Markup & Profit

Tuesday, March 20, 2007


When Michael leaves next week for the JLC Live conference in Providence, Rhode Island, he'll carry flyers announcing our new book, Profitable Sales, A Contractor's Guide. The book will be available for shipment around May 31 2007, we begin taking orders next week.
In the meantime, we need storage space and are offering a few products at a substantial discount. The
6-hour Markup & Profit seminar on VHS video is now only $99.95, and on audio cassette tapes only $39.95 (with the Markup and Profit book included). While supplies last, inventory is limited.

We received the following note. "I would like to
see the best way to grow my company. Do I start with the office manager, the
sales person, the lead carpenter or . . . ?"

Here's the easy answer. Evaluate your own talents and abilities, and those of
your spouse if they are involved in the business. Then you evaluate what needs
to be done in your company, and if you do not have someone capable of doing
that job, then you will have to hire someone to do it.

But it's not really that easy. You need to be careful to not think only in
terms of what you "like" to do. Owning a business is not about doing
what you like, it is about what you and/or your spouse can do better than
anyone else. If you are doing what you are best at, not just what you like,
you are running and building a business that benefits everyone involved.

If you disagree, let me ask you - do you hire employees and let them
tell you what they want to do? Or do you assign what needs to be done based on
their talents and abilities? You must have the discipline to assign
yourself the jobs that need to be done based on the same criteria. As the
business owner, your goal is to get the jobs sold, built and collected, not to
do the things you like to do.

The second thing that you must do is to be sure that the money you need to
hire and pay a new employee is already included in the jobs sold before you
hire them. That doesn't just mean increasing your markup for future jobs. It
means making sure all jobs on the books that haven't yet been built will
generate the money to pay for the employee. If they won't, you have to wait
until the money is available.

Determine what pay is necessary to attract and keep someone long term. If the
person you want to hire will work on jobs, the expense is a job cost and will
be covered in your estimate. If the person to be hired will not be working on
jobs, but will be selling or supervising jobs or working in the office, that
will normally be an overhead expense. Add the expense to your normal overhead
and calculate your new markup before you sell the next job.

If you, as the owner, are skilled at both job supervision and estimating, and
you have the opportunity to hire an excellent estimator/salesperson, then do
it. You concentrate on getting the jobs built and let the new estimator
salesperson secure the jobs. When it's time, look for the job superintendent
you need and when they become available, add them to your staff so you can
focus on operating your business, not on jobs.

There is no cut and dried path to follow when hiring people for your company.
Careful planning, and evaluating yourself and your company for the talents and
skills needed is the only approach, and the answer will be different for each

I will close by adding that you should always build accountability into the
pay of your employees. Create incentives for your employees to get profitable
jobs sold, and or built, and or collected. If paychecks are tied to
performance, you will see jobs built in a timely manner and at a profit.