Everything you’ve been taught about profits is likely this.
Revenue – Expenses = Profits
You bring in sales, you pay your bills and whatever is left over is what you can take home (or put back into your business).
You may even think – it ‘is what it is’… and accept your level of profits.
Maybe you try to cut unnecessary expenses, and of course, you try to get more sales… but that’s the extent of the profit-building strategies.
It’s not your fault – you don’t know what you don’t know, and likely no one has taught you HOW you can intentionally and strategically boost profits in your service business.
It is the biggest myth. There are a TON of areas in your business that affect your bottom line and profit percentage. Here’s a partial list….
1 – Managing Debts – Think about all the interest you pay month after month on debts, whether it’s a truck, a building, credit cards… If you had a Debt Repayment Plan, you could save thousands in interest and pay it off faster so that you have more profits in your bank account.
2 – Understanding Cost of Labor – One of the biggest mistakes I see service business owners make is that they don’t understand the correlation between their numbers and bidding/pricing jobs. They tend to focus on the top-line sales numbers and think if they can just sell and close more jobs then everything will be OK. By truly understanding the numbers, you can alter your prices so that each job is more profitable. Working through my Labor Burden Calculator has been so eye-opening for clients and has created higher revenue and profits.
3 – Have a Customer Retention Plan -It’s always cheaper to get your existing customers to buy more from you and do it more often than it is to go out and get new customers. Your current customers already know, like, and trust you so they will spend more if you give them a reason to. You need to have a strategic sales and marketing plan specifically for current clients to keep them coming back.
4 – Focusing on Customer Service – To be able to charge higher fees, you must be worth more. This includes producing a high-quality work product, giving a consistently high level of customer service, and making your business stand out from your competitors. The biggest piece to the pricing puzzle is communicating your value to your prospects and customers.
5 – Reviewing Your Hiring Process – Employees are the most important asset in your company. Good employees can make your company very successful but bad employees can make it go broke. Bad employees can be a major profit leak in your business. How you attract A Players, your interview process, your policies and procedures, your training methods truly will make a difference to your bottom line.
6 – Planning for Taxes – Not being prepared for tax time can cripple any business and put you further in debt, sucking the profits from your business. Our clients use the Profit First Method which includes creating various bank accounts to put money aside to pay themselves first and have money for taxes. Tax time becomes less stressful.
7 – Analyzing Your Marketing Plan – You can’t throw spaghetti on a wall and hope it sticks. Monitoring and analyzing results from your marketing strategies will help you do MORE of what is working and LESS of what isn’t. This way your marketing dollars will bring you a higher ROI. Even looking at your lead generation methods or companies you contract out, your website and SEO efforts can affect your conversion rates.
8 – Review Processes and Procedures – Sure it sounds boring, but having systems, procedures, and processes can help empower your team to perform at a higher level, close more deals and feel confident at their job. More importantly, they create efficiencies that mitigate profit leaks. They are game changer!
This is just a TASTE of what can help plug profit leaks and move the needle in your service business.
This is why I’m launching a new podcast series called Profitable Home Services Podcast!
I’ll be chatting with industry leaders, software companies, and organizations like Tersh Blissett of Service Business Mastery, Stephen Christopher of WitDigital, and Mike Disney of CEO Warrior to name a few.
They’ll share key strategies in areas of finance, hiring, marketing, sales, management, operations and mindset. Plus hear from service professionals just like you as they share their success stories – all with the goal of helping you profit.
We launch this summer!