Breaking Down a $840K Carpentry Business

This is Nicholas. He runs a custom carpentry business that made $838,000 in revenue last year, but they had negative profit margin and significant amount of credit card debt. This is the Business Breakdown Show where we take real home service businesses and analyze exactly what's holding them back. Our goal is to give Nicholas a strategy to turn around the company in the next 6 weeks. So the name of the business is Calgary Custom Concepts up in Alberta, Canada, and they offer custom walls, wainscoting, acoustic panels, and a lot of really cool carpentry work for walls. So let's go ahead and take a look at their application video.

It's Nick here. So right now all estimates are going through me. My project manager is also my best producer, and he's getting pulled more and more into the office estimating. And job progress slows down. We've got around $110,000 in debt in the business, and a lot of it is credit cards, so it costs a lot in interest monthly. Payables around $25,000 to subcontractors, so any profit that we do produce is getting eaten up between paying that back and making interest payments. We have 3 carpenters, including the PM I mentioned. Often struggle to make payroll. We owe taxes, I think $13,000. And I'd like to hire to increase our capacity, but I don't know where the money to pay for that would come from. And then I used to work 7 days a week, but now with an 8-month-old at home, I gotta be home to take care of him.

Okay, so Nicholas is a new father. Congratulations. Obviously makes it harder to work 7 days a week and is gonna put more financial pressure on the business. So we've gotta solve this. We got a bunch of payables. In other words, we owe vendors money. We have a whole bunch of debt, a lot of it being credit card debt. We have $13,000 in taxes owed to the province. So not a great situation, especially when we look at the profit and loss statement being negative. But let's first look at online observations. So I'm going to go through their website, Google Business Profile, and their Facebook page and figure out where the areas of opportunity for Nick. So first off, let's look at their website. I love this kind of service, by the way. Very premium, ultra premium. And I'm concerned that we might not be charging premium prices, but the work itself, the custom nature of it, you're not going to do this on an entry-level house. This is going to be a luxury. Like, you don't need designs on a wall that look like this. Like, that's so cool. And you can see, like, they've worked for Gucci. Like, obviously you're positioning yourself as a very premium service. So I'm hoping that our prices are going to match that. Your homepage is a little bit long with a lot of different places to go. That's your homepage. Okay, I want work done. Get a quote. There's this one here. Okay, so then I scroll down, I have the form. Okay, I go back here though. Where was this taking me? See our work. That was probably taking you to the gallery, like the portfolio. Okay, and kind of click through different services. Okay. These are really, I love, like I love this stuff, sort of stuff. If you have money to burn, you do cool designs on a wall. Oh, this is cool. Generate a custom render. It is a lot of information and I don't know what it, do I have to watch this to know what's going on?

Especially something permanent like a feature wall.

Okay, so you're basically trying to get people to submit this. Add your info below. Let's get an instant estimate. Oh, we got another page. Whoa, what's this? The Val— the Cal Custom VIP Club. But I just want a design. Where is that? You're in, your render is on your way. Important, make sure to text. Well, I didn't submit any information, so you couldn't really be giving me a quote. I didn't give you my email or anything like that. It's not really on the way, so I don't know what this is doing. It sounds like you want them to text a picture of the wall to you. I would rather just cut out all these extra steps, watching videos, submitting this button, etc., versus like, send us a picture for a free design render. Yeah, like there's a lot of opportunity here with AI making this automated, but right now, like, you're making them go through two different funnels, getting to a page that basically just says, send us a picture of your wall. That's really what you're doing. So I would rather just have this button direct them straight to a form that does that. So we can come back to this, but I think there's a lot of opportunity around just getting in the flow. It's also— I don't know how many people know the word millwork, to be perfectly honest. I think a lot of people watching this video would know what millwork is, but most homeowners probably don't know what millwork even means. And for me, when I got this, this website, because the words Calgary Custom Concepts could be pretty much anything, I needed to know like, what is this business doing very quickly? And I actually found out from the photos on the right-hand side. And so I think that your, your header, this part here could definitely be improved. There's a lot of text for people to understand even what you do. The pictures do tell a story. Awesome. But I think the words could be much clearer. And the fact is you only serve Calgary. I think stating that would be very important. When someone comes to your website, the first thing they're asking is like, do they serve my area and they do my services? And so I think we could definitely tighten some of that up. We got residential, we got commercial tabs up top here. So if I click on this, looks like you show a lot of your work, different types of work that you do, different people you served. Okay, so this is all commercial. Wow, lots of cool projects like churches, got storefronts, banks, very cool. But a lot of text and it doesn't flow super well right now. I would love to see this as service pages as well, just from a SEO, search engine optimization perspective. Oh, I love that you have pricing on here. That's super cool. But if you have like wall paneling, wainscoting, staircase, these should all be different service pages, not just one big long website because it'll, like people are searching for wainscoting. And so I want a page that says calcustom.ca/wainscoting, not just slash custom design because people are actually searching wainscoting, they're searching wall paneling. I want those to be service pages on my website. So I like the fact that you do offer a, you know, pricing and a range so people can self-select and make sure that they're actually a premium customer. Oh, I love this. I love this design. I would, I would die to have this in the future. Headquarter building for the media side. So especially with acoustic paneling, so we got shiplap walls. Okay, so you got a whole bunch of services. I'd love to see these all as service pages, but overall this is probably my favorite page. It shows the work, what it's called, and my price. Makes it really easy for me to understand, like, what do I want? I think we might be lacking some of that on the homepage to understand what you're doing exactly. It's just not hitting me in the face in terms of what do you do, because your name doesn't describe that. So if you have a name that doesn't describe exactly what you do, you got to make sure that when someone gets to your website, it's like slapping them over the, over the face of what exactly you do and what area you're servicing. Okay, so let's go check out your Google. Alright, so this is your Google Business listing. Got 41 reviews, 4.9 stars. Awesome. Looks like you have updated products inside of here. Very good. Um, it looks like you do add photos as well. So like March 13th, March 12th. So pretty consistently you are adding in photos on your Google account, which is very good at keeping the data of Google. They love data. So give them pictures, give them reviews. Let's see if you're responding to any of the reviews. Scroll up here. Boom. View all these. Okay, great. So you're doing great response. Customers are leaving photos with their, their reviews a lot of times. Awesome. And you're doing a very detailed response. So very good. Let's check out your Facebook, see what you got going on. Calgary Custom Concepts here. So it looks like you're showing some after pictures here. I would love to see before photos. Before and after will do a lot better. It looks like you're doing some responses to design trends. I think that's a very good move. I feel like you're probably making a lot of this content yourself. So I think we could delegate this, but responding to design concepts is great. I think the ability to be able to do responding to like bad contractor jobs would be interesting, responding to like visuals. So for example, you're responding right now to this minimalism, curated maximalism, et cetera. Just show photos of that instead of scrolling through a text-based article with just your face. There's not a lot for people to see, but overall, like, you're consistent doing it every day or two. You're posting, and a lot of this is your after work. I would just love to see photos of your crew doing the work, uh, your trucks or equipment, your uniforms, and then also before and afters. Those will sell really well. Any sort of one-time projects I am really looking for— can someone show before and after photos and projects where there's a clear, hey, this was what it looked like before and this is what it looked like after, and it's awesome. I want to show before and afters as much as possible. So in terms of a grade for your website and overall web presence, I would give you a B-minus because I like the professionalism of it. I like the minimalism and the design of your website. I think there are definitely some things that we can improve and we'll jump into that. And if you have a business and you're trying to get more leads and convert more clicks to leads on your website, go check out Home Service Web Design. We've actually now made it available where you can book a call with our team for 15 minutes. It's completely free and we'll give you a consultation on your existing website and see if working with us would be a good fit. So go check out homeservicewebdesign.com/call. The link is down in the description. But let's now jump into Nick's financials. He shared his balance sheet and his profit and loss statement. So let's see if there's anything more we can uncover or learn here. So we do have $62,000 in the bank. Not bad. I have a feeling that either this is— this snapshot is after a big job was completed or something, because he's saying that he's struggling to make payroll, which tells me that the cash flow is probably very lumpy. I'm assuming there's probably $60,000 in the bank today, and next week after paying a couple vendors and doing payroll, it could be down to almost zero. That is very common when it comes to large project-based jobs. And typically the more project-heavy a business, the more cash I need on hand because there are bigger expenses, subcontractors, materials, or just big-ticket items that can come up throughout the project. Okay, so we have about $30,000 of accounts receivable. Let's just keep scrolling through here. We got— looks like a loan from Nick to the business. We got a car, truck, a van as debt assets. Okay, so accounts payable. So it's actually $37,000. That we currently have as payables. In other words, he owes vendors and the like. This is somewhat dangerous when it comes to project-based work because if you don't pay your vendors, they can all of a sudden stop giving you materials. Usually your vendors are the first people you pay because if they don't give you materials, you can't keep doing work. Looks like we have $23,000. This is actually $23,000 in tax-related liabilities. I see the $13,000 is GST and HST, so payable in suspense. Okay, GST and HST up in Canada is a little different. So $13,000 that we owe, other liabilities in here, payroll taxes are due, nothing crazy. We got the van loan for transit. So all in all, we're looking at about, let's see, where's the credit cards? There we go. So credit cards are looking around $76,000. So of this $120,000, about $76,000 of that is credit card debt. So that's probably— he's probably paying 20+ percent interest on that. Okay, let's keep scrolling down. Let's look at the profit and loss statement now for last year, 2025. $838,000 in annual revenue. I'm going to scroll to the very bottom. -$92. So basically breakeven, negative, not great. I'm wondering if he pays himself. I don't think he does, just based on the way he's talking about— let's see here, we got— Wages. Yeah, I don't think he's paying himself anything right now. So that's why we're going into debt is because there's not anything to pay him personally. I could be wrong there. Let's go to the top, though, of the profit and loss statement. We got $230,000 in subcontractors, $130,000 of materials. That's very common, like 15%, 16% of material costs for carpentry service. Very common, actually, on the low end. You got accounting, legal fees, advertising, a couple of thousand dollars a month, it looks like. Probably spending about $2,000 a month on rent. So you got another $20,000 of subcontractor and professional fees. So that's on top of what we've already got for subs. First thing I'm looking at now is labor. Like, where's labor? We got subcontractors. Okay, here we got $218,000 of wages. He's also paying. So it sounds like he's got a bunch of contracting labor, about $250,000, and then also a whole bunch of wages for employees. But that doesn't include all of this other stuff I saw in here, which is like, oh yeah, here we go. All this is payroll related. So vacation expense, holiday pay, overtime. It's a lot. It's like $260,000. So $260,000 in wages, plus we got another $230,000 plus another $20,000 down here. What's killing him right now is that more than 60% of his revenue is going out the door to either subcontractors or the wages for his employees. I want that under 40%. So I see that as a big opportunity and a huge risk. And almost all of his profits are going out the door to the fact that over 60% of revenue is going to just the subcontractors and direct labor. In other words, his gross profit margins is probably like 20 or 30% because he's also got materials. So when you look at your cost of goods sold, you're taking out your direct labor, your materials, and your subcontractors. When we take those three things out of Calgary Concepts right now, we're probably at a 20% gross margin, not net profit margin. That doesn't include all the insurance, all the rent, all the software, all the advertising, all that's afterwards. And so really, really tough business that he's running on very thin margins. Now, in terms of grading the financials, I'm actually going to give you an A. This is one of the few times I have a really solid financial statement to work with. I see some areas of opportunity that we could save some money, like we're paying $40,000 in software subscriptions. Don't know what that's for. If you have like QuickBooks, maybe you have some like HomeWorks, that's like $500 a month. So max, that should be like $15,000. I don't know what you're spending that on. Like even if you have a phone line or two and like some other software. So there are some opportunities to save some money. I think things like overtime can be reduced, but overall right now the wages are just crushing this business. But from a financial organization perspective, I give it an A. If you don't have really clean financial statements, a balance sheet, a profit and loss statement, actually knowing your numbers like Nick did right on this video, I highly recommend go check out HomeServiceCPA.com and we can do your taxes, we can do your bookkeeping, and we can make sure that you have a really organized profit and loss statement and balance sheet at the end of every month. Highly recommend going and checking it out. All right. We're going to go ahead and jump into the 4L framework. The 4L framework describes why every home service business stops growing. It's either a lack of liquidity, a lack of leads, a lack of labor, or a lack of leadership. So we're going to go through each of these categories for Nick and figure out what are the areas in the FOREO framework that can be areas of opportunity, areas of weakness. And then we'll figure out a 6-week plan for him to turn this business around. So when it comes to liquidity, there's some obvious ones. We have, you know, negative profit on the P&L. We also have a lot of loans and most of them are credit cards. So if you had loans on, like, say, just the equipment that was, 3%, 4% over the course of 5 years, that's not bad. But on a credit card, you're usually paying 20% to 30% interest, and that's gonna crush the business. And so that's obviously a huge area that we need to focus on. We also have the payables. That kind of freaks me out anytime you have a whole bunch of money owed to vendors, because if all of a sudden someone was like, "Hey, you can't buy lumber from us. Hey, you can't buy any more drywall," like, we're gonna have a serious problem because the business stops. Okay, when it comes to leads, I do think that your website, we have some real opportunities for better conversion. Everyone geeks out about getting more traffic to the website. That's like door hangers, yard signs, Facebook ads, Google ads. That's getting people to your site. But if they don't convert into leads, doesn't do us any good. And so I think there's a lot of area of opportunity for converting clicks into leads on the website and just overall improving the design and a lot of the what's called a sitemap. So a sitemap is going to show all the different URLs or pages on your website. And I would love to see more organization around service pages, which will really help you with SEO, search engine optimization. Right now, when it comes to labor, I don't hear any massive constraints. It sounds like most of it's on the lead side and liquidity. However, one thing I do consistently see in their financials is no incentive for on budget and on time. When it comes to big projects, whether it becomes scheduling, whether it be profitability of the business, you have to be on time and on budget, whether it be subcontractors or W-2 employees. If we have these big projects that are taking a week, 2 weeks, 3, 4 weeks to take— get through the job and they're now taking twice as long, we're not making any money. They're not on time. They're not on budget. We got a big problem. And I would love for the incentives with the subs as well as for the W-2s to have some sort of pay for performance around that in the future. Now, I think the biggest actual area that we're going to try to solve for here is actually leadership. And that is the last constraint of the 4L framework. Many times this is where at $1 million or so in revenue, it becomes very obvious where the gaps in leadership are because right now he's spending— Nick is spending most of his time spending time on estimates. And I'm going to go on a limb and say he's just generating them. So like they're submitting information, taking a picture of the wall, and he's making the estimate. As well as the fact that his main project manager is doing a bunch of admin. I feel like Nick and his project manager are probably getting sucked into admin way too much. Admin is the lowest leverage activity in a business. We have admin, we have operations, and we have sales. Sales is getting the work, operations is doing the work, admin is making sure we get paid for the work. We answer the phone, we answer texts, we answer emails, et cetera. It's very important. However, it can also be delegated for the lowest cost because finding a really good carpenter is going to be a whole lot more expensive than finding someone to answer the phone and someone finding someone to sell the jobs that the carpenters do. Sales is even a higher leverage activity and more expensive to replace himself. And so I'd like Nick to focus mostly on sales and maybe even going out and doing some operations, but he should not be touching admin. And I have a feeling that's what's sucking up his time when he gets home on the weekends, in the evenings, and time that he should be spending with his kid. And his family is being spent doing admin tasks, emails, QuickBooks, answering the phone, sending out a proposal, putting together a quote. All that should be done by an admin person. So let's jump into the 6-week plan. I feel like this is absolutely a business we can turn around. The first thing is, when it comes to the website, I need it to be painfully obvious what you do, and that is with the header titles on the main page. A customer needs to know what you do, and where you do it right off the rip. And you're— because the name of your business, Calgary Custom Concepts, could be a host of anything as well as like you could very well say Custom Concepts is like a decal, like putting decals on a vehicle. I could see this being a contractor that does like custom builds. I could see this being deck builder, a fence builder, anyone that does any sort of projects around custom work. Cabinetry definitely could be in here. You don't do any of those things. And so I need it to be really obvious when someone shows up your website, they know exactly what you do and where you do it and who you're serving. So something along the lines of custom walls, maybe like wainscoting or whatever that next service is that's super, people know, they know what wainscoting is, they know what shiplap is. I like the pictures, having a video there would be great too, but that's actually what told me what you do. The text on the screen was— it's a lot and doesn't— it's not super clear. So I just want to know what do you do and that you serve Calgary, Alberta. That way I as a customer, if I'm in Calgary, Alberta, and if I need those services, I know I'm in the right place. So that's the first thing I want you to do. I also want you to look at the design render process right now. Really what that is is a like a funnel to get them to send you a text message with a picture. I think this could be way simpler. By having like a JotForm where they just drop in a photo, whether it be on their desktop or on their mobile device. It'll just have them attach a photo. And so that way, right from your website, it says attach a photo for a free custom quote. For example, they click on that, opens up the form, they give their information, they take a picture, and boom, it's in your funnel instead of them going to a page, watching a video, seeing a— like, it's very confusing that when I go here, generate a rent design render and you're talking about like getting a free rendering in 48 hours. Okay, great. But then when I go here, I'm very confused. Oh wait, it went to a different page. Interesting. Okay, so this is get an instant estimate. Okay, well, now it's here. I clicked on the same thing. Thank you for submitting. Okay, so something's wrong on your website. It looks like there's actually a process you have for getting a quote submitted, but it's skipping it and it's going to your thank you page. And there's a lot of text and like this whole like VIP club, they haven't done service with you. So it's rare. Also, once they become a customer, you have their contact information. So them joining your email newsletter is not like a big thing usually. Okay, I'm a little confused here because when I click get an instant estimate, it's jumping to your thank you page. But there was one time I clicked on this and didn't— it went to like some other form. So this might just be broken because I one time I saw it when I went back and it looked cool. So if you have some sort of form that I'm not seeing, definitely it might be caching something too. I never filled this out, but like it's jumping to your thank you page. So the actual form itself is being skipped. But right now there's a 3-step process. They're going to this page, then they're clicking Get an Estimate again, which they just kind of did. Then you're having them fill out a form, I'm guessing. Then they're going to a thank you page. I think all of this could be compressed down to one form. That simply says get an instant estimate and they take a photo, they drop it into a Jotform or something like that directly embedded in your website that comes to you. And then I want you to ideally use AI on these, these quotes. I believe you could absolutely have this Jotform come in with the photo, have an admin person that is able to help alongside this process, but probably put that photo into ChatGPT or Gemini and have the entire design on the wall rendered exactly the way it needs to be within a matter of a couple of seconds. This would hopefully remove you from the whole estimate process, and it would also allow you to— if you gave a really good prompt to AI, you'd be able to likely from that photo also give them a price. If you import all of your pricing by the square foot, I saw in there your pricing was like, hey, minimum of 10 feet by 10 feet for a wall, for example. Your pricing is there. So you're doing some sort of square footage type of pricing matrix, import that into AI, have the picture that is being submitted from the customer put in there with a prompt about your pricing. And there's a really good chance an admin person could then take that information from AI, have the photo attached to an estimate, have all the pricing information, make it really nice, maybe even add a video for that personal touch, and send it back to the customer, removing you from estimates completely. So when it comes to the website, we're changing the header, we're We're also making sure that the design render process is in a very simple form that they can drop a picture in. Then automating that process using AI and an admin person could basically remove you from probably 50 to 70% of your estimates. The next thing is I needed to raise prices. Now, whenever I see 60, 70% of revenue being spent on wages, there's two things that are a problem. Either A, pricing is way off and we're too cheap, or secondly, there's a huge amount of inefficiency. And so I needed to do— raise prices, but I first needed to fix the website and this whole design render issue so you get more leads because you're not going to raise prices when you're concerned about even filling the crew's schedule with work. And so I need to fix the website. I genuinely believe you could get a 50% bump on the amount of leads that are coming in if you automated some of this, made sure that the form was actually working because people can't get an estimate right now. And if you do that, I hope you're so overwhelmed with work you then raise prices. The second part, when I see a home service business that has really like a high percentage of revenue going to wages, the other part is efficiency. When you're using subs, a lot of this, you know, you're not going to be like pay for performance necessarily. But I do want some sort of incentive around on time, on budget. In your budget, I can guarantee you're not assuming 60% of revenue on a job is going to wages, whether it be W-2 or contractors. I guarantee you're not assuming 60% is going to that. So we are very inefficient and/or we have really low prices, one of the two. And I want you to attack both of those because you get so overwhelmed with work. You're like, I got to raise prices. And because we got so many leads coming in and also having some sort of metric of efficiency and incentive for your crew to hit budgeted hours Or even if it's a subcontractor, it's like, hey, this is the percentage of the job you're getting. Right now we're paying so much to subcontractors and so much to labor. We will never make this business profitable. We've got to figure out what— when it comes to your estimates, what percentage is set aside for either direct labor or subcontractors or a mix of two? This is why pay for performance might be difficult because you're mixing subs and some of your W-2 employees likely on the same jobs. Makes P4P in the truest sense of it a little difficult. However, you can have incentives around getting on time and on budget, whether it be budget hours, whether it be cost of the job after everything's been paid out, etc. I need the crew thinking about efficiency as much as you, because right now they're not. And it's evidenced by the fact that we're paying 60 to 70% of revenue out the door just to wages for our employees and subcontractors. And so I really want you to increase these prices by 20% plus. And then I want you to have some sort of incentive around efficiency. And if you do both of those things, then and only then will you get that 40% range that I like to see when it comes to direct labor and subcontractors. If you start getting 50, 60, and you're over 60% right now, Nick, I, I never see a home service business make any money. And so we've got to make sure that we have these things in place. So we've got to make sure that we are incentivized to make sure the jobs are done efficiently. Okay. Next thing is we've got to hire an admin. And I know right now, Nick, with cash being so tight, it's like, why in the world are we hiring another person? That's more overhead. I agree. But I also know that right now, when you're cash tight, you start doing lower leverage tasks like admin, you going out and putting together estimates. These are tasks that can be done by someone $25, $30 an hour. I want you to go out and do the work, make $100+ an hour, or better yet, go out and sell more jobs, which is even a higher leverage task for the business. Right now you're getting sucked into admin and I understand why. It's 'cause you have little cash and you're like, I can't afford to pay anyone else. You can't afford not to pay someone else to do admin because otherwise you're just never gonna grow the business. You're never gonna get the jobs and you're not gonna have enough time to do sales, which would then allow you to have higher prices, would allow you to be able to make sure you have accurate budget hours for your crew to be efficient on the job. So a lot of times, this is actually, in my opinion, the most important one because it unlocks time for you not only to be a good dad and spend time with your family, it unlocks the time that you need to be able to create the systems for the design render process. It allows you the time to be able to focus on upsells, allows you the time to focus on calling customers and doing follow-up phone calls. And by doing that, you close more jobs. And by doing that, you're able to raise prices. So almost always the whole objective of every home service business is do a quality enough service that when you raise prices, customers keep buying from you and they stay with you if they're a recurring customer. That's the whole objective of home services. And right now there is things in sales and operations that are kind of falling through the cracks because you're also doing this admin-related task. I want you to delegate that. And then by focusing on operations and sales more, you'll close more jobs, jobs will be done more efficiently, and you'll make more profit. All right, the last thing that I need you to do, and if you have someone doing your website, they should be able to do this in a matter of a few days, and that is service pages. This will also allow you to be able to get more leads in your local area, and service pages are going to be where it's your URL/service name. Right now, you're just piling a very long service page of residential and commercial. Each of those should be 5 to 6 different pages and you just have it where on your menu when they scroll over residential, it shows 5 or 6 tabs roll underneath that. Same thing for commercial. Let's recap the 6-week plan to turn around the business. First off, we've got to change the website, making sure the title is very obvious in terms of what services we offer and who we serve. We've got to fix this whole design render issue and think a quick form, make it really low friction for the customer, submit that, and then automating using AI and the admin person to take this completely off of Nick's plate. Next, we've got to raise prices by 20%. We're probably only going to do that once we fix the website. We have service pages on there and we're getting way more leads. I also need to fix the efficiency problem because I can't be spending 60+% of my revenue on wages. And to do that for my W-2 employees and for the subcontractors, I've got to create some sort of incentive around being on time and on budget. I truly believe if Nick can get this done, Calgary Custom Concepts will get to the next level. If you'd like me to come out to your business in person, completely free, and fill out a form just like this and make sure you get to the next stage of growth for your business, go check out the links down in the description and apply today.