Financial Management

Ep.104: [Unscripted Back-Up] How to Hit Healthy Net Profits in any Economic Climate with Mike Medford Sr.

Editor’s note: We’re all working from our homes, away from the friendly confines of the office and its podcasting studio. So we dug into the virtual vault to bring you this episode. We’re in an uncertain time for many remodelers, so here’s some advice that will help you weather any business climate.

One of our core principles is that remodeling companies should make a good net profit, after paying the owners an above-average salary. When the economy’s booming, you can get away with a lot and still hit those goals, sometimes by accident. But the goal is to get those healthy net profits consistently, year after year, even in a downturn.

In this episode, Mike Medford Sr. talks to Victoria and Mark about how to do just that. Before seeing the metrics of the Top Ten Roundtables members a few years ago, Mike says his financials were always in flux. But then he took those figures and made them hard targets.

Mike Medford Sr. has been a home remodeling contractor for over 40 years. In 2007, he partnered with his son, Mike Jr. to form what is now Medford Design Build, with offices in Colleyville and Arlington, TX. Mike Sr. is the president of Medford Design Build.

Mike challenged himself and his team to hit the new fixed targets. He refined their processes and challenged his team to hit those targets. By the next quarterly meeting, the company’s profits were rising. He talks about how he and his team made it happen, including:

  • Creating a profit-centric culture
  • How net profits will help you beat the labor shortage
  • Focusing your staff on gross profit
  • The importance of open books to the process
  • Setting up a bonus structure
  • Building time in to plan
  • And more…

Mike also talks about getting back to the art of contracting and how important that is to your margins.

Time to Give Back

After more than 30 years of working with some of the finest Remodelers and Renovators in the business, we are facing new challenges in our industry. We want to give back to an industry that has supported us through good times and bad, and so we’ve created Build Aid, a free event to help support our members, associates, and friends in the remodeling community.

Join us on April 1-2 as we explore various ways your business can navigate these tough times, and position yourselves as a leader when the world begins to recover and re-build.
Click Here to Learn More & Register >>

Ep.100: The Drivers that Make for a Successful Exit with John Warrillow

It’s our 100th episode, and to mark the occasion, we’re welcoming back our first guest ever to talk about how to leave your business behind happily.

On average, 75 percent of founders who exit their company have regrets within one year of leaving, and only five percent are actually happy with the net proceeds of their exit. 

In this episode, John Warrillow will discuss why this happens with Victoria and Mark, and how business owners can better prepare for an exit that will leave them with no regrets.

John is an entrepreneur and author with more than 20 years of research into the small- and medium-sized business market. He’s the founder of The Value Builder System, which aims to level the playing field for business owners as they approach their exits. 

When you sell your company, there are factors that will dictate how happy you are after it’s no longer yours, says John. The first is that the business is ready to sell. The second is a little less clear-cut — the seller has to have done the psychological work that sets them up for success. John talks about what that means, and how to get to the point where you can make a successful exit, including:

  • Why there can be regrets
  • Being clear on what’s next
  • The “push factors” vs. the “pull factors”
  • Selling and staying or going
  • Why it’s not about the money
  • The biggest fears that come with selling
  • Dealing with private equity groups
  • The pitfalls of financing your buyer
  • How to treat your employees during the transition
  • The top three things that determine if your business is ready to sell
  • And more …

If you’d like to hear more about the first part of successfully selling your company — getting it ready to sell — listen to Episode 1. And to learn even more, go to John’s website, builttosell.com

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Ep.96: Tiered Growth: Understanding Metrics and Recognizing Signs to Set Profitable Sales Goals with Michael Hodgin

Most people would consider a company jumping from $1.5 million to $3 million in revenue a growing organization. However, when we look beyond gross sales, those numbers don’t necessarily mean it grew. It could even mean the company is less profitable — and ultimately less successful — than it was before. 

Michael Hodgin says planning for, and implementing, tiered advances are a better strategy for deliberate, healthy growth.

In this episode, Michael discusses his tiered increase growth strategy with Victoria and Mark. For healthy growth, he says you have to set and meet certain goals for sales, job costs, systems and performance before taking the next step.

Michael is a general contractor and business consultant living in the Rogue Valley of Southern Oregon. He started his first construction company as a one-man-show in 2000, eventually growing Coleman Creek Construction to include a successful team of 15. Michael joined Remodeler’s Advantage in 2016 in an effort to deliver the greatest possible value to his clients. Investing in the development of efficient systems for his own business inspired the creation of his consulting agency, Maestro’s Toolbox

Micheal says that your company’s gross sales should bump up to the next milestone only once your teams have mastered sales, pre-construction, and production systems at their current revenue level. That puts a company in a stronger position to handle the inevitable increase in workload. He talks about how to accomplish healthy, tiered growth for you remodeling company, including:

  • The infrastructure milestones to hit
  • Taking deliberate steps
  • The importance of setting goals 
  • Focusing on hitting those goals
  • Proving your success 
  • Nailing down all your job costs
  • Managing slippage
  • Building the foundation for growth
  • The metrics that tell you that you’re ready for the next step
  • Stepping away and delegating
  • And more …

Planning your growth, setting targets, and understanding why and how you hit them will spur the right kind of growth for you and your company.

Ep.75: Cash Flow: The Silent Killer

It’s incredibly busy in the remodeling world at the moment — leads are pouring in, proposals are flying out, and jobs are being scheduled like crazy. We’re seeing businesses with 30 percent growth, year over year.

Yet there’s a silent killer lurking beneath all the fevered growth: insufficient cash flow.

In this episode, Mark’s flying solo and he tackles the phenomenon of “growing broke” — being busier than ever, but running out of cash.

It can happen to the best, most experienced remodelers — times are almost too good, and it’s easy to lose track of your cash flow. Mark shares why you need to control it, and what to do if cash is starting to run out, including:

  • How to assess your cash flow situation
  • Why cash flow is king
  • Long-term planning strategies
  • What to do when you start feeling the pinch
  • How to address a problem if you’ve got one
  • Keeping your customer experience safe
  • And more …

If you’re concerned about where your cash situation is, set a calendar alert for the all-new RA University, launching Monday, Aug. 12 (the link is still to the older site). You’ll find five new lessons — and one of them is The Importance of Cash Flow. You’ll also find the The 5 Things to Never Do & The 5 Things to Always Do, Running a Paperless Office, Marketing that Works, and Setting Goals and Hitting Them. If you want to go even deeper and you can always reach out to us to help you find the solutions to your cash flow issues.

Ep.50: LIVE from the Extreme Business Makeover in Baltimore

For our 50th episode, we gathered a panel of industry experts and took questions from the audience at the Extreme Business Makeover in Baltimore at the the end of January 2019. It capped off an intense two days of learning, sharing, and networking among the remodelers attending and our Remodelers Advantage team.

In this episode, Victoria and Mark direct the lively discussions with our panel. We were joined by:

We talk profits and payroll, cash flow, the owner’s role in a growing business, margins, staying top-of-mind in your marketing, smart lead qualifying, planning and making decisions on your job sites, and the power of asking “why?”  

It’s an insightful and all-encompassing discussion of how to run your business to get bigger margins, more profits, and creating a real life/work balance. If you missed it, you need to listen to this episode.

 

Ep.48: How to Hit Healthy Net Profits in any Economic Climate with Mike Medford Sr.

One of our core principles is that remodeling companies should make a good net profit, after paying the owners an above-average salary. When the economy’s booming, you can get away with a lot and still hit those goals, sometimes by accident. But the goal is to get those healthy net profits consistently, year after year, even in a downturn.

In this episode, Mike Medford Sr. talks to Victoria and Mark about how to do just that. Before seeing the metrics of the Top Ten Roundtables members a few years ago, Mike says his financials were always in flux. But then he took those figures and made them hard targets.

Mike Medford Sr. has been a home remodeling contractor for over 40 years. In 2007, he partnered with his son, Mike Jr. to form what is now Medford Design Build, with offices in Colleyville and Arlington, TX. Mike Sr. is the president of Medford Design Build.

Mike challenged himself and his team to hit the new fixed targets. He refined their processes, and challenged his team to hit those targets. By the next quarterly meeting, the company’s profits were rising. He talks about how he and his team made it happen, including:

  • Creating a profit-centric culture
  • How net profits will help you beat the labor shortage
  • Focusing your staff on gross profit
  • The importance of open books to the process
  • Setting up a bonus structure
  • Building time in to plan
  • And more…

Mike also talks about getting back to the art of contracting and how important that is to your margins.

Ep.46: Onboarding the Most Vital Roles in Your Company with Jackie Shaw

Your accounting is a vital part of your business. You’ve spent valuable time hiring a new accounting staff member. Now what? Too often, owners think the new hire will be able to sit down and get to work with no introduction to processes and policies of the business. This can be a costly mistake.

Accounting is the story of your business in numbers, Jackie Shaw tells Victoria and Mark in this episode. Properly onboarding a new accountant or bookkeeper will keep that story from becoming a tragedy.

Jackie, the founder of Get Organized! LLC, is one of the QuickBooks gurus who support our members — and they love her. She gets paid to clean up a lot of accounting disasters and has seen first-hand how quickly a new bookkeeper can destroy your books. She’s here to help you get the right systems in place so you don’t have to pay anyone to clean up after a bookkeeping hire goes wrong.

“A bookkeeper can kill a database in a week,” she warns. That’s why, Jackie says, when onboarding new hires, they must do everything the same way they were done before, and they need to study prior entries to figure that out. And you have to forbid them from making changes for at least a month. Other things you should keep in mind when onboarding and working with a new hire include:

  • Not making assumptions
  • Experience doesn’t mean competence
  • Why you don’t want your bookkeeper to take ownership of the books
  • The importance of financial SOPs
  • Why accounting can be like an archeological dig
  • And more…

Including the methods you can use to safeguard your company against embezzling. If you thought talking about accounting was going to be dry and boring, then you have to listen to this episode — it’s lively!

Ep.39: How NOT to Grow Your Remodeling Business with Judith Miller

The Great Recession gobbled up a whole slew of remodeling companies, but more of them fail during an economic expansion than during a contraction. Growth is great, but it’s risky, and knowing how not to grow will put you ahead of the game.

In this hot market, there are so many opportunities, you can get ahead of yourself too quickly for the health of your company. And that’s where remodeling company owners get into trouble by growing the wrong way. There are potential downsides, and to avoid them, you have to keep you basic best practices — and customer satisfaction and net profits lie at the center, says Judith Miller.

In this episode, Judith joins Victoria and Mark to talk about the ways to grow your company the right way.

Judith has been a facilitator for Remodelers Advantage Roundtables for more than 15 years. She’s a QuickBooks expert, the author of The Remodeler’s Ultimate Guide to QuickBooks, and has been a columnist for Remodeling magazine for more than 10 years. Judith isn’t just a financial guru, she’s a high-level strategist who understands that numbers prove your strategy. She loves the challenge of helping good remodelers become better every day.

When trying to grow, the biggest stumbling block is a lack of control, preparation, and not focusing on the best practices. Judith tells you what those best practices are, and how to grow the right way, while explaining the details, including:

  • The critical need for leadership
  • Why your financials have to be in order
  • The Top 5 things you need to do to build a strong, profitable company
  • The predictable stages of growth — and which is best to grow in
  • How large you can get
  • Why hiring a sales force is the riskiest transition
  • How to build a company you can sell
  • Why growing over 20% may be crazy
  • And more…

You’ll also learn why “The Whale” projects takes too many remodelers down. Click here to go to the Growth Sustainability Calculator we discussed in the episode.

And if you need QuickBooks help, or want bring in Judith as a consultant for your business, you can email her at jfmiller@remodelservices.com.

 

Want More Ways to Improve Your Business in 2019 and Beyond?

We are excited to announce that we are re-launching and re-branding our annual January event, formerly known as the Master Your Remodeling Business Workshop. The Extreme Makeover: Business Edition Event has been re-tooled and re-focused on providing growing remodelers and renovators with the tools necessary to improve their businesses in 2019 and beyond.

In addition to Judith Miller, this 2-day event will feature well-known speakers such as Victoria Downing, Tim Faller and Mark Harari and bring in new faces like Doug Howard and the 2018 Fred Case Award Winner, Michael Sauri. For more information and to grab Super Early Bird discounts, CLICK HERE.

Ep.32: Industry Insights with Rick Strachan

If you’re curious as to where the remodeling  industry is going and the key opportunities for the future, Rick Strachan of Hanley Wood has your answers.

In this episode, Rick breaks it all down with Victoria and Mark, telling you what will drive growth, and how to face the coming challenges. You’ll get the big picture, detailed information to help you make strategic decisions for your future, and more numbers than you can shake a stick at.

Rick has worked in the media and information business serving the construction industry for 35 years, and for the last 26 years has been with Hanley Wood’s Remodeling Group. He is a founding member of the Harvard Joint Center Remodeling Futures Program, and is a past board member and former chairman of the Home Improvement Research Institutes Remodeling Professional Committee. He has also received NARI’s President’s Award for service to the industry.

The biggest drivers of remodeling, now and for the near term, are the Baby Boomers. Rick tells you what you need to know about this generation’s buying power and habits, as well as:

  • The predicted habits of Millennials in the remodeling space
  • The phenomenal growth in the industry and why the future looks bright
  • How to address your labor shortage
  • Why product and materials costs will escalate, and how to deal with it
  • Why HGTV isn’t all bad for business
  • What our aging housing stock means for you
  • And much more…

This episode is as close to fortune-telling as we can get. If you have any questions for Rick, you can email him at rstrachan@hanleywood.com. For more information about Hanley Wood and its news and information about the remodeling industry, go to their website.

Summit Partners

We are proud to partner with Rick and his team at Hanley Wood on producing the Remodelers Summit and we’re excited to get down to New Orleans for this year’s event. We only have 5 seats left for Summit so if you haven’t registered yet, please do so ASAP. You do NOT want to miss this year’s event!

Ep.31: How to Successfully Use Cost-Plus Pricing with Josh Baker

The Cost-Plus Pricing model seems to go completely against common sense, but it’s a concept that we’re getting more questions about from our membership. One contributing factor is that consumers increasingly demand transparency when purchasing products and services — and homeowners are coming to expect it when undertaking a remodeling project. But so many remodelers don’t understand it. Can Cost Plus be your new pricing model?

Josh Baker, co-founder of BOWA Builders, has been using Cost-Plus Pricing for more than 20 years. In this episode, he talks to Victoria and Mark about its pros and cons, and why it’s a cornerstone of his company’s success.

Josh founded BOWA Builders in McLean, VA, with college friend Larry Weinberg in 1988, serving the Washington, DC, metro market. As the leader of BOWA’s sales and marketing team, Josh helped to quickly grow the company’s revenues from $250,000 to nearly $40 million in just 20 years. As chief revenue officer, Josh’s focus is on growth and managing an energetic, productive sales team. Recognized nationally as an expert in the industry, Josh is quoted regularly in publications, including The Washington Post, Better Homes & Gardens, and Remodeling, and is a frequent speaker at local and national industry meetings.

Cost-Plus Pricing can be a differentiator, but it can also frighten some remodeling business owners — as well as some clients. Josh explains how to present the concept to clients, and what it will take to implement it profitably, as well as:

  • What jobs are suited to the Cost-Plus Model
  • Weighing the risks and rewards
  • The necessity of pinpoint accuracy in estimating
  • Why not to apologize for your costs
  • The time it takes to do well
  • Why you need a sophisticated, expert sales staff to make it work
  • And a whole lot more…

Josh stresses that Cost-Plus Pricing isn’t for everyone, or for every job. Listening to this episode may help you decide if it’s the pricing model for you, or for some of your projects. Check out BOWA’s website for more about the company, and if you have questions about Cost-Plus Pricing, send Josh an email at josh@bowa.com.

 

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