Nexstar Network Coaches' Playbook
Be just a little bit better
Recently, I was talking to a plumbing contractor about some improvements he wanted to make in his business. Each one of them seemed like a big undertaking and he was feeling overwhelmed. I shared with him how big success can come with little changes.
One of the managers who had previously worked for me enjoyed great success running his company this way. He was a consistent performer who exceeded his monthly and annual budgets. His own bonuses were large and he had earned a reputation as a top performer.
No matter how deep you looked at his business approach, his success came back to one thing: He was just a little bit better than his peers. His direct labor was just a little bit better than average. His material costs just a little bit lower. His vehicle costs were lower and his advertising costs were in line. His top line sales were a little bit better and his team did a best-in-class job of converting sales opportunities.
Another interesting thing about this shop was that he also had the best morale. His team respected him and wanted to impress him. He had a lower turnover rate among his technicians and his team was proud to work in his shop.
This manager had a good grasp of his financials. He managed his business aggressively and knew his budget needs before the month began. His budget was built with care and an understanding of anticipated costs rather than a “cross your fingers and hope for the best” scenario. Surprises aren’t catastrophes when you plan for them.
What did he focus on? I call it the “Big 5” — direct labor, material costs, office salaries, marketing and vehicle expense. If you manage these operating expenses daily you are setting yourself up for success.
Call-by-call management was a key focus of his management team. They made sure to get the right tech to the right call. They were best in class for call center conversion rate and they dispatched properly to save on driven miles and fuel costs.
How can we learn from this operator? We can all be just a little bit better. His operational approach to running businesses is simple and we can each do the same things he did to be successful. Below are a few other things to have in place that will help to pull it all together. They are not in order of priority because they are all important.
We have to be consistent. Your company must have effective processes and must follow them. If you plan for something and execute it all the time, it becomes a habit — a winning habit. It doesn’t matter if it is how you handle a time off request or how you dispatch a technician to a call. If you follow your process consistently your team will have less confusion and a better understanding of your expectations.
Are you running your business or are you reacting to it? At the end of the month your costs shouldn’t be a surprise. Do you have a P.O. process in place when parts are being purchased? Does someone get approval before a major repair is authorized on a truck? Are you surprised when a technician has been granted a week-long vacation during your busy season or when another key member is already off?
Everybody needs a goal to drive them to succeed. This goal should be a positive accomplishment each member of your team wants to achieve. Our role as leaders is to help them want to succeed and to help them understand our definition of success.
Tracking and coaching each member of your team is essential to help them improve. Do you tolerate poor performance until you reach the breaking point and fire that individual? Or do you sit them down weekly to help make them winners? Sometimes our teammates need help figuring it out. That’s why we are here. Reviewing their performance and successes each week is a roadmap for them.
The right team
Having the right team in place is always at the top of the list, whether you are playing sports or running a plumbing company. There are a lot of things we can do to build that team. If your company is a great place to work with a positive culture, top talent will come to you and your winners will stay. If you have great recruiting and training you will build winners. A winning culture and the right team go hand in hand. It typically starts at the top of the pyramid. If the owner or manager doesn’t care about their employees or their customers’ satisfaction, their employees won’t care either. Your team has to know which way the compass points.
Now, let’s really think about the results of being a little bit better. If you are running a $3 million company:
- And you lower direct labor by two percent; you send $60,000 to the bottom line.
- Even if you lower direct labor by half a percent, you send $15,000 to the bottom line.
- What if you did a little bit better across all the categories?
- If you can shave one percent in each of the “Big 5” categories, you send another five percent to the bottom line or $150,000
- Think you can shave two percent off each of them? Then you send $300,000 to the bottom line.
Being just a little bit better equates to big wins in your financial results. Also, don’t forget the additional benefits you’ll gain of a happier team and happier customers, giving you the ability to grow and provide more of the reasons you started this beautiful thing in the first place.