Million Dollar Company

Do you mean as opposed to an owner in the field? I would think any business that gets to that point would require the owner to be out of the field and running the business side of things with mangers and crew leaders taking some of the load off.

I am wearing all the hats now, it cant be done, for long, and still be successful.

8 key areas one is in charge of mastering as simple numbers book points out

I think by definition “absentee owner” means the owner doesn’t have their hands in the business from a day to day basis- they have (a) manager(s) to handle their role. Or they incorporate, and only sit in on board meetings…

These types of owners are the type that buy businesses as an investment, and will own dozens of businesses.

Correct me if I’m wrong, but its this type of owner you should have in mind if you plan on building your business to sell. You want the business to be autonomous, so to speak.

Someone who has simply removed themselves from the field so they can focus [I]on[/I] the business, is certainly not absent in my opinion.

I would submit to you that there are some absentee owners that DO work in the field

Good point. You can be absent in an ownership sense, having someone else run the business, and fill a “tech” position because you simply like the work. Hadn’t thought of that.

Ive read all the books and know I need to relinquish some control to others. I even know that some will be better at things than me, but that doesn’t make it easy to do. After 28 years as a cop, I’m still a little bit of a control freak. Just ask my wife. I realize that in order for me to grow, I have to let go a little. One thing I am more than willing to let others do is ladder work. I want the million dollar company. And with all I am learning here, I know it’s possible.

Just didn’t want this to get lost in the shuffle of all the hypothetical “absentee owner” back and forth.

• marketing
• supplies

I believe Chris has said about 10% for marketing so 1 mill require around 100k in marketing

that leaves a grand total of 250k unaccounted for . . .

(pretax profit of 100-150k =

100k left = owner compensation)

to recap, (and please correct this Chris, as Michael said)

1,000,000 Revenue

-333,000 Field Wage
-117,000 Insurance, payroll burden, work comp, benefits
-200,000 Office labor @ 4 people at 50k plus owner’s sweat equity
-100,000 Marketing expense 10%
-150,000 15% pretax profit cause this is an awesome Simple Numbers company
-100,000 owner’s wage

1,000,000 Grand Total

what’s wrong with this picture Obi Wan Kenobi, please help us, you’re our only hope
[MENTION=1]Chris[/MENTION]

well for starters now that I edit something else, operations equip, supplies and trucks is missing, there goes the awesome pretax profit

(I gotta dig up my biz miner reports on large wc companies and post what it shows . . . )

Owner wages ($50k) is included in the 200k. Two phone girls, Field Manager, owner. That’s your 4 office salaries, at $50k a pop, on average. Maybe phone girls make a little less, owner makes a little more… but average.

If I’m going to have a million dollar company, I better be making more than $50k

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1 mil, gotta see 15-20% IMO as owner.

I would believe plenty of guys in the forum, have an employee or 2, do 250-400k and see 150 off of it after everything is said and done

The main problem I see is… 30% for payroll is really a lot more at the end of the day once you figure in tax and contributions. We basically assume payroll will come to a grand total of about 50% when all is said and done.

That’s because they are doing a big portion of the production work…

Well actually that I re look you sort of have that allocated… You may need to re do office staf wages a bit.

Dont forget about:

Vehicles
Repairs
Damage - Customers stuff
Mortgage or lease
Fuel
Vehicle insurance, Liability, workers comp
Work supplies

I wish I had a copy of my budget here at home, I know Im missing other stuff…

So then it’s just choosing where you want to spend your time? By production you mean being in the field still, correct?

Don’t forget that the owner can take some of the profits as distribution on top of his salary.

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yep

the most profitable point at smaller sizes will always be with the owner in the field full time and then just layering the after payroll cost (contribution margin) of the employees on top of that healthy $ base.

But it doesn’t take too much growth at all for the owner to have to start trading field time/$ for mundane office or marketing, training, IT, startegizing ahead of office employees and creating systems for them and keeping even the office people’s schedule full and productive (that IS a job in itself too) etc etc. The bills/budgets/forecasting/projecting etc take time too.

And since more systems development and strategy of admin/finance/marketing is front loaded (planning, paving the way), there will be more demand on the front end of growth rather than the back end of it (execution).

if one is solo at 150k, then he will be reducing his income more and more and more until the backside of things when approaching a mil, then will be getting back to personal income he was making as a solo 150 k.

wouldn’t it be great if this was all mapped out or at least one real life example no matter how ideal or not? from 150k to 1mil, the expense % etc

I just love how Crabtree (simple numbers) called it the badlands, great analogy, because it is a long way across the desert to get out west for sure (150k - 1 mil)

From those I have talked to, seems like job growth was the simpler part, in their cases, along with debt, low income and a load of sweat equity. Then, after the fact, later came all the financial epiphanies of dialing in the budgets and finding out what worked for them and where everything needs to be and the maximization and optimization.