Wayne and Rob continue their conversation about markups vs. margins. Follow Bona US Professional online: Website: https://www1.bona.com/en-us/professional/ Subscribe on YouTube: https://www.youtube.com/BonaProfessional Facebook: https://www.facebook.com/bonauspro/ Instagram: https://www.instagram.com/bonapro.us/
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Hello.
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Welcome to another
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episode of On the Floor with Wayne Rob.
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I'm Wayne Highlander with Bonnie.
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Adhesives.
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All right, Rob, this is going to be part
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two of our podcast.
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We started last week
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with, markup versus margin.
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It went long.
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And,
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so we'll just go ahead
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and continue the conversation.
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You didn't you.
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Okay.
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Wow.
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Yep.
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Yep.
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Yep.
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Yeah.
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So if you see
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if you go to high end restaurant,
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they want you to order appetizers.
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They want you to order drinks.
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They want you order dessert.
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Right.
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I mean there's a reason why business
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we can learn from
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a lot of different other businesses
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and what have you.
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And I think
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by taking all this into account,
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you know,
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charging your worth
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and charging what you need to do
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and whatever,
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and try to upsell when you can and,
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and streamline some things.
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Maybe you can take a business
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that was like,
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okay, it's been a tough
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year, blah, blah, blah,
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or man,
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look at the small changes we made.
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And in the very least you have to know.
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And this is, I think, what
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like I said, we all do this.
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We all want to get bigger, hire more guys
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and get you know,
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more jobs and bigger jobs come in.
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And one thing
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this guy will say in his book
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and that I've learned
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and I've had I've talked to my wife
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after I read this book, is
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sometimes you have to fire your clients.
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And we had to
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fire one of our biggest customers
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they owned. I mean, they got us started.
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They put us on the map.
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The I started
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working for these three apartment, these
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these three attorneys,
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they owned about six apartment
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buildings over, the Bay area.
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Really nice, fancy places.
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And and that's
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how I got my start in flooring business
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by doing all the apartments.
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But I didn't charge enough.
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And, at the time, it was fine.
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I was just
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learning the business or whatever.
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But as as we got more
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custom work and more, you know, whatever.
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And then
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I couldn't afford to do his jobs anymore.
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I'd lose money,
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so we had to cut him loose.
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So anyhow.
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All right.
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As I said, I'll get back here.
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Construction is a cost based business.
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In order to make a profit,
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you must calculate your cost of goods
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and apply the appropriate markup factor
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so you can pay your expenses
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and have a net profit leftover.
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Your proposals cannot generate a profit
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if you do not calculate
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your cost of goods and apply
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the correct markup factor
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without a profit loss statement,
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you will have to guess at that number
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and you cannot guess
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your way to profitability.
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So here's a good example.
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Let's say your income is $1 million okay.
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That's your top line income
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that the money you brought in. Right.
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Then you go
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look at your cost of goods for that year.
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There were $700,000 okay.
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That's 70%
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of every dollar
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that you that came
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in, 70% of that dollar
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went for your cost of goods.
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Okay.
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If you sold
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that same amount of work
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for a higher price,
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then the percentage of cost of goods
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would go down.
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Okay.
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So if you sold that, if it was still
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if it was $1 million,
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excuse me,
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there's 1.1 million instead of 700,000.
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Just give me I take it back.
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If it was 1.1 million
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and then you have some goods
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with 700,000,
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it would be 63.6% instead of 70%.
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Do you see what I mean?
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There?
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Okay, so if you raised your price
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and your your income was 1.1 million
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instead of your cost of goods
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being 70% of every dollar,
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it would be 63.6%.
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Okay.
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Correct.
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Correct.
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Correct. Correct.
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So your expenses.
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So say.
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There you go.
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I would
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I would encourage
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everybody to read the book
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because they go he goes
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way more into detail about
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how to how to how to do this.
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How do we find this and everything.
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And I want to give
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the guy credit for this.
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So it's a really good book.
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And I and I read it,
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I read it over the
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well I read it in a day.
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So okay, so
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so again,
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you're on your profit loss
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when you have, your cost of goods.
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In this case, it was 70%, 700,000,
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let's say now your expenses were 250,000,
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say 25%.
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For every dollar you received,
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$0.25 goes to expenses. Okay.
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Then your
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net profit is 50, $50,000.
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That's equals 5% of every dollar.
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The income you receive
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is 0.5 cents of net profit
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for the business.
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Okay.
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So
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and by the way,
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if your cost of goods are above
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70% of total revenue,
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then your price might be too low
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or the cost of labor is too high
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for the production output.
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Okay, cost of goods is pretty typical
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for a small business
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where the owner is doing
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most of all the work in 70% range.
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They don't have, they don't have,
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they don't
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they don't have a good pricing structure
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sometimes, or they aren't markup
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the cost of goods enough to produce
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sustainable growth. Okay.
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So I think if nothing else out of this,
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figure out your cost of goods
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and in knowing how to market up
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because that is is the the the takeaway.
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Okay.
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So calculate your
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markup factor.
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Dude
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is.
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Yes.
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And a lot of times yeah
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a lot of times
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the owner is paying himself too much.
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You know what I mean?
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And it's just not jiving with it.
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So something's got to give.
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And man, it's like stepping on a scale
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when you do a profit.
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Profit and loss statement everything.
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And it just,
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you know exactly where you're at.
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So.
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And then, you know,
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it tells you what you need to do.
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So for a healthy business,
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so to calculate your markup
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factor, divide
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the dollar amount of total income
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by the dollar
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amount of your cost of goods.
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This will give you your markup factor
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over a given period of time.
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If your net profit in the profit and loss
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statement is low or negative,
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then you need to increase
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the markup factor
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and apply it to all your jobs.
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Okay, so to calculate your markup factor,
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divide the dollar amount of total income
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by the dollar amount of cost of goods.
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This will give you a markup factor,
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give you the markup factor
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over a given period of time.
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So
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you may say now at this point
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you might say, well,
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my clients won't pay me any more money.
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Okay.
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And this
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this guy suggests that you might need
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to find new clients
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once you realize
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that your salary is either,
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a cost of goods or expense
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or combination of the two,
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and you take into account on your profit
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and loss statement,
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you determine the markup
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you need to make a profit.
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You aren't really raising your price.
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You're being more accurate
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with the cost of goods and expenses.
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Remember, price equals cost times the
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markup factor. Okay?
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When you determine your
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actual cost of goods
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and apply a markup factors
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to those cost of goods,
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you calculate your price.
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The more accurate
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you are determining your cost of goods,
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the more accurate
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your markup factor will be.
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When clients say your price is too high,
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he suggests.
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Compared to what
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complete compared
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to your client's budget, well,
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the client's budget is always too low.
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That's one thing about flooring
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is because
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usually when a guy buys a floor
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or lady buys
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a floor, it's
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7 to 10 years, so it's it's a new world.
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Every time they go to buy a floor,
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you know what I mean?
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You can't just, you know.
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So what do you mean, it's too high?
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So.
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And is it too high
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compared to the contractors?
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Well, the other contractor
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might not be charge
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enough to make any profit.
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After all, the.
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Have you ever gone into a restaurant
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owner? What?
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You're willing to pay for a steak?
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Can you
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can you tell them
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that their price is too high?
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So, like I said, sometimes
288
00:10:31,030 --> 00:10:31,664
the best thing you can do
289
00:10:31,664 --> 00:10:32,932
is fire clients.
290
00:10:32,932 --> 00:10:34,400
And, you know, I.
291
00:10:34,400 --> 00:10:35,835
I'm here one day.
292
00:10:35,835 --> 00:10:37,269
This one contractor,
293
00:10:37,269 --> 00:10:39,171
everybody wanted his work,
294
00:10:39,171 --> 00:10:39,872
and it was like,
295
00:10:39,872 --> 00:10:41,340
oh, if you got his work like, well,
296
00:10:41,340 --> 00:10:42,174
that's the statement.
297
00:10:42,174 --> 00:10:42,608
You got this
298
00:10:42,608 --> 00:10:43,976
high end work and you're being a boy.
299
00:10:43,976 --> 00:10:44,844
And he does a lot of work.
300
00:10:44,844 --> 00:10:46,012
So yeah, you're
301
00:10:46,012 --> 00:10:46,779
you're the guy doing all this
302
00:10:46,779 --> 00:10:48,848
for his guys and that's great.
303
00:10:48,848 --> 00:10:51,684
But sometimes that guy ain't worth it.
304
00:10:51,684 --> 00:10:53,319
Sometimes you get three smaller
305
00:10:53,319 --> 00:10:54,654
guys that are
306
00:10:54,654 --> 00:10:55,888
way better than this guy
307
00:10:55,888 --> 00:10:58,624
that, runs you around.
308
00:10:58,624 --> 00:10:59,291
He's never ready
309
00:10:59,291 --> 00:11:00,526
when he's supposed to be ready.
310
00:11:00,526 --> 00:11:03,396
The jobs are high liability jobs.
311
00:11:03,396 --> 00:11:04,563
No, you know, he never.
312
00:11:04,563 --> 00:11:05,631
He has everything
313
00:11:05,631 --> 00:11:06,666
the way he's supposed to be.
314
00:11:06,666 --> 00:11:08,034
His scheduling is all screwed up.
315
00:11:08,034 --> 00:11:10,436
He's a very much a late payer.
316
00:11:10,436 --> 00:11:11,604
So, you know,
317
00:11:11,604 --> 00:11:13,539
sometimes you gotta fire those guys.
318
00:11:13,539 --> 00:11:16,542
Again, a sop right now again, and say,
319
00:11:16,575 --> 00:11:18,811
Rob and I are just talking here.
320
00:11:18,811 --> 00:11:19,912
We're not,
321
00:11:19,912 --> 00:11:21,914
you know, we don't know your business.
322
00:11:21,914 --> 00:11:22,581
We don't.
323
00:11:22,581 --> 00:11:25,384
This is just suggestions out here.
324
00:11:25,384 --> 00:11:26,218
And,
325
00:11:31,957 --> 00:11:34,960
Yeah, but I.
326
00:11:53,979 --> 00:11:54,413
Yeah.
327
00:11:54,413 --> 00:11:57,416
Yeah.
328
00:11:57,950 --> 00:12:00,953
Yeah.
329
00:12:09,428 --> 00:12:09,762
Yeah.
330
00:12:09,762 --> 00:12:12,765
331
00:12:33,552 --> 00:12:34,420
Yeah.
332
00:12:34,420 --> 00:12:37,423
Well.
333
00:12:51,203 --> 00:12:53,873
Well, you.
334
00:12:53,873 --> 00:12:54,907
Yeah.
335
00:12:54,907 --> 00:12:55,841
You and I talked about
336
00:12:55,841 --> 00:12:56,742
this recently, too.
337
00:12:56,742 --> 00:12:58,043
That all right?
338
00:12:58,043 --> 00:12:59,044
In 1980,
339
00:12:59,044 --> 00:13:01,313
I was charging 275 per square foot.
340
00:13:01,313 --> 00:13:01,981
And you asked me
341
00:13:01,981 --> 00:13:03,315
why was I charging an amount?
342
00:13:03,315 --> 00:13:03,682
Well, that's
343
00:13:03,682 --> 00:13:05,751
what all the top guys were charging,
344
00:13:05,751 --> 00:13:06,218
you know what I mean?
345
00:13:06,218 --> 00:13:08,120
That was like the high end of that. Yeah.
346
00:13:08,120 --> 00:13:09,188
So I must be doing right.
347
00:13:09,188 --> 00:13:09,822
I must be doing.
348
00:13:09,822 --> 00:13:11,891
But that's no way to base your number.
349
00:13:11,891 --> 00:13:14,126
Yeah, that's that's just
350
00:13:14,126 --> 00:13:15,394
that you don't know anything.
351
00:13:15,394 --> 00:13:15,961
You know,
352
00:13:15,961 --> 00:13:16,862
I don't know if the other guys know
353
00:13:16,862 --> 00:13:18,397
what the hell they're doing.
354
00:13:18,397 --> 00:13:21,400
So, I'll get into some more
355
00:13:21,867 --> 00:13:22,768
interesting information
356
00:13:22,768 --> 00:13:24,236
about that a little bit later.
357
00:13:24,236 --> 00:13:26,338
Right. All right.
358
00:13:27,339 --> 00:13:28,174
Focusing on
359
00:13:28,174 --> 00:13:28,774
top line
360
00:13:28,774 --> 00:13:31,777
sales do not bring you more profit.
361
00:13:32,111 --> 00:13:34,213
It isn't producing more profit
362
00:13:34,213 --> 00:13:36,248
than it actually making you less money
363
00:13:36,248 --> 00:13:37,483
and adding to your liability
364
00:13:37,483 --> 00:13:39,051
if it isn't producing more profit.
365
00:13:39,051 --> 00:13:41,554
Okay, so like I said at the beginning,
366
00:13:41,554 --> 00:13:42,154
everybody wants to,
367
00:13:42,154 --> 00:13:43,222
you know, go out there
368
00:13:43,222 --> 00:13:45,024
and bring in as much in the come
369
00:13:45,024 --> 00:13:46,959
and get as much as you can.
370
00:13:46,959 --> 00:13:47,993
Focusing on top
371
00:13:47,993 --> 00:13:50,629
line sales is not bringing more profit.
372
00:13:50,629 --> 00:13:52,598
If it isn't producing more profit,
373
00:13:52,598 --> 00:13:54,099
and it's actually making you less money
374
00:13:54,099 --> 00:13:56,235
and adding to your liability,
375
00:13:56,235 --> 00:13:59,271
okay, efficiency increases profits.
376
00:13:59,271 --> 00:14:00,172
Now this is again
377
00:14:00,172 --> 00:14:02,608
what I talked about earlier with
378
00:14:02,608 --> 00:14:04,443
some of the techniques out there,
379
00:14:04,443 --> 00:14:05,377
some of the products
380
00:14:05,377 --> 00:14:07,580
and the stains, the drying time,
381
00:14:07,580 --> 00:14:10,249
you know, that,
382
00:14:10,249 --> 00:14:11,984
you know, that that that can definitely
383
00:14:11,984 --> 00:14:13,419
help your, your business.
384
00:14:17,656 --> 00:14:18,657
Yeah.
385
00:14:18,657 --> 00:14:21,660
Increase.
386
00:14:30,803 --> 00:14:31,136
Well.
387
00:14:31,136 --> 00:14:34,139
388
00:14:39,979 --> 00:14:40,980
Yeah.
389
00:14:40,980 --> 00:14:43,983
The.
390
00:14:52,458 --> 00:14:55,461
Yeah.
391
00:15:11,677 --> 00:15:14,680
Yeah.
392
00:15:20,753 --> 00:15:23,756
Right.
393
00:15:34,633 --> 00:15:37,636
Yeah.
394
00:15:47,179 --> 00:15:47,846
Yeah.
395
00:15:47,846 --> 00:15:49,715
I mean, for for me.
396
00:15:49,715 --> 00:15:50,482
I mean, like I said,
397
00:15:50,482 --> 00:15:52,551
my father, was didn't
398
00:15:52,551 --> 00:15:54,186
he didn't know anything
399
00:15:54,186 --> 00:15:55,487
about the hardwood floor business.
400
00:15:55,487 --> 00:15:57,389
It was the furthest thing from his mind.
401
00:15:57,389 --> 00:15:58,724
He was a construction superintendent.
402
00:15:58,724 --> 00:16:01,794
But when I started doing floors and and,
403
00:16:01,794 --> 00:16:03,529
you know, he just asked me, well,
404
00:16:03,529 --> 00:16:03,862
you know,
405
00:16:03,862 --> 00:16:04,663
you know anything about water,
406
00:16:04,663 --> 00:16:05,331
baby cycle?
407
00:16:05,331 --> 00:16:06,298
What the hell's is.
408
00:16:06,298 --> 00:16:07,633
I says, water based by blood.
409
00:16:07,633 --> 00:16:09,101
He started reading the label.
410
00:16:09,101 --> 00:16:11,270
He goes, well,
411
00:16:11,270 --> 00:16:11,804
look at me.
412
00:16:11,804 --> 00:16:14,640
Look the. He has put two coats on a day.
413
00:16:14,640 --> 00:16:15,708
I mean, why wouldn't you do it?
414
00:16:15,708 --> 00:16:17,109
And he was doing the math in his head.
415
00:16:17,109 --> 00:16:18,077
He's like, dude, you got a
416
00:16:18,077 --> 00:16:19,878
this doesn't make any sense. Other ways.
417
00:16:19,878 --> 00:16:21,013
Anyhow,
418
00:16:21,013 --> 00:16:21,914
he didn't know anything other
419
00:16:21,914 --> 00:16:23,916
than from a business perspective.
420
00:16:23,916 --> 00:16:24,450
That's why
421
00:16:24,450 --> 00:16:25,117
I always think it's
422
00:16:25,117 --> 00:16:25,551
interesting
423
00:16:25,551 --> 00:16:27,720
to take eye information
424
00:16:27,720 --> 00:16:28,454
from people
425
00:16:28,454 --> 00:16:31,857
that are just not in their business
426
00:16:32,358 --> 00:16:34,126
in some ways, you know what I mean?
427
00:16:34,126 --> 00:16:35,728
Okay,
428
00:16:35,728 --> 00:16:36,829
there's another show for that later.
429
00:16:36,829 --> 00:16:38,998
I got good stuff, but, yeah.
430
00:16:43,902 --> 00:16:46,905
Okay.
431
00:17:08,627 --> 00:17:11,630
Okay.
432
00:17:46,865 --> 00:17:49,868
Yeah.
433
00:17:58,544 --> 00:18:01,547
Okay.
434
00:18:09,555 --> 00:18:12,558
Yeah.
435
00:18:18,464 --> 00:18:21,467
Oh, man.
436
00:18:22,401 --> 00:18:25,404
Truthfully?
437
00:18:33,178 --> 00:18:34,279
All right
438
00:18:34,279 --> 00:18:35,447
so again
439
00:18:35,447 --> 00:18:36,915
efficiency increases
440
00:18:36,915 --> 00:18:38,750
profits increase profit
441
00:18:38,750 --> 00:18:40,686
margins increase profits
442
00:18:40,686 --> 00:18:43,689
without having to increase sales.
443
00:18:43,689 --> 00:18:45,924
So better efficiency
444
00:18:45,924 --> 00:18:47,559
increase profit margins
445
00:18:47,559 --> 00:18:48,894
and then increase sales
446
00:18:48,894 --> 00:18:51,029
will skyrocket your profits.
447
00:18:51,029 --> 00:18:52,798
Selling more work
448
00:18:52,798 --> 00:18:54,266
and increasing the top line
449
00:18:54,266 --> 00:18:56,335
revenue is not the solution.
450
00:18:56,335 --> 00:18:58,237
And that's the
451
00:18:58,237 --> 00:18:59,338
that's the
452
00:18:59,338 --> 00:19:01,140
the kind of the sad thing is
453
00:19:01,140 --> 00:19:02,674
that we're chasing your tail
454
00:19:02,674 --> 00:19:03,575
because you don't know
455
00:19:03,575 --> 00:19:05,577
what to set your pricing at.
456
00:19:05,577 --> 00:19:06,845
Yeah, right.
457
00:19:06,845 --> 00:19:08,247
Selling at the right price
458
00:19:08,247 --> 00:19:11,250
and maximizing margins is key,
459
00:19:11,617 --> 00:19:13,118
especially in small businesses
460
00:19:13,118 --> 00:19:15,287
when you can't scale up.
461
00:19:15,287 --> 00:19:15,654
Often
462
00:19:15,654 --> 00:19:17,055
small businesses will say,
463
00:19:17,055 --> 00:19:19,858
I will work on this when it slows down.
464
00:19:19,858 --> 00:19:21,126
It's not a good solution.
465
00:19:21,126 --> 00:19:24,129
Okay, we've all been there.
466
00:19:24,163 --> 00:19:26,565
Okay.
467
00:19:26,565 --> 00:19:28,867
If you do 100 jobs a year at $1,000,
468
00:19:29,935 --> 00:19:32,938
that'd be $100,000, right?
469
00:19:32,938 --> 00:19:35,340
If you double your price to $2,000
470
00:19:35,340 --> 00:19:36,775
per project,
471
00:19:36,775 --> 00:19:37,709
you could afford to lose
472
00:19:37,709 --> 00:19:39,178
50% of your customers
473
00:19:39,178 --> 00:19:41,513
and still make the same money.
474
00:19:41,513 --> 00:19:42,281
So what will you do
475
00:19:42,281 --> 00:19:44,816
with the rest of the six months? Right?
476
00:19:44,816 --> 00:19:47,252
The fact is, you will not lose
477
00:19:47,252 --> 00:19:48,086
half of your customers
478
00:19:48,086 --> 00:19:50,455
because your customers love you.
479
00:19:50,455 --> 00:19:53,225
So there is that okay?
480
00:19:53,225 --> 00:19:54,927
And then this is a wild example.
481
00:19:54,927 --> 00:19:56,428
But you get kind of get
482
00:19:56,428 --> 00:19:57,930
and I'll go back to the example
483
00:19:57,930 --> 00:20:00,465
of the really good contractor,
484
00:20:00,465 --> 00:20:02,501
very successful contractor,
485
00:20:02,501 --> 00:20:05,103
who I'll never forget to he, me
486
00:20:05,103 --> 00:20:06,572
he raised his price by a dollar
487
00:20:06,572 --> 00:20:08,073
a square foot.
488
00:20:08,073 --> 00:20:09,942
Not, you know, in increments.
489
00:20:09,942 --> 00:20:11,677
All this week, I always by 30%.
490
00:20:11,677 --> 00:20:13,812
Next month, I raised by another 30 bob.
491
00:20:13,812 --> 00:20:15,180
No, he raises square foot
492
00:20:15,180 --> 00:20:17,216
price by a dollar a square foot.
493
00:20:17,216 --> 00:20:18,250
And he said his customer
494
00:20:18,250 --> 00:20:19,318
is never better than I.
495
00:20:20,385 --> 00:20:21,119
And he said the
496
00:20:21,119 --> 00:20:22,888
worst part about it is like,
497
00:20:22,888 --> 00:20:24,156
how long did I leave all that money?
498
00:20:24,156 --> 00:20:25,857
Sitting on the table
499
00:20:25,857 --> 00:20:27,226
is a very good, sharp,
500
00:20:27,226 --> 00:20:28,627
reputable contractor.
501
00:20:28,627 --> 00:20:30,262
Okay,
502
00:20:30,262 --> 00:20:32,598
so, back to that example.
503
00:20:32,598 --> 00:20:33,298
You can afford to lose
504
00:20:33,298 --> 00:20:34,933
half of your customers when you pay.
505
00:20:34,933 --> 00:20:37,703
When you you pay double your prices.
506
00:20:37,703 --> 00:20:38,237
What do you charge?
507
00:20:38,237 --> 00:20:39,271
Double your prices,
508
00:20:39,271 --> 00:20:40,706
but you probably won't.
509
00:20:40,706 --> 00:20:43,275
Let's say you lost 40% of your customers.
510
00:20:43,275 --> 00:20:43,709
That leaves you
511
00:20:43,709 --> 00:20:44,576
with 60 jobs
512
00:20:44,576 --> 00:20:45,844
per year at your new price
513
00:20:45,844 --> 00:20:47,746
of $2,000 per job.
514
00:20:47,746 --> 00:20:50,749
That's $120,000 of total revenue,
515
00:20:51,116 --> 00:20:52,951
60 jobs times 2000.
516
00:20:52,951 --> 00:20:54,753
That's a 20% more revenue,
517
00:20:54,753 --> 00:20:56,321
and you still have 40% of your time.
518
00:20:56,321 --> 00:20:58,657
This would serve these customers.
519
00:20:58,657 --> 00:21:00,025
Okay.
520
00:21:00,025 --> 00:21:01,827
And this is the key. Don't miss this.
521
00:21:01,827 --> 00:21:03,962
The is 40% of time is important.
522
00:21:03,962 --> 00:21:05,163
The only way
523
00:21:05,163 --> 00:21:06,298
customers will pay for that
524
00:21:06,298 --> 00:21:07,366
premium of a service
525
00:21:07,366 --> 00:21:09,835
that they receive a premium experience.
526
00:21:09,835 --> 00:21:11,670
So charge more you get.
527
00:21:11,670 --> 00:21:14,573
I know I've said this before.
528
00:21:14,573 --> 00:21:17,142
One thing that it was, was,
529
00:21:17,142 --> 00:21:19,244
key to, success early
530
00:21:19,244 --> 00:21:19,978
in my business is
531
00:21:19,978 --> 00:21:21,213
when I started
532
00:21:21,213 --> 00:21:24,216
charging a lot more money for my jobs.
533
00:21:24,583 --> 00:21:27,085
And it wasn't just that I got more money.
534
00:21:27,085 --> 00:21:28,453
That was one benefit of it.
535
00:21:28,453 --> 00:21:29,655
But what the other benefit
536
00:21:29,655 --> 00:21:32,658
was, I was now in in nicer jobs,
537
00:21:32,758 --> 00:21:34,359
better sub floors,
538
00:21:34,359 --> 00:21:34,660
you know,
539
00:21:34,660 --> 00:21:35,794
more more,
540
00:21:35,794 --> 00:21:37,162
you know, customers
541
00:21:37,162 --> 00:21:38,697
that were willing to pay
542
00:21:38,697 --> 00:21:39,665
and being around
543
00:21:39,665 --> 00:21:41,133
general contractors that were,
544
00:21:41,133 --> 00:21:42,901
you know, they just had really
545
00:21:42,901 --> 00:21:43,268
you know,
546
00:21:43,268 --> 00:21:44,636
everybody on the job was a like
547
00:21:44,636 --> 00:21:46,605
the painter was a stud painter.
548
00:21:46,605 --> 00:21:47,172
Everybody was
549
00:21:47,172 --> 00:21:48,707
there was a respectful of each other.
550
00:21:48,707 --> 00:21:49,941
When he worked in everything,
551
00:21:49,941 --> 00:21:50,575
he was just in a
552
00:21:50,575 --> 00:21:52,010
completely different environment.
553
00:21:52,010 --> 00:21:53,545
I feel like I wasn't down there
554
00:21:53,545 --> 00:21:54,713
fighting with everybody else
555
00:21:54,713 --> 00:21:56,782
now with that, with the crumb kickers
556
00:21:56,782 --> 00:21:58,917
that were, you know, or, and,
557
00:21:58,917 --> 00:21:59,985
and you could charge more money,
558
00:21:59,985 --> 00:22:01,219
you could take your time on jobs
559
00:22:01,219 --> 00:22:02,654
and do more custom work. Okay.
560
00:22:03,989 --> 00:22:06,358
So
561
00:22:06,358 --> 00:22:07,526
no, that's what I'm saying
562
00:22:07,526 --> 00:22:10,495
to you.
563
00:22:11,330 --> 00:22:14,566
Yes, yes yes, yes.
564
00:23:03,415 --> 00:23:06,418
Yeah.
565
00:23:33,545 --> 00:23:36,548
Yeah.
566
00:23:40,185 --> 00:23:43,188
Wow.
567
00:23:54,633 --> 00:23:57,636
Yeah.
568
00:24:08,547 --> 00:24:08,747
They're
569
00:24:08,747 --> 00:24:11,750
super interesting.
570
00:24:12,517 --> 00:24:15,520
So.
571
00:24:23,094 --> 00:24:24,463
Yeah.
572
00:24:24,463 --> 00:24:25,931
And so?
573
00:24:25,931 --> 00:24:26,598
Well, doubling
574
00:24:26,598 --> 00:24:27,499
your price might in
575
00:24:27,499 --> 00:24:28,166
our industry
576
00:24:28,166 --> 00:24:28,767
might be like,
577
00:24:28,767 --> 00:24:30,569
okay, that's out of line or whatever.
578
00:24:30,569 --> 00:24:33,572
But if you raise it by 20%, 30%
579
00:24:33,572 --> 00:24:35,207
or whatever, even 40%. Okay.
580
00:24:35,207 --> 00:24:36,942
And so you lost that,
581
00:24:36,942 --> 00:24:37,442
you know, a
582
00:24:37,442 --> 00:24:38,977
percentage of your customers, right?
583
00:24:38,977 --> 00:24:40,645
You probably lose a percentage of them,
584
00:24:40,645 --> 00:24:43,281
but you're not going to lose them all.
585
00:24:43,281 --> 00:24:44,382
And and like you said, it's
586
00:24:44,382 --> 00:24:46,151
going to give you frees up more time.
587
00:24:46,151 --> 00:24:46,351
Yeah.
588
00:24:46,351 --> 00:24:47,586
The jobs are more profitable.
589
00:24:47,586 --> 00:24:48,587
And then you gives you more time
590
00:24:48,587 --> 00:24:50,222
to look for for a better customer.
591
00:24:50,222 --> 00:24:52,123
So I think that's very interesting.
592
00:24:52,123 --> 00:24:53,258
And this is this next thing
593
00:24:53,258 --> 00:24:54,659
I'm going to say remind me of you,
594
00:24:56,061 --> 00:24:58,997
because,
595
00:24:58,997 --> 00:25:01,433
CPA in this book says that
596
00:25:01,433 --> 00:25:03,268
when he asks a company
597
00:25:03,268 --> 00:25:04,703
what their closing rate is
598
00:25:04,703 --> 00:25:06,238
and the answer is greater
599
00:25:06,238 --> 00:25:09,107
percentage than 50%,
600
00:25:09,107 --> 00:25:10,041
it's an indication
601
00:25:10,041 --> 00:25:12,210
that the profits are too low,
602
00:25:12,210 --> 00:25:13,378
more profitability,
603
00:25:13,378 --> 00:25:14,713
more profitable companies
604
00:25:14,713 --> 00:25:16,214
closing rates are using the 30
605
00:25:16,214 --> 00:25:18,950
to 50% range that we spoke.
606
00:25:18,950 --> 00:25:20,585
Yeah, maybe we talked to one time
607
00:25:20,585 --> 00:25:22,354
you said, man, I'm a great salesman, man.
608
00:25:22,354 --> 00:25:25,357
I close.
609
00:25:25,490 --> 00:25:26,157
Yeah.
610
00:25:26,157 --> 00:25:29,127
You're closing rate.
611
00:25:34,266 --> 00:25:35,634
Yeah.
612
00:25:35,634 --> 00:25:37,235
So
613
00:25:37,235 --> 00:25:37,702
all right,
614
00:25:37,702 --> 00:25:39,838
so this is where this guy in the book
615
00:25:39,838 --> 00:25:41,907
and this is where I'm going to the again,
616
00:25:41,907 --> 00:25:43,742
the book is called Profit First for Grant
617
00:25:43,742 --> 00:25:46,745
for Contractors by Sean Van Vandyke.
618
00:25:47,279 --> 00:25:48,980
Transform your construction business
619
00:25:48,980 --> 00:25:50,482
from a cash eating monster
620
00:25:50,482 --> 00:25:52,350
to a money making machine.
621
00:25:52,350 --> 00:25:54,653
This is where he.
622
00:25:54,653 --> 00:25:55,587
It gets interesting. Why?
623
00:25:55,587 --> 00:25:57,289
I think you should buy the book.
624
00:25:57,289 --> 00:25:59,190
A good way to change your business.
625
00:25:59,190 --> 00:26:01,526
Profit first calculation
626
00:26:01,526 --> 00:26:02,394
is profit first
627
00:26:02,394 --> 00:26:04,930
formula in sales is profit.
628
00:26:04,930 --> 00:26:06,364
Excuse me, is sales minus
629
00:26:06,364 --> 00:26:08,366
profit equal expenses
630
00:26:08,366 --> 00:26:10,101
and is forcing you to prioritize
631
00:26:10,101 --> 00:26:11,369
your profits and operate
632
00:26:11,369 --> 00:26:13,705
a business on what's left.
633
00:26:13,705 --> 00:26:15,140
This is really interesting to me.
634
00:26:15,140 --> 00:26:16,441
If the business can't operate
635
00:26:16,441 --> 00:26:17,776
on what's left,
636
00:26:17,776 --> 00:26:19,811
then the business must raise the prices,
637
00:26:19,811 --> 00:26:22,347
cut expenses or a combination of the two.
638
00:26:22,347 --> 00:26:24,249
But you don't mess with the profits.
639
00:26:25,250 --> 00:26:27,218
So as I said, you set
640
00:26:27,218 --> 00:26:28,787
up five different checking accounts
641
00:26:28,787 --> 00:26:30,055
for your business of one
642
00:26:30,055 --> 00:26:32,057
checking account is for income,
643
00:26:32,057 --> 00:26:33,425
two is for profit.
644
00:26:33,425 --> 00:26:36,428
And he said, listen, start out at 1%.
645
00:26:36,761 --> 00:26:38,163
Whatever you start out
646
00:26:38,163 --> 00:26:40,532
small and incrementally work your way up.
647
00:26:40,532 --> 00:26:42,367
Number three is the owner's compensation.
648
00:26:42,367 --> 00:26:43,768
How much would you have to pay a guy
649
00:26:43,768 --> 00:26:46,237
with your level of skill?
650
00:26:46,237 --> 00:26:47,939
Number four is your tax.
651
00:26:47,939 --> 00:26:48,974
All right, set aside.
652
00:26:48,974 --> 00:26:50,308
You know,
653
00:26:50,308 --> 00:26:52,310
I think anybody who's been in business,
654
00:26:52,310 --> 00:26:53,612
if you get hit at the end of the year
655
00:26:53,612 --> 00:26:54,980
with, 0I0, all of a sudden
656
00:26:54,980 --> 00:26:57,449
I owe the IRS $11,000
657
00:26:57,449 --> 00:26:58,583
as an ugly thing
658
00:26:58,583 --> 00:27:00,218
to have to contend with. Right.
659
00:27:00,218 --> 00:27:02,654
That's why you want to keep this one
660
00:27:02,654 --> 00:27:03,088
right.
661
00:27:03,088 --> 00:27:04,556
And the other one, number five,
662
00:27:04,556 --> 00:27:06,524
is the operating expenses.
663
00:27:06,524 --> 00:27:07,192
After you pay
664
00:27:07,192 --> 00:27:09,060
all the rest of the accounts,
665
00:27:09,060 --> 00:27:09,961
this is what you have
666
00:27:09,961 --> 00:27:11,062
left to run your business.
667
00:27:12,130 --> 00:27:12,597
Okay.
668
00:27:12,597 --> 00:27:13,565
So you serve these
669
00:27:13,565 --> 00:27:15,266
accounts sequentially as
670
00:27:15,266 --> 00:27:16,668
and when it comes in,
671
00:27:16,668 --> 00:27:17,669
never pay your bills.
672
00:27:17,669 --> 00:27:18,870
First,
673
00:27:18,870 --> 00:27:21,206
the money moves from income account
674
00:27:21,206 --> 00:27:22,574
to profit account
675
00:27:22,574 --> 00:27:24,275
to owner's compensation,
676
00:27:24,275 --> 00:27:26,177
to tax to operating expenses.
677
00:27:26,177 --> 00:27:27,512
No exceptions.
678
00:27:27,512 --> 00:27:28,380
And there's not enough
679
00:27:28,380 --> 00:27:31,383
money left over for your expenses.
680
00:27:31,449 --> 00:27:33,985
You do not pull from the other accounts.
681
00:27:33,985 --> 00:27:34,686
It is telling you
682
00:27:34,686 --> 00:27:36,554
that you can't afford them
683
00:27:36,554 --> 00:27:39,724
or raise your prices right, he says.
684
00:27:39,724 --> 00:27:40,258
Start small.
685
00:27:40,258 --> 00:27:41,726
Have to get a check for $10,000
686
00:27:41,726 --> 00:27:47,232
your company can run on on 10th.
687
00:27:47,298 --> 00:27:48,633
If it can run on ten K,
688
00:27:48,633 --> 00:27:51,636
then it can surely run on 9900, right?
689
00:27:52,070 --> 00:27:52,737
So that
690
00:27:52,737 --> 00:27:53,138
but that
691
00:27:53,138 --> 00:27:54,539
hundred dollars in your, in your,
692
00:27:54,539 --> 00:27:58,510
in your, what you called your, profit,
693
00:27:59,177 --> 00:28:01,312
account. You see what I mean?
694
00:28:03,381 --> 00:28:04,416
As an aside, a little
695
00:28:04,416 --> 00:28:05,717
note for about CPAs.
696
00:28:05,717 --> 00:28:07,819
Now, this I found really interesting too.
697
00:28:07,819 --> 00:28:10,188
And this might be controversial.
698
00:28:10,188 --> 00:28:12,557
I don't know,
699
00:28:12,557 --> 00:28:14,426
CPAs will tell you to pay yourself
700
00:28:14,426 --> 00:28:16,861
through the owner's drawers.
701
00:28:16,861 --> 00:28:18,129
This is the most common mistake
702
00:28:18,129 --> 00:28:20,198
I see in construction businesses.
703
00:28:20,198 --> 00:28:21,066
Depending on
704
00:28:21,066 --> 00:28:22,400
the legal structure of your business,
705
00:28:22,400 --> 00:28:23,268
is the only way
706
00:28:23,268 --> 00:28:24,536
to limit your tax liability.
707
00:28:24,536 --> 00:28:25,837
But owners drawers
708
00:28:25,837 --> 00:28:27,505
do not show up on the profit
709
00:28:27,505 --> 00:28:28,740
and loss statement.
710
00:28:28,740 --> 00:28:30,375
That is where it's really interesting
711
00:28:30,375 --> 00:28:31,876
to me.
712
00:28:31,876 --> 00:28:33,912
Technically, taking an owner's draw
713
00:28:33,912 --> 00:28:36,314
may save you some money in taxes,
714
00:28:36,314 --> 00:28:36,915
but it costs
715
00:28:36,915 --> 00:28:38,083
you more money in revenue
716
00:28:38,083 --> 00:28:39,484
because you're not pricing
717
00:28:39,484 --> 00:28:41,319
your work correctly.
718
00:28:41,319 --> 00:28:42,587
It doesn't show up in your profit
719
00:28:42,587 --> 00:28:44,589
and loss statement.
720
00:28:44,589 --> 00:28:45,557
Your cost of goods
721
00:28:45,557 --> 00:28:48,560
and expenses are artificially suppressed,
722
00:28:48,893 --> 00:28:50,562
and you'll never make a net profit.
723
00:28:50,562 --> 00:28:51,429
If the net profit
724
00:28:51,429 --> 00:28:52,664
at the bottom of the profit
725
00:28:52,664 --> 00:28:54,666
and loss statement is incorrect,
726
00:28:54,666 --> 00:28:55,567
does that make sense?
727
00:28:57,602 --> 00:29:00,605
I read that again.
728
00:29:01,740 --> 00:29:05,310
So, when we had the CPA told us
729
00:29:05,543 --> 00:29:07,712
that you pay yourself in draws
730
00:29:07,712 --> 00:29:09,114
and that's the way we had set up.
731
00:29:09,114 --> 00:29:09,881
But this guy's saying,
732
00:29:09,881 --> 00:29:12,083
no, it's for construction.
733
00:29:12,083 --> 00:29:14,486
It's unique to the construction industry.
734
00:29:14,486 --> 00:29:15,920
Is that probably other
735
00:29:15,920 --> 00:29:16,621
industries as well?
736
00:29:16,621 --> 00:29:18,957
But,
737
00:29:18,957 --> 00:29:20,158
the owner's draws don't
738
00:29:20,158 --> 00:29:22,694
show up on the profit and loss statement.
739
00:29:22,694 --> 00:29:25,296
So technically, taking an owner draw,
740
00:29:25,296 --> 00:29:26,397
you may save time.
741
00:29:26,397 --> 00:29:28,600
You save money in taxes, but,
742
00:29:28,600 --> 00:29:30,034
but it's costing more money revenue
743
00:29:30,034 --> 00:29:31,202
because you're not pricing
744
00:29:31,202 --> 00:29:32,737
your work correctly.
745
00:29:32,737 --> 00:29:34,172
Your cost of goods and expenses
746
00:29:34,172 --> 00:29:35,240
are artificially suppressed.
747
00:29:35,240 --> 00:29:37,475
So you never make a net profit.
748
00:29:37,475 --> 00:29:38,276
Is the net profit
749
00:29:38,276 --> 00:29:39,277
at the bottom of the profit?
750
00:29:39,277 --> 00:29:40,545
The last thing is incorrect
751
00:29:40,545 --> 00:29:42,313
as garbage in, garbage out, right.
752
00:29:43,948 --> 00:29:44,816
All right.
753
00:29:44,816 --> 00:29:46,551
So
754
00:29:46,551 --> 00:29:47,252
then you say
755
00:29:47,252 --> 00:29:47,986
most people will say
756
00:29:47,986 --> 00:29:50,255
they want to do high end work.
757
00:29:50,255 --> 00:29:51,289
The best way to do high
758
00:29:51,289 --> 00:29:53,458
end work is to charge high end prices.
759
00:29:53,458 --> 00:29:56,427
Nobody sells a labor.
760
00:29:56,661 --> 00:29:59,664
Yeah.
761
00:29:59,964 --> 00:30:00,799
Most people will say
762
00:30:00,799 --> 00:30:02,133
they want to do high end work.
763
00:30:02,133 --> 00:30:03,067
The best way to do
764
00:30:03,067 --> 00:30:04,402
high end work is to charge
765
00:30:04,402 --> 00:30:06,237
high end prices.
766
00:30:06,237 --> 00:30:07,572
Nobody sells a Lamborghini
767
00:30:07,572 --> 00:30:09,874
at Nissan Altima prices
768
00:30:09,874 --> 00:30:11,843
that would scare off clients.
769
00:30:11,843 --> 00:30:12,243
Also,
770
00:30:12,243 --> 00:30:14,012
you don't have enough money in the bid
771
00:30:14,012 --> 00:30:15,013
now to take your time
772
00:30:15,013 --> 00:30:16,047
and do a first class job
773
00:30:16,047 --> 00:30:17,816
and I've said this example
774
00:30:17,816 --> 00:30:18,716
20 different times.
775
00:30:18,716 --> 00:30:21,119
When I went to buy a truck,
776
00:30:21,119 --> 00:30:22,954
and I've worked out of a van
777
00:30:22,954 --> 00:30:23,922
for 30 years,
778
00:30:23,922 --> 00:30:24,556
and then and,
779
00:30:24,556 --> 00:30:24,989
you know, I've,
780
00:30:24,989 --> 00:30:27,058
I never had a nice truck
781
00:30:27,058 --> 00:30:28,526
because I was always in a work van.
782
00:30:28,526 --> 00:30:29,694
And do you do you had a car.
783
00:30:29,694 --> 00:30:30,895
Didn't make sense to have another car,
784
00:30:30,895 --> 00:30:31,996
blah, blah blah.
785
00:30:31,996 --> 00:30:34,032
But so when I wanted to buy a truck,
786
00:30:34,032 --> 00:30:35,733
I wanted to buy a really nice truck,
787
00:30:36,734 --> 00:30:40,538
and I go to the car lot, whatever.
788
00:30:40,538 --> 00:30:41,139
And they would show me
789
00:30:41,139 --> 00:30:42,473
these other trucks. Like what?
790
00:30:42,473 --> 00:30:43,575
I was,
791
00:30:43,575 --> 00:30:44,409
you know,
792
00:30:44,409 --> 00:30:46,411
I wanted the nicest one I wanted,
793
00:30:46,411 --> 00:30:47,278
you know what?
794
00:30:47,278 --> 00:30:48,179
I thought the nice one
795
00:30:48,179 --> 00:30:50,548
was the Toyota Tundra at the time.
796
00:30:50,548 --> 00:30:55,820
But anyhow, so why limit yourself?
797
00:30:55,820 --> 00:30:57,255
You know what I mean?
798
00:30:57,255 --> 00:31:00,258
So, anyhow,
799
00:31:06,631 --> 00:31:09,133
Yeah, I believe it.
800
00:31:09,133 --> 00:31:12,136
801
00:31:13,238 --> 00:31:16,241
Yeah.
802
00:31:18,009 --> 00:31:19,244
If you're
803
00:31:19,244 --> 00:31:22,247
if you're a typical wealthy consumer,
804
00:31:22,580 --> 00:31:24,182
you know, things cost money.
805
00:31:24,182 --> 00:31:25,183
You look at stuff,
806
00:31:25,183 --> 00:31:27,452
all you look at leather chairs,
807
00:31:27,452 --> 00:31:30,221
you look at whatever, you look at cars.
808
00:31:30,221 --> 00:31:32,056
You know that nice things cost
809
00:31:32,056 --> 00:31:33,625
a lot of money.
810
00:31:33,625 --> 00:31:35,426
You know that there's no nice thing
811
00:31:35,426 --> 00:31:36,194
that's cheap,
812
00:31:36,194 --> 00:31:36,694
because that would
813
00:31:36,694 --> 00:31:39,197
that would scare you off.
814
00:31:39,197 --> 00:31:40,331
You know what I mean?
815
00:31:40,331 --> 00:31:42,567
So it totally makes sense.
816
00:31:42,567 --> 00:31:43,668
So if your goal.
817
00:32:22,440 --> 00:32:25,443
Yes.
818
00:32:59,010 --> 00:33:02,013
Yeah.
819
00:33:36,147 --> 00:33:37,048
Well, I
820
00:33:37,048 --> 00:33:40,018
mean, you know, people.
821
00:33:45,223 --> 00:33:48,226
Well.
822
00:33:48,626 --> 00:33:49,861
Yeah.
823
00:33:49,861 --> 00:33:52,864
All right.
824
00:33:56,534 --> 00:33:56,901
Well.
825
00:33:56,901 --> 00:33:59,904
826
00:34:01,973 --> 00:34:02,407
Yeah.
827
00:34:02,407 --> 00:34:03,107
Well that's good.
828
00:34:03,107 --> 00:34:06,110
That's a good thing for everybody.
829
00:34:06,477 --> 00:34:07,412
All right.
830
00:34:07,412 --> 00:34:09,047
Another thing here.
831
00:34:09,047 --> 00:34:10,882
So we're coming to the end here.
832
00:34:10,882 --> 00:34:12,950
So if your goal, let's say
833
00:34:12,950 --> 00:34:14,018
your goal is a top line
834
00:34:14,018 --> 00:34:17,121
revenue of $1 million, how much time
835
00:34:17,121 --> 00:34:17,655
do you really want to
836
00:34:17,655 --> 00:34:20,358
look at jobs or, like, $800?
837
00:34:20,358 --> 00:34:20,892
You know,
838
00:34:20,892 --> 00:34:22,193
how many
839
00:34:22,193 --> 00:34:23,127
how many of these jobs would
840
00:34:23,127 --> 00:34:24,996
you need to hit your goal?
841
00:34:24,996 --> 00:34:27,532
So you you know, I always look at,
842
00:34:27,532 --> 00:34:27,732
you know,
843
00:34:27,732 --> 00:34:28,733
how do you eat an elephant
844
00:34:28,733 --> 00:34:30,034
one day at a time if you really
845
00:34:30,034 --> 00:34:30,802
if you think, okay,
846
00:34:30,802 --> 00:34:33,204
my top line, I want to do $1 million.
847
00:34:33,204 --> 00:34:35,239
All right, well, then break that down
848
00:34:35,239 --> 00:34:37,008
divided by 12 months
849
00:34:37,008 --> 00:34:40,478
and that by, by, you know, 50 weeks.
850
00:34:40,778 --> 00:34:41,612
I mean, how much do
851
00:34:41,612 --> 00:34:42,814
I need to produce every week?
852
00:34:42,814 --> 00:34:44,515
And that kind of makes you look at.
853
00:34:44,515 --> 00:34:44,749
All right,
854
00:34:44,749 --> 00:34:45,716
what do I really want
855
00:34:45,716 --> 00:34:46,551
to look at these jobs.
856
00:34:46,551 --> 00:34:47,518
Does that make sense to me
857
00:34:47,518 --> 00:34:48,786
and my use of my time?
858
00:34:48,786 --> 00:34:51,189
We have crisp early on here to that.
859
00:34:51,189 --> 00:34:53,858
I talked about charging for estimates
860
00:34:53,858 --> 00:34:56,127
and that was a really good
861
00:34:56,127 --> 00:34:57,895
I really good episode with him
862
00:34:57,895 --> 00:35:00,531
talking about how much time he got back
863
00:35:00,531 --> 00:35:02,700
by charging for estimates.
864
00:35:02,700 --> 00:35:03,401
And,
865
00:35:03,401 --> 00:35:03,935
so again,
866
00:35:03,935 --> 00:35:06,037
we look at the amount of time you have.
867
00:35:06,037 --> 00:35:07,238
That's the only thing we have
868
00:35:07,238 --> 00:35:09,740
as contractors is our time,
869
00:35:09,740 --> 00:35:09,941
you know,
870
00:35:09,941 --> 00:35:11,042
and how we spend that time
871
00:35:11,042 --> 00:35:13,077
in which we charge for it in years,
872
00:35:13,077 --> 00:35:15,379
how successful we're going to be. Right?
873
00:35:15,379 --> 00:35:17,815
So common mistakes that contractors
874
00:35:17,815 --> 00:35:19,250
do again.
875
00:35:19,250 --> 00:35:21,819
Oftentimes contractors do it backwards
876
00:35:21,819 --> 00:35:23,554
for the growth for growth sake.
877
00:35:23,554 --> 00:35:24,822
They focus on more jobs,
878
00:35:24,822 --> 00:35:26,491
more crews, more revenue,
879
00:35:26,491 --> 00:35:28,493
and they figure out later
880
00:35:28,493 --> 00:35:29,694
if they're doing what they're doing
881
00:35:29,694 --> 00:35:30,761
is profitable, profitable.
882
00:35:30,761 --> 00:35:31,863
So it's out of sequence.
883
00:35:31,863 --> 00:35:34,298
So if you get your system first,
884
00:35:34,298 --> 00:35:34,899
like, all right,
885
00:35:34,899 --> 00:35:36,567
my cost of goods are this,
886
00:35:36,567 --> 00:35:38,436
you know, my expenses are this.
887
00:35:38,436 --> 00:35:41,005
And and what might you do with my markup?
888
00:35:41,005 --> 00:35:42,306
Then I start bidding my jobs
889
00:35:42,306 --> 00:35:44,108
with that markup in mind.
890
00:35:44,108 --> 00:35:46,677
And, and you then you're.
891
00:35:46,677 --> 00:35:47,845
And then you got a good system.
892
00:35:47,845 --> 00:35:49,647
You're off to the races.
893
00:35:49,647 --> 00:35:51,582
Another mistake is not reviewing
894
00:35:51,582 --> 00:35:52,316
your expenses, right?
895
00:35:52,316 --> 00:35:53,651
When I talked about that,
896
00:35:53,651 --> 00:35:54,218
you need to look where
897
00:35:54,218 --> 00:35:56,354
every painting is going out the door
898
00:35:56,354 --> 00:35:57,488
and then ask yourself,
899
00:35:57,488 --> 00:35:58,723
do I really need this?
900
00:35:58,723 --> 00:36:00,458
So when you do that formula, visit
901
00:36:00,458 --> 00:36:02,560
paying yourself first in profit.
902
00:36:02,560 --> 00:36:04,529
And then the business has to run on on
903
00:36:04,529 --> 00:36:06,964
what's left. That'll tell you
904
00:36:07,999 --> 00:36:08,866
real quick.
905
00:36:08,866 --> 00:36:10,101
Do I need to charge more
906
00:36:10,101 --> 00:36:11,202
or do I need to cut things out?
907
00:36:11,202 --> 00:36:12,670
Do I really need these things?
908
00:36:12,670 --> 00:36:13,838
Is this really critical
909
00:36:13,838 --> 00:36:16,841
or do I cut this expense out?
910
00:36:17,875 --> 00:36:20,878
And number three,
911
00:36:22,013 --> 00:36:22,346
believe it
912
00:36:22,346 --> 00:36:25,316
or not, stop investing in your company.
913
00:36:25,550 --> 00:36:26,918
So this may sound shocking,
914
00:36:26,918 --> 00:36:27,985
but what many construction
915
00:36:27,985 --> 00:36:29,487
business owners consider
916
00:36:29,487 --> 00:36:31,522
investing is really stealing.
917
00:36:31,522 --> 00:36:32,456
Don't kid yourself.
918
00:36:32,456 --> 00:36:33,958
The reason you invest is money,
919
00:36:33,958 --> 00:36:36,961
because the actual cash doesn't exist.
920
00:36:37,228 --> 00:36:39,363
Truly, investing in your company means
921
00:36:39,363 --> 00:36:40,097
that you allocate
922
00:36:40,097 --> 00:36:41,199
a certain amount of capital
923
00:36:41,199 --> 00:36:44,202
in the company, calculate your ROI,
924
00:36:44,402 --> 00:36:45,369
and work a plan
925
00:36:45,369 --> 00:36:47,405
to realize that rate of return.
926
00:36:47,405 --> 00:36:49,140
Simply taking your compensation
927
00:36:49,140 --> 00:36:51,709
through owners distributions is not.
928
00:36:51,709 --> 00:36:52,944
Investing is stealing.
929
00:36:52,944 --> 00:36:55,713
And I'll give you an example of that.
930
00:36:56,714 --> 00:36:58,816
Like I I'm guilty of that.
931
00:36:58,816 --> 00:37:00,051
Like I would say to myself,
932
00:37:00,051 --> 00:37:02,286
okay, let's just for example,
933
00:37:02,286 --> 00:37:04,555
just does it just it came top of mind.
934
00:37:04,555 --> 00:37:05,957
I don't want to get the new Festool
935
00:37:05,957 --> 00:37:08,426
saw on the tracks and everything,
936
00:37:08,426 --> 00:37:08,960
all the fast,
937
00:37:08,960 --> 00:37:09,460
all the router
938
00:37:09,460 --> 00:37:10,661
and whole sap and everything,
939
00:37:10,661 --> 00:37:12,697
and I'll go down there and pay for it.
940
00:37:12,697 --> 00:37:13,297
Well, really,
941
00:37:13,297 --> 00:37:15,132
that's coming out of my compensation,
942
00:37:15,132 --> 00:37:16,767
right? I'm not.
943
00:37:16,767 --> 00:37:18,669
I didn't set money aside for that.
944
00:37:18,669 --> 00:37:19,103
Whatever.
945
00:37:19,103 --> 00:37:19,804
That's really it's
946
00:37:19,804 --> 00:37:20,638
coming out of my money.
947
00:37:20,638 --> 00:37:21,939
I can say that
948
00:37:21,939 --> 00:37:23,274
it's for the business or whatever.
949
00:37:23,274 --> 00:37:24,842
But his way of looking at
950
00:37:24,842 --> 00:37:26,611
it is stealing from the business,
951
00:37:26,611 --> 00:37:27,912
you know what I mean?
952
00:37:27,912 --> 00:37:30,181
And that that's pretty sharp.
953
00:37:30,181 --> 00:37:33,184
So anyhow, we are not preaching.
954
00:37:33,784 --> 00:37:35,953
We made every mistake in the book.
955
00:37:35,953 --> 00:37:37,355
Rob and I both.
956
00:37:37,355 --> 00:37:40,758
We, this took years and years
957
00:37:40,758 --> 00:37:41,626
to finally,
958
00:37:41,626 --> 00:37:44,862
you know, through CPAs and other CPAs
959
00:37:44,862 --> 00:37:46,497
and, and and, you know,
960
00:37:47,632 --> 00:37:49,066
trial and effort and
961
00:37:49,066 --> 00:37:52,203
blood, sweat and tears, that hopefully.
962
00:38:05,483 --> 00:38:06,550
Yeah.
963
00:38:06,550 --> 00:38:09,553
So it.
964
00:38:17,128 --> 00:38:18,462
And, you know, some
965
00:38:18,462 --> 00:38:19,497
some some guys
966
00:38:19,497 --> 00:38:21,032
rip the Band-Aid off real quick
967
00:38:21,032 --> 00:38:22,133
and do it right now.
968
00:38:22,133 --> 00:38:23,501
Some guys are, like, slowly
969
00:38:23,501 --> 00:38:25,169
take peel the Band-Aid off
970
00:38:25,169 --> 00:38:25,803
how you want to,
971
00:38:25,803 --> 00:38:28,606
how you want to, approach change.
972
00:38:28,606 --> 00:38:31,609
But, and then hold the book up again.
973
00:38:31,842 --> 00:38:34,845
Profit first for contractors.
974
00:38:35,813 --> 00:38:38,115
That's the guy right there.
975
00:38:38,115 --> 00:38:40,284
And, that was a really good read.
976
00:38:40,284 --> 00:38:42,420
Like I said, I read the day
977
00:38:42,420 --> 00:38:43,254
and but
978
00:38:43,254 --> 00:38:45,456
I didn't go through all the stuff.
979
00:38:45,456 --> 00:38:46,757
I didn't go through all the stuff
980
00:38:46,757 --> 00:38:48,259
that he teaches and stuff.
981
00:38:48,259 --> 00:38:49,760
So that's why I think it's it's worth
982
00:38:49,760 --> 00:38:50,328
getting the book
983
00:38:50,328 --> 00:38:51,228
if you're interested in it,
984
00:38:51,228 --> 00:38:54,231
because he goes into,
985
00:38:54,498 --> 00:38:55,900
you know, some Excel spreadsheets
986
00:38:55,900 --> 00:38:56,901
and stuff like that, that,
987
00:38:56,901 --> 00:38:58,202
that, you know, he does things.
988
00:38:58,202 --> 00:38:59,036
And so anyhow,
989
00:38:59,036 --> 00:39:00,938
that was really, really good.
990
00:39:00,938 --> 00:39:01,872
And there you go.
991
00:39:03,374 --> 00:39:05,276
That was a long show for us.
992
00:39:05,276 --> 00:39:06,210
But I hope
993
00:39:06,210 --> 00:39:09,213
people found it was, worthwhile.
994
00:39:09,747 --> 00:39:12,316
Okay, so. So, Rob,
995
00:39:12,316 --> 00:39:15,186
you know, just in case you
996
00:39:15,186 --> 00:39:15,586
you don't
997
00:39:15,586 --> 00:39:18,589
you decided not to do all these things,
998
00:39:18,756 --> 00:39:20,257
the markup versus margin
999
00:39:20,257 --> 00:39:22,159
and what have you, and, you know,
1000
00:39:22,159 --> 00:39:22,893
those type of things
1001
00:39:22,893 --> 00:39:24,395
to look into business, all these things
1002
00:39:24,395 --> 00:39:25,396
that we're talking about here.
1003
00:39:25,396 --> 00:39:28,399
I do have an alternative retirement plan,
1004
00:39:29,100 --> 00:39:31,936
which I call my my slip
1005
00:39:31,936 --> 00:39:34,939
and fall retirement plan.
1006
00:39:38,409 --> 00:39:40,311
The,
1007
00:39:40,311 --> 00:39:42,646
you know, you could go into restaurants
1008
00:39:42,646 --> 00:39:43,981
or commercial buildings
1009
00:39:43,981 --> 00:39:46,984
and accidentally slip and fall
1010
00:39:47,885 --> 00:39:49,987
and, that that might be a good plan.
1011
00:39:49,987 --> 00:39:52,990
And I was thinking what I could do.
1012
00:39:53,758 --> 00:39:56,660
I can offer a course and slip and falls.
1013
00:39:56,660 --> 00:39:57,928
Right.
1014
00:39:57,928 --> 00:39:59,964
And then,
1015
00:39:59,964 --> 00:40:01,232
you know, charge for the course
1016
00:40:02,433 --> 00:40:04,168
and then, you know, sign
1017
00:40:04,168 --> 00:40:06,270
them up and take like, a 20%
1018
00:40:06,270 --> 00:40:07,471
because you could tell them, like,
1019
00:40:07,471 --> 00:40:07,872
all right,
1020
00:40:07,872 --> 00:40:09,940
the best restaurants to slip and fall in.
1021
00:40:09,940 --> 00:40:11,308
The most profitable one is one
1022
00:40:11,308 --> 00:40:14,278
stay away from,
1023
00:40:15,346 --> 00:40:15,946
you know,
1024
00:40:15,946 --> 00:40:16,614
what questions
1025
00:40:16,614 --> 00:40:17,515
the attorneys might ask
1026
00:40:17,515 --> 00:40:18,883
those type of things.
1027
00:40:18,883 --> 00:40:21,419
And then I could give you,
1028
00:40:21,419 --> 00:40:22,720
what do you call it?
1029
00:40:22,720 --> 00:40:25,723
Protected territories.
1030
00:40:26,223 --> 00:40:26,424
Where?
1031
00:40:26,424 --> 00:40:27,691
No, there's slip and fall, guys,
1032
00:40:27,691 --> 00:40:29,326
you get exclusive territories. We.
1033
00:40:29,326 --> 00:40:30,327
No, this slip and fall guys
1034
00:40:30,327 --> 00:40:32,096
could come into that area.
1035
00:40:32,096 --> 00:40:33,464
You could be the slip and fall guy
1036
00:40:33,464 --> 00:40:36,467
for that. That region.
1037
00:40:36,867 --> 00:40:39,904
I think if you slip and fell four times
1038
00:40:39,904 --> 00:40:42,907
a month.
1039
00:40:47,645 --> 00:40:50,648
Rear enders.
1040
00:41:01,959 --> 00:41:02,560
That's what I said.
1041
00:41:02,560 --> 00:41:04,929
Renders.
1042
00:41:04,929 --> 00:41:05,329
Yeah.
1043
00:41:05,329 --> 00:41:07,198
Yeah. Yes.
1044
00:41:07,198 --> 00:41:09,266
So you could do
1045
00:41:09,266 --> 00:41:10,134
if you figured
1046
00:41:10,134 --> 00:41:11,669
I don't know what the payout is on
1047
00:41:11,669 --> 00:41:13,537
slip and fall just for you to go away.
1048
00:41:13,537 --> 00:41:14,438
Let's say you slip and
1049
00:41:14,438 --> 00:41:15,539
fail four times a month
1050
00:41:16,974 --> 00:41:18,642
right.
1051
00:41:18,642 --> 00:41:20,344
And you increase that maybe by
1052
00:41:20,344 --> 00:41:21,779
if you go up to 6 or 7 times
1053
00:41:21,779 --> 00:41:24,548
a month, slip and fall activities,
1054
00:41:24,548 --> 00:41:27,551
throw in a rerender here and there.
1055
00:41:27,985 --> 00:41:28,819
I bet you can make
1056
00:41:28,819 --> 00:41:30,421
a pretty damn good living.
1057
00:41:30,421 --> 00:41:32,456
There's always hope.
1058
00:41:32,456 --> 00:41:33,757
And right there is.
1059
00:41:33,757 --> 00:41:36,760
Yeah.
1060
00:41:37,094 --> 00:41:38,629
Simplifying might be.
1061
00:41:38,629 --> 00:41:41,365
Yeah, yeah.
1062
00:41:41,365 --> 00:41:44,368
You're taking a big risk at our age.
1063
00:41:44,368 --> 00:41:47,338
That might really be the end.
1064
00:41:49,440 --> 00:41:51,342
Yeah.
1065
00:41:51,342 --> 00:41:54,044
Well.
1066
00:41:54,044 --> 00:41:54,545
The thing is,
1067
00:41:54,545 --> 00:41:56,580
when you get a guy in his 60s
1068
00:41:56,580 --> 00:41:58,282
and 70s, as have been falls, you have to.
1069
00:41:58,282 --> 00:41:58,616
You don't
1070
00:41:58,616 --> 00:41:59,550
want to watch it on camera
1071
00:41:59,550 --> 00:42:01,085
because it's going to be so slow
1072
00:42:01,085 --> 00:42:02,486
and awkward.
1073
00:42:02,486 --> 00:42:03,187
You got to realize
1074
00:42:03,187 --> 00:42:06,190
it's really a slip and fall character
1075
00:42:07,525 --> 00:42:10,528
and a gently land.
1076
00:42:19,904 --> 00:42:22,573
Yeah.
1077
00:42:22,573 --> 00:42:23,007
No.
1078
00:42:23,007 --> 00:42:27,211
Well yeah I think the percentage of slip
1079
00:42:27,244 --> 00:42:27,711
and falls,
1080
00:42:27,711 --> 00:42:28,279
you're better off
1081
00:42:28,279 --> 00:42:30,447
slipping forward and backwards.
1082
00:42:30,447 --> 00:42:32,683
I think he would do less damage. Right.
1083
00:42:32,683 --> 00:42:33,484
It's all in my book.
1084
00:42:37,421 --> 00:42:38,956
Oh yeah.
1085
00:42:38,956 --> 00:42:41,959
That's.
1086
00:42:46,063 --> 00:42:46,497
We started
1087
00:42:46,497 --> 00:42:47,631
on one side of the room and,
1088
00:42:47,631 --> 00:42:50,634
and ended up falling on the other.
1089
00:42:50,668 --> 00:42:52,469
Oh I get,
1090
00:42:52,469 --> 00:42:54,638
man.
1091
00:42:54,638 --> 00:42:57,641
1092
00:42:57,908 --> 00:42:58,776
Wow.
1093
00:42:58,776 --> 00:43:01,345
Well, it's not like when you're younger
1094
00:43:01,345 --> 00:43:02,479
and you're just walking.
1095
00:43:02,479 --> 00:43:03,080
You start to trip
1096
00:43:03,080 --> 00:43:04,982
and then just, like, break into a trap,
1097
00:43:04,982 --> 00:43:07,985
like you didn't.
1098
00:43:20,731 --> 00:43:21,165
You take.
1099
00:43:21,165 --> 00:43:22,333
Yeah.
1100
00:43:22,333 --> 00:43:25,336
Yeah, yeah.
1101
00:43:38,916 --> 00:43:40,384
You know I watch this kid
1102
00:43:40,384 --> 00:43:41,418
one time on
1103
00:43:41,418 --> 00:43:42,920
I'm on the social media accounts
1104
00:43:42,920 --> 00:43:45,923
say that
1105
00:43:46,857 --> 00:43:47,658
She jumps up
1106
00:43:47,658 --> 00:43:49,760
like you're going to attack the cord.
1107
00:43:49,760 --> 00:43:51,261
But
1108
00:43:51,261 --> 00:43:53,397
I seen a kid on, one of these,
1109
00:43:53,397 --> 00:43:54,031
social media
1110
00:43:54,031 --> 00:43:55,199
things say that he's
1111
00:43:55,199 --> 00:43:56,367
never so depressed his life.
1112
00:43:56,367 --> 00:43:58,769
And you could tell he'd been beat up.
1113
00:43:58,769 --> 00:44:01,305
And he goes, I just disgusted,
1114
00:44:01,305 --> 00:44:02,773
I mean, absolutely disgusted, man.
1115
00:44:02,773 --> 00:44:03,040
He goes,
1116
00:44:03,040 --> 00:44:05,943
I just totally had my ass kicked.
1117
00:44:05,943 --> 00:44:07,745
I've been taking karate for ten years.
1118
00:44:08,746 --> 00:44:09,546
And this
1119
00:44:09,546 --> 00:44:10,581
the first time I was ever,
1120
00:44:10,581 --> 00:44:12,716
like, in a in a fight,
1121
00:44:12,716 --> 00:44:13,851
and this kid
1122
00:44:13,851 --> 00:44:15,819
just beat the hell out of me.
1123
00:44:15,819 --> 00:44:16,754
And this kid,
1124
00:44:16,754 --> 00:44:18,956
you know, didn't have any kind of
1125
00:44:18,956 --> 00:44:20,858
skills, you know what I mean?
1126
00:44:20,858 --> 00:44:23,827
It was an an unskilled fighter
1127
00:44:24,094 --> 00:44:25,195
and beat the hell out of this guy.
1128
00:44:25,195 --> 00:44:25,796
He's been doing
1129
00:44:25,796 --> 00:44:28,799
credit for ten years of his life,
1130
00:44:29,500 --> 00:44:29,867
and I.
1131
00:44:29,867 --> 00:44:32,870
I feel bad for the guy to.
1132
00:44:33,704 --> 00:44:35,773
Yeah.
1133
00:44:35,773 --> 00:44:37,174
Although I know karate is not just a
1134
00:44:37,174 --> 00:44:39,243
b a b people up.
1135
00:44:39,243 --> 00:44:41,612
1136
00:44:41,612 --> 00:44:42,446
So there you go.
1137
00:44:42,446 --> 00:44:42,913
All right.
1138
00:44:42,913 --> 00:44:45,616
Anyhow, that's it. So.
1139
00:44:45,616 --> 00:44:47,117
So if it doesn't work.
1140
00:44:47,117 --> 00:44:48,352
So if the other thing doesn't work,
1141
00:44:48,352 --> 00:44:50,254
there's always hope.
1142
00:44:50,254 --> 00:44:51,889
All right.
1143
00:44:51,889 --> 00:44:53,157
This has been another episode
1144
00:44:53,157 --> 00:44:54,591
of On the Floor with Wayne and Rob.
1145
00:44:54,591 --> 00:44:56,193
Please stay tuned for another episode.