The underpricing thread.

[Thesnarlingbadger]

Drop those regular clients. It's honestly the easiest. Being VAT registered is the only way to properly grow a business with the limit as it is. Find clients who expect to pay VAT- and thast's not necessarily commercial jobs. High end domestic clients view VAT as part and parcel of getting work done.
 
Have you considered mechanising somewhat? It's the only route I could find to (vague) profitability.

Yes I’m looking in to tractors and timber trailers at the moment to speed things up a bit.
I’m happy working for the commercial side of things as I know that work is what brings in the money and is what I need to grow the business.

[Thesnarlingbadger]

Clients, and must be VAT registered! They are customers, not clients, and there is plenty of work for those who aren't VAT registered. Plenty of one/two man bands stay under the VAT threshold and make a decent living.

I never said there was anything wrong with not being vat registered. I just couldn’t stay that way with the type of work I was taking on.
Not sure why it matters if they are called customers and clients, generally I will call people from the commercial side of things clients and domestic customers.

[Thesnarlingbadger]

Interesting take on things, I'm very similar although I don't need £500 a day after wages and VAT. That may be where you are loosing some of that work...no offence intended but have you gone over your costs in detail to see if you can trim them down a bit??

Non taken, the reason I need to take home that much is I run 2/3 teams generally have a couple of chippers as 3 trucks the yard to pay rent on and the insurance. Fuel costs are about £1500 a month and after all the out goings for the business I have 3 kids and am trying to buy a house for the first time. Generally I’m not a greasy person and I spend next to nothing on myself other than the odd pint on a Friday but I find if I don’t charge the prices I do I am feeling like I’m not getting anywhere. Plus if I have a bit of equipment or a vehicle brake down on me I want the money in the bank to deal with it.

[Hodge]

Non taken, the reason I need to take home that much is I run 2/3 teams generally have a couple of chippers as 3 trucks the yard to pay rent on and the insurance. Fuel costs are about £1500 a month and after all the out goings for the business I have 3 kids and am trying to buy a house for the first time. Generally I’m not a greasy person and I spend next to nothing on myself other than the odd pint on a Friday but I find if I don’t charge the prices I do I am feeling like I’m not getting anywhere. Plus if I have a bit of equipment or a vehicle brake down on me I want the money in the bank to deal with it.

Fair play sir, that makes sense now you have explained it.

[doobin]

9 hours ago, Thesnarlingbadger said:

Non taken, the reason I need to take home that much is I run 2/3 teams generally have a couple of chippers as 3 trucks the yard to pay rent on and the insurance. Fuel costs are about £1500 a month and after all the out goings for the business I have 3 kids and am trying to buy a house for the first time. Generally I’m not a greasy person and I spend next to nothing on myself other than the odd pint on a Friday but I find if I don’t charge the prices I do I am feeling like I’m not getting anywhere. Plus if I have a bit of equipment or a vehicle brake down on me I want the money in the bank to deal with it.

£500 per day profit would be £125k a year over 250 working days... People read the headline figure and assume you want that- profit. But as we all know, that profit after wages is soon lost on overheads, and in my case, finance!

 

As an aside- you say you had an extension built a few years ago but also mention that you are trying to buy a house for the first time? I'm confused.

[doobin]

10 hours ago, Thesnarlingbadger said:

Yes I’m looking in to tractors and timber trailers at the moment to speed things up a bit.
I’m happy working for the commercial side of things as I know that work is what brings in the money and is what I need to grow the business.

You must be looking at fair size jobs if that's the kind of kit you need. My advice (unless you are in a dirt poor area) would be to keep a balance of both kinds of jobs. Commercial can be a trap, both in terms of all your eggs in one basket with a big company and payment terms. I would keep quoting domestics, but quote them relatively high and take them as jam if you get them- particularly with some bigger kit to make them even more profitable.

[Thesnarlingbadger]

£500 per day profit would be £125k a year over 250 working days... People read the headline figure and assume you want that- profit. But as we all know, that profit after wages is soon lost on overheads, and in my case, finance!
 
As an aside- you say you had an extension built a few years ago but also mention that you are trying to buy a house for the first time? I'm confused.

Yes once all the costs are taken out of the £125k a year we are left with about £50k and then I pay myself part of that and put the rest back in to equipment. So it’s never going to be a rich man’s game this industry but I do it for the love.

Yeah sorry I should have explained that better, my parents got a loft conversion and I’m back living with them while I save up to buy a house. I have 3 kids with two ex’s, don’t live with them but support them.

[Thesnarlingbadger]

You must be looking at fair size jobs if that's the kind of kit you need. My advice (unless you are in a dirt poor area) would be to keep a balance of both kinds of jobs. Commercial can be a trap, both in terms of all your eggs in one basket with a big company and payment terms. I would keep quoting domestics, but quote them relatively high and take them as jam if you get them- particularly with some bigger kit to make them even more profitable.

Yes some of the jobs we look at are fairly large site clearances and a lot of roadside ash dieback. We cope with what we have but I have no doubt we have lost a couple of jobs due to not having the kit at the ready. Not that I’m worried about that but we are an expanding company and I’m always looking for ways to go a little bit further. On a standard day I’ll have one team out working on a commercial job or a large domestic job and another team or two out doing smaller domestic jobs or I’ll be out stump grinding.
I wouldn’t loose the domestic side of things but would like to aim for a bit more commercial as that is what seems to bring in the money.

[doobin]

32 minutes ago, Thesnarlingbadger said:

Yes some of the jobs we look at are fairly large site clearances and a lot of roadside ash dieback. We cope with what we have but I have no doubt we have lost a couple of jobs due to not having the kit at the ready. Not that I’m worried about that but we are an expanding company and I’m always looking for ways to go a little bit further. On a standard day I’ll have one team out working on a commercial job or a large domestic job and another team or two out doing smaller domestic jobs or I’ll be out stump grinding.
I wouldn’t loose the domestic side of things but would like to aim for a bit more commercial as that is what seems to bring in the money.

Just bear in mind that ash dieback is a bit of a ‘flash in the pan’, and it won’t be long before you don’t want to go near any of it without a grapple saw either. 

[Thesnarlingbadger]

Just bear in mind that ash dieback is a bit of a ‘flash in the pan’, and it won’t be long before you don’t want to go near any of it without a grapple saw either. 

This is true, but we do have a lot of other work as well as ash dieback and to be honest if the trees are too knackered I’m pricing for a MEWP and or a crane. I’m aware it’s not going to be around for long and if I can use it as a way increase profits and buy larger kit that that’s something (similar to what a lot of older firms did with Dutch Elm. Not that I’m happy about taking ash out as it’s an awful situation but I guess issuing it to an advantage is the best we can do.