The phone is ringing off the hook and keeping up with the demand is a struggle. Because of the increased business, most contractors consider this the best time of year. They hope to make up for the lost revenue from the previous slow months. They also hope to build a reserve to help carry them through the rest of the year. Unfortunately, many companies’ profits don’t keep pace with the increased work. Some find their profits actually drop during this time of year. Lower profits may not seem to make sense but the reason is simple — your material and labor costs go up faster than your revenue. There is good news; with a little planning and out-of-the-box thinking, you can keep your costs in line with your revenue and see your profits climb.
So you negotiated special pricing with your suppliers and you think your material costs are under control, right? Wrong. When things are really busy, you can’t always buy from the supplier whom you negotiated such a great price. Technicians are more likely to run out of truck stock and will go to whoever has the part available, not who can get them the best price. Suppliers are also busy and if the material is going out the door faster than they can get it in, the material you need will be back ordered. Since you can’t shutdown until material comes in, your only option is to buy it from the supplier that has it, at the price they ask.