period of time. Anytime you start a business, I don't care what it is, you're going to have a period, right? A season. of working your butt off. You're going to have a season of grinding it out, long days, long nights, early mornings to get the stuff done in order to grow your business. But that is not a lifelong, sustainable level of working. A short period of time, six months, a year, maybe two years of grinding to get your business established. Sure, that can be acceptable. But 10 years,20 years of working 60,70,80 hours a week just to try and generate the level of income that you want is not sustainable. Your body will break down. It's not a question of if, it will. So it's only a matter of when. And the people that are super successful in business understand this concept very early and they're able to transition their business from being craftsmen to full-on businessmen. Okay? So back to the $40 an hour. You're at $40 an hour. You're working 60,70 hours a week or more. And you're trying to get ahead. And you decide, you know what? If I want to make more money, I'm going to have to hire more people. Because that's the only way. I can't work any more hours. I'm already working 70,80 hours a week. I just can't work any more hours. So the only way I'm going to make more money is to hire more people. Makes sense. Logical sense to do this. The problem is that whenever you... hire more people, you actually put more burden on the business. Okay? Yes, you will make some money, some income from your employees. But if you're working 60 to 70 to 80 hours a week already on the job, it's because you're not charging enough. So what you're doing is you're effectively plugging people into a system that's broken. And all that's going to do is actually break the system faster. Because now you're going to have people that maybe they're only working 40 hours a week, but you're still having to work beyond them to maintain and can keep up with where you're at. Maybe now you only have to work 65 hours a week instead of 70, but you're still having to work more hours because your system is broken. So back to the scenario where I'm charging 80 bucks an hour, you're charging 40 bucks an hour. If I work... 10 hours at 80 bucks an hour, that's $800. If you work 10 hours at 40 bucks an hour, that's $400. So in one potential workday, if we work a 10-hour workday, I'm making double the amount of money as you. I'm making $400 a day more than you are, which means that I can work half as long and still make the same amount that you do. or I can work normal and make twice the amount that you do. Or if I work the 60,70,80 hours a week that you're working, I can make three times the amount of money as you. It doesn't take long to understand why making more money, in other words, charging more money, is an easier way to run a business. I don't know anybody that wants to work more hours. just for the sake of working more hours to survive. Now, working more hours to get ahead, to make even more money, that's different. If you want to work more hours because you want to make more money, meaning that you don't have to, but maybe you want to make a large purchase coming up and you're like, you know what, I'll just throw an extra 30 hours in this month, generate the income that I need to buy whatever it is. Once I buy that, then I can back off. That's a totally different situation of being in than when you have to work the hours just to put food on your table. That's a totally different situation. So I'm not talking about the people that want to work the weekends because they just want to get ahead or they want to make even more money or they're workaholics. I'm not talking about that. I'm talking about when you have to work nights and weekends because you just need to, you need to, you have to. If you don't, you're not going to be able to pay bills that month. You're not going to be able to put food on the table. That's a totally different situation. And so the crazy cycle is whenever you charge less, so you work more hours and you're working all the time and you get burnt out or your family or kids are like, hey, you know, we want you to be home more. You're never home. You're missing our kids events. You're missing dinner. You're doing all these things, working late. We want you to stay home more. And so you're like, you know what? You're right. I need to back off a little bit. So you stop working as many hours because you understand work-life balance. And so when you stop working as many hours, you start making less money. And over a period of time of that, whether it's a week, a month, six months, whatever it might be, you soon realize that you're not making enough money. And so you need to work more hours. And so therefore you work more hours in order to get the money back that you want to make. And you get on this cycle. You work a bunch of hours to make money, get burnt out. The kids want you home. You stop working the hours that you need to. So you make less money. Then you can't pay your bills. So you work more hours to make the money and it just keeps going on and on and on and on and on. And you can live on this cycle for years. I mean, years. I was on this cycle for almost nine years before I finally got my head out of my butt and decided to make a change. So it doesn't have to take that long, guys. You don't have to wait nine years. That's the whole reason I'm doing this podcast. The whole reason I started Hammer and Grind was to help other contractors get off the crazy cycle and have a business that supports the lifestyle that they want. Your lifestyle should not support your business. Your business should support the lifestyle that you want. It doesn't matter what that is. There's no traditional like, you have to work Monday through Friday, eight hours a day. You have to do this or you have to do that. You can do whatever you want. It's your business. That's the whole beauty and benefit of owning your own business. is you can set it up however you want. Maybe you only want to work three days a week. Maybe you want to work 12-hour days and only work three days a week. Or you want to work four 10s or whatever that may be for you. Maybe you only want to work Thursday, Friday, Saturday, and Sunday. Or you only want to work during the week. Whatever that is, set the business up that works for you. Now, obviously, there's some caveats to that. If people don't want you working in their house on a Sunday, then you... Probably shouldn't be working on a Sunday. But you get the point of what I'm trying to say here. Create the business that works for you, that supports the lifestyle you want. Don't get fooled into this idea that you have to follow what everyone else does because you don't. That is also the reason why a lot of you are stuck at a lower charging rate. You don't charge enough. You're stuck at this lower rate because everyone else is doing it. You go talk to your buddies who have construction businesses and they tell you they're charging 50 bucks an hour,45 bucks an hour,40 bucks an hour. Maybe one of them is crazy and he's charging 55 bucks an hour. And you all talk about how you can't charge anymore. Oh, my customers are complaining about how much I charge. They all say I'm too expensive. blah, blah, blah, blah, blah. That's what happens when you surround yourself with people that have limiting belief systems, that have a scarcity mindset around what's possible. The whole reason that I created the Contractor Profit Group, which is our free Facebook group, is to be able to be surrounded by people that have a growth mindset, an abundance mentality. meaning that there's more money and there's more jobs and there's more opportunity out there than anyone could possibly ever do. And so there's no reason to be quote unquote competitive in our pricing. There's plenty of customers out there, especially right now. Right now is the craziest that I've ever seen it in the 12 years I've been in business. I don't know if it's going to get any better than this ever again. I do know that if the recession does come in full tilts and everything goes drops in price, there's going to be some contractors going out of business. There's going to be some people that are going to hold on to their money and not want to spend it. You're going to see a decline in the amount of work that's available. However, the contractors that are charging the right amounts do not have to do as many jobs and they can sustain over a period of time, a year, two years. a downturn in the economy. Those of you that are living paycheck to paycheck, charging 40 bucks an hour, working 80 hours a week, you will have a significant decrease in the amount of hours or jobs that are available to you. Because the people who are wanting to pay you 40 bucks an hour are not the ideal customers that are going to spend money during the downturn. There's different people classes. There's different people mindsets. There's people who love recessions because it's an opportunity to buy things at a discount. There are people who are scared to death of recessions and they got to hold on to their money and they just don't even spend money. And then there's people that have plenty of money and they have an abundance mindset and they don't really care. It's just another day to them and they're just out there working. And so they can spend the money. It doesn't matter. It doesn't matter if they're in the recession or not. They have money to spend. A lot of you get hung up on trying to find a price that works for your customer instead of finding a customer that works for your price. Let me say that again. A lot of you are trying to find a price that works for your customer instead of finding a customer that works for your price. In other words, they're willing to pay what you charge no matter what that is. See, some of you, when the phone rings, you believe that it's your duty to provide them with service. You want to try and sell every single person that calls you. And so whenever they call you and you go out there and you spend five, six hours of your time doing a free estimate and then you turn in the estimate and let's say the estimate's for $10,000. And they call you back and they go, Brad, we really, really, really love you. We want you to do the work. But we had two other estimates. And, you know, one guy was $6,000. Another guy was $8,000. The $6,000, we don't trust him. We don't think he was doing it right. So we want, you know, can you come down on your price at all? Can you match the $8,000 bid so that, you know, we can work with you? Because we really want to. And you're like, man, I need to work. I need to work. Yeah, I think I can do that. I think I can make that work. I'll do it for $8,000. I'm like, oh, great. Awesome. And then you get the job. You start working. Things don't go the way they're supposed to. I mean, I know it's a shocker that every single job doesn't go perfect because we all assume that every job is going to go perfect. And that's how we bid jobs is based on the perfect job. And all of a sudden, you don't make any money. And three weeks later, this job that you thought you were going to make $2,000 profit and you end up making like $200 profit. That's all you made in three weeks. You made $200 profit. Some of you won't even know that because you don't do any job costing at all. And you won't even realize it. You may bid another job for the exact same thing for $8,000, only make $200 and you just keep going down that cycle. That's why I created the job costing worksheet is so you can figure out exactly how much you're making on every job, which should be a 50% gross profit. If you don't know what gross profit is, you're already in the hole. You should understand what gross profit is, what net profit is, what your cost of goods sold are. You should understand what your total labor burden is for your employees. If you don't know what those basic things are, you're already in the hole. You're in the negative. Those are the very most basic things you should understand about your business. And I come in contact every single day with contractors who don't understand the difference between gross profit percentage and markup or margin. I ask contractors, are you getting a 50% gross profit? And they laugh at me. Yeah, dude, I'm getting a 75% percentage. And I'm like, wait a minute, are you talking about markup or are you talking about margin? Well, yeah, I mark up my material 75%. Okay, that's not the same thing. That is not a 50% gross profit. A 75% markup is not a 50% gross profit. It's actually less than that. In order to get a 50% gross profit, you have to do a 100% markup on your materials and labor or COGS as it's what it's called is cost of goods sold. So if you're not marking up your materials and your labor and your subcontractors and your rentals 100%, then you're not going to get a 50% gross profit. It's impossible. Okay? This is what it takes to have a healthy business. A 100% markup. If you want to get off the crazy cycle, you have to charge a 100% markup on all your materials and labor. Some of you are like, you just crapped your pants. You ran off the road. If you're driving, listening to this, your jaw dropped. Like there is no way in hell I could ever charge that much money. No way. It's not even possible. I know it's not possible. And to that, I ask you one simple question. Have you ever tried it? If you've never tried it, then you cannot say that it won't work because that is what's called a limiting belief, a fixed belief or head trash. You have a belief system around what's possible, even though you've never actually done it. That's like me saying, hey, dude, you can fly. I mean, all you got to do is flap your wings, your arms, you know, really fast. Just go up on the rock and just jump off. Go up on there 100 foot up and just jump off. All you got to do is flap your arms. And you just believe that to be true, even though you've never tried it. Now, I wouldn't recommend that because the alternative or the outcome is going to be you're going to fall to your death. But that's how. You believe these things without actually trying it. Now, we know through physics and science and all this stuff that if you jump off a rock, you're not going to be able to fly and you're going to die. We can learn from other people's mistakes, right? But some of you are like, there's no way I could do 100% markup. It's just not possible. But you've never tried it. You've never talked to a contractor who's done it. And so, therefore, you just make up in your own mind. what you believe to be true, and then you live with that. And then you believe throughout your entire business career that the only way you can make more money is to work more hours or hire more people. Now I got to hire 15 people so that I can make the money I want. And the reality is I know one-man operations, single guys who are making well over six figures a year,150,000 plus. doing hourly work, hourly service work, because they're charging what they're worth. So you tell me what's easier. Do you think it's easier to have a one or two man crew or three man crew and be able to generate six figures of profit for you in your pocket? Or would you rather have a six or eight man crew working and then generate the same level of income? Because that's what you believe you have to do. If you've ever had an employee at all, you know that having employees is difficult, right? It's like having an adult daycare a lot of times. So having to manage six employees versus having to manage two or three, I can tell you from experience that managing two or three is a hell of a lot easier than managing six or eight. And every time you add employees, it adds another level of complexity to your business. So if you can make the money that you make or that you want to make without having to add more and more employees, it makes it 10 times easier, guys. And here's the thing. If you want to scale, if you want to grow a multi-million dollar business and you want to have multiple employees, it takes money to be able to do that. You have to have money to invest in your business to be able to hire more people. That's just called business. That's just math. You can't grow your business unless you want to take out loans. And now you have a cash flow deficiency because you take out a $100,000 loan and you're paying X amount per month or whatever it ends up being, $500 a month. And now you've just added $500 worth of liabilities to your cash flow. And it sinks everything and it stunts your growth because you don't have as much money available. Whereas if you're charging what you need to charge and you're putting money back because you have a surplus of money, now when you want to hire, you can just go write a check for a new vehicle. You can just hire people and you don't have a deficiency in your cash flow. Now by hiring them, you're actually increasing your cash flow. That's how you grow a healthy business. The very first step you have to do to get out of the crazy cycle is you have to charge. to make a 50% gross profit. It is not greed. I hear this all the time. You're ripping people off. You're doing 100% markup? Holy crap, you're a con artist. You're ripping people off. No, I'm not. How am I ripping somebody off? I'm not putting a gun to their head and making them hire me. It's ultimately the customer's decision on whether or not they want to hire me. If they go get three other estimates, and you're the cheapest one because you don't know your prices, and they hire you, that's their decision. If they hire me, that's their decision. It doesn't mean that I'm a con artist. It means I know my numbers and what I need to do. Here's the thing too, I always tell people that have a problem with this. If you just can't sleep at night because you make too much money, like it just keeps you up at night because you just made way too much money, donate it, give it away to charity. give it back to your customer at the end of the job. If you're so torn up about it that you just can't live with yourself because you made a 50% gross profit and you made an extra $5,000 on a job that you normally would not make that and you're just so torn up about it, then give it back to the customer at the end of the job. I would bet that 99% of you would not do that. You would have a little bit of a difference of opinion after the job is over. But if it's true, after the job's done and you made an extra $5,000 over what you normally would have, and you just can't live with yourself and sleep at night, then give it back to the customer or donate it to a charity. I don't care. Whatever you got to do, get rid of it to somebody. Give it away. How much good could you do in the world if you couldn't live with yourself and you donated $5,000 to a charity? I mean, that seems like a good solution. to a problem that if you can't live with yourself, just give it away. But to simply say, I'm not going to charge as much because I don't want to rip somebody off, that's head trash. That's 100% your limiting belief. Now, that's how you get out of the crazy cycles by charging more. It's a lot easier said than done. You have to deliver the experience, the product, the service. to support the prices that you're charging, you can't just charge more money and then deliver a crappy experience because then people will feel like they're being ripped off. They will feel like they overpaid for the service they got. So as you elevate your prices, you need to elevate your experience, your customer service. There's lots of ways to do this. And it doesn't mean that if I charge $5,000 more on a job, that I now have to spend $5,000 on the customer experience. It doesn't mean that at all. I mean, you could simply spend an extra $50 per customer, make $5,000, and it will still be a valuable exchange of goods and services. But you do have to have some bare minimums in place, like lettered trucks. It doesn't have to be a full wrap, although I always say you should have a full wrap. You got to have a decent vehicle. It doesn't have to be brand new, but you can't have rust holes in it and leaking oil on the customer driveway. You got to have some nice uniforms, a t-shirt, something that's not going to look like you're a homeless man showing up at their house. You got to have a decent looking website. Doesn't have to be perfect. You got to have some reviews. You got to have a Google My Business and have some reviews set up. These are things that you should do at a bare minimum. If you want to charge more money, you have to look like you're worth charging more money. And on the backside of it is your sales game has to be on point. If you're a people pleaser, if you still have an employee mindset where you think that the customer is your boss and you're working for them, you will have a very difficult time being able to charge more money and deliver the goods or services to match that what you charge. You have to change your mindset completely. And one of the things that you have to do is step up your sales game. So that's why I created the Profit Club is to be able to teach contractors how to step up their sales game, how to communicate effectively, how to provide so much value to your customers that your customers will throw money at you at whatever price you charge them. That is when you know that you have a successful business. When people are willing to pay for your services, even though the old you would have done the same job for $5,000, $10,000 less, you're now charging more and these people are throwing money at you like you're a stripper on stage. That's the level that you want to get to and it takes effort. It takes purpose. It takes intention. It's not going to happen organically for you. You're not going to wake up one day and all of a sudden, all of the pieces have fallen into place and you now have a successful business. I can tell you this with 100% certainty. Where you are in your business today is a 100% reflection of where you are mentally and in your business, like in your personal life, in your growth. It's a 100%. one-to-one reflection of who you are as a person. Where you are in your business is 100% your fault. It's not employees. It's not labor shortages. It's not material pricing. It's not material shortages. It's not your city you live in. It's not your customers. It's none of that. It is your fault. And the sooner that you understand this, the sooner you can simply look yourself in the mirror and say, you know what? I need help. I don't have the answers. I need someone who can show me how to get off the crazy cycle and change my life for me and my family forever. And if you want help with that, please reach out to me and I will share with you what I do for contractors like Travis, who was able to sell a job for $100,000 more than he would have sold that same job for just five months prior to joining the Profit Club. He sold a job for $100,000 more than what he would have sold that job for. $100,000 on one job. Do you guys understand the significance of that? Do you understand that people like Duncan, who was able to produce almost an extra $130,000 in pure profit in as little as four months? What would an extra $130,000 of pure profit do for you and your business and the crazy cycle that you're on in half a year? These are the types of results that's happening. And it's not because I have this special power and I know these secrets. It's simply because I show you what you're doing wrong in your business and then teach you how to implement that. And then you go out and you do it. If you join and you don't do anything, Nothing's going to happen. You're just going to waste your money. But I promise you that the only way that you're going to get out of the crazy cycle is you have to change the way you run your business and you have to start charging more. You have to. It's not an option. It's a requirement. You have to start charging more for every job you do. And what I want you to do if you're having a really hard time with this, on the very next job that you bid, I want you to add 10%. Let's say you get done and the job's going to be $10,000. I want you to add 10% to that number before you send it off. I want you to do 11,000 instead. Just 10%. Not a huge amount, just 10%. And I can almost guarantee you that the people will not balk on that price. And if they're balking at 11,000, they would have balked at 10,000. They would have balked at nine. They would have balked at eight. They would have balked at any number that you gave them. But I guarantee you, if you mark it up just 10%, if you want to be crazy and do 25% extra, charge $12,500 instead of $1,000, then do that. See what happens. I think you'll be extremely shocked at the result that will happen. And you'll be able, at the very minimum, make an extra 10% on the very next job. Now, as you keep going higher and higher and closer to a 50% gross profit, you will start to get some pushback from some clients. And that is where the sales process kicks in. This is where our bread and butter of the profit sales system is because you can weed out tire kickers over the phone, stop wasting your time going out and doing free estimates and actually sell jobs at a higher gross profit percentage. without going out to their house and doing it all over the phone because your phone etiquette and your phone skills and your communication is going to be so much higher level, higher tier than all the other contractors that are charging 40 bucks an hour that it's going to be a night and day difference. People will get on the phone and be like, man, this guy's different. This guy knows what he's doing. This is the type of contractor that we want to work for. I hope we can afford him. I know it's going to be expensive, but man, we got to figure out a way to work for him. That's the type of experience you want for your customers. So to recap on this podcast, guys, if you want to get off the crazy cycle, charge more. That's step one. You simply charge more. That literally is that simple of an answer. It's a lot harder to execute, but it's that simple. And the answer is that you have to charge more than what you're charging. If you don't even know how much you're supposed to charge. Reach out to me. I have a labor burden worksheet that will help determine what you should be charging for employees. I have another worksheet that will help determine how much you should be charging per hour if you're a one-man operation or if you charge by the hour. I have lots of worksheets that I can help you with. Reach out to me. Join my free Facebook group, the Contractor Profit Group. All the information that I share on these podcasts is available in the free Facebook group. You can also find me on Discord. Instagram, TikTok, all the social media platforms. Search for Hammer and Grind Podcast and you'll be able to find me. The Facebook is the Contractor Profit Group. You're going to search for The Contractor Profit Group and you'll be able to join there and get more information. You can also email me. Just reach out to me and I'm more than happy to help you in any way that I can. But please, please, please, please get off the crazy cycle.
