The why determines the what

Sometimes I see contractors get so obsessed with a number that they lose sight of what the number represents. I’ve seen this happen in regard to a variety of numbers, such as labor rate and what percentage of revenues to spend on advertising.

While it is important to know the numbers, it is even more important to understand what the number means. The number tells you what happened, but it doesn’t tell you why it happened. And the “why” determines “what” that number really means.

A multitude of variables can impact any particular number. If you don’t understand the impact of those variables, then the number isn’t going to do you much good.

For example, a recent thread on addressed the percentage of the job spent on materials. The numbers offered varied considerably, depending on the materials used, the efficiency of the painter, the application methods, the labor rate charged, etc. Each of these are unique to a company and thus will impact the percentage spent on materials.

If a contractor arbitrarily seizes some number and sets it as his goal, he will likely ignore the impact of these variables. The result could easily be decisions that are very harmful to the business.

My numbers have nothing to do with your numbers. Certainly you can learn from my numbers, but only if you understand the reasons that give rise to them. Only then can you make decisions about your business.

For example, I spend less than 3% of my revenues on marketing. If you tried to duplicate this, you would likely fall way short of the leads you need. But if you understand why I spend so little, then you might be able to reach that number.

Your business is unique. So are your numbers.

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