Marquee hire businesses can be quite a profitable and flexible means of earning an income for a household. With busy summers and more quiet winters,
this seasonal work pattern might work for families with older adult children perhaps...
but, exactly "How Much Can You Earn Running A Marquee Hire Business?
Top Tips for Planning Your Marquee Hire Earnings...
(with a difference!)
“Exactly how much could I earn running a local marquee hire business?”
The answer to this question may be a little bit hard to get a grasp of particularly if you are new to the industry or novice when it comes to business management.
If you are in the market for buying an existing marquee hire firm you might be met with quite an opaque prospective presentation of financial performance. Vendors, for one reason of another, may not be keen to comprehensively publish actual sales records. This leaves acertaining business revenue and potential earnings indicators like EBITDA a difficult task, to say the least.
Where a ready-made earnings model is not published openly, you will do well to obtain some simple guideline figures to make your planning decisions with greater confidence.
The purpose of this blog post is to prepare you with the necessary facts and figures at your fingertips in order to get a working earnings model together of how your marquee hire business be best poised to generate your desired salary.
The following are the main points of this blog post, entitled: “How Much Can You Earn Running A Marquee Hire Business?”
- Total Capital Start-Up Cost
- Total Cost Per Job
- Total Monthly Fixed Costs
- Total Absorbed Business Costs Per Job
- Total Real Costs Per Job
- Targeted Breakeven Per Job
- Targeted 1st Year Breakeven
- Targeted Annual Sales Revenue
- Targeted Price Per Job
- Targeted Gross Earnings Per Job
- Targeted First Year Salary (EBIT)
Total Capital Start-Up Cost
As with any other equipment hire company the vast majority of the overall capital investment cost of this marquee business will be attributed to acquiring the necessary stock levels to suffice your expected hire capacity.
There are some queries which need to be answered such as ‘will you buy new or used marquee hire stock?’ – either way there will be a relatively large total lum sum exchanged for taking control of the main capital assets of your new business.
There are many vendors which offer a variety of terms inc. bulk purchase discounts, so it generally pays off to do a bit of search.
EXAMPLE – TOTAL CAPTIAL START-UP COST:
Total Cost Per Job
As with every type of business, according to standard accounting and bookkeeping protocol, there is a fundamental item called ‘cost of sale’, which refers to the cost directly relating to the delivery of sale.
Where marquee hire is concerned, such costs would be vehicle fuel for example which would vary depending on the job attended.
For jobs which are closer to your event equipment storage facility, there will be a lesser cost of fuel, due to a lesser fuel consumption. This would in turn reduce the cost per job (aka ‘cost of sale’)
EXAMPLE – TOTAL COST PER JOB:
Total Monthly Fixed Costs
Fixed costs within a business are usually the expected obligations which show up as the typical cost items every month on the bank statement.
There will be related to arrangements with service providers such as car insurance brokers to whom a fixed fee will be paid, usually by standing order,e very month.
This element of your bookeeping will provide some aspect of predictability to your forward financial outlook.
EXAMPLE – TOTAL MONTHLY FIXED COSTS:
Total Absorbed Business Costs Per Job
Whilst ‘cost per sale’ or cost per job in a marquee hire business is directly attributed to each unit of sale, the fixed costs by nature cannot be allocated in such a causative manner. This leaves room for deciding on the most appropriate method of assigning fixed cost proportion to each sale.
‘Activity Based Costing’ is an arbitrary means by which you can attribute fixed and other costs to each sale within a business, thus apportioning every cost against every sale and therefore giving an estimation of the real balance of your P&L.
EXAMPLE – TOTAL ABSORBED BUSINESS COSTS PER JOB:
Total Real Costs Per Job
The combination of the costs per job and the absorbed business costs then gives a real figure for how much each job really costs a marquee hire company.
This simple calculation gives a real figure for how much is really being taken out of every sales figure from the general running of the business, but based on a 100% service capacity takings. Marquee businesses are notoriously seasonal and therefore some adjustment to this figure would be needed to give a more sound expectation during regular annual sales pattern.
EXAMPLE – TOTAL REAL COSTS PER JOB:
Targeted Breakeven Per Job
According to an expected trading pattern for a marquee hire company i.e. main bookings for marquee hire within the summer months only – perhaps only 4 months, especially if targeting wedding enquiries.
Also, there will be the odd cancellation where even if a booking deposit was taken (non-refundable), there will still be an opportunity cost perhaps of having to turn away potential business for a booking which never came to pass.
Both of these circumstances are costs which need to be factored into the breakeven calculations.
EXAMPLE – TARGETED BREAKEVEN PER JOB:
Targeted 1st Year Breakeven
Extrapolated ‘breakeven per job’ figure over an estimated expected number of trades within 12 months, can provide a breakeven figure for annual trade.
With a 4-month peak period for wedding bookings and service capacity to only be able to handle 1 job per weekend, leaving about 17 potential marquee hire jobs equalling 100% capacity for the 1st year.
EXAMPLE – TARGETED 1st YEAR BREAKEVEN:
Targeted Annual Sales Revenue
The only cost item you must remember to account for which until now we have delayed adding, is the owner salary.
This comes after all else has been accounted and therefore provides you with a clear scope of what you hope to achieve for yourself after all other costs have been paid.
An important point to remember is the subsequent years of running the marquee hire business in which the 1st year capital cost which has been recouped by year one profits is supplementary to the owner salary.
EXAMPLE – TARGETED ANNUAL SALES REVENUE:
Targeted Price Per Job
The targeted price per marquee hire job will give you an idea of the kind of ball park you will need to charge in order to cover all bases including reaching your ideal 1st year salary figure.
This price may or may not be good value considering the offers from your peers on the open market.
This price is only a guide price which would effectively accommodate all your previous planning points and secure your personal earnings.
EXAMPLE – TARGETED PRICE PER JOB:
Targeted Gross Earnings Per Job
How much do would you personally earn per job? This calculation arrives at that figure for you as a means of incentive for keeping things going and keeping things tight for the first year of trade.
This enables you to put a clear take home figure on each job.
EXAMPLE – TARGETED GROSS EARNINGS PER JOB:
Targeted First Year Salary (EBIT)
The first year of running any business, particularly a maquee hire business, is going to be a great sacrifice for any owner. The sacrifice will come at the expense of more family time, greater wages elsewhere, multitasking many disciplines all at once, being a servant to everyone involved (even your staff who will depend on you to excel) and great out of pocket expense.
Any serious business will be planned with more than one year trade in mind for it to be worth the start-up journey.
To cover you basics would be a great achievement knowing that if you do a good job, you should gain increase 2nd year on the 1st.
EXAMPLE – TARGETED 1ST YEAR SALARY:
This is a summary answering the question of "How much can you earn running a marquee hire business?" Whilst there are various ways to achieve earning a salary, we think that the running of a marquee hire business is a very versatile means by which you can achieve a simple salary.
This post was written by selmore