Built to Build: Blog
HOW TO CREATE PREDICTABLE REVENUE FOR YOUR CONSTRUCTION BUSINESS
WHAT’S YOUR PLAN?
Most construction business owners don’t have a plan when a crisis occurs or the market changes. We get so caught up in reacting to the day-to-day fires that planning for the future gets delayed.
JUST REACTING TO EMERGENCIES STUNTS BUSINESS GROWTH
This causes stress for the business owner and leads to reacting to emergencies instead of planning out contingencies.
THE SIMPLE FORMULA TO CREATE PREDICTABLE REVENUE FOR YOUR CONSTRUCTION BUSINESS
There’s a simple formula that will show you how to create predictable revenue for your construction business in good times and bad.
I call this The Boring Success Formula™.
Here’s how The Boring Successful Formula™ works.
When someone asks you, “How did you become so successful?”, I want you to be able to give them this answer:
“We just identified what makes us money, and we did that every day. We also identified what was losing us money, and we stopped doing that.”
That answer is kind of boring, but the business behind that answer is not. When businesses get focused on the right things and eliminate distractions, they make more money, create engaged employees, and attract better customers. That’s an exciting business to own, a great place to work, and a service that is in high demand.
Here’s what The Boring Success Formula™ looks like:
[ MAKES $ x 365 ] – LOSES $ = SUCCESS
When you get clarity on what generates a profit for your business, and you eliminate the things that cost you money, then you’ll be able to predict your revenue.
3 QUESTIONS TO SOLVE THE BORING SUCCESS FORMULA
All you have to do is answer these three questions, and you’ll be able to design a plan for your construction business that will ensure purposeful, profitable growth.
Question #1: What do I do NOW?
The answer to this question forces you to focus on the top of your funnel (marketing efforts) and your conversion rate (sale process).
Identify where your leads are coming from and go get more of them.
When your lead generation efforts increase, so will your prospects.
Pre-qualify your prospects and eliminate the prospects that are not a good fit for your company.
(If you need a system to sell your value, attract better clients, and stop giving away free estimates, then click here to enroll in the PAID for PLANNING program.)
Question #2: What do I do NEXT?
The answer to this question is ‘focus on margins.’
When you get the right type of leads coming into your business, and you know which type of leads generate the highest margins, then you do more of those kinds of projects.
Review your last 10 projects and identify the ones that produced the highest margins for your business.
Going forward, do only those projects.
(If your finances are a mystery and you don’t understand how to calculate the margins you need to ensure a profit, then you need my book, Profit First for Contractors. Click here to get your copy.)
Question #3: What do I do NEVER?
Once you determine what you need to do now and what you do next, the final thing you need to do is say “No” more often.
Say “No” to the projects and customers that do not produce a profit. Resist the urge to solve short-term cash flow problems by accepting projects with high opportunity costs.
Opportunity costs “represent the benefits an individual, investor or business misses out on when choosing one alternative over another.” (https://www.investopedia.com/terms/o/opportunitycost.asp)
There’s an old saying, “If you want to get yourself out of a hole, stop digging.”
Opportunity costs are forward-thinking, do not show up on a financial report, and can be tricky to calculate. But ignoring them altogether will result in repeating mistakes of the past.
Just because you did a thing before doesn’t mean you should do it again.
Remember The Boring Success Formula™:
Focus on the things that make you money and stop doing the things that cost you money.
Just because you can do a thing doesn’t mean you should.
Saying “No” to the wrong projects will allow you to focus your time on getting the right projects, which leads back to question #1.
YOU MUST KNOW WHAT MAKES YOU MONEY AND WHAT DOESN’T
Creating a predictable revenue for your construction business requires you to get clarity on what makes money and what loses money. Without this clarity, the business may continue to keep the cash flowing, but it will never produce a profit.
And, a business that does not produce a profit is doomed to fail when the market changes or a crisis occurs.
You can avoid this fate by identifying the types of projects you need, focusing on the margins of those projects, and saying no to everything else.
STOP STRUGGLING AND START DEVELOPING SYSTEMS
Learn the systems that create predictable revenue for your construction business by enrolling in the Built to Build Academy®. You’ll make more money, stop worrying and get your life back. Click here and fill out the application to join the waitlist.