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Business Builders Blog

Knowing this ONE number can increase your profits

In over 25 years of working with contractors, there is one number that a lot of folks I meet don’t understand – and getting that one number wrong is killing their profits!

What sparked this post was a recent call with Joe – a remodeling contractor. We were barely on the phone for two minutes, when Joe launched into a rant about how he felt he’d been doing all the right things in his business, and yet, his bottom line and bank account were not showing the return for all his hard work!

Maybe you’ve been there too at some point?  It’s super frustrating.

Making a profit begins with the markups in your bid

When I asked Joe his strategy for marking up his costs in bidding he replied – “I mark up what I think I can get. I mark up according to what I hear other contractors in my area are marking up, like 10% and 5%, or 15% and 10% on some projects.”

This was part of Joe’s problem.  I explained to Joe that unless you have a large company, your overhead percentage is never that low.  I know this because in the past 25 years I’ve worked with hundreds of small to mid-sized contractors, and I see their numbers.

I could see the irritated look on Joe’s face as I spoke.  “Well, then how the hell do people who only mark up that much on their bids make any money? And how am I supposed to compete against those guys?”

As I asked Joe more questions, I could see he was not clear on the one number I knew was a factor in how he priced his work, and ultimately in the profits, he was or was not making.

Watch today’s video and learn what Joe and I figured out in his business that allowed him to start being more strategic in his bidding, and let him start adding more profits to his bottom line.  You can also read more below.

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Why your sales process is taking too long, and wasting precious time

When my client Bob first called me and I asked what was the number one thing he’d like to change in his business and he replied – “I’m bidding at all hours of the night and weekends, and then working in the field during the day.  I feel like I jump through hoops to try and give prospect what they want, and it takes forever to get them to commit if they commit at all. I want to find a way to get more control of this part of my business, and stop working nights and weekends.”

I told Bob he wasn’t alone.  If there is one thing most contractors can agree on it’s this: selling is not at the top of the list of things they love to do. I can understand this since selling is not usually where your greatest strengths lie. It can feel unnatural and awkward and often leave you feeling like you’re wasting precious time trying to get someone to make a decision, especially when you’re competitively bidding against other contractors.

So how do you stop wasting time bidding the wrong jobs, get control over the sales process, have people commit faster, AND, have you be the preferred contractor?

Good news – it’s not as complicated as you may think.

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