I posted this the other day deep inside another thread... but I think it bears repeating, especially given that nausea inducing blog post from SSC (see Msg #488786 ) -- ugh. When my migraine goes away, I may find the energy to go over that puppy sentence by sentence.
For now.... here's what I wrote the other day (with some edits) regarding making a profit. This is BASIC business management people. If you're in business for yourself and you can't figure out this simple formula, you're killing your own business.
Walter H asked, "My question is what is a fair profit margin that we Notary Signing Agents Should be looking at..."
There is no such thing as "fair" profit margin. You profit margin is personal and needs to be based on your individual business needs. You have to do a lot of market research, both industry wise and for your local area. You also have to consider your individual needs to know how much money you need to be making.
While you should know and consider what your competition is charging in your profit margin... you shouldn't use it as a primary factor, IMO. The primary factor should be YOUR individual needs and figuring out if this business will help you meet them.
Simply put...and this is really simple to paint the picture with rounded numbers. It's not exact...just an illustration.
Consider how much money you need, personally, per month/year/whatever. Take that and add it TO you business expenses for the same period of time.
Let's say you have monthly business expenses of $2,000. Recall that these expenses also include business taxes, not just paper, toner, gas, insurance and such. This is EVERYTHING that it costs to open, run and maintain your business. Consider things like utilities, internet connection, mobile phone and the like.
In order to survive personally -- outside of your business venture (pay the mortgage, eat, etc.), let's say you need a personal income of $4,000 per month, gross. That means your business needs to pull in at least $6,000 per month in invoices ($2,000 in business expenses PLUS personal gross income).
If you're a loan signing agent who averages $150 per invoice, that means you need to handle about 40 loan signings per month at $150.00 each. Now, you may think...well shoot, I can charge half that ($75) and double my appointments and still make the same amount of money, right? NO. Remember that the more appointments you have, the more monthly expenses you have. There is NO SUCH THING as volume work for individual singing agents. Don't fall for that trap. Volume work assumes you can control your business costs and make a higher profit overall. At the signing agent level, there is little, if anything you can do to do that. Your average expenses per signing remain essentially the same whether you handle 40 appointments or 80.
In my example, it would mean one's average expenses per loan signing is $50. That means you'll have a profit of $100 per signing. Now, just because this is "profit" remember that this $100 is what you're actually pocketing. That $50 expense is just that... an expense. It's money that's GONE and you're not being paid for it. You're only making $100.
If you only charge an average of $75 per loan signing, you still have that $50 expense.... and you've gone form making $100 to $25. Think about that... that means you will need to be doing FOUR times the amount of work to make the same amount of money. You could do 80 signings at $75 and still make $6,000. But the thing is... your average cost per signing is still $50. If you do 80 signings at a cost of $50, your business costs go from $2,000 to $4,000... which means you've cut your personal income in HALF even though you've done twice the work. In what world does that make any sense? You need $4,000 per month to survive. By doubling your workload and slashing your price i half, you're increasing your business expenses and decimating your personal income. If you need $4,000 a month (gross...that's before personal taxes) to survive and only pull in $2,000, meanwhile you're overworked, exhausted and broke. How long will you last?
No folks, Don't fall for the "any money is good money" line -- it's not true. You're going to find yourselves deep in debt and overworked.
Do not apologize for YOUR profit margin. Your profit margin needs to cover your personal and business goals... not the desires of other companies. If they won't meet YOUR fees, then move on. There are plenty of good companies out there who will. They're harder to find and get on with...but they do exist. Leave the low paying companies to deal with the uneducated who will overwork themselves and get in to debt quickly disappearing once the tax man starts sending nasty letters. I cannot tell you how many notaries I've met who think they're stealing all my business by charging half of what I charge, gleefully rubbing it in my face... just to find that in a year (or less) they're no longer working as a notary.
BTW... yes, I fully realize that, for many, certain business expenses are tax deductible and some notaries may choose to take the self-employment exemption, etc. For the purposes of my illustration I wasn't going to get in to all of the specifics of that. Those are all individual circumstances that impact the expenses per appointment. My example of that $50 expense assumes all of those are essentially calculated and the $50 is the expense after all of that is factored in. Trust me when i tell you that $40 - $60 average cost per loan signing is actually pretty accurate when everything is factored in. |
