Day rate and running costs.

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I've just run through the costs/overheads for the last 12 months, and it makes scary reading.

I work it all out based on 39 working weeks, which is 195 earning days.

So all the costs are given an annual figure, then divided by 195 for the cost per day. The pay is worked out in reverse. If you want £40k per year (fat chance!) it's 40,000/195 = £205.

There are some figures that leap out. The top three are the unit which is £4.5k pa, the van which is £3.5k pa and the accountant also £3.5k pa.

My total overheads/fixed costs for the year are £20,298.36 for the year, which is fcuking crazy money to be honest. It's also almost bang on the minimum wage of £10 ph x 39 hours x 52 weeks = £20,280. That works out to £105 per day.

So just by running the business I have to cover the amount required to employ someone.

None of the above includes priced job costs like sub-contractors, materials, plant hire, skips etc.

It's a worthwhile exercise for anyone who's self employed or running a small Ltd Co. I can now pick up on any stand out figures and see what I can do to reduce them.

For example, I know that the van costs will be reduced by £2.6k pa in 18 months when the payments are finished. So fcuk buying another one, I'll keep this one running.

I spent just over £3k on replacing and buying new tools. So that can be looked at by considering hire for anything I need that I haven't got and adding it to the job cost/price.

I can (and will) also look at the work I do and see if I can change that to reduce some of the associated overheads.

The point is, if you don't review the costs you don't have the information to see where you're going wrong, or how you could be working smarter.
 
Interesting read. Scary overheads before u even start to make a profit all the same. Would make my head spin lol
 
3.5k on an accountant? did i read that right? if so id get a new one.
i pay 100 a month for mine.

but van and insurance and fuel are big money spenders..
 
Good read.
Just goes to show we simply can't undercut those chancers. Market a quality service not a cheap one and aim for the right customer base I guess.
 
I
Dansouthcoast84 said:
3.5k on an accountant? did i read that right? if so id get a new one.
i pay 100 a month for mine.

but van and insurance and fuel are big money spenders..
Click to expand...
I pay 500 a year and I'm only self employed at the minute, but if the s**t hits the fan he'll go and represent me at hmrc if needed
 
Dansouthcoast84 said:
3.5k on an accountant? did i read that right? if so id get a new one.
i pay 100 a month for mine.

but van and insurance and fuel are big money spenders..
Click to expand...

So that's £1,200 a year for yours. Is that for a ltd co or sole trader?

Annual returns for the company, annual return for me, quarterly VAT returns, monthly PAYE for me, monthly CIS returns, it soon ads up. That said when I compared the time it took me to do that, along with the hassle, then paying the accountant to verify it and make the submissions, it works out cheaper for them to do it daft as that sounds.

Time spent doing it x day rate that could be spent earning or having time off = worth paying someone else to do it!
 
zolco said:
I

I pay 500 a year and I'm only self employed at the minute, but if the s**t hits the fan he'll go and represent me at hmrc if needed
Click to expand...


Yeah, mine includes audit insurance. A lot of people don't realise that if HMRC want to do an audit you have to pay your accountant to prepare everything. Even if you don't owe HMRC a bean it can still cost hundreds and sometimes thousands to prove it, all at your cost.
 
why only 39 working weeks ?
when i was in a business with my brother we had running costs of about 30%. now as a sole trader i have cut my running costs down. no accountant, deal with the tax office direct, no adverts, very small amount spent on tools. fuel is my largest outlay.
 
malc said:
why only 39 working weeks ?
when i was in a business with my brother we had running costs of about 30%. now as a sole trader i have cut my running costs down. no accountant, deal with the tax office direct, no adverts, very small amount spent on tools. fuel is my largest outlay.
Click to expand...
I only worked 20 odd weeks in the last tax year just finished, i mean paid work
 
malc said:
why only 39 working weeks ?
when i was in a business with my brother we had running costs of about 30%. now as a sole trader i have cut my running costs down. no accountant, deal with the tax office direct, no adverts, very small amount spent on tools. fuel is my largest outlay.
Click to expand...

39 weeks allows for holidays, days where I'm not earning but organising 'stuff' (van service, sorting the unit, jobs at home etc etc) getting rained off if I'm outside, odd hours hear and there collecting gear, paperwork, pricing blah blah. It's what I've come up with as realistic earning time. No matter what people think, their productivity is low due to running the business stuff which doesn't earn a bean.

Every business and trade will be different for overheads, but if you take tools for example last year I had to replace the mitre saw. I needed something vaguely portable but large enough to do compound angles on roof timbers, yet accurate enough to do kitchen fitting. I ended up buying a 12" Bosch with trolley/stand which was nigh on a grand.

Saw blades for that or the jigsaw, rail saw, petrol saw etc etc average out at £12 a go and depending on what you're cutting from MDF to oak will need replacing fairly regularly. And so it goes on.
 
imago said:
39 weeks allows for holidays, days where I'm not earning but organising 'stuff' (van service, sorting the unit, jobs at home etc etc) getting rained off if I'm outside, odd hours hear and there collecting gear, paperwork, pricing blah blah. It's what I've come up with as realistic earning time. No matter what people think, their productivity is low due to running the business stuff which doesn't earn a bean.

Every business and trade will be different for overheads, but if you take tools for example last year I had to replace the mitre saw. I needed something vaguely portable but large enough to do compound angles on roof timbers, yet accurate enough to do kitchen fitting. I ended up buying a 12" Bosch with trolley/stand which was nigh on a grand.

Saw blades for that or the jigsaw, rail saw, petrol saw etc etc average out at £12 a go and depending on what you're cutting from MDF to oak will need replacing fairly regularly. And so it goes on.
Click to expand...
How come you went for the bosch then imago and not the new dewalt ones
 
Builderboi said:
How come you went for the bosch then imago and not the new dewalt ones
Click to expand...

The arm that it has means it doesn't need any space behind it to slide, it's amazing how much easier that makes setting it up in a room or the workshop. You can put it up against the wall. Link Removed

Talking of Bosch, if you buy direct from Bosch they have what they describe as "warehouse products". They carry the same warranty and are brand new (not refurbs), but the box is scuffed or torn. They are 30% off the retail price which makes a big difference on the more expensive stuff.

As an example, this hammer drill is £125 - £145 inc VAT from the usual suspects online, but it's just under £99 from Bosch. https://shop.bosch-professional.com...-hammer-with-sds-plus-gbh-2-26--9200000039697
 
imago said:
The arm that it has means it doesn't need any space behind it to slide, it's amazing how much easier that makes setting it up in a room or the workshop. You can put it up against the wall. Link Removed

Talking of Bosch, if you buy direct from Bosch they have what they describe as "warehouse products". They carry the same warranty and are brand new (not refurbs), but the box is scuffed or torn. They are 30% off the retail price which makes a big difference on the more expensive stuff.

As an example, this hammer drill is £125 - £145 inc VAT from the usual suspects online, but it's just under £99 from Bosch. https://shop.bosch-professional.com...-hammer-with-sds-plus-gbh-2-26--9200000039697
Click to expand...
Cheers imago think my dewalt is playing up and like you one day cutting a roof to ten k kitchens, the life of a builder is a glamorous one
 
imago said:
So that's £1,200 a year for yours. Is that for a ltd co or sole trader?

Annual returns for the company, annual return for me, quarterly VAT returns, monthly PAYE for me, monthly CIS returns, it soon ads up. That said when I compared the time it took me to do that, along with the hassle, then paying the accountant to verify it and make the submissions, it works out cheaper for them to do it daft as that sounds.

Time spent doing it x day rate that could be spent earning or having time off = worth paying someone else to do it!
Click to expand...

ltd mate.

paye
cis returns monthly
vat
end of year accounts
verifying new subbies..
 
Good info
Easy to forget how things take down the profit
If your a main contractor
Project managing your jobs you need a pay rise(y)
I' have just recently altered the size of jobs
I do to smaller &
Less hassle /in & out .... usually I was on jobs anything from 3 /to 7 months was driving me bonkers
 
imago said:
I've just run through the costs/overheads for the last 12 months, and it makes scary reading.

I work it all out based on 39 working weeks, which is 195 earning days.

So all the costs are given an annual figure, then divided by 195 for the cost per day. The pay is worked out in reverse. If you want £40k per year (fat chance!) it's 40,000/195 = £205.

There are some figures that leap out. The top three are the unit which is £4.5k pa, the van which is £3.5k pa and the accountant also £3.5k pa.

My total overheads/fixed costs for the year are £20,298.36 for the year, which is fcuking crazy money to be honest. It's also almost bang on the minimum wage of £10 ph x 39 hours x 52 weeks = £20,280. That works out to £105 per day.

So just by running the business I have to cover the amount required to employ someone.

None of the above includes priced job costs like sub-contractors, materials, plant hire, skips etc.

It's a worthwhile exercise for anyone who's self employed or running a small Ltd Co. I can now pick up on any stand out figures and see what I can do to reduce them.

For example, I know that the van costs will be reduced by £2.6k pa in 18 months when the payments are finished. So fcuk buying another one, I'll keep this one running.

I spent just over £3k on replacing and buying new tools. So that can be looked at by considering hire for anything I need that I haven't got and adding it to the job cost/price.

I can (and will) also look at the work I do and see if I can change that to reduce some of the associated overheads.

The point is, if you don't review the costs you don't have the information to see where you're going wrong, or how you could be working smarter.
Click to expand...
my fixed overheads are about twice yours at about 40,000 a year, increasing year by year.
That's not including staff nat insurance or the like.buying new tools is essential as it's a false economy keeping old stuff and repairing etc.I budget around 5 grand a year for new tackle. Just buy tools and charge the hire rate to each job ,what you would have paid out therefore your paying for your tools in any case. I have 2 vans and a pick up.i also have a unit that I own through a commercial mortgage.(the best investment I ever made, paying rent on someone's elses unit is madness, as in another 15 years the unit will be mine outright.)
My accountant is 3 grand a year plus vat including my personal tax return, and they do everything bar my vat returns.i don't spend a penny on advertising, I'm on tools 4 days a week.
 
Good post.
Ive done a few where as a plasterer coming back into the trade i want to do everything by the book and run it as a business.
But its not easy :)
One thing i need is a decent van and livery etc , just for a starter , and that is crazy! how many jobs a month just to pay for that.
Trying to price jobs to reflect the approach im taking and it doesnt equate.
So im having to rethink the van , maybe get a £2k job and a couple of magnetic signs but then you can be hit for another grand a year in service and repairs.
 
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