Johnson Technical Systems LTD

[SJohnson]

Hi,
I am 20 and have been building my business over the last couple of years.

My company has two units:

UNIT(A) - JOHNSON TECHNICAL SYSTEMS - IT Consultants & Support
UNIT(B) - MuscleServers.co.uk - Servers & Workstations

We work with local (and not so local) companys. To upgrade and manage their IT network.

We only have control of 1 network so far, which has actually acted as a sort of testing ground whilst we gain more knowledge on how to setup the perfect, low maintenance network.

I have a meeting with another company on Tuesday to see if we can catter for their needs.

I am also attempting to sell monthly services to these company's:

- Remote Response - Monthly fee per pc for remote assistance during 9am-6pm
-Backup System - Intenet based backups, cheap, secure & reliable.

I am currenly contracted to work in london 5 days a week also to pay for my car/phone/bills.

The company some months can make 500 sometimes 1000 a month sometimes very low like 100-200

What the company makes is never a worry to me because i have a well paid job in london but this doesnt allow me to spend time building on my company.

I do however have a plan and this is where i need your advice/assistance:

Current Overheads:
Mobile: £70
Car (inc Insurance): £575
Fuel: £100
Gym: £75
Internet: £20
Phone: £30
TOTAL: £870

New Overheads:
Mobile: £70
Car (inc insurance): £200
Fuel: £100
Gym: £0
Internet: £20
Phone: £30
TOTAL: 420

So thats a good reduction, over 50% cut.

Mercedes to Fiesta but i can hold my pride still.

I think that ontop of this £50 a week to spend on frivalties such as socialising.

So £620 a month take home, i would need to calculate what this would be with TAX & NIC ontop.

The companys outgoing's would be:
Office Rent: £200
Expenses: £100

TOTAL: £300

This would total about 1200 / month i would expect. So the company must make 1200 a month to pay me my salery and pay its bills.

I think this is going to be tough. As i quoted earlier the company sometimes makes 1000 a month sometimes yes 1200 sometimes its as low as 200 though.

Im young so i would probably be happy to take out a 10K loan and have a pop at it. I think with my full time devotion on the company i would bring in more business & come up with new services & products to sell to our existing clients.

What would you guys recomend?

[BusPlanCoach]

I have to admit to a bias (business planning) but sounds to me that spending some time writing a business plan to put more structure and depth to your vision would be helpful.

I am impressed with your work ethic and common sense in reducing your expenses. But there is only so far you can go in cost cutting. Increasing revenue is the best way to create stability.

Using a combination of networking and working full-time should put you in a good position to succeed.

One of your critical decisions will be how much to charge per hour for services while remaining competitive and profitable. Here is a process that might help you calculate how much to charge...

1. How much money do you want in your pocket after taxes (per month)?

2. How much income tax will you have to pay? All you have to do is find out the mean tax rates for your income bracket. If you have an accountant, he can supply this information. If not, a quick phone call to your local tax department office will supply you with this % of income tax.

3. How much is your monthly overhead? What are the basic expenses (rent, phone, taxes etc.)

4. Determine your total billable hours per month. In other words, what per cent of your total working hours will you be able to bill each month. Total working hours per month are 160 but few can achieve 100% billable hours. You have to allocate time for record keeping, bookkeeping, phone calls and time you will spend doing marketing and sales.

5. Profit: this is your working capital or reserve fund. How much profit do you want or need? I suggest for most small consultants or service businesses that building a three month reserve is a good goal.

6. Billing Rate. Now with two simple calculations you will arrive at the rate you need to charge per hour to be able to pay your overhead and be profitable.