Swimming in the Shallow end of the Pool…

 |  26th May, 2019  |  Author: Andy Welch  |  Category: Business Systems  | 


Design

Are you wasting your time and Business working on jobs that return you little or no profit?

It’s a trap many businesses fall in to – chasing the jobs with low profit margins, often referred to as ‘Swimming in the Shallow End of the Pool’. As small business owners we need to resist the urge to chase the ‘easy jobs’ – These jobs are usually highly competitive resulting in us quoting at a bare bones rate.

As an ex-fencer and landscaper, I was guilty of the above. It wasn’t until I had a hard look at my profit margins on different styles of fencing that my focus changed.

Paling Fences are by far the most requested fencing jobs – a standard block has 3 adjoining neighbours and potential for 1 front fence. The fencing industry is not regulated and can therefore attract lower skilled workers who are more prepared to take lower profits.

I then analysed my margins on Picket Fences and Merbau/Hardwood fencing options. I discovered these profit margins were almost double those of Paling Fencing. This was because these fences required a higher skill set and therefore less competitive allowing us to quote at a rate that returned better profits!

My problem was that over 80% of our business was in Paling Fences….. I was drowning my business in the Shallow End of the Pool – time to change.

By switching our mix of business to 20% Paling fences and 80% Picket fences we quickly doubled our profit margins. By working smarter but not harder, we almost doubled the businesses profits!


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