Most of the time it keeps us out of trouble.
But sometimes it makes us blind to possibility.
Take construction in Australia… it hasn’t been around very long.
(234ish years or 2.8 generations based off avg. life expectancy)
But it still has plenty of established old school construction ‘wisdom.'
Lessons are learned through experience.
Success is a result of the school of hard knocks.
Work harder and you’ll make more money.
And I'll be honest right up front — in the right markets, with the right offers, the right clients, and the right resources, this approach can and does work.
Until it doesn't.
If you've been in the boardrooms and around the water coolers of the biggest names in construction, you'll know they're scared.The world is changing, and their tried-and-true playbook of tactics is crumbling before their eyes.
On the surface, it's sunshine and rainbows.But, behind the scenes, it's common knowledge that the sun is setting on conventional construction methods.
Change, and the new normal that comes with it, takes no prisoners.
National volume builders and contractors are already shutting down by the dozens with the industry failure rate now sitting at 49% (almost half) according to the Australian Bureau of Statistics. Hundreds of businesses and thousands of employees gone – poof – overnight.
But old school thinking isn’t the real problem.
The real problem is that conventional wisdom says that working harder is the only way to succeed in business.
After more than four decades of combined experience with our own companies and working with clients all throughout Australia, we know that just isn’t true.
In fact, most of the time, it’s counterproductive.
So what are you supposed to do instead?
I’m glad you asked.
Lean in for a moment and I'll share a secret that might just change your world…
There are only 5 ways to make more profit.
Taking on more work is only 1.
(if the other 4 aren’t optimised it’s the LEAST effective)
Let's take a look at the numbers.
A 10% increase in lead flow means a 10% increase in jobs i.e. 500 to 550 with sales going from $3M to $3.3M.
If net margin grows proportionally with sales, you’re left with an extra $15k net profit.Not very impressive considering the extra $300,000 worth of work.
The second way is to increase the conversion rate.
In this case conversion's improved by 5% increasing the number of jobs from 500 to 550.
If net margin again grows proportionally with sales, you’ll be left with the same result.
$15k extra net profit.
But here’s where things get really interesting…
The third way is to increase the average job value.
A 10% increase, just $600, will lead to a 10% increase in sales – $3M to $3.3M like before.
But because there’s been no increase in the number of jobs, both job costs and overhead remains the same, giving you a 200% increase in net profit.
That’s $300,000 more than before (meaning avg. job value has a 10x greater impact on profit than increasing lead flow or conversion).
The fourth way is decreasing job costs.
In this instance there's been a 10% drop.
With no increase in number of jobs or overhead costs this takes net profit from $150k to $375k.
And finally you can decrease overheads.
By just reducing overhead costs by 10% this will take net profit from $150k to $210k.
Now, improve all 5 ways together by just 10% and your business will be completely unrecognisable...
$150,000 < $894,750 bottom line profits.
But I already know what you’re thinking...
“It’s easy for you to sit behind your laptop and play ‘what if’ Bayley. Results like this aren’t real”.
Which may be true with old school thinking and conventional wisdom.
However our approach is different, which is why in just 7 short months our clients can go from results like these…
To results like these…
And even this...
But this email isn’t about our clients. It’s about YOU.
So hear me when I say this…
Be careful what truths you believe.
Success is simply knowing what areas of your business give you the most leverage when it comes to making more money.
And while conventional wisdom will convince you otherwise…
There are only 5 strategies you need to focus on.
- Increasing leads.
- Increasing conversion.
- Increasing job value.
- Reducing job costs.
- Reducing overheads.
Improve them even just slightly and your bottom line (and lifestyle) will TRANSFORM.
Never be fooled into thinking that the only way to grow your bank account is by simply 'working harder'.
Hope this helps.
Bayley ‘Pull The Right Lever’ Peachey
P.S. Remember, the biggest cost in business is what you don’t know.
This is called the ‘ignorance tax’.
Our goal is to help you pay down that debt as fast as possible.
Making more profit isn’t magic... it isn’t voodoo...
It’s simply knowing where to focus.Click here if you’d like help getting started.