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I have an old truck with enclosed utility bed, it is not nice persay, but I own it. I am not ready to go into debt to buy a new van, which is what I need, at this current time. I do have magnetics on my truck.
Sorry, but that is not good enough..

You are only going to able to charge more for your services if you look like you are worth it...

Best thing is work at getting a new vehicle first.... it may sound like it is a lot of money but in reality you are spending the same thing for repairs on the old one.

The cost to buy is just another part of doing buisness....
 
Define an "aggressive ad campaign"
Go to the coffee shop every morning where all the old timers hang out and get to know them. You would be surprised how that type of aggressive advertising pays off in these small towns.... If you intend to stay in that area, you are going to have to be one of the "Good 'ol Boys" and wait your turn. I grew up in Dallas, but wanted to get back to my home town. I could have done anything in this industry, and have done most. I came and went from this area, until it was my turn, now I am the big fish, setting the prices. I am hammering away at the old ways around here. If I accomplish no more than making it betters for my 2 son's future ( the 4 girls are smart enough and pretty enough to make it own there own.) Then that is good enough for me. I kid you not about the coffee shop. It sounds funny, but you know what I am saying.
 
Go to the coffee shop every morning where all the old timers hang out and get to know them. You would be surprised how that type of aggressive advertising pays off in these small towns.... If you intend to stay in that area, you are going to have to be one of the "Good 'ol Boys" and wait your turn. I grew up in Dallas, but wanted to get back to my home town. I could have done anything in this industry, and have done most. I came and went from this area, until it was my turn, now I am the big fish, setting the prices. I am hammering away at the old ways around here. If I accomplish no more than making it betters for my 2 son's future ( the 4 girls are smart enough and pretty enough to make it own there own.) Then that is good enough for me. I kid you not about the coffee shop. It sounds funny, but you know what I am saying.
Slick you where making laugh when I read your post :laughing:

You make sound like your two boys are ugly and stupid :laughing:
 
Discussion starter · #66 ·
Is that gross or net
This is Gross. The net is what is left over after everyone gets paid. That is the profit. Our indirect costs are just under $30,000 per month. That will pay the bills and keep the lights on. Pay the taxes and insurance the cell phones and the advertising, Pay for fuel the accountant, the electric bill and the trash pickup, Pays for business cards computers and the call taker, Covers the costs of uniforms, small tools and the phone bill, Keeps us warm in the winter and cool in the summer buys our shoe covers, drop cloths and cleaning supplies, Covers education expense and puts a little money in the bank for retirement,
 
Discussion starter · #69 ·
Why uniforms? Is this necessary to be successful?
Someone told me once that the customer experiences your company in phases. For example. Their first experience with you or the first window of opportunity is how they find you. Could be a referral or an ad or a business card, may be they saw your truck. If it is a Card, how does it look. It should be unique and professional. If a referral , what was said. This will define you as good, bad or mediocre. The next window of opportunity you have is when they contact you. Do they get an answering machine. People hate answering machines. With cell phones it is very easy to pick up the phone and personally respond to every call. How do you answer? " thank you for calling plumbpro how may I help you today?" Then listen, with empathy. Understand them and let them talk. People will appreciate that . Do not quote prices over the phone. You need to get in the door to show them who you are and why they should hire you. Quoting on the phone makes you a commodity. You must prove why you are worth the price. People buy with their heart and justify with their heads. Schedule the call at their convenience. "SERVICE TODAY" is one of the best Value Builders you can have. The next window you have is when you arrive at the door. Be on time. If not then call ahead and let them know that you will be late. Communicate. Your truck is your truck it is what you have but is it clean and Neat? Is it dripping oil? Is the cab a mess? Wash the windows and keep the truck as clean and neat as you can. Wear a uniform. By all means YES. Buy some polo shirts and put your logo on them. Get some work slacks and keep them clean. Shine your boots. Wear Shoe covers. Hand the customer your card when the come to the door. Ask if you can come in. Be showered and Clean Shaven. Be polite, considerate and professional. Ask them about themselves Bond with the customer. Use drop cloths. Use a professional tool box. Ask to see their problem. Ask them if there is anything else that needs attention. Price the job upfront in writing. We often give choices. Good better best. "Here are three faucets for example two handle, single handle or pull out spray"....Guarantee the work labor and material. Do the job on the spot. Clean up, remove all debris from the site. Leave valve tags and stickers. Collect your money. In a few days call them back and ask how things are going. This is the last window of opportunity. Apple Computer is the most successful company in the industry today. They are also the most expensive. Remember companies don't go out of business because they charge too much.

First things however. You must know your costs in order to price correctly. Measure first. If you want to run a business then run it right. Get you financials in order. this is first and foremost. I cannot stress this enough.
 
Discussion starter · #70 ·
In startingmy new business I did not feel at all compfortable being in debt, and have a no debt policy in my personal finances excluding my house.
I like this way of thinking. The ideas I gave you require minimum investment. You are starting out so use what you have but make it the best it can me. People will appreciate that. When you get rolling you will be able to grow and purchase other things. Business financials are simple:

Total Income 100% TOTAL SALES
- Payroll 15% DIRECT COSTS
- Materials 15% DIRECT COSTS
= Gross Profit 70%

Gross Profit 70%
- Overhead 50% INDIRECT COSTS (INSURANCE, FUEL, ACCOUNTING ETC)
= Net Profit. 20%

how much is a 20 percent markup on a $100 part?
 
Discussion starter · #71 ·
Define an "aggressive ad campaign"
An aggressive ad campaign would be over 7% of your total sales. If your gross sales are 100,000.00 then that would be $7000.00 per year. That is if you have allowed for that line item in your overhead. This is all part of the pricing scheme. Direct mail is usually a good way to go. especially with existing customers.

Someone else had a good idea. call the plumbers in the phone book if any of the numbers are disconnected then try to get the number forwarded to you.
 
Discussion starter · #73 ·
Is it $20? The part would then cost $120
That is what I thought when Frank Blau asked me the question. If you want to make 20% profit on your material sales then you need to think this through. Lets say you sell the $100 part for $120.00. Take 20% profit off the top for your company growth. 20% of $120.00 is $24.00. That will leave you short.

To figure a real 20% divide the number by the reciprocal or (.80). $100 / .80 = $125. $25.00 is 20% of 125.00. If you figure this way you will make a true profit off the top.
 
An aggressive ad campaign would be over 7% of your total sales. If your gross sales are 100,000.00 then that would be $7000.00 per year. That is if you have allowed for that line item in your overhead. This is all part of the pricing scheme. Direct mail is usually a good way to go. especially with existing customers.

Someone else had a good idea. call the plumbers in the phone book if any of the numbers are disconnected then try to get the number forwarded to you.
I would be a lot more interested in an effective advertising campaign....:laughing:
 
Discussion starter · #75 · (Edited)
I would be a lot more interested in an effective advertising campaign....:laughing:
Direct Mail is a good way to go. Do you have a customer list yet? Remember your most effective way of advertising is with your existing customer base. Up selling is the most cost effective way. It is free to ask for more sales. Also sell service agreements. they can get you back in the door.
 
We use quick books and do well. I've been on my own little over a couple
years now and have done very well. One thing I had noticed is new business owners do good for a bit, then go out and buy a new truck, they look for a shop etc, and try to buy every tool they can and over load what the new company can support when tings slow down, and it always does. One can never hang a promise that the busy times will remain indefinitely. A business needs to try to maintain business capital, I buy when I can, if I cant afford it I dont buy it. And I have yet to have my first loan. My suppliers are happy to accept my credit card and I pay when I pick up. I never have a supplier bill at end of month to worry about. I realize this is not a luxury a bigger company can do. In my mind I try to keep all overhead to its lowest possible. Any rig I drive is used but nice looking. I paid cash , and pull a cargo trailer I paid cash for. As I said, no loans policy here. Works great during slow times which aren't often but still have them. Works for me atm because I am slow. But realize not for everbody.
 
We use quick books and do well. I've been on my own little over a couple
years now and have done very well. One thing I had noticed is new business owners do good for a bit, then go out and buy a new truck, they look for a shop etc, and try to buy every tool they can and over load what the new company can support when tings slow down, and it always does. One can never hang a promise that the busy times will remain indefinitely. A business needs to try to maintain business capital, I buy when I can, if I cant afford it I dont buy it. And I have yet to have my first loan. My suppliers are happy to accept my credit card and I pay when I pick up. I never have a supplier bill at end of month to worry about. I realize this is not a luxury a bigger company can do. In my mind I try to keep all overhead to its lowest possible. Any rig I drive is used but nice looking. I paid cash , and pull a cargo trailer I paid cash for. As I said, no loans policy here. Works great during slow times which aren't often but still have them. Works for me atm because I am slow. But realize not for everbody.
Having supplier account and bank lines is different than you financing yourself with your own money..

Using your own money to operate a buisness can put you in a money pinch. Most supplier has 30 day payment on supplies purchased... so this further lessens a personal money pinch.

Another reason to have accounts is so you increase your credit rating.

Running your household and operating a buisness is not the same thing.

There is more beniefts having a new vehicle that to buy a used one.

The number of years you get out of an old one is and repairs add up to what a new payment is.

Furthermore your vehicle is your office and the first impression everyone gets from you.

There is a saying " money and a fool is soon parted" once you spend your cash you can not get back. You are way better off to make payments than part with a large sum of your money
 
Virtualplumber has brought up some good points regarding the need to know your numbers. There is a balance though to the percentages we are all taught to strive for.

Percentages are a lot like the Pirates Code, more guidelines than actual rules. The real rule is to sell a widget for more money than it costs you to provide said widget. Percentages of the pie pieces from here to there help from a management standpoint but in the end, did you get the actual dollar amount you set as a goal?

Math is a funny animal. There are several ways calculate almost everything. In the end, knowing how to accurately calculate a margin like VP illustrated is crucial if you are budgeting based on margins. On the other hand, it can also be effective to say, "I need $xx at the end of the year. So, I will charge $xx above my costs daily and weekly to get that result."

The actual dollar amounts are what we pay taxes on, pay rent with, and buy fish bait with. Goals based on percentages alone have a tendency to become arbitrary. And of course as has been preached to us from the beginning of time, none of this matters if you don't really know your costs.

Business is a game we should not play if we don't know how to keep score.
 
Having supplier account and bank lines is different than you financing yourself with your own money..

Using your own money to operate a buisness can put you in a money pinch. Most supplier has 30 day payment on supplies purchased... so this further lessens a personal money pinch.

Another reason to have accounts is so you increase your credit rating.

Running your household and operating a buisness is not the same thing.

There is more beniefts having a new vehicle that to buy a used one.

The number of years you get out of an old one is and repairs add up to what a new payment is.

Furthermore your vehicle is your office and the first impression everyone gets from you.

There is a saying " money and a fool is soon parted" once you spend your cash you can not get back. You are way better off to make payments than part with a large sum of your money

In many was I agree with you Oldschool. I'm referring in this case to newer business owners like me. My "not new" rig has cost me a few bucks to maintain, but then again not 500.00 to 800.00 a month. And thats just the truck. What about Ins, and if I have that "borrow for everything mentality" my butt would be in deep crap by now. Credit lines, I agree are important. But isnt it funny, we have been taught to keep overheads down, keep profits up, I'm not sure how to maintain standard profile as I drive down the road, while sweaten how to pay the darn thing every month. Guess I just don't get it. But being debt free works extremely well for me. But it is funny, if I went in for a loan, my fico score would show bad, even though I'm debt free sept for the Ins, fuels, on and on.
As far as truck image, I get compliments from costumers on an on going basis. I will post it some day, as my logo makes kids laugh, I look down at stop lights and see people pointing, laughing, and cell phones in hand snapping shots. But its original and definatly draws attention. Cost 500.00 cashhhh. And yup I turn in every receipt possible.
 
In many was I agree with you Oldschool. I'm referring in this case to newer business owners like me. My "not new" rig has cost me a few bucks to maintain, but then again not 500.00 to 800.00 a month. And thats just the truck. What about Ins, and if I have that "borrow for everything mentality" my butt would be in deep crap by now. Credit lines, I agree are important. But isnt it funny, we have been taught to keep overheads down, keep profits up, I'm not sure how to maintain standard profile as I drive down the road, while sweaten how to pay the darn thing every month. Guess I just don't get it. But being debt free works extremely well for me. But it is funny, if I went in for a loan, my fico score would show bad, even though I'm debt free sept for the Ins, fuels, on and on.
As far as truck image, I get compliments from costumers on an on going basis. I will post it some day, as my logo makes kids laugh, I look down at stop lights and see people pointing, laughing, and cell phones in hand snapping shots. But its original and definatly draws attention. Cost 500.00 cashhhh. And yup I turn in every receipt possible.
This is not directed at anyone but..

Now you got to figure.... am I charging enough.... more than likely not.

You have been Biz for how many years?

Even tough you drive stuff that is paid for you should still be making enough every month to cover overhead like this.

I am amazed that in construction many guys say ... I am going in Biz for myself and dont buy much to start up.

This has to one of a few types of Biz that can be started up with hardly any money..... you take a look at any other type of start up biz and it costs lot just to get it off the ground.

Most guys thinking they are running a biz but actually they are just earning an income...:cry:
 
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