Thread: WHo knows there profit margin?

We did an analysis of the last year, What is a normal profit margin per inspection. per year?
what percent do HI's spend on marketing? education ?
Thanks,
Stephen

To find the answers to your questions and much, much more. Contact Brian Hannigan (the administrator of this board) to obtain a well conceived and put-together spreadsheet called, "The Cost of Doing Business".

No inspector should be without it, new or old. The cost is paying pennies to re-coup dollars back after obtaining the information needed.

Give it a try... you'll be glad you did.

Rich.

Stephen,

Since most HI's work on a individual basis, it would be difficult to determine what is "normal" in the profit line.

One may hustle, another may sit and look at the phone all day waiting for the call.

Your need for income may be more or less than another HI and would determine how you approach getting business.

With the market as it is now, I'm sure the "profits" are down somewhat from the previous years we have had.

Personally, I'm not one to chase the bottom line, percentages, or costs all the time. If I'm working, the business takes care of itself. I've learned as many of other seasoned HI's will tell you that when business is good you put some back for the rainy days.

JMHO

Originally Posted by Rick Hurst

I've learned as many of other seasoned HI's will tell you that when business is good you put some back for the rainy days.

JMHO

Pay yourself first!!! What Rick posted is good advice. Every check should be split by percentages. I take 85% and post to my checking account and the other 15% to savings. That works for me... I find work as if the 15% does/never-did exist.

Rich

I was wondering what percent of your cost of an inspection is spent on:
Advertising/Marketing
Gas
Batteries, tools
Internet, websites, C
Cell phone
Insurance
Tax license, county and city buss. license
Accountant
Education , Ashi, Nachi
Then what is the profit left over/savings
This is all rolled into the cost of each inspection, right?
My gross sales and my net sales are two different numbers.....not even close

This is what I was looking for.
Thak you,
Stephen.

Originally Posted by Stephen Houmard

I was wondering what percent of your cost of an inspection is spent on:
Advertising/Marketing
Gas
Batteries, tools
Internet, websites, C
Cell phone
Insurance
Tax license, county and city buss. license
Accountant
Education , Ashi, Nachi
Then what is the profit left over/savings
This is all rolled into the cost of each inspection, right?
My gross sales and my net sales are two different numbers.....not even close

This is what I was looking for.
Thak you,
Stephen.

Stephen,

As Rich noted above ... get with Brian Hannigan or look almost anywhere on this forum and download/purchase the "Cost of Business". That small investment will help you in all ways of where your $$ are going or need to go.

I purchased it many years ago and I review it several times each year.

As Rich noted each inspector's "expenses" can/will vary ... especially for those who are running their own show. I'm not even going to try and guess about those who are working for U.S. Inspect, LandAmerica or other such national multi-inspector firms.

The margin is slimmer than I like. I will probably be letting my license hit the "inactive" status when it expires. There is no way I can compete with the low ballers, and make enough to operate the kind of business I would like. I drive an economy vehicle, have all my tools, but by the time I do the inspection and get the report out, I am looking at an hourly rate of about $40.00. I can easily make that doing other things, without the risk.

I put a lot of time into research/education, so I can provide my customers with high quality service. That eats up time too that isnt included in the "hourly rate".

As far as Land America, etc. It just makes the whole thing look like any other service job. I wouldnt want to work for any one other than myself.

Originally Posted by Stephen Houmard

My gross sales and my net sales are two different numbers.....not even close

Sales are sales.

You mean Gross Income/Sales and Net Income.

The difference between my Gross and my Net was typically about $50,000 per year. And I was a one many company.

I suspect (because I've heard others say it) that that $50,000 per year is pretty typical for overhead.

Your Accountant as part of you P&L Satement will reflect the Profit (Cents on a Dollar).

I know my actual profit margin as the Accountant reviews and recommends adjustments to business practices monthly....

I am curious as to what others yield (if known).

Working off 2006 taxes and numbers, I kept about 60% in 2006. This year will be less as sales are a little (a lot) lower than last year, and the overhead stays about the same.

Thank you Jim,
Thats what I was looking for, sort of.
60%...not bad at all.

Use the "Cost Of Doing Business" spreadsheet. You will have to put your eyes back in their sockets afterward. But, you will stop raping yourself with every inspection that you do.

A addressed this question in another post today. I simply took my total business expenses as they were calculated in my taxes. Divided that by how many inspections I did for the year. This told me, on average, how much each inspection costs me. I was surprised to see that I was running about 30% cost per inspection. But remember that is every possible expense as reported in my taxes.
From there I can easily calculate how much I make with each inspection. What was more difficult was guessing a per hour rate, but when you're self-employed, who cares. The money is all yours anyway. You have to make the personal choice as to whether or not you are spending to much time "at work".
As for the details in spending. Just as with any budget, there are expenses you have no choice in. Such as vehicle, office, equipment and business fees (insurance, licensing, whatever). So I am not so sure you need absolute details for things you have to spend money on, versus the total cost of doing business.
Marketing of course is another thing. But in my case the 30% includes that. And it cover several phone books, flyers, the silly pens with my name, etc.
In general it is no different from any other budgeting you have to do. The hard part is not knowing how much you're going to make next week!