Episode Transcript
[00:00:13] Speaker A: Welcome back to the Total Profit podcast. I am T2, and I'm here to peel back the curtain on all the stuff that nobody wants to talk about, like why you're working your tail off and still not seeing the profits that you expected.
That's because most folks don't really know what's missing until somebody shows them. So today we're going to be naming some of those blind spots, the ones that quietly bleed your business dry and leave you wondering why things still feel a little bit off.
Even when your revenue looks good on paper. Sometimes there's this gut feeling that something is just off.
It's not as good as I thought it should be. And that's a problem. We had a client, her name was Angie. And she came to us after four years of what she called checking every box.
She had the CRM, she had the marketing agency. She had a really great crew that could get the job done. Her revenue was in the millions. Millions. But she still wasn't profitable, which is. Feels so weird, hard to believe. And. And she said, I just feel like I'm building something that is broken and I don't know what to fix. And that stayed with me. That resonated with me, and that was the big red flag for us. Right. So you're grinding, but that profit isn't showing up.
By all intents and purposes, everything looks and feels successful. You're not lazy, but you're just flying blind.
[00:01:43] Speaker B: Well, it gives us the intuition to work harder. Cause that's what we're taught as we're growing up.
[00:01:48] Speaker A: Work harder, work faster.
[00:01:49] Speaker B: Exactly. So if you're not working harder and knowing what your costs are you into the ground, you're flying blind.
[00:01:59] Speaker A: Yeah, you're flying blind.
[00:02:01] Speaker B: And a great example. Millions, you think? Millions. And that's where people get the perception they must be rich. It's like. But they're empty because they don't know how to foster.
[00:02:12] Speaker A: It just is. It's. It's crazy to me that somebody can be that successful.
Yeah. And I think that feels weird to anybody. Anybody would look at that and say, what's wrong? What is wrong?
[00:02:27] Speaker B: Oh, the gut check just has to hurt.
[00:02:29] Speaker A: Yeah.
So that is why we built our onboarding process to identify those blind spots right out of the gate. And one of the first things that we do is that diagnostic across four different areas. So pricing, labor, overhead, and those line of business margins. So it's like. It's just. It's like turning the lights on in a room where you've been working in the Dark. Suddenly you just, you see where all of that clutter is.
And so today I want to break down what the top four blind spots are that we have been able to see again and again. Number one is a flat pricing model.
So you're charging the same across all job types without factoring in time, labor and the material variance. And that's margin suicide, wouldn't you say?
[00:03:19] Speaker B: Oh, exactly. Unless you're running a factory where you're producing the same thing over and over.
[00:03:24] Speaker A: The same widget over and over again.
[00:03:26] Speaker B: Yeah, exactly. You have to know where you need to be flexible.
[00:03:29] Speaker A: There are nuances in every job and you need to flex with those. And so we help you with that. So the flat pricing model is number one. Number two is that payroll bloat that happens in the off season. So you're carrying a full time staff year round for seasonal work. A lot of the contractors that we work with are seasonal.
And your overhead is basically just kind of eating your lunch, right?
[00:03:53] Speaker B: Yeah, yeah. And if you don't account for that overhead, whether you do a dollar's worth of work or a million dollars worth of work, those costs are still occurred in your company.
An eye opener.
[00:04:05] Speaker A: It's a small problem versus a big problem.
It's still the same problem though. Right.
Okay. So number three is no project level profit tracking. So you know revenue per job, but you may not know your profit per job. There is a big difference, right?
[00:04:22] Speaker B: Exactly. From when you hit the send button on a quote to when you send the send button on the invoice. There's a lot of action that goes on. And if you're not tracking that, it could fall apart and you don't even know it.
[00:04:34] Speaker A: Yeah, yeah.
[00:04:35] Speaker B: You'll be peeling the stamp off your envelopes to get your invoices back so you can correct the bottom line.
[00:04:43] Speaker A: Most people are doing things via email these days.
What the fourth one is, and this one's going to hit home for a few people.
You're taking owner draws out of your business without a plan.
Without a plan, you're pulling cash whenever you feel like you need it. Instead of building a system that pays you predictably and sustainably that you can build your personal life on too.
[00:05:12] Speaker B: Exactly. And you can build the draws into your program 100% bang on. And yeah, it's not your personal piggy bank.
[00:05:21] Speaker A: That's right.
Every one of those things is fixable, but only if you're willing to face them head on. And that takes a little bit of courage.
[00:05:28] Speaker B: Yeah. And there's no judgment. The Things that have happened are learning experiences and we build those into our systems. So it's your experiences, so it's real data.
[00:05:41] Speaker A: So we do protect, we protect our clients privacy, of course, but sometimes I almost wish that clients could see how often we encounter the same things over and over again.
So many business owners are making the same mistakes and so there's no shame in it. It's just a learning.
[00:06:00] Speaker B: And the reward to us is watching their body language change when they don't have that stress inside of the unknown, when they start putting pieces together and they make sense.
[00:06:13] Speaker A: I said this in one of our early podcasts, but we have made grown men cry. Yes, because they thought that their business was going under. They weren't. That they were a failure. They weren't going to be able to provide for their families and chase a dream that they wanted and, or, you know, you inherit a business from your family or father or great uncle or something like that and. And you feel like you've let them down. You know, things like that become very intensely personal. And it's just a learning process. You just have to learn how to do it and learn how to do it very smartly and we can help with that. So this is where the performance margin zone phase two starts to show up. The realization that profit isn't about hustle, it's about planning. And you can't discipline what you haven't diagnosed, so you do that first. And again, most business owners are not stupid or lazy, quite the opposite. They are very sharp and they are willing to hustle and willing to grind and do what it takes to make it work.
They're just missing the map. And so that's what total profit management gives them.
During the onboarding process, we become part of your team. Yeah, we do.
[00:07:30] Speaker B: We feel your pain and we work through the pain. It's the rewards that we get out of this are helping our clients just get back on their feet and have a new outlook on their.
[00:07:41] Speaker A: Yeah, I love that. It is a. It is very rewarding. Very rewarding. All right, so here's your mission for this week. Choose one area. Pricing, labor or overhead or profit by job. Okay, one of those four.
And shine a flashlight on it. Pull one report, run one quick audit and just get curious and see what you see and see what you learn.
And if that flashlight turns into a spotlight, don't panic.
That is progress. All right, next week we're going to be talking about the Founders wake up call, which is the moment that you realize you don't have a revenue problem at all. The problem is not around the revenue. You've got a profit strategy problem and we can help fix that.
[00:08:26] Speaker B: Absolutely. Until then, always remember, no matter how bad you feel, fake or cool, it's all going to work out.
[00:08:35] Speaker A: Don't get too excited, it's all under control.
