Electrical Contractor Success Story
Prospect Pain Points
(from our initial Zoom notes)
Specializes in commercial, residential & marine
Husband is electrician / Wife is Office Manager
- In a fog
- Husband wakes up every morning unhappy
- In a dire situation
- Need to do something immediately
Their Challenges
- E-Myth type contractor – working nonstop in the business, not on the business.
- Making matters worse, they were “Yes” type contractors. Yes, we build bridges. Yes, we build hospitals. Yes, we build nuclear power plants. Yes, we can cut our price (VERY BAD).
- Like most contractors they came from the technician side. They never had any training in financial management.
- They never used a CPA firm that were experts in the construction industry.
Initial QuickBooks Physical
They agreed for us to perform our “QuickBooks Physical” where we rated from 1 to 5 Stars how well they were doing in 20 different areas. They scored 3 Stars (60% – a failing grade).
We provided and discussed 39 pages of printouts from their QuickBooks Company file.
Bottom line – their dire situation concerns were spot on. They were losing money and would most likely go under in the next 6 months.
Our Solutions
We spent two long serious days with them in their conference room. We provided a Most Trusted Business Advisor meeting agenda in advance.
We drilled home: “Volume Kills and Profits Thrills!”
That they had no choice but to “immediately” increase pricing or they would go out of business. That they needed to get past concerns about client pressures and perceived competition. That they would certainly lose some clients and jobs.
We drilled home: “You live and die by Markups!”
We studied their current estimating markups. We explained the importance of using different markups for each type of work they perform. That this was necessary to achieve desired Gross Profit dollars and Target Net Income.
We used our proprietary MTBA tool: “Breakeven with Target Net Income.”
We worked together on the input assumptions: General & Administrative Expenses, Owners Compensation and Benefits, Target Net Income, and Gross Profit %. The result showed how much Billing was needed monthly, quarterly and annually.
We also used our proprietary MTBA tool: The “What if” Game.
First, we looked at their current Revenue and Gross Profit percentage. Next, we played the “game” and input different mixes of work and Gross Profit %’s. This showed the effect on Target Net Income. It was eye opening to them.
Today
As a result of our meetings we developed a new paradigm. A Strategic Plan to help them make more money!
- They listened to our advice.
- They no longer accept jobs that do not fit the Strategic Plan.
- They have a seven-figure bottom line.
- They are properly compensated.
- They are finally funding their retirement.
We are very pleased to be their Most Trusted Business Advisor!
PS – they were right about possibly losing a good client. One GC decided to see if the grass was any greener. They found out how great a Sub our client really was. They came back and now pay the right contract prices.