A danger area for all contractors, especially in this recession with declining sales opportunities, is eliminating or laying off outside techs and installers without addressing the need to do the same with people on the “inside”.
Rule of Thumb: For every two techs or installers out there doing the work, there should be one inside (support) person. This is the best of staffing ratios, which is 2:1.
- Example: Ten techs (or installers) each billing
for their work for five inside people who don’t install or bill for their work.
Guess what! You count as inside staff unless you’re spending the majority of your time working in the field and making the company money by selling. Having others do the work is better, but still counts toward inside staff.
The problem comes with companies that once had a number of techs and installers out there making money and got used to having all the staffing positions filled on their organizational chart by someone other than themselves. It’s nice to have a personal secretary or a service manager or someone else doing the books besides you or your spouse. But, if the outside sales falls and outside staff is cut, you must take the steps to cut your inside overhead.
By the way, if you have a staffing ratio of 1.5: 1 you can still be a profitable company.
- Example: Nine techs (or installers) each billing for their work
for six inside people who don’t install or bill for their work.
- Example: Nine
techs (or installers) each billing for their work for nine inside people who
don’t install or bill for their work.
What can you do?
Start by tallying up who’s on the outside and who’s on the inside. Count yourself and any sales staff, warehouse people and such who don’t bill directly for the work they do (a.k.a. don’t install). Then, think about what job positions can be combined and, if necessary, done away with or sub contracted out until you get back to a profitable and sustainable staffing ratio again.
Ultimately, the goal is to get back to growing your marketing and sales opportunities and building your staff the right way with the right resources and in the right proportion.
Give Me 60 Minutes And I'll Show You The Secrets To Running A Profitable Plumbing, Heating, Air Conditioning, Carpentry, Electrical or any other Service Business... Even During A Recession!
Al Levi is a consultant and a contributing editor to PM magazine and blogs for many other BNP trade magazines. Al is presenting a free online video seminar called the “60 Minute Recession Solution” Online Video Seminar.For the first time ever, you’ll hear from him and just a few of the many contractors who have engaged the power of the Power Programs. They’re happy to share how this dynamic program worked for them and how it is still working for them especially in these tough economic times.
“This program has helped dozens of business owners I’ve worked with one to one,” says Al. “The Power! Plans have also helped. But now, thanks to new technology, I’ll be able to help many more contractors with my 12-Month Power Plan Coaching Program than ever before. This program will include the building of your own customizable Operating Power! manuals.”
These programs have been working for Al in his family business for years and in his clients’ businesses where now they are reaping the results. Click on the following link and learn more so you can see and hear for yourself: www.60MinuteRecessionSolution.com.
