Business Spring Cleaning - Plumbing & HVAC
ByRon ColemanAll maintenance jobs should already be completed at this part of the season, and there won’t likely be many more rounds of maintenance work until September. Instead of taking the summer off, use. . .
ByRon ColemanAll maintenance jobs should already be completed at this part of the season, and there won’t likely be many more rounds of maintenance work until September. Instead of taking the summer off, use this time to do some spring cleaning. There are plenty of areas within your business that could do with a little sprucing up. This includes inventory, office processes, estimating, and customer and employee clean up. Your inventory is directly tied up with cash flow; it requires storage space and gets shuffled around. The larger the inventor, the tougher it is. What can you do to cut down on inventory, particularly the equipment that has been sitting in your shop for more than two years? Eighty per cent of the value of your inventory is in only 20 per cent of the equipment. Those are the ones you need to control. Talk to your accountant about writing off old inventory to save corporate tax. Develop an effective inventory management system, ideally using barcodes. There is a variety of software available to make the task easier. Make sure you use one that is compatible with your specific needs. Talk to suppliers, associations, or competitors to find out which software makes the most sense for you. It is so frustrating to hear a technician say, “I spent an hour going to the wholesaler, getting a product, and driving back to the job site,” when that product is sitting in your shop shelf. It could have been couriered to them a lot cheaper and faster. Also, if you billed that customer for that hour, they won’t be happy, and if you didn’t, you won’t be happy. Now, you are out of pocket buying something you already had! Bad cash flow. Maintaining relationshipsMake sure you have developed a solid relationship with your suppliers. Getting product when you need it is critical for you and your customers. Speedy access to product is far more important than a lower price. Put value over price and do the same for your customers. Will your supplier courier product to your job site, if needed? Think about the value you get from your supplier. In addition to your relationship with wholesalers, it’s important to ensure your company has an efficiently operating shop. How close are you to a paperless office? Are your timesheets and all your payroll processes paperless with the money going straight into the employee’s bank accounts? Are the payroll hours and values linked to your job costs? Are your quotations paperless? Are your work orders, invoicing, and deposits paperless? Do they all integrate? How about when you’re paying suppliers, is that done in a paperless manner? Also, when ordering from suppliers, do you have forms with all the standard information on them so that it’s only necessary to key in the variable information and email it off to them. Do we download their invoices, post to our ledger, and pay online or manually?It’s important to put together variance reports on each job, with each payroll showing whether it is under or over the hours booked to each. I’m a big believer in planned maintenance. I have addressed this topic in detail in previous articles. Now with the advances in software, you should have automatic reminders reminding customers of your upcoming visits. I also like flat rate pricing for residential service and menu pricing. Do you have automatic reminders telling customers that their next service call needs to be scheduled? Does the process allow you to follow up with the customers to schedule visits?EstimatingAnalyzing estimates is an important process to include for any successful business. What percentage of estimates convert into work orders? Is there any particular size or type of work that have the highest conversion rates? What type of work generates the highest profit margins with the least overhead?I’ve previously talked about minding your ABCs and selling your Ds. Have you done this? If not, why not? Focus on your A customers and the B customers. Get the C customers up to Bs and sell your D customers to the competition. Most of us know the 80/20 rule, which is called Pareto’s law. For examples, 80 per cent of your revenue comes from 20 per cent of your customers. That 80 per cent of the money due in your accounts receivable comes from 20 per cent of the accounts. However, when it comes to employees, I don’t recommend the 80/20 rule. My preference is the 20/60/20 rule — 20 per cent of your employees are the ones that carry the business, 60 per cent are the average hardworking ones, and 20 per cent are not carrying their weight. The saddest part of this is that employers tend to spend too much time managing the bottom 20 per cent. They are high maintenance and you ignore the top 20 per cent who are your prime earners and are more likely to get poached by a competitor. Get rid of the bottom 20 per cent and focus your energy to the top 20 per cent. Work vehiclesThe price of gasoline and diesel fuel has gone up significantly in recent months. Kudos to those of you who have either acquired EVs or hybrids or are in the process of analyzing the benefits. I’m sure very few of your vehicles travel more than 400 kms per day; kilometre ranges are getting higher. There are huge savings in fuel, operating costs and waiting in line to fill up at gas stations and virtually no time lost when vehicles need to be serviced. Drive by your competitors and see what they are driving. Spring cleaning at home can seem like a daunting task. Once you start picking up things and sorting them into piles, the process seems to take on a life of its own. The hardest part is starting. It’s amazing what you can do in a couple of hours. You now know the elements that need to be “sprung” at work. Just pick one area, get a key employee to work with you and get it started. Without action, there is no change; one step at a time. Getting rid of activities that add no value will enhance your whole business experience and make your company more valuable.