This is the time of year when some business owners start planning for next year. Some will actually create a budget, although for the most part, it is only one-half a budget. They seem to focus on what sales are going to be next year and not much else. My question is, what are profits going to be next year? You can’t determine that unless you do a complete budget with all those pesky expenses. What I bring in is important, but what I get to keep is why I am here and keeps the doors open.
If you will focus on market penetration – job growth – you will find it easier to grow your business. Sales growth is more of pricing correctly and good quality training with your technicians. I have seen several business more than double in sales volume just due to pricing properly and great training to get the ticket average up. Yes, they did make more money, but job count was equal or less than the previous year. They did not really grow the business. They just made what they have more profitable.
In order to create a sustainable, growing business, you must grow your customer base. Fifteen percent is the minimum target. Let’s face it, you are going to lose ten percent of your customer base every year. They die, move, or you just can’t make everyone happy. So realistically, a fifteen percent increase is required. How do you grow your business? Increase your market share by increasing your customer base.
Now this really takes work. You have to do more jobs each year. You need more technicians every year and they are hard to find. You will need more trucks and equipment, so you will have to invest in your business every year. A smart man told me a few years ago, if you know you are going to need a truck soon, buy it now. If it just sits, it will cost you $800 a month. If you need it and don’t have it, it will cost you $8,000 a month. The numbers might vary just a little, but he was pretty close.
If you focus on job count increase, the sales revenue line takes care of itself. I worked with a contractor in the Northeast for a while. He had a two story building. The offices and dispatch area were all on the second floor. In dispatch, he had a large ships bell. Every time they completed job number 30 for the day, they would ring that bell. You could hear it down the street. That was the signal they were making money and the owner could tell you how much they made for the day based on the number of jobs!
From a budgeting standpoint, if I know the number of jobs I am going to do, that will also tell me how many technicians I will need for next year. Try it. It really works. It makes it easy to plan ahead.
Companies that I see focusing only on the top line always seem to never have enough manpower when needed. They staff for the slower periods. When it really gets busy, they never have enough techs, start scheduling 3 and 4 days out, and lose the work and the customer because they could not arrive in a timely manner. If we staff for the peak periods and get every job done every day, business grows every year, and so does market share.
What do you do with those techs when it gets slower? Keep them busy by finding more work. It is easier to find more work to keep everyone busy, than finding good techs.
Increasing job count is the focus point. Learn to track your job count and compare it month to month, year to year. It is the true measure of growth. Now, get started on that budget. You just need 15% more jobs next year to really grow.
If you need some help learning how solidify your business, contact me at www.theplumberscoach.com, follow us on LinkedIn and like us on Facebook.