Does Size Really Matter?
The size of your business is not always as important as the health of your business. In this video, Dmitry explains why bigger is not always better, and why consistency is more valuable than notoriety.
1. Three Year Record
The foundation of a business cannot be established until after three years of income reports have been taken. Three years of reports are necessary because you need documentation that your business is sustainable. Any contractor can have one good year, but stringing together three consistent years is the true sign of an established professional.
2. Area & Factors
Churning out $3 million a year in Boston does not carry the same weight as grossing $3 million annually in Mobile, Alabama. Why? Because they are different markets. Cost of living, materials, competition, etc. is all higher in a big city. The goal is to be consistent, so if you’re annually making $4 million, and that works for your business, then that’s perfect.
$3 million is the recommended cut-off for when to know you’re becoming profitable. Remember, the size of your business is not the size of your profit. So many factors like overhead and commissions need to be assessed before you can claim an income total. Strive for increasing 20-30% each year, and over time you will notice a consistent, sustainable growth in the company.
3. Thor Construction Fails
Thor Construction, the largest construction company in the Minneapolis area, just closed its doors here in 2019. They were grossing over $300 million in annual sales, yet their reputation began to suffer and they could not continue paying their vendors. The lesson here? More is not always better. Taking on more than you can handle is not a surefire way to higher profits. There are simply too many factors that might ultimately damage your business.
4. Profit & Your Business Health
As has been repeated all video, the goal is consistency. While an ideal number of gross income depends on your lifestyle and goals, Dmitry says between $4-8 million in annual earnings is typically the best. It allows flexibility and does not handicap you too much for when problems arise. Throw your ego aside and focus on delivering a quality service that keeps customers coming back for years to come. You’ll be happy you did.