How the Best Contractors Ensure Profitability

As an owner-operator entrepreneur trying to turn your passion and craft into profit, you already know dozens of “profit assassins” that’ll kill your profit potential.

That being said, a few key “profit assassins” are more impactful than others.

As we grind through the busiest part of the year, I want to pull your attention to the one that I see as being one of the most impactful things you can pay attention to right now.

You probably already know this, and aren’t going to hear anything that you don’t already know.

But we get distracted, and need to be reminded to keep the main thing the main thing.

So, what is this highly impactful profit assassin?

Running over estimated hours on a job.

You need to know estimated vs actual hours on a job.

What is the necessary ingredient to know this KPI in your business?

Tracking time daily, and allocating those hours to the job you’re working on.

Seems kind of obvious, no?

Yes… but as the founder of SynkedUP who serves contractors, I can tell you this is the one that the most people fail to get done.

Why?

Because tracking time daily requires discipline.

It requires you as the owner to not accept your crew just texting you their week’s hours on Friday.

Or just saying they worked “8 hours” today.

Yes, you need to know those total hours to run payroll.

But what you really need is to know what those hours were for.

So that you can run estimated vs actual hours reports on a job.

Why is this estimated vs actual hours thing such a big deal?

Because labor overruns is the single most profit killing thing contractors deal with.

And most (non-SynkedUP user) contractors completely underestimate this drain on their profits.

Quick example to highlight the impact:

Let’s say you run over estimate by one day on a job, twice a month.

2 days a month. Not that big of a deal, huh?

Ok, let’s say you have a 10 month working season.

That’s 20 days a year. In overruns.

20 days that you are paying the labor costs for. (because they are overruns, you pay for them, not your customer)

20 days of your business operating, that you need to cover the overhead expenses for.

20 days of lost opportunity to get additional jobs done. Aka additional revenue.

That is why it is one of the most impactful profit assassins.

That overrun whacks you multiple times – direct costs, overhead costs, and lost opportunity.

Too often we are chasing the urgent, rushing on to the next job.

Hey, you might even be doing the tracking of labor!

But then failing to take 2 minutes to review the estimated vs actual hours and asking yourself what caused the overruns.

So you can learn from it and prevent the same mistake on the next estimate you are cranking out on your desk right now.

So, in this season where everything is feeling urgent, production is all you can think about, protect your next estimate’s profits by tracking your hours, and assessing your performance.

Track time.

Assess.

Fix any mistakes for the next estimate.

Do this and you’ll win.

Cheers!

Weston Zimmerman

SynkedUP CEO & founder

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