Expenses-when do i start making a profit?

[Rich]

Here's a link to those who are concerned about how their expenses affect their bottom line. It's an excel spreadsheet that enables you to, by plugging in your own numbers, arrive at a break-even point, that point at which all of your overhead expenses are paid and you can start seeing the fruits of you labor :)
http://www.stephenlnelson.com/free_stuff.htm
When you get to the page, scroll down to "Free Excel templates" and click on "Profit volume-cost analysis template".
The most difficult part, I found, was identifying the fixed costs and the variable costs, but once you have correct numbers to work with, you can play with different scenarios to see how your bottom line might be affected by changing your expenses or the price you charge.
Rich

[kodydog]

Thanks rich I'll check it out. I've seen a lot of upholstery businesses come and go. the biggest reason they fail, not keeping an eye on the bottom line.

[Rich]

Just curious, I wonder why there have been  nearly 100 views on this post but only one response. Is it b/c it's not relevant to the way most of us run our businesses, or something else?
Anyone?
Rich

[sofadoc]

Just curious, I wonder why there have been  nearly 100 views on this post but only one response. Is it b/c it's not relevant to the way most of us run our businesses, or something else?
Anyone?
Rich

I can only answer for myself. I'm a "one-man" shop. I make a profit on every single job that I do. The "bottom line" always takes care of itself. I've been in business over 30 years, and I've made a profit every single one of 'em.
I can certainly see where the spreadsheet would be of benefit to a "start-up" business, or one with several employees.
But the MAIN reason? I'm too set in my ways, Just hearing the word "spreadsheet" makes my eyes glaze over, my brain goes numb, and I curl up in a fetal position. :D

[Rich]

Sofadoc, thanks for the reply, I'm a one man shop also, been doing this for 22 years that way, but I never got the concept of how costs affect profits until I investigated break even analysis. I'd heard of it years ago and thought I might plug in my own numbers, but never got very far with it because it just seemed like too much work. What I like about this spreadsheet is that all the formulas are already there and you need only gather your own data to plug in. I find that It's interesting to see how, by doing one more job you can make a huge difference in profits after the break even point has been reached, b/c the fixed costs have already been paid. At that point, the income on that job is mostly profit, whereas all the preceeding jobs mostly paid the bills. It's like a rocket that has left earth's gravitational pull and needs only a small charge to get it to move further.
Pretty neat!
Rich

[sofadoc]

I find that It's interesting to see how, by doing one more job you can make a huge difference in profits after the break even point has been reached

Another dealbreaker for me.
I only have 2 hands. And as far as I'm concerned, there are only 8 working hours in a day (at least that's what my body tells me). I do all that I can in 8 hours, and then I go to the house.
So even if a spreadsheet says that 1 more job will make a huge difference in profits, I'm not too terribly interested in doing that extra job.
As I said before, I'm only speaking for myself. But I can see where a spreadsheet would be a helpful tool to most people.

[Rich]

I do all that I can in 8 hours, and then I go to the house.

You may have just summed it up for the other hundred or so.
Rich

[Saddleman]

Just hearing the word "spreadsheet" makes my eyes glaze over, my brain goes numb, and I curl up in a fetal position. :D

Now that is funny!!

Rich I looked at it and saved it to my computer.  I just have not had the time to dig into it.

I think it will help to see how to lower the break even point and raise those profit for the 8 hour 2 hand day.  I'm all about working smarter not harder.

Thanks for sharing it.

Loren

[bobbin]

The computer is not really my friend at this point.  I'm in the same camp as Sofadoc, with glazed eyes and even occasional tears of frustration when I'm tired and just can't seem "to get it".  But I do try to put in my time on the damned thing and am gradually establishing a friendlier relationship with it.   In general, though, I find it very frustrating and time consuming at this stage of the game.   Hence, no website just yet. 

I work "stock and time" and over the years I've gotten pretty good at giving good estimates on the time required to crank out a job, so I rarely pork myself in that department.  Also, I'm at a point in my life where I work to live, not the other way around.  If someone wants to nickel and dime me over a job... thanks just the same, I'd rather pull weeds in my gardens. 

[Rich]

The great thing about forums like this is that when an aspect of running an upholstery business becomes a bit too much to tackle, there's usually someone who can offer their experience and between a few of us, a solution can be reached. like I said in a previous post, I always had a difficult time understanding the concept of how profits are affected by expenses and by the time it takes to do each job, so I've found this tool to be very helpful. I never liked running my business by "the seat of my pants" but will admit I've done it that way more often than not. My accountant has not been much of a help either. If anyone would like to  give this a shot and I can be of any help, let me know.
Rich

[mike802]

In the upholstery field "just one more job" can take 8 to 12 hours, or more. :o  I'm with Bobbin on this one.

[Mojo]

Rich:

I had my wife make me a spread sheet specifically for solar screens. All I have to do is plug
in the numbers and it spits out a price. Everything is already formulated into the equation, thread
hardware, binding, fabric and labor. It makes it very simple.

Any other jobs I get I do a careful analysis of what my costs are and where I want to be on my profit margin and then go from there.

I will still grab your spreadsheet to see if there is something there I can use.

Thanks,

Mojo

[Rich]

Mojo,
Spreadsheets are great! They're like having a really good brain when they're set up correctly (The one I was born with is quite slow these days).  I have made many over the years and while some have passed into non-use others get used every day and I update them when needed.  Fabulous time saver and profit protector!
Rich

[papasage]

keep up with every thing and unckle sam will know what vyou are doing and git all the profit . :o ;D.
after 48 years i know i made a profit i have lived on what i made and  my shop building is paid off and my home and i have a  extry home i rent out . now if i could sell my shop i would retire and  go fishing   ;D