Nobody likes red tape. Nobody likes spending hours reconciling bank statements and comparing a pile of purchase orders with a pile of packing lists and vendor invoices. Nobody likes doing inventory and income taxes.
Installers prefer to load the gear into their truck, deliver it to the jobsite and complete the days work. Salespeople prefer to whip out numbers on a quick proposal, hand it to the customer and close the deal. Project managers want to see it all running smoothly so they can go home at the end of the day without a worried mind.
Salespeople, installers, service techs and project managers all spend a lot of time out of the office. If you see them sitting around for very long, someone might think they are goofing offbecause all the real work is done out at the jobsite.
No Love for Red Tape
When a customer looks at your proposal, he clearly sees that your contract includes paying you for installation labor that is performed on his site. In this business it would seem ideal for all workers to be out at jobsites 40 hours a week so that all of their time is billable for the company. Time spent in the office on red tape is often not billable and can represent a loss for the company. Combine this with the lack of pay to do it and you begin to understand why small installation companies spend most of their time running from job to job, and very little time in the office building system solutions that manage their processes. T
his lack of focus on business management is the biggest problem that most small installation companies face. Many owner/managers of small installation companies have just not had enough training in the business of business. Statistics warn us that most small business will fail within the first few years. These ominous stats are often ignored when everybody is busy, and the phone keeps ringing with new work. The bottom line is that all of your hard work and the urgency of busy-ness can lead your company to financial failure.
Todays increased competition and thinner margins on AV equipment are testing even the most successful integration companies. Here are 10 tips to begin building a winning management system:
1. Owners and managers should take college level business management courses on nights or weekends.
2. Hire an experienced CPA who helps you setup your bookkeeping system and meet with him on a regular basis, reviewing reports of your financial performance.
3. Meet with your staff and set realistic goals for your sales and installation each quarter and monitor your progress. Create budget targets for overall income and expense.
4. Review all the products and services that you sell. Consider your expertise with each and the profitability in your market. Enter the products into your proposal system complete with all details of pricing, labor, and accessories so that your proposal system provides you with repeatable manageable results.
5. Get paid for your office time, too. Charge your customers for all time spent designing and project managing the system: handling the ordering, meeting with architects, builders, decorators, coordinating your schedules with the general contractor, etc. This can range from 10-15 percent of the entire job costs, and will vary with the level of job complexity. Dont be timid here. You are actually spending a lot of time working on their project when not at the jobsite.
6. Evaluate your market and your product mix. Determine which products and systems can help you increase overall sales and profits. Plan a strategy to sell the highest quality products to your market.
7. Work closely with your local manufacturers reps to acquire the best products that have protected pricing. These reps are your partners in success. They are an incredible resource to bring you the big picture of what is happening in the AV world and in your market.
8. Increase your profits by increasing your efficiency and workflow. I recommend creating three system solutions (Good, Better and Best) and selling them again and again. Find a system solution and control system that you really love and sell the same solution over and over again.
9. Hire a bookkeeper/office manager who works 9-5 at the office, managing all of the days workflow. This vital team member can take over daily tasks and free your team members from those duties.
10. As you grow, invest in your business managers and project managers. Give them all the training and management tools they need. When they spend time in the office on big picture solutions, respect that time as a crucial investment that will pay for itself again and again.
Rich Riehl ([email protected]) is a Los Angeles-based consultant to the CI business and creator of BidMagic.