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Subject - Consultants for the Electrical Industry
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northpowell
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Hello all,
My name is Marc Blanchard, president of Service Doctors International, Inc. A fellow member has called us to request information on Flat Rate software and made us aware of this wonderful resource. We wanted to introduce ourselves you all and let you know that we may be of service. In the event you need any type of business consulting that touches marketing, employees, operations, software and other business topics, we would appreciate you "picking our brains".
We review on behalf of our customers every type of breakeven, flat rate and dispatching software available. Like you, we look for the best value for your dollar. We also distribute the software at the same price as the manufacturer yet we provide all support to make sure that you deal with someone that knows your industry well, not just a software company.
We also provide newsletter services, call analysis to make sure your front line is doing well, marketing assistance, in fact if you have a need, we can either help you or refer you to a tried and tested resource who can.
Please feel free to call or email us for a free demo disk that walks you through all software alternatives and services we offer. It also permits you to get to know Service Doctors and the type of commitment we have to our customers. We would be more than happy to supply you with a listing of satisfied customers as referrals from across the US and Canada.
So please, feel free to contact us at your convenience. We are Service Doctors, when a bandage isn't enough!
Marc Blanchard Service Doctors International, Inc. (877) 782-3627 ext. 21 marc@servicedoctors.com
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John A. Peters
| I have deleted my prior notes to Marc, and I hope he will join us in offering actuall direct help in exchange for all the valuable electrical knowledge we are sharing with him, and all our readers, here on the forum. It is not to be re-sold IMHO. Marc, excuse me if I was less than welcoming to your advert. Lets get started.
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John A. Peters
| Now that I think about it I think commercial interests like the above should be treated equally here. The other commercial interests help support this forum by having pay per click advertising. See the top or bottom of any page here.
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Pat@amber
| If anyone needs a call analysis of their front line, let me know. I'll call your office for free and let you know how they treated me. Sorry I missed your original posts John.
Pat
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northpowell
| Hi again,
This is Marc from Service Doctors.
I did not realize how complicated it would be to post a simple message on this board. Now, I now regret doing so. All I wanted to do was make available a resource that many electrical companies from around the US are using to acquire answers to business related issues. I did not realize it would fall under such strict scrutiny.
Based on the replies to date, they makes us seem that we have been taking advantage of this board without offering any benefit to other users, although we have posted our first message only 48 hours ago.
I understand and respect the true value of these types of forums and the rules of conduct that insure its on-going success. But it is not worth jeopardizing our hard earned reputation by having users insinuate that we are here to take advantage of a good resource.
For this reason, I wish to express my regrets to anyone that was offended by my previous post and I will not participate any longer on this particular thread. We will happily offer information or advice to anyone seeking it based on our customer’s experiences combined with the knowledge we have acquired over the years. Whether requests are posted on this board or sent to us directly, we look forward to helping our peers as best we can.
Please do not take this reply the wrong way and I request the moderator not censure this response. The intent of this message is only to move on from a moot issue and hopefully start sharing industry related topics that potentially benefit the majority of users.
I personally consider this matter closed and will no longer respond or discuss the true intent of an otherwise straightforward posting. I hope that others will follow suite.
Thank you for your time and understanding.
Marc
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JimmyDee
| quote: Originally posted by northpowell
Hi again,
This is Marc from Service Doctors.
I did not realize how complicated it would be to post a simple message on this board. Now, I now regret doing so. All I wanted to do was make available a resource that many electrical companies from around the US are using to acquire answers to business related issues. I did not realize it would fall under such strict scrutiny.
Based on the replies to date, they makes us seem that we have been taking advantage of this board without offering any benefit to other users, although we have posted our first message only 48 hours ago.
I understand and respect the true value of these types of forums and the rules of conduct that insure its on-going success. But it is not worth jeopardizing our hard earned reputation by having users insinuate that we are here to take advantage of a good resource.
For this reason, I wish to express my regrets to anyone that was offended by my previous post and I will not participate any longer on this particular thread. We will happily offer information or advice to anyone seeking it based on our customer’s experiences combined with the knowledge we have acquired over the years. Whether requests are posted on this board or sent to us directly, we look forward to helping our peers as best we can.
Please do not take this reply the wrong way and I request the moderator not censure this response. The intent of this message is only to move on from a moot issue and hopefully start sharing industry related topics that potentially benefit the majority of users.
I personally consider this matter closed and will no longer respond or discuss the true intent of an otherwise straightforward posting. I hope that others will follow suite.
Thank you for your time and understanding.
Marc
While I respect the knowledge and energy of some posters here, and their contributions to this site, keep in mind that what they have written, is their opinion and nothing more. Unless you receive an e-mail from Scott Vickery, the site owner, you have done nothing wrong. Unless Scott e-mails you and tells you to stop, feel free to continue posting. We don't want to discourage anyone from posting here and we value your input. If what you are posting is for personal gain only and can not be considered for edification of the users here, Scott can deal with that when the time comes. Jim (JimmyDee, Moderator)
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MONOLITH
| Marc,
I think it was just bad timing. There are some heated conversations as of late regarding businesses selling their 'expertise' to other businesses; but it was mostly regarding something not particularly the same as your situation.
Hang in there.
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kiwisholland
| My 2 cents:
Sometimes I feel that some guys on here feel they can do it all alone, and if so, good for you.
This also goes to all the threads discussing paying for help. I can't afford to pay Nexstar this year. But, I might next year. I think we all should re-read the ESI thread and think about what we can get help wise from many sources.
Marc is a very helpful, very knowledgeable guy as far as our industry is concerned. Please don't dismiss him so easily. Maybe some don't agree with the way he presented himself here, so be it. Just check out his web site and better yet give him a call. If you know everything, why are you here? Start your own web site and start dishing out the free info.
We electrcians need to get our heads out of the sand and step up to the plate as far as service is concerned. Just look at the organized efforts plumbers and tin knockers have! On the Service Business thread, some guys were surprised to find out that women are the focus market, come on... WE ALL CAN USE HELP. We all need to keep learning everyday or we're dead right?
I for one am willing to pay for knowledge. Past experience in the service sector is priceless, why reinvent the wheel? Maybe John Peters has an awesome niche dug out for himself, but we all don't have the benefit of 30+ years experience like he does.
I am not being paid in anyway by Service Doctors, I just had a great experience with them. But, now that I mentioned it... Quid Pro Quo, Marc?????
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northpowell
| I could not resist posting a reply to thank those who have helped define the true meaning of my original post. Monolith, JimmieDee and Kiwisholland, you have clarified the true intent of my original post and I thank you all very much.
We are in the business of supplying information and provding valuable tools to the industry. However, most of our time is spent interpreting issues and providing resources to help rectify problems and this, free of charge. So please, feel free to contact us whenever something new pops up and you need a second opinion. That's what we are here for!
Now to put our money where our mouth (or keyboard) is, here is a little advice about your pricing:
How can companies expect to make money if they do not know their true cost of doing business? Most companies we deal with were not assessing their labor or overhead rates properly. This made them to charge too much or more often, too little.
You would be surprised on the number of companies out there that do not know how to price theirs jobs properly. They make quick estimates from the top of their heads trying to take into consideration some overhead and labor costs. Or perhaps they have a budget and go by their fixed and variable overhead only.
But shouldn’t the true cost of labor be calculated, including your technicians “unproductive hours” such as drive time, running for parts, shop and lunch time? And shouldn’t the income that your technicians generate also be factored in so as not to be way overpriced? What about callback labor, vehicle maintenance, uniforms, etc.? Have you calculated all of the above to find out what you really need to charge. Do you know what your true breakeven point is?
One way of doing this is to calculate your fixed and variable overhead and add your cost of labor, including benefits. Divide it by your employee’s productive hours (a benchmark would be 50% of their paid hours if you are a service shop). The resulting number is what you need to charge per productive hour to breakeven.
As an example, let’s say your total fixed and variable overhead as well as your labor costs arrive at $500,000 per year. Don’t forget to factor in any callback labor (work done for free), consumable tools, in fact, every dime you spend operating your business. That accounts for our total yearly expenses.
Then, calculate your total productive hours. For example, you have 3 full time technicians getting paid 40 hours per week. Using our 50% ratio, that would leave them with 20 productive hours each week or 60 in total. Multiply that by 50 weeks (2 weeks vacation) and you arrive at 3000 productive hours per year.
Now take your costs of $500,000 per year and divide it by your 3000 productive hours. You arrive at a charge of $166.66 per productive hour. Now before you have a heart attack, keep in mind that we will use this number to calculate only true job time since driving, chatting with the customer, truck inventory replenishment costs have been accounted for in the unproductive time (20 hours per week or 50% of their paid hours).
Now that you have this number, use it to calculate your true cost of any job. Example:
A 4 hour project would cost for labor and overhead 4 X $166.66 = $664.64
Ten add your materials and/or subcontractor costs, let’s say $500.00
Your true cost for this job is $1,166.64. Knowing this is the first step, since you now know that charging any less would be a loss for the company. To add profit, simply use this formula:
For 10% profit, divide the number by 0.9. For 20%, divide by 0.8 For 25%, divide by 0.75, and so on.
So to make 20% profit on this job, it would be $1,166.64 divided by 0.80 or $1,458.30
As long as your expenses are correct and your productive or job hours are conservative and achievable, this method will not steer you wrong. You will be making 20% profit on that job or $291.66
So I hope this little tidbit helps a few of you reevaluate your pricing. If you have any questions on this, do not hesitate to email or call us. We also have a full streamlined movie on CD that reviews this in depth as well as everything else we do. Fell free to request it, it is free of charge.
Again, thanks for the support of the above mentioned members and we look forward to learning from you all as well. Until next time, have a peasant holiday weekend!
Marc Blanchard Service Doctors International (877) 782-3627 marc@servicedoctors.com
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Pat@amber
| Humble apologies for my wrong first impression. Thanks for sharing.
Pat
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stedder
| A very professional follow up I'd say, kudos to Marc.
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willie
| Marc- If I tried to charge $664.00 for a four hour call in my 30,000 populaion town, and then tack on a 20% profit to boot, I would have to add in an additional $300.00 per day for a bodyguard. I agree we deserve it because we are starving on charging a 50% mark-up on labor. But if the market will not bear it, then what?
Will
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BASE
| You don't really do electrical work do you????? You just crunch numbers??????????????? How much would you charge to run a switch leg from an existing light that is currently on a pullchain? Help me, I think I am lost in reality of common sense and can't find my way into charging an arm and a leg for just a handjobs worth of work!!! Please make me seeeeee theeeee llliiiiiggghhhhttttt!!!!!
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Doug Wells
| how much would i charge to install a switch leg from a pull chain I would not do it for less than 150.00 And i think my profit would be about 20.00. By the time i drove to the job and back installed and clean up that is a 2 hour job.
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MONOLITH
| One of the things I like about this site, is there has been a certain maturity level maintained here.
Professional adults helping other professional adults.
I hope that's not changing.
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northpowell
| This post is for Willie, Base and anyone else that thought that my last message suggested they charge the amounts mentioned in the post itself.
I wasn’t saying that your companies in particular need to charge $664.00 for a 4-hour job. That number was based on an example company who's labor and overhead expenses amounted to $500,000.00 per year and only had 3000 productive hours to make it up.
My example was a formula that you must use with your own numbers. However, whatever numbers you arrived at with your calculations are indeed what you need to charge.
As another example, say your own overhead and labor rate came up to $150,000.00 per year. Also, you have 2 techs in the field producing 20 hours of billable time per week (by the way, billable or productive time is their total paid hours minus any other time spent driving, chatting with the customer, picking up parts, anything that is not actual tasks or job time, a 50% ratio of their paid hours is a good rule of thumb). So 20 per week of productive time multiplied by 2 techs is 40 hours per week. Multiply that by 50 weeks and you have a total of 2000 productive or billable hours per year.
So you take your $150,000.00 of yearly costs and divide it by 2000 productive hours. This would equal a $75.00 breakeven cost or what you need to charge for everyone one of those 2000 productive hours to bring in $150,000.00 per year and pay your expenses. It is important to understand that you need to use your own numbers to do this so you may arrive at your own breakeven.
Now, taking the same example as before, a 4 hour job multiplied by a $75.00 breakeven equals $300.00 or the entire cost for the overhead and labor part of this job. Add your material cost of, example $100.00 and the total job costs you $400.00. At this point, it is up to you to sell this job at cost or add profit to it. If you want to add 10% profit, you need to divide this number by 0.9. If you wanted to add 20%, it would be divided by 0.8, 25% would be 0.75, 30%is 0.7 and so on. So we want to make 10%in this example...
$400.00 divided by 0.9 equals $444.44. If your overhead and labor expenses are accurate and your productive hours are conservative and accurate as well, you would need to charge $400.00 to breakeven or $444.44 to make 10% profit.
So Willie, you need not hire a bodyguard unless you have other "extra curricular activities" that would require one in a town of 300,000. But you do need to charge what this formula will suggest based on your own expenses and productivity or you may end up with a nasty surprise at the end of your fiscal year.
Mr. Base, we are not electricians but we do a lot more than crunch numbers. We specialize in the service industry and deal strictly with electricians, plumbers and HVAC shops. We also understand that 8 out of 10 companies do not calculate their true costs accurately and, in turn, lack the information required to charge enough to cover their expenses. This is why there is such a high rate of companies that go belly-up in their first 5 years. We just want to make sure that yours is not one of those companies, hence the help we are trying to provide. 
And Doug, make sure that if you do use this formula, you do not calculate the drive time as job time since we have accounted for that by eliminating 20 out of the 40 hours of a regular work week. You would only need to apply the breakeven to the actual job time. Then you add the amount of profit you can to maximize profitability while keeping your price competitive enough to get the job.
Thanks for the kudos Stedder and Pat@amber, apology gladly accepted!
I hope this message clarifies my earlier post. I do enjoy this forum and look forward to any other questions you folks may have. Have a great and profitable week!
Marc Blanchard (877) 782-3627 ext. 21
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mahlere
| Let me qualify my following comments by first stating that prior to this post, I had never heard of or dealt with northpowell or his company- that being said:
willie, base and doug wells - please come work for me. You will make more money with less headaches, aggrevation and in less hours than you do now. You will have full benefits, a company truck, company cell phone, company uniforms, etc. You will not have to worry about paying your supply house bill at the end of the month, you will not have to worry about your tax bill at the end of the quarter, you will not have to hope and pray that nothing breaks down.
The truth is that one of the reasons that it is difficult to get the prices that we need is simple. There are too many guys in our industry who, instead of saying "hey, it really costs me $X.XX to operate this thing. That guy is charging it, why can't I". Instead, we have too many guys that say "he's ripping you off, i'll do it for 1/2"
Let me expand a little - we are in Central NJ. The area we cover is around 250,000 people. We base our rates on $175.00/hr +material. This covers our costs and makes us a little profit. Our costs include 4 service vans, a 48' double bucket truck, a 2500 sq ft warehouse/office, scissor lifts, misc hyraulic/electric bending and pulling devices, etc. All of this costs money. The only place we can get that money is from our customers. By the way, our repeat rate is about 45% for a 1 year period and about 70% for a three year period.
On top of that I am second generation (I know, I'm not that bright :-) My parents house, which is nearly paid off, cost them $40,000 30 years ago. My house, which is smaller, cost me nearly $300,000 last year. I need to make enough pay to cover my mortgage. To many local contractors bought their house 30-40 yrs ago, many of them are still charging the same rates as they were 30-40 yrs ago.
There are a couple of companies that charge more than us. One is at approximately $245.00/hr. But they have 2 more trucks than we do and cover 5 times the are (read that as a lot of downtime)I don't begrudge them for billing that much, I just don't need to. I want to stay local ,be more efficient and have happier customers.
There are tens of guys who are still at $55-$70/hr. Mostly one man shops. Their wife has to work to get insurance. Trucks on it's last leg. Office is an answering machine in the corner of the kitchen. Garage has been converted in to a parts depot. You get the picture. And better yet, many of them somehow bill 10-12 hrs/day for 5-6 hrs of actual work and seem to think this is ok. Because you "have too to make any money"
Now for the real kicker - people need to get electrical work done. That being said, they will pay for it. Whatever they have to.
I would bet (and I am a craps player) that everyone on this board - if you truthfully filled out a break even worksheet - would be within $30/hr of each other. Whether you were a 1 man shop or 100 man shop. I say this because a 1 man shop that wants to work only 40 hrs a week total (paperwork and all) will only have approximately 15 productive field hours. A 100 man shop has a much higher burden to cover.
So if we all charged what we really needed to in order to be profitable and stay in business, people would still pay.
A little tangent - my fiance is about to go through a custody battle for her 2 year old. Unfortunately, she is from VA and we need to find a lawyer there. Without any connections, we have been calling around and interviewing them. Their rates range from $175/hr to over $400/hr. Do you mean to tell me that an attorney deserves to make that money and drive a mercedes, live in a mansion, etc. But electrical contractors, who everyday are responsible for the life safety of hundreds of people, don't?
I am just a contractor. I'm not an industry advocate or a business advisor. I just get frustrated when the 1 man shop with the 10 yr old truck, no benefits, no pension, no anything tells me that I'm too expensive.
Sorry for the rant. I know I jumped around and might not make complete sense, but it is frustrating.
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mahlere
| by the way, Marc are you hiring?
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MONOLITH
| mahlere, an excellent post.
Some of us strive to elevate our industry, to the benefit of us all; and some unknowingly keep it down.
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northpowell
| By the way, Willie, your second question asked what to do if the market could not bear the price. Once you have established your true costs, it is up to you to decide how much profit to make, if any at all. However, if you cannot charge your cost only, you need to either reduce expenses or bring up your productive hours.
Reducing expenses is sometimes difficult but bringing up productivity may be a little easier. Make sure you are using a dispatching tool that will help you minimize your drive time by assigning the closest techs to a specific job. Provide scripts and procedures to your employees so they can minimize the amount of time spent chatting, getting tools out of the truck, etc. Teach them how to maximize a call by providing a cursory inspection to get add-on work or sell electrical safety inspection agreements. All of these things will permit you to either help reduce your costs for a call or bring in more money from a call while providing additional value to the customer.
This brings on another point. If all you give your customer is a price, that is all they will have to compare you to other shops. And I guarantee you that there will always be someone out there with a cheaper price. Educate your customers on why they should use your company. Perceived value is the most important criteria for any purchase.
Let's say you buy a new car. All a car is really is four wheels and an engine to get you from point A to point B. However, knowing that it had rave reviews from Car and Driver, that your dealer received the Best After-Sales Service award for 3 years running, getting a phone call from your salesmen asking you how much you are enjoying your vehicle, all enhance your perceived value of your vehicle purchase.
You must use the same philosophy for your business. Make sure your customers know how long you have been in business, that you guarantee their satisfaction, that you have been serving the community for 10 years. Make sure your truck looks good, your techs look clean, and your front end is professional. Offer them some references whether in written format or someone they can call to confirm their expectations. Ideas like these will give them something else to compare you to other than just a price. I know that I am willing to pay a little more for better service from a reliable company. I also know that if I get a good impression for the person I deal with on the phone, that goes a long way as well. Your front end is your entire company in one phone call, make sure they are representing your company properly.
Also, after sale efforts will help insure repeat customers. Have someone called them up after the call is complete for a satisfaction survey, it will impress them as well as provide you with valuable information about your company and ways you can improve. Leave behind written information about your company, a magnet, cup or something that will keep your name in their homes or offices.
So bottom line, after you have "trimmed the fat" and maximized your efficiency, you have to charge what you need to pay the bills. But perceived value will go a long way to getting you those customers that are willing to pay a little more for better service. And aren’t those the type of customers that you want in your customer database anyway? Don't forget, whether you charge 10 customers $100.00 or 8 customers $125.00, you make the same money. However, with 8 customers, you have two less calls to deal with, so don't be afraid of losing a call here or there, you'll make it up with a better brand of customer!
I hope this helps!
Marc Blanchard Service Doctors (87) 782-3627 ext 21
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northpowell
| Mahlere, as a matter of fact, we are! 
Great post by the way!
Marc
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Doug Wells
| Thanks for the posts you guys. I am slowly trying to get into a Flat Rate type of Electrical Contracting for resi stuff. I understand that i quote a real low price in my previous post and do under stand that I should have posted a price of about 325.00. I was being on the cautious side .Too Bad i am like that with my customers that call for pricing. I shouldnt be so cautious and let the customer decide if my price is too high.
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John A. Peters
| quote: Let's say you buy a new car. All a car is really is four wheels and an engine to get you from point A to point B. However, knowing that it had rave reviews from Car and Driver, that your dealer received the Best After-Sales Service award for 3 years running, getting a phone call from your salesmen asking you how much you are enjoying your vehicle, all enhance your perceived value of your vehicle purchase.
Well said. I like it. It shows how money can be secondary. I apologize if I put you down when you first showed up here. You are welcome, and thanks for the guidance.
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willie
| Marc- Thanx for the guidance. As a second generation contractor, I should know all this stuff, but I know more about grounding than I know about business. After doing some soul searching I can tell you that I'm lazy on the marketing side, and keep my pricing at about the upper level of moderate, and serve people by word of mouth and a fairly decent YP ad. It might be truthtelling time to forget what the competition charges, figure out what my breakeven is, and charge as much as I can get away with, and market harder to maximize profit.
Will
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jcarl
| hello this has been the most informative post i've read so far, not only do i find fellow sparkies with the right of idea of promoting our industry and raising the bar as far as service work goes, but to actually find out that i was doing my mark up wrong was an added bonus. i'm sick of losing jobs to other people over a price point i can't match, presently my company consists of 2people,my brother and i. we argue over prices all the time my philosophy is that quality over quantity will get the work, his is quicker,cheaper, faster. with all the costs we pay out insurance,2 trucks and rental space, there are times i want to throw in the towel, but i just keep plugging away, knowing that the slow days will all pay off in the long run. thanks for letting me vent!!!!!!!!!
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John A. Peters
| I wonder if there is a way to translate the above in to something that will work for a small new company. I gather that the people here who need help the most, do not have a years worth of history in thier accounting program. They may not have a computer.
We agree they need to know the true cost of doing business by knowing their fixed and variable overhead expenses, but what are these? It may be easier to say what are the expenses that are NOT in this overhead group.
I think the overhead costs may be everything except thoses costs that can be allocated to a particular job. Yes? If you don't know which job caused the expense then it is overhead. Easy example, phone costs.
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John A. Peters
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quote:
I would bet (and I am a craps player) that everyone on this board - if you truthfully filled out a break even worksheet - would be within $30/hr of each other. Whether you were a 1 man shop or 100 man shop. I say this because a 1 man shop that wants to work only 40 hrs a week total (paperwork and all) will only have approximately 15 productive field hours. A 100 man shop has a much higher burden to cover.
You say 15 productive hours a week, I get 32 hours. Why does our math differ by a factor of two?
There is a an old rule of thumb (1 to 4 ratio) that I have heard many times over the last 30 years from several people that says that if you making good money working for your boss and you wanted to be in business and be your own boss and have electricians working for you, you would need four men to make the same money as you did working in the field.
You can translate this to mean that you can (have to) make a 25% profit off of each man to match your previous salary. So there are five workers, four are productive and one is "non productive" (you), for a total of five men. So our company is 4/5 productive assuming you have no office help, just you. Mathematically 4/5 is the same as 80% So your company should be billing out 80% of the hours worked by the whole team, including your bid time, office time, etc. etc.
You could extrapolate this to mean that if you are a one man shop and you are that same 80% efficient, then if you work only 40 hours a week (ha ha!) you will be able to bill out 32 hours each week.
So as a craps player (which I am not, so please excuse my joke here) I guess I match you and raise you 17?
The other point I will make is, if the new man's wife is working outside and has insurance and the house is inherited and the garage is rent free etc. then his expenses are truly lower than the large company. For example I started out that way, and I advertised in the penny shopper. I would tell the customers to get two other bids before I came to look so they "would recognize a good deal" Yep I got my work by being the low priced guy!
Then one day my insurance agent said "If I am going to cover you with workers comp then you will have to take out general liability insurance too. Up went the costs. Over the years the expenses went up till now I am NOT the low priced leader. I try to be the only bidder. I kept looking at the books and watched to see what areas of electrical work paid best. Then I moved in that direction. One day some one said "If you like old houses, and that is the best money and the least trauma, why not turn down the other work, and tailor your advertising to old houses?" A light bulb event!
I hope this helps.
p.s. To my readers, who have not responded until now. I challenge you to NOT answer me and the others here, but to type up a personal question from your own experience or lack of it and open a new thread here. We like helping. It is fun, but I can not hear your thoughts. Is that you I hear typing? Remember to compose your note some where else that has a spellchecker and a way to save a backup, and then copy and paste. This is your insurance against loosing your text.
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John A. Peters
| Marc Blanchard, said <snip>quote: we would appreciate you "picking our brains".
I feel much better now that you have been volunteering some helpful information here, rather than asking us to pick your brain, or maybe that is what we are doing now. . . I think that as the people in the small companies that are here, grow their companies, eventually they will become so busy that they will come to your for professional help. I have a "part time CFO" that helps me. He audits our books every quarter, and gives phone and email business advice and acts as a mentor. Had you been available years ago, I might have been working with you. I still might, since my man is mostly a CFO, not a management specialist in my field, like you seem to be judging by your latest posts. P.S. Thanks for them.
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Russell120
| I really liked Marc's post. Very informative.
An additional point that I would like to be make. There are two models to making money in the construction industry. There is the large and (more importantly) long time frame construction jobs that have very low margins, but use the customers own money to leverage a higher rate of return. That will only normally only work for the big guys (unless you have a lot of service agreement clients).
The other model is the one that Marc mentions, which is to make a decent to good profit on a lot of smaller jobs and just keep turning your money. You will essentially get the same advantages as you get with compounding interest rates. In other words if you start with $10,000 and every month you get a 5% return on your investment, after 12 months your capitol will be at $17,959. But you have to get your money quickly and keep working it.
But you have to at least break even or you will go under much quicker then you think. In the reverse of the above situation, lets say you charge enough to cover your direct labor costs, but not your overhead so you lose 5% each month. You will only have $5,404 at the end of the year, and your overhead (fixed) costs likely have not gone down as quickly as your capital has. I think what happens to a lot companies (big and small) that price aggressively is that they bleed themselves to death with a bunches of small losses and survive on the occasional windfalls. And when they don't get that windfall or hit a particularly rough patch they go under.
What is the typical survival 5 year survival percentage for a new electrical contracting or service business? What is the survival rate of a 5 year old company? I'll bet both numbers are scarily small.
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northpowell
| Howdy all,
It has been very busy for us at Service Doctors today. Just got home a few minutes ago and was very pleased to see all the new posts on the forum. It is 10:45pm now and I must spend a little quality time with the family. My wife just gave me a dirty look when I went into our home office to check out the latest posts. So I must sign off a little early tonight but could not resist saying a few words.
Thank you all very much for the nice posts. I am happy to see that our advice is helping some of you folks out. I actually received a few calls today from fellow members starting up their business as well as a few others that want to fine tune their operations. This is indeed a dynamic group of people that strive to improve. Also, I wanted to thank John personally for his very nice post. There is something to be said about a man that is willing to put out that extra effort to make things right. I look forward to many more exchanges John, I am sure I have a lot to learn from you as well!
As for Russell, Jcarl, Willie and Doug, thanks again for the more than kind remarks! I look forward to getting to know you all a little better and perhaps working together in the future!
On this note, I must sign off, you know the golden rule...
Happy Wife, Happy Life! 
Until our next chat, have a good evening!
Marc Blanchard Service Doctors International (877) 782-3627 ext 21
"What would you attempt to do if you knew you could not fail?" - Robert Shuller
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