Sales is for vanity, profit is for sanity.
Sales for show, profit for dough.
Whichever way you phrase it, the result is the same.
You can show as much money as you like on your accounts, but the profit is what really matters.
There are a lot of posts going around at the moment from people, telling a story of how much sales have increased and how well they are doing.
But with cost price increases rocketing, how much profit is there in real terms?
And do you know what it is?
You sell a kitchen for x amount and a profit of y.
But then things happen.
A couple of extra panels need to be ordered because the client would like some shelving.
The customer asks for a couple of extra sockets to be put in at the end of the install.
There was a cutlery tray missing off the order so you need to give one free of charge.
Suddenly, a lot of extra costs have hit the sale!
You knew what your margin was when you took the deposit, but do you know what your final margin was?
When I am working with new clients, this is one of the first exercises we go through.
Know your profit and what you are really earning from your jobs.
And there are a certain amount of things you can do that will help.
1 - Know your margins
Whatever system you use to quote your kitchens, make sure the selling prices, and the cost prices are up to date.
There is no use selling an item that you thought was returning a large margin, only to find out there has been a price increase and you have now made a loss on it.
You perhaps use a quoting software package such as TruBlue, or you use your own computer spreadsheet, or maybe a folder from the supplier.
The number one priority is that the cost prices are accurate and you aren’t getting a nasty surprise when you would out your final profit.
2 - Check Your Plans
Ideally, get somebody else in the business to do it, but make sure every plan is checked and double checked before being confirmed with the customer.
Make sure all of the units are correct, the trims have been calculated accurately, the worktop colour chosen is the right one, and all of the appliances are either listed on the quote, or marked as “customers own” on the plan.
Annotating plans is a vital part of protecting your margin.
Let’s say you have an infill and you plan on using a wall end panel as materials.
The fitter on site sees an infill is needed and decides he can get two fillers out of a base panel.
Suddenly, you are a base end panel down and need to order one.
There is a time issue so you may need a courier, there is the cost of the panel and the installer may also need to go back and fit it.
If there is an infill on the plan, annotate exactly what materials are to be used for it.
Also, is there a waste bin on the quote? Are there lights? Is there a cutlery tray?
Back when I was managing showrooms, I would check every plan before it was presented to the customer.
If there was no cutlery tray on the quote, I would give it back to the designer to add it before giving it back to me.
Why?
Because at the end of the project, the customer would come to me to say that they were missing a cutlery tray, and I had to give them one free of charge.
Eventually, every quote had a cutlery tray on as standard without me having to check.
3 - Cover everything !
When you are putting together your contract for the customer, make sure everything is covered and that they know exactly what they are getting for their money, and more importantly, what they are not getting!
It’s very easy for the customer to ask a few favours on site.
“I’ve bought a small radiator for another room, would you be able to fit it ?”
“I would like an extra light fitting in the dining room, could you just do it quickly?”
“Can I have another double socket fitted in the kitchen?”
The answer to all of this is, yes you can, but there will be a charge.
Explain what the charge is, what it covers, and get it confirmed in writing by email or in person.
Margin “leakage” costs small businesses a lot of money, especially in the world of KBB.
You need to protect every penny.
So, in summary, sales are of course the major focus of your targets, but margin is as, if not more important.
Stringent processes and procedures are absolutely key to making sure you are protecting yourself, your business and your profit at all times.
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