# When your growing your business



## carpenter uk (Nov 25, 2009)

Been growing it for years and making good money on paper but never see a penny of it 

Have you been there ? Was it worth it in the end?


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## Bradcon (Sep 9, 2015)

On paper is the worst place to make big money. Where is it all going?


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## tedanderson (May 19, 2010)

I worked for a guy who didn't get a paycheck for the first year that I worked on his crew. He told us that he had a goal where he wanted to make enough to start paying himself a salary. If he didn't make that goal within a certain time frame, he was going to make some changes.

Well that day of reckoning came and my co-workers and I were looking for new jobs. He was trying to run an efficient and profitable business but we just weren't cutting it. 

Many years later I figured out why we got canned. It wasn't necessarily because we were losing tools, screwing up projects, or wasting time. It was because we weren't helping him be profitable.

There's a time in the beginning when you have to invest back into your business to make it grow, but then there also comes a time when you should see the fruits of your[STRIKE] hard [/STRIKE]smart work.


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## carpenter uk (Nov 25, 2009)

Bradcon said:


> On paper is the worst place to make big money. Where is it all going?


Its on the money merry-go-round 

You do a job make some money, take on more jobs, take on more labour take on bigger jobs to keep all the labour busy, take on more labour as the job is on a tighter schedule than you thought due to other trades getting behind earlier in the job, take on bigger jobs because you hate to turn them down...................


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## carpenter uk (Nov 25, 2009)

tedanderson said:


> There's a time in the beginning when you have to invest back into your business to make it grow, but then there also comes a time when you should see the fruits of your[STRIKE] hard [/STRIKE]smart work.


Its knowing when the fruit is fully ripe, and how much longer you can go hungry is the difficult bit


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## Metro M & L (Jun 3, 2009)

You should make money on every job. Occassional loss leaders are ok to grab big clients but otherwise there is really no reason to work for free or lose money. My number one goal business wise is to have the bank account bigger every month. Doesnt matter so much how much but always trying to stay in the positive.

It definitiy weezes up and down as you do work and build up receivables. I seem to take a step up about every 60 days. And then taxes come due and I have to work for free for a month a half.


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## carpenter uk (Nov 25, 2009)

Metro M & L said:


> You should make money on every job. Occassional loss leaders are ok to grab big clients but otherwise there is really no reason to work for free or lose money. My number one goal business wise is to have the bank account bigger every month. Doesnt matter so much how much but always trying to stay in the positive.
> 
> It definitiy weezes up and down as you do work and build up receivables. I seem to take a step up about every 60 days. And then taxes come due and I have to work for free for a month a half.


Im ok in that respect, I always make a profit on paper but its always tied up in wages and unpaid invoices, the bigger the business gets the more is tied up


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## sailfish27 (Jan 25, 2014)

I hate to say it but I think you may be kidding yourself. Making money and making a profit are very different things. Profit is an easy thing to track. If your checking account balance increases month over month year over year your making a profit if not your playing another game.

I think it's easy to get sidetracked and work or build for other reasons than pure profit. I also think if you just concentrate on the bottom line it's not hard to start making real money and not just on paper.


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## Metro M & L (Jun 3, 2009)

carpenter uk said:


> Im ok in that respect, I always make a profit on paper but its always tied up in wages and unpaid invoices, the bigger the business gets the more is tied up


Maybe a better question would what is the cash 'tied up' in. Maybe youre over extended on receivables, maybe lots of euipment. You might be able to make some adjustments based on your answer.


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## carpenter uk (Nov 25, 2009)

I tend to get paid 30-60 days after invoice but pay the labour weekly and with the constant increase in labour I am tying up more and more.

If I made £5k profit last month but took another guy on this month that £5k would be paid out in wages for the new guy and would be 2-3 months before I saw it again.

I think it must be different over there and you get your invoices paid quicker


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## Metro M & L (Jun 3, 2009)

Nope.


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## lawndart (Dec 3, 2006)

carpenter uk said:


> I tend to get paid 30-60 days after invoice but pay the labour weekly and with the constant increase in labour I am tying up more and more.
> 
> If I made £5k profit last month but took another guy on this month that £5k would be paid out in wages for the new guy and would be 2-3 months before I saw it again.
> 
> I think it must be different over there and you get your invoices paid quicker


Do you have a line of credit from your bank? What industry are you in? How many employees do you have?


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## Pearce Services (Nov 21, 2005)

If you are fast-tracking your growth by rolling all your profits back into the business and you can afford to do so, that is not a bad thing. 

I think you need to look at your accounting system to make sure it is giving you the proper info you need to be sure you are adding assets at a rate of your perceived profits.

You should be able to add up your cash on hand, receivables, inventory, and percentage of project completion value (portion completed but not invoiced). Basically a good balance sheet should show you the Owners Equity.

Do you have numbers to support your perceptions?

If so and you want to take some income, slow your growth and convert some of your inventory and receivables into cash so you can pay your self. Or even better, keep growing, get deposits and more progress payments and let your customers pay for your payroll as it accrues.


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## Spencer (Jul 6, 2005)

My business is pretty simple. My bank account automatically withdraws my weekly salary from my business and into my personal account. You have to make sure you are at least making a salary, even if it is low in order to grow. I'm in the beginning stages of growth so I keep my salaray same as what I made as an employee and don't take distributions yet.

Do you take out a salary weekly? It is a very good habit to have. I'm glad I started out doing it that way.

Do you use quickbooks? If you don't, get to using it. Its one of the most powerful tools you can have. You should be able to run a quickbooks P&L report and easily identify the answer to the question you just asked.


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## carpenter uk (Nov 25, 2009)

lawndart said:


> Do you have a line of credit from your bank? What industry are you in? How many employees do you have?


No lines of credit, all my own £ 
Im in sub-contract carpentry and currently have 16 carpenters


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## carpenter uk (Nov 25, 2009)

Pearce Services said:


> If you are fast-tracking your growth by rolling all your profits back into the business and you can afford to do so, that is not a bad thing.
> 
> I think you need to look at your accounting system to make sure it is giving you the proper info you need to be sure you are adding assets at a rate of your perceived profits.
> 
> ...


Yes i'm ontop of my figures and the balance sheet looks good, p&l looks good, personal account is dismal as I have been taking minimum wage for a few years now to fund the growth

We supply labour & fixings only so dont carry any materials as such, but the receivables is the killer


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## carpenter uk (Nov 25, 2009)

Spencer said:


> My business is pretty simple. My bank account automatically withdraws my weekly salary from my business and into my personal account. You have to make sure you are at least making a salary, even if it is low in order to grow. I'm in the beginning stages of growth so I keep my salaray same as what I made as an employee and don't take distributions yet.
> 
> Do you take out a salary weekly? It is a very good habit to have. I'm glad I started out doing it that way.
> 
> Do you use quickbooks? If you don't, get to using it. Its one of the most powerful tools you can have. You should be able to run a quickbooks P&L report and easily identify the answer to the question you just asked.


Yes I draw minimum wage monthly and just scrape by,
I do use quickbooks premier and know where all the money is but it becomes a grind after a few years with no reward.


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## BamBamm5144 (Jul 12, 2008)

carpenter uk said:


> Yes I draw minimum wage monthly and just scrape by,
> I do use quickbooks premier and know where all the money is but it becomes a grind after a few years with no reward.


My advice. Fire everyone and sub contract.


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## Tom Struble (Mar 2, 2007)

..from the man himself


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## JBM (Mar 31, 2011)

Stay small and keep it all. 

I would rather have 2 crews of 3 guys instead of a job where all 6 work together. 

1 crew can pay for 2 but not if they are on the same job and in a pickle. I wouldnt put up with not making money for more then a year. 

Wait, for more then 20 years


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