Do You Set Profit Goals For Each Kind of Revenue?
Do you set profit goals for each source of your revenue?
In other words, do you set profit goals for your water damage work, mold remediation, fire restoration, contents cleaning, roofing, rebuild, and any other kind of revenue?
Industry norms suggest a 75% profit for mitigation, 65% for contents cleaning and mold remediation, 45% for rebuilds, and 40% for roofing.
Many contractors don’t earn these margins.
It’s not because they can’t, they just don’t know how.
If you learn the systems, processes, and practices to manage your work better, you will see profit margins increase.
You’re in business not merely to generate revenue but to make a profit. Profit requires good business practices and closely monitored project management.
There is one more step to this benchmarking process.
You need a rigorous and consistent job costing system. Those who don’t will tell you, “Ya, we make a 38% profit on rebuilds.” You ask, “how do you know that?” “Well, I’m pretty sure that’s what we do on most projects.”
They have no idea what they make, and you can be sure it’s substantially lower than their guestimate. You have to know your numbers, and the only way to test your operating efficiency is through rigorous job costing.
Set realistic profit goals and pursue these benchmarks on every job and for every kind of revenue.