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Why 10% Is The New Break Even For Builders

Builders Business Coaching

Is your building company making at least 10% net profit on every contract?

That’s net margin after all your fixed expenses and after drawing market wages for yourself…

 

If you are not making AT LEAST 10% net after all expenses and your drawings, your building company is in serious danger…

 

It’s effectively on life support and any moment now the plug could get pulled out...

 

At this point a lot of builders zone out of the conversation… 

They believe that a 10% net margin is simply not possible for a residential home builder…

 

And yet, our members are clearing between 12% and 14% net profit EVERY MONTH.

How is that possible?


Why are some builders struggling with cash flow, losing jobs on price and quoting more and more jobs in the hope of winning a tender...

 

While others are effortlessly growing their building companies while enjoying double-digit net margins?

 

Ironically, most builders that are struggling with cash flow believe that if they could just sign a few more jobs, all their problems would be sorted.

 

Nothing could be further from the truth.

Builders Business Coaching

If you attempt to grow a building company on low margins your business will fail.

 

3.6 years is the average.

 

There is a reason so many building companies fail, they’re not profitable.

 

It’s no good making $150k a year if you are not drawing wages out of the business. What happens at the end of the year when you allocate that $150k to ‘directors drawings’?

 

Your business is left with nothing.

 

Your building company may have turnover, but no ‘real’ cash...and just like a house with no foundations, it will topple over. So many builders get this wrong, mainly because they have no idea how much they should be adding to their building contracts. Firmly believing that if they increased their margins they’d never sign a job again..

 

“What happens if I increase my price and I don’t win the job?” They say…

 

“What happens if you don’t increase your margin and you DO win the job?” I reply…

 

The fact is, raising your prices is the easiest thing to do in business… 

... especially for builders as houses are not commodities.

 

“If my clients thought I was making 10%+ on their home, they’d never trust me, they’d think I was a crook.”

 

And yet the building companies that make the biggest margins have the happiest clients…

It’s a fact.


We’ve measured enough NPS scores in building companies to know what we’re talking about.

 

Builders Business CoachingThe truth is, you can only grow a building company safely and securely if you are making strong margins.

 

And to do that you need to use a proven sales process.

 

There’s more to increasing margins than simply putting your prices up, you need to follow a process that demonstrates value.

 

When you demonstrate value to a prospect, they stop comparing quotes, because they UNDERSTAND the differences.

 

There are only 2 reasons why a client would choose another builder instead of your company.

 

  1. The price was lower.
  2. The other builder demonstrated more value and signed at a higher price.

 

Now here’s the thing, the number of prospects that sign with another builder is nowhere near as high as you would believe. We studied this in great detail interviewing hundreds of consumers over a 3 year period.

It turns out, they always say that to the losing builder in order to get rid of them!

 

That’s right, by telling you the other builder’s price was lower, they can quickly end the relationship and move forward with their preferred builder.

 

So what happens if you offer to beat the price?

 

That’s why they tell you it’s $150k lower than your quote!

 

That’s right, while you’re left wondering how another builder can do the job below your cost price, they’re actually signing a contract that’s higher than yours!

And all because the builder you’re competing against has a sales process.

 

You don’t get to achieve 10% net margins just by putting your prices up.

You need to implement a sales process as part of your strategy.

Is this making sense?

I really hope so, because if you continue signing jobs at close to cost price, which most builders are doing right now, there’s not much time left to take action.

 

3.6 years...and the clock is ticking.

 

So, you know that 10% margins are achievable because we have inside access to hundreds of building companies’ accounts.

You also know that in order to achieve a 10% net margin in your building company, you need to implement a proven sales process.

So to help you do that we’ve put together a free presentation covering the 8 Step Sales Sequence For Builders.

 

You can watch it here

When you have the 8 Step Sales Sequence For Builders you will have the blueprint for taking a new enquiry right through to contract without having to compete against other builders on price.

 

Everything you need to know is included in this free presentation for builders so you can start growing your building company and enjoy the life you deserve.

 

Click here to watch the 8 Step Sales Sequence For Builders

 

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