May 20th, 2021
Success is More than Increasing Your Revenue
“Business is booming.”
“Revenue is at an all-time high.”
“We have never had more success in finding and creating interested prospects.”
This is a sampling of the feedback we have heard over the first 5+ months of 2021. Yes, it is a great time to be in the home improvement and remodeling industries. Yes, forecasts indicate a continued increase in related homeowner purchases for the remainder of the year. However, a caution: Industry surveys show several concerns that are visible, and some that may not appear in full force until 2022.
Profitability is more than just product demand. Strong companies do not rest on their laurels in times of success, they anticipate challenges and constantly search for ways to improve.
Current and future challenges include:
- Recruiting, hiring, managing, and retaining salespeople and installers;
- The future of independent contractor status, as new rules and regulations are already creating havoc;
- Significant increases in backlog and cycle times;
- Shortages of raw materials that are affecting nearly every product line; and
- Sufficient cash flow to tackle industry challenges and grow your business.
Cash flow difficulties may prove to be an obstacle for industry companies, specifically for the next 18 months. The burden falls on the business owner to focus less on installed revenue and more on increasing profitability. Here are several easy-to-implement suggestions to increase your cash flow:
- Deposits on all sales: Most can be treated as liabilities and represent no tax
consequences until the contract is completed.
- Progressive payments: Critical on large cash jobs, payments upon delivery or partial completion speed up the collection process and enhance cash flow.
- Prompt payment discounts: Use the phrase, “The balance of $_________ is due on the day when work is substantially completed. If paid on the date of invoice, which shall
be considered the date of completion, the customer shall be entitled to a discount of _____%. Balances paid after that date are subject to interest at the rate of _____%.”
- Bi-weekly payroll: Creates a payment structure of 26 vs. 52 payrolls.
- Cut-off date for purchasing: If you purchase from a vendor/supplier that offers 30-day terms and sends a statement at the beginning of each month for all shipments made through the 27th day of the preceding month, the best practice is to place large orders after the 27th or during the first week of the new month. Also note that many vendors are currently open to extended terms on large purchases.
- Add-ons and change orders: Implement a policy to always collect on these adjustments as soon as they are executed.
These are just some of the techniques you can use to continue maintaining and increasing your installed revenue, while also improving cash flow and profitability. Others will be presented at The Home Improvement Profitability Summit, our event in Northern Virginia from June 22-24, a program that’s designed to improve your overall profit by the end of 2021.
Pertaining to the areas covered above, the agenda of the Summit will address:
- New age sales and communication techniques designed to create rapport with prospects;
- Modern marketing strategies that will increase your lead flow while reducing marketing costs;
- Best recruiting/hiring practices to reduce turnover and mis-hires;
- Management/training methodology that rapidly brings new employees up to speed and incentives your top performers; and
- Surefire ways to decrease your backlog and cycle time.
As a reader of Door and Window Market [DWM] magazine, Dave Yoho Associates is offering two complimentary tickets to the Summit ($1,790 value). We have also developed an extremely comprehensive safety plan for the program, so you will have no concerns and can focus on the powerful content presented.
To claim your complimentary tickets, contact [DWM]’s editor, Drew Vass, at firstname.lastname@example.org.