Part 1: Eliminate Grief and Increase Profits
By David Thompson
In this article, I plan to give you a brief overview of what our company has produced into a 500+ page manual for running a successful business. I know your profits will go up and your anxiety level will go down as a result of reading and implementing these highlights.
Business plans are a practical tool that we use as business owners to guide us through all the different stages that we will encounter. A good business plan will help, or better yet, make you think through scenarios from many different angles. We need to go beyond mission statements that say “we plan on being the best in the industry” to practical statements by which we can gauge ourselves on a yearly, monthly, weekly and daily basis. For instance, this is one thing that we did to help our company become more profitable. Try this test: Describe your company. List your strengths on one page and your weaknesses on another. Be truthful, be innovative, be ruthless and list everything you can think of. Now – take your strengths and rate them 1 through 5 in importance from your point of view (1 being not important and 5 being very important.) Now, do the same rating from your customers’ point of view. Wow! This was a real eye opener for me. The things that I had rated a 2, my customers rated a 5 and the things I had rated a 5, my customers rated a 1. When I saw things as my customers did, I immediately changed my approach to advertising and marketing to focus on what my customer saw as important. I saw dramatic results! What pays the bills? Results! That’s what I mean by planning.
In a recent article in Business 2.0, July, 2002 magazine, they compared Avis to Hertz and showed how Avis spent $9 million on advertising compared to Hertz with $53 million but Avis ended up #1. How did they do it? By looking at the experience through their customer’s eyes! Let’s learn with someone else’s millions instead of wasting ours! To recap, a good business plan is not a vague document sitting on a shelf but a map to be used daily to ensure you reach your destination.
Policies, guidelines, and procedures are also critical to planning and productivity in your business.
You buy a super neat tool and put it on your trucks. You’re the “gizmo guy” and know your technicians will love you for this. -They not only don’t use it, they lose it!
Option #1 – Erect a guillotine back by the loading dock (OSHA approved of course) to punish the perpetrators.
Option #2 – Yell, scream, cry and basically get sick over the lack of gratitude, efficiency, etc.
Option #3 – Have a policy in place that rewards good behavior and punishes bad behavior.
In short, this particular section says, “you lose it, you buy it-creepo!” It’s amazing what memories my techs have since I’ve instituted some of these policies and guidelines. It used to go like this: “I’m not sure what happened to that tool boss, I’m not even sure we ever had one on the truck.” Now it goes like this: “At approximately 12:15pm, Eastern Standard Time, I departed from job #1 and at 12:28pm arrived at job #2 and immediately after starting the job noticed that XYZ tool was missing and called the previous customer at 12:59 to say I would be by at approximately 4:32pm to search for, find and recover XYZ tool. Same people-same tool-different memory! Think through your business and write down step by step everything you want to happen and only then you can actually make it happen.
Have you ever tried to pound a square peg into a round hole? I have! I used to hire people because they were “nice” or because I needed someone right now to finish a project. MISTAKE! Now, I write down each job description as detailed as possible and then interview prospective applicants with description in hand to see if they “fit.” Sometimes you have to let someone work a while to see how well they fit in, but usually they will either work themselves into or out of a job because they knew exactly what was expected of them. This also works well for existing employees and evaluations. It’s never too late to start.
Management and delegation come on the heels of job descriptions because now, not only do you, the owner, know what everybody is doing, but so does the manager or lead man on a crew. It makes it easy now to delegate responsibility to give you, the owner, time to plan and grow your business. Now you’re working on your business instead of in your business
Organization = more profit!
Everything is measurable, so why not performance!? How well is that ad in the paper doing? Do trade shows really pay off? How about direct mail? How much should each tech produce daily or hourly? What is the closing ratio on sales? Measure and compare within your own company and with outside companies. Don’t waste a lot of time or money with things or people that don’t pay off. Dump the losers and concentrate on the things that are the most productive and profitable.
Incentives and performance go hand in hand. Guess what? You don’t have to give any more raises; your employees will do it for themselves, by performing better than expected (and what’s expected is written down, right?) We don’t pay more just because you’ve been hanging
around a while. Bonuses are earned by better performance. Employee #1 says: “Hey, I need to be making more money, I’ve got bills, you know?” You say: “Maybe if you spent less time sleeping, smoking cigarettes and complaining, you could do better!” No, actually, you say, “Look here at page 6 and see how you can increase your paycheck with above average performance as stated in section a-b-c.
Let’s touch on marketing and sales. We want to screen out the undesirable customer because they are just a waste of good time and resources. First of all, don’t try to be all things to all people. I don’t like to do everything and I certainly don’t want all people as customers. We all have competition and we need to pick our special niche where we are the most comfortable and profitable. Also, I don’t like doing business “as usual” because I see a lot of “as usual” businesses struggling. Markets are changing and we need to stay ahead of competition with good innovation and planning We are daily implementing better ways to reach new and better customers by phone, message on hold, salesman on site, technician “upsells”, follow up letters, newsletters, thank you letters, referral programs, internet, etc. When it comes to ad agencies or advertisers, I don’t appreciate them spending my vacation and retirement money because they think I need “more repetition” to get results! I know my market much better than they do. If you understand your business and know your target market, the rest is much easier than you think. The right ad, in the right place, at the right time always gets results – and at the right price per customer. This way your sales people are contacting better qualified and more highly motivated customers, giving them higher closing ratios and better morale. It all starts with some good business planning.
So you’ve planned hard, sold smart, been organized in your service, and now it’s time to collect your hard earned money. Three things – Always have a signed contract by the customer or purchasing agent, always have a completed contract (and I mean not only with complete specifications of work but, more importantly, exclusions for things you don’t want to be liable for), and, if not being paid upon services rendered, have a signed credit agreement complete with social security number, place of employment, and spouse’s same information. I’ve found that a good contract keeps my customers honest. I know I do good work, but I don’t know them from Adam. “My” contract is for my protection, not theirs!
Remember, the changes that you make in the way you operate your business will determine YOUR future. Present trends are changing quickly and we need to be anticipating market trends in order to grow. One of the biggest reasons why successful business people fail is because they ride a horse until it drops before they shift horses. Bruce Burton once said, “When you’re through changing, you’re through!”
In planning for success, it will take some time and effort, but you will never regret it. You will find yourself running your business more efficiently and profitably than you had imagined instead of playing fireman and running around putting out fires and letting your business run you! Now you can spend your time and money the way you want instead of letting others spend it for you.
David Thompson is President of Clean Air Technologies and has been in the Indoor Air Quality industry since 1978. With a background in marketing, he and his wife Darla have developed Clean Air Technologies, a service and consulting company in the Indoor Air Quality field. They reside in Matthews, NC.
This article appeared in the Winter 2003 IKECA Journal