We discuss profitability, profits, and introduce the letter of intent as we grow our businesses

What do we all want as contractors? We want to provide a good service and be paid for our work. Where does this process start? As we discuss on Episode 86 of The DYOJO Podcast, positive project outcomes start with a clear and consistent client intake process.

OVERHEAD & PROFIT 

The client intake process also initiates the data collection process. The gathering, interpretation, and application of solid data is critical to helping an entrepreneur make good business decisions. If you want to be profitable as an organization you must manage the project lifecycle sequences. We begin this discussion on The DYOJO Podcast Episode 89 as well as a series of articles on overhead and profit that myself, Ben Justesen, Anthony Nelson, and Ed Cross will be releasing for the in-print version of C&R Magazine.

LETTER OF INTENT

Contractor's often discuss whether they should be charging for estimates. Some of the options include:

Offering free inspections and estimates as a marketing tool
Charging for inspections and estimates to cover expenses
Getting a contract signed prior to inspection and estimation
Using a letter of intent (LOI) to screen clients prior to scheduling an inspection

We talk rather frequently with contractors about this concept of the Letter of Intent or LOI. We will introduce this resource during Episode 89 and will go into further detail in the following episode.

FOUR MODES OF PROFITABILITY 

Our competition as contractors isn't even necessarily with the market, but with ourselves. We want to grow our company by laying a foundation. If you want to be a profitable company, it's important to understand some of these concepts that lead towards profitability. So that's why we're tying a lot of this together, from:

The new client intake process (TDP 86)
The project lifecycles (TDP 89)
The Four Modes of Profitability (TDP 89 and an upcoming series of articles in C&R Magazine)

I'm working on the first in a series of articles with C&R magazine that's going to touch on some of those elements of overhead and profit. My contribution, the working title is The Four Modes of Profitability for Contractors.

There's an infographic coming out from Restoration Industry Association (RIA) that will also be a helpful tool for contractors as they work through the process of developing and growing their team. Within that tool there are definitions and visual aides such as these two:

Revenue is the income you earn by selling your products and services.
​Your gross profit is your sales price minus your cost of goods sold, we also call those COGS or your direct costs.

These resources are designed to help shorten your DANG learning curve and to build your company through those stages of profitability. Thursdays are for The DYOJO Podcast. 

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