Focus on Where to Grow

Jim (Bone) Hamilton
Contributing Writer
Nexstar business coach

In the fall of 1990, while listening to my mentor Frank Blau, I asked the questions, “When should I add a truck? When will I know it’s time to grow?” Frank looked me dead in the eye and said, “You should always be looking to grow. If you’re not growing — you’re dying.”

It’s no secret this past year has been different. This year, nearly everyone has been focused on staying alive. Congratulations! You made it this far alive. Know that many competitors around you are nearly out, or have gone out, of business. This is a growing opportunity for you. Let me explain how to grow when others are merely surviving:

  • Remember all the potential work left on the table by your customers? Well, that work is still out there. Economists call it pent-up demand. Think of it like someone blowing up a balloon. The need keeps going in but doesn’t come out. So it expands until it pops. Like the balloon example, a torrent of work may come at you all at once.
  • You will get the work from your competitors who are now out of business. Will the floodgates open in 2010? No one knows the answer, but one thing everyone is sure of — work opportunities are growing.
  • Qualified employees, who worked for those now dead or soon to be dead competitors, are looking for work. That means your pool of candidates is growing and is considered the best it has been in years as measured in quality and quantity. And it continues to get better so long as the recession continues to weaken the market.

Sure, you will need to stay in survival mode while consumers hold out. You made it this far because you had cash reserves from which to draw. You are managing your costs in relation to sales, expanding into line extensions, improving your marketing, or any and all of the above.

Go into the next year with a renewed focus. Here’s where I think you should focus:

First things first—make sure your base is solid before venturing off your foundation.

Create a budget. Financially and operationally. Budgets will help you iron out kinks in your operation before they become major issues and give you a clear vision of where your company is going. Review your results monthly. Compare your results to budget expectations. Use a monthly and year-over-year P&L to budget your company’s variance report, combined with an operational pace report. These reports will keep you laser-focused. Upward budget variances may be your first indication the floodgates are cracking open. This is critical. Keep actively projecting budgets and tracking performance. If you are not, call your coach—today. You need this report.

  • Watch your overtime. This will be one of your first indicators the recession is easing. As a rule-of-thumb, I tell owners and managers when overtime consistently reaches 20 hours a week, it’s time to hire another technician. The key word is — consistently. If you are paying your technicians for 20 or more hours of overtime, you are paying three quarters of the cost of hiring another technician. Prevent your existing technicians from burning out by hiring another tech.
  • Improve your efficiency. There is a limit to how high a company can raise their prices. Improving efficiency is your best tool for controlling price inflation. Efficiency can be improved everywhere in your company. John Foley addressed this issue when he talked about belief levels at this year’s Super Meeting. Since efficiency improvement should be the objective throughout the company; the coach and cheerleader should be the owner. Look for big and small areas where efficiency can be improved. Set efficiency goals in every department. When goals are reached, set a new goal. Striving for greater efficiency improvements is one of the best complacency deterrents for an owner. Keep breaking barriers by moving everyone’s belief levels.

Growth through more offerings.

  • Line extensions. Sewer line replacement is the fastest growing area for Nexstar companies. You need to get in the game, whether you are an electrician, a HVAC company, or a plumbing company. Sign up for the Sewer Sales School in Charlotte, North Carolina in March. Nexstar coach Jack Tester does a great job training this class. Why should electricians get into sewer replacement? My reasoning is this: If I can do it, I know an electrician can do it. It’s not brain surgery. No offense to you drain guys, you know where the money is. This is where first-year plumbers start and it happens to be the most profitable side of the business with up to 80{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} gross margins! Oh, another bit of advice for you electricians — get into the HVAC business. It is 90{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} electrical anyway. Your technicians will be a great cross trained fit for HVAC.

Think bigger than postcards and TV ads for your marketing.

Look for opportunities. This economy has created an unheard of climate for landing acquisitions. Businesses are selling at a fraction of what they were even a few months ago. You can do this. You don’t need a chunk of cash to buy a company. If you don’t think you are in a position to make acquisitions, call your business coach today. Ask how much leverage you have to accomplish a buyout. Buying a company now will pick up bucket loads of customers that pays for itself several times over.

Profit is nice but cash is blood.

  • Manage your cash. Cash is king and you need to monitor a cash flow report. Call your coach if you’re not using this critical management tool. Profit is different than cash. Know the difference.

A Nexstar membership gives you access to these growth programs:

  • Service System is the best customer service and satisfaction program on the planet. Send all your managers and technicians to the retreat. Then, everyone should work on earning the badge of honor — a Nexstar Service System certification patch for his or her uniform.
  • Train the Trainer for Service System is a must if you train technicians.
  • HVAC Sales System for all your sales people, sales trainers and managers.
  • Peer group meetings for all owners and managers. If you haven’t been to one, you must go. These events keep you abreast of how superior service is evolving.
  • HVAC Sales Management for all install coordinators, install and sales managers and owners.
  • Sewer Sales School for everyone; electricians, plumbers, HVAC technicians, managers, owners. Top line extension, baby (no pun intended).
  • Call Center School for call takers, dispatchers and managers.
  • The two major networking events: Owners’ Spotlight Series and Super Meeting.

Trained employees produce more. Make the most from your assets, by continuously training your people. This is the least expensive and most reliable way to grow. Why? High-producing technicians need fewer calls—which, in turn, lead to needing more technicians. Accumulate high-producing employees through training and/or hiring and watch your business grow. I’m excited about 2010. Bring it on!

Jim (Bone) Hamilton is a business coach with Nexstar®. He has spent 36 years in the PHCE service industry and has purchased and transformed 28 underperforming companies into profitable businesses, each in less than a year. Nexstar members get rapid results, guided by experienced coaches, surefire systems and incredible peer connections. For more information on how you can get rapid results, go to www.nexstarnetwork.com or call 888.240.STAR.

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