# Net Profit?



## timberseal (Jul 24, 2008)

Curious where your net profit falls (% wise) for those in the business of snow removal (not subs). I just read a for sale ad for a company doing 1.8 million a year in business with a net profit of $237K. That seems LOW.... what is that around 8% net on gross sales? 

I've been in business for 13 years now and we're just starting to get into snow plowing again. That would make me sick to see a 8% net though considering what would be involved in doing $1.8 million in business :crying: We net around a 35 to 40% net and it's been similar in other businesses I've been involved in as well.

BTW ~ The above company was for sale for $750,000


----------



## snow patrol (Nov 30, 2001)

It's 13% not 8%; and yes its still low. Historically we average between 60% to 70% GP. By the time we clean it up we net closer to 45% to 55%


----------



## timberseal (Jul 24, 2008)

Oops my bad.... yes 13% and yes thats still horrid.


----------



## M&M (Sep 8, 2008)

Most businesses in our country would kill to have 13% margins. Take a look at financial reports of public companies. Yes I know, this is a small business and it's apples to oranges but I can tell you that 99% of snow plowing companies would love to see $230K at the end of the snow year. You are right that it is a lot of effort to generate 1.8 in sales but I'm sure the owner (the guy bringing home the $230K) has a large staff that handles the heavy lifting. Generally, you can sell a business at 3 times net profit plus property/plant/equipment.


----------



## timberseal (Jul 24, 2008)

They were based out of Chicago so I suppose $230K over 4 to 5 months isn't bad (for the chief anyway) but to have a small business model yielding 13% just seemed rediculous. I can understand large corps having lower net profit percentages as they're often reliant on higher volume sales but it stinks to see that in the service industry.


----------



## dannyslawn (Oct 29, 2007)

Our snow operations net between 39% and 50%.


----------



## Neige (Jan 29, 2008)

Net profit is a tricky thing. You guys that are saying above 20%, are you getting a full time salary during this period. I am sure that the owner of that company was drawing a large salary during those winter months.


----------



## JD Dave (Mar 20, 2007)

These threads are a little like comparing blade sizes, no one uses the same ruler.


----------



## Mick (May 19, 2001)

You can MAKE money plowing snow?


----------



## snow patrol (Nov 30, 2001)

> "Net profit is a tricky thing. You guys that are saying above 20%, are you getting a full time salary during this period. I am sure that the owner of that company was drawing a large salary during those winter months. "


Good point! If the owner take $100K in salary, that alone translates into about 5.5%. Also, if you run your snow plowing as an extension of a bigger business; say landscaping, then the numbers will be much different than if you are strickly a snow control company. I.e. your overhead (rent, insurance, phone, utilities, advertising, administrative, etc.) for the year will be spread across both the snow season and the landscaping season (12 months) as apposed to just the snow season (3-4 months).


----------



## snowman55 (Nov 20, 2007)

net is what the company made... not the owner who runs it. Net is whats left after you pay all expenses including depreciation and all salaries including the owners. it drives me crazy to see guys say they net 40% it connot be true. if it was the industry would be flooded buy other companies with capital. now maybe 1 guy has gravy accts and is making a killing but if that was industry standard capital would flow into the industry dropping prices. law of economics.


----------



## Hunter9 (Jul 7, 2006)

snowman55;661398 said:


> net is what the company made... not the owner who runs it. Net is whats left after you pay all expenses including depreciation and all salaries including the owners. it drives me crazy to see guys say they net 40% it connot be true. if it was the industry would be flooded buy other companies with capital. now maybe 1 guy has gravy accts and is making a killing but if that was industry standard capital would flow into the industry dropping prices. law of economics.


x2, net profit is always "Net" after 100% of all company expenses are considered. Running 50, 60 or 70% is impossible....unless maybe you are Google


----------



## dannyslawn (Oct 29, 2007)

I'm glad I came back to read this thread again. Our snow operations nets between 39% and 50%. This figure accounts for all overhead, saleries, cost of sales,short term debt, long term debt, and every other outlay of money associated with getting the job done. When that's all said and done that 39% to 50% that's left goes into my pocket. I'm the owner of the company and when all else is paid then it's my turn for a pay day. So I guess in if you want our real net it would be 0%.


----------



## snowman55 (Nov 20, 2007)

you are correct Danny. but to compare to other business standards you should set a salary for you. not as owner but for the position you hold a CEO should make 6 figures. what would it cost you in wages to replace you and you were a silent owner? that is the figure you should use as a salary and deduct as an expense. 

dept is not an expense. interest on that debt is. You also have to figure deprecation as an expense(roughly 15% of all assets)


----------



## creativedesigns (Sep 24, 2007)

Mick;661220 said:


> You can MAKE money plowing snow?


Hmmm, not sure 'bout that one Mick? LOL


----------



## Mick (May 19, 2001)

creativedesigns;675423 said:


> Hmmm, not sure 'bout that one Mick? LOL


Sometimes I wonder. But probably a good topic for another thread.


----------



## JMHConstruction (Aug 22, 2011)

I'm going to bring this 8 year old thread back to life. Do any of you guys on here now net anywhere close to this?? I'm talking real net, after salary and EVERYTHING has been paid. If so, is it because I'm so small, subcontracting, don't get much snow, or maybe all 3 that I don't net this? I RARELY net anything, let alone 40+% some of these guys are saying. I get paid, don't get me wrong, but not much is profited with my snow operations after job costs and overhead. Maybe I need to get my own accounts next year (too late now), and actually make some money.


----------



## Philbilly2 (Aug 25, 2007)

JMHConstruction said:


> I'm going to bring this 8 year old thread back to life. Do any of you guys on here now net anywhere close to this?? I'm talking real net, after salary and EVERYTHING has been paid. If so, is it because I'm so small, subcontracting, don't get much snow, or maybe all 3 that I don't net this? I RARELY net anything, let alone 40+% some of these guys are saying. I get paid, don't get me wrong, but not much is profited with my snow operations after job costs and overhead. Maybe I need to get my own accounts next year (too late now), and actually make some money.


This sums the reason I no longer have a snow operation in my company... I loved to do it, my accountant did not.

I believe the margins could be there if you structure properly, and have the right market and niche, but in my case, the construction side was better to just let idle and do small winter work than screw with the plowing.

We still go out on big snows to play hero at the schools and hospitals that we service on a day to day basis as we have the larger equipment that they don't. When they need us, my guys can still get the regular wages that they typically get, so it is just the day to day operations for me.


----------



## Philbilly2 (Aug 25, 2007)

And on another note, the OP was speaking about 13% profit... 

I had an estimator working at a company that I worked at years ago tell me he shoots to make 20% on jobs and is happy to make 10%. 10% profit at the end of the day keeps lights on, people employed, and is a in the black number... The boss my not get a new truck that year, but at 10% PROFIT on every job he estimates, we will all still have a place to work tomorrow.

That kinda stuck with me when I went out on my own. 

I try to make a little bit a lot of times, not a lot once...


----------



## JMHConstruction (Aug 22, 2011)

I pay for pretty much all my "yearly overhead" in the 8-9 months of normal work. Then we basically do the snow removal to keep my main employee somewhat busy and to keep paying my salary. Some years I definitely turn a profit, but usually maybe net 4-5%. I'm adding a truck this year, so we will see how that helps. I enjoy doing it, and the guys like the little extra income. I'll keep doing it and maybe keep growing, but I don't see every making a 40-50% net profit. Maybe one day payup


----------



## JMHConstruction (Aug 22, 2011)

Philbilly2 said:


> And on another note, the OP was speaking about 13% profit...
> 
> I had an estimator working at a company that I worked at years ago tell me he shoots to make 20% on jobs and is happy to make 10%. 10% profit at the end of the day keeps lights on, people employed, and is a in the black number... The boss my not get a new truck that year, but at 10% PROFIT on every job he estimates, we will all still have a place to work tomorrow.
> 
> ...


As a whole, my company usually been profiting between 10-25% (not this year ) as the company grows. I guess if I look at snow as an addition to my other business it's all profitable, but the snow by itself just pays my salary while we aren't doing jobs in the winter.


----------



## ktfbgb (Jan 31, 2016)

JMHConstruction said:


> As a whole, my company usually been profiting between 10-25% (not this year ) as the company grows. I guess if I look at snow as an addition to my other business it's all profitable, but the snow by itself just pays my salary while we aren't doing jobs in the winter.


Same boat here. We do it to diversify and keep positive cash flow during the slower winter months. My guys like it because it gives them more steady income over winter. I get to take a few bonuses for Christmas and such but mostly pays my paycheck over winter and keeps my guys from looking for a new employer for the winter. We still do construction over winter it's just slower so I can't afford my guys to walk out on me lol.


----------



## John_DeereGreen (Jan 2, 2011)

We net 32.6% on 980k in snow only last season. 

Summer maintenance, lawn/landscape...lets not go there. If we break into double digits I'm jumping for joy. It's been running between 7.9 and 8.7 the last couple years on 1.5 million in sales.


----------



## JMHConstruction (Aug 22, 2011)

John_DeereGreen said:


> We net 32.6% on 980k in snow only last season.
> 
> Summer maintenance, lawn/landscape...lets not go there. If we break into double digits I'm jumping for joy. It's been running between 7.9 and 8.7 the last couple years on 1.5 million in sales.


Out of curiosity, how many trucks and other equipment do you have? That (to me) is a lot in sales for snow. I'm hoping to do 10k for a truck and 15k for my 2 sidewalk crews. My truck numbers might be a little off, but it will be my first year plowing in my own truck and not someone else's for $20/hr. Usually run 2-3 sidewalk crews. We also only average 22-24" of snow. If I can get 25k in snow I'll show a small profit.


----------



## JMHConstruction (Aug 22, 2011)

ktfbgb said:


> Same boat here. We do it to diversify and keep positive cash flow during the slower winter months. My guys like it because it gives them more steady income over winter. I get to take a few bonuses for Christmas and such but mostly pays my paycheck over winter and keeps my guys from looking for a new employer for the winter. We still do construction over winter it's just slower so I can't afford my guys to walk out on me lol.


I pretty much got tired of every bid I went on wanting a "winter" discount, so I just don't work for about 3 months and avoid it. Production drops so much in the cold also that it's just not worth it for me. Plus the guys like the break between snowfalls, then they just collect unemployment on the weeks we don't work. It also gives me lots of time to fix all the tools and everything that breaks. Works out good for us. If I can pay my salary with snow, awesome. If it's like last year and we only gross 6k with only 3.5" of snow, I just make a less. I pay myself more than enough the rest of the year, so I'm good.


----------



## ktfbgb (Jan 31, 2016)

JMHConstruction said:


> I pretty much got tired of every bid I went on wanting a "winter" discount, so I just don't work for about 3 months and avoid it. Production drops so much in the cold also that it's just not worth it for me. Plus the guys like the break between snowfalls, then they just collect unemployment on the weeks we don't work. It also gives me lots of time to fix all the tools and everything that breaks. Works out good for us. If I can pay my salary with snow, awesome. If it's like last year and we only gross 6k with only 3.5" of snow, I just make a less. I pay myself more than enough the rest of the year, so I'm good.


I'll have to mention the unemployment to the guys during off weeks never even crossed my mind. I have to pay for it they might as well use it


----------



## JMHConstruction (Aug 22, 2011)

ktfbgb said:


> I'll have to mention the unemployment to the guys during off weeks never even crossed my mind. I have to pay for it they might as well use it


My thoughts exactly! I had to make sure I was good to let them do it even though we randomly worked, and they just can't claim on weeks we've worked. I also may or may not pay cash after storms and only "pay" them once a month so it works out in their favor. But we won't get into that . They just don't collect on the week they get paid.


----------



## ktfbgb (Jan 31, 2016)

JMHConstruction said:


> My thoughts exactly! I had to make sure I was good to let them do it even though we randomly worked, and they just can't claim on weeks we've worked. I also may or may not pay cash after storms and only "pay" them once a month so it works out in their favor. But we won't get into that . They just don't collect on the week they get paid.


Got it.


----------



## Philbilly2 (Aug 25, 2007)

JMHConstruction said:


> My thoughts exactly! I had to make sure I was good to let them do it even though we randomly worked, and they just can't claim on weeks we've worked. I also may or may not pay cash after storms and only "pay" them once a month so it works out in their favor. But we won't get into that . They just don't collect on the week they get paid.


We refer to that as "creative payroll" round here...


----------



## Randall Ave (Oct 29, 2014)

I'm still trying to find the meaning of profit in relation to snow.


----------



## FredG (Oct 15, 2012)

JMHConstruction said:


> My thoughts exactly! I had to make sure I was good to let them do it even though we randomly worked, and they just can't claim on weeks we've worked. I also may or may not pay cash after storms and only "pay" them once a month so it works out in their favor. But we won't get into that . They just don't collect on the week they get paid.


I don't want to go there either, In the winter months you have to play some of that. Around here it will be hard to find a guy that you need a couple days a week and give up his whole UE check. Plus some of the union guys are giving up there weekly sub pay. I don't like it but what can you do.


----------



## FredG (Oct 15, 2012)

Randall Ave said:


> I'm still trying to find the meaning of profit in relation to snow.


LOL I'm still figuring out how to get a salary.


----------



## John_DeereGreen (Jan 2, 2011)

JMHConstruction said:


> Out of curiosity, how many trucks and other equipment do you have? That (to me) is a lot in sales for snow. I'm hoping to do 10k for a truck and 15k for my 2 sidewalk crews. My truck numbers might be a little off, but it will be my first year plowing in my own truck and not someone else's for $20/hr. Usually run 2-3 sidewalk crews. We also only average 22-24" of snow. If I can get 25k in snow I'll show a small profit.


Too many.

We have some constant service accounts that will see 10-15 tons of salt a night. Chemical plowing is what they're after. That's why the gross is so high. If we were dealing with normal trigger accounts the gross would be significantly lower.


----------



## JD Dave (Mar 20, 2007)

The best money I ever made plowing snow was when I lived with my parents and plowed with my daily driver. I'm pretty sure my % net has steadily declined since that time.


----------



## Mark Oomkes (Dec 10, 2000)

JD Dave said:


> The best money I ever made plowing snow was when I lived with my parents and plowed with my daily driver. I'm pretty sure my % net has steadily declined since that time.


I thought you still did?


----------



## Gr8WhiteNorth (Sep 27, 2007)

For the guys making the crazy profit-
-what equipment do you use and what rates per hour do you earn with them?
-what kind of work do you do? Residential vs commercial
-how much is your annual snow fall?
- how many times do you go out for snow vs ice mgt services?

I've been in the business for a long time, earn over $1M annually doing snow and am lucky to ever make a dollar of profit. I don't know if it's our low snowfall depth or low market prices? our rates are at the high end of of the spectrum. With the Canadian economy being in the dump, I need to start making the off-season count


----------



## theplowmeister (Nov 14, 2006)

Gr8 what do you call crazy profit?
you do 1 M in gross sales and lucky to get $1 go back to 1 truck and plow 10 drives youl make more $


----------



## John_DeereGreen (Jan 2, 2011)

Trucks, skids, wheel loaders. I won't post my hourly rates, too much local competition watch these boards. 

All commercial. Anywhere from 10 parking spaces to 15 acre lots. 

32"-36" average. 

About 15 and 25, plowing and salting events.


----------



## Mark Oomkes (Dec 10, 2000)

Gr8WhiteNorth said:


> For the guys making the crazy profit-
> -what equipment do you use and what rates per hour do you earn with them?
> -what kind of work do you do? Residential vs commercial
> -how much is your annual snow fall?
> ...


Meh, I wouldn't hold my breath with the claims of some of these folks.


----------



## dycproperties (Nov 19, 2012)

Gr8WhiteNorth said:


> For the guys making the crazy profit-
> -what equipment do you use and what rates per hour do you earn with them?
> -what kind of work do you do? Residential vs commercial
> -how much is your annual snow fall?
> ...


I am not quite where you are in sales but have similar experience as far as profit at this point I am happy to make a wage and gain equity in the yard full of equipment I have. I have been buying more brand new equipment the last few years and the dream/plan is that Once it is paid for it will still have a lot of life / residual value left and that's were the real profit starts. Problem is we keep growing so the payday keeps getting pushed as we add equipment. We get roughly 40 plow events and 50 sands in a season


----------



## Philbilly2 (Aug 25, 2007)

Gr8WhiteNorth said:


> I've been in the business for a long time, earn over $1M annually doing snow and am lucky to ever make a dollar of profit.


Better question is for you. Why if you are doing $1M in annual revenue, what is causing your profit margin to be so low?

Is your overhead to high for what you can charge?
Is your equipment not productive enough for your rate?
Do you have to many call backs that you cannot charge for?
Are you tripping on dollars to pick up pennies?


----------



## John_DeereGreen (Jan 2, 2011)

Philbilly2 said:


> Better question is for you. Why if you are doing $1M in annual revenue, what is causing your profit margin to be so low?
> 
> Is your overhead to high for what you can charge?
> Is your equipment not productive enough for your rate?
> ...


That's a question I had, but my way of asking it wasn't nearly as nice.


----------



## Philbilly2 (Aug 25, 2007)

My wife says I am a word smith... When I don't let my mouth and brain get in the way...


----------

