26 Keynotes January/February 2025 aloa.org BUSINESS Financials for Locksmiths When working out their profit for the shop, some business owners tend to use weekly figures. This is not a true pic- ture because a shop typically closes on days throughout the year due to public holidays, etc. The fixed overheads still remain, however. Annual Sales Sales at 50 weeks ...........................$100,000 Overheads ............................$1,200 per week $1,200 x 52 weeks ............................$62,400 $62,400/50 weeks ...............$1,248 per week Sales at 50 weeks ............................$100,000 Cost of stock ......................................$20,000 Gross profit ........................................$80,000 Overheads .........................................$62,400 Net profit............................................ $17,600 $17,600/52 weeks ............$338.46 per week Gross profit margin ................................. 80% Net profit margin ...................................17.6% Service Vans Many company owners underestimate the true cost of running a service van and do not charge sufficient labor to cover the running costs. They consider the profit on products supplied and fit- ted as labor, but product sales should be considered as a separate and additional profit. A locksmith with a gross salary of $42,000 per year equates to $913 per 37.5 hours per week, or $24.34 per hour salary. This is based on the locksmith working for 46 weeks per year (includ- ing vacation, public holidays and sick days). (This is an example; Your local pay will vary.) The cost of running a service van could be as high as $45 per hour, includ- ing salary and all ancillary costs. All costs should be taken into account when setting a labor rate, and the following ancillary costs should be considered: Accounts/administration/technical support. Office, equipment and workshop costs. Advertisement and marketing. Callbacks and quotations. Downtime (van off-road). Pension contributions. Tools and uniform. Phones (landline and mobile). Van repayments, tax and insurance, diesel/gasoline and motor repairs. Bad debts. Employer taxes Employees’ non-billable hours Bank charges. Employee liability insurance and other insurance costs. Accountancy and legal fees. Education and training. Recurring Revenue Recurring revenue streams are very important in every business, and lock- smiths are no different. Aim for contracts and repeat com- mercial clients who will engage you reg- ularly. Having many of these customers will save you the expense of advertising for new customers (It is far cheaper to retain customers than to acquire new ones). Repeat customers may include: Realtors. Property management companies. Facility and maintenance companies. Housing associations. Police. Architects. Insurance contractors. Safe suppliers. Car dealers and body shops. Here are a few ways to add to your existing revenue streams: Supply your own exclusive restricted keys and master key systems, as you are guaranteeing repeat key cut- ting and supply and servicing the cylinders. Schools and colleges in particular need to get doors maintained and serviced. They welcome maintenance contracts for annual servicing of doors, closers and locks during school holidays. There are opportunities for mainte- nance contracts for electronic locks that you supply with battery replace- ment and programming. It is mandatory to get security systems and door operators serviced annually to comply with regulations. Costs Sometimes, we are so concerned about getting and doing the work while trying to get paid that we neglect to look at our costs. By paying out too much money unnecessarily, you have to work harder and charge more to be profitable. Costs need to be monitored constantly. Some simple things to do include: Monitor your staff performance and make sure you are getting full value from them. You may find that you will get the same results with one less staff. The biggest cost to your business can be carrying too much stock. Only buy what you need! Check your purchase invoices for mistakes with overcharging and non-delivery. This does not happen on purpose, but mistakes do happen. Investigate cheaper but good suppliers of electricity and phone services. Check your fuel bills, and offload all the scrap from the back of the vans. Make a budget each year for adver- tising and marketing, and stick to it. After-hours and weekend callouts should be charged accordingly. You are working anti-social hours to provide an emergency service.
