Tim McGuire
Contributing Writer
As the team was clearing the field from their turn at bat, the umpire looked at her watch and declared the game was over as time had expired. As our seven-year-old, Lucy, was packing up and getting ready to leave I asked her who won. She looked at me with that devilish grin of hers, shrugged her shoulders and said “I don’t know. We weren’t keeping score!”
“If you’re not keeping score, why do you play?” I asked. She just smiled and said, “Because it was fun.”
As we left the ballpark and headed for home I was reminded of a conversation I had with industry great, Frank Blau, back in 1991. I have been blessed with many things over the years and meeting Frank up close and personal is right up there at the top of the list.
For those who know Frank, you know he can be intimidating. Make no mistake, I was intimidated.
Frank invited my Dad, Mom and me to visit his shop in Milwaukee and was very adamant about telling us to bring a calculator. We all packed in the car and made the 8-hour trek from Minneapolis to Milwaukee. The next morning Frank picked us up at the motel and took us to his shop for a tour. It was a Monday morning and their guys were assembled in the tech area receiving assignments for the day. I remember it was a very busy and energetic place for this time in the morning.
After the commotion from the line-up died down, Frank invited us to his office to talk numbers. His first question was, “What’s your breakeven?”
Breakeven? What did that even mean? I must have had the same look Lucy displayed at the ball field because the next thing Frank barked was, “Yeah, you Herman, your breakeven. What does it cost you to produce a billable hour of labor?” Calling me “Herman” was Frank’s way of jabbing for my attention.
It didn’t take Frank long to realize that I didn’t have a clue as to what he was talking about. Thankfully he started a series of questions I did know the answers to. He pulled out his calculator and insisted I get mine. After going through a lesson on mark-up and margin we got to our plumbing business. After all the button pushing and equations were complete he came up with a number, $83.50.
“$83.50? What does this mean?” I asked
“$83.50 is what it costs you to produce an hour of labor.” I told him there must be some mistake. We did the math again and came up with $83.50 again. I had a puzzled look on my face; Frank asked me what wrong. I told him we were the highest priced guys in Minneapolis at the time and we were charging $68.00 per hour. “Congratulations,” Frank said, “you’re only losing $15.50 per hour. Not as bad as most of the slugs across the county.” At this time I was really intimidated and didn’t know what to say.
After a couple of days with Frank and several months of hard work we were able to accurately identify what our costs were and what it would take to recover those costs on every call. We were determined to follow through on our commitment to run a profitable and successful plumbing business.
After reminiscing about the past, a small voice from the back seat brought me back to the present. Jack, our four-year-old, wanted to go to Dairy Queen on the way home. He declared that because Lucy’s team didn’t lose the game we should get a treat. Those of you who have a four-year-old know that getting a treat is one of their sole missions in life. I pondered his logic for a moment and had to admit he had a point, so off we went.
Over the years I have come to discover there are thousands of contractors looking for help and guidance on how to run a more profitable and successful business. Many of us don’t like to admit our shortcomings and like Jack; can convince ourselves anything is appropriate. The good news is you can make some serious improvements to your business and your life when you discover and admit your shortcomings.
Seek out trusted friends and advisors to help you evaluate where you are with your business. Take the time to crunch your numbers; find out what it really costs you to provide your services to the consumer. You will be surprised with your results and may have difficulty overcoming your fears of running by the numbers. Resort back to your trusted friends and advisors to help overcome this fear.
Finding a friend who truly understands the numbers of running a business is difficult, fortunately there are several best practice groups who can help you. I was fortunate enough to have been a founder of Nexstar and worked directly with Frank. Although I am now not a member now, some of my most trusted advisors came from this group and I am still in contact with many of them on a weekly basis.
Find a group you are comfortable with and join. For the average shop a membership with these groups will only add a couple of dollars to your billable rate.
As we pulled into the garage, Lucy said we should to go to Dairy Queen after every game because it was a lot fun. Knowing your numbers and keeping score can be a painful process for some, however, when you have mastered the numbers you will be able to make informed decisions that will allow you to change your business for the better and have a lot more fun going to work each day.
Tim McGuire is owner of McGuire and Sons Ben Franklin Plumbing in Hopkins, MN., Master Plumber and Pipefitter with 24 years in the plumbing industry and a founding member of Nexstar Network. Tim can be contacted by calling 952-292-5541.