Extra Edition / Business Management

Hot Topics, Cool Solutions 16: Taking Control, And More

June 12, 2005
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Al Levi
Editor's note: Consultant Al Levi helps contractors run their businesses with "less stress and more success." HVAC and plumbing contractors seek his advice regularly. Al has agreed to let us share with readers of The News some of the questions he gets and the answers he provides. The focus is strictly on problem solving and handling the day-to-day operations of a successful contracting business.

To send Al your own questions, which if selected will run anonymously, send him an e-mail at info@appleseedbusiness.com or fax him at 212-202-6275.

This column is meant to be a resource only. Please check with your own trusted business advisers, including your own attorney, to make certain that the advice here complies with all relevant laws, customs, and regulations in your area.

Dear Al,

Our trucks are a mess! Our techs look like they slept in their uniforms!

I pay for all this great marketing and tell potential customers we're better than the rest and then we show up looking like the worst.

What can I do?

Sincerely,
Minding The Mess

Dear Minding The Mess,

I feel your pain! Frustrating, isn't it?

But ultimately, it's your own fault!

I was watching this new TV show called "Nanny 911" and it shows an out-of-control household, but it's not the kids who are at fault. It's the parents who have allowed everything to get out of control.

You need to be willing to hold your techs accountable each and every time. Yes, operations manuals that define your standards will help. Taking digital photos of what their truck and their uniforms should look like will help.

But what makes all the difference is your unflinching determination not to tolerate the mess anymore.

Here's what I know. If you continue to tolerate this situation, the problems will only get bigger and their attitudes will only get harder to handle.

Think they're not being sloppy on the job?

Now, you can also improve things by running a contest to reward the tech with the neatest truck each month.

Take control and it'll be good for you and they'll also be better off.

Regards,
Al Levi

Dear Al,

What's all this stuff I read in the magazines about needing to do a budget?

I don't have the money to hire someone to do all this fancy financial work. And besides, my accountant does this stuff, doesn't he?

All I know is I'm not making the money I thought I'd be making, and I'm not sure why.

Sincerely,
Financially Floundering

Dear Financially Floundering,

The reason you don't have money directly relates to your lack of understanding of what consultant Ellen Rohr calls KFP (known financial position).

The problem with accountants is that they are great at helping us avoid paying taxes, or at least delay paying them, but they don't give us the information it takes to run our company in the real world.

The most important business process is the annual budget process. Too many contractors avoid this step. But, it's really the most important because from your annual budget everything else financially going on at your company happens.

Simply stated, here's the process:

1. Create your annual budget.

a. One column is all the expenses from the last year and any adjustments to those expenses you need to make. Like gas isn't $1 a gallon anymore, is it?

b. One column is what you'd like to do this year. Like hire a new office manager, write new operations manuals, build a training center, etc.

c. The last column is how much profit you want to make.

2. The total dollar amount and your percentage of profit is the company's annual sales goal.

3. You then take the annual sales goal and divide it by the average number of trucks that can earn that amount in a year.

4. Now, you have the individual sales goal.

5. Finally, you divide the individual sales goal by the number of billable hours your people can sell in a year [typically about 1,000] and you now have your correct selling price.

Okay, now you know what you don't know.

Regards,
Al Levi

Al Levi of Appleseed Business specializes, as his Web site says, in "Making Contractors' Lives Less Stressful and More Successful." Through private workshops, on-site assessments, customized operating manuals, and staff training programs, Levi delivers the benefit of the experience he gained from years of operating a large family-run HVAC and plumbing business. Learn more by visiting www.appleseedbusiness.com. You may also contact Levi by e-mail at info@appleseedbusiness.com or by fax at 212-202-6275.

Publication date: 06/13/2005

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