UKC

Dear font of all knowledge, I swear I'll make a climbing related post at some point (I do read all of them, just had most of my climbing questions answered way back)

Bit of a vague 'how long is a piece of string' question here and not expecting someone to provide some mystical algorithm don't worry, but I found out what I make the company earlier after phase one of my "do our accounts team's job for them because they've made a massive hash of it" (old accounts guy and new accounts folks...seems they are both clueless and we've had a right mess so I've been going through all our contracts)

I make the company (after my salary and 'costs') 4 to maybe a bit more times what they pay me.

This is tech company with about 22 staff, my 'team' (it used to be a team, it's been just me for the last 3 years....) mostly provides, supports and does dev for a system which we resell. We split the income 50/50 with the supplier.
The only costs to the company other than that 50/50 split and my salary (giving some for NI contributions etc) are the bit of rent and bills for the building you could attribute to me.

When I worked out what I'm bringing in I was pretty disappointed as I thought it would be more (it is less than I could do if I'd had support from management previously and is part of why I'm kicking about the ants hill at the moment so I can try and improve things). My girlfriend then said that vets (she's a vet nurse) normally target to pull in 3 times their salary, so actually it's good.

Just wondering what others think out of interest?

In reply to Scarab9:

What would the multiple be if you used 150% of your gross wage as your base cost?

How many non-fee-earning staff does the company employ?

In reply to BnB:

If I use 150% of my gross, the the income is about 3.5 times that.

We have our own systems too so other than me there's 'my share' of our MD, the sales guy, and 3rd parties accounts person and we do have a website so a small part of that cost.

(while my product brings in rather a high amount per person working on it, it takes up a very minimal part of those non fee earner personal as I do support/development/marketing/account management/some of sales work/consulation....I'm basically a one man team)

In reply to Scarab9:

Who owns the business?

In reply to neilh:

a board of 6 (I think...about that many) people which includes our MD (I dont' know what share he has, I'm pretty sure it's not equal).

So privately owned.

In reply to Scarab9:

I would suggest that all your figures are probably irrelevant. What you need to figure out is the net proft that the shareholders want/ or are looking to " make" and then work back from there.

The " board" may not be the owners/ shareholders.

You maybe confusing Gross profit/net profit.

BnB probably has more experience of this than me in techy companies, where these % can be different to other sectors.

In reply to Scarab9:

That's about a third, seems pretty reasonable. The owners of your company take risks every day that you simply don't have to worry about and most people likely have never even considered. They probably didn't get paid at all for the first couple of years.

Nevertheless, if you want a pay rise, ask for one. If you're worth it to the boss you'll get one. I don't think it pays to over-complicate things.

In reply to neilh:


unfortunately I don't know that, though I doubt there's a figure in their mind for the product I deal with as (long story and source of frustration) it's always been considered a peripheral one despite effectively being vital to making the main two successful....


they are. The 5-6 people are the ones who bought the company and we don't have shareholders, it's owned by them.


I can't get a defo figure for eg. rent, but I'm attempting to give the net (ie. gross once all costs are removed), which is 4 times my wage


I'm mostly asking to get a better handle on how the 'business' side of things wok and am aware my knowledge is a bit lacking here. I know how a business operates and how the accounts work generally but I don't know some of the details for this one as they're not really shared with us. Thanks for all input from folks though as it points me to things to consider.

In reply to Scarab9:

Its not just your gross salary that you need to consider, its your total cost of employment, plus all other over head in your business. As well as your salary, other employment costs include employers NIC, benefits such as pension. Factor in holidays and sickpay. Overhead will include non billing staff, rent, insurance, services etc.

In reply to BnB:



thanks.

not related to pay rise or anything like that (although given the work I do one would be rather appreciated!), just trying to get a handle on how the product (which I am essentially a one man band for) is doing as I've not much to compare the figures to, so good to know it's doing ok.

My next task is to take those figures of what our contracts show we're making and make sure accounts are invoicing correctly...

then compare the amount we're making per client to how much work each client is so we can see if some need reviewing (we've had a history of back of a fag packet contracts, some of which are a shambles, and also several haven't been reviewed for 15 years despite massive changes to how things work and even what product we use to provide the service...).

taken me 3 years to get the bosst o let me have access to these figures and review them while some clients are a big loss for us!

anyway, rant over. cheers again

In reply to Scarab9:

You maybe the cash cow for the business......I d be asking for a payrise and see what happens..... or ask to be a shareholder.........it is worth trying to figure thes things out ... just do not assume that gross and net are the same ..which is a common mistake

In reply to neilh:

yeah don't worry I am taking into account factors (such as benefits and sickness mentioned above etc), just don't want to bombard y'all with every detail. (eg. holiday and sickness in my case is by far covered by the assistance and expertise I provide to the other teams which is far greater so we'll call it nil overall and call it quits)

anyway..

this was all to give me an idea of how it/I am doing as a base point as I know I can improve it now I'm getting listened to on certain matters a bit more and have the freedom to try. Though I may use it to prompt discussions with the boss on where I'm going here...lack of cross training means too much of my time is spent on 'grunt work' rather than using my expertise and a re-balance has long been mooted but not followed up on. But that's getting off topic.

In reply to Scarab9:

From a business owners perspective, I think you are probably underestimating the 'costs' / overheads. Sure, as an in-going concern/project the costs are probably as you describe and they are making good money out of you. However :

They need to win the project in the first place. They've probably paid for marketing/directors meetings/contract drawing up etc. prior to it going live.

Not every project is a winner, or even won. The costs above may be incurred and there be no return.

There are dozens of fees and taxes hidden away in overheads. Obvious ones like corporation tax, business rates. Then loads of others. Insurance for cars, employers liability, public liability, professional indemnity, product liability, contents, buildings, business interruption and probably more. Water, electricity and gas/AC. Telephones can cost a fortune, particular with rented systems. Mobile phones. Building rents and maintenance changes. You have to pay for the space that doesn't make money - canteens and toilets etc. Health and Safety might not be a massive issue, but they probably still pay a consultant, fire risk assessments, fire extinguisher servicing. Trained a first aider? That's 4 days salary before the cost of the course. Then it needs renewing and someone else trained for holiday cover. Do they have a defib? That's a grand alone. Software costs? Licensing done properly is expensive particularly with specialist stuff. Membership of professional bodies and the quangos that tag on to all medium businesses . Chamber of commerce, fsb, cbi, trade bodies etc.

Employee costs as highlighted above can be quite high. Employers NI, sick pay, holiday pay, company cars (for some), uniforms/ppe.

Then there is risk. Suppliers go must and it costs to fund an alternative. Customers go bust and never pay. Projects get priced wrong - not surprisingly these are the ones you are most likely to win!

An finally, half of the folks are probably unproductive lazy arses and they have to pay them too.

In reply to Scarab9:

When I was farmed out as a junior scientist developing nutritional products the company billed my time at 10x my hourly rate. The actual return they got on my time is a bit harder to calculate but is probably at least double that based on the number of products that I designed that made it to market.

I cost a lot more now but I doubt the returns are as good!

In reply to Scarab9:
How many customers do you have. If you have only a few and one leaves how does it look, or if you get a new one?

I used to work for a European office of a specialty software vendor based in the US. One product generated 1m of sales a year with no real work or update, others were far less profitable , but the varying support staffs got similar wages

In reply to Scarab9:

It's not about 'profit' but about 'return on capital employed'. ROCE of about 20% is 'normal'. This could be anything from 1-50% profit depending on the level of capital funding in your business.