I am being given a business

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Brad2770

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Inquired about this. Not exactly what I want to do, but the way everything is going, if I wait it’s only going to be more difficult.
 
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Brad2770

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I was paid out a bit over 27k for my wrecked truck. Finally found one for less than 30k.
Going to get it today.





Edit***

I got the truck. They gave me a secured bed cover as well. Payments are less than my previous truck (no extended warranty on this truck, so that helped price).
 
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Brad2770

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So I did end up getting the warranty. But with my credit being way better (previous truck was 12.99 and this one is 4.99) and they gave me employee pricing for warranty, I only pay $14 more a month on a truck that is a step up in trim, secured bed cover, and is $8k more expensive than I did on the previous one.

The bastards wouldn’t let me have my free oil change I never used on my previous truck though.

99483997-01C3-4A1B-8D54-D93623358578.jpeg
 
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Brad2770

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Bare bones minimum.

I’m looking for the quickest way to build a customer base that also works well with my schedule and what equipment I have. Mosquito applications would be the way to go. It’s something I can just show up and do and then leave. No appointments and I don’t have to go into their house. The minimum price I will charge will be $40. It goes up in increments there, based on how many gallons I use, but that’s the base. I need about $3000 a month to live. That’s bare minimum. My first goal is to get to the point I’m 100% self sufficient.

The question (for business owners):

Based on my bare minimum price, how many customers would I need to pay myself and still support the business and pay proper taxes? I’m looking for a realistic short term goal here. I don’t need exact math, just something to aim for.

My current guess is about 120-130 regular monthly customers. That would support me through the active months (8 months out of the year).
 

Sanrith Descartes

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Bare bones minimum.

I’m looking for the quickest way to build a customer base that also works well with my schedule and what equipment I have. Mosquito applications would be the way to go. It’s something I can just show up and do and then leave. No appointments and I don’t have to go into their house. The minimum price I will charge will be $40. It goes up in increments there, based on how many gallons I use, but that’s the base. I need about $3000 a month to live. That’s bare minimum. My first goal is to get to the point I’m 100% self sufficient.

The question (for business owners):

Based on my bare minimum price, how many customers would I need to pay myself and still support the business and pay proper taxes? I’m looking for a realistic short term goal here. I don’t need exact math, just something to aim for.

My current guess is about 120-130 regular monthly customers. That would support me through the active months (8 months out of the year).
We discussed this portion of being a business owner back when you started. You really need to understand the financial side of running a business. You dont need fancy software right now, but access to Excel will make your life better. or I think there might be a free google knock off of it. You have got to understand how sales tax works and most likely hire a bookkeeper if for nothing else than to file your quarterly sales taxes with the state. Unless you can teach yourself how to calculate it and do it.

The answer to your question though is one only you can answer. You need to calculate your costs and subtract it from your price to know your net profit on a job. Once you know that then you can do the reverse math to look at how much you can pay yourself. Odds are you wont be an actual employee (avoiding payroll taxes) and instead just take distributions of the profits which you will note on your income taxes.
 

Brad2770

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I guess my question is this:

At least until I get a larger base and I’m not beholden to a full time job, is it feasible to basically pay the business the bare minimum (taxes, supplies, daily maintenance costs) and pay myself the rest so I can be independent or should I follow the 30/30/30 rule?
 

Sanrith Descartes

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I guess my question is this:

At least until I get a larger base and I’m not beholden to a full time job, is it feasible to basically pay the business the bare minimum (taxes, supplies, daily maintenance costs) and pay myself the rest so I can be independent or should I follow the 30/30/30 rule?
There isnt a single answer to that question. Usually in your position you would continue living off the salary of your "job" and reinvest every dollar you make in the business back into the business to grow the revenue and customer base.

Keep this in mind also, some of that money you company makes is going to be needed for all sorts of various things you may not have run into yet. You will have a better answer once you have some books created and can begin tracking cogs/revenue/profits/expenses. Im not intentionally trying to be obtuse, its just your question isnt actually a simple yes or now. There is a ton of factors that will go into the answer.

Personally I wouldnt pull a dime out of the company and instead use the profits to grow the business if you can feasibly do so.
 

Hateyou

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Bare bones minimum.

I’m looking for the quickest way to build a customer base that also works well with my schedule and what equipment I have. Mosquito applications would be the way to go. It’s something I can just show up and do and then leave. No appointments and I don’t have to go into their house. The minimum price I will charge will be $40. It goes up in increments there, based on how many gallons I use, but that’s the base. I need about $3000 a month to live. That’s bare minimum. My first goal is to get to the point I’m 100% self sufficient.

The question (for business owners):

Based on my bare minimum price, how many customers would I need to pay myself and still support the business and pay proper taxes? I’m looking for a realistic short term goal here. I don’t need exact math, just something to aim for.

My current guess is about 120-130 regular monthly customers. That would support me through the active months (8 months out of the year).
Like Sanrith said you’re the only person that can answer that. Taxes, operating cost, etc all need factored in here. $3000/$40 to get a bare minimum jobs needed count isn’t going to answer it.
 
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Fogel

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Yep, we have no idea what the profit margin is on that 40$ job. How much cost is chemical/gas? Another thing to consider is what the competitors are charging. You can either mirror them to get a higher margin or go slightly lower at the start to try to capture some market share. Most people are going to go to their regular guy if some stranger is charging the same, but they're more likely to take a chance on the new guy if he's cheaper.
 
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Brad2770

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Ok, I’ll get some operating costs together tonight for more detail.

I ended up not switching employers, so I’m still with the lower paying guy. Mainly because the employer that fired me last August wanted my full CA license. I would also be gone a month every quarter and there is no way I get my business going with those two things.

I like the guy I work directly for at this current place (known him for awhile), but I don’t really like the owner (I have known of him, but didn’t meet him until I started here last Sept.)
 

BrutulTM

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You need to get a realistic picture of your direct costs (chemicals, wages, gas, etc), and overheads (depreciation on the truck/equipment, insurance, advertising, accountant fees, legal fees, etc). Overheads can really kill you and they are the reason people mistakenly set their prices too low. It's easy to say "Shit I made $40 on this job and only spent $4 on chemicals, $1 on gas, and $15 on wages...$20 profit!" but forgot to figure in all the stuff you have to have just to be in business.
 
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Sanrith Descartes

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Ok, I’ll get some operating costs together tonight for more detail.

I ended up not switching employers, so I’m still with the lower paying guy. Mainly because the employer that fired me last August wanted my full CA license. I would also be gone a month every quarter and there is no way I get my business going with those two things.

I like the guy I work directly for at this current place (known him for awhile), but I don’t really like the owner (I have known of him, but didn’t meet him until I started here last Sept.)
Ok, I lack the ability to do this without getting into the weeds so buckle up.

First, you need to set up a chart of accounts. Excel is totally fine for this. If you cant afford/dont have access to MS Office then try to use Google Sheets (part of the free Google Office clone). The chart of accounts is a part of your General Ledger to track ALL of your expenses and put them into categories. Example: This is part of one. The first number is the account number and the second is the description).

1649263996399.png


Second. You need to define your expenses in terms of what is a part of COGS (the cost of goods sold) and what is not. COGS is what you actually have to buy to create deliver your product/service. An example would be chemicals. This is a DIRECT cost. Ie.. it directly is a part of the good/service. Everything else is a non-direct cost. If you have no customers on Friday you still have to pay indirect costs. Such as Rent, Utilities, Advertising etc.


So, now you can write down and calculate exactly what a customer costs you. Then and only then can you know what you should charge the customer. A very basic example:
if a 1-hour spraying jobs costs you...
Chemicals - $3
Fuel - $5 (1 gallon)
Direct labor - $15 an hour for 1 hour
FICA/SUTA/FUTA etc (payroll taxes) - $1.5 for an hour of labor
Your basic COGS is $22.5

If you charge $45 to the customer your net profit is $22.50 (or 50%) ($45 - $22.5 = $22.5). BUT...
You have lots of indirect expenses.
Truck payment - $350/month
Truck insurance - 250/month
Liability insurance - $150/month
Cellphone - $75/month
Licenses - $25/month
Advertising - $100/month
Postage - $25/month
Bank and credit card fees. - $250/month
Blah, blah, blah. The list is long.
For this example lets say the above is bare bones and you are using something like Chase small business account to take credit cards. You run it out of your house so no rent etc. The above indirect expenses work out to $1225/month. So lets do some math.
You make $22.5 net profit per job.
Your indirect expenses are $1225/month
Therefore you need to complete 55 jobs a month to pay your monthly indirect expenses and to break even. 55 jobs a month divided by 20 work days a month (M-F 4 weeks a month) = 2.75 jobs a day. Every job you complete above the 55 jobs in a month is $22.50 profit in your pocket. Every job less than 55 in a month means you are paying $22.50 out of your own wallet.

The above is a very basic roadmap for you to proceed. Write your own chart of accounts, calculate and plug in your "actual" costs for every type of service you offer and then do the same for your indirect costs and viola you have a very basic business model.

ps.. before you spend all that profit you need to remember you will be paying income taxes on that profit. Which is why a necessary indirect cost is paying n accountant to do your taxes each year unless you are comfortable doing it yourself. Oh, and yeah understand how collecting and paying sales tax works.

Good luck and God speed.
 
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Urlithani

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Bare bones minimum.

I’m looking for the quickest way to build a customer base that also works well with my schedule and what equipment I have. Mosquito applications would be the way to go. It’s something I can just show up and do and then leave. No appointments and I don’t have to go into their house. The minimum price I will charge will be $40. It goes up in increments there, based on how many gallons I use, but that’s the base. I need about $3000 a month to live. That’s bare minimum. My first goal is to get to the point I’m 100% self sufficient.

The question (for business owners):

Based on my bare minimum price, how many customers would I need to pay myself and still support the business and pay proper taxes? I’m looking for a realistic short term goal here. I don’t need exact math, just something to aim for.

My current guess is about 120-130 regular monthly customers. That would support me through the active months (8 months out of the year).
General advice. I don't know your industry.

Focus on where the money is. Middle class and affluent communities with busy professionals that would pay for service and convenience.

You can go on USPS website and look up their EDDM program (every door direct mail). There is a maps feature that you can hover over. It shows you the mailing route, average number of people per household, median household income, and a couple of other stats.

Target specific areas, and focus on those to keep your fuel costs down. If you have multiple clients in an area, you can knock out a lot with a little driving.

Create raving fans: A+ customer service is the secret sauce for small business. Always be polite and keep it positive. Never trash talk the competition. If someone says they have someone, say, "I'm glad to hear someone is taking care of your needs. Can i leave you my card in case anything changes?" Referrals only come from people that like you and the services you provide.

Get some door hang tags made and go put them out in neighborhoods you want to work in.

If you're targeting commercial: when you're driving around town, stop by any shopping center that has an empty retail space. Take a picture of the "retail space for lease" sign. Call that number and say something like this: "Hi this is Brad from X pest control. How are you today?" "Great. I was driving around and saw you manage the Plaza del Sol shopping center on Greenville in Plano. I'm a local business owner that does pest control, and I just wanted to know who I would talk to if you had a need for our services?"

At this point the gatekeeper will either give you a name or tell you to send it to her for review. You will likely get the general email inbox, but sometimes you get put into voicemail or someone's email. Be sure to get the gatekeeper's name; be extra nice to them or they will just discard your business card/email.

Make a general script email and personalize it just a tiny bit to save time: "Kate, Thank you so much for taking the time to chat with me today. I appreciate the opportunity and I hope I have a chance to earn your company as a client. I am the owner of X pest control, a locally owned small business. We focus on friendly, professional, and hassle free pest control service. If you have the time, I would like to sit down and go over how we can be of benefit to you over the competition."

You also need to have a deal or something to entice people to switch to you. For property management, you can do kickbacks in credit: Refer your tenants to me and I will give you $X in credit towards pest control on your other properties for each tenant that signs with me. Or maybe a discount to spray the rest of the property if 3 of their tenants in a shopping center sign up. Something like that.

Always have business cards. If you are doing commercial, stop by the other stores while you're in the area: "Hi. I'm the owner of X pest control, and I just wanted to stop by and introduce myself. I'm doing preventative spraying monthly for your neighbor James, and I just wanted to leave my card (hand them the card while talking; they usually look at it while you're doing your pitch) in case you have a need for my services." I walk right past "No Soliticing" signs like they don't exist: as soon as I say "I just wanted to introduce myself and leave my card" they immediately relax because I'm not selling something today and they don't have to feel awkward rejecting me.

You don't get what you don't ask for.

Charisma is not a dump stat. In fact it's probably the most important. People buy from people they know, like, and trust.

Everything is negotiable.

If you're always out marketing and looking for new clients, you will not be a slave to people looking to nickel and dime your rates. Keep networking and always have plenty of jobs to choose from.

"We may not be the best fit for you." Is a professional way of saying, "Thanks but no thanks." (E.g. Unfortunately I cannot provide this service at the rate you wish. We focus on quality and customer service; if the price is your biggest concern, We may not be the best fit for you." Or maybe: "Rattlesnakes? We do service that focuses on insects and rodents. We may not be the best fit for you.")

I'm starting my business on Monday, but this is all stuff I've been taught by successful business owners in my industry for the last decade.
 
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Control

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The minimum price I will charge will be $40.
For whatever it's worth, I can barely imagine getting someone to drive to my house to do something for $40 in today's world. You know your business, but I wouldn't bat an eye at multiples of that amount. Also for some possibly worthless market research, I don't think it's ever occurred to me to pay someone to spray for mosquitoes. Any time I've ever had issues, it's been ants. The last guy I was using retired, so I've been spraying around the exterior perimeter once a year or so myself. It takes more time to dig the sprayer out of the shed than anything else. I'd be happy to pay someone to come by and do the same every 6 months just so I wouldn't have to fuck with it, and I probably wouldn't really even care how much it was.
 
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Brad2770

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My current goal is to focus on a zip code just north of me. There is money there and mostly smaller or moderate sized lawns.

The $40 is to quickly gain a base. Off of the top of my head, a gallon of solution costs me about $3. Most yards will use 2 gallons max. I am willing to treat up to 4 gallons for the $40. I know I won’t be getting rich off of this. My current goal is to get rid of the full time job and to be self sufficient.

I know a lot are rooting for a large business with employees, but I need to walk before I run. I don’t want to get ahead of myself and stress myself out over things I shouldn’t even be thinking about right now (maybe I should be thinking about it).

I’m tired of working for others. The last few weeks have just solidified that.
 

Sanrith Descartes

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My current goal is to focus on a zip code just north of me. There is money there and mostly smaller or moderate sized lawns.

The $40 is to quickly gain a base. Off of the top of my head, a gallon of solution costs me about $3. Most yards will use 2 gallons max. I am willing to treat up to 4 gallons for the $40. I know I won’t be getting rich off of this. My current goal is to get rid of the full time job and to be self sufficient.

I know a lot are rooting for a large business with employees, but I need to walk before I run. I don’t want to get ahead of myself and stress myself out over things I shouldn’t even be thinking about right now (maybe I should be thinking about it).

I’m tired of working for others. The last few weeks have just solidified that.
I really hope you succeed. You are being offered advice from people in this thread who seem to know what they are talking about. The best thing you can do is listen to them. You are willing to spend $12 in chemicals to grab a $40 revenue. This doesn't include any other of the various costs. I think you are missing the fact that it doesnt matter if a company has no employees or 1,000 employees that understanding your costs and using them to properly price your product/services is critical.
 
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Aychamo BanBan

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My current goal is to focus on a zip code just north of me. There is money there and mostly smaller or moderate sized lawns.

The $40 is to quickly gain a base. Off of the top of my head, a gallon of solution costs me about $3. Most yards will use 2 gallons max. I am willing to treat up to 4 gallons for the $40. I know I won’t be getting rich off of this. My current goal is to get rid of the full time job and to be self sufficient.

I know a lot are rooting for a large business with employees, but I need to walk before I run. I don’t want to get ahead of myself and stress myself out over things I shouldn’t even be thinking about right now (maybe I should be thinking about it).

I’m tired of working for others. The last few weeks have just solidified that.

You should watch the office episode about the Michael Scott Paper Company and see why racing to the bottom isn't good. He did exactly what you're planning.

Control Control is right your prices need to be higher. What are you going to do when you have "a base" who all expects you to do their treatments for $40, when you realize that you used "up to 4 gallons" ($12), drove 16 miles to get there ($5.00 in gas each way, so $10), taxes ($7), and you "profited" $11 on their yard, and that is not even counting all of your indirect costs, or that it may be more than 1 gallon of gas in your truck to get there, maybe replacing a spray bottle thing, grabbing a soda on your way there, etc. You will be overrun with yards that you are losing money on and the customers will all drop you when you have to raise prices.
 
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Borzak

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County/Parish spray for mosquitos here off of trucks on a regular basis. Deep south and I've personally never seen or heard of someone spraying formosquitos for themselves, maybe someone with a real stagnent pond. The people with money have connections to get the county/parish to come out more often or when needed. The people without connections wouldn't have the money or need to spray anything.
 

mewkus

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Ok, I lack the ability to do this without getting into the weeds so buckle up.

First, you need to set up a chart of accounts. Excel is totally fine for this. If you cant afford/dont have access to MS Office then try to use Google Sheets (part of the free Google Office clone). The chart of accounts is a part of your General Ledger to track ALL of your expenses and put them into categories. Example: This is part of one. The first number is the account number and the second is the description).

View attachment 406771

Second. You need to define your expenses in terms of what is a part of COGS (the cost of goods sold) and what is not. COGS is what you actually have to buy to create deliver your product/service. An example would be chemicals. This is a DIRECT cost. Ie.. it directly is a part of the good/service. Everything else is a non-direct cost. If you have no customers on Friday you still have to pay indirect costs. Such as Rent, Utilities, Advertising etc.


So, now you can write down and calculate exactly what a customer costs you. Then and only then can you know what you should charge the customer. A very basic example:
if a 1-hour spraying jobs costs you...
Chemicals - $3
Fuel - $5 (1 gallon)
Direct labor - $15 an hour for 1 hour
FICA/SUTA/FUTA etc (payroll taxes) - $1.5 for an hour of labor
Your basic COGS is $22.5

If you charge $45 to the customer your net profit is $22.50 (or 50%) ($45 - $22.5 = $22.5). BUT...
You have lots of indirect expenses.
Truck payment - $350/month
Truck insurance - 250/month
Liability insurance - $150/month
Cellphone - $75/month
Licenses - $25/month
Advertising - $100/month
Postage - $25/month
Bank and credit card fees. - $250/month
Blah, blah, blah. The list is long.
For this example lets say the above is bare bones and you are using something like Chase small business account to take credit cards. You run it out of your house so no rent etc. The above indirect expenses work out to $1225/month. So lets do some math.
You make $22.5 net profit per job.
Your indirect expenses are $1225/month
Therefore you need to complete 55 jobs a month to pay your monthly indirect expenses and to break even. 55 jobs a month divided by 20 work days a month (M-F 4 weeks a month) = 2.75 jobs a day. Every job you complete above the 55 jobs in a month is $22.50 profit in your pocket. Every job less than 55 in a month means you are paying $22.50 out of your own wallet.

The above is a very basic roadmap for you to proceed. Write your own chart of accounts, calculate and plug in your "actual" costs for every type of service you offer and then do the same for your indirect costs and viola you have a very basic business model.

ps.. before you spend all that profit you need to remember you will be paying income taxes on that profit. Which is why a necessary indirect cost is paying n accountant to do your taxes each year unless you are comfortable doing it yourself. Oh, and yeah understand how collecting and paying sales tax works.

Good luck and God speed.
neo-serfdom 101
 
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