Examples: 5% of income should go to continuing ed. 2% to insurance, 15% to marketing, etc.
Maybe that is too individual to compare?
The first couple of years you are going to spend portionally more on advertising then you will in later years. Some because your income will be lower in the earlier years and partially because you may not need to spend as much once established.
I spent $3600 the first year on Yellow page. I grossed $15,000 that year. Got no business from the ad. Zero. The next year I spent $0 on Yellow Pages but spent $1500 on a website. Spent the other 2 grand on other marketing stuff.
The costs distribution will vary depending on what is important in your business. In my state, we are required to take 12 hours CE in a classroom environment. Generally costs $350. I attend additional training and money on training aids beyond that in an effort to raise my knowledge. The miniumum would be $350 but I probably spend more like $1000+ per year.
I keep copies of the code books on the shelf. The codes change every 3-4 years so I spend $75-$100 a year on the new version of the code. Many inspectors feel that code knowledge is not required and should not be mentioned or used in inspecting. I have a small library of code books and reference them regularly. New construction and warranty inspections have many code violations which make my reports.
Are you a T-shirt and jeans or a logo uniform shirt and slacks inspector? I have a closet full of custom embroidered shirts and outerwear. Had to develop a logo, embroidery setup charge, and embroidery per item charge. Shirts are drycleaned and pressed. I buy premimum shirts and spend $ to have them embroidered. If you are wearing whatever is in your closet, then no cost to your business.
I wear footies at every inspection. A new pair while doing the interior and a second pair already worn once for the exterior. If I step outside onto a deck, porch, out a window onto the roof, etc, I remove the booties and put them back on once back inside. I buy them in a case of 300 for about $90. That's roughly $.30 per bootie or $.60 per inspection. Some clients want their own set.
I wear tyvek coveralls in the crawlspace. Buy them by the case for about $3 per coverall. Sometimes I only get 2-3 crawlspaces while other times may get 5-6 crawlspaces out of a single suit. Keeps me clean and willing to go all the way to the back corner.
I send out advertising letters. Postage, envelopes, letterhead, printing, cost of buying mailing lists. Cost about $1 per letter and I send out about 5000 a year. The letters generate more direct income than they cost.
I have several "real estate" type signs. I place one in the front yard during inspections as advertising. On warranty inspections, I ask if I can leave in their yard for a couple of weeks. I have 3 signs at $100 each. First year was expensive, but zero from then on.
My GPS manufacturer offers an update map about once a quarter for $65 or a lifetime update for $130. My GPS knows about the newer streets and gets me to the job on time. The detour function has routed me around traffic several times and gotten me to the job on time. Took the $130 hit so onging costs are zero. If you don't have a GPS, then you are need one.
I track mileage. This year I have gone farther afield to get jobs that in past years. Mileage is up with fewer jobs than previous year. Either way it comes off the taxes.
My state just changed the laws requiring general liability insurance and 17K in assets OR E&O. Previously no insurance requirement for home inspectors. That is going to raise the cost of business for many inspectors. GL is about $200 a year. E&O runs from $2500 to $5000 a year. Depending on your state requirements, deductibles, and level of coverage, your costs will vary.
Do you have a dedicated vehicle? Do you track mileage and travel expenses? Do you have signage on the vehicle? All expenses. At association meetings I have seen everything from dedicated vehicles covered in signage to stealth vehicles.
How about association dues? CPA for taxes and accounting. Business cards & letterhead. Sponsorship of community activities? Software updates and computer equipment replacment.
Do you deliver hardcopy reports to your clients? How about home maintenance books or other materials? Printing, binding, shipping, postage, plus the cost of books/materials. I know a local fella who hand delivers a hardcopy report to each client the following day. Printing, binding, fuel, mileage, & time. It claims it works for him. Combined time for all that is at least one less inspection per day.
You need to get a software program for home inspectors called Cost of Business. You enter all your costs and it helps you to understand what you should be charging to make a profit. It may also help you to make a budget for next year.
www.hanntech.com/expenses/
