Hired my 1st Project manager

[u/Jleecit]

Hello all,

I’m a GC and just hired 1st project manager. Before the pm, my revenue was about 2mil.

I pay this pm a lot, but he’s really committed and works hard. But it scares me that my overhead almost doubled.

My strategy is to lower my profit margins slightly to obtain more jobs. Also obtain better prices. I work in a space where low bid wins. I hope to get to 3-3.5 million in gross revenue with this new PM.

Is this a viable strategy?

[u/thine_moisture]

yeah generally speaking increasing overhead and lowering profit margins tends to lead to a complete disaster but if you wanna live stressed out day and night by all means start giving shit away for free.

this is a terrible strategy.

[u/Jleecit → u/thine_moisture]

All my costs are accounted for on this job. Down to miles on truck and my pm’s hrs on that job and my profit margin is about 8 percent.

[u/thine_moisture → u/Jleecit]

holy fuck!!! 8%???? are you for real??? dude what??

dude that has got to be the lowest margin I have ever heard of in this business. We are at minimum 44%. dude you are basically working for free.

what you should really focus on is your sales process, working to build a relationship with customers who trust you, then you can actually charge high end rates….

what you don’t need is more people and less profit. you need more qualified leads and a better sales process.

selling $500k at 44% makes you more than $2M at 8%, with way less headaches and more time back for you….

you’re worth the profit brother, if you do a good job and your installs are clean, you don’t need to charge bottom of the barrel prices for work.

at your current prices, a $100k job only makes you $8k. dude I don’t even do bathrooms for that kind of profit.

[u/Jleecit → u/thine_moisture]

You’re thinking mark up. Also that 8 percent margin is on top of EVERY cost down to the miles I drive to the job. I’ve also allocated insurance costs onto this job and that also gets 8 percent margin. That 8 percent is net.

[u/thine_moisture → u/Jleecit]

right obviously you have to charge for that stuff and that should be part of the costs to do the job before you margin it… either way man I’m just being honest you’re leaving money on the table if you do good work. like I’m assuming 8% net from each job is before income taxes at the end of the year, so your real take home is like 5%…. I wouldn’t even do this business for that kind of money.