Running your custom installation business profitably requires putting systems in place to manage your products and prices. It is not possible to build a successful business model without essential systems of management and control.
Over the years, I have spoken with hundreds of companies who approach this in a variety of ways. Larger, more established companies have generally created a system of organized steps that provide consistency to their routines.
Newer and smaller install companies often spend little time planning and managing their operations. Some are very busy, but operate from month to month without clear long-term goals. Since the main urgent business of the day is installing and servicing systems, things appear to function well. Like a young eagle in the nest who must grow strong wings to fly, these fragile young businesses must develop essential business skills to survive in the competitive business world.
Because today’s urgent to-do lists scream loudest for our attention, most businesses shun the additional effort needed to create workable plans and put them into motion.
Put your company under a microscope to observe how it works at the lowest atomic level. You sell products with installation labor. Products and labor-two things-no more, no less. At the bare minimum, your management system must deal with these two core functions.
Basic product management includes pricing, purchasing, and selling all products that you offer. You may deal with thousands of products from a hundred or more manufacturers. Your list may consist of 20 suppliers, including those sourced directly from individual manufacturers and those purchased from distributors or rep/distributors. Hours spent on these tasks are not logged at the install site and are not “billable” hours. Maintaining a current list of your products and pricing plus counting your inventory can consume many hours.
Basic labor management demands a system to assign installation hours for every installation phase associated with each product you sell. It also involves managing the resources of your technicians and scheduling work orders to complete the jobs on time and on budget.
Although the concept of including a set amount for labor on each product you sell is clear enough, implementing systems that automate this process with software that can combine products and labor can be a daunting, time-consuming process. How can a small company accomplish all of this without being buried by these requirements? Here is a step-by-step plan.
Step 1: Meet with your staff and resolve that you will proactively begin building a system that works for your company, even if it takes months or years. This will involve your sales, installation and management team.
Step 2: Create a master list of the suppliers and manufacturers you work with.
Step 3: While the Web is a great resource for information, looking at product information online does not generally allow you to load this data in a usable manner. Contact those suppliers and ask them to provide Excel spreadsheets containing the products you purchase from them complete with all details available. Be resourceful in obtaining these prices. If necessary, hire a fast typist to add selected products manually into your spreadsheet.
Step 4: Merge all of these spreadsheets into a single document and then delete all of the products you do not actively plan to sell. Chop away without mercy, as the shorter you make this product list, the better. You don’t want to stock them all. You do not want to sell them all.
Step 5: Determine what you will charge your customers for each product, any accessories required and then lock down the prices.
Step 6: Figure your total labor hours to install each product and enter those into the spreadsheet, breaking down each labor phase when possible. Be sure to consider all of your costs and include reasonable amounts to cover design, project management, programming, travel, shipping, etc.
Step 7: Find software solutions that can take this information and use it to automate your product and labor management. Focus on software that combines your products and pricing to efficiently create proposals, purchase orders, and work orders for your company. While accounting software offers does some of these steps well, it was designed for accountants and bookkeepers and is usually not your best choice.
Step 8: Create a plan to keep your products and prices updated on a regular basis. This may take a few hours a month for smaller lists. If your active product list is too large to maintain in-house, several companies may be able to provide current product lists as a service for you.
Step 9: With you plan in place, maximize your ability to automate your processes, simplify your workflow and increase your efficiency. There are huge benefits that will open doors to increased success and profits for you.
Step 10: Realize that your system solution is continually changing and improving. In fact, this process will never end as it is a core function of a living, growing business.