Sunday, January 23, 2011

Ready to mow

I know the vast majority of us are shoveling snow and giving no thought to the upcoming mowing season; but for others right now is the time to put everything in motion for a successful summer.  I plan on making $20,000 this summer and if I am going to reach my goal then I need to get a plan in place.

My father has a mowing business but is thinking about selling his equipment and 22 yards.  I have full time employment, but the opportunity to take part ownership is very tempting.  I know how to mow commercially, and I also know that I would be able to take on the administrative tasks without creating a burden on my own financial record keeping.

The problem I am facing is the distance I would have to travel to take ownership in the business, and thus figuring out how much I would need to make to offset the wear and tear on my vehicle.  The first item on my agenda is to set a value for my time, and for strictly hypothetical reasons I will go with $30 an hour.  By establishing a base value this will help when I do cost analysis on the rest of my business decisions.

With a base value established I start identifying the costs associated with running the business.  The distance traveled from my house to the business is 50 miles, so I am looking at a minimum of a 100 mile round trip each day I travel.  My car currently gets around 34 mpg, and by doing some simple math I will use 2.95 gallons of fuel and at today's cost of $3.09 per gallon that trip cost me $9.12, not counting the depreciation on the car.

Since it takes me 1 hour to travel each way by my valuation of $30 an hour I need to make at least $60 to make this trip worth it, and I have already spent $9.12.  I change the oil in my car every 5,000 miles and while this is not a major expense it will have to get added in as I will reach this milestone in just 50 trips, which could happen as quick as 2 months.

I have some more costs to identify and will be doing research and posts as the winter drags on and I move closer to making my decision.

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