“Through the three-year budgeting process, I learned the correct price formula for my overhead and desired net profit. I earn a six-figure salary, and my growing firm has a bright future.”
Most kitchen and bath firm owners can make much more than they currently do. Problems in generating higher profits usually come when owners keep doing the same things they’ve always been doing when trying to earn more. This advisory looks at concepts some kitchen and bath owners have implemented with great success. We think these five profit-building strategies will enable owners to maximize their kitchen and bath business’s growth.
Strategy #1: Create the correct price formula
Most sales designers spend too much time on the budgeting process. Implementing the right price formula for your firm will improve your front and back end, making your business smoother and enabling faster service.
With a Good-Better-Best (GBB) selling platform in place, your team can speed up their sales and streamline your services for a superior customer experience. It’s a crucial move to make to be ready to scale your operations.
Owners with an accurate budget and price formula should save 10% of their net profit. When your numbers are straight, you can put another 10% of each paycheck into a liquid investment instrument. Do you have an accurate budget and price formula to save 10% of your net profit? You can confidently put another 10% of every paycheck into a liquid investment instrument if you care for your monthly income goals.
Strategy #2: Build more products into the sale
Let’s suppose, like many kitchen and bath dealers, you have a beautiful showroom replete with a comprehensive display of state-of-the-art appliances and a team of excellent sales designers, but you’re selling average-priced jobs.
Kitchen and bath customers want convenience built into their investment. There are clear choices owners can make to satisfy this want.
- Encourage your sales designers to include brand-name products in their renderings
- Provide additional services such as electrical and plumbing
- Design auxiliary products such as plumbing fixtures, lighting, snack bar seating, and new closet interiors into the renderings
- Budget transparently with prospects so they see all of the possibilities for purchases within your firm. This makes it easy for them to upsell themselves
These options add profit with little effort! It’s all about knowing what your prospects want in their buying experience and presenting them with attractive possibilities.
Strategy #3: Focus on gross profit dollars
Your prospects’ perceived value of your firm drives your sales – so how you deliver your products and services correlates to how much you can charge for them. Owners providing products and services built around their client’s needs make them stand out from the competition.
Instead of pouring tens of thousands of dollars into a new kitchen from a big box store, prospects will seek out the craftsmanship and expertise of your brand experience for their investment.
While the kitchen and bath industry has seen small business loyalty, many firm owners worry about losing business if they raise their prices, even though there is proof that designers who interact with their customers to develop a budget for a prospective kitchen sell more jobs at higher prices.
It’s not just the professionalism of interactive budgeting that draws customers in; prospects become more invested in the process when they see all of the pricing details that come with a project’s installation.
Strategy #4: Streamline your sales process
The modern business world rests on speed and transparency.
Businesses are designed to operate faster than ever before while maintaining a high standard of service. You can expect five outstanding benefits if you streamline your firm’s selling process.
- Save up to 75% of the time gaining client commitment
- Increase closing percentages to upwards of 75% on opportunities
- Increase annual sales by at least 100%
- Charge up to 40% higher prices
- Improve your returns by over 200%
Imagine how many more jobs per year you will be retained for by streamlining your operations. You’ll have many ecstatic customers when your team collaborates with a transparent, Good-Better-Best budgeting process.
Strategy #5: Sharpen your saw for financial management skills
Most owners dedicate themselves to the daily operations of their firm and need to be savvier when it comes to seeing the big picture. If you want your business to earn a robust 20% profit per year, you have to know the numbers your business is doing. Without knowing the numbers, you can’t know where your firm is spending too much or not enough, making it impossible to know whether or not your spending decisions are good or bad moves.
Besides making an uncertain gain, navigating through a recession without going bankrupt would be difficult. To protect your business, you should review your financial statement quarterly and budget monthly, sometimes weekly – even daily during harsh recessions.
Outstanding leadership is about being ahead of the curve. There is too much to lose from being unfocused. Several concepts are helpful when deciding the area of interest you want to sharpen your business acumen.
- Implement the first four strategies mentioned in this advisory
- Read on topics of pressing interest to your business
- Attend industry seminars and roundtables – benefit from peer critiques!
- Keep a healthy reserve fund so you can backstop your business for up to twelve months
- Take courses on subjects that will help you expand your brand
- Study your statements – so you know the right questions to ask your financial advisor
Improving your business acumen means working on your business from the outside. We encourage you to take action on the steps outlined in this advisory for several months and note the changes you see along the way. Reaching your firm’s full potential is worth it.
—SEN Leadership Team
Master strategic planning, selling more into each job, leveraging technology, Good-Better-Best selling, and other intelligent implementations at one of SEN University’s valued online business courses. Or contact us to attend our in-person schools.