Before you can make higher profits, you need to understand what you are and how you drive your business forward.
A little while back, I found myself watching a movie called I’m So Pretty with my kids.
You’re already wondering what this Warrior dude’s talking about, right? What the hell does this have to do with improving profits in a service business?
It all comes down to the message in the movie.
In fact, that message was so profound that it was like a breakthrough for me. Or more accurately, it was like a reminder of a breakthrough that I’d had before that got a little lost.
It was all about the way that you look at yourself.
The way that you look at yourself has a huge effect on the success of your service business. Your mindset is just as important as the skills that you bring to the business.
If you see yourself as some beaten down and broken shell of a leader, guess what happens? The business gets beaten down too. You bring that negative perception in, which has a direct effect on your profits.
But if you can improve how you see yourself, you improve what you bring into the business. And from there, you can create a mindset and a culture that achieves profit through positive energy.
Does that sound a little woo-woo for you?
There are four things I want you to do, starting today, that will help you to improve profits.
Step #1 – Understand That You Are a Profit-Producing Machine
Say the words to yourself right now:
“I am a profit-producing machine!”
You’ve got to believe those words with every fiber of your being. They say that what you believe you achieve. If you believe you’re broken down, you achieve broken results.
If you believe that you’re this powerful machine that creates profit, you will make that profit happen.
I’m a big manifestation guy. I know that the beliefs I create influence every aspect of my life.
For example, over a year ago I wrote in my journal that I’d exit my service business by 2020. I knew that the CEO Warrior movement was growing so big that I couldn’t devote my energy to both that and the business.
I manifested a future reality that I followed through on.
This is all about programming your mind. It’s about setting your expectations for what your future will look like, whatever that means to you.
I want you to repeat the mantra above at every meeting. You need to tell yourself that you’re a profit-producing machine at every opportunity until you believe it.
This will create the drive to take action so you can turn that belief into a reality.
Step #2 – Have a Profit Target
What’s the difference between a target and a goal?
A goal isn’t as solidified as a target. It’s something that you’re okay to fall short of as long as you still get a result.
For example, I could set myself a goal of losing 20lbs. Now, I might only lose 10lbs instead of 20. But if that happens, I’m still pretty happy because I got a good result.
A target, on the other hand, is something that you set in stone.
The military guys out there know that if you give them a target, they’ve got to hit it. If they don’t, they’ve missed the target and failed to achieve what they want.
You need to have a profit target rather than a profit goal.
A target isn’t an optional thing. You either hit it or you don’t. And when you have that target in place, you’ll push hard to actually hit it. Nearly hitting it isn’t good enough for a target.
Step #3 – Make Sure Your Employees Understand Profit
It’s amazing to me how many service business owners don’t focus on creating understanding in their teams.
Here’s an example:
Let’s say your profit margin is 8%. That means you make 8 cents for every dollar that you earn.
Now, imagine how much your employees think the business makes on every job.
For example, they go out on a job that costs a client $2,000. The employee probably thinks you’re banking at least 50% on that. They think you’re making $1,000 of pure profit and the rest goes to them and the business.
But you know you’re paying the employee. You’re paying for equipment and everything you need to keep your systems and processes running. The reality is that you only make $160 of pure profit on that job.
You’re not swimming in cash because of that job.
Your employees need to understand this, which means you have a duty to educate them. Show them the realities of running a service business and make it clear that you’re not just sitting back and collecting money.
When they understand the mechanics, they can help you to come up with ways to improve your margins. After all, they’re no longer working under the assumption that you have rivers of profit flowing in.
Step #4 – Make Business Costing Critical in the Summer
The summer is your busiest time of the year. And that makes it your most critical time for job costing too.
What most service business owners don’t realize is that they lose more money when they’re busy. You’ve got cash flowing in, which makes it seem like you’re making a lot of profit. But the reality is that you’re probably not costing your jobs properly because of that. You accept losing a few dollars here and there because you’re busy enough to make money elsewhere.
But when the slow months come, those lost dollars have a big impact on your profits!
Use your busiest months to course-correct. Reaffirm your target and make sure your pricing is where it needs to be for you to score a direct hit.
Get the Mind Right and Take Action
I’ve given you a mix of mindset and actionable steps here.
But it all comes down to how you see yourself. If you don’t think you’re a profit-producing machine, you will never become one.
So manifest your future and set targets. Make sure your people understand how money flows through your business and take the opportunity to course-correct.
That’s how you build a profitable service business.
I’m going to leave you with a question…
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