When we first started our moving company, we were so focused on revenue, that we lost a lot of money. Sounds weird right? Focusing on making money can lose you money? After you run a business for a while you may find out that certain ranges of revenue actually have a much lower overall profit margin. Sometimes it costs more money to make more money with overhead because maybe you hired a new manager.
Going down to the job level and understanding what jobs are the most cost effective is really important. Getting granular and understanding how efficient your crew is or how well planned their route is can have a substantial impact on revenue and profit. Just a simple adjustment can reduce payroll, add a job or two and increase profits. For bigger jobs, understanding the materials, equipment and labor costs are critical to pricing properly. If you can nail the costing side of things, you can rest easy knowing you are sending out a profitable crew each day.
Sometimes cutting someone’s lawn may not be that profitable, but that doesn’t mean you should not do it right?! That is because you might get some great jobs from that customer like a paver patio or snow plowing or clean ups. Working in that neighborhood and doing a great job should present more opportunities to the rest of the neighborhood. These are called loss leaders and are more than just a job, it’s marketing at it’s finest! That is a great segue into understanding the next important section of numbers.
Job Profitability is one side of the numbers game but another equally important side to understand is your conversion numbers. This can be how many leads or opportunities you convert to jobs or how many ads you run that convert leads. We have all kinds of sources of leads, from website / organic search to google ads and referrals. If you can understand which lead sources work best or which sales rep are the most successful, you can adapt and improve. WIthout understanding these concepts, you may just spin your wheels and be wasting money on ineffective practices.
Last but not least is understanding the trends of your business. Some businesses are cyclical and some are year round. Understanding when leads and jobs are going to be most prevalent can help you shape your ad spend or your staffing to be most profitable.
Maybe you notice that your advertising conversion is still high but you aren’t booking those jobs as much. That signifies your pricing may be higher than the market will justify (AKA LOWER THEM!). Hopefully it’s the other way around and you are converting so many jobs you can’t even execute them all. That means its time to hire more or increase your prices! Or maybe you see a downward trend for you best crew and you need to increase your training efforts.
Numbers can be so confusing and had to really gather them in a useful way. At Perennial, we can show you all of these in an easy to understand format. We can show you how healthy each function is and what way you are trending. Understanding this will unlock so much hidden profit and can be ground breaking! We are always working on the best way to display the most successful parts of your business as well as the areas where you can improve.
Want to learn how we can save you time, make you money and generate you more profit? Start your free trial today!