Monday 3 June 2019

Why Large Loss Profits Are So Much Smaller

Posted by at 8:00 AM in

The key to job profit is controlling material and labor costs. However, we all know the larger the job, the smaller the profit. But, do you know why? Because we lose control of the job!!

I coached one restoration company known for its high volume of large-loss jobs. Sure, they knew how to reel it in, and how to get it done, but not how to make a profit. One job I found that Xactimate paid $80,000 for labor to complete the scope of repair. The company, however, spent $120,000. Not only did the project manager spend every nickel the company was paid for labor, but then took another $40,000 right out of the wallet of the owner and spent that too.

That’s what I mean by losing control of the job. When we lose control, the objective is to “get ‘er done.” We throw bodies and money at the job to get it done and off our plate. That might be OK for project managers, but owners want it done with a reasonable profit margin. We don’t break the bank when we buy 15 sheets of drywall instead of 10, or when we pay more for paint than we are paid. But, when you don't know your labor numbers and don’t control those costs – you will lose your shirt and break the bank!

Reference: The Business Transformer – Double, Even Triple Your Business in 18 – 24 Months