Matt and Tony Jones –
TRJ and Sons Construction
TRJ and Son’s went from cleaning the shed to making $2.5 mil and 6.5% net profit in a year
Here’s how I helped one of my clients climb out of a hole they’d gotten stuck in.
Barry owns a property maintenance and electrical services business up near Brisbane. He’s been working in the electrical industry for 27 years and has been managing property renovations and maintenance for 16 years.
We started working and set our strategy.
A strategy that covers the 6 parts of building a business and we focused on marketing. When you focus on marketing, you get busier because marketing works and they did get busier. Being busier means there should be more profits, but the profits didn’t come. We were tracking everything in our Big Numbers Tracker; their revenue, gross profit and net profit because we were following a system and it was clear that, despite being busy, profits were not there.
We had a difficult meeting where I showed them, in the tracker and in Xero, that the profits we were expecting were not there. It was awkward and uncomfortable for all of us. More so for them, probably.
The first place we looked was the 20% margin they told me they were making on all their jobs. But they didn’t have the systems to measure profitability on job completion. What they did do was finish a job and move on to the next one. They gathered a quote and some invoices and we started comparing. Pretty quickly, we saw that their estimator had allowed $750 for rubbish removal and they had invoices for skips for almost $2000. Just for skips!
We were clear that something was wrong with the estimating. We decided to get a new estimator, someone who was more open with how he made his estimates. Then they started building a system. A system of recording costs and timesheets against jobs so they could check how accurate his estimates were.
It turns out they were charging a 20% margin but on shitty, out-of-date and incorrect cost estimates. No wonder there was no profit.
Now that we built a solid base of correct estimates, we increased rates to bring them into line with other local builders and they are now making a healthier profit.
Increasing what they charged was a terrifying and slow journey.
At first, they only increased their rates a little bit at a time. Yet profits increased. Both business owners were able to give themselves pay increases and they pulled out $200,000 in cash not so long ago (for a property investment).
They’ve raised their prices again and coupled with their excellent focus on sales and as well as a structured proposal, they are winning work with profitable rates.
This year is $2.5m with a 6.5% net profit (after pay increases) and we’re aiming for $3.2m and 11% next year. We’ll do it too.
These Sydney builders went from cleaning the shed (having no work), to earning healthy profits on every job. Because they implemented systems in their business. Systems that work in an automated fashion, bringing in leads consistently and tracking the profitability of jobs, consistently.
Want some advice on how to build that cohesive hiring process?
Or need help understanding your profitability?