The Doctor is In: 3 Steps to Improve Profits
Most integrators find that labor is the hardest thing to estimate and track.
Typical errors include overestimating the effectiveness of the technicians (how many hours per day they're actually available for producing work) and overestimating the efficiency of the crew (how long it takes to complete each task). Requiring your field technicians to maintain time cards and tracking non-productive time (supply runs, drive time, setup and breakdown, meetings, etc.) can help you get a better handle on both effectiveness and efficiency. Creating schedules and sticking to them will allow you to better manage your time and your crews.
OVERHEAD COST: Review your overhead to see where there are wasted dollars. Most integrators have slashed overhead during the recession, but now may be the time to gear up your back-office processes—but only if it increases your productivity. Would hiring more office help make your jobs run more smoothly or keep your technicians on budget? Reconsider ways to reduce overhead by shopping around for insurance costs. å
Cut office expenses by going paperless. If payroll processing is outsourced, consider moving to a bi-weekly pay period to cut processing costs. If your company matches health care, be sure to match on a dollar amount instead of a percentage. That way, it won't automatically carry the burden of premium increases.
Do More Work
Unlike selling the same amount of work at a higher markup, the additional dollars you bring in by selling more jobs at the same markup do not automatically add to your bottom line. Why not? More jobs means more management and the potential to introduce inefficiencies as technicians bounce from job to job.
But if you increase your sales volume without increasing overhead costs, your overhead cost per sales dollar is reduced, adding additional dollars to the net profit. Only do more work if it is profitable. But now may be the time to focus on sales to bring in more work, as long as you can do that work with the same staffing level.