Profitability Revolution Paradigm
There are three simple things you must do to survive in business. None of them will put you out of business immediately. However, lack of attention in these three areas causes a slow death spiral and will eventually lead to business failure. Here are the things to pay attention to:
1. Take care of your customers.
Your active customers base (those customers who have done business with you in the past 18 months) should be increasing all the time.
The only time your customers consciously think of your company is when they need your products or services. They want to know where to go when they want something specific or the unexpected happens and they need a product or service. If you’ve done your marketing properly to potential customers and taken care of your existing customers properly, your company’s name should pop into their heads.
Every impression counts. Customers are fickle. Even if someone has been a customer for 10 years you can’t take him or her for granted. I’ve seen too many times where someone has been a customer for a long time and starts looking for another company simply because they sense “something’s changed” and they aren’t being taken care of like they were in the past. Will you ever know it? Probably not until you realize that you haven’t heard from that customer in years. By that time it’s too late.
In most areas there is so much competition that the unsatisfied customer will easily find another company to use. If that company goes out of its way to handle the customer right, you’ve lost a customer that you spent years and hundreds or maybe even thousands of dollars cultivating.
2. Take care of your employees.
A complaint I hear all the time is “I can’t find good techsp”. There is a shortage of qualified help in our industry. However, there are companies who have people wanting to work for them, technicians dropping off resumes in hopes of a job opening, and a stable work force. These companies are also generally busy even in mild weather when their competitors are waiting for the telephone to ring.
Keeping your employees takes work and attention. It is simply setting the standards, enforcing the standards, creating a career path, following through on the career path, listening to their wants and needs, and doing what you promised.
Let your employees know you appreciate their work. This can be done in many ways: notes in paychecks, notes sent home to wives and significant others, a “thank you” as you are passing someone in the hall; or a visit to the job site when you don’t want anything other than to say you appreciate their hard work.
Listen to your employees. They are on the front line. They have the best idea of what is happening out in the field or in the office. So, when issues arise, ask for input. If you trust them, and they know that by telling the truth they won’t get in trouble, then you can get to the bottom of the situation and resolve the issues.
When you start getting unsolicited resumes from people who want to work at your company, you know that you are on the right track.
3. Watch your cash.
Cash is the lifeblood of business. You need it to pay your employees, yourself, for the materials, equipment and overhead items you need to keep the doors open.
Obviously, for your business to survive you must generate cash. However, even if you are showing a profit you may not have cash. This is the case when you do work, bill for your work, and don’t collect your money.
Now that it is summer you probably have a lot of cash coming in the door. It’s important to price properly and collect so that you keep this cash through the winter.
Watch inventory. Inventory is a bet. When an employee purchases a part for the warehouse, he is betting your hard earned dollars that part will be sold. I’ve seen a lot of “bets” on warehouse shelves. Purchase only what you think that you will reasonably use in a specific period of time.
If you take care of your customers and employees and watch your cash, you’ll have a better chance of staying in business, growing profitably, and not falling into a death spiral. It’s easy to do these things. It’s easy not to do these things. The choice is yours.