If your top-line revenue is good but your net profit is not you need to really analyze this issue. A weak margin means you’re basically working for practically nothing. The old saying, “Good sales revenue covers a lot of ills but when the top line hiccups the bottom-line crashes.”
As an old-time sales manager, my first thought and real net margin killer is discounting. This is a slippery slope and once you get into the habit of cutting your prices to get the sale it becomes easier and easier. Sure, as a mobile jobber, your prices may be high compared to Amazon, eBay, or even some of the big box stores but there always was and always will be someplace where your customers can get many of their tools for less. However, none of the brick-and-mortar competitors offer the personalized service that you do — free delivery, specialty tools, professional quality tools, great credit terms, and an excellent no-hassle warranty. So be sure to continuously remind your customers how valuable your services are, how much you appreciate their business, and when a customer says your prices are high just say, “Sure they are, and here’s why…” Then fill in the gap with all the great personal services and great products you provide.
Another way to look at your margin problem is to look at what you are promoting during your sales presentations. Yes, promoting the inexpensive or heavily discounted product your brand has on special this month may be an easy sale. However, using your valuable selling time on promoting low-margin products may not be the best for your take-home pay. Of course, you may want to mention the latest product promotion but invest your major selling time in more profitable items such as tool storage, EV battery and powertrain lift tables, exhaust analyzers, or other high-margin items.
Plan your sales presentations around profit instead of ease and your net will improve nicely.
Other profit killers to review are poor truck maintenance which causes down days for repairs, not taking advantage of supplier/wholesaler buying promotions, and overpaying for insurance and incidentals. By the way, just because you buy a product from your brand or a WD on special does not mean you must sell it at a discount.
