Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Episode: Double Your Profit Day #2: Cut Costs Like a CFO
Release Date: August 2, 2025
Hosts: John Wilson and Jack Carr
Introduction
In the second installment of the "Double Your Profit" series, John Wilson, CEO of the Wilson Companies in Ohio, delves into the critical topic of cost management. Aiming to provide actionable strategies to help businesses double their profits within 30 days, this episode focuses on adopting a CFO-like approach to cutting costs and maximizing every dollar spent.
John Wilson [00:00]: "Thanks for joining us for the double your profit series where we spend 30 days diving deep into the action steps that you can take to double the profit for your business."
Cutting Costs Like a CFO
No Sacred Costs
John emphasizes the importance of scrutinizing every expense, asserting that no cost should be considered untouchable. This includes reevaluating long-standing contracts and expenditures that may have been overlooked over the years.
John Wilson [00:30]: "There are no sacred costs. Review everything."
He stresses the necessity of re-examining each line item in the Profit and Loss (P&L) statement, especially when preparing for bank lending, business sales, or other financial evaluations where every dollar impacts the overall valuation.
Zero-Based Budgeting
A core strategy discussed is zero-based budgeting. Unlike traditional budgeting, which typically builds upon the previous year's expenditures, zero-based budgeting starts from scratch, eliminating assumptions and reallocating resources to areas that offer the highest returns.
John Wilson [01:15]: "The more impactful way to do it is zero based budgeting. So it's getting rid of the assumptions."
By implementing this method, businesses can identify and eliminate unnecessary costs, ensuring that every expense contributes directly to profitability.
Reallocating Resources
John shares practical applications of zero-based budgeting within his company. By restructuring their personnel, incorporating more automation, and hiring offshore staff, the Wilson Companies have been able to:
- Enhance employee compensation
- Invest in growth-driven initiatives
John Wilson [02:00]: "Tactically for us, one of the ways that we've used zero based budgeting is we've changed our people structure, we've added more automation, we've added more offshore people."
This reallocation not only reduces costs but also positions the company for scalable growth.
Challenging Long-Standing Vendors and Services
A significant portion of cost reduction involves renegotiating or terminating existing vendor relationships. John highlights the importance of questioning ongoing contracts that may no longer be the most cost-effective options.
John Wilson [03:00]: "So your cellular provider might be one of them. Hey, we randomly chose Verizon or AT&T or whoever six years ago and now we pay them $15,000 a month in perpetuity. Well, let's bid that relationship."
By renegotiating terms or switching to more affordable alternatives, businesses can achieve substantial savings.
Vendor Negotiations
Even after identifying necessary costs through zero-based budgeting, John advises that these should still be negotiated to secure the best possible deals. Continuous evaluation and negotiation with vendors can lead to significant cost reductions.
John Wilson [04:00]: "If I today launched a $30 million plumbing company, what would I actually need to run that plumbing company as profitably as I can and what do I not need?"
This approach ensures that essential services are obtained at the lowest possible cost, enhancing overall profitability.
Implementing a Cost-Cutting Culture
Consistent Overhead Evaluation
John advocates for ongoing assessment of overhead costs rather than limiting evaluations to annual budgeting cycles. This proactive stance helps in identifying and addressing inefficiencies promptly.
John Wilson [05:00]: "This also helps you to negotiate better vendor deals. But negotiating vendor deals and negotiating your existing partnerships... We are constantly evaluating our overhead."
The "Up List" Process
A practical tool introduced is the "Up List", a monthly practice where the team identifies and focuses on five P&L line items to negotiate with vendors. This systematic approach ensures that cost-cutting remains a continuous priority.
John Wilson [05:30]: "Every single month we come up with five line items on the P L that we're going to go up, we're going to go negotiate with those vendors."
By targeting specific areas each month, businesses can methodically reduce expenses without overwhelming their operations.
Recap and Key Takeaways
John summarizes the essential points discussed, reinforcing the importance of a disciplined, CFO-like approach to cost management:
- No Cost is Sacred: Every expense should be evaluated regularly to ensure it contributes to profitability.
- Zero-Based Budgeting: Eliminate assumptions from past budgeting cycles and reallocate resources to high-impact areas.
- Continuous Vendor Negotiation: Regularly renegotiate with vendors to secure better deals and reduce ongoing costs.
- Implementing the "Up List": Use structured processes to consistently identify and tackle unnecessary expenses.
John Wilson [07:00]: "Make sure you like subscribe because we have 28 more."
These strategies collectively foster a culture of meticulous cost management, positioning businesses to achieve substantial profit growth.
Conclusion
In this episode of "Owned and Operated," John Wilson provides a comprehensive guide to cutting costs effectively by adopting financial strategies commonly used by CFOs. Through zero-based budgeting, relentless vendor negotiations, and maintaining a consistent focus on overhead evaluation, businesses can significantly enhance their profitability and set the stage for sustained growth.
For more insights and actionable advice on growing your home service business, subscribe to the "Owned and Operated" podcast and visit www.ownedandoperated.com.
Notable Quotes
- John Wilson [00:30]: "There are no sacred costs. Review everything."
- John Wilson [01:15]: "The more impactful way to do it is zero based budgeting. So it's getting rid of the assumptions."
- John Wilson [03:00]: "So your cellular provider might be one of them. Hey, we randomly chose Verizon or AT&T or whoever six years ago and now we pay them $15,000 a month in perpetuity. Well, let's bid that relationship."
- John Wilson [07:00]: "Make sure you like subscribe because we have 28 more."
This episode serves as a valuable resource for business owners seeking to optimize their cost structures and drive greater profitability through disciplined financial management.