Qualified Remodeler Magazine

JUN 2017

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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CRITICAL PERCEPTION Remodelers ought to think about the work they produce in dollars, or cost of goods sold, instead of how many jobs they sell, McCadden says. In doing so, they can readily mark up the costs for producing those jobs to cover both their overhead expenses and their target net profit; and as a result, they should know when they need to raise their prices because they are not selling enough dollars of work. "I have no idea when I sold this if I'm going to make money, so if I try to produce this job as cheaply as pos- sible—get it done as fast as I can and spend as little as I can on materials and subs—maybe I'll make money," McCadden says of the predicament many remodelers face. "Once you understand the numbers, then you can un- derstand what sort of changes to make and how it's going to affect the bottom line," says Downing, who advises remodelers to join a peer group for support. "We talk about it being a puzzle; all those financial puzzle pieces have to fit [together] in the right way. And when they do, the company really can make very strong profits." | [Owners] need to be paid for what they do to run the business, and then the net profit is the return on investment for the business—for the risk it takes—and not for the owner's efforts. – Shawn McCadden, Remodel My Business AMOUNT % OF INCOME 6180 · CAR/TRUCK EXPENSES 6181 · Gas & Oil 6182 · Repairs & Maintenance 6183 · Registration, Excise, License 6184 · Insurance-Auto Total 6180 · CAR/TRUCK EXPENSES 6200 · INTEREST EXPENSE 6210 · Finance Charge 6220 · Loan Interest 6230 · Credit Card Interest Total 6200 · INTEREST EXPENSE 6300 · MARKETING 6310 · Uniforms 6320 · Lead Service 6330 · Website 6340 · Miscellaneous 6350 · Promotional Items 6360 · Direct Mail 6370 · Business Promotions 6380 · Business Promotional Items Total 6300 · MARKETING 6400 · SHOWROOM/OFFICE EXPENSE (PLANT) 6410 · Rent 6420 · Cleaning/Janitorial 6450 · Trash Removal 6460 · Utilities 6470 · Security System 6480 · Displays Total 6400 · SHOWROOM/OFFICE EXPENSE (PLANT) 6500 · OFFICE EXPENSES (PURCHASES) 6510 · Office Purchase <$500 AMOUNT % OF INCOME 6520 · Office Supplies 6530 · Postage and Delivery Total 6500 · OFFICE EXPENSES (PURCHASES) 6570 · PROFESSIONAL FEES 6571 · Accounting 6572 · Legal Fees 6573 · Computer Consultants 6575 · Business Consultants 6576 · Appraiser 6578 · Payroll Processing Fees Total 6570 · PROFESSIONAL FEES 6600 · COMPUTER & RELATED COSTS 6620 · Computer Supplies/Equipment Total 6600 · COMPUTER & RELATED COSTS 6700 · CREDIT CARD COSTS 6710 · Credit Card Fees 6720 · Credit Card Machine Rent Total 6700 · CREDIT CARD COSTS 6900 · TRAVEL & ENTERTAINMENT 6902 · Meals 6903 · Travel Total 6900 · TRAVEL & ENTERTAINMENT Total Expense NET ORDINARY INCOME OTHER INCOME/EXPENSE Other Expense 8010 · Other Expenses Total Other Expense Net Other Income NET INCOME OVERHEAD OVERHEAD Source: Courtesy of Remodel My Business QualifiedRemodeler.com QR June 2017 37

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