How to Work Smarter... Not Harder.
"I have increased my revenue considerably while not increasing the number of projects very much, however, I have made some pretty major staff changes in the last year which has resulted in an increase in productivity and company morale.
"I have never been good with this in the past but after seeing how little changes can make a big difference, I have become more comfortable making tough decisions that I believe make good sense."
Guy Wood, Westside Pools, Ft. Worth TX, '03 Grad
You will need
to gather this information for the previous year.
Leads- number of prospects you (or your team) saw during the year.
Sales- number of jobs you sold from those leads (must be smaller than Leads).
Total Revenue- the total dollar amount of all Sales.
Gross Profit- the total dollars remaining after subtracting direct
job costs only (Must be less than Total Revenue).
Overhead- business expenses that are not directly related to
a job (This number subtracted from your Gross Profit yields your Net Profit.)
Ambition- percent growth you want to achieve on all of the key
enter your numbers in the form at the right. See for yourself the
difference between controlling key metrics and trying
to control the bottom line.
What is this calculator
This calculator will help you see how little effort it will take to increase your net profit significantly by focusing those efforts
in the right areas.
Key Metrics Calculator
The biggest mistake
Earning a million dollars a year as a custom pool builder is possible
without becoming an encumbered, multi-layered business. For some reason,
most high-quality builders find themselves hitting a plateau at about
$2 million per year in revenues with a net profit of $300K or less. The
primary reason builders hit this plateau, in my opinion, is by focusing
their attention on metrics they cannot control while ignoring the
metrics they can.
What you must measure
There are ten business metrics, or operating measurements,
a builder must track to measure performance: leads, close rate, sales,
average sale, gross revenue, margin, gross profit, overhead, net profit
and growth. Most builders begin to fail by not tracking these metrics.
I am shocked by the number of builders who do not know how many leads
they had in a given year. If business is declining, they won't know whether
it is their sales or marketing that is failing. That knowledge is every
bit as important as revenue and net profit, in fact more so, and here
What really counts
Of the ten metrics you must track, only five of them are what we could
call, key metrics, those are: leads, close rate, average
sale, margin and overhead. Why are these key and the ones you have been
paying most of your attention to like gross revenue and net profit and
growth, not key? Because the key metrics are the only ones you can do
anything about. You have absolutely no control over the others, they are
simply the mathematical results of the key metrics. You do have control
over key metrics and, by exercising that control, you can become a genuine
Gold medal Pool Builder.
Here is an example
Take, for instance, a builder seeing 150 prospects or leads per year
who builds 50 pools at an average cost of $40,000 each. If he holds a
27.5% margin on his pricing and keeps overhead to 12.5% of revenue, he
will net $300,000 per year or $25,000 per month. A good living, but not
Gold Medal status. Most business owners understand that the only alternative
to growth is decline and they arbitrarily pull 10% out of thin air as
an objective. With 10% yearly growth on net profit, our fictitious builder
will be making about $400,000 in another three years. The irony is, he
has no control over net profit or its growth! He can only control those
things whose mathematical result yields net profit, not the profit itself.
50 Sales @ $40,000 Average
$2,000,000 Total Revenue
$550,000 (27.5%)Gross Profit
- $250,000 (12.5%)Overhead
= $300,000 Net Profit
@ 10% Growth
Yr 1 $330,000 Yr 2 $363,000 Yr 3 $399,000
What is the real potential?
What if he were to increase those things he can control by 10%, what
would be the result? Let's do the math. Ten percent more leads (165) at
a 10% better close rate (36%) would yield 60 sales. Raising the average
sale to $44,000 and increasing the margin to 30% would increase his gross
to nearly $800,000. By reducing overhead another 10%, which will occur
by default as a percent of revenue (unless he finds a way to spend a lot
of money to achieve the gains), he will net over a half million. Getting
67% growth, in one year, from a 10% increase in effort, by focusing
on the things you can control, is the path to Gold Medal status.
165 Leads @ 36% Close Rate
60 Sales @ $44,000 Average
$2,640,000 Total Revenue
$799,000 (30%)Gross Profit
- $297,000 (11.3%)Overhead
@ 10% Increase Per Key Metric
= $502,000 Net Profit
What about the long
Typically, the largest gains come earliest and easiest, so let's
reduce our three year growth objectives to the 3-10% range. Couldn't
we always find ways to get more leads, get better at closing, increase
our average sale and hold a little more profit? If so, and we don't
spend a lot of money doing it, our overhead will go down and our
net profit will grow even more.
Figure 1. represents
the three year results of our fictitious contractor increasing his
key metrics a mere 7%. You can see that in three years, he will
be making over $850,000! Well on his way to Gold Medal status
How can this be real?
This is the result of what the Japanese call kaizen; steady,
regular, incremental, unrelenting growth. More leads, higher close
rates, bigger sales and fatter margins, this is how you get triple
digit gains from single digit improvements. Easier said than done,
you are thinking, and I will agree, but well worth doing nonetheless.
How will you get there?
The starting point is to build and use a "system" for marketing
and selling your work. Using a system will get better leads. Using a system
will help you learn what your buyers really want. Using a system will
make your presentation better and increase your close rate. Using a system
will make your pricing more accurate. Using a system will allow you to
understand your errors and learn from your mistakes. Using a system will
allow you to train others. In other words, I think you should use a system.
What is a selling system?
It is a step-by-step set of procedures, and the tools to support
them, that has been proven to result in a profitable, buildable sale.
Selling, particularly high-ticket selling, is not just "talking them
into it." Professional selling is a carefully orchestrated and executed
set of procedures, supported by tools such as forms, documents, photos
and samples that create desire and urgency without using manipulation
or pressure. The creation of a selling system for your company should
be your first priority but in the hustle of getting pools built, it often
falls victim to time limits. This explains why most builders end up on
the typical earnings plateau.
Where do you get a selling
It takes time to work out all of the details and assemble the presentation
tools and materials needed for a complete professional selling system.
The Gold Medal Pool Selling System is a complete, finished package and is unique
to the swimming pool industry. Each element of our system will help you
increase one or more of the key metrics with a minimal impact on the expenses.
Are you ready to earn a
million a year?
Until you make the commitment, nothing will change. Start now by using
the online calculator below to see for yourself, with your own numbers,
what you could be earning with a systematic approach to continuous, steady
improvement in your key metrics.
We invite you to begin the
Complete the enrollment form and join us for the Gold Medal Pool
Builder Program so you can achieve your four key objectives: more leads,
higher close rates, bigger sales and fatter margins. Fulfilling these
goals will lead you to the Holy Grail of Success, Gold Medal status.