There’s nothing wrong with a little forward planning. 2022 is just months away, making now the perfect time for some clarity and focus for the year ahead. Answer these simple questions to identify your drivers for next year.

1. What was the most important decision you took in your business this year?
2. What was your best quality as a leader this year?
3. What was the best piece of advice you got, book you read or course you took this year?
4. Where were you most focused this year?
5. Which moment / single event was your proudest this year?
6. Which two actions brought about the biggest results?
7. Where were you most inspired this year?
8. Which three most important qualities will dictate your performance next year?

To help you on your way, here are some powerful insights from my good friend and life coach
Martyn Hume Cobbe.

Would you build a house without plans?

If you wouldn’t build a house without plans then why would you build your life without a clear
plan for how you want it to be and how to achieve it? Maybe to avoid disappointment if it’s
not achieved?

But if you fail to make a plan, you’re guaranteed to be disappointed. The first step in a creative process is getting clear about what it is you want to create. The
design might evolve throughout the process of creation but how can you commit fully to action,
focus your energies and make all the necessary decisions required without a clear outcome in
mind?

In the life planning process, step 1 is establishing the goal – what you’d like your life to be in 3-5 years time. This picture includes your relationships, physical environment,
your work life, your health and your experience of living, just to name a few.

Step 2 is getting really clear about your personal resources, your drives, your strengths, your
natural abilities and your values, for these are what will empower you and keep you on the
pathway to fulfillment.

Step 3 is to eliminate any limiting beliefs that arise as you start moving toward your desired outcome. These are bound to arise because they are the primary barriers that have prevented you from already
achieving your life goals.

This three-step process is about creating a map of your life and then creating and installing an internal
compass. This compass will keep you on track and in the right direction as you come to the many forks in the road.

The amazing thing is that, when you know you’re on the right path, you’ll find a wonderful sense of gratitude
in the now and an innate ability to enjoy the journey as it unfolds…

It’s incredibly tempting to engage in a race to the bottom. We can extort workers to show up and work harder for less in order to underbid a competitor. We can take advantage of less sophisticated customers and trick them into buying items for short-term satisfaction and long-term pain. We know how to do this. There’s always the opportunity to cut a corner, sacrifice integrity and quality and suck it up as we struggle through this lean period.

This might bring more cash-flow for now, but not for long and not without dire consequences down the track. Someone will always find a way to be cheaper or more brutal than you.

 

The race to the top makes more sense to me. The race to the top is focused on marketing, design, respect, dignity, guts, innovation, sustainability and client-centric generosity, making for a much more positive process. Best of all, the race to the top is the long-term path with the desirable profit outcome.

Your margins give you lifestyle and options so a few percent in gross margin could mean plenty on your bottom line. For example – if you’re turning over $2 million and you move from a 15% to a 20% gross margin, that’s a $100,000 and probably around a 50% (or more) increase in your net profit. So how do you go from 15% to 20% you ask? Here’s five ways:

1) Design a marketing system that allows you to put 1% on your pricing.

2) Identify your biggest inefficiencies on jobs to save 1%

3) Shop around and shave 1% of your materials and subbies

4) Target higher margin jobs for another 1% increase ie. jobs with higher labour or carpentry content.

5) Shave 1% of your running costs

This all takes a little time and analysis but it’s well worth the additional bottom line result.

If someone selling a flat-screen TV can give you options and deliver value to the extent that you’re prepared to pay more (ie. extended warranty or free delivery), you should be able to do a hell of a lot better on a new home or renovation. Don’t settle for lower margins because that’s what everyone else is doing. The big problem with the race to the bottom is that you might win.

Construction is a fickle business, and recently, I’ve been hearing complaints from certain quarters about the lack of enquiries, savage under-cutting and a drop in sales conversion rates. Fortunately, regardless of who you are, none of these issues is insurmountable. In fact, the simplest solutions are often the most effective. Renowned businessman, John Rollwagen, puts it perfectly when he says “The secret of business, especially these days, is to focus relentlessly on your unfair advantage – the thing you do that others don’t.”

Luckily for us in the building industry, this is so easy to do. These three magical steps will have you converting sales in no time.

1) Return your phone calls.
Most builders and contractors don’t return their phone calls at all. The ones that do are often 2-3 days late. Phone calls should be returned the same day or by 9am the next day.

2) Show up for your appointments on time. Not showing up for appointments, or showing up late, is one of the major gripes clients have with builders and contractors.

3) Do exactly what you say you will do, and do it when you say you will do it. It’s the little things that count!

Just these three actions should give you an unfair advantage over your competitors. Remember – making sales is first and foremost about building trust and confidence in your company and in you. The best way to build trust in any situation is to demonstrate it.

Once you’ve established a level of trust, you need to set the parameters under which you will work. If you don’t set these parameters, the customer will.

One of the first questions I recommend with any prospective client is “What is important for you when selecting a builder or contractor?” This is often immediately followed by “When would you be ready to start the job?” These two questions put the prospect on notice that you’re not there to dish out prices.

Let them know you’re serious about doing your work and if they just want a price, you’ll be on your way. Other, more detailed, qualifying questions coupled with a sprinkle of tact are no doubt also required here.

The primary purpose of your questioning is to discover what the owner is thinking. If their primary interest is price, then sorry, it’s time to leave and look for someone willing to pay a fair price for your services.

If you find you’re experiencing too many price-sensitive people, it’s important you look at how you’re attracting enquiries. If you are offering free quotes or reaching out to people looking for low prices, that’s what you’ll get. If your competitors are coming in at half your price, and getting the job, you’re aiming for the wrong market.

A very wealthy Australian recently said, “It’s easy to make money. To make money, you just need
 to do the things that make money.” Simple but right on the money!

 

What is your plan for doing the things that will make you more money this year?

As fascinating, simple and profound as it is, this quote begs the question –what percentage of your time do you
(or your team) spend on the tasks that make money and how well are you doing them?

 

Here’s a small list of questions to prompt you:

1) Could you be more efficient with your time?

2) Could you shop around to increase your margins?

3) Do all your invoices go out on time?

4) Could you qualify your prospects better?

5) Could you do more marketing to generate better quality enquiries, even if it’s just one more phone call a day?

6) Could you manage your finances better so you build more working capital?

If you stop working on a job, what happens? You lose money. The same applies to working on your
business and the things that make you money.

If you wanted to make an extra $100,000 profit this year, what would it take? A few extra jobs? How many more jobs would you need to price and what would you need to do to price those extra jobs?

Let’s say you put in an extra four hours a week focusing on generating that extra $100,000. That’s a total of 192
hours focused on generating more work. If it’s a focused 192 hours, I’d put money on you making the extra
$100,000. If we divide $100,000 by 192 hours, that’s $520 a hour. But here’s the clincher! Once you’ve set up
the systems you should generate the extra $100,000 for the rest of your career!

The most common objection I hear when I recommend spending four or five hours working on your business is “I
don’t have time”. If it’s worth $520 an hour (conservatively) then it’s costing you $520 a hr. So could you find the
time?

Have you ever accurately calculated just how much work you need to turn over to cover your running costs and fixed expenses? This measure, known as the break-even point, is an immeasurably important step in ensuring business development and growth. It goes without saying that without it, things could turn south very quickly.

Simply said, if you don’t know your break-even point, then how do you know when you’re making a profit?
Before you start feeling frustrated about this often irritating little detail of business, the good news is that’s all about to change. We’ve created a free, very simple break-even calculator to help you figure out the break-even point for your business right now. All you need are some accurate financials and in three easy steps, you’ll have your measure.

Step 1: Source an accurate copy of your profit and loss. Note it’s imperative that your numbers are as accurate as possible, otherwise the result won’t mean a thing. So make sure the income and expenses listed in your P & L are up to date and accurate.

Step 2: Ensure that you’ve separated your ‘Cost of Sales’ from your ‘Running Costs’ or ‘Fixed Costs’. If you’re unsure about this, make sure you ask your bookkeeper, and if they’re unsure, give us a call we’ll walk you through it.

Step 3: Punch your numbers into the yearly or quarterly space on the calculator and hit each of the three calculate buttons to figure out your gross margin, break even and net profit figures.

Start Here >> Breakeven Calculator

Now here’s the thing – once you’ve calculated your break-even point, you can play around with the numbers and gauge the result to your bottom line. You can also use the top part of the calculator to work out your gross margin on individual jobs and find your most profitable work. Chances are 80% of your profit is coming from 20% of your work.