Increase Profits Without Price Increases
Originally published: 03.01.10 by Ruth King
10 ways to boost productivity and lower expenditures.
You’re stuck. Your company is in a very competitive environment, and you can’t raise prices. Your competitors have no clue what things really cost and are depressing the labor rates and installation rates for jobs and service. What do you do? First, you don’t want to be the cheapest contractor in town.You do want to have the highest quality service and installation in town. Once you’ve achieved that, how do you make sure that you are getting the most out of your field and office personnel? How do you make profitable and productive use of every dollar that comes in the door? I’ve often said that the contracting business would be easy if we had robots installing and servicing. One of the toughest things owners and manager shave to do is to productively manage a labor force. Your field labor is “out there on their own,” in front of the customer,without supervision. How do you make sure that they are doing what you want done and are representing your company in a professional manner? Companies that manage their labor and their inventory effectively are among the most profitable. Remember, inventory is a
Here are 10 ways to increase productivityand profitability:
1. Lock up your warehouse and parts room. Stop running a warehousesupermarket where your field laborgets free reign to choose any partsthey think they might need. Controlyour inventory and purchasing, andyou will save dollars.
2. Make sure that charges for nitrogen use, silver solder, vacuum pump(and the oil change after each use), reclaim units, and leak testing are included in your flat-rate pricing or added to the invoice. It is important to charge for the use of all of these tools. You are using them on the customer’sjob; the customer should payfor them.
3. Add a charge of 0.50/lb for refrigerant disposal. This is in addition to the reclaim charge. You have to spend time transferring spent refrigerant to larger tanks, hauling it off,and accounting for it. If a customer complains, tell them that you’ll leave the jugs with them. They won’t have a problem with the charge.
4. Say thank you to your installers and service technicians by bringing them a soda or hot drink on the job. One company I know brought ice cream to a job one summer when it was hot. People on the job site (in new construction environments) who don’t work for your company get jealous and think that you have a great company to work for. You might get a few good employees doing this.
5. Create a sheet and have the customer sign off that they understand how to use a programmable thermostat. They won’t sign the piece of paper until they understand how to use the thermostat. It is much cheaper to spend a few extra minutes when you are installing it rather than having a call back later on. An alternative is to have only one type of programmable thermostatand teach everyone in the office how to use it. So, when someone calls, anyone answering the telephone can explain how to use it over the telephone.
6. Use tickler files. Whenever the service technicians go to a job, they should write down everything they find wrong with the system. If the customer chooses not to repair everything,keep a copy of the service ticket for future work when it gets slow. Dispatch should call the customer and explain that the last time the service technician was out at the home or office, several repairs were recommended but weren’t performed. Dispatch should try to set u pthe calls. The customers, as a rule, really like this because they’ve forgotten about the recommendations. Most will have the service technicians come and make the repairs.
7. Say, “It’s time for your prepaid maintenance check” instead ofspring/fall tune up. This may get some people to agree to an earlier appointment, especially since you are reminding them that the checkup was prepaid.
8. Keep the second call of the day open. This should help decrease your dispatcher’s stress. Most times the tech on call will have things that have to be taken care of in the morning or you will get an emergency call.Having a place to put these emergencies will save the dispatcher time by not having to rearrange schedules as often. If no emergencies come up,then dispatch can push the schedule up. It is very rare that a customer isn’t pleasantly surprised to have your technician arrive earlier than expected.
9. Use the camera in your phones or keep a digital camera in your trucks. Sales people should have digital cameras. Most insurance companies suggest that you do this in the case of an accident. However, the digital cameras are efficient fo rtaking pictures of job-site situations,such as equipment on roofs wherethe customer doesn’t want to go; or at other times where a picture can help explain a situation clearer and faster than words.
10. Track productivity. How many hours do your field personnel put on their time sheets versus how many hours can you bill a customer for? Once you start tracking this, and your field personnel know you are tracking it, productivity goes up. More billable time means more profits.
Accomplishing these 10 things will help increase your company’s bottomline by boosting productivity and profitability.
Ruth King has over 25 years of experiencein the hvacr industry and has workedwith contractors, distributors, andmanufacturers to help grow their companiesand to become more profitable. She ispresident of HVAC Channel TV and holds aClass ll (unrestricted) contractors license inGeorgia. Ruth has authored two books:The Ugly Truth about Small Business andThe Ugly Truth about Managing People.Contact Ruth at www.hvacchannel.com or770-729-0258.
Articles by Ruth King
Rethink Your Bonus Strategy
Enact a profit sharing program, rather than a bonus entitlement.
Prevent Employee Embezzlement, Part 4
Most contractors don’t think about how much time is stolen by employees doing personal activities on company time.
Prevent Employee Embezzlement, Part 3
If you ignore locking your warehouse and limiting access to it, don’t use material sheets and don’t make your technicians responsible for the inventory on their trucks, you’re inviting theft.
Keep Your Money Safe
Keeping your hard earned money safe is your responsibility. Put the procedures in place to keep the honest people honest and protect yourself from employee embezzlement.
Protect Yourself Against Employee Embezzlement
If you don’t have systems in place, it’s easy for a stressed out bookkeeper or stressed employee to get tempted. They make stupid choices they never would when thinking rationally.