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Skyrocket Your Profits With These 7 Game-Changing Secrets
46 Plays4 months ago
In this episode of The Better Contractor, host Brent Oberlink breaks down the crucial strategies that can instantly take your contracting business to the next level. Discover how to leverage historical data for precision bidding, dial in consistent systems and processes, and cultivate a reputation that lets you charge more—without apologizing. Whether it’s pricing smarter, attracting the right clients, or setting clear, profitable benchmarks for your crew, these seven secrets will help you crush your competition and finally claim the profit margins you deserve.
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Transcript
Strategies for Increasing Profit Margins
00:00:14
Speaker
Welcome back to another edition of The Better Contractor. Today, I want to look at seven ways to make more money on your projects. So obviously that's important to all of us. If you're in this game, you are doing it for profit. You're not doing it just for fun.
00:00:28
Speaker
So if you can take projects and get 10% more profit margin, 20% more profit margin, what does that allow you to do with your company in the future? Is that growth? Is that new advanced equipment? Is that some newer trucks, you know, upgrading your fleet? So if you can make more money at each individual project, obviously your bottom line is going to
Accurate Bidding and Cost Management
00:00:48
Speaker
improve. so Let's just dive right in. Number one, a lot of people do not do this well or they don't do it at all, especially smaller companies, but know your historical data. So you need to be able to track it. That's going to allow you to bid more accurately. Know all of your overhead costs. Know your production numbers. I see a lot of contractors that do not know
00:01:09
Speaker
They're overhead at all. like They don't know their FICA, their state taxes, their unemployment, their work comp. They do not know all of that. They do not factor that in on top of their labor rates. A lot of them, I see, do not know their production numbers. So you're not talking historical. So when you go bid a new job, how nice would that be to say, my actual payroll costs are 30. My overhead costs on top of that add whatever it is, eight bucks.
00:01:35
Speaker
And then if you have office staff, that needs to be covered somewhere in your labor rates. All of your different overheads need to be built in. If that's equipment maintenance, all those things, that needs to be added into your equipment rates. So know that overhead number to a T. So that way you can actually price that accurately. And then knowing your production numbers. You should know on average what it costs to lay you know a yard of concrete to trim an average tree.
00:02:05
Speaker
you know, all these different things just as an average. And then when you bid stuff, you can see how far away you are from the average. If the job is weird and it's way different than other ones, then that makes sense that you're way higher. But if it's pretty similar in average to all the other jobs, but you're still way higher, you know you messed up. Or if it's still way under, you know you messed up. So number one, know your historical data. That way you can bid more accurately.
00:02:29
Speaker
Number two, actually put eyes on the on the project and have a bid document that you prepare that captures the photos, all the details from that project. Then that bid detail will get shared with your foreman. um And then have a weekly call with that foreman to be able to go back and see if his production rates are hitting what you estimate your bid.
00:02:52
Speaker
I see a lot of places just go through and they'll just you know take a piece of paper and make notes. Maybe they don't even view the job site. They do it via Google Earth or some other way. They don't actually take unified notes, photos, you know list all the equipment that will ever be needed, the hours for each. I like spreadsheets for this type of stuff. There's obviously a lot of bidding software out there.
00:03:14
Speaker
but you've got to put eyes on it and build that project out in that spreadsheet with all the costs so that it is accurate as possible. But you guys share that with your crew, share that with your foreman.
Utilizing Technology and Training
00:03:24
Speaker
You know, to me, if you bid it for four weeks, let's say, and you have the labor, you have all the equipment, and they're two weeks in and they are not at 50% complete, a conversation needs to be had, whether you misbid it or whether there's issues on site, production issues with the crew,
00:03:40
Speaker
So that communication is so important with being able to put the eyes on the project and then stay in contact with that forum to make sure those goals are met. Number three, get a software system as well as onboarding and training in place. So you've probably heard us talk about that a lot and it's not just because we sell onboarding, it is because it's actually important.
00:04:01
Speaker
This will allow you to track data, record data. To me, you should be making that data and those analytics your friend. It is how you know that your crews are hitting your estimates, that you are making that money, that you are actually hitting all those goals and those steps. But if you don't have that software to track it, if you don't have the onboarding and the training in place, chances are you're not going to hit your goals because you don't have any standards. You've never told your crew, this is what we expect.
00:04:28
Speaker
So you gotta to have that software system. You gotta do the training. Set standards and build uniform teams with onboarding and training. I've said this before, either you will set the standard for your team, your crews, or somebody else will. Number four, stop being afraid to charge what you need to. I see so many contractors pull into this low bid game.
00:04:52
Speaker
To me, if there's a customer and they are only low bid and they don't look at anything else, they don't actually pre-qualify contractors. They don't look at your safety record, your quality. They just take a little bid. Chances are you'd probably be better off to save your money and not even bid it, to be completely honest. they're they're They're not going to be what you need. You need to be able to charge what you need to charge and make money and to pay your guys well, to have the nice equipment. Pay your guys well enough that they want to stay, they can stay to attract and retain people.
Client Outreach and Cash Flow Management
00:05:22
Speaker
So establish a decent profit margins and actually charge it and stop undercutting yourself. Play the numbers again, guys. I heard one time it was like, make 10 calls. Those 10 calls will will we'll give you three leads. I know those three leads you'll make one sale. So with this in mind, you may just need to simply get out there and play the numbers game a little bit more. So if before you were doing 10-3-1 and you still need that, but you want to be able to charge more,
00:05:50
Speaker
you may need to increase that number to do 39 and three. That way you're getting out there in front of more people, but you're gonna grab those clients that do value quality, that value a good crew showing up, and that demand a better work product in the end. You gotta be able to deliver it. You can't just be the one that charges it and doesn't deliver. But assuming you are delivering it, you can charge that, but you're gonna have to find those customers. So don't be afraid to play the numbers game to find those customers.
00:06:17
Speaker
um Keep your cash flow in mind, too, on this, guys. Set up a payment schedule with your customers now. So when you're when you're doing that bid process, if you need 25% at the start of the project, 50% at Midway, and the other 25% at the end, then set that up now. Cash flow is more businesses than anything else. So you got to set your cash flow and your payment plans up to where you can survive, pay your bills, get your guys paid. Number five, communicate.
00:06:47
Speaker
Talk about this a little bit earlier, but set those production goals with your crew. So if you're not doing that and you also have never shared that with them, they don't know what to work towards. Most people like to have a goal. So give that goal to them. And then daily or weekly, depending upon the duration of the project,
00:07:06
Speaker
Get with your crew foreman, maybe you get with the whole crew periodically. Talk about the goal, talk about where they're at. Help work through those obstacles, those issues, stuff like that to get that crew back on track to actually meet the production that you set forth in the bid. But you have to communicate. Number six, don't overcharge underli and under deliver. We mentioned that earlier. Price yourself to do good work, pay your guys well, and then deliver. That's where your organic growth will happen.
00:07:35
Speaker
overcharged, underdeliver, underdeliver and you will ruin your company over time. I've seen some contractors do this and they're in business for a few years before their reputation tanks. If you're going to charge it, you got to deliver. Sometimes it's hard. I get it. The labor market today is is tough. There's not a lot out there. You got to find the skill within that, you know, number of people that are actually available. It's tough. I will say right now, 2024, you've got to be able to pay decent to get decent help. So you're not going to do that with low bid work. So you got to get out there and charge what you need to charge in order to get those good guys and demand that quality.
Marketing and Company Culture
00:08:14
Speaker
Number seven, last but not least.
00:08:17
Speaker
Market yourself and your company. You have to build trust with customers via trust with customers via marketing. You need to tell your story. You need to show your cool projects. Your marketing must look legit if you are indeed legit. One mistake a lot of people make with marketing, I think, is they think it's only in order to get more customers. They do not believe it is to build culture, attract, and retain employees. And it's actually all three of those.
00:08:41
Speaker
If I'm a brand new guy and I'm in the industry, whichever it is, and I'm out here looking for a job, and I'm going through Instagram, Facebook, whatever, and I'm looking up some companies that I'm interested in. I am going to want to work at the place that probably has what appears to be the coolest place to work. So don't sell yourself short on marketing from the employee standpoint, future employee standpoint, and also the customer. People are going through there to look to see how legitimate you are and probably how you conduct business.
00:09:11
Speaker
Let that marketing bring you more clients. It's just, it's a sales process. It's part of your sales process, but that's where you're building that trust. So, you know, obviously here at Better Contractor, we indeed offer marketing services, not to plug us, but we do. The reason we do is because it's important. um You know, we use it in house Atlanta court. We use a very contractor and gosh, it helps so much to be able to have that marketing out there. You know, there's a lot, I look at our followers list. There's a lot of,
00:09:41
Speaker
People who are in the field, I'm assuming they're competitors or they work for a competitor, but they follow us. It's because our marketing is good. So you have to have that marketing in place as well. As we wrap this up, if I was going to point out one thing, one nugget, as far as I'm concerned, two nuggets, let's do two. One would be the systems and processes you hear me talk about all the time. You got to have it. You got to know your data. You got to know your historical data. You got to know how to bid your job.
00:10:08
Speaker
than a two price things correctly. I see so many contractors scared to death to not be low bid. And if that's the case, it's because you're not bidding the right clients. Find the clients who are more of a niche in your industry. Find the clients who maybe have a little bit more money or who are just simply of value quality over cheap. That's the sweet spot. That's where you want to be. You do not want to be in the general category.
00:10:34
Speaker
or the low end category of, hey, I don't really care about anything. I just need this done. I don't care what it looks like. I just need cheap. That is not where you want to be. It's not where you want to serve you know keep your business focused on. So that would be the two nuggets that I would kind of come away with this on. So if you guys have any other questions on this topic, please do message us Instagram, Facebook, wherever.
00:10:56
Speaker
We would love to dive in a little bit deeper. Obviously, these podcasts are meant to give you kind of a general overview. It's a little bit of a generic, um you know, look at it because we don't know your individual ah points or your individual background. Everybody's different. Every situation's a little different. But if you've got more questions, hit us up on Instagram, Facebook. Also, if you've liked this podcast, please share it with others. Obviously, we do not charge for this. It's a free one. All we really want is for you to share it. so If you enjoyed it, please share it. If you don't like it, obviously you don't have to listen. So anyway, appreciate you guys. Love you. See you next time.