The Big Squeeze - The Overhead Fix
In this training video, contractor‑focused speaker Jim Johnson explains how contractors are caught in a "big squeeze" – rising fixed overhead combined with flat customer pricing that erodes profit margins. He first visualizes fixed overhead as an anchor dragging a boat (the business) down, then critiques the traditional "body shop" model where growth forces the hiring of more staff and technology, inflating costs by 15‑17% (people) and 10‑11% (tech) of revenue. Johnson proposes a "hybrid workforce" that replaces the costly body‑shop approach with four layers: (1) amplified leadership that is 10× more productive, (2) a global remote workforce (e.g., offshore bookkeepers, accountants, customer‑service reps) that can cut overhead 30‑40%, (3) automations that eliminate repetitive tasks and save another 10‑15% of overhead, and (4) AI agents that can handle CSR, sales follow‑up, invoice validation, and more, delivering an additional 10‑20% cost reduction. He illustrates the financial impact with a concrete example: replacing three U.S. staff (totaling ~$185k) with two global professionals and a $45k tech stack saves roughly $140k, which can be reinvested or used for bonuses. The video then promotes a paid virtual workshop – the "Profit Mindshift" – scheduled for March 5, featuring the Nero Story Selling system (sales acceleration), an automation checklist, an AI roadmap, and an executive vision summary. Guest specialist Noah Wessel will train attendees on automations and AI implementation. Limited seats are offered (75 salespeople, 25 companies). The video ends with a QR code call‑to‑action and a teaser for the next episode, "Victim or Victor," urging contractors to choose a profitable path.
Chapters
Hey, everybody. Welcome back to the contractors training room and our series on the big squeeze and the what's getting squeezed. Our profits as contractors, they're being squeezed from both sides that we're starting to hit a market cap in what customers are willing to pay. And whenever you combine economic uncertainty, you get this friction that we can't charge much more. When our first part of our series, we talked about our Nero story, selling that allows us to not only increase those numbers the way that we need to, but also close more jobs in a way that puts the homeowner in charge. Now, also, the other thing that we talked about is how we can start to reduce some of our costs and our cost of goods, material, and labor. But today I want to talk about those fixed cost, the fixed overhead, the things that are dragging us down. And we're going to talk about that in our big squeeze because we're being squeezed from our cost and also our revenue being squeezed together, which brings our profit into a situation where it starts to get compromised, putting our businesses in a compromising situation. So let's talk a little bit about what this looks like. All right, so I'm going to try and draw a little bit of a picture here to give you an idea of what I'm trying to talk about. Oh, let's imagine that your. Let's make this a little bigger. So let's talk a little bit about what that looks like. I want you to imagine that your business right here is this boat. And this boat is flowing through the water. It's got a motor on it with a propeller and all that good stuff. But it's also got this thing on it. It's coming down here. We'll try to make this as pretty as we possibly can. You're floating along in the water. Water's not red, water is blue. So we're floating along in the water here. And you have this thing back here that think of that as the bottom is dragging along and it's got this big anchor on it. It's just digging in, digging in, digging in. And what is this thing that's holding us back or eating into our profits? This anchor? This is our fixed overhead, which has been one of those things that for generations has been something that's hard to avoid, hard to navigate, hard to manage, because we've had to, for lack of a better term, haven't. That's your rent, that's your insurance, that's your people. That's all these things that are involved in our business that are fixed overhead that's actually dragging us down. And when we build a business and we're thinking about growing our business, we start adding to this fixed overhead. And it tends to be the thing that we add the most are two important things, especially in today's times. We add bodies and we add tech. Now, I've been looking at profit and loss sheets for our clients for the last six months as they're starting to hit these critical things where they're not growing like they thought they were going to grow. And if anything, they're staying even or maybe even declining. But they still have this overhead, they still have this number that's holding them back. And so they thought they were going to grow and they added bodies or administrative people to support and make sure that that workflow continued with what they were expected to happen. And they've also added technology. These bodies are costing anywhere from 15 to 17% of the revenue and the tech 10%. 10, 11 ish. And so that's a significant portion of just our over that doesn't include our rent and insurance and all the other things that go into our businesses. So what do we have to do to handle this fixed overhead? And can we we focus here without hurting there? Because that's important for me. I don't want to hurt people either. But for us to scale up, we've had to add these things, or at least we used to. Now we might be able to do it a different way. And I want to talk about that a little bit today in what we call the overhead fix. So we're going to try and fix this overhead thing and see if we can solve some of those issues for you. Let's move that on up out of the way. And we're going to talk about the old model. Okay? The old model is what we call what we call the body shop. And so when we start to scale up in our businesses, we start to bring on more bodies to support the boots on the ground. We have our salespeople that generate revenue. We have our production people that fulfill on the work. And then we have this administrative support staff that helps us perform that work and facilitate those sales, hopefully to keep happy customers. Now, I'm not saying I want to see anybody lose their job. That's not the goal of what this conversation's about. What I do want to see is I want to see a multiplier. In other words, I want to multiply the talented people that we have and amplify their abilities where they can do 10x of what they could do before, which Allows us to scale up quickly because we've implemented some things to amplify and multiply the people that we have. And then if we have to scale down, there's no cost associated with it. The cost is actually not a fixed cost anymore. It is a cost that flexes with our business. But in the, in the past in the body shop, what we've done is we've said, hey, we're going to add more jobs. So we're going to add more bodies to handle those jobs. And each one of those bodies that we add has a cost to them. Those are dollars. And every single one of those dollars matters. And so I hire a production assistant and that's 60k. I hire a person in the office, it's a bookkeeper and she's 75K. And I'll hire a administrative paperwork person. So just a straight admin and that's another 50k. And now if you add all of that up, we're looking at 125, $185,000 added to our current staff and bottom line that we already have just to handle this new level of revenue and generation jobs. So what if we didn't have to do it that way? This is, this is the old model. Every time we grow our business, we have to add more people. And if those jobs are repetitive jobs that can be done through process and system, do we have to hire that many people or could we just have a really good person that facilitates this through a different way of looking at our business? So this is the body shop. You know, you're looking anywhere from 185 to $200,000 if you're going to move just two and a half million dollars in your business. So if you're going to go from 5 to 7.0.5, you're likely going to add a lot to your bottom line. And don't forget the technology that would need to be added. So more users, more fees, just driving your technology prices through the roof. Because these users, these new people right here, have to use that software. And so what could this look like if we didn't have to do it this way? What if we could do it in a way that multiplied the people we already had, amplified their abilities and help them to lead better and to generate revenue for our businesses. So let's, let's talk about what that might look like. We're going to set that off to the side and we're going to talk about what we like to call the hybrid workforce. Why is it hybrid? Well, we've got some things going on. Let's. Let's talk about that old body shop. Let's pull this over for just one second. We'll come out, pull that to the side. We'll talk about the hybrid body shop. This is the way it used to be built. Okay? So we've got this triangle here. And at the top of this, we have our leadership. Okay? So that's our leaders. And then we might have what I call revenue generators. That's our salespeople, marketing people, folks like that. And then we have our fulfillment. That's our crews, project managers, quality control, things like that. And then we have our admin. And that admin can be a lot of different things. It could be an office manager, a bookkeeper. It could be office assistants, it could be supplementers. It could be all kinds of different people making sure that we facilitate the jobs that we have. And so this body shop tends to start putting more and more people in here to support the more and more people that we put up here as well. Okay. Especially in revenue generation and in our fulfillment and ultimately leading to even having to add more leaders to manage all the people that we've created in our business that are all dollar signs, every single one of them. And they're not cheap. Those. We talked in the very first episode that revenues are down 30 to 40% across the board in the industry, while the pay scale has risen 18 to 20% for these positions coming into our company. And so is there any positions that I don't have that for me to scale, I wouldn't have to hire? And I would argue that there are. Is there any positions in here that I could actually multiply what they could do in less time? I would argue that there are. Are there any positions in there that aren't performing at the high level that I want them to perform because they're all I could get because I was desperate that I could replace with somebody that does high quality work and performs better? We have to always ask those questions. Because here's a key thing. If I have one person in my organization that isn't doing what I need them to do, the whole organization suffers. Everybody's compromised. And so I got to cut them out of my business so that my business actually survives. And this is the reality of the world. If you're out there listening and you're an administrator or you're a support person, this is the reality of what's coming in our world, is that you are at. You are under threat. You need to perform at the Highest possible level. Because the one that stays. The one that stays is going to be the one that gets force multiplied. The they're going to be able to raise their performance because they're willing to adjust to what's going on. And so this is the old way. I want to challenge us to think about a little bit of a new way with a hybrid workforce. Okay, we'll bring that down where you guys can see it. So hybrid workforce. So how could we be hybrid? What does that look like? Well, it's four different layers, much like it was with the other. So I'm going to go ahead and draw that same exact pyramid and do it in green this time. I like green here. And so we still have our leaders. Those leaders are important. And I want to not just take those leaders, but I want to 10x those leaders. I want to get more out of them in less time. I want them to be able to perform at a high level and have the information available to them to make great decisions. And so those leaders, I want to 10x them, so I don't need as many of them to continue to scale my business. Now, the next group of people that are really important to us is a thing that we might want to consider, which is global workforce. So what do I mean by global workforce? You might be thinking the term virtual assistant. And I'm not talking about a virtual assistant. I have two virtual assistants. I have one that handles all my email and calendars and things like that so that I can do more with my time and so I can lead and 10x what I can do. And I also have a graphics person that handles a lot of the marketing stuff that we do so that I don't have to do that anymore. Because first off, it's not my greatest skill on the planet. And secondly, it allows me to get more done in less time for what I pay to that global couple of people. It more than makes up for it in the amount of production that we can generate. And so we start to think like that. But who is this global workforce? Well, you'd be surprised to know that those people are bookkeepers and accountants. I could probably write better. Bookkeepers and accountants. They are also customer service reps. They're also administrative people. And those folks get paid quite a bit less than what we pay here in America and actually do great work. And I've seen it happen over and over again. We can actually cut our overhead just in this part right here, as much as 30 to 40% that we can cut off of our overhead. Especially as we grow. Now that doesn't mean I want you to replace the people that you currently have. But as you grow, I want you to use the global workforce to empower your people on site to do even more so that you don't have to hire another person at that huge salary. And if any of these people aren't performing the way you need them to perform at a very high level for you to be as profitable as possible, I want you to consider replacing them. Because this global workforce is a massive difference to what is going to happen in your business from a profit standpoint. Now let's talk about a couple of other things. How do I amplify? Now I got these people right and I've got to amplify them. One of the things that we can do to amplify them is automations. So what can we automate? And it would shock you how much could be automated these days? What if I could automate my estimates? What if I could automate my supplementing? What if I could automate contract signings? What if I could automate follow ups from my salespeople to our customers? What if I could automate bookings whenever people call for appointments? What if I could automate all that stuff that's repetitive that I could do over and over and over again and do it perfectly every single time? What if I could automate those things? How much could that save me in my overhead? And that number is anywhere from 10 to 15%. So out of a hundred percent of my overhead, I've knocked off about 50% of that. Now that's a massive amount when it comes to a people perspective. Now last but not least, and the one that is going to be the one that's really moving the needle these days is a. So automations are things that are developed to automatically. Once something's triggered, something else happens. An AI agent is different. An AI agent actually has the ability to look at things in context and deliver a high quality, well done task every single time and even solve problems that might not have even been known that existed. And so what does that look like? Well, that could be an AI agent that does CSR work. So I could replace that with an agent. I could have a sales agent, I could have a follow up agent, I can have all kinds of agents that do work for me and complete tasks for me. And these agents are going to be more and more and more of those. And in our virtual workshop on the profit mindset, this model that we're talking about, what the new businesses are going to look like the ones that are going to survive the changes in our world. AI agents are going to become paramount. How about an agent that looks at every single one of your material invoices, compares it to your price list, says it's good or not, sends back the ones that aren't, and then puts the right ones where they belong in your QuickBooks and your. It's possible. And you know how it's possible because it's already being done. And there's so many more applications for that. I can't wait to share all those in our virtual workshop as your minds are going to be blown, especially with some of the new stuff that's coming out that I've just seen recently in the last two or three weeks. And another great thing about this workshop is I'm bringing our own specialists, his name is Noah Wessel, into the conversation. This is his specialty. These two things, these two things right here. I don't know too many people in the world that are better than him at these two things. Automating repeated repetitive tasks in your business and then empowering AI to take on some of those tasks and get them done. All of these reduce the cost of things. AI empowerment. You're looking at another 10 to 20% of your people cost. Okay, now again, I don't want to see if I get fired unless they're not performing. What I don't want to see is a bunch of people get hired. You don't need to anymore. These solve that problem. And here's the beauty of this. This is the part that excites me more than anything else. Not only can I scale up, if it's necessary, I can scale up with these automations and AI agents and global workforce. Not only can I do that, but I can scale down because the costs aren't as painful. This right here has reduced all of that. I didn't have to hire a whole bunch of more people. And what I have hired in global workforce is such a minimal cost, I have to cut them. I will, but I shouldn't have to. It's kept my overhead that anchor off the bottom and in the boat to allow us to keep propelling forward. So this is the hybrid workforce that you're going to be seeing in the future. And what does it do? What does this hybrid workforce like do for us as a business? Well, the big thing that it does is it absolutely empowers our leaders to 10x themselves. They're not doing all the menial tasks anymore. They're not answering all the extraneous questions anymore with AI, the answers are right there. Imagine your business as its own large language model. Everything you need to know about it is there. You just don't have a way to interpret it yet. Well, that time has come where we can actually do that so that our leaders pull the right levers at the right time to grow our business or scale down our business while still protecting our margin, which is the most important part. So let's talk about what it actually means in numbers. Let's just take that example that I had earlier of a few people that were a bookkeeper, a production assistant and a office assistant. Those folks right there, bookkeeper, probably at least 70 to 75k. And that's being light production assistant, you're looking at probably 50. Okay, and an office assistant 60. And you guys all know your own numbers. But you put all that together, that's 110, 185K. That's not to mention, okay, all of the other things that it would save you money on. If you automate things, that's less time that somebody's having to do that thing. If I have a AI agent doing things, that's somebody I don't have to pay. So let's just take these three though. And you could probably imagine several others in your organization. Think anybody that does a repetitive task, if it's a repetitive task, if it's a support task, because you could throw in a customer service rep, you could throw in um, a follow up person. Like all kinds of people outbound, call people, you name it, they can be replaced with these tools. But we'll just use these. And what if I could get all of that done? This 185,000 with two global pros, one that does bookkeeping and one that does both of these all combined. And in throwing in your tech stack and everything else that you need to do it with, you're looking at about 45k total all in. That's a savings of 140k. That goes right to the bottom line. It's 140,000 that you could do more with. You can invest back into your company, you could give back to your community, you could give bonuses, you can do all kinds of things to make sure that your business is perfectly healthy. What would $140,000 business. Would it be worth the effort to spend three hours to learn exactly how to do that, to get the roadmap on exactly how to do that? Well, that's what we're going to be doing in our profit mind shift model, virtual training this workshop that's going to be intensive. Self and Noah are going to lay out a roadmap for you on exactly how to get there and to get there quickly because we need to get there quickly. If we don't, our businesses are compromised. I'm tired of seeing two and a half percent profit, net profits out of companies right now. I want to get that back over 10 and up to 15 and maybe even 20 and 25. The leaner we run with the more quality jobs that we do, the healthier our businesses. And so what does this look like fully? I'm going to go ahead and just do a little bit of drawing here. I hope so. In our profit mind shift workshop we have two sections. One is AM and the other is pm. In the AM we're going to do the Nero story selling system which is going to drive up top line revenue, average sale revenue and it's also going to drive up closing percentages. Everybody that's in there is going to get the neuro story selling system but they're also going to get the field guide. It's 150 pages. It's everything you ever needed to improve your sales system to be top line pro sales system in the in the country. It's 150 pages. You're also going to get the objection cards. Those Objection cards are $100. They're not cheap. There's a bunch of them. It's a 52 card deck, not a 20 or 25 card deck. It's everything and anything be two fun ones in there but 50 of them are going to be fantastic for your team. You're also going to get the presentation and exactly what it needs to look like so that you can literally install it right away. Now in the PM we're going to be talking about that hybrid ops so, so hybrid operations. We're going to cut cost of goods and we're going to cut overhead dramatically. When you put all of these together, you're going to have a significant difference in your profit margins for 2026. It's our number one goal to see the profit margins radically change. You are going to get inside of here, you're going to get the automations checklist, you're going to get the AI roadmap, you're going to get a full implement. The other thing you're going to get is you're going to get an executive vision summary. That executive vision summary is going to give you your mission clearly explained for 2026. Exactly what to do, when to do it, how to do it so that you hit those margins that you are missing in 2025. I invite you, please take the time to check this out, see if it's the right fit for you and your business. In the AM we're only going to take about 75 salespeople. So send your salespeople to us in the PM. We're only going to take 25 companies. That's it. That's all we have time for. We want to be in relationship with you and hands on with you putting these things together. So if you want to join us, here's a QR code right here. You can find out more information, exactly what all it entails. Very clear. You'll actually find a little video explaining just overall the whole picture. You'll have access to this entire course. But go and check out what we're going to do and don't miss our next episode. Our next episode is Victim or Victor and it's a wrap up of this whole entire thing and where you might choose to be. You have a choice what you want to do with your business. So go ahead and click that QR code, get on the list for more information. We're going to be doing this March 5th and I can't wait. I'm looking forward to it. So that's end of our episode. We'll see you on the next one.
