How Moving Companies Boost Profits in 2023 - Part 3 - Cutting Expenses
Louis Massaro argues moving companies shouldn't cut expenses blindly but instead justify every cost and reallocate it toward revenue. He walks through assessing P&L items, shifting resources to high-performing channels, and investing in capabilities that generate more than they cost.
Questions this video answers
October 12–14, 2023.
Scottsdale, Arizona.
movingmasterysummit.com.
An average move of $2,000 with an industry gross profit margin of ~50% (i.e., ~$1,000 gross profit per move).
Chapters
If you want to increase profits for your moving company in 2023, cutting expenses is not the answer. Let me explain what I mean. So when any business you know, you're either going to make more profit by increasing revenue or by reducing expenses. That ratio the difference between your revenue and your expenses, it's what's going to give you the profit at the end of the day. And as moving companies come out of moving season, I see it all the time and I've felt this instinct early on too, until I learned what I'm going to share with you today, which is let's cut back. Let's cut back things. We're not going to be making as much revenue. So in order to get the profit, we've got to cut back the expenses and the shift there and the mindset shift. And the way of looking at it is pretty simple. What we want to do is instead of cutting expenses, which basically could be people that we need, marketing sources that we need, trucks that we need, things are going to set us up to succeed long term, we instead look at every single expense and we justify every expense. Right? So before you just start cutting because something is maybe a high ticket item on your P and L or if you don't have your P and L on your bank statement, but the reality is every expense you have in your business at some point you justified it to be able to be a means to make more profit. Right? Right. So now what we want to do going into the off season is we want to look through that P and L, we want to look through that bank statement, we want to look through that list of expenses and justify every one. Is this an investment that's helping me make more money? These salaries, are these helping me make more money? This marketing source that I'm paying for, is this helping me make more money? These trucks, are these helping me make more money? The insurance, is this helping me make more money? All the expenses need to be directly tied to making more money. Right. And if you can't justify them, then they need to go. Right. We tell people this all the time that come and join us at our, at our three day live seminar, which by the way, we've got one coming up here, October 10th, I'm sorry, October 12th through the 14th in Scottsdale, Arizona, 2023 this year. So if you don't have your tickets, make sure you go to movingmasterysummit.com get signed up for that, come and join us. But we're, we tell them when people are like, well I don't know if I've got the money to attend, we're like, well what's your average move? And they'll be like, well you know, $2,000. Okay, well it's $2,000. And what's your gross profit margin? You know, meaning what is the cost associated with servicing the move? And you know, industry average is around 50%. So let's say it's 50%. So if your average move is $2,000 and you got to spend $1,000 just to service that move, now you've got a thousand left over, right? So we do the math form and know how much is it going to cost you to buy the ticket to come to the event? How much is it going to cost you to fly out and stay? Okay, great. So let's say it's a couple thousand bucks. It's going to be a few extra moves for you to come and learn the skills, the tools, the systems, the processes, the mindset to take your business and life to the next level. And, and that's something that you get to keep with you forever. It's a capability that you're building. We help justify the expense because sometimes when we're in, you know, I love the quote that a friend of mine shared with me. He said, you know, don't let your small business make you small minded. And so many times when we feel that fear of oh, the money's getting tight, the cash flow's getting tight, we, you know, put ourselves. And I say we because this was me when I started. You know, I may have built a $20 million moving company, I may help hundreds of moving companies build a business of their dreams. But I started off in a truck rental yard as a 19 year old kid with nothing, right? So I had to kind of learn all this. I had to manage the expenses, what to cut back on, what to push forward with. And when we get in our head about money's tight, money's tight, right? We come from that place of fear, we come from that place of stress. Our first instinct is to start cutting stuff back. And where I see this hurt moving companies the most is they get rid of marketing sources that are working for them, that without that there's no more revenue coming in, right? So we don't want to cut expenses and sacrifice revenue, right? So when we talk about justify every expense, it's okay, how can this thing make us more money? The other thing that people cut right away is their team, their staff. I don't have, I don't have enough work for everybody, right? And so we start looking at, okay, well how can we kind of channel them? And look at everyone that you hire? Because look, everybody that you hire, you hire for two reasons. It's either investment opportunity, meaning you're going to hire that person and there's a direct investment. They're going to make you money, right? You need a salesperson to sell the jobs and you need a mover to do the jobs. Without those, there's no money, right? So. Or the other option is freedom value. You hire somebody for freedom value. That frees you up or somebody on your team up to work on higher level stuff so that you could start to move out of the day to day, so that you could start moving out of some of the struggles that you might be dealing with and start to build that business. So when you're thinking about your expenses going into this off season, go line by line. Don't just look and go, wow, that would be a relief to get rid of that. That would be a relief to get rid of that. Instead, look at it and say, okay, how am I underutilizing this resource right here? Right. How am I underutilizing what we're spending on? And you might have a marketing budget that needs to be cut, right? You might have certain marketing sources that just aren't performing and others that are great. Take the money from the ones that aren't, apply it to the ones that are and let that boost it up. Right? That's called marketing fund allocation. So we just want to be thinking about this in a way where we're reducing expenses, but we're doing it in a way where we're actually strengthening our business and not taking away everything that our business needs to live, to breathe, to survive. Because when I see people start cutting, cutting, cutting, before long they cut out the whole business and there's nothing left. Right? So challenge yourself to justify every expense. The other thing is channel your resources. You know, you've got resources in your business. You've got your time, you've got money, you've got people, you've got your trucks. These are resources that just because things get slow, just because you might be going into the off season doesn't mean that you need to start getting rid of stuff. No, no, we've got to channel those resources. Louis, I've got extra people. What should I do with them? You should direct them and channel their energy into money making activities. Get them to be doing things that are going to help your business grow. They're going to help you make more money, right? So again, the short sighted look at it is cut that expense. Cut that expense, you know, and I get it. I understand. I used to, you know, walk around and see employees and it's like I could see their paycheck on their head, how much they made, right? Their weekly salary or whatever it was. I'd see it on their head. I'd be like, do I need them? Do I need them? Should I cut that? Should I cut that? And that scarcity thinking only leads to scarcity, right? But when we think in abundance, when we think about, okay, I'm paying that lot of money, how could I channel that resource to help me make more money, right? And so maybe you've got to move somebody from one position to another. Maybe you've got to introduce a new system or a new role for them to be able to actually boost profits for your business or help you make those extra follow up calls. Go out to the customer's house and make sure that they've got everything that they need. Network with your local chamber or whatever it is that you network with. Like there's things that you could do to channel those resources. Same thing with your trucks. You know, maybe you've got, you know, 5, 10, whatever, whatever, however many trucks you've got. And things slow down in the winter. Okay, well, can you expand your territory a little bit? Meaning can you start to service perimeter areas that wouldn't be the same as going and opening a whole new location, but you're just expanding it out, right? You're kind of expanding your resources of marketing to say, let's cover this area as well, might be a little bit further, further of a drive. But we've got the trucks, we've got the movers. How can we use them to go make us money, right? I did this in my, my Denver office years ago. I was like, you know what, things are slowing down in the winter. Let's start doing some moves down in Colorado Springs. It was a little bit of a drive, right? So we lost a little bit of money there in spending the money on the drive and the fuel and extra pay for the movers. But we were utilizing our resources, we were keeping the movers busy, we were gaining customers in that market which were bringing us more repe. More referrals, more reviews that allowed us to book. And then what did we do? Like, we kind of proved out the concept. Let's open an office down there. And we put a little office down there with a few trucks moving forward. And that allowed us to grow. So when we think about cutting expenses. We don't want to come from this fearful place of I've got to cut this or else. We want to come from an empowered place. You're in business to make money, you're not in business to cut expenses. And the only way you can make money is spending money. The problem is what we see is that often those resources just aren't allocated correctly, the people aren't directed correctly. And unfortunately a lot of times it comes down to the owner is overwhelmed and stressed out and it's got so much on their plate that it's hard to direct their teams. Right. That's why we really focus on helping companies, not only the owners, but helping the team to integrate into the system so that they take some of that load off the owner. Right. And I get it that, you know, sometimes it's challenging to lead people or to delegate. And you know, we find that sometimes people have deep held beliefs, limiting beliefs really that are holding them back from being able to do that. Like, you know, the belief of I shouldn't pay somebody to do something that I could do myself. Right. I had a childhood friend that, you know, his dad was very proud about that and always like preached it to us when he was mowing the lawn. And what I've learned in business is the opposite. Like, no, never do something yourself if you could pay somebody else to do it. And the reason is because if we're focused just on the thing, the mowing the lawn or answering the phones or dispatching the trucks or going on the truck yourself, and we're just focused on that again, kind of being small minded with it. And we're only looking at that direct expense, but we're not looking at the missed opportunity that if we were able to free ourselves up from doing that lower level task and work on higher level stuff where that would take our business. Right. And what we find with people that are at that point is that they're, when we survey them, when we work with them, it's like, I just don't know what to do with my time instead. Right. So it's like I don't trust paying someone else or spending money on these resources when I could just do it myself. And if that's you, I totally get it and I understand that. But the question I have for you is do you want to maintain and stay on that hamster wheel forever? You know, and it feels like it could be scary to step off. It could be scary to get to a place where you're able to work on your business. And not just in your business, where you're able to have a clear understanding of your numbers to where you're forecasting and you're budgeting, right? And you kind of know what you need to do. Because what we also see oftentimes is people making changes and making, you know, rash decisions on cutbacks. And the reality is it's all because they feel like they're not making money. But when we do the numbers and we look at the books, it's like, no, you're actually making money, but there's these factors that are causing you to feel like you're not. The cash flow isn't what it needs to be, and the mind starts playing tricks on you, right? You look at the bank account, it's not there. But these are the things that you've got to be able to build the capabilities around. This is what we're going to be diving deep into, into a moving mastery summit. So if you're not already signed up, please don't miss this. You know, the industry is changing rapidly. We've got AI, we've got automation. The, you know, really the new blueprint of success is the reason why maybe you might be feeling like this year things aren't working. It might be why you're questioning whether this industry is going to be around. And the reality is people are always going to need to move. Right now we're in a temporary crunch where the Fed is just trying to push down inflation with rising interest rates, and that's going to come to an end. And when it does, there's going to be another surge and a big opportunity for the people that are able to move forward with this new way of thinking about their business, but also with new systems and processes that allow you to streamline and be more efficient. So maybe you do have some excess administrative costs. Maybe you do have too many people around. Maybe there is some automation and maybe there are some AI tools that could help you to reduce those expenses, to have less people to manage, to, you know, streamline everything, which there are, but first and foremost is whatever you've got, the resources that you've got, channel those resources, right? Same thing. It's like if you're, you know, some of the biggest problems that moving company owners face is they either got too many moves and not enough movers or trucks, or too many movers and trucks and not enough moves, right? So where are you right now? Focus your energy on that, right? Spend your resources on that. If you need more jobs, figure out how you can spend money to get more jobs, Come to moving Mastery Summit. It sounds self serving, but the reality is I'm gonna break down how you get more jobs, how you automate a system that's gonna keep bringing in and generating leads, and then you could book that at a whole different level than you've been able to book it in the past. Now, if this sounds like too good to be true, honestly, we're in a revolution right now with the technology that's making it a very exciting time to be in this industry. And it's, you know, every business, every business cycle's got hills and valleys, right? And when you're in the, when you're on the hill, like, you know, many of you might have been in 2020 and, you know, when that, with that Covid boost and everybody got a big spike because interest rates are low and everybody was moving, you know, you don't tend to look at your systems, you don't tend to look at what's working and what's not working. Same for me, my first seven years in business, it was a booming economy. And I grew and I grew and I grew up. It wasn't until things came back down, it wasn't until I hit the recession, that it really highlighted all the areas where I was inefficient, all the areas where I can improve, all the areas where I can save money, make money, and just get things dialed in. And that's where we're at right now. So use this as an opportunity. Don't allow the negativity of, you know, the market and what's going on in the news and the uncertainty in the world. There's always been uncertainty in the world. But what we can control, which is right in front of us, is our business. The actions that we take, the decisions that we make, right, where we choose to channel our resources, our time, our money, our energy, our team, right, Our sanity. We got to make sure we've got sanity as well. And so we want to be running our business from a place of power, from a place of strength. We don't want to come in reaction. We don't want to just, I got to cut expenses. I got to cut expenses. I got to cut expenses. And if you're there right now, I get it. I understand. I remember when I was going, it was the middle of the recession. I had multiple offices around the country. My bookkeeper would bring me a stack of manila folders, one for each office, with all the invoices and the checks for those invoices. And there was a period of Time where I had to sit there and I had the unpaid bills report on the front of each manila folder for each office. And in the past it was like, just review them, check it out. If there was something, you know, I wanted to check the invoice, it was there. And there was a period of time that I was just like, nope, don't pay that. Nope, don't pay that. Nope, don't pay that. Because it just wasn't there. And what I had learned in that time was there was things that I could have been and should have been and wish somebody would have showed me in advance doing that wouldn't that I would have seen things going in that direction and would have gotten to a place where it was just like, oh shit, I'm out of money, right? Luckily I was able to bounce back from that. Luckily I was able to go and sit with my CPA and say, listen, I need you to teach me how to know what to look for and my numbers. I mean, I built a multi million dollar moving company locations around the us made myself a millionaire and I didn't even know how to read my own financial statements, P and L, balance sheet, cash flow, none of it. Because things were, it was good times, right? And the sales processes we had in place and all the back end stuff was really good that I never spent the time to really look at those numbers. But the reality is you need to learn those numbers and once you do, you're in an empowered place, right? And you could sense the feeling if you slow down for a minute, if you're in the middle of, you know, possibly trying to cut expenses or see where you're at, you kind of slow down, say where am I coming from right now? Am I coming from this, this, you know, fight or flight like do or die feeling, Right? I know that feeling. That was the feeling I started my business with. That was the feeling I had to go through during the recession. But I also know that even though that fueled me with adrenaline, it made me feel like, let's go, let's go get. Also caused me to make bad decisions. And when we've got the clarity and we know that look, it's not about just cut, cut, cut. Because that feels like that's what's going to be the relief, right? It's like, cut that. I want to pay that anymore. That makes it easier, cut that. We have to maintain a sight on what that's going to do to revenue. So again, we want to take every single expense, we want to justify that expense and we want to be able to tie it directly to making revenue. We want to be able to tie it to, directly to bottom line to be able to make more profit. Cut, cut, cut is not the answer. It's streamlined, it's optimized, it's simplify, it's maximized, it's learning. The new adaptive approach to this business that, you know, is just honestly very exciting because what's happening right now that's really unfolded in less than the, you know, less than a year is transforming the way this business goes. It's allowing things to be done easier. Right. What used to take us forever to come up with systems, processes, tools is now accessible to anybody. And you're not going to be able to get to a place where you can take advantage of that if you don't make it right. And, you know, maybe it's that serious and maybe it's not. You know, sometimes we've got a great business going and things are just down and we're still making money. We're just not making what we wanted to make. And our mind can make us feel like this is the end, things are over. This industry is terrible. People are never going to move again. And we get stuck in that binary thinking that doesn't serve us. And if I could share anything with you today, it's that this industry is heading into a very exciting place. You know, there's some companies out there, they've already, they've already waved a white flag and they've already given up. They've, you know, kind of taken the victim approach of audio, the, you know, the market and the economy. And if those thoughts have crossed your mind, I don't blame you. I get it. Right. It crossed my mind, too. My whole focus over this last year has been coming up with the systems, the processes and the new approach to move forward. And now that we've got this, you know, revolution really, with, with technology, it's just taking things to a whole nother level. So get the Moving Mastery Summit. It's October 12th through the 14th. All right. When we talk about expenses, I get that there might be some money involved in coming, no doubt. But what's in action going to call cost you? What is it going to cost you to continue to do the things that you've been doing that don't seem to be working? What's it going to cost you to watch as the industry shifts and you're not shifting with it? Right. This isn't about. It's going to be harder. It's actually going to make Things easier, right? So get the Moving Mastery Summit. There's a link somewhere. Find it, click on it. Get signed up. See everything that we're going to do, and we're going to spend three days, and we're going to adapt to this new way of doing business that's brand new for 2023 just because of the technology and the changes and the shifts. Then we're going to pivot, right? Because in order to, you know, get to that next level, people ask me all the time, Louis, how do I get to the next level? When we start working with people, I want to make more money. I want to have more freedom. Okay, what does that look like? How much freedom? What do you want your days to look like? How much money? What do you want your lifestyle to look like? What do you want your future to look like? Now, this is what we do on day two of the event. We pivot. We take these new strategies, new approaches. We see what's possible, and then we pivot into a direction for you, right? Your dream, my dream, everybody else's dream, something different. You might want to open 50 offices. You might want to be the biggest mover in your country. You just might want to, you know, have a steady source of passive income and be able to set things up so. So they're smooth and streamlined, and you don't actually have to be there all the time grinding it out. Whatever your focus is, whatever your desire is, and even if you don't know what that is, we're going to help you get really clear on that. Because then on day three, we're going to give you the action plan to go grow for you, for your team. You don't have to do this alone. You know, for years, I tried to feel like I was all alone. And once I started to recognize that, no, I could lean on other people, right? I could find out what others are doing. I could get ahead of industry trends. But I could also count on my team and deploy them and delegate to them and help, you know, let them help me build the business that I want to build. Everything changed. So if you're not already signed up, get signed up for Moving Mastery Summit, movingmasterysummit.com and remember, don't just cut, cut, cut. Justify every expense. Channel your resources. Remember, profit is not made by just reducing expenses. It's made by bringing in revenue, by utilizing the expenses to earn that revenue, to get that profit. Until I see you next time, go out there every single day. Profit in your business, thrive in your life. I'll See you later. Hey, my friend, before you go, you've got to hurry and watch these next few videos over here. They will absolutely help you take your moving company to the next level. Go watch them now and I'll see you over there.
