no money to even go to the grocery and buy food. but determination had paid off form me. I sold my security business to Honeywell and retired to this. I really wish I would have done this type of work 20 years ago.

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                    • #25
                      Very interesting insight!

                      It seems to me, it's the expenses that is the bigger trap than anything else.

                      It seems we all want to look good, not just entrepreneurs but everyone in society. We all want to project the image that we are on the top of our game.

                      Rob you brought up a very interesting point that I wanted to explore more.

                      Quote[/b] ]I used to get emabarrased in my little s-10 but I could care less now. It does the job and brings in good money. I'll buy a new truck in a couple months cash. Nothing fancy just what I need.
                      Can you explain this a little more because I bet a lot of people reading this can relate to you. Why were you embarrassed by your truck? Who did you feel embarrassed by? Customers? Other Lawn Care Operators or just everyone and anyone?
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                      • #26
                        Quote[/b] ]Can you explain this a little more because I bet a lot of people reading this can relate to you. Why were you embarrassed by your truck? Who did you feel embarrassed by? Customers? Other Lawn Care Operators or just everyone and anyone?
                        Well when I first started out I didn't really have any money. I bought it from my neighbor for $250 and put a new transmission in it myself for another $250 just to get started. I felt kind of embarassed by customers when I showed up to do work because I wasnt in any type of company looking truck. And also when I was driving around from job to job passing other lcos in a little s-10.
                        One time their was 4 guys (lcos) in a nice brand new chevy and we were at a stop light. I looked over and the 2 in the back (same age as me) were looking at my truck and laughing. But this is after months of being in business so I didn't really care. Because what it took them a month to make working for that other lco I made in a week easily. Of course thats during the busy time of the year.

                        Anyways I learned that people want to see quality work. They don't really care what your driving. But I think it might show that you have been in business longer or are more professional with at least a okay looking truck. I think it also gives off a better image to your customers. When you can upgrade then it doesn't look like they might not ever see you again. Maybe kinda shady.
                        Rob
                        Green Image Lawn & Landscape

                        \"If you don't feel the same way about Friday nights as you do Sunday nights, then you are not doing the right thing.\"

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                        • #27
                          Rob I applaud you for sharing this insight with all of us.

                          I want to point a few things out to you.

                          Quote[/b] ]One time their was 4 guys (lcos) in a nice brand new chevy and we were at a stop light. I looked over and the 2 in the back (same age as me) were looking at my truck and laughing.
                          As far as this specific situation goes. The 2 guys in the back were laughing? I am guessing that they were sitting in the back because they weren't owners. They were laughing because you are a shinning example right in their face that you are in the drivers seat and you are making it happen without having to go into debt to buy a brand new truck. They use all these excuses to allow themselves to stay as employees and they fear venturing off to do what you are doing now. They laugh because it makes them uncomfortable that you called them out on their excuses. It's nervous laughter. Let them laugh. You are a success in my book.

                          Now for more stories.

                          Have you ever heard of Henry Ross Perot?

                          Henry Ross Perot - Net Worth: $4.2 billion
                          Source: Investments, computer services, real estate
                          Self made

                          Age: 75
                          Marital Status: Married, 5 children
                          Hometown: Dallas, TX
                          Education: US Naval Academy, Bachelor of Arts / Science

                          Former IBM salesman founded Electronic Data Systems 1962, sold to General Motors for $2.5 billion in 1984. Founded rival information services firm Perot Systems in 1988. Stepped down for politics in 1992, making 2 unsuccessful bids for presidency; warned of job losses from free trade agreements. Since then Perot Systems set up subsidiaries in India. Chairman emeritus spends time supporting military veterans. Son Ross Perot Jr. stepped down from top spot at dad's company last year, still heads Dallas real estate firm Hillwood Development. Money management firm Perot Investments lead investor in new intellectual-property fund.


                          When Ross Perot ran for president in 1992 it was revealed that he still drove a 1983 Chevy Nova.

                          Now think about that. This guy is a billionaire!

                          When you take a moment to reflect on it, you can see how he became a billionaire. He knew where to spend his money and where not to. He was thrifty.

                          <hr>

                          Now let&#39;s move on to another billionaire Sam Walton.

                          This is Sam&#39;s actual truck&#33; See more of it here.


                          Sam Walton - Despite having billions, Walton still drove a pickup truck and wore clothes from his own discount store, Wal-Mart.

                          <hr>


                          Ingvar Kamprad - KEA founder Ingvar Kamprad, ranked 4th richest man in the world, drives a 15-year-old car and always flies economy class, in part to inspire his 90,000 employees worldwide to see the virtue of frugality.

                          Here is his actual car&#33;
                          I am attaching the picture its a white volvo.

                          Net Worth: &#036;28 billion
                          Vehicles Owned: 1993 Volvo 240 GL

                          <hr>

                          Now how does this effect your view on what you drive?
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                          Download your Free trial of Gopher Lawn Care Software.

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                          • #28
                            How does it go -
                            Those who are busy trying to look rich are actually broke
                            Those who look broke - are broke
                            And the rich look like everyday people

                            I think this is true most of the time.

                            All the time when I&#39;m driving thru these nice neighborhoods with the huge houses, boats, nice cars, I think wow nice stuff but I bet they don&#39;t own any of it. I wonder how much they are in debt.
                            Rob
                            Green Image Lawn & Landscape

                            \"If you don't feel the same way about Friday nights as you do Sunday nights, then you are not doing the right thing.\"

                            Comment


                            • #29
                              Quote[/b] ]I wonder how much they are in debt.
                              There is a huge amount of debt going on now in our society. You are going to see a lot of fall out from it as well.

                              Keep all this in mind when you consider taking on debt yourself. Don&#39;t try to impress anyone. Do what&#39;s best for you and your business.
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                              Download your Free trial of Gopher Lawn Care Software.

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                              • #30
                                Quote[/b] (FourSeasons @ Dec. 21 2007,11:32)]All the time when I&#39;m driving thru these nice neighborhoods with the huge houses, boats, nice cars, I think wow nice stuff but I bet they don&#39;t own any of it. I wonder how much they are in debt.
                                Probably up to their EYE-BALLS cus the bank owns their other balls or at least one of them anyway. Your right on the money with the old saying:
                                Those who are busy trying to look rich are actually broke
                                Those who look broke - are broke
                                And the rich look like everyday people

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