Planning for Profits – Your Company’s Budget
Imagine it’s December 2020, and you’re reviewing the results of your business for the past year and you notice that compared to 2019, your profits are WAY up, AND, you didn’t have to kill yourself to make it happen! How great will that be?!
That’s what’s possible when you operate your business with a plan. Planning for increased profits by creating an operating budget for your business. I don’t just mean a revenue plan (most people have one of those), I mean planning for bottom-line net profits and increased cash flow. In today’s video, I’m going to share with you the tools and steps to employ to help you do just that for your business! Read More
Planning for Profits – Be Intentional About Your Money
It was a huge wakeup call for me when one day I was faced with needing to buy a new set of tires I desperately needed for my car, and no money in the bank or available credit to buy them. The realization set in that my habit of living from paycheck to paycheck was not workable.
The story of, “When I make more money, I’ll have more money,” was a lie. Because every time I got raises and my salary went up, I still never seemed to have any extra money for unexpected expenses.
Being in my mid-20’s at the time, and starting to look at not just surviving, but actually wanting to buy a house some day, I knew something had to change.
It was while channel surfing one Saturday morning that i stumbled upon the Suze Orman Show and her voice blared at me “your problem with not having enough money isn’t really about not making enough money, it has to do with the fact that your not being intentional with how you spend your money.” I immediate stopped changing the chanel, and started to pay close attention.
That wake up call, and her books and courses completely transformed my relationship with money and began to show me the principles of how to always make a great profit and have money in the bank when I want and need it.
Pricing for Profits: The Story Your Numbers Tell
My client, Bob, called saying, “I’m a little freaked out, and I need your help.” He continued, “I’ve been working my butt off to get my revenue up, but my bottom line profit is dropping.”
If you’ve ever experienced your revenue increasing, but your bottom line staying flat, or worst yet declining, then you can probably relate to why Bob was freaking out.
Making a consistent profit can be a common problem for many contractors, but it doesn’t have to be your problem.
When things like this happen, I tell clients to start with the data. Numbers always tell a story. So Bob and I sat down together armed the company’s profit and loss reports.
Sure enough, he was right. Revenue was steadily increasing, but the gross profit margin had been falling little by little from 30% a few years ago, to 27%, to 25% this year.
Contractors live and die by gross profit margin, so this decrease was worth a closer look.
If you’re working super hard, but you’re just not seeing the results you want, keep reading . I’ll explain to you why this happens, and then, what you can do to change it. We’re going to talk today about what causes gross profit margins to drop, how to avoid “overhead creep”, and how to price for increased profits.
How to Price for Profit in Your Construction Bids
When my client Joe and I met a while back, he shared with me his recent revelation that has caused him to completely re-think how he bids projects.
It all started while reviewing his financial results (prompted by his concern over a declining bank balance). It didn’t take long for him to see a pattern… his company’s gross profit margin was steadily dropping. Joe knows that construction companies live and die by gross profit margin, which meant he needed to dig deeper. As he did, here are a few things he discovered..
1) Pricing in the estimate for materials was not the price they actually paid. There were two reasons for this:
a. The price paid for materials were not what was in the estimate. It’s easy to let this happen, especially if you do long term projects like Joe’s company, where there’s a lag time in between writing an estimate and placing a purchase order.
b. The quantity of materials purchased was over what was in the estimate. When they were self-performing the work (as opposed to using a subcontractor), the final material take off had far less material than they actually needed as shown in the plans.
2) The estimated hourly cost of labor for different positions was too low. This was only affecting the work that was self-performed. So the work done by subcontractors was profitable, but self-performed jobs were losing money.
In today’s video we’re going to talk about why this type of problem occurs on porjects and in bidding, and what you can do to make sure it never happens to you.
We’ll tackle one of the biggest challenges construction companies face when bidding jobs, and I explain how to always make sure you’re pricing for profit.
A Contractor’s Succession Plan – Part II
This is the second part of a two-part series on succession planning for a contractor, and the process of finding and developing a new leader for a business as the owner nears retirement. If you’re thinking of someday selling a construction company, wondering about the future of your business, or curious about what your retirement could look like, you don’t want to miss today’s interview.
In this video, we’ll discuss what succession planning is, what does it take to sell a business, what has worked really well for my guests, and what would they do differently after going through the succession process.
I’m talking to Tom and Barbara Weiher, the original owners and founders of Carmel Builders in Milwaukee, WI. Carmel Builders successfully transitioned the business from Tom and Barbara to their son, Louis, a few years ago. (You can watch my interview with their son Louis here.)
Tom started the design, build, and remodeling firm 40 years ago. Ten to 15 years ago, he started wondering, “How’s this going to end?” It seemed ideal to him and his wife, Barbara, for one of their five children to take over the business to keep it in the family. But at the time, none of them were working in the business or interested in taking it over.
A Contractors Succession Plan – Part I
Today, I’m sharing part one of a two-part series about succession planning. In the contracting industry I see so many folks who have been working for 30 years, 40 years, and beyond, who want to transition out of their businesses but they don’t know where to begin and as a result, continually put it off.
Knowing how to plan for your phase out or complete succession from your business is the pathway to you being able to reap rewards from the hard work the you’ve put into it over these many years. And proper planning, as my guest today will share with you, can help you save money and increase your return as well.
One of the companies that successfully made the transition is Carmel Builders in Milwaukee, WI. Today, my guest is Louis Weiher, the owner and president since 2016. In my next blog post, I’ll interview his parents, Tom and Barbara Weiher, the founders of the 40-year old design build build firm.
Whether you’re on either end of a possible succession or just wondering about your eventual retirement, these two interviews will help you navigate your way to a successful transition.
How to Close More Sales and Three Ways to Get More Referrals
In this week’s blog, I’m super excited to be joined by Chip Doyle of Sandler Sales. Having successfully trained hundreds of people to be great salespeople, what Chip talks about is a proven approach for effective prospecting that results in closing more sales.
In my interview Chip shared some best practices around sales and prospecting that are simple to implement, and don’t require you to be “salesy.”
“To create fruitful prospecting (i.e. be attracting the RIGHT customers), you need to control the lead source,” Chip shares in this interview.
I especially love when Chip explained how “every opportunity you have to connect with customers and prospects is an opportunity to prospect for more customers, thus an opportunity to close more sales.”
How to Charge for Pre-Construction Services
As he sat down across from me, I asked Josh “how have things been going this past month?”
“Last week I submitted the fourth bid to a client who has an incomplete set of plans and is not clear on exactly what they want. This whole thing of helping people figure out what they want to design, and what it will take to build it, while simultaneously asking me to bid and re-bid, and NOT getting paid for it is making us crazy!”
De-Mystifying Online Marketing – And the ONE thing you can easily do create a stronger online presence
If you’re like me, the whole world of online marketing can often feel very confusing and daunting. This week in my interview with my friend and colleague Joleen Emery she de-mystified social media marketing in a really lovely way. In the process, she also helped me understand some key areas where we could improve our “digital footprint” as she calls it (this is explained in the video).
Joleen talked about how to get more people calling us, and how to get our business to show up on the first three pages when someone does a Google search – without paying for ad space!
No cost and no confusion marketing – who doesn’t love that?
Project Schedules that Make You Money!
When three different clients told me about Robin and his brilliance around making money in scheduling, I knew I needed to interview him for my blog. And I’m so glad I did.
For over 30 years Robin Beauchamp has been increasing profitability on his projects by employing an approach to scheduling that has been key to getting teams to stray focused, subs to show up when needed, clients to make decisions quicker, and design teams to stay on track.
In my interview, Robin shared how he keeps project teams aligned on goals, delivering on promises, and working as a cohesive team. And he does it without having to cajole, threaten or throw anyone under the bus.
Listen to today’s video blog and learn how you can make your projects flow more smoothly, and have your schedule make you more money!
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It’s my sincere hope that this content helps you to grow, thrive and prosper in your business and in your life!
Warmest,
Vicki
p.s. If you haven’t already gotten your copy of my book, The Profit Bleed, check it out here. It’s now also available on Kindle.
p.p.s. I’m committed to helping contractors to grow, thrive and prosper, so if you found this content to be useful, would you please share it with a friend or associate you think could value from it too?
Vicki Suiter helps people see their businesses differently, then gives them the tools to do things differently. Since beginning her business in 1990, Vicki has helped hundreds of contractors achieve the kind of success they never dreamed possible. Today, in addition to consulting, Vicki is an in-demand speaker at industry conferences nationally and internationally. Vicki’s articles and opinions have been widely shared in print and across the web. She is also the author of the book “The Profit Bleed” How managing margin can save your contracting business.