Podcast 229: The #1 Tactic To Increase Profits Today with Dave Sullivan
Dave Sullivan
Thankfully, business is booming again and everyone has plenty of work these days! Today, I share with you how to increase your profits so that you’re not one of the 80% of contractors who go out of business within the first five years. The secret is NOT in getting more leads, it’s in keeping up with your gross profit margin. Listen in as I help break it down for you, and share my process for the all-important mid-year review. This will help you see where you stand financially and figure out how to finish off the year more profitably.
What you’ll hear in this episode:
The gross profit margin is the #1 thing you should be looking at. Your sales for each job, minus your direct costs (labor, materials, permits, etc.) is how you figure your gross profit margin.
Your rent payment, truck payment, cell phone, and employees are examples of your overhead expenses.
You should also be paying yourself a 10% salary as an overhead item!
Your gross profit margin covers these overhead expenses, INCLUDING your salary.
Running a good business means paying your overhead expenses and reinvesting into the business with your net profit. Hiring great team members and investing in a focused marketing program are two excellent examples that get great results.
I teach the business end of the roofing business. Are you looking for a coach? This is also a great way of reinvesting into your business.
If your close rate is about 50%, you’re not charging enough money. Differentiate yourself by adding value and you can sell your work for higher prices.
My overview of the mid-year review: get everyone involved! And start by dusting off your 1-Page Business Plan.
Start at the end and reverse engineer: what’s your destination?
Take a hard look at the kind of customers we want to do business with.
Focus down on the elevator pitch.
SWOT (Strengths, Weaknesses, Opportunities, and Threats)
Having systems and processes in place that aren’t reliant on you.
Action – what’s the one thing that will make the biggest impact on your business?
The view.
Keep an eye on what I’ve detailed and make your adjustments along the way. You’ll be able to grow your business, make more money, and have more free time. Don’t forget to enjoy the journey!
