We recently discussed using Julius Caesar’s “Divide and Conquer” dictum to your business. How? By 1) analyzing the profitability ratio of the services you offer and then 2) dividing off the losers to 3) conquer your net profit challenges!
But you face a bigger challenge than offering ‘non-profitable services’. Too often I hear carpet cleaning and restoration subcontractors boasting: “Yep, I usually make over $100.00 per hour with my truck mount!” And I gently reply, “Ummmm, no, you aren’t…” Here’s why…
The carpet cleaner is ONLY looking at the time their truck mount is running as in “Wow, we ran our machine on this job for 2.2 hours AND the bill is for $269.20! Uhhhhhh…. that’s over $100.00 per hour! WOO-HOO!”
Or a smarter cleaner may calculate their ‘drive up to drive away’ time on the job and OOPS! Very likely they’re not going to hit the much-sought-after $100.00 per hour mark!
NOTE: In SFS: Business Transformation our ‘numbers guy’, Chuck Violand, will shock you with his ‘5-M’s calculations’! You’ll learn that you’re likely losing money even at $100.00 @ hour on total job time!
Your problem? Your actual ‘wand on the carpet’ production time ratio is skewed by a multitude of time-eating issues. Your biggest time challenge? Almost certainly…
You are losing huge money in tech travel time! So strongly consider reducing the market area you serve!
A smaller service area offers so many advantages:
1. Shorter commutes to and from the office.
2. Shorter drive time between each job.
3. Focused marketing. A smaller market means you’ll be more visible in the community. Your signed vehicles will make a greater impression and you can focus your marketing too.
4. Focused giving. You’ll make a bigger impact by being involved in ‘local’ civic and charitable events.
5. You can tap into the ‘buy local’ movement. (In a big metropolitan area people prefer to buy from a close by ‘local company’ that only serves their area.)
NOTE: And especially if you are just starting out it makes even more sense to ‘divide and conquer’ your service area. And then you can expand into new areas as you grow into a larger Critical Mass Business!
Of course, traffic and travel issues are only one time waster. Let’s talk soon about other ways you can increase your actual ‘wand to the carpet time ratio’!
Steve