With fuel prices continuing to rise across the country, contractors are becoming increasingly and understandably concerned. This might surprise you, but I see the recent fuel spike as an opportunity for home and commercial service providers. And before you write to the ACHR NEWS editors trying to get me kicked out of my first guest column, hear me out!
I look at things through a different lens. Too often, we only look at the doom, gloom, and trouble out there, but by shifting our perspective just a bit, it can bring to light opportunities for your company to improve and stand out. After all, isn’t that what a service call really is? A customer has a problem, and it creates an opportunity for you to solve it, make them happy, and also get paid. I haven’t always thought this way, and I admittedly need to remind myself often to shift my outlook. It’s a learned discipline. I remember listening to a podcast a while back that described a leader's job as the CPS or “Chief Problem Solver.” The value you bring to your business is directly related to the problems you solve in it.
So, I’d ask you to think about this gas situation as an opportunity. But before we dive in, let’s put into context how much these rising fuel prices are actually costing your business. Let’s say, for easy math, that you use two gallons of gas per call. I know this varies from job to job, but that's a pretty good average. What if gas goes up by $3 per gallon? How does your business handle it? That means you would have to charge a whopping $6 extra per call to cover it. If your tech completes four calls a day, that's an extra $24! Oh wait — that doesn’t sound all that hard to overcome, right?
I’m a big fan of taking action when an opportunity arises and wanted to share a few ideas about how contractors can use this recent gas price increase to improve your business.
- Analyze and adjust your pricing — There are several variables in play when it comes to what you are charging. As the leader of your business, protecting and monitoring your margins should be top priorities. If the cost of labor, materials, or overhead expenses are rising, then you should adjust your pricing accordingly. This gas spike is a great opportunity to do just that and have a system in place to monitor and adjust frequently. One area where it’s easy to adjust is your diagnostic dispatch fee. Check out the chapter on the “Perfect Diagnostic Dispatch Fee” from ServiceTitan’s Contractor Playbook. It turns out there is a sweet spot for these types of charges. Too low and you leave money on the table. Too high and you don’t book the call. By adjusting your fee to an optimal amount, you can easily offset the cost of increased fuel usage needed for a job.
- Optimize systems and processes — I’ve witnessed a lot of contractors who, frankly, have let their operations get a little sloppy. When the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL), and loan forgiveness were available at the beginning of the pandemic (along with the fact that call volume was up last year), it was easy to let things slip a little. So now is the time to look at tightening up your organization and optimizing for efficiency. One key area this can be used is in dispatching. If you aren’t utilizing a dispatch process with techs assigned to zones and route optimization, chances are you’re using more fuel and wasting precious potential billable time. I’d also recommend tightening up your service circle by not sending techs outside of those circles. A debrief system will also help improve your efficiency and potentially lower overhead. By implementing a debrief on every call, you can eliminate errors in billing and timekeeping, which will save your office staff a ton of time on the back end. You can also improve the performance of your techs by ensuring all the required items were checked off, memberships were offered, and payment was collected. All of this reduces the chances of a callback.
- Train on overcoming price objections — Your office staff, as well as your techs, are likely to encounter objections from customers on price increases. Set your team up for success by increasing and updating the training they go through. This will increase your staff’s confidence, empower them to properly explain these increases, and politely overcome objections from customers.
- Earn rebates –— With fuel going up, now is the time to set up a fleet card with rebates, or a credit card that earns cash back. If your overall costs are rising, you might as well get some of it back with these rebates.
Being in business for yourself brings along opportunities for problems to be solved every day. I encourage you to shift the way you look at these and realize that every problem is an opportunity to improve. Before I sold my own home service company, my goal was to leave the business each day a little better than we started. Those compounding efforts over time really paid off, and it can for you as well.