5 Ways To Increase Net Profit In A Trade & Construction Company

  • Home
  • /
  • Blog
  • /
  • 5 Ways To Increase Net Profit In A Trade & Construction Company

I’ve got a neat new tool to help you increase your net profit.

But first let me explain why I’d like you to have it.

Make no mistake.

Running a business is a hustle like no other.

A whirlwind of tasks, responsibilities, and endless to-dos.

I get it. You get it. Every entrepreneur out there gets it too.

But whether you’re just starting out, chasing that first million, or gunning for 8-figures.

There’s one shared fundamental truth.

Time is the currency we all trade in, and it’s as limited as it gets.

With the same 24 hours a day, there’s only so much time available to work ON your business.

So what’s important is how you choose to spend it.

Introducing my secret profit-making formula: Simplicity.

Like a symphony, where each note matters in carefully cultivating a masterpiece.

There are only five core levers that increase net profit.

1. More Leads

2. Better Conversion

3. Higher Prices

4. Lower Job Costs

5. Leaner Overheads

Depending on the business, some levers have more impact than others.

Your job is to know which ones will give you the greatest return for your effort.

For example, a $3M business clocking in a cool $150,000 in net profit:

Let’s play with these 5 levers to see where they take us.

Increase leads by 10% and you're looking at an extra $300,000 worth of work:

If the bottom line grows consistent with sales that’s an extra $15,000 in net profit.

Curious, right? This $300k hasn’t made much impact at all?

We’ll circle back to this in a moment.

What about increasing how many jobs you win by 10%?

A 60% conversion rate churns out an extra $600,000 work and $30,000 net profit.

While that’s a little better… here’s where things get really interesting.

How about a 10% price bump?

Suddenly, you're dancing in the rain with an extra $300,000 in profit.

(200% higher than before).

Translation: pricing holds the golden ticket, being 20 times more sensitive to profit than more work.

For every 1% increase in price, the business makes an extra $30,000 net profit.

Whereas every 1% increase in leads only makes an extra $1,500.

That's a serious difference in ROI...

What if you lowered job costs by 10%?

Net profit would rocket from $150,000 to $375,000 (also much higher than volume and conversion).

Finally, you could trim overheads by 10%.

This would mean an extra $60,000 in net profit.

So what have we learnt so far?

Out of the five ways to increase net profit.

Not all levers are weighted equally.

If you don’t know the math, you’ll risk working too hard for too little.

So here’s that list re-ordered from most to least effective in this scenario:

Increase Job Value $300,000
Reduce Job Costs $225,000
Reduce Overheads $60,000
Increase Conversion $30,000
Increase Lead Flow $15,000

Note that increasing volume was the LEAST effective lever*

But where does every owner seem to spend their energy?

Chasing after leads, leads, leads like there's no tomorrow.

Adding $300,000 in work for a measly $15,000 in profit.

Whereas the real high-octane fuel for the profit building fire is increasing prices:

So, time my friend, is your most precious asset.

It’s the battleground where you make your stand.

And with the clock ticking, you've got to wield your efforts where they count most.

Because life is short.

It marches on regardless of the effort you put in.

So don’t risk pouring your heart and soul into the wrong area of your business.

We’ve built a new spreadsheet to show you which lever to focus on first:

Now it won’t solve all your problems…

But it will open your eyes to the raw simplicity of making more money.

i.e. focusing on doing more of the RIGHT stuff, and less of the WRONG stuff.

Once you know what lever has the greatest impact and opportunity to improve.

You work on implementing strategies specifically in that area.

Click here if you’d like a copy.

And remember…

“Putting things off is the biggest waste of life: It snatches away each day as it comes and denies us the present by promising the future.”

In other words, time is fleeting.

Take the right action now, before it becomes too late.

Hope this helps.

Bayley Peachey

P.S. We post content on Instagram to give daily quick tips to help you build a stronger contracting business.

With topics like business growth strategies, winning work at higher prices, knowing the numbers, and improving cash flow (never more than 1 minute to read or watch) – I’d hate for you to miss out!

Click here to connect.


Bayley Peachey | Client Advisor

About the author

As an accountant with a background in construction Bayley has advised trade businesses anywhere from start-up to $20M, helping to simplify financial management, increase business KPIs and generate millions of dollars’ worth of additional profit.

Book A Free Call Today