Why can you work constantly yet still make almost no profit?
Greg worked 16 hours a day, six days a week for a full year, then asked his accountant how it went. The answer: roughly $2,000 net profit for the year, which works out to less than $2 an hour. The hours were real, the effort was real, but without understanding costs and pricing the business swallowed everything he earned.
The lesson here is that effort does not equal profit. Profit comes from understanding the numbers and actively managing them.
What are the levers you can pull to improve profitability?
There are three main areas to look at:
- Hourly rate. What you charge per hour for the work your business does.
- Cost of operations. The fixed costs to run your business, including vehicles, computers, rent and everything else needed to get jobs done. These costs run eight hours a day, every day, whether you are billing or not.
- Material markup. What you add on top of your cost of materials. Some businesses stay profitable on materials while losing money on labour, but Greg's view is that you should be making profit on both, not covering up inefficient labour with material margin.
Every hour you are not billing, your cost of operations is still ticking over. That is why labour efficiency is central to the whole model.
Why do business owners on the tools bill far fewer hours than they think?
If you are running the business and working on the tools, you are also taking phone calls, booking jobs, collecting parts and project managing. Greg's observation is that even in an eight-hour workday, most business owners on the tools are only billing for around five of those hours.
At that level, even a reasonable hourly rate produces very thin margins. You end up in negative-two to positive-two net profit months and cannot grow. It is not until you put on your first tradesperson, who can bill eight hours a day because that is their only job, that you start to get the leveraging effect.
How does the forecasting tool show where your time actually goes?
Greg built a Forecaster tool that starts with your waking hours each weekday, then works out how many of those hours are spent at work. Within your working hours, you allocate time across four areas: admin, operations, sales and marketing, and strategy.
Once you put those numbers in, the tool shows whether you have spare time or whether you are already in the negative. When you are at negative hours, the first thing that gets sacrificed is time at home, then strategy, then sales and marketing. If you stop doing sales and marketing because you are too busy on the tools, a workflow problem is coming. If you stop doing strategy, you lose direction.
When you add a team member into the tool, their available hours are added to the total and you can see how that changes what becomes possible across every area of the business.
What does gross profit actually mean in this context?
Revenue is what you can bill if you fill the available hours. Gross profit is what is left after you subtract what you pay your tradespeople per hour and the direct cost of materials and anything else tied to the job itself. That gross profit is then what pays for your admin, your operations management and all the non-billable functions of the business.
As the business scales, gross profit grows, but so do overhead costs. The Forecaster tool is designed to show you both sides so you can plan ahead rather than discover the problem at the end of the financial year.
Why does your profit and loss statement matter every single month?
Your profit and loss is your business scorecard. Greg is direct about this: if you are not looking at it every month, you cannot trust what you are seeing when you do look. A common problem is invoicing in the wrong month, which makes one month look highly profitable and the next look terrible. None of that data is reliable unless you close off each month properly.
When the data is not reliable, most owners stop looking at it altogether. That is a risky place to be because you are running the business blind. Closing off your month correctly is what makes the scorecard usable.
What should you take away and act on?
Every time you are in a position where you cannot do sales and marketing and cannot do strategy, the business will stop growing. That is a clear warning sign. The goal is to create capacity in your team so you have the spare time to work on pricing, financial performance, service delivery and training. Those are the things that compound over time and build a business that actually pays you properly for the hours you put in.
