Optimizing Profitability and The Need for Emergency Capital

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16:20

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How I survived the LAST economic collapse

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What happens here

The speaker reflects on the unexpected outcome of his strategy: by cutting back his business by 50%, his profits remained the same, effectively doubling his profit margin from 2007 to 2008. He repeated this process in subsequent years (2008-2009), further refining his processes to achieve an astonishing 50% profit margin, which he notes is exceptionally high in construction (10% is average). This led to a 'lightbulb moment' about the importance of streamlining and cherry-picking. He then introduces the second crucial strategy: having emergency backup financial resources. He shares a personal anecdote from 2008 where a contractor owed him $100,000 but disappeared, leaving him responsible for payroll and material costs without immediate payment. This highlighted the necessity of having readily available funds for such emergencies.

Goal: Realize and capitalize on increased profit margins through efficiency, and recognize the critical need for emergency financial backups.

What they say

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profits here's what happened in 2008 I intentionally cut my business back my profits in 2007 were right here in 2008 after I cut my business back my profits were right here my profits never changed I made absolutely as much money profit put in my pocket in 2008 as I did in 2007 and here's where that light bulb went off I pulled it off and I said wait a minute I just did 50% Less business and I got to keep the absolute same amount of money why have I not been doing this all along so in 2008 to 2009 when companies were starving people were going under times were tough I intentionally cut my company back even more I sat down with my top guys and I'm like where else can we cut without eliminating guys that we absolutely need what else can we do to refine our processes to make this thing flow even better to give us higher profit margins and in 2008 to 2009 I cut my business back again not as much as I did in 2007 and 2008 but I cut it back and as I cut my business back my profits actually Rose higher than they did at our peak in 2007 and I'm sitting here going I did it again I washed rinsed and repeated I did it again did it once I did it again can I do it a third time so what do you think I did I cut back again and again and again and again until I got my company where I was actually operating at a 50% profit margin and in construction a 50% profit margin is unre 10% is average 50% is UN heard of and that was my average year-to-date profit it wasn't on a oneoff job it wasn't on a great month it was the entire year I operated at a 50% profit margin and in fact you may have noticed it because that's about the time I started my company and I think I made a video saying why I had to go out and buy $330,000 worth of equipment in one year and this was in a down year this was in a bad year um so streamlining your company is absolutely critical if you think times could get tough and what I see happening in November is not going to be good for anybody in any way shape or form it doesn't matter if the red team wins or the blue team wins crap is going to hit the fan in one way shape or form or another and it's good to be prepared but there's a second thing you have to do to prepare just doing this oneoff thing is okay you'll get by you'll do good but there's a second thing you need to do and I'm actually going to bring in a special guest to talk us through this next phase coming up in just a few moments back in 2008 when things were

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