Posted by walthtz on 10/13/13 9:51pm
Msg #488002

FAIR PROFIT

There has been a lot of talk lately about low pay from various companies.
My question is what is a fair profit margin that we Notary Signing Agents
Should be looking at. I have been involved in this business for many years
And my fees are not low but as of lately the fees we get are dropping.
Which makes me wonder why???

PRETTY PLEASE. ONLY serious answers should answer.

Reply by sueharke on 10/13/13 10:46pm
Msg #488007

Responding as a CPA: I suggest you visit the Small Business Administration (SBA) and take their courses. Also sign up for SCORE - Retired executives that help small businesses. Sounds like these low cost or free courses will help you understand your business.

Second choice: take a course online from your local community college on creating a business plan and understanding your business better.

Without detailed information, no one can help you figure out what you want to know.

Reply by Marian_in_CA on 10/14/13 12:16am
Msg #488010

"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.

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. In order to survive (pay bills, eat, etc.), 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. 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? You're wrong. remember that the more appointments you have, the more expenses you have. Let me explain.

In my example above, 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 paid. 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?

Do not apologize for YOUR profit margin. Your profit margin needs to cover your personal and business goals... not the desires of other companies.

Reply by Marian_in_CA on 10/14/13 12:23am
Msg #488011

BTW... yes, I fully realize that, for many, certain 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.

Yes... $50 is a conceivable expense per appointment. Recall that I'm including EVERYTHING in that... not just the basics.

Reply by MW/VA on 10/14/13 7:39am
Msg #488016

Great explanation, Marian. This is a unique business & we

do have a pretty large expense factor, including operating & maintaining a reliable vehicle.
Unfortunately, we're dealing with Economics 101--supply & demand. The supply is far greater than the demand, which drives prices down. Also, when our volume decreases, we are at a different profit/loss ratio, because some of our expenses (advertising on listing sites, E&O insurance, etc. remain the same). I'm thinking there are many NSA's that will be reporting a loss this year on their taxes.

Reply by Notarysigner on 10/14/13 7:59am
Msg #488019

Re: Great Marian..I like the explanation also.

Last month I only did two loan signings ( lot's of GNW though) and the first thing I noticed was, I only filled my gas tank up ONCE. Talk about a jump in profit margin! Income down, expenses down but profit margin up.

Reply by Christine/OK on 10/14/13 8:25am
Msg #488022

Yeah, James! :D Way to go! n/m

Reply by ME/NJ on 10/14/13 9:24am
Msg #488031

Only some expenses down (this kills a business thinking that

Like owning a home you generate monthly cost that are set. Phone, car payment, internet, insurance. etc I could keep going. Fixed monthly cost, now think of your time you still need to pay yourself every week if you can't give it up. Always pay yourself if you cannot do this one item then the business is not viable.

Rule of thumb, figure out cost of everything to provide service and multiply it by 300% that is what you need to make a profit and keep things going well.

Reply by Notarysigner on 10/14/13 9:32am
Msg #488032

Re: Only some expenses down (this kills a business thinking that

What? That P L A N N I N G was done twenty years ago...what do you think annuities, IRA's and Social Security are for. You can retire doing SS work BUT you can do SS work as a retiree.

Reply by 101livescan on 10/14/13 8:29am
Msg #488023

Great explanation. This should give all those $50 notaries something to ponder over. In fact, Marian, this excerpt would be quite a piece to repost on this board on a regular basis for all those folks coming on line that think doing 6 $50 notaries is a bonanza field day.

Reply by JanetK_CA on 10/14/13 1:51pm
Msg #488084

I agree. I think this s/b be added to msg # 33325! n/m

Reply by Christine/OK on 10/14/13 8:23am
Msg #488021

Totally awesome explanation, Marian. :D Great support! n/m

Reply by NVLSlady/VA on 10/14/13 9:41am
Msg #488033

Re: Totally awesome explanation, Marian. :D Great support!

I second that (someone's been at this a LONG time!)

Reply by Les_CO on 10/14/13 9:12am
Msg #488030

Now if we could only get someone to pay us enough so we could make that ‘fair profit’

Reply by Luckydog on 10/14/13 11:45am
Msg #488058

Nothing needs to be fair in making a profit....first mistake in even thinking that way.

Reply by Scriba/NM on 10/14/13 12:59am
Msg #488013

Marian explains it very well.

In our business, each signing will have a different cost associated with it, due to differences in amount of printing, time it takes you to prepare (print, review, etc.) and distance to the customer signing location, and the time it takes to get the docs signed.

Your task is to total all of your expenses (obvious and not so obvious - like wear and tear on vehicle and computer equipment) for a known period of time and then average out what your costs actually work out to be. Anything above that is your "profit." Be aware that you have to add ALL of your expenses as Marian says - taxes, fluctuating gas prices, oil changes, - everything!

If you are satisfied with a meager profit (food stamp qualified) then accept idiotic $50 - $60 signings that these moronic companies try to shove down your throat. If you want to make an actual living, you have to charge more, obviously. The $50 notaries will evaporate and companies will come back a reliable and knowledgeable notary and not the low-cost nitwit that screws up their loans.

Reply by SharonMN on 10/14/13 12:06pm
Msg #488063

It should be noted that if you cannot find clients able to pay the rates you need to make a profit, the solution may be to find another line of work that will pay your desired income. Personally, my notary workload has dropped from more than I can handle in 4Q2012 and 1Q2013 to almost nothing in the last 4-5 months. Fortunately, it's not my main source of income.