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Gary Elekes, president and partner of ePL for Residential, said that the keys to becoming a 20 percent profit company are “simple.” It requires “lots and lots of discipline, and this is the challenge,” he stated. “It’s the discipline that get you. Business is 100 percent about the decisions you make daily.
“There are hundreds, if not thousands that you make. These choices are grounded in the principles [below], whether you realize they are or not. How well your business performs in these areas has everything to do with improving performance. So if you want to learn how to improve your profits and even make upwards of 20 percent profits, then learn to improve these areas of discipline in your business.”
The areas noted by Elekes include:
1. Financial structure and controls — to be sure you have measurements that help you make decisions.
2. Sales process — selling enough, selling well, and selling the right mix of business.
3. Controlling labor costs — keeping labor costs as a percentage of sales at a proper rate, and producing enough gross profit dollars per man-day.
4. Lead generation — having enough leads to be able to sell well.
5. Controlling costs — overhead specifically.
6. Managing your pricing — pricing is crucial to developing proper gross margin dollars per man-day.
7. Controlling cash flows — collecting your accounts receivables on time, not having bad debts, and knowing how to keep inventory levels low and still maintain service.
8. Execution — executing the job, maintaining a quality standard, and meeting the required timeline.
Publication date: 09/22/2003