There’s a timeline in business just as there is in life. You have to crawl before you walk, and you must walk before you run. If you expect to achieve positive results, you have to plan for it.
Establish your business goals over the short term, and then project out over five and then 10 years. What is your vision, what will the company look like at that point? Where do you want to grow to? When will you need to hire additional help? When is it time to add an operations manager or to move to a larger facility?
Make a plan
In order to plan properly for the future, you have to create the baseline. If you haven’t done so yet, work on a budget plan based off your prior year’s revenues and expenses. Were you profitable? If so, how can you become even more profitable?
In the electrical service business, a majority of the revenue is brought in through running service calls. Knowing the revenue produced and the number of calls run can help you establish an average ticket. You need to track this and have a system in place to measure it. We can boost our revenue by either increasing our average ticket or increasing the number of calls run.
Training our techs and having properly stocked trucks enables us to make the offers that our customers see as valuable. Depending on the age of the average house in your area, service upgrades or replacements may also be a result of running service calls and should be tracked as well to get a better vantage of how revenue is produced and its predictability for the future. Knowing what percentage of calls may lead to a replacement opportunity can help you plan for next year.
Dial in
Increasing the number of calls run is multifaceted. First you need the calls, and then you need the manpower, vehicles, and support staff to run them. If you are looking to drive more calls, you are going to need to establish a marketing budget. Review what you spent on marketing last year. Was it effective? Hopefully you had tools in place to track the results.
By increasing your spending on effective marketing, you should be able to predict an increase in service calls. How aggressive do you want to — or can you — afford to be? Are you willing to trade short-term profit for long-term growth? You’re the only one who can make that decision, but by creating your budget, you will have the foundation for your choices.
Track the numbers
As the calls increase, you’ll have to budget for hiring and training new employees. If you have a busier season, don’t wait till you are in it to try to hire. Looking at last year’s budget will help you establish a timeline. Track your results, and compare it to your budget. If you are hitting your numbers, pat yourself on the back. If not, analyze the numbers, see where you went wrong, and make the adjustments before it gets too far out of line.
Back to the future
Now look out at the future. Is it realistic to see 10% growth over the next five years? Are you aggressive enough to see 15%? What does the picture look like after 10 years? Taking this realistic approach to growth enables you to make the big decisions before the time comes. Would you want to renew a 5-yr lease when your budget is telling you that you’ll outgrow your facility in 18 months?
Don’t neglect to plan for an increase in office and management staff as you support more field employees. You need to account for an overhead value as management increases — whether it is a field supervisor or an operations manager. More and more of their time will not directly involve revenue-producing activities, but their performance will ease the burden on yourself and help steer the business to the growth you desire.
Share your budget with your whole staff. Let them in on the company vision — it affects them as much as it does you, so seek their input to help form it. Growth is exciting, so plan on it.
Murdy grew up in the electrical industry and holds a degree in electrical engineering. He has been in the residential electrical service industry for 30 years and has been a business owner for more than 25 years. He independently owns and operates the Mister Sparky electric franchise serving western Long Island, N.Y. He can be reached at [email protected].
