Want To Sell? No Buyers?
There are some contractors who have struggled for years building their business. They have fought to get good employees and tried to keep the best-qualified ones. It's been an uphill battle. For more than a few, the profits have not matched their expectations. Long hours and hard work don't seem to produce what they would like to see from their business.
These days it seems like consumers try to be "do it yourself" experts -- probably because of the promotion efforts from the home warehouses that imply you can fix anything in your home. In addition, the home warehouse prices are frequently lower than the prices contractors pay for the same fixtures, parts and materials.
It's no surprise contractors are feeling "burned out" and frustrated from the impact of all the negative influences to their business. Morale is low among the independent contractor service and repair businesses.
OptionsThe choices available to a service business owner to sell, retire and get back some of their investment and years of work seem to be diminishing. Most of the consolidators who were buying (and paid top prices at one time) have stopped acquiring businesses. Only one I am aware of is actively looking, and then only for shops with a long-standing reputation that are available at reduced prices -- no bargain for the owner.
Very rarely nowadays can you approach the competition with an offer to sell. Although it is still an available alternative, it is not an attractive one because in today's market they are facing the same challenges you are. Instead of paying you for your team, they would rather wait you out and hire your technicians when they are looking for a job after you have called it quits. It's cheaper and they are in no hurry to expand.
Many contracting businesses are transferred to the children for a bargain price. Sometimes they end up being run well, just as often not so well. Consequently, the return of your investment is in a precarious position. About the best you can be assured of is a place for Grandpa to go to get out of the house. Certainly, giving it to the kids should be considered a last resort -- unless your situation is unique.
Some contractors will tell you that they are just hanging on waiting for things to change. That's like hoping for a miracle. Waiting and hoping -- signs of desperation -- are the worst things a service and repair business owner can do. That approach paralyzes his ability to make decisions, keeping him from taking action to improve the situation.
Success groups have helped some people increase their awareness of the problems in their businesses and, to a lesser extent, have helped them identify solutions to provide better profitability. Overall, simply meeting in a group three or four times a year is not enough to change the way you run your business and improve your profits. It still comes back to you. If you want to get better results from your business, it's up to you.
Best IdeaThe only feasible alternative I see is to run the business yourself and turn it into a more successful operation. What is really needed is a motivational boost -- call it a shot in the arm or a kick in the pants -- something that gets a person excited about going to work and making the business work for them.
I was surprised (and gratified) when I discovered that many of the thousands of seminar participants I have worked with over the years attended the training programs not just for the information but for the motivation they received. Occasionally, it takes a fresh look at the industry to stimulate some of the potential you have locked up inside so you can go back to your business and apply yourself with a new spirit.
Of course, one of the reasons to renew your motivation to polish up your business for more profits is the newest information and management techniques that will make a difference in the operation of the business. You don't have to revolutionize the way you do business, just recognize the latest in operations, sales and management practices that produce a healthier business.
What's HotThough many of the fundamentals stay the same, there are some areas of the business that require keeping up with to avoid being passed by the competition. Some of these concepts you have heard me strongly suggest or write about before, but there are still some contractors not on track yet. A sampling of the practices your business needs for success and profitability follow.
Flat Rate, Flat Rate, Flat Rate -- I can't emphasize enough the value of flat rate pricing all your jobs. Do you want customers second guessing prices for fixtures and materials, like water heaters or kitchen disposers, from the local home warehouse? Tough to answer those price questions. Remember: you are selling service; you are in the service business.
Service Agreements -- Speaking of service, sell service agreements. They are probably the biggest discovery I have made in the past years for generating: profits, access to customers' homes to inspect for needed work and loyalty from customers in an industry where customers reach for the Yellow Pages first, then call a service company. They are a huge source of cash for your business. Get with it if you don't offer them.
Training -- If your employees haven't been trained in the latest customer service techniques, you are losing business opportunities. Standards for everything from technicians' appearance, demeanor and pricing the job to closing has changed in the past few years. Customers today are more knowledgeable and more demanding of service companies. If you want solid margins you had better be able to deliver the service quality customers expect from quality companies.
Financial Management -- It's difficult to get older shops to discard anything, but without inventory control systems and financial management techniques that make economic sense, profits suffer. Today's manager must be able to read and understand his business's financial statements -- and be able to make management decisions from that data.
I am still uncovering businesses where the owner can't precisely determine his costs for jobs and for monthly overhead. Making decisions in business today requires the best data available; otherwise, you are making decisions unaware of their impact on your business's profits. Can't stay in the dark any longer.
Trucks -- Operating a fleet of trucks is a challenge by itself. Do you know the best layout for a service truck? What should you carry to maximize your technicians' effectiveness? We found that properly equipping a truck avoids expensive trips to a supply house, leaving a customer alone (with their Yellow Pages). Even the arrangement of the materials and equipment on the truck makes a difference. Trucks are expensive so your business must use them in the most efficient manner.
There are many other areas of operating a service and repair business that need attention in the businesses I see, all across the country. Dispatch procedures, the use of radios and GPS (Global Positioning Systems), for example, have changed the way owners are running their businesses.
To solve that frustrated feeling, get the information you need, implement it into your business and you will look forward to going to work again -- and coming home with the profits.