How many times has a technician said, “I think the owner is getting rich!”? There’s an interesting perception that business owners must be raking in the cash. Is that true?
Well I have the answer and I’m going to share it with you.
How Much Does The Owner Really Make?
Let’s look at the business model for a residential HVAC service company as an example. This example will work for your plumbing or electrical business as well.
Pull a dollar bill from your pocket. That dollar represents a dollar of HVAC business revenue. You are going to be using that dollar in this exercise.
So where does the money go?
Can you answer the following questions with precision?
- For every dollar the company makes do you know how much goes into technician wages?
- Do you know how much goes into paying for equipment, fuel, vehicles, and advertising?
- How much of the dollar do you think the owner of the company keeps?
It’s interesting that when I do this exercise with technicians, most techs think that the owner keeps up to half the money brought in! Which would mean that if the company does one million dollars, the owner would get to take home up to $500,000.00 a year. However, that is far from the truth.