Episode Transcript
[00:00:00] Speaker A: Foreign.
Welcome back to the total profit podcast. I'm T2. I'm here with the original margin mechanic himself, Tommy P.
And we are about to deliver some tough love with a warm smile.
Because today's episode might sting a little.
Might hit a little close to home for some, which probably means that it's the episode that you need the most.
[00:00:31] Speaker B: Tune in. We're ready. Yeah, I got my toolbox right over here.
[00:00:34] Speaker A: All right, we're calling this one the Founders wake up call. You don't have a revenue problem.
And if you're sitting there saying, but our sales are up, we are booked solid. We're definitely talking to you. All right, so we worked with a contractor last year. Gonna protect his name.
Let's call him nate.
He hit 3 million in top line revenue. Big difference between the top line and the bottom line, right? On paper, everything looked like a win. But Nate had less cash in the bank at the end of the year than when he started.
[00:01:11] Speaker B: So, yeah, the more jobs doesn't mean.
[00:01:16] Speaker A: More profit, more revenue, more crews, more stress. But he had less money.
He had less money. And so Nate didn't have a sales problem. That was not the problem. He had a visibility problem. He was chasing revenue without chest, without.
Without checking his margins, basically. And that's where the wake up call hits. So most jobs or more jobs don't automatically mean more profits. So here's how you know this is you, all right? You're too busy to stop and check your numbers.
You're constantly worried about cash in spite of the fact that you're booked.
You feel stuck in the cycle of selling more just to survive.
And you're telling yourself, if I could just land that one big job, I could just land that one big job. What else? Like, what are some of the things that are more, you know, some of those wake up calls for businesses?
[00:02:09] Speaker B: So I'll go back to your landing that big job scenario. What happens if you land that big job and your costs are still up? Portion. You have an opportunity to lose more money a lot faster.
[00:02:22] Speaker A: So it's not always okay, say that again. You have the opportunity to lose money faster. A lot faster.
[00:02:29] Speaker B: Yeah. So what we do is we take our clients and walk them through their cost, because your cost are your cost. Again, we are going to harp on this. It's going to be the temporary tattoos are coming because. Because other people's costs do not impact your bottom line. Because we peel everything back piece by piece and assemble it to your cost, and then we put the margins on there. And all Your margins aren't exactly the same. They're by work types. So we dissect those so you can have a higher margin on some of your low overhead, low costing jobs. And then if you have a large job, you'd love to make huge profit on that, but you realistically have to proportionally feel that out, so you're still competitive.
[00:03:23] Speaker A: So talk to me more about work types. At Total Profit Management, we give every client, every new client, two new things immediately. So we margin map their work types and we have this clarity document that we kind of work through. Talk to me more about that, about the different work work types in the program.
[00:03:41] Speaker B: Absolutely. So your work types are broken into your crafts that sometimes if you're bidding to build, that's one work type. But if you have a service program, that's another work type because the costs are different and your markups are different. So you, you have to be able to troubleshoot those numbers independently and not in a kettle soup. So it's just like you, you have to respect your expertise, charge for it accordingly, but also be competitive.
[00:04:13] Speaker A: Very clarifying. To see which areas of your business make more money than others.
There are some areas that you might not make as much margin and you have to decide if those are still worth carrying and leaning into. But we help you identify what those are.
And the clarity document sort of lays out what we have found, what needs fixing, and how we're going to get there together. So it's no fluff, it's no guesswork, it's just math.
[00:04:42] Speaker B: Math and practice.
[00:04:43] Speaker A: Math and practice.
So this is the turning point in the performance margin zone, the moment where you stop grinding so much and you start planning a little bit better. Profit isn't magic, it's just math. It's systematized. And it starts with getting brutally honest about what's working and what's not. And so we help walk through that in the performance margin zone. And for a lot of business owners, that first hard look is really all it takes to change the game, right? Yeah. So here's your challenge this week.
Stop chasing more and start analyzing what you've already got. So take a look at last quarter's revenue and then ask how much of that did I actually keep?
If the number surprises you, good.
All right. Now you know where to look.
Next week, we're going to start kicking off February with a hard reset. We're done reacting.
We are talking about how to actually build a business that plans for profit from day one.
All right?
So don't miss that one Absolutely.
[00:05:50] Speaker B: It's not impossible by any means.
[00:05:52] Speaker A: Nope.
[00:05:52] Speaker B: But again, if you're feeling uptight, make her cool. It's all going to be fine.
[00:05:58] Speaker A: Don't get too excited. It's all under control.
