Monday 15 June 2020

Are We Making any Money Yet?

Posted by at 10:02 AM

Are We Making any Money Yet?

Net profit is what's left over after all your work is done, and bills are paid.

In restoration, we should expect net profit to be around 20%. If you make $1 million in revenue, you should have $200,000 remaining after everything is paid.

Where is your net profit?

Most restoration companies come in at less than 10%.

If they make $1 million, they have less than $100,000 remaining when all is paid.

That's not good!

Why is net profit so low for so many? It's not because they pay too much for insurance, or have too large a staff, or pay too much for rent.

It's because they undermanage their work and don't make the profits they should.

Restorers should expect 75% profit on mitigation work, 65% profit on mold remediation, 50% profit on rebuild, and 40% profit on roofing.

By the way … the ONLY way for you to know what you are earning per job is through 100% job costing. If you determine your per job profits based on anecdotal information, it is ALWAYS wrong … so don't do that!

If you are not making 20% net profit, you have a problem that needs to get fixed!

It's easier to get more work that boosts revenue than it is to improve management controls leading to higher profits - so you may need help determining what to do and how to do it.