Realistic Revenue/Profit Goals

[Marvel]

Another Canadian guy on this forum, SND, said “You need to find an accountant that understands taxation is theft.” Paraphrased, but close. When I read that years ago I thought “Ha, yeah okay.”

Now I’m certain he’s correct.

Yes! You need an accountant that can comprehend the tax laws and read between the lines, but not cross the line.

 

[Stirling]

This should be read carefully by everyone interested in this thread. If you’re Canadian, forget it. Canada is a shit hole that hates small business and has none of the opportunity of the US of A.

There are specific types of scams you can run here though. Have a half-baked idea that you can bullshit your way through? Apply for scientific grants, Innovation Canada funding and government innovation grants. Cook the books, make it look like a legitimate business then sell the assets (all tax payer funded) for a tidy profit. Rinse, repeat. The entire region of Waterloo, Ontario is based on this.

Wish I could get me a grant like that and keep the equipment….
Ontario has so much h more assistance for manufacturing in general.
Alberta… not so much.

Canada in general is less friendly to buissness than our neighbours to the south.

So when all of you are saying margin for a single person show.
Is that after wages/compensation or before? At 50%+ I ASSume wages are not part of the 50%cost

 

[red beard]

It sounds like you're off to a good start. I worked in my dad's shop for many years, and we worked very well together. I was good at CNC work and office management; he was good at customer relations, manual machining, and welding. When he retired in 2016 I bought the business from him. I figured I would hire one or two guys and keep doing things more or less the same as before. I was wrong.

Having employees was frustrating. I spent so much time managing, I had very little time for machining. I couldn't replace the chemistry that developed over 15+ years working with my Dad by just adding employees.

Eventually I went to just working by myself, and I was so much happier. There was an initial drop in gross revenue, but profits were actually higher. The past few years I have just focused on making my shop an efficient one-man operation. I now have 6 CNC machines, so I try to find jobs that I can keep as many machines running as possible, and I avoid jobs that I have to babysit. I do that mainly by quoting aggressively the jobs that suit my operation well, and quoting the more fussy jobs high. I still sometimes get those types of jobs, but it's not so bad if you're making $150-200 per hour on it. My gross revenue and profit margins have steadily increased since implementing this strategy, and my stress level is much lower.

Having just a few employees is a difficult place to be. There are too few to hire someone to manage them, and there are too many to get any real work done yourself. Something to think about as you plan for the future.

 

[Freedommachine]

I do that mainly by quoting aggressively the jobs that suit my operation well, and quoting the more fussy jobs high.

This is common practice and there is nothing wrong with it; but why not just say "not interested"?

I make my own products so I don't normally take on customer jobs; maybe 2-3 times a year. However, I do sub out my production so requesting quotes is something I do more often.

I do not like sending out half a dozen rfq's for the same job and I hate sending rfq's to a shop that I never award them to; it makes me feel like I am wasting people's time. If it happens enough, all of my quotes will start coming back with a silent "annoyance fee" added to cover their time that I have wasted - you can't tell me I'm wrong either lol.

I cannot speak for every customer but for myself, a high quote accompanied with a note would be helpful. Something like; "not a good fit", "features x & y are time consuming", "bend tolerance requires special attention" or even just; "oh hell no, I want no part of this job."

This way I can make changes to simplify the design. Basically; is it expensive because the vendor doesn't want it? Or because my design is flawed? If I don't know that info, it could take 2 more weeks of submitting and waiting on rfq's to come back before I know for sure.

If design changes are required to meet my profit margin, I have just wasted the time of 3 vendors and gotten myself 1 step closer to slow quotes, ignored rfq's or an annoyance fee.

Hopefully this doesn't derail the context of this thread. It doesn't need discussion; consider it more like rhetorical customer feedback I suppose.

 

[Marvel]

This is common practice and there is nothing wrong with it; but why not just say "not interested"?

I quote some "fussy jobs" high as well, it's not that I am not interested, its just a higher number cause I know what its going to take to get it done and if they are willing to pay, I will make it happen. I would call it a risky quote that I could lose quick at any given time during the job and need to replace material quickly so the higher number is more or less a safety net. But I do occasionally offer some manufacturing advice along with a higher quote, or ask what the function is to understand what the features are doing and advise any changes that could save money.

 

[Garwood]

This is common practice and there is nothing wrong with it; but why not just say "not interested"?

I make my own products so I don't normally take on customer jobs; maybe 2-3 times a year. However, I do sub out my production so requesting quotes is something I do more often.

I do not like sending out half a dozen rfq's for the same job and I hate sending rfq's to a shop that I never award them to; it makes me feel like I am wasting people's time. If it happens enough, all of my quotes will start coming back with a silent "annoyance fee" added to cover their time that I have wasted - you can't tell me I'm wrong either lol.

I cannot speak for every customer but for myself, a high quote accompanied with a note would be helpful. Something like; "not a good fit", "features x & y are time consuming", "bend tolerance requires special attention" or even just; "oh hell no, I want no part of this job."

This way I can make changes to simplify the design. Basically; is it expensive because the vendor doesn't want it? Or because my design is flawed? If I don't know that info, it could take 2 more weeks of submitting and waiting on rfq's to come back before I know for sure.

If design changes are required to meet my profit margin, I have just wasted the time of 3 vendors and gotten myself 1 step closer to slow quotes, ignored rfq's or an annoyance fee.

Hopefully this doesn't derail the context of this thread. It doesn't need discussion; consider it more like rhetorical customer feedback I suppose.

Do the tricky, fussy stuff in house and farm out the basic easy stuff.

You only have so much time. Spend it making (or saving) the most money possible. Farm out the easy parts.

 

[boosted]

Having just a few employees is a difficult place to be. There are too few to hire someone to manage them, and there are too many to get any real work done yourself. Something to think about as you plan for the future.

Yes! As an owner who does not cherish administrative duties, getting past the 2 - 3 employee stage was very difficult. If I had to do it again I would spend more time building up the admin side of the business while I was working alone, and make sure the foundation was rock-solid before adding any more labor.

 

[red beard]

This is common practice and there is nothing wrong with it; but why not just say "not interested"?

It's not that I quote every RFQ. There are some jobs so far outside of my wheelhouse that I just no quote. But lately, it seems like my customers are having trouble finding anyone who is able to do the work within tolerance and on time. I've been surprised at some of the jobs I've been getting the past couple of years. I throw out a high number and think "there's no way I'll get this one", and 15 minutes later I've got a PO. They seem kind of desperate to find someone who can do the work at all. They seem more upset if I no quote the job than if I quote it at, what I consider, a high rate.

In the end, if I make good money on a job, and the the customer is satisfied then I don't see a problem.

 

[Stirling]

Yes! As an owner who does not cherish administrative duties, getting past the 2 - 3 employee stage was very difficult. If I had to do it again I would spend more time building up the admin side of the business while I was working alone, and make sure the foundation was rock-solid before adding any more labor.

We need more threads about setting up good buissness/admin practices!
I’m very weak in that area
(Managment experience,, but now a one man band honestly intimidated to grow due to weakness in establishing good admin practices)

 

[candeservices]

How is that optional? SE tax is required for over 400/yr in income. I can see missing it with a side thing, but if you're full time, you should be paying it.

Do you mean there wont be that safety net when it goes broke?

 

[Covenant MFG]

Do you mean there wont be that safety net when it goes broke?

I was born in 1999. In 2065, I'm pretty doubtful I'm gonna get a substantial payout (assuming I even do see a penny) from SS. That said, they make me so I still pay into it.

Note: it might be just youngster me talking, but while I plan to have the ability to retire/not gain more income by the time I come into old age, I plan on building whatever work I do to be enjoyable enough to not want to ever retire from it. I don't want to be that guy who can't wait to stop working.

 

[candeservices]

Your going to have to ask yourself One question.
What is more important? Money is more important than________(insert text).
When I started my business my son was born and I made a whooping 1800.00 that year. My sales grew steady and I had a full time job for backup. When I started working 40 hours at my job and then 40 hours at my business I was making a shit load of money, until I asked myself that question. So I quit my steady job and concentrated on my business, I cut my pay in half but tripled my free time with my son. If you are good with what you are making right now and can deal with the size then you should be good, the business will GROW on its own, may even get too big. I remember one year that I had to turn away a 200k job because I would not been able to deliver my word that ALL my customers would be serviced in a timely manner. I could have hired some help but what about after the contract was finished? This new employee is considered family to me an I am responsible for his welfare also. I am a one man operation and have kept it that way for some time now. Try to keep things simple, Don't overextend yourself, it will feel unnatural to turn jobs away. The bond with my son is the most important asset I have in life, that guy would give me both his kidneys if I needed them!(I wouldn't take them)

 

[candeservices]

I was born in 2009. In 2065, I'm pretty doubtful I'm gonna get a substantial payout (assuming I even do see a penny) from SS. That said, they make me so I still pay into it.

Note: it might be just youngster me talking, but while I plan to have the ability to retire/not gain more income by the time I come into old age, I plan on building whatever work I do to be enjoyable enough to not want to ever retire from it. I don't want to be that guy who can't wait to stop working.

There is a belief in my family that once you stop working the joints will seize up and your timecard will get punched out. Me myself I don't know what the word retire means! It just looks like a bunch of letters left over and bunched up together.

 

[SND]

Realistically if you do good work and don't give all your money to other people for rent and such, you can earn a decent living, assuming the work is there, and all customers pay their bills.

Gross billing doesn't mean anything without knowing how much of it is material, single use tooling and outside services. The guy that bills $100k could be ahead of the guy that bills $500k.
Labor is what matters, how many spindles you can keep running and how many hours in a week/year.
It helps if you enjoy working 7 days a week...

 

[EmGo]

Realistically if you do good work and don't give all your money to other people for rent and such, you can earn a decent living, assuming the work is there, and all customers pay their bills.

That's the best summation I've seen. Perfect.