QUESTION: I’m frustrated with how little my per job profit is. How do I increase my profits without alienating my current clients? What should I do?
ANSWER: That is a great question, one that I hear all of the time. It frustrated me when I owned my cleaning business. Then I realized that there was a systematic way to make enough profit on every job.
When you are estimating a new job, you need to strike the correct balance between what the customer is willing to pay and what you need to make from the ongoing job. To do this accurately, all of the stars must be in alignment. By stars I mean what you are charging your clients, what your clients are willing to pay, what you pay your employees and your other business costs such as overhead. To get these stars in alignment you need to evaluate what your profit “leak” is. And believe me, striking that perfect balance iswell worth the effort. I have seen clients increase profits by as much as $75,000 per year!
There are several questions that you must answer and adjustments you must make before your stars can line up. Perhaps you are not charging enough for your service, even though your region’s market would bear a higher price. You may need to reevaluate your method and procedure to make sure your employee productivity is up to par. Whatever your situation, there is always room for improvement in the estimating department. Be sure to pay attention to this critical component of your business. Like a bad back, the situation will keep bugging you until you get a much needed realignment.