My buddy Steve Stone, of Shubee’s, Inc., is a meat-and-potatoes business builder. Did you know that each day you may be losing $100? And that you can easily capture those loses by paying attention to a few “under the radar” items. It’s about excellence in operations…and about saving $100! Read on…
Let’s Do the Math…
We all know there are approximately 20 working days in a month, not including after hours, Saturdays or Sundays. So, by multiplying the $100 a day lost by the number of working days you can estimate that $2,000 a month is lost. To figure this on an annual basis take the $2,000 per month and multiply it by 12 to get a total of $24,000 lost. Now, this estimation is based per truck so if you have 3 trucks in your business, you lose $6,000 a month and $72,000 annually. I want to also point out that $100 per truck is extremely conservative; you can go ahead and bet that much more money than that is being lost.
So how is this happening and what can you do to prevent your money from slipping out the door?
You will NEVER be able to correct 100% of the problem, but you can address the majority of the problems just by heeding these words of advice:
Out of control spending often goes unnoticed because instead of the gas bill being analyzed the way it should, it just gets paid. Luckily, this is easy to catch if you just examine the bills a little closer! Each month make sure to look at your statement; be aware of frequency, amount spent, type of gas purchased and compare that to total dollar amount that was estimated to be spent. In my company, I found that a lot of times premium gasoline was being used and hiking up our gas bill for no reason. If the bill doesn’t add up, it is your responsibility to your company to find out where the money is going and why.
In my company often tickets would get “lost”. As I am sure you are aware, this causes a large problem for a company. What I did to keep this from becoming a problem was to issue a certain number of tickets with tracking numbers on each and the technicians would be responsible for returning them to me, in order, for them to receive more. For example, I would give a certain tech ten tickets, let’s say tickets 50 – 60, he would have to turn them back into me in that order, 50, 51, 52, etc. in order to receive more. Even if the ticket was torn, or a mistake was made and he had to start over, it is his responsibility to turn that ticket in as well. If a ticket was “misplaced”, that’s when I came unglued and I would hold the person responsible for any money, material or time lost. This helps ensure that the tickets are not used for side jobs or that tickets are being changed after a cash sale.
You can also require a customer signature on every ticket for jobs completed. But the best way I found to put a stop to this is simply do a call behind and ask the client if they were happy with their service, confirm what service they had done and confirm the price they were charged. By doing this you are protecting your business as well as your clients and they will definitely appreciate that!
The third issue I want to bring up is how you respond when your materials are unaccounted for. One way to prevent materials from disappearing is by keeping inventory daily. If your give your tech 5 toilet wax seals and they turn their tickets in and have sold one, you would give them one to replenish what they used. This helps keep track as soon as anything goes “missing” and if it is you charge the responsible party for the missing material. This is one thing you cannot be passive about, materials lost are money lost, and there is no way around it. George Brazil, of George Brazil Plumbers once told me to “always connect brain to pocketbook”. I think that about says it all.
Time is one of the easiest ways to lose money because it is not as easily trackable as tangible materials or tickets. Time can be lost by blatant laziness on the job, by adding in an errand or two in between jobs or by taking longer to do a job than it actually should. Your time is valuable to you, the more time your employees actually spend working the more money your company is going to make. So, how do you figure out how much time is really lost?
Now, what I consider to be the most important defense against money lost by time lost is a little gadget I like to call a GPS. If you own a service business, it is the greatest tool in tracking your vehicles and making sure they are going where they are supposed to be going. We had one of these when I owned my companies and each morning when we were getting ready for our meeting we would look to see where the vehicles were; if they were in route to the office or hadn’t even fired up yet. It also enables you to track where the vehicles go with each stop; from leaving the office in the morning to arriving back in the afternoon, the GPS allows you to see where your vehicles are really spending YOUR time. These little miracles can also alert you when the truck goes over a certain speed or moves after hours or on the weekends. In other words, the GPS is truly a must.
I think we all know that I have not even begun to touch on all of the areas that need to be covered, but this is definitely a benchmark to dissect your company and recapture the $72,000 annually you are losing. The only way to grow your company is to recapture that money and, again, let me stress this is a conservative number. My suggestion is to hire one person as a controller to specifically watch and track these problems. If you pay this person $22,000 a year and they recapture all of that $72,000 you are still adding $50,000 to the bottom-line annually. When running my company with 32 trucks, by following the advice above and tracking these key indicators, I recaptured between $250,000 and $275,000 a year. Start paying attention to the above mentioned problems and figure how much you are losing. Then, using your own methods or some of my tips from above, become more proactive in protecting your company and its money.