Tom and Dan address your questions about including your overhead in your gross profit, how you handle estimations with the differences in price between materials, if Facebook advertising is a good idea, and surrounding yourself and networking with other like-minded individuals.
In this episode, we talk about…
Question1: I included my overhead in my hourly rate. Do I still need to include it in the gross profit?
- Find out what your hourly rate should be because you have to charge for the field labor, recover overhead, and then make a profit.
- Many people charge double their hourly rate. But if you are charging twice for overhead and profit, you are making your prices way higher than they need to be.
- Use the job costing sheet instead of the charge sheet.
Question2: How do you deal with estimates with the way materials are all over the place price-wise?
- If you get a deposit and have a shop, you can buy the materials at that day’s price.
- Material is not your problem; it’s the customers’ problem.
- Material pricing is a sales process and marketing issue. This is content that should be on your website.
- Some people have no confidence indirectly addressing costs on the front end — start with that.
Question3: Do you think Facebook advertising is a good idea?
- You are thinking of tactics — Facebook ads, Google ads, and direct mails are tactics.
- Think strategically — how do you want to build your brand, or how do you want to position yourself?
Question4: What should a first-year look like for a new business when funding is limited to using the profits to reinvest? I have no access to any loans or outside help.
- The first year in business should be a high gross profit business.
- Start right, get some help, educate yourself, invest in yourself, make sure you’re charging enough, do not get into debt, and market yourself.
- You don’t need outside money if you do your work right.
- Do not be in a hurry to hire — if you’re on the tools, stay on the tools and make sure all the money goes into your pocket.
Question5: Say something about the importance of surrounding yourself and networking with like-minded people and how that affects profitability and growth.
- Read chapter 45, “Show me your friends,” in Tom’s book.
- You become who you hang out with.
Question6: Can you put the job costing link in there?
- Link for job costing sheet: https://thecontractorfight.com/jobcosting/
- The left side is where you put in what you think will happen, and the right side is what actually happens when the job is done.
Submit your questions to email@example.com with the subject “Podcast” and Tom and Dan will try and answer them on an upcoming show.
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