Jul 24, 2023
In this episode, we explore the 50% gross profit margin rule, a game-changing principle shared by Robert Gauvreau that involves knowing your project costs, doubling them, and achieving a 50% profit margin for a solid foundation in your business. Discover the difference between markup and gross profit margin, how to use the 50% margin as a financial benchmark, and why understanding your numbers is crucial in the entrepreneurial journey. Robert emphasizes the analogy of a scoreboard – without tracking the score (your margins), how can you make informed decisions? Keith stresses the importance of being aware of true costs, not just the obvious ones, to drive better business decisions. Join us to unlock the secrets of financial success and build a thriving business that lasts. Let's dive in!
"For every job you're going to do. And you're going to price, you want to know what the costs are associated with delivering that project, right, you need to know all the material all the time, all the travel, everything, get very well informed of what that looks like. And then take that cost and double it, when you double it, it will give you a 50% profit margin on your job. And that is a benchmark that you can take to the bank. And it will help build you the foundation of a really strong, financially successful business."
- Robert Gauvreau
Topics
Covered:
- The 50% gross profit margin rule
- The difference between a markup and a gross profit margin
- How to use the 50% margin as a financial benchmark
- The 50% profit margin is the foundation of a financially successful business
- If you don't know your numbers, you don’t know the score of the game
- What are the profit margins of your business
- The financial model for a small service business
- Understanding break-even point
- Business success is just a numbers game
Key
Takeaways
"If you don't know your numbers, you don't know
the score of the game, right? And I use the analogy of thinking of
a scoreboard going into a basketball game, you go into a basketball
game, there's so many shots being taken, which is like the
entrepreneurial journey, right? We're so busy, there's so many
things moving. But if we aren't keeping track of the score, how do
we know if we should be on offense or defense? are we protecting
the lead? Or should we be going hard at trying to score and that
sort of analogy in our businesses, we need to know how we're doing
in our business, we need to know our margins." -
Robert
"100% markup is a 50% profit. So this is the last thing that's really occurring to me is Well, I do know my numbers, I do have a bookkeeper, we do get p&l statements. And I know every single penny coming in and out of the business, right, and it allows me to make better decisions, right. And I was frustrated when I didn't know that. So what sometimes when people say things like that, maybe they might be thinking that either or they're not thinking because they don't know they're not aware, or they're pointing to other people. And like a speculation to that. Maybe the people you're saying this too, aren't aware of their true costs, they just see the costs that are right in front of them, but they're not calculating all of the back end, and ongoing, you know, variable costs and all these different things." - Keith
Connect with Robert
LinkedIn:
https://ca.linkedin.com/in/robert-gauvreau-fcpa-fca-93531430
Twitter:
https://twitter.com/robert_gauvreau?lang=en
Instagram: https://www.instagram.com/robertgauvreau/?hl=en
Facebook:
https://www.facebook.com/bob.gauvreau.1/
Connect with Keith
Instagram: https://www.instagram.com/keithkalfas/
Facebook: https://www.facebook.com/thelandscapingemployeetrap
Website: https://www.keithkalfas.com/resources
Youtube: https://www.youtube.com/@keith-kalfas
Resources and Websites:
🙋♂️Get My Free Landscaping Business Startup Video Series
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Here
https://www.keithkalfas.com/Landscaping-Series
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