Double Your Profit Day #2 Cut Costs Like a CFO

I'm John Wilson, and I'm the CEO of the Wilson Companies in Ohio. We are a plumbing, HVAC, and electrical contractor that will do about $30 million in 2025. Thanks for joining us for the Double Your Profit series, where we spend 30 days diving deep into the action steps that you can take to double the profit for your business. Thanks for tagging along. Okay, this is video number 2 on Double Your Profit series. So today we're gonna be talking about cutting costs like a CFO and making every dollar count. There are no sacred costs. Review Everything. Now that sentence matters a lot. That means when it comes to software or when it comes to marketing, there is nothing off the table. We are going to reexamine as often as we can every line item inside that P&L. When you go to a bank to get lending, when you go to sell your business, when you go to do whatever it is that you're gonna do, every single dollar counts. The way that most people budget is they look at what happened last year. Hey, last January I drove $100,000, so this year I think I'm gonna drive $108,000 'cause I'm gonna grow 8%. That's a way to do it. But when you're looking at the cost structure So it's getting rid of the assumptions. Instead of looking at last year's cost structure and saying, hey, we spent X on marketing or X on fleet, we're gonna say, if I today launched a $30 million plumbing company, what would I actually need to run that plumbing company as profitably as I can? And what do I not need? Maybe most importantly, because zero-based budgeting, the power of it is you get to get rid of these assumptions and you get to reallocate costs to where they're actually needed. So if I'm a plumber and I'm trying to figure out how much to charge for a job, has the highest and best use. So tactically for us, one of the ways that we've used zero-based budgeting is we've changed our people structure. We've added more automation, we've added more offshore people, and what that's allowed us to do is pay our existing people better, but also invest in the things that grow the business. So that's gonna be a topic that we cover later on, so make sure you subscribe so you don't miss that video. What the zero-based budgeting does is it kills the we've always done this mindset. It's really easy to get into that trap. We have softwares and vendors that we've used for 5 or 6 years, and it's something that you sort of can't imagine working without. So your cellular provider might be one of them. Hey, we randomly chose Verizon or AT&T or whoever 6 years ago, and now we pay them $15,000 a month in perpetuity. Well, let's bid that relationship. Can I get it to $10,000? Can I get it to $5,000? Or do I even need that relationship at all? Am I paying for something that I don't even need? This also helps you negotiate better vendor deals. But negotiating vendor deals and negotiating your existing partnerships— if after you've broken everything out of your P&L and you say, hey, I'm doing zero-based budgeting, I do need this cost. It does exist. It is helpful to the business. Now it's time to go negotiate. Yep, I need cellular. My guys need phones. They need iPads. We got to track our trucks. Something that we focus on consistently, and this isn't just during budgeting season where we're doing, uh, zero-based budgeting, but we are constantly evaluating our overhead. And I don't wait for that once a year. We even have a process for it. It's called the up list. And what that is, is every single month we come up with 5 line items on the P&L that we're going to go up, we're going to go negotiate with those vendors, we're going to see if we can get X amount of pricing off voice over IP service or our cellular or our uniforms, or maybe it's equipment with our manufacturing vendors. The easiest way to find money inside your business is where you're already spending it and cutting it. So to recap, the way you should think about cutting costs like a CFO: no cost is sacred, every single cost should be evaluated, and regularly. Zero-based budgeting allows you to get rid of assumptions and cut dangerous overhead that has stuck around for years for no good reason. You should be regularly negotiating with your vendors to drive additional savings through your business, and you should have a hit list as often as possible. And I think the most important concept here is this should be regular. This should be weekly, every other week, monthly. It should be a normal part of your culture that you are driving savings as hard as you can, wherever you can. Make sure you like and subscribe because we have 28 more.