Company Profit Margin
October 2006This month’s question is one that is asked frequently of AWCI, but no one that we know of tracks this sort of thing. So we thought we’d ask you in an effort to get some kind of idea.
Understanding that the question was sensitive, we asked you to answer anonymously. That didn’t work for a lot of people, but we are happy that those who did answer provided some good, honest answers. Now that you see how easy it is to put a number down on paper, perhaps you’d like to add your thoughts. Go to www.awci.org/cd to post your answer online.
What is your company’s profit margin? And, outside of your company, who are the people you feel comfortable talking to about it?
We try to operate at about at 25% gross profit margin, but that only takes into account actual job costs, not overhead. I might discuss this information with other business owners in order to determine if this is appropriate.—Whittier, California
30.40%. My accountant.
Our gross profit margin target is the telltale number at 23% of sales. The family members draws—the major overhead cost—Is the overhead variable cost that assures the equity will grow at twice the rate of inflation. We tell all to our bankers and bonding company, but limit vendors to the FYE Balance Sheet and suggest a D&B report. To the G/C, we suggest they require bonds on their projects, as our statements are confidential.
What is your company’s profit margin? 5%-15% outside of your company. Who are the people you feel comfortable talking to about it? 20%.
23%, and we like to net 5% to 8%.
There are two different kinds of Profit and you didn’t specify which one you were interested in hearing about, Gross Profit or Net Profit. As for Net Profit, the real important one, the bottom line so to speak, we target for and hover around 12% of sales.
If you think 8% is a good profit margin, save your money and invest in the Stock Market. You’ll come and go, but the ones who truly know the construction business will continue to grow and prosper. Believe it or not, honesty and integrity will always be profitable.—T.M., Houston, Texas
4 to 6 percent, and it is discussed only with our banker.
40% before overhead and taxes, 10% or less after. Comfortable with banker, and my accountant.
20%, plus or minus.—Coral Springs, Florida
Our true profit margin varies, of course, from job to job, but a good average is 28% after all overhead, materials and labor. We do lath and stucco.—Arizona