Season’s here and the customers have come on like gangbusters! Your crew (or crews) are working at peak efficiency, they’re doing all they can to beef up production, but you’re making too many sales for them to keep up.
We at CTi see this predicament each Spring season when the weather starts allowing homeowners to utilize their outdoor patios or pool decks, or they notice their driveways and walkways could use a new look. It sometimes seems like everyone contacts your business at once, whether it’s through a Home and Garden Show, or your phones simply become a lot busier.
So what is a Dealer supposed to do with this situation? The knee-jerk reaction is to add more people, create another crew and keep up with the increased demand. This is not a bad idea and it definitely will lead to more revenue for the business, but it comes with challenges that should be considered prior to pulling the trigger.
First, do you have the time to train a lead person for this additional crew? Unless you can teach a new person how to effectively handle and manage a job site, you’re going to see issues in productivity and quality. Training a new manager will normally take a few weeks and many Dealers just don’t have the time once season has come on them.
Second, can the business afford the increase in overhead? New wages on payroll, new equipment and a new truck are just some of the expenses the business is going to incur when you add another crew. It’s going to take some time for the cash flow from the increase in production to pay for the increase in overhead. This lag may be anywhere from a few weeks to a few months, so you need to prepare accordingly.
Third, and most importantly, is increasing the size of your business truly what you want? Most business owners get caught up in growing a business for the sake of increasing its size. If not done properly, the business, over time, may become an entity the owner didn’t want in the first place.
There are other possible solutions when customers become too plentiful.
One is looking at adding some extra help to the crew you currently have (instead of adding an additional crew). An extra set of hands used at critical times during the installation process can help a crew get additional square footage down each week.
A second consideration may be to look at equipment that may speed things up. If your crew is grinding concrete with a 7″ hand held grinder, a larger walk behind can increase speed and efficiency and will lead to more production.
The final consideration is your selling price. Business owners forget this option when they’re in the heat of running their business, but many times it’s the most effective way of growing a business’ profits while addressing the issue of too many customers. A Dealer who has a backlog of work can increase his average selling price by $.50 per square foot without losing too many customers; the ones he does lose can be tolerated by the business because of the backlog. The beauty of this solution is that the $.50 per square foot (of $500.00 for every 1000 square feet installed), goes directly to the bottom line of the business; no other increases in overhead or cost of goods has been incurred.
Create the business you’ve always wanted by keeping in mind the vision you had when you first started it.