Profit is your FUEL
Let's talk about my favorite topic.
I have a sign in my office that says:
Gross revenue is vanity
Net Profit is Sanity
Cash is KING.
Profit is your everything and I stand on mountain tops screaming that if you are not truly profitable you put a terrible strain on the engines, your wings and sometimes force the plane to land (to use the metaphor of your business being like an airplane).
The number 1 reason a business fails is CASH FLOW. Cash Flow, as we have discussed all along in this section is affected by a combination of many things.
Your marketing gets your product/ service noticed and entices people to buy from you.
Your sales effort to ensure that you are selling enough of a service to meet the financial needs of your company.
Then your control of the overhead. Keeping your overhead light and lean of course increases your profit.You don’t need to be so lean that quality is affected but I am a huge fan of monthly review of your expenses and asking yourself the hard questions “Do I need this?” or “is this expense returning a profit?”
Profit in terms of our aircraft is your fuel. Your fuel tank is filled and emptied with the fluctuation of your cash flow, which is driven by your profit.
I have a saying. No one leaves the parking lot if the service will not return a profit. You can’t. At least not habitually.
Our industry will have some unique occurrences that will make you believe that you must sell your service for a low profit.
It's a LIE and you should not believe it.
Here is the truth about Overhead and Profit.
"The claim is usually that the “restoration industry standard” is “10/10”, or that overhead and profit (O&P) cannot be included in the invoice. Let’s be clear here, there is no such industry standard. "
Let’s discuss a few areas where profit is vacuumed out of your business.
This is also very true for reconstruction, especially if you are utilizing subcontractors. It is well known that while construction can have better payment terms, you are dealing with thinner margins and even finer margins for areas of error.
Construction may be your background and seem like a logical add on for your business but you must carefully look at the margin delta, management expenses, timeline and overall value.
We have a service that is loaded with opportunity to provide a strong response to customers in need and requires a large amount of strategic empathy, but that cannot be extended to a point where you are not responsibly watching the bottom line of your own business and the livelihood of those that commit their days to helping you build it.
Our clients do not need us to carry the complete financial burden for their loss. While we cringe at the thought of a client having hardship, you should equally be concerned with your profit and keeping it in the company so you can build it to help MORE customers.
You need to shift your paradigm.
Whats needed is a balanced approach to your business.
Placing the survival of your company ahead of the poor treatment of the client by their insurance company is critical.
Profit is your fuel
It will help you weather through the quieter calm months and stay ahead of challenges.
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