5 minute read
Shop Management
Making sure your business stays busy doing the right things is crucial in maximizing your performance in the busy season. By Ron Coleman
David Henry Thoreau once said, “It is not enough to be busy. So are the ants. The question is: What are we busy about?” In business, it’s essential to know when you will be busy and plan for when you are not. But, unfortunately, when the busy season comes, we often forget about our personal lives.
When it comes to being busy, these are two truisms in my office — we prioritize the wrong things and put off living for the wrong reasons. This is a common occurrence for most businesses. Particularly when the busy season rolls along. For many, it comes as a surprise and we react accordingly. We should prepare for the busy season to come and that it will be followed by a quieter season. Successful contractors plan ahead and even out the ebbs and flows. Last minute strategies are not the answer, however, even the best approach can take a season or two to develop, implement, and fine-tune. The sooner you start, the sooner you will be able to stop putting off living. Ask yourself “What am I busy about?”
Here and now
One of the first things you can do is to look at your pricing menu. You can ask yourself, what can I do to squeeze extra dollars out of each service call? For example, if you have five technicians working 160 hours per month, that totals 800 hours. If you have another $5 per hour, that would generate $4,000 in additional profit per month. At $10 per hour, that would be $8,000 per month. Try to develop premium rates for same-day callouts, evenings and weekend calls.
There are other methods of charging customers that you should also consider. These are pure profit and there is no cost to the company. One, implement a fuel surcharge or increase it if you already have one. Two, increase the time allowed for travel time. For example, if your minimum charge is for 30 minutes on-site and you charge $100 for the first half-hour on-site, increase that to $125 for the first half-hour on-site and $25 per quarter hour after that. Thirdly, add or increase the charge for supplies or consumables. Next, make sure you charge for using vacuum pumps, scopes, and other equipment as line items on your invoice. Five, have a checklist for
your technician with the usage fee for all items that should be extras. In addition, consider flat rate pricing for both the customer and the employee. You can also use menu pricing for the more common work, like changing out faucets, toilets or thermocouples, fans, belts, etc. Also, don’t be afraid to brainstorm with your team members to see what recommendations they can make.
Customer work
In the busier seasons, customers are less price sensitive. If you are increasing your workload and attracting new customers, you could charge a $10-hour premium. However, now might not be the best time to take on new customers, and you should focus on the customers you do have and build their loyalty. Loyalty begets loyalty. You don’t want to lose existing customers because you can’t service them since you have taken on new ones. That’s like filling the bathtub without out putting in the stopper.
Instead, offer your technicians premiums for working longer hours. Allow them to bank time or get paid out, and because you are charging out their time at a premium, you can afford to pay more for extra effort.
You should also try and schedule your work to minimize travel time. A good rule of thumb is to stay within eight km of your base. Now, when you’re on a call, do as many different tasks as possible. This could be offering to check other systems that might need work. If you are going to try and maximize each call, make sure your vehicles have as many parts and tools as possible so that the technician avoids trips to wholesalers and return journeys to the customer. Develop a good triage process so that you are not rushing off to calls that could be better serviced a day or two later. Bring in students to stock up the vehicles and wash them when they come back at the end of the day. Have the work schedule ready for your techs when they come to work. Automate as many procedures as possible. Implement on-site invoicing, as this is billable time. If it is done later, it is overhead. This also improves cash flow and reduces queries about invoices.
The long-term
We’ve looked at short-term solutions or tricks you can implement. Now let’s dive into what long-term solutions you can implement in your business. To start, develop as many planned maintenance customers as possible and provide them service in the shoulder seasons. If you have implemented a planned maintenance program, now is the time to review it, tweak it and push to sign-up customers. Be sure to articulate the advantages to the customer and reward your employees for signing customers to the program. The added incentive to increasing your planned maintenance customer base is increasing your business’ value.
For all my plumbers out there, this one is for you. When you go on a call, put food colouring into each cistern before you start your service and then offer to replace any leaking flappers. At $15 or $20 per flapper, you could easily pick up $30 to $40 for a quick fix and help the customer use less water. Leaky toilets can waste a very significant amount of water every day. Give your tech $5 for each one they install.
In a previous article, we explored augmented reality and how the training can benefit your company. Check out that article and see how that could enhance your productivity, as some service contractors are using this for diagnostics and training. Offer discounts to customers who get their equipment serviced in the shoulder seasons. Where possible, schedule retrofit work for the shoulder seasons. Also, to increase efficiency, cross-train your technicians so that it is easier to schedule workloads.
Whatever changes you make to your business, you must ensure that they fit your business model and values. Gouging your customers in the short-term is not to be encouraged. Your reputation will suffer. Make sure you get regular feedback from your customers. This means calling or emailing them often. Some years ago, I did a customer focus program for an HVAC contractor and asked three questions to the customers. The question was, “what is most important if you have no heat?” And the available responses were: the response time, the quality of the work, or the price. Now, which answer do you think always finished third? :
Ronald Coleman is a Vancouver-based accountant, management consultant, author and educator specializing in the construction industry. He can be reached by e-mail at
