← Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Double Your Profit Day #1 Choose Profit Over Revenue
00:04:54
Loading summary
Transcript1 lines
- [00:00]
A
Welcome to day number one of the double your profit series. We're going to be spending 30 days and 30 videos giving tactical insights and tactical perspective in how to double your profit. Because the number one rule when building a business that lasts is building a profitable business. It's easy to get caught up in revenue and chasing big dollars because it's easier to measure. And that's what most people talk about. Revenue is the big splashy number that's going to attract a lot of attention. Like if I said, hey, I made $2 million this month, that's going to be and attractive. But the reality is that was my revenue, not my profit. The reason profit matters is in order to build a big business, you have to be able to continue investing from your profit. And whenever it is that you go to sell, almost the only thing that matters is the profit. Businesses are valued off of a multiple of profit. If selling the business at any point is a goal for you, then you have to be able to show that this is a profitable business. One of the things that people get a little concerned about when they start to focus on profit is people give pushback and they say, oh, we're not profit focused or you're all about the numbers, you're all about the whatever. And the answer is, yeah, 100%. That is why I woke up. That is why I put my house at risk. That is why I did this. In the process of building a big business and making a profitable business, we've changed hundreds of people's lives as their career trajectory has changed and as they've made more money than ever. When you build a profitable business, you're able to pay people what they want, what they dream of making. You're able to have people buy their first houses, first cars, take benefits home to their family that, that they didn't have at other opportunities. You never apologize for focusing on the core thing, which is a profitable business, because at the end of the day, that that's not only just for you, that is for everyone on that team. Profit allows for growth. Growth can look a ton of different ways. It can be acquisitions, it can be expanding buildings, it can be adding new geographies, it can be growing organically, it could be new marketing, it could be new people. But that money has to come from somewhere and that somewhere is going to be from your bottom line. We've over the years but bought a ton of businesses and we've started new businesses and we've bought real estate and we've done all this stuff investing from the profits of the business over the years. The way that we've continued to drive profit is really raising revenue and the other is killing costs. We're roughly going to spend equal amount of time on both. The advantage of focusing on costs is that costs are something that's essentially 100% within your control, whereas revenue is not. So when we're thinking about streamlining the business and making us more, more profit focused, the things that we need to be thinking about are what type of customers am I working for, what type of jobs am I accepting, what type of marketing am I doing. One of the biggest levers that we've had in our businesses we've continued to grow is continue to open up the P and L and be more transparent about what's really happening. We have the team aligned on profit. I think it can be hard for a team member to conceptualize, hey, this business just did two and a half million dollars of revenue this month. That sounds like they made two and a half million dollars. I've actually had people say that, oh, you just made two and a half million dollars. And it's like, do you not see the 170 people walking around this building? Like, do you think they're free? Are you free? So what we've started really working on is explaining our cost structure as openly as we can. Our payroll's $850,000 a month. Here's how much we spent on materials. That was $500,000 last month. Here's how much we spend on marketing, 220. That way we're transparent with what's happening in the business and we can explain where the money goes. So that when we explain why we're profit focused and we talk about the profit number, it's no longer this crazy consumerist thing. Like if we say we made $400,000 net last month. If you are intelligent and you've been following along with what we've explained, you know, that I'm not ripping 400 grand to go buy shit. We're investing into new vehicles, we're investing into more marketing, we're bringing on more team members to go to the next stage of growth. So we're really transparent and dialed in on why profit matter. And we've aligned compensation to that because it is the ultimate goal. My last take on profit is always improve it. And every single percentage point matters. I think it's easy the bigger you get to lose track of dollars. But being able to create systems that allow you to catch leakage inside your P and L, like, hey, are people buying lunches and they shouldn't be. Are they buying random stuff at gas stations? Are gas cards being used just for gas? Or are we gassing up their wives cars too? What's happening with marketing? Marketing? Are we getting a return on that and getting all this data and getting it in a way that you can condense it and drive profit decisions? We do this relentlessly because every single point counts. Thanks for tuning into the first video of this series. We have 29 more where we dive deep into tactical exercises on raising revenue and dropping costs.