Extra Edition / Business Management

Hot Topics, Cool Solutions 21: Business Fundamentals, And More

November 11, 2005
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Al Levi
Editor's note: Consultant Al Levi helps HVAC and plumbing contractors run their businesses with "less stress and more success." He has agreed to 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.

Business Fundamentals

Dear Al,

What are the business skills that an owner must master? I'm strong technically and I'm pretty good at selling stuff but my staff's performance is hit-and-miss in both these areas.

I'm also bored to death when the accountants send me the financial reports to look over. Frankly, I don't understand them and they offer no help when I ask a question. Financial knowledge eludes me.

I seem to get enough calls to keep me busy ... I think.

In reality, I'm so busy I just guess things are going okay. I don't want to raid my personal bank account to add more money to the business.

What am I missing?

Sincerely,
Missing Something

Dear Missing Something,

What you're missing are the business fundamentals that I call the "Power Concepts."

1. Operating Power: Create policies and procedures for every task in every department of the company. Implement the systems to run the company systematically and automatically without you from day-to-day.

2. Financial Power: Generate your selling price and define how each person affects the financial success of the company. Sell people on the pricing using open book management. Decide what numbers need to be collected and trained on. Address accounts receivable, accounts payable, and the credit department.

3. Selling Power: Establish how each department plays a role in pricing and profitability in order to focus on how each employee affects the selling process. Sales meetings, role-playing, and scripts all are put to work here to ensure that everyone understands they have a vested interest to sell what is ethical to the customer.

4. Marketing Power: Once the price is established and the tools to sell have been given, we need to market effectively to reach the target audience - those most likely to desire what we're selling. Different than advertising, joining organizations and networking in the community are keys to marketing the small business.

5. Staffing Power: Add people with the right attitude and develop the rest in-house. Hold people accountable for the sales, operational, and technical standards you create. This will make existing staff better, or make them go away if they don't want to play a better game. When you want to hire from other companies, have the systems to identify what they know and then train them your way. Knowing how to train is the key.

Staffing Power is all about recruiting, hiring, and training for every position at your company. Based on all of the other power concepts, you must acknowledge that training is essential to your success. Never stop training. Become excellent at training and communicating through effective meetings. This requires the development of the skills of an excellent presenter.

6. Leadership Power: Set the goal, inspire a vision or belief, and take the actions to make it all a reality. To do that, you need everyone on the same page. The managers and owner need to be effectively working on the business, coaching those who need it and congratulating those who are achieving on their own. Leadership is about working on the right things, in the right order, and getting them implemented.

7. Sales Coaching Power: Have everyone who performs work for the customer use a selling system that is linked to a system for coaching sales. Using objective financial measurements, create a reward system based on a three-tier approach: (1) Do this measured minimum and you keep your job. Thanks for coming to work. (2) Do below this measured minimum for a specified amount of time and you get coached on how to improve your sales. Keep doing poorly and you'll need to find another place to work. (3) Do above the measured minimum and you've earned a bonus. Rewards are more than just financial.

Master these concepts, or get help in mastering them, and you won't be "missing a thing or draining your bank account in the process."

Regards,
Al Levi

Pursuing One Or More Trades

Dear Al,

I'm the third generation to work in my family's plumbing business. Plumbing is good, steady work, but I wonder if we shouldn't be doing other trades like heating, cooling, and electrical work.

The family is divided on whether to expand our plumbing business or add heating, cooling, and electrical work to our plumbing business.

Any advice?

Sincerely,
One Trade Or More

Dear One Trade or More,

Companies I work with for awhile have the same dilemma. The good news is they are in position to objectively assess whether they should do more than one trade. The reason is they have mastered the one trade they do and they have learned to do market research rather than rely on their gut instinct. Also, they can enter another trade because they know they can write a manual and add the new trade to their training center to cross-train technicians to do another trade very well.

The advantage of doing multiple trades is that the customer already knows you and it allows you to sell your own customers these new trades. This is a great help. It also is a big plus if you can lock out your competitors from your customer's home.

The work ahead will be daunting but with professional help you can recognize great returns by adding more trades.

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: 11/14/2005

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