Profits

[sean]

Would be interested in getting some feedback from those who run their own business regarding the following question from Tech Cert exam paper......

 

A contractor has made a significant profit at the end of the financial year and has full order

books for the foreseeable future. Outline the options available to the contractor to invest the

profits towards the growth of the company. Give examples of how each option may affect

both the hourly rate charged by the contractor and the work output of the business.

 

Thanks in advance.

[Stephen Blair]

what size is the business, what type of work do they chase, and what age is the equipement that is in use?how old is the owner?is the company ltd? if they havent told you this in the question then i couldnt answer, and who ever wrote the question has never run their own business. imo

[Mesterh]

A truly hypothetical question that one "full order

books for the foreseeable future"

 

Sry but it made me laugh.

 

If you have a healthy profit and endless amounts of work then the sky is the limit for expanding.

 

Need to think of things like buying more reliable efficient machinery, chippers trucks etc. Working out how much they cost to buy and run and how often they are to be replaced therefore working out how much to increase the hourly rate to pay for them.

 

Buying in labouring saving equipment ie truck with a grab or crane, timber trailer etc, costs to buy run and replace, do you need to put workers through training so they can operate, drive the machines. They will certainly save on time but will cost xx amount more to run so is it worth it? ie not if most of work is in back gardens with no access, but invaluable if its street, site work.

[sean]

what size is the business, what type of work do they chase, and what age is the equipement that is in use?how old is the owner?is the company ltd? if they havent told you this in the question then i couldnt answer, and who ever wrote the question has never run their own business. imo

 

That was a question from last years paper.....like many of their questions, tend to be somewhat ambiguous!!

[Stephen Blair]

That was a question from last years paper.....like many of their questions, tend to be somewhat ambiguous!!

 

tell them you would do nothing different because things are going great and you wouldnt want to fix what isnt broken:001_cool:

[tommer9]

tell them you would do nothing different because things are going great and you wouldnt want to fix what isnt broken:001_cool:

 

Top reply.

[sean]

tell them you would do nothing different because things are going great and you wouldnt want to fix what isnt broken:001_cool:

 

If that question comes up next week i'll just write..."shreks little brother said...."

[Highland Forestry]

That is a really stupid question IMO - theres so many different factors to consider which in turn are all different for every individual business.

 

If the order book is full and the business is showing a good profit, why would you mess about with it?

[Stephen Blair]

If that question comes up next week i'll just write..."shreks little brother said...."

 

 

ok then, spend 25k on a new tracked chipper, another 3k on a trailer for it, you better get a descent 4x4 to tow it 17 k. you now have borrowed 45k. you want that back in one year.so thats an extra 25 quid an hour.

[sean]

ok then, spend 25k on a new tracked chipper, another 3k on a trailer for it, you better get a descent 4x4 to tow it 17 k. you now have borrowed 45k. you want that back in one year.so thats an extra 25 quid an hour.

 

That's the answer they'll get then. Nice one. Top work on the 'view unveiling' btw. Why on earth would you sit looking at that for 3 years though? Are they mad?