Years ago (never mind how many) I launched Blau Plumbing. As a young pup, I thought I knew it all. Of course, I didn't. And maybe that's the most important thing I've learned through the years. No matter how much I think I know there's still much to learn.
Here are a few other things I wish I knew then:
- The bottom line counts more than the top line. I used to chase new construction work, because the numbers were big. So were the costs. At the end of the day, it doesn't matter how much money you bring in, it's how much you keep.
- If you don't cover your costs, you're subsidizing your customer. By costs, I mean the costs you would incur if you're doing business right. Build the cost of beat-up trucks into your overhead and all you'll ever have is beat-up trucks.
Your prices should cover the cost of the job, plus the cost of doing business, with a little left over. Fail to price correctly and you're effectively taking money from your pocket and giving it to your customers. Subsidies are for the government, not plumbers.
- Sell your services the same way everyone else does, with a single, guaranteed price. No one would hop on a plane if the airline charged a variable amount based on the amount of fuel used and the headwinds or tailwinds encountered. And no one likes to buy services without knowing how much it's going to cost them before they start out.
- The only real assets of a service company are its customer base and its employees. Treat both employees and customers like you value them and wish to keep them around.
- Employees want many of the same things you want from your work. Employees want satisfaction from their work. They want respect on the job. They want fair pay, health care and a means of retiring one day. Give it to them and you increase the odds they will build a career with your company.
- Use Ronald Reagan's approach to managing your employees. Trust them, but verify. Create the systems that keep people honest by removing the temptation to stray from the righteous path.
- Customers want the same things you want as a customer. They want you to respond, to listen to their concerns and treat them like they're important. And most of all, they want you to do the job right. Perform well and customers will remember it long after they've forgotten what they paid. Perform poorly and they'll remember it forever.
- Customers will forget you if let them. Plumbing repairs are not an every day, every week, every month or even every year occurrence for most customers. You must continually remind them who you are or they will forget you. It costs too much to get a customer to risk letting them forget about you. Stickers, valve tags, direct mail, newsletters and so on, keep customers from opening the Yellow Pages to find your number. Even better, create a service agreement program.
- If the Yellow Pages become the sole basis of new and repeat business, you're placing your future at risk. While it doesn't happen often, I can cite a number of examples where the Yellow Pages messed up an ad, listed the wrong number, placed an ad in the wrong location, or simply forgot it altogether. It doesn't happen often, but it's devastating when it does. Don't rely solely on the Yellow Pages.
- If it's not in writing, it doesn't count. I can't tell you the number of handshake deals or agreements I've had with people that have gone awry through the years. There are some people I will trust with a handshake because they've proven their honesty and integrity time after time. Until someone's proven it, however, I want it in writing.
- Don't sweat the small stuff. When a customer is unhappy, take care of him, no matter what the cost. Build a reserve into your overhead to take care of dissatisfied customers so they you can give them their money back.
Disputes over petty amounts are not worth the cost in management time. And if it gets to the attorneys you lose even if you win. Even if you're right, it's not worth the fight. Give the money back, blacklist the customer so that you never do business with them again, and focus on customers you can satisfy.
- Embrace new approaches. Given the way people in our trade adopt new ideas and new technology, most should still be traveling to work in a horse and buggy. The world is constantly changing and improving. Be open to new ideas, new approaches, new methods, and new technology.
If you are not online, for example, buy a computer and get started -- today. Five years from now, anywhere from a third to half of your service calls might very well be scheduled online. You can stand in front of it, screaming "Stop" and get run over. You step aside, watch it roll by and run to catch up. Or you can hop on board and enjoy the view.
- Diversify with related business. If you perform well and you build up a base of satisfied customers that trust you, you've taken the first steps toward creating a brand. A brand is nothing more than a promise. If people trust your brand, trust your promises in one business, they will welcome it in others when there is no one they can trust.
Add HVAC and other services. It lowers your marketing costs, making your marketing more efficient and it provides a measure of security when times get tough.
- Remember 6 percent unemployment is the same thing as 94 percent employment. To keep your business prosperous in bad economic times, all you have to do is out service, out market and out hustle the slugs. And at the end of the downturn, you will be larger, stronger, smarter and have fewer slugs to contend with.
- Read a little every day. You'll never know what you don't know if you refuse to look for new ideas. If you want to learn about the business of contracting, read my book. If you want to learn about basic pricing, read Ellen Rohr's book, "How Much Should I Charge?" and "Where Did All The Money Go?" If you want to read about marketing, read Dan Holohan's book, "Just Add H2O!' If you want to know more about customer retention, read Matt Michel's book, "Never Lose A Customer." And of course, read PM.