One sure way to advance your business situation is to follow proven techniques for increasing profits. Each of the techniques below have worked for me, and each has produced financial advantages over the years -- and they can for you, too. All you have to do is implement them.
1. The P WordIt seems that year in and year out, business owners and managers are reluctant to plan the direction they want to go. Though planning is rarely sufficient, it is nonetheless essential.
All successful businesses have strategies they follow to narrow their market choices. Without a specific direction, you compete with everybody in the business. For example, you can't be the quality service business and the lowest price business at the same time.
The best way to use all your company's resources to develop a plan is to get away for a half-day -- or spend a whole day -- in a retreat. That way the ideas you get are not limited to your own. Shooting in the dark is a tough way to be successful in running a business. Plan is not a bad word.
2. Consider Strengths & WeaknessesIf you honestly assess your company's strong and weak points, you'll avoid falling into a rut where you miss opportunities and lose efficiency. For example, are you tracking inventory? Does the building need to be cleaned up? What shape are your trucks in? Letting things go can cost you more in the long run, so determine what needs attention.
That old telephone equipment may still work but it also may be interfering with the efficiency of the call takers. Untrained technicians are another weak spot you want to seriously address. Fix the weak areas and the business will reward you.
3. Be Project-OrientedOne of my favorite office products is a large erasable white board. They are a much better use of wall space than that old wallpaper. Any aspect of the business you want to measure can be displayed for everyone to see.
Whether it is calls completed, volume of business, customer satisfaction or performance of individual technicians, every board shows the progress of a project and helps motivate those involved with its progress.
Keeping track of data can give you timely information for good management. Besides using erasable boards displayed in conspicuous places, I recommend using a Palm Pilot or electronic organizer so all the data you need to work on the important projects can be available at your fingertips.
4. Good Financial RecordsSure, most companies have an accountant who produces annual tax returns and, when needed, financial statements for the bank, but how many accountants really understand the service business?
A good accountant can provide a breakdown showing the billable hours and a clear reflection of your costs for each job. If you do not know your break-even point and exactly what it costs you to put a truck at the customer's door with a trained service technician ready to solve his or her problems, you can't be certain what your profit is, or if there is any.
There is nothing more damaging to the successful management of a business than proceeding with inadequate information. Waiting until the end of a quarter or a year to see how well the business performed won't permit good management decisions.
5. New Flat Rate ManualsOnce you are aware of your real costs of doing business, you will be convinced it's time to recalculate the effective hourly rates in your flat rate manuals. Your new (higher) rates must be reflected in your prices. New prices mean reprinting your flat rate manuals.
Since the flat rate manuals are a key part of your interaction with customers -- especially if your technicians are trained how to use them properly -- you can't implement that higher hourly rate unless the job prices have been changed.
It's always a good idea to review each job's price to make certain they reflect both your costs and consider the market in your area. Some jobs may have competitive market pressure and some may face little competition.
6. Implement Your Service Agreement ProgramI can never emphasize enough, nor stop talking about, service agreements. There are so many advantages I can't mention them all here. But if you have listened to me speak at a training session or read other columns I have written, you know how strongly I believe in service agreements.
Foremost, customers give you money up front; that's a dramatic improvement for most businesses because cash flow is usually a concern. Combine that with the opportunity to get in front of a customer at times during the year when business is often slow, and you have a guaranteed increase in profits.
Fundamentally, the agreement offers a customer a discount on future work if they pay for the agreement. In exchange, they are entitled to have a trained technician visit their home once annually to inspect all their systems to make sure they are operating properly. If legitimate work is necessary, the customer avoids future system failures and the risk of any potentially hazardous situations.
One tip on duration of the agreements: We have researched various times for the length of the service agreement contract and concluded that a very attractive time period is five years. Going beyond that arrangement, we offer the agreement at no charge for the remaining time the customer spends in that home after the five-year term.
It's still profitable for many reasons. Probably one of the more important ones often overlooked is the automatic customer loyalty it builds. Customers won't call anyone else for service and repair work when they enjoy the benefits of a service agreement with your company.
7. ComputerizeDo you know that there are still some businesses that keep records by hand, with a pen and pencil? Hard to believe but it's true.
How do you call up a database of recent customers for a marketing promotion with handwritten records? How do you look up what work was completed in the recent past for a caller needing service and repair work? Or how do you determine quickly which technician did the work?
Many businesses have adopted computers and use them for accounting only. There are many more productive uses for the latest software and hardware. Reports on call volume, inventory tracking and customer information are just a few of the additional uses.
Don't forget a GPS system: A satellite-based global positioning system that allows you to determine the precise location of any vehicle. With a good GPS mapping program on your computer, you can tell instantly the location of any truck in your fleet. Plus, reports are available for the routes and times traveled every day. It offers limitless possibilities for tracking your technicians and monitoring their progress.
8. TrainingWhat worked last year may not work this year. The only way to keep up with the latest innovations in customer service, pricing, management controls, etc., is to attend training programs that share proven approaches to success.
What is really nice about training is that the payoff is immediate. The next day a technician is on the job after training he can apply the practices he learned, instantly increasing the chances of closing jobs on calls and improving customers' images of your business.
After training more than 18,000 technicians at the Maio Success University in San Diego, we have seen the significant changes in the companies throughout the country. Without a doubt, trained technicians produce more revenue for your company.
9. Work On The BusinessInstead of working in the business -- driving a truck, dispatching or any day-to-day function -- you need to work at building the business -- performing strategic tasks. Making decisions on how the business will be run is more important, and a better use of your time, than service as another hourly employee.
If you are not running the business, who is? A good owner/manager can operate the business with about 20 hours of on-site time a week. The remainder can be used for meetings and even a little time off.
10. Learn About InvestmentAll your years of hard work and long hours will not pay off for you if you do not understand how investing money works. It's never too soon to learn about investing for your retirement. If you do not know how to profit from real estate, stocks, bonds and other investments, your retirement will be a big disappointment.
If you work for yourself, you can only blame the boss for your shortfall on setting funds aside. The more you know about putting your money where it will grow the better you will enjoy the benefits of operating your service and repair business.