After working with a few hundred coaching clients, I believe that the key to profitability in construction is staying focused on doing a few things well.
I see too many contractors trying to be all things to all people. The best example is building new homes and doing remodeling. Then there are the companies that advertise, “We Specialize In A, B, C, D, E, F, . . . .” Where is the specialty? They are like manure and bad news – all over the place.
Review your jobs over the last year. Calculate your percent of profit on every job. Put the jobs in order with the most profitable at the top and the least profitable (the one you lost your shirt on) at the bottom. Pick the top three type of jobs in order of profitability, and only take leads for that kind of work.
What, you say there aren’t enough leads? Then rethink your advertising program. Most, and I do mean well over 90% of all contractors do not advertise enough or correctly. This is a great time to begin.
Estimating Profitably — Ten Tips to Improve Your Estimating Skills
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Do what you make money at, and ignore the rest. Stay focused.
The Bottom Line:
Specialize. Trying to be all things to all people is what keeps most contractors from making money. Review last year’s jobs, figure your profit percentage on each, and only chase leads for your three most profitable job types. If that means fewer leads, the fix is better advertising, not a wider net. The article walks through the exercise.
Related Articles:
We Don’t Advertise
Growing a Construction Business
Making Money or Keeping Busy?
Generating Consistent Leads
What’s a Reasonable Advertising Budget?
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses. He is the author of Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations. More here.
