In this episode, Louis Massaro shares how to set moving season revenue targets in your moving company.
- “I’m a big believer in business in having sprints. Usually, it’s a 90-day sprint. In typical circumstances where you kind of go hard on one thing and then take a little break, relax, recuperate… Figure out what the next move is. Usually, those are quarterly sprints. However, with moving season, we’re going to do a 120-day sprint to where you maximize this season”
- “It’s easy to say, “Hey, I’m just going to go out, seasons here, we’re going to make a bunch of money.” But if we don’t have a clear target on where we’re headed and what we want and where we’re going, then it’s easy to just drift. It’s easy to get caught up in the day-to-day of what’s going on and not hit those numbers, right? And just because we’re hitting certain numbers and just because we’re busier than we are the rest of the year, doesn’t mean that we’re going to be profitable.”
- “If your targets are constantly being hit or your goals are constantly being hit, you’re not setting them high enough. Never be afraid to not hit your target. The targets aren’t there to get hit, they’re there to keep you moving towards them. So don’t feel like you need to set this low, realistic target so that you can win the game, hitting the target is not winning the game. Getting beyond where you are now, that’s what starts to advance you towards winning the game.
- “Please don’t move on with your day if you’ve got the time, just sit down and come up with these targets. You don’t have to make it complicated. You don’t have to get a spreadsheet out, just get a single sheet of paper, write them down.”
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Louis: This is really where I kind of say, all right, look, what’s going on now and how can you maximize your business and really take advantage of the current season or the current circumstances, whatever’s going on in the economy, whatever new technologies out there. And right now starting today, it’s moving season. So what we’re going to talk about is we’re going to talk about doing 120 day sprint.
So you’ve got, May 15th, which is today. Okay? And then we’re going to take that through September 15th, so that’s going to be your 120 day sprint. I’m a big believer in business in having sprints. Usually it’s a 90 day sprint, right? In typical circumstances where you kind of go hard on one thing and then take a little break, relax, recuperate, right? Figure out what the next move is. Usually those are quarterly sprints. However, with moving season, we’re going to do 120 day sprint to where you maximize moving season, all right? I know you know it’s going to get busy, however, what a lot of people will do during moving season is assume that it’s going to get busy and kind of rest on their laurels a little bit. Right? So what I want to do today is I want to talk about some ways where you can maximize this season to bring in more money. And we do that by setting targets, right?
It’s easy to say, “Hey, I’m just going to go out, seasons here, we’re going to make a bunch of money.” But if we don’t have a clear target on where we’re headed and what we want and where we’re going, then it’s easy to just drift. It’s easy to get caught up in the day to day what’s going on and not hit those numbers, right? And just because we’re hitting certain numbers and just because we’re busier than we are the rest of the year, doesn’t mean that we’re going to be profitable. Right? So I want to give you some targets that I want you to set and I want you to set them from today, May 15th through September 15th. And by the way, I don’t know if it’s exactly 120 days. It’s four months. So I know somebody is going to be in the Chatroll like Louis, it’s 123 days, or it’s 118 days, whatever it is, it’s a four month sprint, okay?
So here’s what we’re going to do, we’re going to go over five different areas of revenue targets that you need to set and then try to achieve this moving season and realize that setting a high target is a good thing, right? If your targets are constantly being hit or your goals are constantly being hit, you’re not setting them high enough. Never be afraid to not hit your target. The targets aren’t there to get hit, they’re there to keep you moving towards them. So don’t feel like you need to set this low, realistic target so that you can win the game, hitting the target is not winning the game. Getting beyond where you are now, that’s what starts to advance you towards winning the game. So let’s talk about these areas.
The first area is gross revenue target. So gross revenue for your business, everything combined, right? Whatever you do, local, long distance, storage, everything combined, gross revenue for May through September 15th. So the best way to do this would be to take a look, run the dates in your CRM for May 15th through September 15th of last year and see where you’re at. See how each month breaks down so that you could kind of identify certain milestones of where you are along the way to see if you’re on track, but take a look at last year and then see where you are now. Right? Do you have more momentum? Have you increased over last year? As the first quarter of the year. So if you run those numbers on January, February and March and include April in there too, what percentage are you up over last year?
Do you have more leads coming in? Do you have more salespeople? Do you have more trucks and movers and opportunity to bring in more money? And you’re going to want to set your target based on gross revenue. This is the easiest number to attain in the way of like, it’s the easiest thing to just shoot for a high number, but it’s not everything because it doesn’t really matter at the end of the day what the gross revenue is if it’s not translating into net profit. I mean, it’s not really about what your company does. You’re not winning awards for doing two million, three million, 20 million, whatever it is, you’re not winning awards for that. Your awards are the net profit that you’re able to take home at the end of the day. So gross revenue target, and they need that. That’s first, then your RPM target, your revenue per move.
So this is going to help you increase this. Revenue per move, another way of saying your average move is so important right now, because most people will run into capacity issues over the next few months. Meaning, I’m talking to people already and they’re already booked out for the end of this month. And so when you start to hit capacity issues, meaning you don’t have enough trucks or movers to service all the demand, what do you got to do to raise the revenue? You got to make more money per move. So how do we make more money per move? Well, number one, raise your prices, this is the best time of the year to raise your prices. If you’ve been hesitant to do so, or even if you’ve already raised your prices, this is a great time to raise them again.
A higher price, people are worried that people won’t move with them, but if you’re selling service and not price, and you’ve got the objections, most of you are in Moving Sales Academy, you’ve got the online course. You’ve got all the rebuttals and you know what to say to overcome that, you could sell at the higher price, but even if it reduces your volume, that’s okay because you can’t handle as much volume in the summer, right? If you’re finding yourself turning away business, you need to raise the prices. Another thing is, your revenue per move can consist of packing. How much packing are you selling on each individual move?
Now, packing can be sold at the time of sale. Meaning when they’re booking the move, it could be sold, we do a seven day packing checkup call. Where seven days prior to the move we call the customer to see how the packing … how everything’s going, your moves coming up. It’s a week out. Just want to check in on your packing to see if you’ve been able to get everything packed, it shows here that you’re going to be doing the packing yourself. And the customer’s like, “Well, to tell you the truth, it’s a mess. I haven’t had time to do anything.” “Oh, well, we offer packing services as well.” Then you go into selling packing, a week out is perfect to do that because the people that are behind. And at that point, if they haven’t started packing a week out, they’re going to be a little stressed out about it. And if you could come in and help them alleviate that, plus raise your revenue per move, perfect.
You could also do this again on the confirmation call two days before the move and all of your movers should always have packing material on the truck. You go out there and there’s paintings on the wall that need to be packed, they can sell additional packing. Mattress covers, mattress bags, shrink wrap, all this additional stuff that … even general boxes, 1.5, 3.0, whatever it is, where you go out there and there’s stuff not packed that they said they just didn’t have time to do, it’s an opportunity to sell additional packing. Now of course, always make sure that the customer knows that there is an additional charge, don’t just pack up a bunch of stuff and then hit them with a bill. They need to understand what it is they’re paying for. You also can bring in storage as well. Don’t think that storage has to be all or nothing, a lot of times the customer will just need to store one room of furniture, so always have storage paperwork with your movers on every job even if that job’s not a storage job.
Be proactive in having the materials and having the stuff you need to do that. So you raise your price, you sell some packing and any other additional services that you could do, maybe you’re selling valuation. Anything additional that you could sell on those moves, maybe there’s some things you’re not charging for, but you want to start charging for. Maybe you can charge for a truck fee or a trip fee that you don’t normally do. I was talking to somebody recently and they’re like, “I’m going to add $40 trip fee to every job.” They did the math, I forget what the number was, but it was a significant amount of additional money. Now, they weren’t going to just add it, they were going to tell the customer upfront. It was like part of the estimate. It was going to be added into the estimate. Let’s see how you can raise your revenue per move. Now’s the perfect time to do that.
Sometimes in the other parts of the year you’re like, “I just need moves. I just need moves, I just need moves. I have trucks to fill, I’ve guys to keep busy.” Well, now you’re like, “My trucks are full, my guys are busy.” Okay, well, if your average moves $800, can we get it to 950? Do the math, you could easily raise hundred dollars across the board average move, easily, with increased rate and selling some additional packing. So figure out what your revenue per move target could be. So for example, if you’re at 800 average, maybe your target’s going to be 850 average or 900 average or 950 average. So by the end of this sprint, where can you get your average move up to? It doesn’t mean that’s going to happen overnight, but you use the summer as an opportunity to say, hey, volume is not the issue right now. Quantity of moves is not the issue, let’s make more money for the moves we’re doing.
You all know you’ve got additional costs involved. You’ve got movers want more money, everyone out there is having drivers and movers say, I want numbers that are unheard of for labor. Well, you’ve got to compensate for that somehow. You can’t keep charging the same old rates and pay a ton of money more for movers. So track that, set yourself a target because here’s what will happen with this, now is the time where you almost get like a free pass to try this out, because it’s going to be so busy as it is, but what you’ll find is you’ll build this up, let’s say from 800 to 950 or whatever. And that’s like a local move average, long distance, maybe you go from 3000 to 4,000, whatever it might be. So once you get to September 15th, once we start to come out of the heart of moving season, all these principles and all these practices and your confidence, and being able to sell at a higher price is still with you. And that’s how you’ll be able to continue through October, November, December, January, February, with those higher rates. Okay?
So revenue per move target, RPM, then your cash reserve target. So it’s so important that you’ve got a cash reserve for the off season. And now’s the time where you start to fund that cash reserve. And cash reserve is essentially an account that you set up with money in it that you don’t touch from the end of moving season to spring time. You don’t even start to think about touching it until let’s say March, and you feel things start to pickup. And the only time that you use it throughout the off season is to balance out cashflow. If you’ve ever been through a tough winter and you’re juggling expenses and juggling bills, and you kind of can’t pay everything, that cash reserve account is there to help fund that. Right?
And so the idea is that you fund it in the summer. So fund it now between May 15th and September 15th, fund that account, then you don’t touch it, you leave it in there unless you need it for running your business for cashflow purposes. A lot of people, what they’ll do is they’ll winter time, all of a sudden, they’ll say, “Things are tight, I need to cut off certain marketing sources,” which is like killing your business. You can’t cut off marketing when you need it the most, so you don’t want to be in a position where you have no ammunition, you can’t win the war. And sometimes you know that’s how it could feel in the winter when you’re struggling to make ends meet and things are tough and they’re tighter than usual. You can’t win that war without ammunition, and the cash reserve is ammunition.
So my recommendation is you take 5% of your gross revenue and you put this in a cash reserve account. So let’s say you do 200,000 a month and you do 200,000 a month for the next four months. What’s that? 800,000, right? So 5% of 800,000 is going to be 40,000 bucks. How nice would it be to go into the winter with just an extra, and this is if you’re like a $2 million company, it all adjusts. You might say, “Louis, that’s so much.” Or “Louis, that’s not enough.” Figure out what your 5% is. But you go into that winter with 40,000, there, that’s a feeling of security. That’s a feeling of confidence. Listen, juggling expenses, I went through the recession, I don’t want to do that again.
I don’t want to be in a position where it’s like, what could we pay? What could we not pay? What could we pay? What could we not pay? I’ve been there, and it’s one of the most stressful things, and it interferes with your business and your ability to lead. When you could pay all your bills, maybe you’re not raking it in, in the winter, but you could pay all your bills. And you know if you hit a rough spot, no problem, there’s a cash reserve account that your main account could pull from, you can rest assured that all your bills could be on auto pay. Everything could … You know what I mean? You don’t have to juggle and have those big cashflow meetings and things like that. Fund this account and what I want you to do is have a target for this. So I’m suggesting 5%. Maybe you’re like, hey, I’m going to do three. Hey, I’m going to do 10, whatever it might be for you, whatever that number is.
So let’s say, again, let’s say this is $200,000 a month is your gross revenue. And we’re talking about four months, 800,000, 5% of that is going to be 40,000. So for this you would have a cash reserve target of 40 grand. So maybe in the first month, maybe in May, maybe right now, you’re still catching up on some expenses from off season. And you’re not able to fund the 5% this month. Okay. Well, you got some catching up to do to hit the 40,000. Don’t make the target 5% a month, make the target a set number. So if that’s 40K, that’s 40K. 40K by September 15th, right? Again, whatever that number is for you, you’ve got a target, you’ve got a cash reserve account, you’re filling it to where you get to September 15th and you’ve got, you’re like, I’m good. I got the fund.
Let me tell you something, you want to talk about stress relief. You want to talk about going into the winter with a sense of security. You’ve got that money stacked up in there, you’re going to feel really good about that. Then net profit percentage target. So you might have this big gross revenue target and let’s say your gross revenue target, for example, just to put it in context here would be, I’m just going to use the same example here. Let’s just say it’s 800,000. Okay? Is your gross revenue target for the four months, meaning you’re going to do 200,000 a month. And you’ve got your revenue per move and maybe you’re going to go from 800 to 950, average. Okay? Now here you’re going to say, okay, I’m going to have 40,000 by September 15th. Well, here, we’re going to talk about net percentage.
So just because you did 800,000, doesn’t mean you’re going to make any money. So anybody could go out and spend all kinds of reckless money on advertising, all kinds of reckless money on labor that they can’t afford based on their rates. Have low prices and their job costing is so off that every move they sell, they’re losing money. Anybody could do that, that’s not the name of the game. The name of the game is to get the gross revenue so that you could get the net profit. So what I want you to do is come up with a target, wherever you are now, as far as net profit target. Look at last year, okay? Look at May 15th through September 15th on your P&L and see what your net profit was for that period. Because a lot of times I’ll see companies that they’ll have like a very busy summer, but they’re letting the wheels fall off, if you will. Things are running so fast that the tightness starts to loosen up and all the profits come dripping out the bottom.
So maybe in the past you are at 10% net, and you’re like, hey, I want to go to 15%. Maybe you want to go to 20%, whatever that number is, if it was me, unless you’re at like a really low percentage, unless you’re like under 10, which there’s companies out there doing millions of dollars that are doing 3% and it kills me to see it, but it happens. So set yourself a realistic percentage. I would recommend that that’s anywhere between 15 to 20%, that should be your target. And you want to make sure that in the midst of the busy season, in the midst of things being little chaotic, it can be a little extra just constant stuff going on. The more moves that happened, the more problems that could happen, the more trucks that are on the road, the more truck issues you could have. I mean, it’s just everything compounds and everything increases, so you’ve got to make sure that you keep your eye on this. You don’t want to get to the end of the season to discover that you dint make any money.
So if you’re doing 20% and you’ve got 800,000, what is that? That’s $160,000. That’s the move in business. That’s what it needs to be. So when you talk about, okay, I’m going to fund a cash reserve account. Okay. Well, where’s that 40,000 going to come from. It’s going to come from there. Right? It’s going to come from there. So this net profit, in other words, this isn’t an expense. This still is part of the net profit, but when you take it out from a cashflow perspective there’s still 120 there. So net profit, then you need a reason to be doing all this. Sometimes we profit, but we forget to thrive. Or you thrive and you forget to profit. You’re living your life, you’re enjoying your life, but you’re forgetting to make money. Well, we’ve got the money part covered for the business, right? This is smart business right here doing this. But what you got to do now is you got to set a target for your fun fund. You’ve got to fund the fun fund. Say that 10 times over, fund the fun fund.
So you’ve got to have a target of money that you say, you know what? By September 15th I’m going to have a fun fund set up. You can call it whatever you want. That that’s money for me to do whatever I want to do with, money for me to blow. You’ve got to reward yourself after every moving season, but the first thing that needs to happen is you’ve got to be able to get this gross revenue up. You’ve got to be able to raise your RPM, your average move. You need to be able to make sure that you’re profiting, so there is this money so that you can fund a cash reserve account, you could fund a fun fund account, and still have operating capital within the business to move into the off season. Because the idea is that you don’t want to really have to touch this if you don’t have to. So you can make this number whatever you want.
I would say to make it two to 3% of the gross. Two to 3% of the gross, or you can make it on the net profit if you have this set and you know what the net profits going to be, you can make it on the net profit and set it. But let’s say you made it, let’s just call it 2.5% of gross, so 2.5% of gross. So you’re talking about 20K, you’re doing 200,000 a month. At the end of the summer, I want 20,000 bucks to blow, to do what I want to do with. And I don’t mean you blow it, like go to the club and pop bottles. If that’s what you want to do, do it. Maybe you want to get a new car, maybe you want a down payment on a house. Maybe you’re like, hey, my goal for this season is to invest in a new piece of real estate that I can collect rent on. Maybe you need to pay college funds for the kids, whatever it is, it’s money to spend.
You’ve got to have a target in mind, okay? This is what’s going to keep pushing you through the summer, take a $20,000 vacation, that’s a nice trip. Set yourself up, go away for a couple of weeks, spend 20,000 bucks, stay in a nice places, do what you want to do, whatever it is for you, everybody listening, everybody watching, you all have different things that you want to do. The point is, you’ve got to have a target with money for you and your family where it’s like, why did I work so hard? Right? What is it all about? You didn’t work so hard so you can have a, hey, look at my P&L, I’ve got 160,000 net. Okay, that’s cool. Or I have got 40,000 to get me through the emergencies in the winter. Okay, great. You need some money to go enjoy yourself. Profit and thrive. And what I would do is I would figure out right now, when you’re setting these targets, what you’re going to do. You come up with that number and say, what could I do with that number?
It could be anything, could be trips, could be some type of … something that brings you satisfaction in some way, shape or form. So these are the targets I’m encouraging you to, if you’re not doing it right now as we’re talking and coming up with these numbers, as soon as we get off to just number one, what’s this going to be? Number two, what’s this going to be? What’s this going to be? What’s this going to be? And what’s this going to be, all four. You might say yes, this Louis, this is a great idea. I’m going to do this every single month. And that’s cool if you already do it, but if not, I think going from May 15th to September 15th on a sprint, knowing that there’s an end in sight, because you might be hustling a little bit more, you might be working a little bit more. You might be dealing with a little more problems and stress. You want to have that end in sight, set yourself up for this sprint.
Have these targets, have these goals, it will set you up to thrive in the off season and you’ll do higher numbers period than you would have done if you didn’t set these targets. And guys, that’s it. Make sure you go set these targets. Please don’t move on with your day if you’ve got the time, just sit down and come up with these. You don’t have to make it complicated. You don’t have to get a spreadsheet out, get a single sheet of paper, write them down. They’re targets, don’t feel like you’ve got to hit them, don’t feel like you’ve got to set them low. Season is what moving business is all about. You got to get out the rake, rake in the money, go out there and make it and make sure as you’re doing all this, you not only profit in your business, but you thrive in your life as well.
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