Guest Column: New Year’s Resolutions to Stick With!
It is hard to believe that just 10 years ago, all of us were just beginning to realize the potential of DVD and home theater systems; and the proliferation of automation throughout the industry had yet to fully take hold. With the widespread adoption of DVD spreading throughout the country, our businesses became hot spots for a revitalized consumer base looking for better picture, better sound and increased ease-of-use from their home entertainment systems.
In this craze, opportunities were plentiful and many of us made a great living delivering exceptional entertainment systems to our clients. However, like all good things, the craze has fizzled out and the latter half of this decade has proven slightly more difficult.
If you've been operating your custom installation business over the last two years, you've certainly weathered a storm rarely seen. Too often I have heard my colleagues tout the recession-free stability their businesses enjoy due to their mostly affluent clientele. As I am sure most readers know by now, this assumption was proven mostly incorrect. It turns out, no matter how much wealth one acquires, when the global economy is depressed, everyone wants to save a buck. As the economy contracted, our wealthy clients slowed down their spending on luxury items and left many CIs scrambling for new opportunities. Some moved down market despite their business's historical high-end offering, while others devised cunning ways to reach out to their legacy clients to create new work. This year, as we approach a new decade, I think it is the perfect time to focus our energies as business owners on a few New Year's Resolutions for 2011.
Understand Your Overhead
I know many of you have heard this over and over again, but the principal remains true. If you do not truly understand the total cost of basic operational procedures, it is impossible to determine if your business is profitable. How much does it actually cost to put a tech in a truck and drive to a project? Putting aside the cost of labor once you go inside, what's the overhead of just getting from the office to the property? What is the true cost of programming an automation system? Don't just consider the hourly labor cost for the tech, but all the costs involved: the laptop, electricity, Internet access, time for training, opportunity costs, etc. Take the time to cost out a project at its conclusion: what did you bid, what did it ultimately cost to deliver, and did you make the profit margin you sought? This valuable information can mean the difference between a good year and a great one!