Took me 3 years to figure out my profit margins were all wrong

I been running a small landscaping business out of Detroit since 2019. Last month I sat down with a guy from the local SCORE office to go over my numbers. He asked me one simple question what am I charging per hour for my crew. I told him $75 and he just stared at me. Turns out I was only counting the guys on the job but not the time I spend driving to the supply yard, picking up equipment, fixing broken mowers on weekends. After he walked me through it I realized I was actually making about $22 an hour after all those hidden costs. That was a gut punch for sure. I had been underbidding every single job for years and thinking I was doing great. Anyone else ever have an accountant or mentor show you something that made you feel like a fool for not seeing it sooner?

3 comments

3 Comments

wilson.joseph7d ago

Has anyone tried swapping out some of those supply runs for delivery services instead? I know it costs a little more per load but when I ran the numbers for my buddy it actually saved him money when you factor in his time and gas. Might be worth seeing if your local yard will deliver for a flat fee.

spencer9819d ago

My buddy runs a small painting crew over in Warren and had the exact same kind of wake-up call about two years ago. He thought he was doing great until his wife finally convinced him to let her look at the books, which he had been keeping on napkins and random envelopes. She figured out he was charging $60 an hour but was losing like 15 hours a week just driving between estimates and supply runs that he never billed for. He told me he felt sick for a week after that, but at least he fixed it before the business went under. Its wild how easy it is to miss the stuff you arent putting on the invoice.

phoenixw119d ago

You ever try just blocking off a chunk of time each week to handle all that non-billable stuff at once? That’s what I did with my own gig, saved me a ton of wasted miles and made it way easier to see what I was actually making.