Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
The Owned and Operated electrical, HVAC, and plumbing business growth podcast is hosted by John Wilson and Jack Carr. These two Home Service Business owners bring you weekly podcasts and daily content with multiple perspectives, actionable advice, and info on an ever-changing industry revolving around advertising, lead generation, and more.
Join us every Tuesday for topical conversations that unlock the potential for your business growth. Covering topics from top-tier talent recruitment to mastering marketing strategies and scaling your home service business, the podcast aims to be your guide on the path to entrepreneurial success.
For more information, visit www.ownedandoperated.com.
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Double Your Profit Day #5 Can Zero-Based Budgeting Save Your Business Money?
Double Your Profit Day 5: Zero-Based Budgeting for Home Service Businesses, Contractors, and Small Business Owners
Welcome to Day 5 of the "Double Your Profit" 30-Day Challenge — your go-to business growth series for home service business owners, contractors, and small business entrepreneurs looking to boost profit margins fast.
Today’s strategy? Zero-based budgeting — one of the most powerful financial tools for HVAC companies, plumbing businesses, electrical contractors, cleaning service operators, and anyone in the trades or service-based industries.
🔧 Most small businesses budget based on last year’s expenses. Not here. We’re showing you how to start from scratch — building your 2025 home service business budget from zero, line by line. Every expense, every tool, every salary, every marketing dollar must be justified and aligned with profitability.
✅ What is zero-based budgeting and why it works
✅ How to apply it to your contractor business
✅ Tips to cut overhead, improve cash flow, and increase EBITDA
✅ Why it’s a game-changer for scaling your field service company
🔑 What You’ll Learn Today:
What zero-based budgeting actually means
Why you should ignore revenue when setting budgets
How to start from zero and justify each expense
Re-evaluating overhead like marketing, admin, and utilities
Focusing on your biggest costs first for faster savings
💼 This Episode is Brought to You by Avoca AI!
Looking to train your call center and improve technician performance? Avoca AI helps teams identify issues, improve call quality, and drive results from start to finish.
More Ways To Connect with O&O
John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC
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Welcome back to Double Your Profit. Today we're gonna be diving even deeper into zero based budgeting. It is such a powerful topic that we wanna make sure that we're really covering this in depth. So the way the zero based budgeting works is you start from $0. So if I'm a $30 million plumbing company and my overhead is $10 million, we want to be able to start that overhead at zero.
Now, zero based budgeting is cost only. We ignore revenue and we ignore anything above the gross profit line. So that's gonna be labor, materials, subcontractors, tools, and equipment. What we are focused on is our OPEX budget, so that's gonna be marketing, administrative staff, fuel, rent, utilities. This is meant to test all of our assumptions.
We're gonna have to justify every single expense. We're gonna not have any leftovers, and we are going to really dial in on is every dollar going. To its maximum potential. One of the common mistakes I see when people start this process is they skip the biggest line items. I think it's either because it's scary or they think it's sacred.
They think that that cost is sacred. I can't touch that. But the biggest line items is where you get the biggest juice. So what you should be focusing on first is highest dollar amount. What will give us the highest impact? If I can solve this problem, is it gonna be office wages? Is it gonna be software?
Is it gonna be marketing? Is your marketing expense just blowing up? What is the biggest thing that I can do that will drive the biggest savings in the shortest amount of time? 'cause we're here to double our profit. As you're going through the list, what I like to do is I grab my credit card statement, I grab my p and l, and I just start ripping it apart.
I wanna look at costs that we've had forevers and sort of test the assumption, do I need that software? No. Turns out I can have somebody do it in Google Sheets. Do I need any of these things? And half of the time the answer is no or yes, but it can be done for less. So what we're gonna do as we pick apart these giant line items is we're gonna kill the fluff and we're gonna make the legacy costs prove themselves.
To us as actually valuable. What this helps us do is it gets us clear visibility across the board. We wanna know where every single dollar's going, and the bigger the business, the harder that is to do so. As you get all this data together, it helps you to really understand where all of the dollars are going.
It's probably gonna be a pretty big spreadsheet. But do you, as you start dialing it in, you can start racking up very real savings. Zero-based budgeting is time consuming, so doing it once a year could be good enough for you. But we do want to hit it more often. We'd like to get as close to every six months and maybe even every 90 days if possible, by department, because you can break budgeting into a few different sections, departments.
So, hey, my call center. What do I really need to run a best in class call center? My marketing department? What do I really need to run a best in class marketing department and so on? So you can do that every 90 days and then roll it up to the whole, or you can do the whole company depending on the size of your business, as frequently as you can.
You want to test your assumptions and make sure that you are maximizing. Your dollars. What I really wanna drive home here is this isn't just about saving money. That's obviously a big part of it, but it's about saving money and being strategic with what your long-term goals are. The reason that zero base budgeting helps that is it helps you get aligned with what you are actually here to do.
We're here to drive profit. We want to be at a hundred million. By 2030. And if we focus on a tight p and l, and if we focus on reinvesting and if we put our dollars where they should be going, then we're going to get there. But if we have a million dollars a year of sunk costs into all this random stuff, it's gonna take us longer because that's just lost dollars that we can't reinvest.
So zero zero-based budgeting isn't just about cutting costs and raising profit, it's also about aligning your dollars. With your strategy, what I'd love is if you commented below with how you're budgeting and how often you're doing it, I'd love some feedback on ours. Make sure you like, subscribe, and share with a friend.