Sales, Profit, Debt, Value
1. $1M Sales
According to Dmitry, grossing $1 million dollars in a fiscal year is quite attainable. Consider, that you would only need to land two contracts a week, at $10,000 per job to be on pace for $1 million in sales. In the roofing industry, it’s not crazy to think that’s possible. But there is more to being successful than simply grossing $1 million in a year.
2. $1M Profit
Notice the distinction between numbers 1 and 2. Sales and profit. Your sales are not your profit. If we take the $1 million in sales example from the above section, our profit comes out to roughly $70-130,000 per year. That’s because your profit should range from 7-13% on each job, depending on factors such as overhead and your investment into the business. If you’re not netting at least 7-13%, you need to redo your numbers and quote bids that will make you profitable.
3. $1M Debt
As with any type of loan, there is good debt, and bad debt. You obviously want the good debt because that means you have a means to pay that debt off. This typically comes in the form of receivables, or money that you have coming back to you. Be mindful of debt you owe to suppliers. Dmitry knows many contractors who lack the financial understanding it takes to properly assess their debt versus income, and it ends up costing them their business.
4. $1M Savings
Count your pennies. Do this by using rebates, buying in bulk, or anything that can save your company money over the long haul. It’s important to note that sacrificing the quality of your work to save money is not an option. Saving money happens when you have a heady financial team in place that can spot deals and trends. This is not necessarily common sense either. Shop around, check your inventory, and do the little things to find gaps in your budget where maybe you are spending too much.
5. $1M Value
Invest, invest, invest. Make your business fully functional, to the point it can run without you. Whether your goal is to sell your business or pass it down to your children, it’s important to have a system in place that can keep making your business money. This takes time to develop and perfect, but once you reach that point, you’ll be happy with the rewards.