2017 - What was your margin ?
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    Default 2017 - What was your margin ?

    Right now, January 2nd, 2018, what was your margin ? Just a number please, should be able to pull this up off Quick Books or your Excel sheet in less than a minute. No BS about it depends on what I’m making, or my product is special, or I’m waiting for a big order to come in.


    Me: 55 %

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    Does that include your own pay?

    Mine was 24%

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    does hopefully positive count?

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    Quote Originally Posted by Comatose View Post
    Does that include your own pay?

    Mine was 24%
    No, no payroll costs. It's just me, operating as sole proprietor.

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    Quote Originally Posted by RedBaron View Post
    Right now, January 2nd, 2018, what was your margin ? Just a number please, should be able to pull this up off Quick Books or your Excel sheet in less than a minute. No BS about it depends on what I’m making, or my product is special, or I’m waiting for a big order to come in.


    Me: 55 %
    55% on $20.00 in sales??? or $200 Or $2000 or $20000 or $200000 or $20000000??? There is a difference.

    We are starting the process of evaluating our performance on Margin Contribution rather than Gross or Net Profit. I still need to get my head around this concept...

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    Quote Originally Posted by RedBaron View Post

    Me: 55 %
    Just so we are on the same page...
    Is this gross margin before G,S&A?
    Do you use GAAP?
    What depreciation schedule do you use?

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    Der...you want to know everyone's margin without factoring in labor costs? (Does asking about this qualify as 'stupid BS'?)

    If I'm operating as a sole proprietor my "margin" is ~80%. But that's a crap number because labor is such a huge part of cost in this business. And honestly, at the end of the day, I probably pay myself way more than I'm worth

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    Quote Originally Posted by Johnny SolidWorks View Post
    Der...you want to know everyone's margin without factoring in labor costs? (Does asking about this qualify as 'stupid BS'?)

    If I'm operating as a sole proprietor my "margin" is ~80%. But that's a crap number because labor is such a huge part of cost in this business. And honestly, at the end of the day, I probably pay myself way more than I'm worth
    What’s “stupid BS” ? I said “BS”, not “stupid BS”,
    If the labor is directly related to the production of your goods/services, then by all means include. It’s your accounting, not mine. If I’m only myself, I suppose I could include my labor at a rate of $X per hour, standing at a machine, but what would be that rate? $10 per hour, $20,? I wear many hats, so it seems pointless to include in my case.

    I looking for a feel for margins across the board in manufacturing, whether a multi-million dollar company or a $10,000 company.

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    For the first time since I went full time 5 years ago my gross sales went down. But, my margin was slightly better than last year, so I will not complain.

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    Quote Originally Posted by RedBaron View Post
    Right now, January 2nd, 2018, what was your margin ? Just a number please, should be able to pull this up off Quick Books or your Excel sheet in less than a minute. No BS about it depends on what I’m making, or my product is special, or I’m waiting for a big order to come in.


    Me: 55 %
    What is it when you add in reasonable labor costs? Say $28/hr, including overtime, + 941 taxes and insurances.

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    Quote Originally Posted by ewlsey View Post
    For the first time since I went full time 5 years ago my gross sales went down. But, my margin was slightly better than last year, so I will not complain.
    It's not how much you gross it's how much you get to keep.

    Years ago there was a big study done in the construction industry. The results were counterintuative to most reasoning. The results indicated that on average most contractors would have had more Net Profit if they would have NOT taken 30% of their contracts.

    It seemed that in everyone's race to get bigger, they became less picky about jobs they took. These jobs were usually outside their areas of expertise and skill set. These jobs also consumed an inordinate amount of internal resources for almost always marginal profits.

    Does this sound familiar?

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    Quote Originally Posted by Ziggy2 View Post
    Does this sound familiar?
    Sure. But, there is more to the equation than just the $. They kept more folks employed. They made more contacts. They added niche skills to their portfolio. They squeezed the competitors.

    Those things have a value, though maybe not on a balance sheet.

    Oh the joys of business.

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    Quote Originally Posted by RedBaron View Post
    I looking for a feel for margins across the board in manufacturing, whether a multi-million dollar company or a $10,000 company.
    We did over 19 million in sales for 2017.
    I should just subtract materials used in production and that would give you the number you are looking for?

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    I got no margin here, there's what came in, what came out, what the government took, and I spent every cent that was left, 13yrs in a row and counting...
    That said, labor cost is about 90% of my gross sales, and 2017 was my best year. Jan 2017 was my best month ever, and Jan 2018 already beats it, I'd be happy if this kept going a few years.

    Now back to work...

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    Quote Originally Posted by Toolroomguy View Post
    We did over 19 million in sales for 2017.
    I should just subtract materials used in production and that would give you the number you are looking for?
    After you get back from your board meeting or whatever, if you still have the time to participate in the discussion please do so.

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    Quote Originally Posted by RedBaron View Post
    What’s “stupid BS” ? I said “BS”, not “stupid BS”,
    If the labor is directly related to the production of your goods/services, then by all means include. It’s your accounting, not mine. If I’m only myself, I suppose I could include my labor at a rate of $X per hour, standing at a machine, but what would be that rate? $10 per hour, $20,? I wear many hats, so it seems pointless to include in my case.

    I looking for a feel for margins across the board in manufacturing, whether a multi-million dollar company or a $10,000 company.
    If you want to keep it an apples-to-apples comparison, you have to include labor. And overhead, and every other little thing.

    If you only want to compare yourself as a one man shop to other one man shops, and you don't want to include labor, that would be a fair comparison. But if you don't include the cost of employing someone to do exactly what you do every day, there's no way to compare your business to a company that has employees, managers, etc.

    And here's the tough thing about being a one man shop: your business probably can't afford to replace you. If you were to try to hire someone who can do everything you do just as well as you do (which you can't, but pretend for a second you can) you're probably looking at spending better than 6 figures by the time you factor in salary, benefits, insurance, and OT.

    Even among one man shops, you'd probably have to break it down between guys who are working in their basement or garage (and don't have any unique utility bills) and guys who are renting or buying a space for their shop. In businesses that size, it makes a huge difference. And all that without getting in to the different types of accounting, as some other posters have mentioned.

    I'm really not trying to be a jerk about this, and I understand the question you're asking - it's just a lot more complicated than you give it credit for.

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    Quote Originally Posted by RedBaron View Post
    What’s “stupid BS” ? I said “BS”, not “stupid BS”,
    If the labor is directly related to the production of your goods/services, then by all means include. It’s your accounting, not mine. If I’m only myself, I suppose I could include my labor at a rate of $X per hour, standing at a machine, but what would be that rate? $10 per hour, $20,? I wear many hats, so it seems pointless to include in my case.
    Why do you want to know everyone's margins? It isn't going to tell you a lot about a sole proprietorship unless your factoring in your production time. One shop can put 100 hours into $100 piece material and sell for $2K, while another might put in 15 minutes the same piece and sell for $150. Which shop would you want to run based on margins?

    For a sole proprietor I would be interested in profits for a year vs how much I worked more than anything else. So how much an hour did you make? This works unless you have a very capital intensive shop, which many one man shows do not.

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    Quote Originally Posted by RedBaron View Post
    After you get back from your board meeting or whatever, if you still have the time to participate in the discussion please do so.
    How did you know I serve on the BOD?
    I am just trying to help you understand your 55% margin is not a number that will survive any scrutiny. You must include all costs of good sold, depreciation,interest expense, current portion of long term debt, professional fees, office supplies, taxes, accrued wages and vacation, etc ad nausium.

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    Quote Originally Posted by newtonsapple View Post
    For a sole proprietor I would be interested in profits for a year vs how much I worked more than anything else. .
    That number is rather depressing, a bit nauseating too, its best not to even think about it...

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