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Contractor Profits And Building Net Worth Are Critical

By Eugene Peterson

Recently, I was invited by another consultant to take a look at his website “BLOG” – and if so inclined post a comment or two.  Opening to the site, the first topic that caught my eye and attention was the subject of proper owner’s compensation.  It was suggested that owners be paid eight percent for profit and another eight percent for the work they do in the company.  My immediate response suggested that was a bit wimpy – the real target should be raised to 10 percent plus 10 percent, and adds another 10 percent or more for business net worth.  It continues to amaze me the risk owners take and the little, if any, reward they garner.  The reason that we are in business is to make a profit. It is not an ugly word – but a word full of excitement and opportunity. If other companies can do it – so can you.  It is my very strong belief that the risk of doing business ought to be rewarded with at least 10 percent net profit. And that the owner should take a proper wage commensurate with the job or jobs that they are doing. No more free bookkeeping.  That amount could total 10 percent, or even more.  The third part of the owners’ compensations is seldom discussed, perhaps not well understood and less often dealt with properly - company net worth.  Building company net worth can be one of the biggest achievements an owner can do.  It is often overlooked, rarely understood and so seldom planned for.