I can do two or three of these jobs in a year and be fully set. Welcome back to another midweek modern craftsman, where I am hot off the plane from Omaha, Nebraska, where it was very hot. We had our contractor coalition Summit. But first things first, I'm going to talk to you about what we are going to be covering today on the podcast. It's about understanding your ideal project size and the scope. So generally, when we talk about growing a business, the assumption often is that bigger
projects mean bigger profits. But I did that for roughly a decade, I worked towards that, and I've learned that that while
sometimes may be the case, it's not always the case. So in this week's episode, I'm going to be breaking down how I discovered my ideal project, size and scope, not based on just what looked good on Instagram, what fed my ego, but on what actually made me money and helped me maintain that lean overhead and allowed me to build a sustainable business, a profitable business, and one that really helped me avoid burnout. So I hope that all of you guys and girls enjoy this
one. If you missed out on contractors coalition summit in Omaha, we are hosting one in Chicago coming up here. So we have them on contractors, coalition summit.com, on the on our newsletter. So hop on modern craftsman.co. Sign up for the newsletter. We are offering a ton of discounts leading up to that event, and the only way to get them is through the newsletter. I believe that recently, it was something like $4,000 off a ticket. So this past week in Omaha, honestly,
the most fun I've had in a very long time. Just a really great group of people, such a fun time. Obviously, we had the educational aspect of the event. We locked in, we we took care of business, but we also, from the outset, just really took some time to get to know everyone, connect with everyone, on a on a personal level. And we ended up hanging by the pool. We ended up spending time after dinner together. Just really a super strong social aspect to this event. And I felt that I knew
everyone. I felt that everyone was, you know, friendly friends. We just built this great camaraderie that, not that that was lacking in other events, but that was one of the biggest takeaways for me here, right? We market this and we push this as this educational, driven event, right? You're going to come in, you're going to learn processes, systems, you're going to get a peek into what we do, be able to get some access to myself, Morgan, Brad, Mark, Nick, and then the dinners, the social
aspect, the networking, is all secondary. And this event, I realized that there's so much power and value in the networking and developing that rapport with people all around the country, with different sized businesses, and moving forward like that's something that I want to ensure that we
focus on. Day one I was I was speaking with Mark Williams getting ready to fly home, where it's like, day one, let's have an exercise that breaks down barriers, allows guests, allows hosts to be vulnerable and to really get to know each other, because that happened this event and the rest of the event, honestly, it was like I was hanging out with, you know, 50 of my best friends, talking shop, talking business, but also just having a good time, the banter, you know, busting some
stones, having fun with each other, swimming, documenting all of it. It just was a blast. I had so much fun, and I'm really looking forward to Chicago. So if that's something you're interested in, definitely hop on the newsletter, modern craftsman.co you can get it, you know, on our on our website, contractors, coalition Summit, you can get it through the Instagram, modern craftsman pod. If you can't find it through any of those means, [email protected] but
definitely check that out. Honestly, yeah, it's a it's a work trip, but like, I need to express how much of a vacation this was, how much of a social event it was. I. Yeah, we had all of the educational aspect, all the teaching, all the deliverables, the access to this network of people, but it was three, four days worth of just fun, like absolute vacation type
of fun. So you're going away, it's going to be a work trip, but you are also going to be staying in a nice hotel, have nice meals, nice dinners, and hang out with people that you probably relate to more than you realize, and you will have a boatload of fun. Check out the pictures. See how much
everyone's smiling, see how much everyone's laughing. Honestly, the best four days I've had in such a long time where I just got to let this beautiful hair down, relax and have some fun and socialize with some people who I have a lot in common with. So today's podcast, let's get into that, because that's what you're all here for, right understanding your ideal project size and scope. So for many years, probably the first 10 years in business. And I think I started my business 2010 so
we're 15 years now. I I always wanted to work towards the higher end jobs. I wanted the jobs that look sexy, that look cool, that I could post on Instagram, those details, because I thought that that was the path to financial freedom, to profitability. You know, just one more job like this. If I get this client, if I get this project, if I could work with this architect, with this designer, then I'll be set. And
I chased that Dragon for a long time. And I'm not saying that those jobs are not profitable and that they aren't my ideal type of project now, but I realized that I was focused on focusing on the aspects of those jobs that aren't quite as important, right? It doesn't need to be a job driven by ego for me to make money. It might be the similar type of esthetic and the similar type of client wanting that type of work, but that shouldn't be the defining characteristic of the jobs that
I'm looking for. It's about the fit, and it's about the fit from not only client perspective, but what's the scope? How do I make money? What type of trades are involved? What's the logistics of this project? How do I orchestrate and build this project to make me the money. Maybe it's a super high end job.
Maybe it isn't, but I understand what needs to go into it, and how I can piece all the parts of the puzzle together to optimize efficiency, maintain that lean overhead, be able to charge for management, be able to self perform some trades and have enough of a markup on some materials that I can actually make money and not have to put multiple millions of dollars worth of work into place. So this took me, probably again, 10 years to realize that, like, although the project may be
sexy, that's not what's making the money on the project. And I've done sexy jobs that have made me money. I've done sexy jobs that cost me money. And I've done the same thing with jobs that aren't there, right? They're they're more of a utilitarian type of project, and some of those have made me more money than the more complicated, more ornate, more detailed jobs. And typically, that comes down to economy. And the numbers look big, the amount of time that you are allocating and the values
that you are assigning to line items look big. But what you don't realize is that you're creating custom one off work where your systems aren't repeatable, and systems that you used before may not apply as easily to these projects. So these type of jobs require learning. They require mistakes. There's a lot of inefficiencies associated with this that sometimes are difficult to calculate, account for, manage and also scale. So I relate it
to the golden egg, right? If you're if you're building the golden egg every time, it may be an expensive egg, but the resources that go into it may require may be more heavy. So what if there's a project that maybe it's not the golden egg, maybe it's the silver egg. It still looks great, still great. Clients, the numbers are still there. The fit as far as client profile and job type of profile are there, but maybe it requires slightly less resources to make it work, so your margins
actually go up? What ends up happening right with these larger projects, at least for me, or these, like higher end larger projects, there's the golden egg issue that I I just mentioned, where, like, systems that you've developed cannot, they don't. Directly transfer or correlate to this type of job. So you may have systems, but when you get into that highly detailed custom work, those systems may not transcend each
and every job, so you're still reinventing the wheel. So you have the inefficiencies there's time that you can't capture. You're learning on the fly. You're learning how to use new materials how to orchestrate this entire song and dance. I guess choreograph would be a better word, and it doesn't justify the amount of time and resources that go into it on
your end. So typically, these larger jobs, when you get into the bigger jobs, when you get in the more complex jobs, the numbers of those jobs go up right the selling, the revenue, the numbers are up. But what ends up happening is you start, if you're an owner operator now, or you're a smaller contractor, you start treading into projects that larger contractors are also
pricing. So for me, I have higher markups because I'm looking to achieve higher margins, and the reason why is because I'm not putting three to $5 million worth of work in a place. So you have these larger companies that can also handle these jobs, that don't want to touch the smaller jobs, but they have a higher overhead. They have more staff. They have systems put in place that allow them to put more work into place, to generate more revenue throughout the year, to create
an economy of scale for their projects. So if I'm looking at a job and it's like right on the lower end of a job that a big company can do and the higher end of a job that I can do, I have to be careful that I'm competitive, right? And so if I price a job a certain way, and my markups are 40% and a larger company in who lives in the world of full renovations, full builds, and their pricing and their builders fee might be 12
to 18% I might be pricing myself out of those projects, right? So if I try and be competitive, and I bring myself down, I bring my numbers down. Now I'm performing at a level and a price point
that doesn't make me any money. So I found that, like, right in that transition spot, I would rather maintain and air towards the size of jobs that the bigger contractors still don't want to touch right so I'm, like, at the top of my my size of job, my scope of job, my price of job, and what that does for me is that allows me to maintain my markups, my margins, and not have to compete with these bigger companies that have much lower builder fees than me, because they have the systems in
place. They have the economy they can handle the inefficiencies. I need to ensure that our jobs go seamlessly, that my overhead remains really low, and there's just not a lot
of room for error there. I need to live in a world where my jobs are big enough, and this may sound weird, but also small enough that I can justify my higher markup when you start to play in the world of the bigger contractors, they need to remain competitive, and they're putting five, $10 million worth of work into place, so that 12 to 18% builder's fee ends up still
being substantial. If I'm putting a million dollars worth of work into place, that 12 to 18% builder fee, or however your pricing is structured, winds up not making me any money, because that's supposed to be covering your overhead and your profit. So my numbers have to be larger. So I need to be focusing on a
specific client. I need to be focusing on a specific job. I need to ensure that I keep my overhead as low as possible, to further, I guess, exacerbate the difference between my revenue and my overhead, which which creates a higher profit margin percentage, right? So it's like, I want to live in the 40% net profit margin. If I can aim for that. I don't need to put $3 million worth of work in place, because my overhead is really
low. So what type of job does this necessitate for me to be profitable, to be successful, to be able to still differentiate myself and to make the money that I need to the smaller jobs can make me money, and they typically have better margins, but I have to account for how much work I have to self perform, how much work I want to self perform, so I can make money self performing all the trades in a bathroom, but it requires a lot of physical effort on my behalf, which at
this point. Point I may or may not be wanting to do if I start subcontracting trades out of a bathroom, even if I'm getting a management fee, there's not enough money there for me to be working one job at a time and to be making the money that I need to with downtime, with inspections, the numbers on the subs just aren't big enough. So the markups would have to be ungodly high for me to make money move into, maybe kitchens,
right? Kitchens I can make money doing, and that's because typically they're big enough that I can bring some subs in. The subs numbers are bigger. So I'm making a little bit of money on Markham on then I'm selling some higher end finishes, some materials like cabinetry, where I can make money, and then I'm still able to self perform tasks that make me money. It's a good job. I like kitchens. They make me money.
They're a great space for my business, but they aren't the most lucrative, and most of that comes down to, they require more of my time, and I'm somewhere in between, like, should I self perform this amount of work? Should I bring somebody on? Should I bring in somebody part time to help me work? Or should
I subcontract this out? If I subcontract it out, the numbers aren't quite big enough for me to have a substantial markup and management on top of that, and they're just getting to the point where they're a little bit too big for me to self perform everything by myself, so I'm somewhat in the middle where I can make them work, but it's either going to require a lot of physical work from me, or stepping back and managing subs
and making a little bit less money. So I've learned over the years that my ideal project, client, aside, you know, demographics, psychographics, all of that stuff aside, is going to be like a first floor renovation with a kitchen. And the reason that works great for me is I can bring on somebody
part time. I can have the help when I need it. The budget of the project, the scope of the project necessitates help in some capacity, from TRG, so I get to self perform the trades that I'm self performing are generally big enough that it there's a lot of time, there's a lot of hours for there for me to capture my premium rate. There's also some labor intensive and labor heavy trade tasks that I can subcontract out. I can have my premium markup on them, and I can also charge a management fee
on them. For example, demolition, right? That's not something that I want to be doing or that I feel I can charge a premium rate. So I can have a subcontractor the number like the numbers justify bringing help in for that, I can charge my markup on them, and then I can fine tune and I can
manage. So I get a couple of days where we get to sell, perform or manage, and I still make my premium based labor on that, while remaining competitive from an overall numbers perspective, dryable insulation, even my electrical numbers, all of these numbers are big enough the materials the kitchen cabinets, I don't sell appliances, but millwork, trim, paint, all of those have materials associated with them and and sub trades associated with them that the price tags a
little bit bigger than a standard kitchen, so I'm making a little bit more money. But the logistics, the staging, the breakdown, the correspondence, communication isn't that much more than just the kitchen, because most of the layout, most of the communication, most of the time, is being spent in that kitchen, and then your sub trades are there doing other work throughout the house. That's somewhat easy work, right? It's a living room, it's a dining room, it's a foyer,
it's a powder room. They're not the it's not a full bathroom, it's, it's, it's areas of the house that are big spaces, but not highly detailed. So these type of projects, there's economy and there's efficiency. With the trades, I get to self perform a lot of the work. There's big enough subcontracts that I'm making money on them, and I'm also able to manage
them. There's big enough labor heavy trades that I could subcontract them, and I don't have to sell perform them, then it's also enough work to keep myself and a helper busy, even if that helpers only part time. So these are the type of jobs that make me the most money, and I understand it's because of all those things as to why they make me the most amount of money. These type of contract or these type of projects they they leverage my craftsmanship, my differentiation, and also my
systems. Many of these renovations are living. Mm. So I get to differentiate, I get to make money on site protection. I get to sell the value of site protection. All of this is part of my marketing. It's part of my lead generation, and it's also part of my systems that I feel I can fulfill better than contractor B and C. So it allows me to not have to compete. I can still differentiate, I can still sell a value driven service, but
I can make money. These are also the type of jobs where, you know, a bigger contractor may come in, and it's, it's low on their priority list, right? They want to be doing other work. So although they may have low markups, which would make them be more competitive. It's not the type of work that they make money on, so they throw somewhat of an a hole number on it. So I
can still remain competitive in this space. I can still make money through my system, through my setup, through my efficiencies, and through my lean nature of my business, while still making the money that I need. So I would recommend understanding how you generate numbers, what your overhead looks like, how you make money as a business, and
that should dictate what type of projects you should be doing. I can do two or three of these jobs in a year and be fully set if I was a bigger contractor, if I had multiple employees, I'd have to do more of these type of jobs, or I'd have to implement smaller fill in jobs, or have one and a half things going at a time. The way that I'm structured, the way that I'm set up, I can plant myself on these jobs, even if they take six months, four months. Do three of them, I'm making the money that
I need to. I can subcontract trades when I need to, if I land another job and I want to bring another job on, there's enough money that I can subcontract trades that typically I would self perform, and I could manage them, and I can get a fee for that, and I could still maintain the standards that I need to. So they give me some leniency as far as how I want to spend my time if I want to sell, perform, if I don't, but I know that the money's still there regardless, because they're big enough for
me to be able to make the money in that manner. I can't do that with a kitchen, right? I can't subcontract a ton of trades with the kitchen or bathroom and still have any money for me. So I'd have to do a boatload of them to be able to make money
subcontracting them. From a scheduling perspective, if you have employees, or if you're looking to sell, perform more, or you're subcontracting certain aspects of those trades out and you only have one project going, what are you supposed to do with your help or your labor, your workforce, when there's inspections when the drywallers are there. So that's why I've found out that these are the best jobs for me. And I'm
protecting my numbers. I'm protecting my company. I know what makes me money, so again, I would really consider what makes you money. And so many people say I want to get into new builds. I want to be doing high end work. I want to be working
for these type of clients and working with designers. And I would challenge that, and I would ask yourself, why is there a path to suiting your needs and fulfilling your requirements from a business that's a little bit easier to make money, because those jobs, those more discerning clients, if you are not set up and structured to make money delivering that type of product, it can be more headache than it's worth. It can cost you more time. It can cost you more money. The systems that
you're creating aren't necessarily repeatable. You have to have tighter strings on everyone. You have to manage your subs at a higher level, and sometimes you may not be set up from a budget perspective, a systems perspective, a process perspective, to handle those type of jobs. So hopefully this gives you a little bit of insight as to how I manage my projects, how I market my projects, what type of projects make me money, and just some food for thought as to how you
can determine what is a best fit for you. It's not just client, it's not just demographics, it's not just, you know, psychographics and how you're what the purchasing process looks like, what the personality traits are, what type of client is your ideal client, and even from a project perspective, right? It's not just high end projects. It's not just
kitchens. It's understanding what goes into them, what type of materials are selling, what you're owning, what you can manage, what you can subcontract, what you can sell, perform to make those numbers come together and suit your business needs. And I think once you do that, and once you understand that, you can manipulate those numbers, some to work as efficiently as possible for you, you will have a. A business, a model and a marketing program that you can
tailor to fit your needs, to fit your ideal needs. So I hope that helps all of you, at least gives you some food for thought. You can begin to dive into what makes you money, what type of projects are ideal for you and your business structure, or what you might actually need to grow or scale back to achieve again. Check out CCS Chicago coming up. Sign up for the Modern craftsman.co newsletter. If you want to hop on a consulting call with me myself. Trg Tyler Gray, shoot me an email.
we can dive into your business, your numbers, a plan what the [email protected] future may hold for you as for me. That wraps up this week's midweek as always. Thanks for everyone for following along, for listening. Thanks to everyone who came out to contractors, coalition Summit, honestly, one of the best times I've had in such a long time. And it wasn't necessarily because we are in Omaha, is because of the people who are
there. So thank you to everyone. I will catch all of you next week.