Replies

1. 
   BobKovacs | Oct 13, 2004 01:37am | #1

   Well, somethings out of joint if your numbers are correct.  Three scenarios: 

   1.  What you overheard about OH being $60k/mo is wrong.  Even if sales are $1 million, OH at $60k/mo is $720,000.  That leaves $280,000 for labor, subs, and material.   The markup multiplier would have to be around 4 to get a sale and cover costs, yet along make a profit.

   2.  Their annual volume is far more than you've guesstimated.  If they truly have $720k in OH, they should have a volume of somewhere around $3 million. 

   3.  They're extremely top heavy, and everyone works for peanuts.  With an office staff of 8 people, $60k in overhead would put the cost per employee at around $5,000/month, including benefits and other burden (this assumes that $20k/mo goes to rent, insurance, owner salary, etc.).  Using a typical multiplier of 1.5 x base wage, that puts the average employee in the group at around $3,300/mo, or $20/hour.  Maybe that's not bad for where you are, but it's way low for NJ.

   Even with #3, they'd need a far greater volume to make their numbers work.  I know many one-man shops that do $1 million a year standing on their heads- 8 office and 6 field personnel should easily handle $3, 4, maybe $5 million.

   Bob

2. 
   davidmeiland | Oct 13, 2004 02:38am | #2

   If you have three people selling, then you either need WAY more field staff or you need to sub a whole lot. Sales should be in the $5M range like Bob is suggesting.

   Last company I worked for as a PM had three sales, two designers, 4 PMs, office manager, owner, VP, and about 25 field staff, $6-7M annual. No carpentry subcontracted.

3. 
   SamT | Oct 13, 2004 02:56am | #3

   Just looking at your three sales personel.

   Pay = 6% same as a realtor.

   They earn$4k/mon each or about $24 /hr

   12K/6%=$200k sales per mon

   $2.4M/annum gross sales

   Of course if they earning 12%, then your sales could be $1.2M per year

   Guessing at some more of your numbers:

   Title                Wage          annual cost($K)
   Lead              $20                $240
   Carpenter        15                 135
   O.M.                 15                 40
   Accountant       20                 50
   Designers         25                 130
   PM                    40                 110
   Sales                 50                150
   total cost of help                   $955,000

   Edit: Jet just reminded me of our friend Suzanne. She is the office of a firm that does between $2 and $4 million a year in sales. O.M., P.M., and Bookkeeper. Perry, the owner, does sales.

   SamT

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   Edited 10/12/2004 7:59 pm ET by SamT

   
   

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   Edited 10/12/2004 8:15 pm ET by SamT

1. 
   MisterT | Oct 14, 2004 03:56am | #4

   maybe it was 6000 a month!!?? does that sound better?

   72K/ year

   Or maybe 60K /year?

   How do those #s affect your analysis? 

   Mr T

   I can't afford to be affordable anymore

1. 
   SamT | Oct 14, 2004 06:23am | #5

   T

   You're Johnny-on-the-spot.

   What are your numbers for salary for all the help?

   $6K/mon should cover office expenses, + phones, rent, etc w/o wages.

   Any paid benes, ins, vacation, etc?

   There's a lot more to OH than just the above.

   You want a ballpark? Including the parking lot and the liquour store across the street, gross income of at least $2M for that many personnel(sp).

   SamT

   Vote for the future. Put a third party in parity with the big two

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