112: The 3 Metrics That Drive Profit in Construction and Service Businesses
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May 27, 2025
Discover the essential three metrics that can elevate profitability in construction and service businesses. Learn how to measure sales efficiency and the return on labor, crucial for optimizing operations. Understand the importance of financial metrics, including the return on invested capital and net operating profit after tax. Steve simplifies the calculations and benchmarks needed to assess true performance, helping you make informed decisions that could lead to substantial growth.
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volunteer_activism ADVICE
Focus on Three Core Metrics
Focus on just three key metrics: sales efficiency, operational efficiency, and value efficiency.
Use these metrics to avoid being overwhelmed and effectively measure business performance.
volunteer_activism ADVICE
Maximize Sales Efficiency
Measure your sales efficiency by calculating the ratio of gross profit from new customers to total sales and marketing spend.
Aim for a 3:1 return ratio to ensure scalable and healthy customer acquisition costs.
insights INSIGHT
Sales Spend as an Investment
Most companies mistakenly treat sales and marketing costs as pure expenses instead of investments.
Understanding the return on sales spend changes how much you invest and grow your business.
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The Cash Flow Blueprint every contractor wishes they had sooner: coltivar.com/cashflow
Is your business beating the stock market?
Steve shares the three metrics every founder must know if they want to grow profitably and build a business that’s both valuable and optional. Drawing from his experience as a CFO for a billion-dollar construction firm, he breaks down what he calls the "three efficiencies"—and how they reveal whether you're wasting money on sales, underperforming on labor, or sitting on a business that’s barely outperforming an index fund.
If you’ve ever wondered how to measure true performance, this one’s for you. Steve walks you through the calculations, benchmarks, and tells you exactly where to look in your financials, without getting lost in jargon. You’ll leave knowing which KPI deserves your attention... and why it might just be time to raise your standards.
Disclaimer: The views expressed here are those of the individual Coltivar Group, LLC (“Coltivar”) personnel quoted and are not the views of Coltivar or its affiliates. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Coltivar has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendations. The Company is not affiliated with, nor does it receive compensation from, any specific security. Please see https://www.coltivar.com/privacy-policy-and-terms-of-use for additional important information.
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