11 Business Tips For 2011
Over the past several years we’ve explored many variations on a few basic themes. To kick-start this new year, I’m going to act as if I had only one letter in which to tell you everything I believe is important in running a successful business. The list below is in no particular order because you are the one who will decide which items need the most work in your particular shop. Without further ado, here’s 11 for 2011:
1. Win-win-win.You have a business to run. You need to earn a profit in order to keep it running. In order to earn those profits, you must continually fight to keep your sales high and your costs low. But that hardly means you have to conquer everyone in your path in order to succeed. Instead of concocting ways to squeeze another dime out of your customers, consider ways to add another dollar’s worth of value to your services. Your customer wins because of better service, your company wins because of better sales.
And instead of building walls between yourself and your employees, why not consider how to make their lives a little easier and perhaps a bit more lucrative? You don’t have to give away the farm but if you engage them in the process of delivering more value to your customer, you’ll be rewarded with more loyalty on both fronts.
Higher sales is a win for your employees and your company. Better employee retention is a win for your company and your customers. Look for the win on all three fronts and you’ll find that winning is fun!
2. Know your costs.It’s hard to say it any simpler than that. If you don’t know your costs, how do you know how much to charge? If you don’t know your costs, how do you know whether you’re losing money or earning a profit? You can’t fill out deposit slips with hunches. Learn what it costs to run your business, then set your selling prices accordingly. Here’s a hint: If you’re charging “the going rate,” you probably don’t know your costs.
3. Keep it simple.One of my favorite Einstein quotes is: “Everything should be made as simple as possible, but not simpler.” Have you ever listened to those radio commercials where an announcer spends about 15 seconds to tell you about a company’s “Super Saver Discount Deal,” then spends the rest of the ad rattling off the legal fine print explaining how you’re probably not going to qualify for the offer?
Closer to home, how many hoops do your employees have to jump through in order to figure out their paycheck, especially if you’re offering performance bonuses or commissions? Or how many different metrics do you monitor in order to know if your business is on track? All these layers of complexity are like dragging an anchor in a foot race. Cut out the layers wherever possible.
4. Earn trust.The concept of earning trust works hand-in-hand with keeping things simple. There is a proverb which says, “Where words abound, sin is not absent.” Make fewer promises but take them more seriously, especially when they involve your employees or customers. Learn to under-promise and over-deliver. Consider that the price of trust lost in breaking a promise is much higher than whatever benefit you hoped to save by breaking it.
5. Earn referrals, then ask for them.If you have the attitude that you’re going to ask for referrals at the end of each job, then you’ll offer your best service possible. At the end of the job, if your customers appreciated your service, the odds are that the referrals they give you will be for customers who will also appreciate your service. This helps you grow a customer base that, not surprisingly, appreciates your level of service.
6. Make the phone ring.Referrals are important and should play a major role in growing your customer base but if you’re going to build a business, marketing will be an important part of your job description. Regardless of the strength of your reputation or how experienced your staff might be, if people don’t know about you, they won’t call you.
Long gone are the days of posting ads in the phone book in order to inundate your phones. These days, the noise level is so high you have to be shrewd and tireless in order to keep the phones ringing consistently.
7. Train, train, train.Customer service is better when you have a trained and professional staff. Technical training results in better workmanship. Sales and communication training cements a customer relationship. Your office staff is the telephone “face” of your organization, so invest in your CSRs. Dispatchers need training, as do your supply staffers.
Do not expect “the other guy” to train your people because he doesn’t have standards as high as you do. Hire individuals of high character, then train them to do the best job possible.
8. Support your profession.Training is one way to support your profession but there is more you should do. In case you never noticed, codes don’t write themselves. If contractor professionals don’t participate in the code process, the manufacturers and builders are more than happy to take up the slack. Every ordinance adopted by a city or state was put there by someone with the initiative to make it happen. Every positive step requires the input of someone with a cause. Are you willing to let someone else drive your profession?
9. Support your community.Civilized society is fundamental to our profession. We provide valuable services such as flush toilets and cozy homes, but without our community, we don’t have a job. As members of our community, it’s our responsibility to help that community flourish. No one enjoys takers, so give something back to your community. Besides, community service can be good public relations; good public relations can mean good advertising.
10. Build ladders.I am convinced that the greatest plague to the plumbing-heating-cooling world is found in the boss’s chair. It’s a rare company that provides opportunities for a craftsman to become a trainer, then a manager or recruiter or marketing executive or other “clean hands” professional. Our knees and backs don’t last forever, so if a professional can no longer swing the wrenches, he is forced to move into other professions or, just as likely, hang out his own shingle so he can be at the top of a tiny empire.
Many, maybe most, of these new contractors would rather earn a living within an organization rather than face the hardships of starting up their own business. The only way to solve this problem is for you to think like a business person. Build your empire and bring others with you. Who knows, perhaps you can even groom your own buyer for that time when you’re ready to hang up the wrenches.
11. Stay nimble.Our nation faces more economic uncertainty than at any time since the New Deal. This is the natural and expected result of a growing government because, regardless of political bent, government consolidates power. Consolidated power magnifies the results of every decision. Good decisions by big government can result in broadly good results. Bad decisions by big government can result in major disruption. The swing between good and bad can be huge, hence the challenges of uncertainty.
In times of uncertainty, businesses need to be nimble and able to dance in the wind. Nimble businesses will have low debt and low, efficient overhead. It’s difficult to shrink either of these items as fast as the economy can contract. The fewer extra mouths you have to feed, the better off your company will be.
And here’s a bonus tip. For about eight years I have preached the virtues of earning the profits you deserve but I have never meant to imply that money is what it’s all about. If you don’t believe me, re-read the list above. None of the items above are worth the effort if you’re not going to enjoy what you do. More importantly, money will not give meaning to your life. Let your business support your life’s mission, not replace it.
As near as I can tell, I’ve been penning this column for almost eight years, which is surprising to me since I’ve enjoyed doing it so much. I hope you’ve found a few columns worth re-reading, as this will be my last regular column for Plumbing & Mechanical.
I need to pare my schedule back a bit in order to make room for several service projects I keep saying “yes” to. Be sure to check UpFrontPrice.com and Plumb-Biz for help in earning the profits you deserve. Thanks for a long and gracious ride!