The Winners After
In case you're wondering, Gene and Tim are still proudly wearing their Red Sox hats. They earned that right, as you'll soon read about in their own words.
Tim and Gene remain passionate about helping you, too. They feel all their hard work detailed in this article can be inspirational for you to do better.
So once again, I've asked them to speak to you directly in this article by way of sharing an e-mail Tim sent me, which details just some of the many things we've done and what the results were. Plus, I'll explain why we chose particular areas of improvement and what Gene and Tim are working on further. (Incidentally, you may want to re-read the article, “The Winners Before,” we published in the July 2003 issue of Plumbing & Mechanical.)
Accounts Receivable“I was trying to get this e-mail off to you earlier this week. So, here I am on Friday morning trying to live up to my commitments.
“First and foremost, as of today, our accounts receivable are down! Within our accounts receivable numbers, we have dissected that some of the total amount was not due, but most of it was. Due to our new awareness and having many failed attempts under my belt, our accounts receivable is now lower and part of it is not even due at this time. Our 30-day accounts receivable was reduced over 33 percent already.
“The bottom line result is that we are doing a better job at collecting money and are now posting our results and expectations of what to collect each month.
“Our new phone skills now establish our payment policy in a very positive way. The techs underwent a retraining process on expecting to get paid at the time of service. The method of payment for the service techs was a very small adjustment inside the computer software. I even found that I could e-mail the customers' preferred method of payment right into the service tech's phone so they would know what to expect.”
Al: My two-day needs assessment visit identified accounts receivable as the No. 1 priority of Tim and Gene. Once that was established, we focused on a two-pronged approach:
The first step was to get the old money in. We discussed how to provide an incentive to the customers with outstanding balances for rapid payment and a reward to the person making the calls for getting the money in quickly and keeping the customer.
Tim and Gene followed my suggestion about posting the numbers so everyone would see their progress. This is key!
The second step was to stop building up the accounts receivables by getting paid at the time of service. Working with Tim and Gene, we put together the training that was needed by the CSRs, dispatchers and techs. The most important thing was the change in the company's thinking to “Yes, we expect to get paid today.” This has profoundly changed the company's receivables.
With the old money rolling in, future accounts receivable will be the money owed for ongoing large installation work that is now rigidly tracked with the work done.
Inventory Control“Our warehouse has been totally reorganized to a point where we are 60 percent bar-coded and 80 percent of the stock has minimum and maximum quantities. This process has created less duplication when reordering, and it has allowed us to see how the goods flow out the warehouse. The next step is to coordinate the warehouse with the computer software system. The restocking of the warehouse is helped by posting a dry erase board that allows all to see what we need and when it was posted.”
Al: I had suggested to Tim and Gene that since they were purchasing 80 percent of their materials from one vendor that they partner with that vendor if that supplier would provide bar-code scanning and help integrate it for both the warehouse and truck stock. They did this and saw a significant change. The warehouse and truck stock issues have all but disappeared.
We also limited the access to the warehouse stock to the warehouse manager, service manager, Tim and Gene. The truck stock inventory list was formalized so that we now know what's on each truck.
Another frustration that was addressed when Tim and Gene followed my suggestion was the missing power tools. First, we limited the access to the power tools and then we had each tool signed in and out for tracking. In the near future, the power tools will be bar-coded so tracking by the computer will be even better.
Sales“We are awaiting the beginning of our new sales training program, reward system and sales coaching system this month. I hate waiting but hope it will be worthwhile.”
Al: In my first visit, I discovered that there was no formal sales training and sales coaching. The techs were expected to sell but they weren't being given any help or guidance. They weren't even told how much they were expected to sell or given any incentive to do so. So, there was frustration by everyone.
Today, Tim and Gene are embarking on an in-house tech sales training system, sales coaching and reward program that gives everyone the help they need. We also spent a lot of time talking about running weekly half-hour sales meetings. These meetings will be about the posted sales results for the week, coaching those who need it in private and the sales training that will teach their techs how to do “Ethical Selling.” A very brief explanation of “Ethical Selling” is offering the menu of products and services that provide your customers with the best solutions to their problems the way you'd want someone to offer these products and service to your own mother.
Marketing Process“We have seriously begun to look at what makes up our market and what our clients are looking for. We have decided to dig in to the towns in our general area and uncover the towns that we are not performing in as well as our dominant towns. We've begun to focus our marketing efforts on these new towns. The next step is to begin to look at local organizations to join, real estate agents to solicit and professional groups to speak to.”
Al: In our first visit, Tim and Gene shared with me how disappointed they were in the work of his existing marketing company. I asked them to explain why. They did. Then I asked how they had delegated the project.
What they said revealed that they were not handing projects off in a way that gave the best chance for success. They lacked a systematic approach.
Because they didn't:
• Tell the people in writing what they wanted.
• What resources they had to accomplish it.
• What objective measurements they'd use to judge the results.
• When they'd be meeting so that any mid-course corrections could be made and help could positively affect the outcome.
• When the results were expected.
Tim and Gene no longer do this when delegating projects and this has produced great results.
We have continued to talk about their USP (Unique Selling Proposition) and reaching their ideal customer. We have reworked the marketing to be “what people just like you say about us” rather than “what we say about us.”
I guarantee that this new marketing initiative and approach will be a resounding success.
Minimum Dispatch Fee And One-Column Pricing“Until the new price book is printed (it's at the printers now) we have verbally gone to one column pricing and are no longer discounting for paying today. We have a minimum dispatch fee on weekends and for calls scheduled after 2 p.m., Monday through Friday.
Al: We have talked about the value of a firm minimum dispatch fee. The approach is “if you don't like our minimum dispatch fee, what will you possibly like about the pricing in our flat rate manual?” We only have so many hours to sell so let's get in front of the customers who see the value of what we do.
We set up a phone script that the CSRs follow to handle this type of objection and there have been minimal complaints. The conversion rate of incoming calls is tracked and it is still near 90 percent!
The price book has been simplified to make it easier for the techs to work with and for the customer to understand. They no longer discount the price to get a sale, which is showing up on their bottom line.
Service Agreements (Heating Contracts)“Our new campaign focuses on cleaning the heating system and our offer to insure the system for the year for an additional fee. So far, the approach has been very successful and we are adding clients to this program every day during the heating season. This is one of the ways the company will make money when we are not working in the customer's basement.”
Al: During our ongoing conversations, we talked about the need to generate income and work during the inevitable slow-times. Tim and Gene agreed that the best way to do this is to revamp their service agreement. And, what I suggested is that they contact their satisfied “service agreement” customers to ask them what they like, what they don't like and what they'd like to see offered in the future. The result of this market research is the successful addition of new clients to the program.
Buy-Sell Agreement“We now have a concrete buy-sell agreement in our possession that addresses death, divorce [should we want to breakup our partnership] and disability.”
Al: I come from a family business so I know about the need to have a buy-sell in place that is reviewed annually. Gene and Tim are not family, but as partners, they are like brothers. To minimize conflict and upheaval to the business, I suggested they put together a buy-sell together that fully addresses the three critical areas listed above.
We have been speaking about how to best fund this and attach a value to the business that provides for one another's family without straining the business. And, I advised them to get their lawyer and accountant to work together to produce the best buy-sell that addresses all of the possibilities.
Depth Chart (Organizational Chart)“The service manager now has a depth chart that closely resembles a seating plan that he can call upon from time to time to fill vacancies or cross-train all service techs.”
Al: Tim and Gene took my PHC organizational chart and used it to create their own. The point of an organizational chart is to display for all to see what it takes to run the business and to not be upset if your name ends up in most of the boxes. That's OK. As the company grows and we cross-train, other names will appear in those boxes. The best thing an organizational chart does is show you where you are strong and where you are weak so you may build the depth. Just like a football team does.
Training Facility“Above all else I could see the importance of a training facility for hiring, training, and overall improvement. The fact is that no other company in the area has one or would consider investing in training! I feel that when this facility evolves and begins to form itself, we will see a new breed of service tech that is grown instead of trained on the job or bought during an acquisition. To continue the analogy, we're going to have our own farm team. I can also add that this facility will show off the products we use and the finest work we can perform. As time goes by, all of our classes will be videotaped and sales training will take place in-house.”
Al: Once I showed Gene and Tim photos of my training center, they were hooked. They instantly grasped the concept that without a program to grow their own techs they'd be doomed to pirating staff from others as they grow. And, this would mean dealing with the whole employee they got rather than building apprentices into techs their way. The training center also provides a marketing opportunity. They plan to proudly display their in-house training center and proclaim “We're not coming to your home to learn our job. We've been trained and certified in our own training center.”
They both understand that the training center is where sales, operational and technical training come to life. They are following the principles of my newest workshop called “Staffing Power!” to make their existing techs more productive, hire and train new techs that will be more effective and build their own apprentices into techs.
Hiring Practices“All hiring has become a better science complete with background checks and DMV checks. These practices cost money and save us money at the same time by not hiring the wrong person, or a person that will drive our auto insurance through the roof. I cannot say enough about the new training facility's potential value to the company and its employees.”
Al: Learning is a two-way street. I learned a lot from both Tim and Gene. They are avid readers and they suggested I read two business books. One book called “Mastering the Rockefeller Habits“ by Verne Harnish and the other called “Good to Great” by Jim Collins. When I read them it allowed us to share these great concepts.
In “Good to Great,” the primary focus of the great companies is getting the “right people on the bus [the team] and get the wrong people off the bus.” That's why Tim and Gene have followed my advice about how to hire, indoctrinate and train the right people the right way. Again, this is covered extensively in the workshop called “Staffing Power!”
Personnel Files“The locked cabinet is now within my office. OK, this one was easy, but it is a change!”
Al: Personnel files contain information that is too important and too sensitive to handle any other way.
And, what makes Tim and Gene so unique is their ability to change. Once they've been given compelling reasons to change and they have created a plan for doing it, they get it done.
I've met a lot of talented contractors over the years. And here's what I know. What separates the ones who are successful from those who are not is the ability to plan and implement vs. those who either don't plan or don't pull the trigger on what they've planned.
The Next Challenges“I, as a young business owner, have stretched outside my comfort zone to ask more questions and not be so quick to say yes to the next great idea that gets placed in front of me. I have learned to ask more than enough questions to make the correct decision for the company.
“As a result of the exercise with you, I will not go back to my old ways that were outdated; I now need to know how to stay ahead of the curve. I see the importance of being prepared for the unexpected power failure; I see the importance of constantly training and continuous learning.
“Winning this award gave me more than I expected. I expected you to find the problems and expose the holes in the organization; what I did not expect was to get a mentor and a person who takes our success personally. For that Gene and I are grateful. Thanks for helping us find the path. We realize there is still much ground to cover; we will arrive one step at a time.”
Al: What Tim and Gene have learned is that a great idea is only great if it fits in with the core values of the company and the priorities that have been agreed to. Otherwise, you whipsaw the staff and risk pulling ideas that don't mesh. You end up building a Frankenstein. A great idea is only great if it fits the company and it gets implemented.
Tim and Gene have been meeting with me regularly by phone and e-mail. What we've done is take the detailed needs assessment report I wrote for them following the first visit and converted it into my priority project planner.
What has helped Gene and Tim accomplish so much so soon is their ability to get things done. But they learned fast that getting all the company's projects onto this one powerful form is key to determining what they should be working on.
PM and Slant/Fin's sponsoring of this contest brought a young company to the next level of professionalism and success they desired.
On a personal note, it has been a great pleasure working with two guys who are passionate about what they do and who know that what sets the successful businessperson apart is his or her ability to plan and implement. They incorporate the best of both.