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Improve Profit with Job Costing

⏱️ 40:47 🎤 Andrew Dwyer, Kevin Hoffman, Chris Moore
AUDIO EPISODE
Improve Profit with Job Costing
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Chapters

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  • 0:00
    Unnecessary Home Maintenance
    The hosts discuss common social media-driven home maintenance tasks like flushing water heaters and cleaning ducts, questioning their necessity.
  • 4:17
    Introduction to Job Costing
    The hosts introduce job costing as a necessary practice for painting businesses, unlike the debated home maintenance tasks, and welcome Chris Moore to discuss it.
  • 8:41
    What is Job Costing?
    Chris Moore provides a simple definition of job costing: analyzing the money made on a job by comparing revenue, labor, and material costs.
  • 11:02
    Job Costing vs. P&L
    Chris differentiates job costing from looking at a profit and loss statement, explaining how P&L can be skewed and how job costing provides more granular, actionable data.
  • 15:53
    Client Reactions and Insights
    Chris shares common client reactions to job costing, often highlighting a surprise at profit margins or a realization of undercharging, and how it reveals underlying business issues.
  • 21:19
    Industry Benchmarks
    Chris outlines key industry benchmarks for profitability, labor, and material costs in residential and light commercial painting.
  • 30:29
    Case Study: Exterior Projects
    Chris shares a personal case study from his former painting business, explaining how job costing data led them to stop taking on large exterior projects due to lower profitability and more callbacks.
  • 38:29
    Overcoming Spreadsheet Aversion
    Chris addresses common painter resistance to spreadsheets, emphasizing that job costing can be simple and should not take more than five minutes per job.
  • 45:28
    Job Costing for Business Growth
    The discussion covers how job costing provides data to support gut feelings, inform managerial decisions, and test the impact of operational changes as a business grows.
  • 49:45
    Elite Business Advisors & Resources
    Chris discusses Elite Business Advisors' services, offers a free job costing sheet via email, and promotes the American Painting Contractor magazine.

Speakers

A
Andrew Dwyer
Host
K
Kevin Hoffman
Host
C
Chris Moore
Founder of Elite Business Advisors

Key Takeaways

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Implement job costing to accurately track revenue, labor, and material costs for each project, moving beyond general profit and loss statements.

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Aim for a gross profit of 45% or more on residential and light commercial repaint jobs, as this is a key industry benchmark for profitability.

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Keep labor costs (after employer taxes) at 40% or less of the total job cost for in-house employees, or 40-50% of revenue for subcontractors.

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Monitor material costs, targeting 10-15% of revenue, and investigate if consistently exceeding 16% as it may indicate an issue.

✦

Utilize job costing data to identify which types of jobs (e.g., interiors vs. exteriors, cabinets) and which crews are most profitable, and adjust your business strategy accordingly.

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Don't let aversion to spreadsheets deter you; simple job costing can take as little as five minutes per job and provides invaluable insights.

✦

Use job costing data to back up gut feelings about team performance or project types, providing concrete evidence for coaching, training, and strategic decision-making.

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