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November 2015 | KitchenBathDesign.com | 21 3 Detail all of your Sales Expenses. 4 Detail all of your Administrative Expenses (including your market- rate owner's salary). 5 Add your 10% Net Proft. 6 Reverse-engineer to the required Gross Profit Dollars and % of Total Revenue (add Steps #2-#5). 7 Fill in Cost of Goods Sold (subtract Step #6 result from Step #1 result). Let's assume for a moment that your Year One revenue number is $2,500,000, your pre-tax net proft is $250,000 (10%) and the gross profit ends up at $1,100,0000 (44%). To establish the correct price formula for your over- head structure and desired $250,000 net profit, every project's total cost (including materials, labor, subcontract costs and use tax, if applica- ble) must be divided by 56% (which represents the same Cost of Goods Sold % of Total Revenue in your company's annual budget). So, for exam- ple, if a project's cost totals up to $50,000, then the correct sales price should be $89,286 ($50,000/.56). Now, to build that emer- gency fund that's needed, 10% of every check received should be immediately placed in a liquid investment port- folio. At that rate it will take four to fve years to achieve the requisite $840,000 in re- serves. The balance of these checks should then be used for working capital, paying for job costs, overhead ex- penses and your $250,000 salary. Is it doable? Absolutely! You just have to wrap your brain around the gross profit percentage required to fnance your overhead ex- penses and desired net proft. Operating at a much higher gross proft margin has been achieved by a number of dealers once the need and methodology sets in. Of course, still being per- ceived as a good value at a higher price will be a mar- keting/selling challenge. That, too, is doable, but better left for another column, or a business school class, where the topic can be thoroughly covered. Ken Peterson, CKD, LPBC, is president of the Charlotte, NC-based SEN De- sign Group. For more info about this topic, or to receive an Excel spread- sheet for developing a Three-Year Budget & Price Formula, please con- tact Peterson at 1-800-991-1711 or kpeterson@sendesign.com. Peterson also welcomes comments, questions or concerns. The New Definition of Simple Every bathroom remodel has its challenges. The last thing you need is a time-consuming ventilation fan installation. That's why we created WhisperFit ® EZ. Slash installation time by using existing duct work, thanks to the included 4" to 3" duct adapter. Its low profile 5 ⅝" depth, Flex-Z Fast ™ bracket, and detachable installation adapter make it a cinch to install anywhere. Pick-A-Flow ™ Speed Selector lets you customize airflow to 80 or 110 CFM with the flip of a switch. The optional SmartAction ® Motion Sensor turns the fan on automatically when someone enters the room, help- ing eliminate damage-causing moisture while saving energy. Featuring powerful, quiet operation, this versatile workhorse complies with today's stringent green building codes and standards, including ASHRAE 62.2, LEED, ENERGY STAR ® for Homes 3.0, IAP, CA Title 24, and WA Ventila- tion Code. For ventilation made EZ, visit business.panasonic.com/whisperfitez Circle No. 11 on Product Card