How a £600,000 plumbling & heating business made an extra £65,000 profit every year by making just one change
Just over twelve months ago, I sat down with a husband and wife who ran a £600k plumbing and heating business.
The business had been growing steadily – year on year the sales were up. The team had grown too.
The only thing that hadn’t grown over the last 12 months was the profit number. That was the reason why the two business owners sitting opposite me felt flat, frustrated and a bit anxious.
They’d done what most good business owners do – pushed harder, sold more, hired more – and yet it felt like they were running just to stand still.
This is a moment many entrepreneurs recognise. Sales growth becomes the focus, while the numbers underneath are assumed to “sort themselves out”. The reality is that small changes, left unchecked, quietly compound into big problems.
In this case, the issue wasn’t complicated or dramatic. It was a 4% slip in gross profit. Four percent doesn’t sound like much when you’re busy running jobs and managing people, but for a business of their size it was quietly costing tens of thousands of pounds a year from the bottom line.
The Plan: Understanding the numbers changed everything
Step 1: Increased prices
Prices hadn’t been increased for several years.
Despite the prices of everything they bought going up, they’d put off increasing their own prices. They were worried that the higher prices would scare off all their customers.
They increased prices across the board by 10%…and not a single customer complained.
Step 2: Focus on the type of work
Not all jobs are created equal when it comes to making profit.
Some jobs kept the team busy but delivered low profit margins. The focus moved towards higher-quality work where higher prices could be charged. Higher prices meant higher gross profit margins.
Step 3: Team productivity
The team often finished early which cost the business a lot more money than anyone realised.
Early finishes tended to happen when the team completed the last job of the day earlier than expected and there was “nothing else booked” in the diary.
A different approach was taken to scheduling, which along with clearer processes, meant the team stayed productive for the full day.
The Results: Big increase in profit
Within a year, not only was the lost 4% gross profit recovered, it increased by a further 7%.
By focusing on the 3 key levers profit had increased by £65,000.
For this family business, that £65,000 was the difference between feeling comfortable and checking the bank balance before paying bills.
It meant less stress, better sleep and confidence that all the hard work was finally paying off.
Key Takeaway
This story isn’t really about plumbing, pricing or productivity.
It’s about understanding what your numbers are trying to tell you and using them to take action to build a better and more profitable business.
If you want to stop guessing, start making calmer decisions, and finally see more profit and cash in the bank, now is the time to act
Take a proper look at your numbers, understand what they mean, and give yourself the chance to change the outcome before small problems turn into big losses.
If you’d like help understanding your numbers and gaining clearer insights for better results, just get in touch.
To get in touch you can drop us an email to [email protected] or call one of the team on 0161 410 0020.
Disclaimer
You must take professional advice before making any decisions based on the information that you have learnt here. While every effort has been made, to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information. Professional advice should be taken based on specific circumstances in each individual case. Whilst we endeavor to ensure that the information contained in the article is correct, no liability will be accepted by Krystal Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.
