By Dave Murphy
Posted on Sunday, August 6th, 2023
I worked for 35 years without making any money. Then this old farmer came along and helped me see the light.
He told me that he made more money from working on his books than he did out in the fields. The books showed him where there was waste, what was profitable and what wasn’t, where he was efficient and where he lost money. It’s really just common sense.
Ever since that conversation, I keep track of the time and materials on each project to see if I made any money. Through that, I have learned what works and what doesn’t. Even if you have money in the bank but still don’t do this, you’re in the dark about the most important part of your business.
Every piece of equipment you buy has an expected lifespan. The manufacturer will tell you how long a piece of equipment is expected to run before it needs repairs or replacement. The cost of the equipment must be divided by that lifespan, and you have to put that amount of money aside each year to replace it when the time comes. Otherwise you’ll be in trouble.
I don’t get every job, but that’s fine. I know my price is what I need to survive in the business. It takes a little bookkeeping to know what to charge. It’s not something you grab out of the air. You can’t use the price someone else charges or what “feels right” to you. You can’t let your competitors—or your customers—price your work.
I have to charge what I have to charge. I’m going to lose some jobs. But there are other jobs that I can do efficiently and make money on that I am better spending my time on. That’s how to make money. You make money doing the things you do better than somebody else.
Dave Murphy, Murphy Signs, Harlan, Iowa
