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One measurement is what Les Cunningham of Business Networks calls the "risk quotient." "It's a lot easier to go upside down with a company that's too big than with a company that's small," says Cunningham.
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In the March 2001 issue, we set the benchmark for owner salary at 10% of gross revenue. Fortunately there are lots of other perfectly legal ways for company owners to compensate themselves.
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Back in the June 2000 issue, we set the REMODELING benchmark for net profit at 10%. According to financial data collected twice annually by Business Networks from each of its 100-plus remodeling company clients, the average net profit actually reported is just over half of the benchmark.
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(The data comes from Business Networks, but the identity of the company remains unknown to us.)The result was a less than 1% fluctuation in gross profit.More important is the way Company A has planned for the rapid growth of the past three years.
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Try as we might to eliminate them, change orders are part of the business of remodeling. Even a change with no cost attached (such as a tile color change) should be recorded to prevent misunderstandings later.
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In the United States, there are 2,080 standard working hours in a year. For a variety of reasons, however, few remodeling company employees are consistently productive eight hours a day, five days a week.
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Membership in REMODELING's Big 50 now numbers more than 1,000 individuals. That's a large enough number to make for some interesting statistics.
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To avoid being fooled into misidentifying the source of cost overruns, Jud Motsenbocker of JUD Construction in Muncie, Ind., makes the following recommendations: Compare hours estimated to hours spent. Summary reports usually provide enough information, but sometimes they can be misleading.
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Otherwise, each employee will describe what they were doing differently and the data will be difficult to input and analyze. Employees are more likely to cooperate if they have input into the estimating process, followed up by regular summary reports that show how actual performance compares to...
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If you only have one part of bookkeeping done right, it better be your progress job costs," says Mike Weiss of Weiss & Co. in Carmel, Ind. Because variances in labor costs are a major source of slippage, tracking payroll is key to accurate job costs.