Money Talks: Five Crucial Tactics to Increase Your Profits
Nothing beats the rush of selling a job at an impressively high price, predicting a hefty profit margin. But what happens when the final calculation doesn't reflect the profit you anticipated? What if your bank account doesn't mirror the profit shown on your Profit & Loss statement?
The road to success and financial stability in contracting requires a set of strategies that ensure each job you handle is profitable and moves your business forward. This article presents five practical tactics that will help you make more money on your next painting job, significantly increasing your profitability and ensuring your business thrives.
1. A Clear Scope of Work
The first crucial aspect to consider is the Scope of Work. Each job has its unique demands, and you should thoroughly understand these before the work begins. Having a clear scope of work means having a comprehensive view of the tasks involved in each job, including timelines, man-hours, conditions, and client expectations. You or whoever estimated and sold the job should have this information at their fingertips.
Time is a notorious profit suck for any contractor. Parkinson's Law states that work expands to fill the time available for its completion. Therefore, a clear target with a defined timeline prevents open-ended time allotments. Providing your crew with a well-defined scope of work, including clear time expectations, is critical for maintaining profit margins.
2. Transfer the Trust
The second tactic involves transferring the trust. This strategy emphasizes the importance of creating a strong rapport between your team and the client. This trust-building step happens at the start of each job. It involves you (or whoever sold the job) and the person who will run the job meeting with the client.
In this meeting, you walk through the scope of the job, confirm the specific tasks, and align everyone's expectations. The client should meet and get to know the person who will be running the job. This meeting not only ensures everyone is on the same page but also provides a platform to defuse any potential issues before they cause problems.
3. Weekly Operations Meeting
The third crucial tactic is to hold a regular Weekly Operations Meeting. While some might question the value of such a meeting, it's a proven way to rally your team and keep everyone informed about the status of ongoing jobs and future projects. The foreman or project manager should give an account of jobs completed in the past week, comparing the estimated hours to the actual hours worked.
These meetings offer a perfect opportunity to discuss future jobs, providing your team with a sense of job security and confidence in the company's future. They also present an excellent time for quick training sessions on new tools, safety protocols, and other aspects of your operations.
4. Daily Recap
The fourth tactic is the daily recap, which serves as a real-time report on the progress of the job. The person running the project should gather the team at the beginning and end of each day to discuss plans and assess progress.
By assessing whether you're on track daily, you can avoid nasty surprises of jobs going over budget. It also ensures effective communication with the client and allows you to make necessary adjustments on time.
5. Love the One You're With
The last, but certainly not least, tactic is what the Doobie Brothers summed up in their song: "Love the One You're With." In the context of your contracting business, this means dedicating your focus to the job at hand. We've all been in situations where multiple projects demand our attention, and we're torn between which to prioritize.
The key to making more money is to start strong and finish stronger. Don't split your attention among various projects; focus on one, deliver excellent results, and then move on to the next. Committing to a single job ensures that your team works efficiently and that the client receives an outstanding experience.
By focusing on one job at a time, you have the opportunity to plant seeds for future work, upsell where possible, and build a strong relationship with the client. Encourage clients to leave reviews and share their experience, which helps build your reputation and secure more profitable jobs in the future.
In the painting contracting business, inefficiencies like pulling team members off an ongoing job to start a new one often lead to negative compounding effects. These can affect the quality of work and ultimately, the profitability of each job.
Building A Safety Net
In addition to the five tactics mentioned above, it’s vital to keep an eye on your financials. Implement effective bookkeeping practices to make sure that your Profit & Loss statements are accurate. Additionally, keep tabs on your cash flow to ensure that you have enough to cover not just the expenses, but also to reward your employees and reinvest in the business. By doing so, you build a safety net that will keep your business stable.
Employee Bonuses and Financial Stability
In a competitive industry, retaining top talent is as critical as acquiring new clients. Offering bonuses to your employees is a fantastic way to keep them motivated. However, it's essential to balance bonuses with the financial stability of your business.
With effective job costing practices, you can estimate the profitability of each job more accurately. By integrating this into your bookkeeping, you can allocate a portion of the profits to employee bonuses without risking the financial stability of your business. This not only incentivizes your employees to work efficiently but also helps in fostering a loyal and motivated workforce.
Conclusion
As a painting contractor, you aspire to see your business thrive, making profits, and growing sustainably. However, this does not come easy. By implementing a clear scope of work, transferring trust, holding regular operations meetings, having daily recaps, and focusing on one job at a time, you can significantly improve your profit margins.
Combining these tactics with effective bookkeeping and job costing, you can reward your employees while ensuring the financial stability of your business. These strategies not only help in making your current job profitable but also lay the foundation for future successes.
Through diligence, communication, and commitment to excellence, your painting contracting business can rise above the common pitfalls and establish itself as a benchmark for quality and profitability in the industry.
Now, equipped with these tactics and insights, it’s time for you to take your painting contracting business to new heights. Your next job awaits, and so do the profits you deserve.