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How to Adjust Your Business Mix to Create a Smoother Running, More Profitable Contracting Business
April 5, 2018
Category: Achieve Consistent Business Success,Business Tips,Define Your Vision and Plan,Techniques and Solutions
Do you cook? I can cook a little, and I watch TV food shows a lot, and one thing that I’ve learned about cooking is the mix of ingredients in a recipe matters a lot. Too much of one ingredient, or not enough of another, can ruin a recipe and make it inedible.
The same is true in your business.
Here’s how I see it: The ingredients in your business recipe are the types of work you do. (e.g., design build, maintenance, sprinkler, lawncare, snow plowing if you’re a landscape contractor and types of customers (e.g. high-end residential, small commercial, large commercial, GC’s, HOA’s, etc.) you work with. And just like in cooking, each ingredient has its own specific characteristics and adds its own special flavor to your business.
For painting contractors for example, exterior repaint is subject to the weather, and interior repaint which is not.
Or think about the difference between working with GC’s on new commercial jobs and working with residential customers. GCs often have you jumping through hoops to respond to the GC’s changing schedule and then waiting to get paid. Comparatively, with residential customers you have more control over the schedule and get paid relatively quickly.
The Recipe for a More Profitable Business
Like cooking, if you mix your ingredients well you get a great business dish. Mix them poorly and you get a business dish that’s almost unpalatable and might even give you an upset, queasy stomach!
Yet, despite its importance, most owners don’t actively manage the mix of ingredients in their business recipe.
Do you? If you don’t, you really should!
Many of my clients have made amazing strides in their businesses by tweaking the mix of ingredients in their business recipe.
One, for example, stopped working with GC’s who couldn’t stick to a schedule and wouldn’t pay on time. They also cut back on exterior work because of its dependence on the weather and the chaos that it created in his schedule. He added a pinch more interior work as well as a lot more cabinet painting, much of which he could spray in his own shop. His new recipe resulted in a smoother running, more profitable business and a lot less heartburn!
How to Mix Up a Better Business
Are you ready to change the mix of ingredients in your business and create a tastier business? Here’s the recipe:
- Determine your current business mix.
Get your P&L for the last 12 months and break down your revenue by type of work and customer type. Then, calculate the percentage of business you currently get from each. - Define the impact each type of work and customer have.
Determine the pluses and minuses for your business for each type of work and customer type in terms of: profitability, headaches, and problems the work or customer type causes, available labor pool to do the work, your ability to get customers, cash flow impact, etc. - Decide on an ideal business mix.
Now comes the fun part where you get to play chef and adjust the ingredients in your business recipe to create the smoother running, profitably growing business you really want. To do this, simply decide on the percentage of revenue you want from each type of work or customer which leads to an awesome business dish. Don’t over think this, because you can tweak your mix later to improve your recipe. - Develop a transition action plan
Next, you need to create an action plan to change your business mix. Determine what you’ll need to do to make this transition happen. Do you need to stop working with some GC’s? Fire some customers? Change your marketing to attract more ideal customers? Update your website to highlight the type of work you really want to do? Hire more people who are skilled at a certain type of work?
Map out the steps and put them on a timeline along with who is responsible for executing each step. If you’re making big shifts in your mix you may need to phase in these changes over two or more years so that you don’t disrupt your business completely. - Implement and follow through
Follow through is critical! It’s one of the biggest problems that I see with owners. Be relentless in your follow through. Track and evaluate your progress, hold yourself and your team accountable and tweak and adjust your recipe as you move forward and you will change the mix. - Enjoy!
If you follow the wisdom of the TV food shows and tweak the mix of ingredients in your business recipe, you’ll transform your company into the business equivalent of a culinary delight.
Bon Appetit!
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For more help with designing a perfect mix of business ingredients, let’s talk! My specialty is helping million-dollar and larger businesses figure out how to become more profitable in simple, painless ways. Give me a call today at 856-751-1989
Here’s How We’ve Helped Other Businesses.
Since working with Bill we have gone from losing money to a 6-figure profit and our business has grown more than 20%. It’s incredible. Working with Bill has been a great investment.
Bill’s tools and techniques reduced the struggle and helped me get and retain new customers. While working with Bill, my sales increased 40%, even though the price wars were brutal.
Bill’s constant guidance and insight has helped us make decisions that were instrumental in greatly improving our business and making us happier more fulfilled people.
-Rick Holtz, HJ Holtz and Son Painting
-Warren Hoffman, Hoffman Interior Painting
-Chelsea Cleary, United Security
