“Motivation is the catalyzing ingredient for every successful innovation.”
Too many kitchen and bath firm owners are swamped with work and lose sight of sharpening the attributes that made them successful in the first place.
Every so often, it’s essential to take stock of where we are in our business and recognize where we want to take it.
Every owner knows that learning new things to improve our business would be time well spent. But, all too often, taking the time needed to better ourselves is passed over in the name of being “too busy.” Owners need to make time to improve themselves and their business so that “business as usual” doesn’t lead to the pitfalls that take a lot more time out of our schedule to reverse.
Look inside to find nine practices you can use to build a more substantial, more profitable firm and be ready for rough economic times when they come.
#1 – Know your numbers
Owners who do not know their firm’s financial statements drive their companies blindfolded. This is the practice of underachieving firms. Understand where the inflow of dollars is going so you know what needs to be adjusted to maximize your gross profit potential. The growth of your company depends on it.
#2 – Practice transparent selling
Your prospects will be excited about you designing their dream project once they are brought face to face with their project’s realistic budget. When sales designers budget interactively with your prospects, they understand how their selections contribute to the total price, and that typically leads them to make a bigger investment in their remodeling project. Interactive budgeting has been proven to elicit bigger sales time and again.
Your prospects want information and choice. Keeping budgeting details behind the velvet curtain is a practice of a long-dead era. Owners who keep their customers in the dark about their remodeling budget are simply behind the times.
#3 – Focus on gross profit dollars
Gross profit percentages and gross margin dollars are the two most important numbers on your income statement. Remember, it’s not how much you sell in annual volume but how much you make for each job that contributes to the total gross profit dollars required for your business to be profitable after a market-rate owner’s salary.
Don’t be bashful. Make sure you’re charging the right amount for each job. Your salary and desired net profit must be where you want them to be after your overhead is cleared.
#4 – Account for burden expense
Most kitchens and bath firms lose far too much of their gross profit from unaccounted burden expenses. Your team should always factor burden expenses into the price formula. If your team isn’t doing this, your firm’s gross profit margin is compromised.
This is the #1 reason so many kitchen and bath firms are only marginally profitable – and it’s an easy fix!
Make sure to calculate your burden expenses in your annual business budget so you are not overpaying your sales designers if they are incentivized through a share of the gross profit of their completed jobs.
#5 – Leverage technology
One constant change that has been highly visible over the past twenty years is that technological improvements are continuously changing how business is done.
Only fifteen years ago, social media was novel, and using it was considered beneath the standards of good business. Today, marketing on social media platforms is sophisticated and compulsory. Chances are your team can handle your social media campaign, but at least for the initial run, a vetted digital marketing firm should take care of your SEO.
Owners, or experienced team members, must interview several marketing firms before settling on one. That way you hear various perspectives on the state of your business in the digital world and the solutions that can maximize your firm’s impact on it.
#6 – Get the right people on the bus and in the right seats
Your team is the engine of your business, so it’s crucial to have the right people serving the right roles in your firm. Your SEN membership entitles you to a free DISC test. Once you’ve made the right hire, you can use the DISC results to ensure your new hires fill roles they’re ideally suited for. There’s overwhelming evidence that successful companies are rooted in a body of productive, happy employees.
#7 – Motivate through emotion
While people make decisions intellectually, they buy emotionally. Exceptional sales designers understand that their prospects may be unable to visualize their project from a floor plan, elevation, and specifications.
The best sales designers paint pictures with words to excite their prospects about their remodeling project and motivate them to sign on the dotted line. When sales designers play into their prospects’ emotions, they’re making spending more money on their dream projects more comfortable and convenient.
#8 – Sharpen the saw
The main characteristics of being a leader are humility and fierce resolve. You are your greatest business asset. If you’ve got an excellent team working for you, you have time to invest in education that will improve your business acumen. It’s not always formal education that owners need to better themselves. Pick-up courses, lectures, books, and regular vigorous exercise are ways to improve yourself and sharpen your business acumen.
Exercise and a healthy diet are the main ways to fend off stress, pain, and other health concerns that come from aging:
- Create a workout schedule and commit to it
- Choose three times per week for 60 minutes of vigorous exercise
- Maintain a healthy diet
Reserve two to three days per month for formal in-depth training:
- Engage with a business development group
- Study outside of your comfort zone to become more resourceful and valuable to others
- Discard your ego, so you become a better leader
- The formula of a level five leader is humility mixed with fierce resolve
#9 – Begin with the end in mind
Better your bottom line – it’s what all owners want to do in abundance. Unfortunately, many owners undervalue their salary and take less than their worth – mainly because they haven’t implemented the proper planning process.
Every kitchen and bath owner should earn a 10% pre-tax net profit after a market-rate salary. If you’re not already doing this, look at the suggestions below to see how you can get to a point where you’re earning what you’re worth:
- Budget your business three years out, so you have strategic visibility and maneuverability
- Create a 12-month cash-flow forecast – can you pay your bills if you take a $50K bonus?
- Utilize a Good-Better-Best selling system
- Be transparent in your budgeting process
- Take all cash discounts from vendors – some can be as much as 54% return on investment!
- Save 10% of every check received for backstopping your business in case of an economic downturn
- Invest it in a high-performing fund that can be liquidated in 3-4 days
Putting these practices to task will catapult your business to greater productivity and gross profit earnings. We’ve seen it happen.
—SEN Leadership Team
Master strategic planning, selling more into each job, leveraging technology, Good-Better-Best selling, and other smart implementations at one of SEN University’s valued online business courses – or contact Shannon Blair to attend our in-person schools.
