When we want to do more than labour-only jobs, there needs to be a level of knowledge with the numbers, or we will find ourselves in deep water quickly.
For those of us who start out as tradesmen, numbers are not likely to be our strong point but this is exactly why so many businesses fail after a long struggle.
The biggest banana skin is not knowing the difference between markup and margin! We need margin to survive. Not adding the right markup to your quotes will cripple you from the off!
The knowledge and mindset around the numbers need to be right. You will get that right here!
This video will help you understand if you are doing things wrong and what to do about it.
Other videos in the KBB University support this video, you should watch these videos AFTER watching this video:
1. Preparing your quote, using the quote template - here
2. How to send your quote/contract - here
Key Takeaways From This Video:
- The video is about costing, margins, and markups in business
- It emphasises the importance of keeping margins lower in the early stages of a business until there are more reviews and case studies to showcase to customers
- The video discusses the difference between markup and margin, with margin being the percentage of the sales invoice that is kept after paying for labor and materials
- It highlights the importance of having enough markup to cover the cost of running a business and making a profit
- The video suggests aiming for an ideal margin of 33-41% to have enough money to invest in the business and have a good lifestyle
- It warns against confusing activity with achievement and encourages working on the business rather than just in the business
- The video mentions the importance of good supplier relationships and working for the right customers
- It suggests that starting in the "red zone" of low margins and gradually working towards the "green zone" of higher margins is a common journey for business owners
- The video concludes by emphasising the potential for earning a significant amount of money in the kitchen industry and the importance of tapping into support and having a plan to move forward.
- Pricing jobs properly is important for the success and growth of a business
- Aim for a margin of at least 30-40% to have more money to play with and enjoy life
- Bigger jobs usually have lower margins and can become more difficult and costly to manage
- The ideal job size is between 10 and 20 thousand pounds
- Good supply relationships and marketing can help achieve a 40% margin or more
- Consistency in pricing and updating job costs is crucial
- Use software or a spreadsheet to track and manage job costs
- Benchmark labor rates to ensure fair pay for employees
- Put an expiry date on quotes and re-quote if the job has expired
- Avoid accepting work out of desperation and settle for nothing less than what you need.
- Importance of considering profit margins and profitability in accepting jobs
- Warning against accepting jobs that you don't want, as they can go wrong
- Emphasizing the need to find reliable suppliers and stick with them
- Advising against jumping around to different suppliers, as it can be a nightmare
- Suggesting using one or two suppliers for specific types of products
- Mentioning the possibility of deviating from preferred suppliers if necessary
- Recommending keeping things simple and avoiding shopping around for everything
- Warning that constantly shopping around can make jobs difficult to manage
- Noting that this can impact costs and the overall profitability of each project