Year-End Series #5 – I Want More Money Next Year and Here’s How I’ll Make It!
“How can I make more money next year?” Most contractors immediately answer this question with marketing strategies. If your company are going to make more money it must require more sales, more jobs, more work.
This couldn’t be more wrong!
The best opportunity to make more money is to improve your internal operation where profit is gained or lost. The only money that really matters is the money you keep. If you make a $100 and spend $100 what have you gained – nothing!
If you make $1,000,000 and keep $200,000 you have a lot of options. Keeping more of what you earn is the key to your business success and personal prosperity!
HOW CAN YOU MAKE MORE MONEY?
- The starting point is to set profit margin goals for each revenue stream (water, mold, construction). Next introduce a job costing system to help you determine your success. For example, water mitigation should produce a 75% profit margin and build back services a 50% profit. Job costing will tell you if you are achieving your per job profits.
- Making major material purchases from wholesale distributors will increase per job profit – how would you like to buy flooring at 45% – 50% below Xactimate pricing? This alone would put you well on your way to an overall per job profit of 50%.
- Upgrading the skills of your estimators can insure they leave fewer qualifying charges on the table. Implementing a periodic estimate review process will help you see just how much money is lost on each estimate submitted. If you get this wrong your job starts in a whole you never dig out of.
- Using Xactimate as a key management tool will help you take control of material purchasing and labor costs – most per job profit is lost right here!
- Refusing to take bids from subcontractors will save you a lot and keep you in charge of your work.
- Paying subcontractors by the job not by the hour will put a stop to the dribble of milking the clock and bilking your profits.
- Implementing a comprehensive cash flow management system could get your construction draw within 7 – 10 days of estimate approval and your final payment within 2 weeks and a whole lot more.
- Squashing excess spending requires taking all credit cards away from your field staff.
- Creating a system for hiring, vetting, and supervising subcontractors will provide the labor pool needed to complete the growing amount of work you manage.
As you can see there are a lot of steps you can take to protect your net profits and increase your cash flow and cash reserves.
Taking control of your internal operation to insure top profits on every job is not as hard as you think and the rewards are transformative.
If you are disappointed in your net profit or intrigued by the possibilities of taking control of your construction services call me for a FREE 30 MINUTE CONSULTATION and let’s talk. Let’s raise the performance bar and increase your net profit.
The time to begin preparing for 2018 is right now.
You can complete your assessment within weeks, prepare a plan to address the most vital changes needed, implement those changes before the start of next year and gain the benefit of those best practices throughout the year.
2018 could truly be a better year for you than 2017, if you start right now!
6 Month Coaching Plan – The Profit Maker – Make More Money Than Ever Before Managing Your Business Like A Pro
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