How To Run Your Contracting Business By The Numbers

In this episode of the Leveled Up Contractor show I share how to run your contracting business by the numbers. Running a successful business as a contractor can be tough. There are so many moving pieces and complexities to running the business.

One of my best construction management tips is to keep your business simple. One of the best ways to do that is to let the numbers tell the story and take action and make decisions on the numbers. If you’re doing things right, the numbers don’t lie.

In this Episode I share:

• How to run your entire business from a single one page dashboard
• The big difference between lagging and leading indicators.
• How to get employees to know and take responsibility of the numbers.
• How do use numbers in meetings to drive results.
• How do use numbers in your employee one on one meetings to drive performance.
• How to make sure you get good numbers to make decisions on

Other things you should check out:

• 3 Pieces To A Successful AR System For Contractors
• How To Master Cash Flow In Your Business
• How To Map And Systemize Your Entire Business

Get Access to the FREE CHEATSHEET: The 5 Reports Every Contractor Must Have To Run And Manage Their Business By The Numbers

Check out the Leveled Up Contractor Program Here.

How To Run Your Contracting Business By The Numbers

Hello, everyone. William Fletcher here and welcome to the level of contractor show. And guys, I’m excited to bring this video to you today because today we’re talking about how to run your contracting business by the numbers. And this is something that I’m absolutely passionate about. If you’re into numbers, you’re into spreadsheets, I’m probably your guy.

But the reason I’m so passionate about numbers is not the fact that I love spreadsheets. I know it’s nerdy, but that’s not the reason. You guys, I spent 10 years doing corporate accounting for a service-based business. I ran my own business. I’ve done it in the contracting industry and the trades business but guys when I really learned what numbers was all about was when I was out there and doing prospecting.

And I knew that I had to talk to X amount of people to get myself in a position to get X amount of people onto a call with me to make X amount of sales, to make X amount of dollars to put into my bank account. And that’s when numbers became like a light bulb moment for me. It was like, oh man, numbers are powerful.

And that’s how you have to approach numbers in your business. And guy’s numbers are one of those things that I absolutely love because it cuts through the bull crap, right? Numbers are what they are. The numbers tell a story and they don’t lie. They just happen to be what they are. So if you’re trying to make $500,000 in sales for the month and you come in at 300, you know, you’re short, the numbers didn’t lie.

They tell a story. They tell you that. Your goal was 500. You sold 300 you’re off track, or your goal was 500 and you sold 600. So, Hey, you’re ahead of pace. Now let’s go into next month ahead of pace and let’s crush that goal. So that’s what I love about numbers and even more so with people. And we’ll talk about that a little bit more, in this video a little bit later, but with people, you know, you may love Bob.

Bob’s a great guy. Bob makes you laugh. He’s a great person to have in the office. He’s at the water cooler, making everybody laugh. Bob’s a great guy, but when you look at Bob’s numbers, Bob aint performing. So when you have to have that tough conversation with Bob, you know, that can be a tough thing to do, right.

But at the end of the day, it’s not super hard when Bob’s supposed to do a hundred thousand and sales. And Bob comes in at $20,000 in sales. That conversation’s a little bit easier when it’s not a focused around emotion or getting mad at somebody or whatever it may be. It’s focused around the numbers.

How to run your business by the numbers

So that’s why I love numbers, but let’s transition into how do we actually run our business by the numbers. And guys, it really starts with goals and targets. And I know that sounds cliche. It sounds boring. Like, oh, okay. Yeah, we got to set some goals. We got to set some targets, yada, yada, but just the example I gave a minute ago .

If I don’t know that my goal is 500,000 and I sell 300. What do I care? So for numbers to have an impact on your business, first of all, you got to have goals and targets to even have that set up, to, to know where you’re going. If I’m trying to get somewhere and I don’t know where I’m trying to go, then there’s no way I can look at a map and figure out how to get there.

Well, it’s the same thing in your business, right? If you don’t know what your goal is, then how the heck are you going to get there, maybe your goal is to do 5 million in revenue this year, or maybe your goal is to do, you know, 500,000 in profit, whatever it may be. But when you have the goal, now you can start working it backwards and say, okay, well, if I want to hit that goal, I’ve got to sell X amount.

I got to produce X amount. My expense has gotta be this. I can only pay my crews, this, I can only pay this much for materials. I can only spend this much in view. I can only, buy this building, or I have to stay in this building because if I buy that one, I’m not going to hit my profit goal.

So when you have a goal, you have a target. Now you can start building the map and building the plan to actually get you where you want to be. Now, the next key part of that will be actually tracking your numbers, so if you set a target and you worked it backwards and you know what you got to do, if, you know, in January, I got to sell $500,000 to be on track for my $5 million goal that I have said at the end of the year.

Now you got to target and now you can work January. Okay. What is it going to take to hit my January sales goal? What is it going to take to hit my January profit goal?

Contractor Numbers Dashboard

And one of the ways that we do that in our business and what we teach our clients to do is to have a single one page dashboard that you’re looking at every single day. And it’s updated every single day with the numbers that you need to hit your targets. So if I know that I got to sell $500,000 in January, well, then I can look at this and say, well, I got to sell X amount of jobs. I got to have a closing rate of this.

I got to give this one. He estimates I’m going to have this many leads. So now if I put that onto a single one-page dashboard, or even a simple sheet of paper that I’m looking at every single morning, I can now break this out and be like, Hmm. So January has 31 days. So if I want to do 500 sales and I got so X amount of jobs, how many jobs do I go sell per day?

How many leads do I gotta have per day? And then I started looking at it and I have a, uh, here’s my target column. Here’s my actual column. I can look at this and say, okay, I was supposed to have, 10 appointments on the calendar yesterday and I had eight shoot. I’m already behind, what am I going to do today to make up for those two appointments that I didn’t get yesterday?

Or maybe you had the leads, . But you’re looking at your sales and you’re looking at man, you know, we’re, we’re 15,000 behind that our sales and we’re halfway through the month. What are we going to do? To make up for that 15,000 sales. So you got to have a one page dashboard that you’re looking at every single day and you’re making decisions on .

If you got to report that you’re not making decisions off of, then there’s no reason to even look at a report. And guys, one of the big things that we preach. And we talk about lagging versus leading indicators, at the end of the month, I want to get the $500,000 in sales. And if all I’m looking at every day is the number of sales that I’m looking at a lagging indicator.

There’s a lot of things that have to happen. For me to make $500,000 in sales this month. There’s a lot of pieces that going to happen, like we talked about, I got to have so many leads. I’m going to sell so many jobs. I got to close at a certain percentage. I got to get in front of enough people.

I’ve got to give out X amount of estimates. If all I’m looking at is sales and I’m not looking at all those little pieces that make up. And then all I’m looking at is the lagging indicators, I’m only looking at the end result and not all the little pieces or the leading indicators that add up to the lag measures.

One of the best ways to illustrate this is, you know, if you’re a company that is a door-to-door company, meaning that you go out and you canvas and you knock on doors to get your leads right. Well, if all you’re looking at is how many leads you got. Great. I love you. I’m glad that you’re looking at how many leads you’re getting each day, because you’re starting to pay attention to your numbers, but those leads don’t tell the full story.

Well, if I’m short, only. I want to know how many doors did we knock? I want to know how well we converted at the door, turning those into a lead, right? Because then I can start to dissect it and go, Hmm. Maybe we’re not converting well, but when I look at it, we’re converting well, but we’re not getting enough leads.

What’s going on. Uh, here we go. We didn’t knock enough doors to hit the lead target that we sent. Or maybe it’s the other way you knocked all kinds of doors. You knocked it out of the park, but you’re looking at your leads and you’re going, man, we’re behind what the heck is going on. Oh, we’re knocking a lot of doors, but we’re not converting many of those into leads.

So what the heck is happening, are we in a bad area? Do we have an ineffective approach at the door? What is it? So you can start looking at all of these leading indicators that add up to the results that you want to get. No, So that’s a big one.

Getting Employees To Focus On The Numbers

Another thing that we really focus on is getting our employees to focus on the numbers

it’s one thing as a business owner to look at the numbers, it’s, it’s absolutely a must. It’s important, but when you can start to get your individual employees to look at their numbers, and I’m not talking to just at the senior management level every individual employee. Uh, focusing on some kind of number,

if I’m an appointment setter, you know, maybe I’m focusing on, you know, my conversion ratio to phone calls to how many leads I set, or maybe I’m focusing on strictly how fast I get to a new lead. If a new lead comes into my email or I get a text on a new lead, came in my number might be two minutes to make sure I’ve called that lead.

Well, sales guys, it’s easy there’s all kinds of numbers that most companies are tracking with their sales guys. They can look at their close rates. They can look their average job size. They can look at how well they’re estimating jobs that can look at how many jobs are estimating versus how many appointments they go to or how long it takes them to get an estimate to a customer or how well they’re doing their fault.

There’s all kinds of metrics with sales guys. So that’s an easy. When it comes to production, giving your production employees to start focusing on the numbers, your production manager, they’re looking at the margin on the jobs. Okay. We said when this job was turned in, this job was going to come in to , X gross margin.

And at the end of the job that came in at this margin, what happened? Why did we start here? And why did we end. Or why did we start hearing? We ended here, right? What made that happen? So you got your production manager focusing on those numbers. You got your project managers focusing on those numbers.

Every person in your company can have a number that they’re focusing on and the way you get there guys is you start talking about numbers. And when you’re talking about the company goals and the company vision, you’re laying it out to your employees. Hey guys, here’s what we’re shooting for. Here are the numbers that are going to make that happen.

We need this many leads. We need this many, phone calls. We need to do this many demos. You know, we gotta, we gotta do this on our close rate, all this stuff, we got to keep our expenses. You start bringing that out, right. You start talking about the numbers, then you go to your managers and you’re talking to numbers of them.

You’re talking about their department. If I’m putting my sales manager, I’m going. Okay. So, how’s your team doing? How what’s what’s your mountain sales this month. Okay. How many leads did you guys run? Okay. What’s your guys’s close rate. What’s your, what’s your team’s average job size so you’re talking to your managers that way, then your managers are talking to their direct reports that way, they’re in a meeting with one of their sales reps and they’re going over their numbers.

So all of a sudden, all your employees are starting to look at their numbers, you’re talking to your appointment center, but like, man, you know, it’s taken us 30 minutes to get to a new lead that comes in. Well, what if we got that to 10 minutes? How many more leads can we turn that into?

So you start having these conversations and meetings in your employee. One-on-ones . Anytime you’re having conversations is a great time to bring up numbers and performance. So we, we talked a little bit about how to use numbers and lay those out with employees. And I said, meetings, right?

Review Numbers In Meetings

Meetings are a big one guys, every meeting that we have, there’s some portion dedicated to numbers, usually it’s early on in the meeting. We have something that breaks the ice, you know, maybe, everybody shares a win, something like that. But then we go into a numbers review, we’re driving numbers throughout the business.

We’re getting in everybody’s head. Because it, remember the numbers, tell the story, the numbers are what get us to that end goal that end result. So the more we bring it to our people, the more we bring it to our meetings, the better we’re going to do. So. One of the last pieces would numbers and this can be a big one.

Guys is if you don’t have good data, it’s really hard to make good decisions. And there’s, there’s two ways people get this wrong, right. One way, is there a extremely unorganized. They there, they don’t have their numbers getting input. Usually it’s a lack of accountability from them holding their employees accountable to putting the right information in the system.

You know, putting in all the leads they talked to or putting in their sales. Or recording things. You know, getting the material and labor and all that stuff in there. So you can properly track the profitability of the job. That’s a big one that most companies are experiencing,

you know, bad data in is bad data out. So if you’ve got bad data going in, it’s really hard to make good decisions off of those numbers. But if you’ve got good data, you can make good decisions. If I know I’m supposed to have 15 leads to. And I looked at the number and I got 13 and that’s an accurate number.

That’s powerful because now I know we got to do everything we can to get two more leads to make sure we stay on track for our goal. And then you have the other side of the spectrum, you got the people that they, they are so focused on their numbers, that they overanalyze that over detail is this right?

Is this right? And they’re so focused on getting it a hundred percent accurate that they lose focus by the time they figure out what their accurate numbers are. It’s too late to do something about it, if it took you 15 days to figure out how many leads you had the first five days of the month, because you were trying to get it exactly right.

Making sure you got every source, every single lead find every single one. And now we’re in day 15. Now we’ve lost 10 days worth of tracking. Now, if we were often days, one through five, it’s really hard to make that up because we’re way down the road now. So you gotta make sure you have good numbers, but you don’t want to spend so much time diving into every individual detail to get it down to the penny when you’re trying to make daily decisions off of it.

Right now, when you’re doing your books for your accountant and your you’re doing your end of the year review. Yeah. Let’s fine. Tune the numbers let’s get them. But when you’re making daily decisions on your business, off of the numbers, Let’s get him real close and let’s make good decisions to help us stay on track for our goals.

That’s it. Numbers are a powerful thing. I guess I wanted to give you an example. You know, I was talking to an owner recently, struggling to hit their results. And, you know, he has a young sales manager on his team, a young guy that’s, that’s fired up that did great in sales.

He’s doing, you know, a lot of things in the business, he’s doing a lot of things. He’s working really hard. He’s working a lot of hours, but he just wasn’t hitting the results that the company was looking for. And, you know, talking to this owner and, you know, it was gutting him. Like, he’s like, man, you know, I got to do something about this.

I gotta talk to this guy and you know, kind of let them know. And I said, well, what, what do the numbers say? You know, at the end of the day, what are the numbers say? If you’re supposed to have 800,000 in sales and you, you turned in 300,000 in sales, that’s a big problem, right? You’re $500,000 behind from your sales target.

And if you let that continue, because you’re afraid to have a conversation with a guy because you like him, that’s a big problem. And we talked about at the beginning of this video, guys, you know, numbers tell the story, it’s not about emotion. It’s not that you don’t like this guy. It is what it is.

So you got to have that conversation. You’ve got to say, Hey, look, I know you’re working hard. I know you’re trying to do the right thing. But at the end of the day, here’s where we’re at. We had to have 800,000 sales to hit a target that we all agreed on right now we’re at 300,000. And we’re never going to make it to our goal if we don’t make a change.

So what has to happen for us to get there? And that can be a tough conversation to have. You don’t want to make that guy upset. You don’t want to make that guy mad. And you started taking all these songs to Aliene. You know what, if I come down on him and he leaves, he’s a great guy. He’s a great guy for the company.

No, you have the conversation, you show them the numbers, you ask them what you can do to help them, you lead them to guide them. You get them focused on the things that are going to bring those numbers up. And maybe when you start to dive into it, things become really obvious, maybe it’s something simple, but if you never have that conversation, you just stay off track.

You have a really good guy, but you’re not hitting your target. So that’s it for today’s training guys, focus on the number, run your business by the numbers and watch what happens.