Getting to a million dollars in sales is an important milestone for several reasons. Of course, it’s a figure that means something emotionally; you now have built a million-dollar business, a success that not very many people achieve. It’s worth taking time to celebrate that.
But it’s not uncommon for owners to reach that million-dollar milestone, only to subsequently lose momentum and motivation to continue growing. Here are some key points to consider:
You might be making more money at $700K than you are at $1 Million. At $500,000 – $900,000 in sales, you’re probably doing most of the work yourself and making almost all the money for the company. Expenses are low, and you’re likely the low bid for every repair or installation. Once you get past the million-dollar mark, that model becomes less feasible.
You need to get out of the truck to run the company. You’ll need someone to do the things that keep the company running, such as answering phones, doing the books, and scheduling calls. You’ll need to hire people – the best you can afford – and that will erode your profits in the short run. There are plenty of owners who get discouraged at this point; they feel like they’re going backward. But this step is critical to achieving real growth and profitability.
Once there’s distance between you and the customer, you can put systems and processes in place to make the company more efficient. Invest in a Customer Relationship Management (CRM) system, like Housecall Pro or Service Titan, so that follow-up and annual maintenance reminders can be automated. More marketing and advertising so you can keep the phone ringing.
Yes, these investments cost money and will reduce your profitability. That’s why you’ll need to raise your prices. Hiring someone to do the work you’ve been doing for free can be expensive. You’ll have overhead to cover, and you’ll need to re-evaluate how you estimate the jobs you bid on. You may no longer be the low-cost leader in the market. That’s a good thing. Customers who hire you solely because you’re the cheapest option are unlikely to be long-term, loyal customers. Buyers also know this, and they see low costs and low pricing as adding risk to the purchase of the business.
If your business is not generating at least a million a year, it will be harder to sell. Most owners selling less than a million a year do so with almost no help. They’re making every sale and solving every problem. They are the only skilled technician in the company, so whatever happens, happens because they’re in the van.
That’s not a bad job, and you can make good money working with almost no overhead except perhaps for an entry-level helper. But I never get a call from someone telling me, “I’d like to buy a business where I work in the field 14 hours a day, in all kinds of weather, then come home and do six hours of paperwork every evening after dinner.” That’s no one’s idea of owning a business. The only person who will want your business when you’re ready to retire is someone who is working up to that level, and they won’t be able to make any kind of large offer.
What I tell single operators is that the business isn’t sellable, except under very specific circumstances. And that’s ok. There’s nothing wrong with running a profitable small business and not aspiring to grow. Just understand that when you eventually do exit the business (everyone does), you won’t have proceeds for a business sale to fund your retirement.
