Am I Being Paid What Am I Worth?
That's all things at the end of the day. I'm going to talk about the income they pull in. But realistically, it does not matter if you're making a good profit.
Even if a company does $ 2 Million a year in revenue, but the profit is 1% ... .they only keep $ 20,000 at the end of the day.
I believe in running a tight business, which means keeping my margins between 40-50%.
So how do you actually begin to do that?
1. Charge premium prices.
This doesn’t mean you over charge your customers or just add money on. This means that you offer more value for the price they are paying. You give them the best experience they will ever have and an assurance that the project will be completed better then any person they’ve hired before. If you can communicate value, you can charge a premium price.
It’s unrealistic to walk into a job and not have any budgets set. You need to have a pre job budget set up. You should know down to the cent what you’ll be spending on materials, labour, etc. Is it perfect? No….but it will give you a sense of where your profit should be at before you even step onto the job. This allows you to change things consistently in your estimating process. For example, if you’re noticing that you’re going budget on materials every time, then you should likely increase the estimate cost for materials in your pricing.
3. Financial Tracking
Track your profit each day. Make sure you track exactly where the money is going. Do a review each week on the totals. After the jobs are completed, make sure to keep track of all receipts and how much you paid for labour. We call this a post job expense check.
If you can implement these 3 things, your profit will skyrocket 5-10%. As you continue changing and iterating, you'll probably get up to the 35% profit margin, regardless of what industry you're in.
VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.