“Turning the Tide Towards Profit”

To Be the Focus at Nexstar’s® Owners’ Spotlight Series

Owners of plumbing, HVAC and electrical home service companies will gather at Nexstar’s Owner’s Spotlight Series, March 18-20 in Clearwater, Florida. “Turning the Tide Toward Profit” is the theme and consistently achieving results that count is the focus. Nexstar has reserved a number of VIP seats for prospective members at this event that is typically for members only. It is an opportunity to experience the rapid results of Nexstar.

It’s no secret that times are tough right now in the business world. But on the bright side, some economic reports are beginning to look a little more optimistic and talk of economic recovery is all over the news. Markets tend to be cyclical, and in this case, it is just a matter of time before we head into another era of economic prosperity. When we reach that time and you need to hire more employees to get the work done, will you be ready and will your employees be ready?

It bewilders me when I hear comments from certain people in our industry who say, “contractors can’t afford to operate showrooms.” Hogwash. I have always considered my showroom facility a tool that is necessary to get the job done profitably and professionally. When this tool is utilized properly, it is well worth the effort and investment, and enhances the professional image we all strive to convey.
I’ve had a showroom ever since 1962, when I was a young plumber doing new construction work. Specified materials tended not to be the best back then, so my showroom was used primarily to upgrade plumbing and heating in the new homes and other buildings for which we contracted. Our builders were open to the idea as long as they didn’t have to get involved. Homeowners were invited to the showroom to view what was specified for their new homes, and what they could get for a few dollars more. The additional profit that showroom generated was a nice plus for a young plumber doing battle in the highly competitive new housing market.

The following story is true. The names have been changed to protect the innocent. If you think this story is about you…you are probably right.

The Martyr and The Intimidator

Leslie is the owner of a roofing company, a business she inherited from her father. Back in the day, her father managed a small crew and operated with handshake-contracts and stacks of cash. Now that her dad has retired, ambitious Leslie sees a different future. She wants to grow her company so that she can make a fortune…and provide career opportunities for her beloved team. And she wants to build on her (and her father’s) reputation for taking great care of her customers.

Last month, I asked you to fill out some worksheets containing four hypothetical contracting jobs with different overhead factors and to identify the most desirable job of the bunch.

I know from my teaching experience that most PHC contractors are totally befuddled by these worksheet problems, and they aren’t inclined to take the time to participate in this exercise. As usual, it is the more diligent and knowledgeable contractors who find intellectual stimulation in business problems, just as they are the ones you find attending seminars, participating in industry affairs, etc.

From Comanche Marketing, here’s Matt Michel’s tips on ways to get the most out of any conference or trade show you attend.
1. Dress professionally, but in comfortable shoes and clothes – if your conference includes a trade show, you will be on your feet a lot. If you’re uncomfortable, you’re not focused on gathering information.
2. Engage others in conversation – people often remark that the most valuable information they get at trade shows comes from the hall talk. Why? Because it’s peer to peer conversation. It’s interaction with …

When your business phone is ringing and customers are requesting service, life is great! Oh, I remember those days. Where have they gone? Bring on the bitterly cold weather of winter, the sweltering heat of summer, the flash flood waters of spring—and bring it on quickly!

It was exciting to watch the Vikes beat up the Dallas Cowboys this past Sunday, advancing them to the NFC championship game. As I watched the game I was impressed by the Vikings defense; they were relentless. Tony Romo will have nightmares of #91 Ray Edwards pursuing him for yet another sack.

Recently, I have been working on an inventory project at our company. In October, we sold our company assets along with 2 other companies to form a new entity in the Twin Cities, Noah Acquisitions, DBA Ben Franklin Plumbing now has 20 plumbing crews doing service and repair work. In this new business, our old system of inventory quickly became outdated.

In the fall of 1990, while listening to my mentor Frank Blau, I asked the questions, “When should I add a truck? When will I know it’s time to grow?” Frank looked me dead in the eye and said, “You should always be looking to grow. If you’re not growing — you’re dying.”

It’s no secret this past year has been different. This year, nearly everyone has been focused on staying alive. Congratulations! You made it this far alive. Know that many competitors around you are nearly out, or have gone out, of business. This is a growing opportunity for you. Let me explain how to grow when others are merely surviving:

As explained in the previous article, “productive” hours are those hours charged directly to a specific job, as opposed to the so-called “nonproductive” hours that are not charged to a particular job but must be spread across all jobs. The nonproductive hourly cost, therefore, is overhead, along with various other costs associated with equipment, office supplies, utilities, etc.

Nonproductive hours are a measure of the time spent by support personnel, as well as by field people engaged in something else besides working on a revenue-producing job, such as vehicle maintenance or stocking warehouse shelves. In order to calculate dollar-per-hour overhead cost, it is essential that all hours spent by mechanics working on a particular job be identified as a direct cost of that job. Likewise for the working owner, who may be involved in a multitude of activities ranging from estimating, trip to city hall for permits, material pickup at a supply house, or working with the tools, all of which should be identified as either direct or indirect (“nonproductive”) hours for the job at hand.