Construction Business Improves Profitability by Lowering COGS

Aug 18, 2021

The owner of the construction business HEG approached Yeager Sherburne CPA and Growth Consultants looking for ways to increase the company’s profitability to have more to invest in wealth creation. But the company couldn’t take on more projects, which meant they needed to do more with their existing resources.

To build a wealth creation strategy, we implemented our 4-step wealth creation program.

  1. We reviewed the company’s expenses to look for ways to improve profit margins.
  2. Then we evaluated the company’s operations to look for ways to streamline processes to create improved productivity and look for new sales opportunities.
  3. Next, our team evaluated the company’s profit margins to check for opportunities for improving profit margins.
  4. Finally, we helped use the efficiencies and improved bottom line we created to help the construction business owner improve his personal net worth through wealth creation.

Business Case Study: HEG

For HEG, the greatest insights came from step three in the process. In this business case study, we’ll explain what we found and how we aren’t your traditional CPA company. YSCPA is a strategic business partner that helps you get more out of your business.

Business Case Study ResultsGoal: The owner of HEG hired YSCPA to help them begin the process of wealth creation by improving company profitability. This is how owner would be able to free up some funds to invest in wealth creation.

The challenge: No capacity to take on additional construction projects or jobs to grow the bottom line. Without hiring additional staff and expanding the business – which increases expenses – it could not take on more work. HEG needed to keep more of the money it was making.

YSCPA insight: After reviewing the construction business profit margins, we discovered that the cost of goods sold (COGS) for the service division and residential new construction division were too high. This was harming its profits immensely and they were actually losing money on many of their residential projects. To fix the profitability issue, we dropped both of these revenue centers and concentrated all of the Company’s marketing and manpower solely in commercial work.

The results: After implementing our insights, HEG saw incredible profitability results.

  • COGS decreased from 33% to 26%-28% depending on the job
  • 3X overall revenue increase for the past 4 years since we started working with them

 

Customer Testimonial

“Yeager Sherburne CPAs has helped us grow and maintain our COGS numbers for the last 4 years. They assist us as our virtual CFO and consultant. They have helped me run my business as opposed to my business running me.”

Free informational call

Learn more about our unique process that helps business owners enjoy the financial benefits of owning a business while planning for a lifetime of wealth. Schedule your free informational call now.

 

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