Taking Care of Business: When Do You Monitor Expenses?

In case some of you are getting tired of seeing surveys and e-mails from me, lighten up. Your feedback has been giving me some great ideas on business topics - topics that many HVACR contractors can relate to. I am not a Rhodes scholar when it comes to managing a business, but I did sleep at a Holiday Inn Express last night. And there were lots of educated business owners there, too.

In fact, I’ve “slept” at a lot of Holiday Inn Express hotels in my 10-plus years as a business editor for The NEWS and I have come away with a lot of good business management advice from many of you. OK, so I have only stayed at a Holiday Inn Express on a handful of occasions, I think you get my drift (if you have seen any of their television commercials).

The point is, I learn from you. My latest foray into the survey and feedback world included an informal survey on how business owners watch their expenses and adjust pricing whenever possible. I used this feedback tool as a precursor to a larger article, which will appear on these pages later this summer. A total of 40 contractors responded to my quickie survey, both online and in person.

WATCHING THE OUTFLOW AND FINE PRINT

I asked contractors how often they reviewed their checkbook or ledger. I know from interviewing experience that some business owners prefer to sign every check while others keep their distance. Some simply prefer the hands-on approach and want to know everything they are paying for while others monitor the business expenses through the eyes of an accountant or office manager.

I was interested in seeing the frequency rate of checking the outflow. The choices were between daily, weekly, monthly, yearly, and never. Thank goodness no one checked the last two choices. But then again, this is a very unscientific survey as the people who replied run good businesses and are in the upper tier of the HVACR trade.

Anyway, it was a pretty even split between owners who watch their accounts payable each day or weekly (some said they watch expenses two-three times a week). Nineteen said daily and 18 said weekly. At least they are staying abreast of their expenses on a regular basis, whether they sign the checks or get a regular report.

I also asked how many of them read the “fine print” on vendor contracts because many times the fine print can be a real killer, especially where additional charges or higher interest rates apply. Fourteen of the respondents said they read the fine print sometimes while 18 said they always read the fine print - which every business owner should do.

One respondent said he/she never reads the fine print. Good luck in the future.

GETTING EMPLOYEES INVOLVED

Business owners often tap into the collective brainpower of their employees to come up with ways to reduce costs. It is only natural that many heads instead of one create better ideas. I asked contractors if they discussed expenses with employees and how these expenses related to profitability.

The results were almost even with 50 percent saying they always discussed costs with employees and 45 percent saying they sometimes discussed costs. At least they took the time to involve their employees. Two respondents said they seldom discussed costs with employees. Again I say, good luck in the future.

I also asked if contractors had some sort of suggestion program that rewarded employees for good ideas. And again, the results were pretty evenly divided. Seventeen contractors said they didn’t have a suggestion program, while 11 said they did and another 11 said they “sometimes” had a program. My recommendation is to always have a suggestion program and give a monetary reward for the best money-saving ideas.

Finally, I asked contractors how they reacted to competitors who raised their prices. The choices were: also raise prices, add a trip surcharge, do neither, or take time to study options. Forty-four percent felt it was best to take time and study while 37 percent said they would raise prices. The remaining replies were smaller and scattered between adding a surcharge or doing neither. I found this interesting because there was very little middle ground between reacting and taking time to study.

What does all of this prove beyond the fact that I have too much time on my hands? It proves that there are no cut-and-dry solutions to keeping a handle on business expenses. Too bad, I was hoping there would be. I guess it’s time to go back to the Holiday Inn Express.

Publication date: 06/30/2008