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Why Flooring Companies don’t make money

Having seen inside the financial statements of over 60 flooring companies we can reveal the average net profit is a miserly 1-2%.   Shocking.

Some owners may be OK with that as they have taken a decent salary and maybe a bonus.

But this lack of profit means you aren't building equity and have less ability to reduce your debt load.  And it limits the spoils you can share with your hard working employees.

It also makes you vulnerable.  One bad job could completely kill your business.

 

Installing floors is a craft learned over generations sometimes. So where does the profit go?   More importantly how do you improve that net number?

We have identified 4 areas that can increase your profit margin from say 4% to 15%.

“Nonsense” you say.

“It can't be done” you cry.

 

Well we have done it.  Many times.  In commercial flooring companies.

These are areas of opportunity we have found to be most fruitful:

 

Commercial Flooring Business Consulting

A quick explanation of each.  For more detail you can watch the recording of our Flooring by the Numbers LIVE! Show where we discuss these categories. CLICK HERE FOR THE SHOW

Red Light Management

Companies tend to look at their overall portfolio.  This does not provide sufficient insight.  Break them down into red lights and green lights.  A green light is where the project delivers a margin higher than the sold margin.  Red lights deliver margins lower than the sold margins.  Early course correction of these can add 1-3% to your profit.

Small job pricing

We often see a reluctance to properly price small jobs.  Our quick tip -anything less than $10,000 should have a 35% margin.  Overall this strategy can add 2-3% to net profit

End user portfolio

It's easy to go the bid board and bung in a quote.  It requires more discipline to get end user work.  This type of work enjoys higher margins and less competition. Worth 2-4% added profit.  Check out our End User Course here

Eliminate bad jobs

There is usually one or two jobs you get every year that go south.  They tend to be bigger and more complex.  We advocate a Big Job Team to mitigate these risks. We talk about this in this episode of our show: CLICK HERE FOR BIG JOB SUCCESS

These strategies can take a 4% business to a 10-19% business. Don't settle for less!

Want to learn what they are in more detail– see our Flooring Academy which you can find at flooringbythenumbers.com/academy