Doctors, Air Conditioners and Churches. See if these things be true.

Why don’t we commit to run our business this year with a new level of professionalism and planning so that it will take better care of us?  A few small improvements could easily make a 10-20%  difference in our bottom line.  A good place to begin is with the question; How much does it cost to run my business?

I was just over on ShuBee’s  site and Frank Blau had brought up this question in his great article on the issue.  I would like to give my condensed take on it here.

Your company’s costs are made up of fixed and variable, or indirect and direct costs. Fixed or indirect costs are referred to as overhead expenses, and can be best calculated by your accountant using a program such as Quick Books or Peachtree. As bills are paid, costs are given a category code and entered into the computer. A report can be called up in seconds that will give you more info about your business than you could imagine. You must know what to do with that info and Frank’s article is a great place to start.

If you are trying to do it any other way than up to date computer reports that are generated from your actual accounting numbers, then we’ve already identified how you can improve your business this year.

If you want to be an accountant, turn in your tool belt for a calculator. Frank is dead on in that we should be aware of our overhead and use correct markup calculations to assure that we are making the money we need to remain in business.

(I’ve said it before, our clients will not be benefited if we are not around to give them service, or if we are too weakened to give them the benefit of, as one example, quality diagnostic equipment and the time it takes to pinpoint air quality issues that never cross the minds of “fly-by-nights.” Another example is not having enough time to spend with the client to determine what is important to them and how you can make their life better.)

My point is, yes, you must understand all your costs in order to price jobs to make your necessary profit.  However, if you try to do all the accounting it takes to keep you well informed and up to date it will not get done. Remember,  you you want to (as much as possible) work ON your business, not IN your business.

Set aside regular time with your support team, which should include your accountant, marketing consultant, manufacturer reps and peers, brainstorming your business and how to make it stronger this year.  This will keep you sharp on things you don’t have time to be an expert on.

The fact that you are reading this says that you are smart enough to be looking for new ideas and encouragement from outside yourself, so be encouraged and don’t hesitate to delegate.

Here’s the link to Frank’s article for an in depth discussion of overhead. While you’re there you may want to read about calculating mark up so you’ll be able to discuss it intelligently with your accountant.

http://www.shubeebusinesstips.com/2010/01/lets-talk-about-overhead/

Let’s make it a great year!

Rodney

If we will spend time finding out what’s important to the client ( beyond the problem they called you for), then we can search for solutions to the problems they may be having.  I am not talking about making things up, or finding stuff that isn’t there.  A good question to ask is, ” has anyone been having any unusual headaches or congestion”. If the answer is yes, that’s a good indication that there may be poor air quality in the home, which is our ballpark. There could be mold growing somewhere, or holes in the duct work drawing contaminates into the home, etc.

If you are able to solve a problem which affects their health that they were not aware of, what do you think that does to your image? You have separated yourself from the low ballers maybe for good, and you will certainly be in a position to get a testimonial and referral.

If you want your revenue to improve, then something must change. We could wish for the economy to change, or we can make changes to how we’re thinking about our business. Some of us can’t wait on the economy, the rest of us don’t want to, so start thinking outside the box for new fresh solutions to our client’s most pressing problems. Become your client’s most trusted adviser.

Rodney

rkoop@windstream.net

The other 5 contractors had only offered a new unit as a solution, only one had found the raccoon hole and offered to repair only that section. Matt proposed repairing the heat exchanger, some filtration and a permanent solution to duct leaks, all for about the same cost as the highest bid. The unit is now running more efficiently and the client said they are waking up now without the congestion they had grown accustomed to.

By adding value that the client recognized, he won the bid and the loyalty of the client. He is also being paid well for the service being rendered, more profit than in a new unit. That’s important to us if we’re going to stay in business and prosper. Important to our clients as well because we are making their homes healthier, and saving them hundreds on doctor bills and drugs, all while making them feel better.
A contractor with no money in the bank is no good to anyone including their clients. He is not able to purchase the equipment necessary to analyze and execute the job, or spend the time giving the client the service that everyone wants, but only a certain number are willing to pay for. We have found however, that if we do just one thing, the client sells their self and is happy with the price they pay.

Rodney

rkoop@windstream.net

Most standard systems such as these are found in the form of computer programs that can be purchased off the shelf. I don’t have to say how much time and money these will save you, but the point of this post is the systems you create in-house to standardize the tasks that your team performs on a routine basis.

An example would be if you sent your service tech to do a  home inspection. There should be a system to ensure that everything done was according to a well thought out plan designed to accomplish certain things leading to a sale. For instance, putting booties on before entering the house. That would be one element of the system, but what happens when the tech enters the attic or a dusty basement? Does he track the dust that he picked up on the booties back into the house? A system for using booties would include the reasoning behind the choice to use them as well as all of the smaller elements that make the system work well including what you say to the client as they watch you are doing.

Systems are sometimes referred to as standard practices, and should be written down in a standard practices document and used for training new employees and evaluating older ones. You should be open to suggestions on improving your systems which could have a multiplier type effect on improving your business. Let’s assume you have 25 core systems in place and you are able to improve 18 of those by 10 to 15% each. It’s easy to see how your business can benefit from that kind of improvement. Would it have happened if you just said I want to improve my business and were not able to drill down to individual systems? Another benefit is when you decide to outsource a certain part of your business. Your standard practice document could be shared with the sub-contractor as part of your agreement on how you want the work completed.

You would do well to have systems for every routine task that you wanted to maximize performance on. Just like a sales script has bullet points that the salesman can use as checkpoints going through his presentation to make sure he stays on track. Memorized standard practices insures that the client will receive all the service intended, or that a repair was fully checked to minimize callbacks. In fact, you should have a sales system. There should be a script or system for answering the phone that you have worked out well in advance and determined its effectiveness. I have a system for dispatching that I know you will find profitable. As I have said in previous posts, I’m working on getting these ideas in a transferable form. Please stay tuned.

Your good common sense is the best source of efficient systems in your business, but there are many sources including forums that you can join to see what your industry considers best practices. These can give you ideas on areas you haven’t worked on yet, so it’s always a great idea to stay caught up on your industry’s best practices by looking at what others are doing.

Early on I wondered how companies managed multiple employees at multiple locations, when I was having trouble managing the few I had working out of my office. The answer is to have standard practices or systems in place that everyone follows.  How do you think McDonald’s can give consistent service and quality around the world? It’s easy to see that successful businesses must rely on what some call systems and others call standard practices. Whatever you call them, the long term benefits await those who invest their time to create and implement effective systems.

Rodney

rkoop@windstream.net

At the minimum, one employee is needed that you can delegate work to, or at least someone to answer the phone, keep up with paperwork and manage the one thing that doesn’t get managed in a one-man shop. That is the hours in a day that someone is working to bring in income. That person should make sure you are spending your time on the high quality jobs and giving the client the highest level of service. The jobs that allow you to give great client service and get paid accordingly.

A one man shop model doesn’t allow time for you, your family or your client. That’s when your business becomes a bigger load than you can carry, and things head in a downward spiral. Even a shop with multiple employees can find things headed south, but usually for lack of a well thought business plan.

So what do you do if you find yourself in this meat grinder? It’s probably time to talk with someone who has already walked down that road and let them help you with your purpose and plan. If you aren’t comfortable about asking for help from someone in your service area, go outside the area, but make sure you’re getting advice from someone who is running their business like you want yours to be.

I will be posting a discussion of what you want your business to do, be, and accomplish. Hopefully it will be available by the time you read this, but in another post.

Rodney

rkoop@windstream.net

It would take too long to detail all the causes for the problems, but it could be summed up by saying that we were growing for the sake of growth, without realizing the price I was paying.

As I have gotten older and hopefully wiser my business model has changed. We are smaller with less headaches, more easily managed, and while being more profitable. Our customers are more satisfied and more loyal because we take the time to listen to what their needs are. We’re not flying in and out of houses anymore at break neck speed just to keep the trucks moving. It doesn’t take long to realize that a moving truck is burning fuel but not making any money. So why not make fewer calls that do more to satisfy the customer and make them much happier and more loyal. We make sure we do the job right the first time so we don’t have to come back to correct mistakes.

There are certain systems that we’ve adopted that have helped us create and maintain our model. We are currently working to make those ideas transferable. When you develop ideas from experience over the years, putting them in an understandable form is sometimes a challenge, but actually a lot of fun, and very stimulating for me. So, I’m looking forward to getting these ideas organized so I can share them with you.

Rodney

rkoop@windstream.net