Net Profits - Four Major Levers

Increasing net profits for contractors comes down to four major levers that can be pulled.

D. Brown Management Profile Picture
Share
Leadership Tools: Four Basic Profit Levers. Like operating a backhoe; use all four levers simultaneously.
  1. Increase quality revenue up to the point where it stretches your operational capacity.  Not revenue for the sake of revenue but revenue in alignment with your market strategy and capabilities.  Not stretching to the point of breaking but just enough to allow you to grow. 
  2. Increase the “Sold Margin” on projects by finding the customers that will pay the most for the capabilities that you have and by building capabilities that the market places a higher value upon like advanced preconstruction services
  3. Decrease the cost of building project through investments in talent, training, process streamlining, tools and technology.  
  4. Decrease the cost of overhead and indirects in both absolute dollars by looking at every cost and asking how it truly adds value to the customer.  Be careful not to “over-cut” and create a hollow organization that will impact future growth.  

All are interrelated and seem simple on the surface. 


A 3rd party perspective can be helpful for assessment and planning purposes




Contractor Exit Strategy 2 of 6: Pass Down to Family
Contractor Exit Strategy 2 of 6: Pass Down to Family. This is a very common strategy for contractors and is successful for those with interested family member(s) who are effectively working in leadership roles.
Retirement Onboarding - 12 Questions
Sue Weiler-Doke and David Brown discuss “Retirement Onboarding” for construction contractors, starting with 12 key questions.
Unicorns and the Growing Contractor
If you are having consistent difficulty finding the right person for a role, you may be looking for a unicorn. Requiring unicorns to grow is a bad plan. If you do find a unicorn, just ask them where the pot of gold is and forget about construction!