ha that was funny Dan as I was trolling thru this post thinking of my response just as I saw yours, lol
Overall, the %'s stay similar regardless of size, a one man show is just getting “paid” from many departments to comprise his total “take home pay”
whether you’re one man or bazillion employees you’re looking for 10% ideal as pretax net profit (after everyone is paid, etc, etc)
Pharmacutical industry has the highest net profits of ALL corp industries (hmmmm) at about 12% last time I checked.
I keep coming across this as far as window cleaning as an ideal:
(the perhaps “better” way to make more personal income is to increase gross revenues so that the owner’s compensation for that various duties he doing within the business total up to the personal income amount desired, rather than “raiding” the net profit, which the business will need in one way or another to move forward sustainably)
30% field (job) wages
15% to 20% (absolute max) for all things field (trucks, gas, payroll burden, equip, work comp etc etc)
15-20% administration - wages and all things office and home office or outside office (utilities, supplies, stationary, liability ins, computers,
20-30% marketing - advertising, phone book, direct mail, wages, staff or you for your time
10% profit
As Chris said, you just keep evaluating what can be cut or more efficient etc.
and one man or many employees, this is pretty similar. if you are one man, you are doing the office work, all the marketing and sales and all the field work. so you may make 100k a year on your 1040, but technically it came from all 3 departments it’s just that the field is where the $ come from so many folks totally “discard” all the other equally necessary time and effort in their way of looking at it.
hire an office person, it’s not an additional expense, technically, you were already doing it and getting “paid” for it, so it’s merely you NOT getting paid for office work, rather than ADDITIONAL expense.
Same pie, just divided up differently is all, or the pieces of the pie being served differently, if you are solo you have several pieces of pie on your plate
ok a tangent, but relating to the % being the similar no matter what size a co is
examples:
150k company one man:
45K for performing job wages (30%)
30k for operations (let’s say 15k for equip supplies, no work comp and truck and gas and 15k wages)
30k for marketing (let’s say 15k for phone book, display ads, direct mail and 15k wages)
30 for admin (let’s say 15k for supplies, stamps, stationary, programs, home office expense, and 15k for you to answer phones, input all this stuff and schedule etc etc etc)
15k pre tax net profit
you’re personal income or total wages would be 45K field squeegeeing, 15k “mgmt”, 15k sales and marketing, 15k office work = 90k personal 1040 income
15k Profit will end up being 12k in a sub chap S after tax and then you can take it all and make 105k in personal 1040 income
now let’s say you’re Donald Trump and you have staff for everything
you could still make 105k in a year, it would just take 1,050,000 in annual revenues at 10% as the business owner ONLY
the % would still be similar, just that instead of you being reimbursed for doing office work, sales work, mgmt etc you would be paying a operations mgr, an office mgr and her assistants and a marketing mgr and his assistants, so you would not be getting those wages or doing THAT WORK in ADDITION to the net profit, since you would not be working IN the business in this scenario
% are the same, just radically different scales and purposing of funds
hope this makes sense to somebody, if it’s clear as mud, ask an additional question please
