The Advantage of Having a Steady Flow of Money-Making Work

Remodeling companies need a steady flow of business. If you’re like many remodeling business owners, you’re so busy meeting the day-to-day needs of your company that you don’t have much extra time to figure out how to create that flow. Here’s an easy place to start.

First, make a list of all of your jobs from the last 12 months, then put them in order from most profitable to least profitable. Now go down the list and, as accurately as you can, identify how you got these jobs. Don’t worry about the type of job or the amount of the contract. What matters is the percentage you earned as profit, and where the job came from.

Let’s say that the most profitable jobs you do are window and door replacements, and siding. I understand that this may not be your favorite type of work and may not fit your image of the kind of remodeler you are. Like a lot of remodelers, you may want to do only the “good” jobs, the ones that fluff your ego, win awards, and make you feel warm and fuzzy all over. Unfortunately, the reality is that those jobs often do not make you the money you need.

Following our example, if your business motive is to make money, you may want to figure out how to get more jobs doing windows, doors, and siding. It’s quick in-and-out work, people have less time to pick you apart, and the cash flow is good. By getting more of this type of work, you’ll make more money and have less time to take on the jobs that don’t pay you what you are worth. Another way to think about it is that by having a steady flow of money-making work, you have the luxury of taking on the “good” jobs now and then, even though they don’t earn as much profit.

Let me give you two reasons to focus on work that earns good money—and, by the way, to me “good money” means you, the owner, take 20 percent of gross dollar volume before taxes. Reason No. 1 is that when you build a business that can kick out 20 percent to the owner, you have a business that can be sold. Reason No. 2 is that when you build a business that can be sold, you start questioning why you would want to sell it? PR

Find out what type of job makes the most money and focus on creating a steady flow of those kind of jobs, even if they aren't as glamorous as you'd like. The cash flow will provide a buffer for less profitable "glamor" jobs.