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[Formula] How To Double A Builder's Profits

Written by Russ Stephens | Jan 20, 2016 7:47:33 AM

Too many builders simply hope to double their business rather than plan it.

It's a nice target, but too many builders simply hope to double their business rather than plan it.

 

APB has been systematically doubling its business year on year since 2011. Here's how we do it.

 

 

Where To Begin

 

To start with you need to be clear on where you are now. If you are making sales of $3m a year with an average contract price of $250k, then you are averaging 3 sales per quarter. So let's start there.

 

The easiest way to sign a contract is to create a customer. So by selling a low value item like a soil test or contour survey, you are 5 times more likely to get a contract signed.

 

By measuring the conversion rate, we know how many low value sales need to be made each quarter.  A 33% conversion rate means we need 9 low value sales each quarter.

 

But to sell a low value product and create a customer, we need a qualified lead, otherwise known as an opportunity. If we are converting 20% of our opportunities into customers (not contracts, just customers), then we need 45 opportunities every quarter.

 

Now to generate an opportunity we need a lead. And if 3 out of 4 of our leads are time-wasters or price-checkers, we'll need 180 of them to create our 45 opportunities.

 

So how do we get 180 leads? Our website! And by converting just 3% of our website visitors into leads, we only need 6,000 of them each quarter.

 

This is the easy bit! Because in order to get 6,000 visitors to our website, all we have to do is buy traffic from Google or Facebook at a couple of dollars a click!

 

That means for an advertising budget of less than $4,000 a month, a building company can generate sales of $3m a year.

 

So How Do You Double Your Turnover?

 

Simply double your advertising budget and you'll end up with 12,000 visitors a quarter.

 

Three percent of those visitors is 360 which will become leads.

 

When you eliminate 75% of the rubbish, you'll have 90 qualified leads. And if you sell a low value item to just 20% of them, that is 18 customers.

 

By converting 33% of those customers into clients, you have 6 contracts with an average value of $250k, which is $1.5m or $6m for the year.

 

Of course, you could also work on an up-selling strategy to increase the average client spend and increase your selling price through better marketing and positioning, but if you just want a fast, simple way to double your business, this is it.

 

You may be thinking "it can't be as easy as just doubling your marketing budget," and you'd be right.

 

You Need To Implement The Process And Measure Results

 

You will need to put the process that I've just outlined in place and measure your conversion rates to maintain profitability. But in essence, this is how the Association Of Professional Builders continues to double its business each year and this is how we have helped the builders who have worked with us to double their businesses.

 

 

If you'd like to see this process mapped out you can download the free sales process for builders by clicking on the link below.