All plumbers can turn a wrench, but not all contractors can turn a profit. Turning a profit requires tradespeople learn how to master the trade of business. It requires understanding key principles about the business side of plumbing. Here are some essential principles contracting business owners should understand in order to become successful.
1. Revenue measures service exactly
Your total company sales are an exact measure of the value you provide within your community. Want more revenue, find ways to be of greater service. Add new products or services to your offering. Expand to cover a greater geographic area with more customers. Increase your marketing so that you serve more people.
2. Profit measures efficiency
The profits that your company keeps are an exact measure of how efficiently you deliver value. To increase profits, work on becoming more efficient. Of course, your pricing might inhibit your ability to deliver value, so pricing might need to be raised first. When you raise prices, raise your value and your service level, accordingly.
3. Consumers will never understand plumbing economics
A consumer will never understand how much it costs to place a skilled tradesperson at their front door with a fully stocked truck. No matter how cheap a plumber prices, it will seem like a lot to the homeowner. If a little seems like a lot and requires you to squeeze down your service level and personal lifestyle, you might as well go ahead and charge a lot so you can serve people the way they deserve to be paid and give your family the lifestyle they deserve.
4. Not everyone is your customer
The managers of Neiman Marcus do not pass out promotional flyers in front of Walmart. Walmart customers are not Neiman’s customers. Ruth’s Chris Steakhouse executives do not try to attract McDonald’s customers. They do not have the same customers. Figure out who your customers are and go after more people like them. Do not worry when you do not appeal to people who are not your customers.
5. No one will take your customer, but you can give your customer away
If you have repeat customers and do a good job taking care of their needs, periodically remind them you are around for them, and no one will be able to take them from you. However, you can perform so poorly, you give them to a competitor.
6. Your truck is your greatest advertising vehicle
Your truck, if well-wrapped, is your greatest advertising vehicle. It literally gets 30,000 to 90,000 impressions a day. A well-designed, well-wrapped truck stands out and can give you brand awareness by itself in your market. A white truck makes women uncomfortable. They call them abduction vans.
7. You can own a business or have a job that owns you
Some plumbers do not want to grow. They like being small and falsely believe it gives them freedom. They do not own a business. They own a job, or rather, the job owns them. Building a business that can run without you is real freedom. It is real security. It is real wealth. It is real salability.
8. You can be process centric or people centric
Businesses that are process-centric can change out personnel without losing consistency. The consistency comes from the process, which is continually improved upon until it is perfect. Businesses that are people-centric upend the way things are done every time a key person leaves the company. There is no consistency. The process-centric plumbing company is the closest thing a service business can get to automation.
9. Every customer interaction results in a sale
When your plumber presents repairs and options to a homeowner, a sale is inevitably made. The only question is who the buyer is and who the seller is.
10. Better pay gets better people
If you cannot attract top talent, ask who can? What do they pay? Don’t limit yourself to plumbing. Plumbers are fundamentally mechanics. Does the auto dealership pay more than you? Offer better pay and benefits and you will attract better talent.
11. Putting customers first means putting them second
If you want your customers to be treated well, treat your team better than your customers. Your team will not treat your customers better than you treat your team. So, to put your customers first, put them second, behind your team. Take care of the team and they will take care of the customers.
12. Training is like bathing
Training and bathing both wear off. This why they both are needed frequently and repeatedly. Sports teams run the same plays over and over again until they are automatic and perfect. Train on your processes over and over again.