The rule of thumb is contractors should spend 8% of gross revenue on marketing. $1 Million in revenue requires $80,000 of marketing to ensure you maintain your current level of earnings. $80,000 of marketing money could provide a full-time marketer and some internet activity. Not bad! OR, $80,000 could be spent on fees to TPAs and additional admin support to manage that work.
As a contractor, I was always opportunity greedy! What I mean by that is that if there was an opportunity to grow my business, I took it! I searched for opportunities, determined how to qualify for each one, and chased them until I got them. One by one, each one … until I got it! One of the best opportunities for full-service contractors is serving Disabled American Veterans through the Veterans Administration. The VA provides grants to disabled veterans to remodel their homes making them more handicap friendly, we called it handicapable. The HISA Grant (Home Improvement Structural Adaptation) grants veterans $7,000, and the SAH Grant (Specially Adaptive Housing) grants $70,000 for major renovations.
In order to get paid quicker once the job is completed, you need to understand the triggers that lead carriers to process payments. It’s really pretty simple – is the scope of repair completed and is the customer satisfied? If they get a “YES” to both questions, the trigger trips and the payment is processed.
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.
What’s your plan to grow your restoration business? Is it to market more agents? Do you have a plan to reach plumbing contractors? Are you going to try pay-per-click? Perhaps you don’t have a plan at all. Do you need help to focus or retool your efforts to increase sales? Perhaps I am the person to help you do just that! What I have done for others – I can do for you!
If you made less than a 20% net profit on your business operations, you need to improve. What’s at stake? At stake is your cash flow. Improving net profit provides more cash flow and fewer worries! At stake is cash reserves. “What’s that,” you ask? That’s money in the bank, in your savings account to keep the operation moving when cash flow dwindles. I understand the lack of familiarity with this – I struggled with having cash reserves too.
Half of the 25,000 restoration businesses in the US never grow larger than $500,000 in sales. If they make it beyond this point, they hit another hard ceiling at around $1 million. Breaking through the $1 million cap on the way to $3 million, $5 million, and more almost always requires two money-making generators:
There are 25,000 restoration companies in the US. Over 80% are mitigation-only businesses. Would it surprise you to learn that many of those want to become full-service? But they don’t for one reason – FEAR! Contractors are afraid. They’ve heard the warnings and lousy experiences of less able others and believe their half-truths as reasons for not taking the plunge themselves. Some of the most common half-truths that keep contractors out of this profitable service are:
What’s your plan to grow your restoration business? Is it to market more agents? Do you have a plan to reach plumbing contractors? Are you going to try pay-per-click? Perhaps you don’t have a plan at all. I am a successful restoration business coach. I help owners grow their businesses, and that’s why they call me … they want to grow their business and make more money.
Many contractors are afraid of flooring. They don’t like doing it, and so they walk away from it. They sub it out to local flooring contractors for little profit instead of learning how to make killer profits every time. Why are they afraid … why do they give it up … why do they accept low profits … because they haven’t figured out what it takes to make significant profits on flooring. The average cost for an insurance damage repair rebuild is approximately $10,000, and flooring typically represents nearly one-third of the total repair bill. Think of that, over $3,000 of charges for equipment, material, and labor for flooring. That’s a considerable percentage of the whole. If you give it away to a local retailer, you lose the single largest profit maker on the job.