How do I make more money next year? Most contractors immediately answer this question with marketing strategies. If they are going to make more money that must mean more sales, more jobs, more work. They couldn’t be more wrong! The best opportunity to make more money is to improve your internal operation where profit is gained or lost. The only money that really matters is the money you keep. If you make a $100 and spend $100 what have you achieved? If you make 1,000,000 and keep $200,000 you have a lot of options. Keeping more of what you earn is the key to your prosperity! HOW DO YOU MAKE MORE MONEY? HERE ARE SEVERAL POSITIVE STEPS YOU CAN TAKE:
- Setting profit margin goals for each revenue stream (water, mold, construction) and implementing a job costing system will help you determine your success for each revenue source. For example, water mitigation should produce a 75% profit margin and build back services should yield a 50% profit.
- Making major material purchases from wholesale distributors will increase per job profit – how would you like to buy flooring at 45% – 50% below Xactimate pricing? This alone would put you well on your way to an overall per job profit of 50%.
- Upgrading the skills of your estimators can insure they leave fewer unstated charges on the table. Implement a periodic estimate review process and you will see just how much money is lost on each estimate written.
- Using Xactimate as a key management tool will help you take control of material and labor costs – most per job profit is lost right here!
- Refusing to take bids from subcontractors will save you a lot and keep you in charge of your work.
- Paying subcontractors by the job not by the hour will put a stop to the dribble of milking the clock and bilking your profits.
- Implementing a comprehensive and multi-faceted cash flow management system could get your construction draw within 7 – 10 days and your final payment within 2 weeks.
- Squashing excess spending requires taking all credit cards away from your field staff.
- Creating a system for hiring, vetting, and supervising subcontractors will provide the labor pool needed to complete the growing amount of work you have to manage.
As one can see there are a lot of positive steps you can take to protect your net profits thereby increasing your cash flow and cash reserves. For example, with a reasonable profit goal in place for each source of your revenue you can assess how well your operation achieves that goal. I am big on stating that restoration contractors can and should be earning 50% profit on every construction rebuild job, every time! How well are you doing? If you are at 28% – 32% like most contractors, you have a lot of room for improvement. If you can raise the bar to a 40% per job profit imagine what that would do to cash flow and cash reserves. How would you like to make payroll just once without the mad dash to collect payments so you can pay your staff? Cash flow eases the strain of business and increasing profits are the best way to improve available cash. Taking control of your internal operation to insure top profits on every job is not as hard as you might think and the rewards to you and your company are monumental and life changing.
If you are disappointed in your net profit or intrigued by the possibilities of taking control of your construction services call me for a FREE 30 MINUTE CONSULTATION and let’s talk further about these things. I am confident we can raise the bar and increase your net profit going forward. You have a lot to gain by making that call. The time to begin preparing for next year’s year-end is right now. You can complete your assessment within weeks, prepare a plan to address the most vital changes needed, and implement those changes before the start of next year and gain the benefit of those best practices throughout the entire year. 2017 could truly be a better year in many ways for you than 2016 has been. The time to act is right now! 6 Month Coaching Plan – The Profit Maker – Make More Money Than Ever Before Managing Your Business Like A Pro http://growmyrestorationbusiness.com/plans-pricing-new