Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:08] Speaker B: Welcome back to the Total Profit Podcast. Your place to cut through the clutter, tighten your margins, and finally run a business that pays you. I'm T2, and joining me is the man who has bid more jobs and fixed more broken ones than anyone I know, Tommy P.
Hey, have you ever.
[00:00:27] Speaker A: Won a job and immediately regretted it?
If so, you're in the right place today.
[00:00:33] Speaker B: All right, we're talking about one of the most dangerous leaks in any business, and that is broken bids. And not just losing bids. I'm talking about the jobs that you win, but they actually cost you money.
[00:00:48] Speaker A: Yeah, everybody thinks the goal is to win the job, but if you win the job with a broken bid, you're just booking unprofitable work. You're wearing out your crews. You're entering your pocketbook. That's not winning. You're just bleeding a slow financial death.
[00:01:06] Speaker B: So let's start what we mean. Let's start with what we mean by a broken bid.
What is it that makes it broken, Tommy?
[00:01:16] Speaker A: So the short list is your labor is underestimated, your overhead is missed. So your cost of doing business, whether you do a dollar or a million dollars, is a fixed cost, so you need to include that.
Then materials aren't properly allocated or accounted for, so those show up missing on bids. So those costs just go and take right off the bottom line.
And you're. You're guessing at your real costs. Like, you can't reach out to your friends and ask them, what should I bid this at? What would you put for a square footage price? And I think it happens more often than people realize.
[00:01:59] Speaker B: We see it a lot on social media. Like, we respond to a lot of social media questions out there. Hey, how would you guys bid this job? Or, you know, what do you think about these numbers and so on in the groups around.
There's a lot of Facebook groups out there that. That we follow and participate in, and we see that question a lot like, am I bidding this right? So basically what you're saying is that it looks good on paper, but it's a margin nightmare in the real world.
[00:02:28] Speaker A: Yeah. Let me just give you a quick story about a client that we had that was out there doing some commercial work, bidding like crazy. And he couldn't understand why his. His checkbook wasn't moving. And we broke it down with him, and we dug in and figured out what his employee costs were and what his actual costs were, and it turns out he was losing, like, $45,000 a quarter.
[00:02:55] Speaker B: That's insane. That's really that's when that's just under bidding. It's just, and it's not a rounding error. Right? I mean, $45,000, that's a salary, that's an entire salary of a worker. So yeah, that's, that's scary.
[00:03:12] Speaker A: Yeah. And it happens so frequently and it may not be to that extreme, but you know, let, let's fix those again. We're, we're on the topic always of profit leaks. How do we plug those up? And you know, a good bid are based on facts, not hope.
And you know, we're going to talk about the framework that makes that up. You know, load in your overhead. Again, whether you do a dollar's worth of work or a million dollars worth of work, those costs are, are fixed in your business. You have to cover those costs to keep your doors open, escalate your materials, make sure you're using up to date quotes, check with your vendors. That's what your salespeople are for. They're there to help you get the most accurate information. So you can mark that up.
Know what your past job costs have been, how you've executed your work and how you can improve your work. Make sure you, your teams are affiliated and know what the quantities are. So, so there's a direct communication with that. And add your desired margin.
Give yourself a goal for a margin at the beginning of the year and use that as your guideline.
You know, don't deviate from that profit margin and it's going to start feeding your bank account.
[00:04:35] Speaker B: Right. So if you listen to us, last week we talked about paying yourself first and so on. I mean, we don't want you to back into that profit. We want you to build it in from the start. And that's just a smart way to do business. So you're not guessing to try and win. You're pricing appropriately in order to sustain your business.
[00:04:54] Speaker A: And what a comfortable feeling knowing what your costs are when you see them on paper and you feel that's a good number. So we're using the performance margin software. That's where this product shines.
It goes in and it costs your labor, it costs your equipment, it costs your material. And then once you have your cost, then you can include your margin and that's where you start recovering those, those that profit. And it's a wonderful thing. So you can forecast more accurately that way. Your next bid is built on real numbers, not wishful thinking.
[00:05:33] Speaker B: And that just turns your estimating process from very stressful to strategic.
So always a good thing. So your total Profit challenge this week is to pull your last three jobs. Pull your last three jobs, compare your estimated versus your actual labor and materials and kind of do that post mortem before and after comparison. Identify where that delta is, where did you go over, and where did you go under, and then use that data. Use it to update your bid template before your next proposal. Or give us a call regarding performance margin software and we can show you how to do it very, very easily.
[00:06:15] Speaker A: Exactly. And that's just it. If you don't have a bid template, there's one integrated into performance margin software that is very effective and you can template it that way. You're not starting your bids from scratch every time because that's wasting your time.
[00:06:32] Speaker B: And finally, this episode is sponsored by performance margin. It's the tool that makes your bids smarter, faster, more profitable.
Guessing is expensive.
Guessing is just expenses. So when your bid is based on truth, your profits will follow.
So if this helped you subscribe and share with someone still stuck pricing from their gut or what feels right.
[00:06:56] Speaker A: Let's turn those budget bombs into profit machines.
[00:06:59] Speaker B: All right. Taker cool.
[00:07:01] Speaker A: Taker cool.
[00:07:03] Speaker B: Don't get too excited. It's all under control.
[00:07:06] Speaker A: It's going to be fine.
[00:07:07] Speaker B: It.
