
This Business Building Tool Brought to you by *Grandy & Associates*		November 2009

A Message from Grandy & Associates

Don't just go to a convention this year. Make sure to get a good return on your investment!

By Tom Grandy

The holidays are upon us, and it’s been a tough year. You may be looking at your budget for the coming year and thinking to yourself, “Should I go to our convention this spring? If I go, should I take (my wife, my tech, my manger, etc.) with me?” The point of this article is not if you should attend your state or national convention ... that answer is yes. My concern is that you return from the convention with lots of great ideas on how to improve the profitability of your company.

Bill and Sue Lovelife really enjoy conventions You mention the word "convention" to them, and their minds jump into high gear. It's convention time again! Whoopee! They know it's a time to greet old friends, party a little (or perhaps a lot!), play a little golf, do some shopping and see a few sites. They enthusiastically sign up for the final banquet so they can find out who was elected "Contractor of the Year" and who next year's president will be.

Sound familiar?

It does to a lot of contractors. It’s just one big party that can be written off on your taxes, right? Now, there is nothing wrong with having a good time and seeing old friends, but when you are investing $1,000-$2,000 (at least), wouldn’t it be great to have something to show for it?

Approach this year's convention with a plan in mind.

This year why not try something different. Why not approach the convention with a desire to take something home with you that will help you to become more efficient, better organized or, at the very least, a little more profitable. If you were going to spend several thousand dollars on training your employees or purchasing equipment, you would expect a return on your investment, right? Let’s approach this year’s convention with some specific objectives to make your business more profitable. Promise yourself this year that you will return home having accomplished the following specific objectives.

Objective number #1: Return home with at least one new business idea.

Not three ideas; not seven ideas; and not 15 new business ideas. Just one. Why one? If you come home with lots of things to do, what happens? Nothing. That’s right, nothing. You may try to do so many things that not one of them gets done. Attend the seminars and listen, take notes, and ask questions. Make long lists of some great business-building ideas, but on that long ride home take a really good look at your list and narrow it down to one thing you will actually put into practice when you get back. Be able to look back six months later and say to yourself, “My business is different because I put this idea, or that system, in place that I learned about at the convention.” One good way to be sure it happens is to make yourself accountable to someone for your plan. When you have decided what to do, tell someone and ask them to ask you about it every once in a while.

Objective #2: Pick up at least one new marketing idea.

Marketing ideas are really neat because they work. As a matter of fact, nearly all marketing ideas bear fruit ... if they are carried out, that is. The good news is that most of us can name at least five things we could do in our business, from a marketing standpoint, that would increase our sales. The bad news is we never get around to doing them! We get busy, it costs too much, or we don’t have enough time. These are just some of the excuses that come up, and marketing never gets done. This year pick up a new idea and do it. As sales increase, you can then look back and say to yourself, “My business grew because I attended last year's convention and put my new marketing idea to use.”

Objective #3: Take the time to learn about new products

Our third objective involves attending the trade show. Have you ever asked yourself what the real purpose of the trade show is? Some think it’s simply a way to fill several hours of the convention schedule. Others believe the trade show is a way to get manufacturers and distributors to offset part of the conventions cost by underwriting the convention with the booth rentals and sponsoring the parties we all love to attend. Wives sometimes see it as a way to keep the kids busy for several hours going from booth to booth picking up freebies. Contractors themselves often view the trade show as a necessary evil to attend because they are expected to show up.

These are all partly true.

Do you know why the trade show was really placed in the overall program by the convention designer? It was put there to introduce you, the contractor, to all the new products that have been designed for your industry over the past year. That’s right; the show is designed for you! Take advantage of it. Do you remember what your most valuable asset is? It’s your current customer base. These are the people who like us. They continue to use us and they want to purchase our “new” products as well. Spend quality time going through the trade show this year with a very specific idea in mind. Look for that special “new” item you can begin to carry that your particular customer base may be interested in purchasing.

How often would you buy from the same store if they always carried the same things? Sooner or later you would go elsewhere, even though you like store, the employees and consistent customer service. Bottom line - you are bored. Your current customers are the same way. They want to replace old with the latest-and-greatest thing on the market. They want new, unique, high-efficiency equipment. If you don’t offer it to them, they will shop somewhere else until they find it. Look for that “new” item at the trade show and then introduce it to your current customer base with a direct mail piece with a coupon attached. (Oops, that was a marketing idea wasn’t it! )

Attend the trade show this year and take that new product literature home with you. It might just increase your bottom line a bit!

Objective #4: Make a new contact.

Our fourth objective is a bit more fun. Meet someone new. Old friends are great, and we want to keep those relationships. However, between sessions at the trade show, in the halls, and during breakfast or seminar breaks, look for that person who seems to be all alone and introduce yourself. Ask about their company, how they got started, what they offer their customers and how. Don’t talk -- just listen! The best conversationalist I ever knew was one who listened and asked questions. Lots of people are shy and feel uneasy in crowds. Make them feel welcome. Let them know you care because you just never know; that new relationship might just be the source of your new business or marketing idea!

Objective #5: Have fun.

Last but not least, relax. You have worked hard all year. Many spend 50-70 hours a week or more running their businesses. Take some time to smell the flowers. On a more personal note, if you’re not sure you can afford to take your wife to a convention, let me help you make that decision - take her. You can't afford not to. Who is it that keeps the office running for you and encourages you when business is down? If she doesn’t work at your office, chances are she is working somewhere; she needs a break too! When was the last time you and your spouse or significant other sat over a cup of coffee and really talked? You could even take a couple extra days on one end or the other and do something really unique. You won’t regret the time together.

So there we have it, new objectives for this year’s convention. Look for those new business and marketing ideas and put them into practice when you get home. Attend the trade show and find that “new” product you are going to offer your valuable current customers when you get back. Meet someone new and if possible, continue the relationship by mail, phone, fax or e-mail and lastly - relax and refocus on what is really important in your life. Enjoy this year's convention and allow it to become the catalyst in making some positive changes in your business and perhaps your life!

A great first step to learn how to run a profitable business is to attend our three-day “Basic Business Boot Camp.” To review dates and locations check out our website at www.GrandyAssociates.com

Thanks,

Tom Grandy

Grandy & Associates

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Finding Freedom in Today's Business World

By: Bill Kinnard

I just returned form another Basic Business Boot Camp where the attendees and I talked at length about surviving in today’s business world, which is very different today than it was in recent memory. As our discussion spanned the three days of class, I heard that same sentiment, which is the same one I hear in every Boot Camp. You're likely familiar with it. You sit down with your accountant, and he or she tells you that you’ve had a pretty good year. As a result, you owe "X" in taxes this year. You're sure you will end up with cardiac arrest (owners of contracting business experience this all the time). When the dizziness finally stops, you’re still thinking, “If I made that much money last year, where is it?”

From here, you go back to the office and look at the books again, think about your crew again, and resign yourself to the fact that you'll just have to do more work. Somehow you will get this tax bill paid and get over this hump. Next year will be better…or will it?

Can You Ever Really Find Freedom?
If you are always caught up in the rat race of trying to keep sales flowing, keep the crews busy just so you can pay those suppliers who you know will be calling soon, chances are you feel like you’re always in a prison of sorts. You’re stuck running as fast as you can on this wheel, and there is no way to get off.

There is good news!

There is a way off the wheel, and you can you can find financial freedom. The problem with the scenario I outlined above is not the tax bill that’s due. The problem is simply an overall profitability problem in your business.

I know this may seem like I’m stating the obvious, but this is the issue you need to deal with. I also know that there may be some confusion, as your accountant just told you that you had a great year and made a nice profit. In order to find true financial freedom in your company, you need to remember there are significant differences in how your accountant looks at your business and how you need to look your business.

Your accountant is a very important part of your business and, along with your banker and attorney, your relationship with him/her is one of the most important relationships you can develop. This being said, the profit and loss statement you receive from your accountant is not one of the documents that you can use to run your company on a day to day basis.

Sure, your P&L will be used to determine what you need to pay in taxes and in a number of other areas in your company but the fact that your P&L showed that you had a great year last year and you have no money to show for it - or to pay your tax bill - should be proof enough of this fact. Understanding the reasons why is one of the first steps to finding financial freedom. Let’s review them quickly.

Equipment Replacement Costs
Every company has equipment that needs to be replaced. It doesn’t matter if you are in heating and cooling with trucks and job trailers or in photography with cameras and lighting equipment. Even if you take care of your equipment and properly maintain it, someday it will still need to be replaced. The cost of replacing your equipment is a very real cost of running your company. In fact, it is most often the second greatest expense you have.

Your P&L will address equipment replacement costs with depreciation. You take a deduction for the expense of buying new equipment. Depreciation however, deals with what you paid for that piece of equipment some time ago. It does nothing for you when it comes time to replace it next time. Have you ever taken your P&L down to your local car dealership, showed them your depreciation, and asked,“So what’ll you give me for it?” Of course not! When you replace your equipment, you need to have the cash available to replace it.

Equipment replacement costs deal with what it will cost you to replace your equipment a few years from now, not what you paid for the last one. The goal is to have the cash on hand to purchase your equipment outright as opposed to having to secure a loan to purchase it. Taking a loan will only cost you more money. If you want true financial freedom, work toward becoming debt-free. As we have all experienced over the last year, it’s not if the economy slows down, but when!

Loan Payments
If you have followed the conventional wisdom in business over the last several decades, you simply took out loans to purchase major pieces of equipment or to keep your business afloat. During the Boot Camps, I hear several different thoughts regarding loans. Here are just a couple:

• "I need to purchase equipment using loans, as this allows me to get a tax deduction and I couldn’t survive if I lost that!" – This is proof that the credit industry has done a fantastic job on selling us on the so called benefits of using credit to run our business. Let’s think about this for a minute. If you buy a truck on a loan, you will pay interest on the money borrowed. While it is true that you can deduct this interest from your taxes, the math just doesn’t work. If you pay $3000 in interest and you’re in a 30% tax bracket, your benefit will be $1000. You are paying $3000 in order to save $1000. If you have the cash to pay up front, you don’t get the deduction but you also save the $3000 in interest expense.

• "If I don’t get a loan, I can’t keep my business afloat." – If you find yourself in this position, you’re treating the symptom, not the problem. If you don’t have the money to keep your business afloat, your pricing is not correct. You need to take a serious look at how you are pricing your products and services. Your pricing needs to include all the real costs of running your business including any and all loan payments (keep reading this section to find the hole that is usually missed here), your salary, and your desired profit you. If your current pricing is not adequately providing for all of these things, you need to change it today.

If you are paying on any loans, do you know how this is reported on your P&L? Let’s say you have a $500 loan payment, of which $400 is principle and the remaining $100 is interest. What shows up on your P&L? Take a close look and you’ll find that only the $100 in interest is reported. What happens to the $400 that went toward the principle? Wasn’t it real? Why isn’t this taken into account? If you know where to look, it does show up ... but not on the P&L. If you do some math, you will find that since it’s reducing your liabilities, it shows up in your balance sheet, not your P&L. The fact that the money came out of your checkbook was, however, very real and is a cash-flow expense to the company. This cash-flow expense needs to be taken into account when you are looking at your profitability.

These are just a couple of the major issues to deal with when looking at finding freedom in today’s world. You also need to look at the level of service you are providing to your customers, what you are doing that makes you stand out from your competitors (remember there are lots of places your customers can go to get the same products), the systems you have in place and making sure every employee in your company follows them, establishing goals and metrics for every employee in your company and measuring their performance against those metrics, and more.

It all starts with operating your company profitably. As I mentioned earlier, it’s not if things slow down, but when they slow down. Sure, things appear to be picking up a bit but the recovery will be long and slow. If you are looking for freedom in today’s word, you need to start by looking at your pricing and your true profitability from a cash flow perspective, not from an accounting perspective. If your P&L shows a 3% net profit before taxes, by the time you factor in loans and equipment replacement costs, you will find that your true profitability could be several percentage points below what your P&L is showing you.

If you are looking for help in understanding how to run your company profitably, consider attending the Basic Business Boot Camp . You will determine how to properly price your products and services, create budgets and determine your true profitability all from a cash flow perspective. The Basic Business Boot Camp is held at locations all across the country and there is a location that is convenient for you. Anyone can make money when things are going well. It takes a true understanding of your business from a cash flow perspective to in order to remain profitable in the tough economic times. For more information, visit the Boot Camp information page or give us a call at 800-432-7963.

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Completing the service call on the first visit is critical

By Tom Grandy

We have been reviewing several of the 24 Key Performance Indicators (KPIs) for your service technicians. Do you track of what percentage of the time your techs complete the service call the first time? If not, you should.

This month’s KPI is another key number to track. The term in the below report is First Time Completion Percentage and it can be found under the heading of Labor Leverage. Think about what happens when the service call is not completed on the initial call. What happens? First of all, you have unhappy customers. Their expectation was to have the job completed that day, and now they must reschedule another visit, take off of work again, and end up thinking, “I wonder if the job will actually be completed this time."

Not only do you have unhappy customers, the company also loses. Now the tech has to return a second time, which eats up valuable time for travel and work time; the two hours he or she spent going back a second time could have been spent doing profitable work.

From the standpoint of the company, you want to know why the job was not completed the first time. If you were a ProfitMaxx user, you would know the answer to that question. If the tech did not complete the call the first time, he or she would need to mark one of the following reasons:

Lack of Parts – This immediately tells the owner or service manager the techs truck is not stocked properly and/or it is so messy they can’t find the part.
Lack of Technical Expertise – If the tech continues to check this one, we instantly know that specific tech (not all the techs) needs additional training.
Lack of Man Power – This is telling us we simply did not plan well. The job should have had two techs on the job in order to complete it on time.
Customer No Show – This is not the tech’s fault, this is a dispatching problem in most cases. If this is checked often a review of procedures might me necessary to be sure the customer is properly contacted before the tech is dispatched.

Again, we are going to glance at the KPI Report (from a real ProfitMaxx user) below and see how our techs are doing:

You will notice Rob has the highest completion ratio but even he is only hitting a completion ratio of 86.79% which is nearly 10 points below the goal. With numbers like those, it is time to look at the specific reasons the jobs are not being competed. Once we know the problem, then we can work on it. When we fix the problem, productivity goes up and the service departments profitability increases as well!

It’s amazing what happens when you set specific goals (KPIs) for your techs then measure their performance against them. Things that used to be a problem suddenly get taken care of! Now, if you really want to watch productivity and profitability skyrocket, tie performance into a bonus program like ProfitMaxx does!

Attend a FREE Webinar to learn more about ProfitMaxx

If you would like more information on the ProfitMaxx software give us a call at 1-800-432-7963 and/or sign up to attend a FREE 45-minute webinar. If you want to check out ProfitMaxx on your own then simply visit the ProfitMaxx section of our website where you can learn more about ProfitMaxx and how it can benefit your company. All you need is access to the internet and a phone. Attending the live webinars allows you to ask questions and to discuss your company issues with Tom or Bill.

Participate in a live webinar or watch a brief video overview now.

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Don't Go Back: The Dominant Communication Style

By Bill Kinnard

Last month, we talked about the fact that many contractors used the slowdown in the economy as an excuse to trim back some of the dead wood in the company. The less-than-stellar employees who created a drain on the creative energy and productivity of your team were let go. Everybody can adapt to be something they are not. When that next potential candidate walks in your door for an interview, chances are they will adapt to be the person they think you want them to be. It is imperative that you understand the four communication styles and how candidates will interact with your current employees and your customers. Remember, everyone has a combination of all four styles, but one or possibly two will be dominant. These dominant traits will dictate how the person will interact with others.

As a review, the four styles are:

D – Dominance – How you deal with problems and challenges

I – Influencer – How you deal with people and contacts

S – Steadiness - How you deal with pace and consistency

C – Compliance – How you deal with rules and procedures set by others

It is important to remember that one style is not better than another. There is no good or bad – there just is. It’s also difficult for some styles to understand why others don’t think the same way they do. For example, a person who is a high D may not understand why everyone else in the world doesn’t see things the way they do. Everyone should view the world the way they do; if they don’t, they are missing something. Remember, there is no right or wrong, there just is.

This month, we’ll take a closer look at the Dominant communication style. Here are some of the traits of the high D.

The Need to Lead

The Dominant communication style tends to be a leader within the group. Actually, let me rephrase that – they will think they are the leader. They have an inherent need to direct. They will be very outgoing or extraverted and will usually give their opinion even if you don’t ask for it. The high D loves action. If a group, meeting or conversation is moving along a little slow, they will want to move it along. They love a challenge and look for a mountain to climb. If there isn’t a challenge there, they’ll create one.

Desire to Win

Living is winning to a high D. They are driven to win. The high D’s mantra is Vince Lombardi’s famous quote: “Winning isn’t everything, it’s the only thing.” Everything is a challenge to be conquered, and they will strive to conquer!

Direct Communication

The high D will be very direct. You will know what they are thinking. You won’t get flower responses or a high degree of feeling. These people are fact-oriented and think there really is no need for feelings. This being the case, they can be blunt or even confrontational. Some of their discussions may even seem confrontational but, to them, it’s just business. When it’s over, they seldom will hold a grudge.

There is a lot of value in having a high D on your team. A well-blended team needs to have a mixture of all four styles. Too many of one style is not a good thing and will only end in disharmony. That is why some companies get into trouble with their typical hiring practices. The owner simply hires people just like themselves and, as a result, ends up with a team that will not function as smoothly as it should. Here are some of the traits a high D brings to the table:

Bottom-Line Organizer

The High D is a results-oriented person. They will cut through the red tape and want to eliminate anything that does not add value to the end result.

Self Starter

The high D always wants to be doing something, so put a challenge in front of them and they will get started with little prompting.

Places a High Value on Time

High Ds are driven for efficiency. As stated, they will want to eliminate anything they see as needless. For the technician, this may mean presenting other options and add-ons to the customer or not explaining everything they did after a service call. Remember, communication is not a high point of this person. The final conversation with the customer will likely be something like “OK, all done. It’s fixed,” as opposed to explaining what was done and building value in the work that was completed.

Challenges the Status Quo

"That’s the way we have always done it," is seldom something a high D will say. They would prefer to re-invent the rules with one thing in mind – results. They’re not afraid to rock the boat in their quest to find more efficient ways of doing things. Watch this one. If they don’t understand the big picture, they may not see the need for doing certain things. It’s important to let them know how what they do affects others in the company.

Communication

When communicating with the high D, you will need to be clear, specific and to the point. Stick to business and present you facts logically and efficiently. Don’t leave loopholes or cloudy issues. Be prepared with all requirements, objectives and support material. They are not a detail person, so be clear. But, don’t ramble or waste their time. Since they are not a "feelings" person, don’t try to build personal relationships or chit chat with them; they will get frustrated and stop listening. Here a couple more tips on managing the high D style:

Clearly explain what you expect for end results.
Define the rules.
Confront face-to-face with all disagreements.
Provide Challenging assignments.
Train them on understanding and being easier on other people.
Plan advancement and a career path.

When you look at your customer base and employees, can you identify those that are high Ds? Are you a high D? Once you understand how to deal with a high D style, you will find it much easier to get things done and provide happier, more satisfied customers.

Next month, we’ll take a look at the high I – Influencer communication style. In the meantime, spend some time getting to know how the high D person thinks. The success of your company depends on it.

If you want more information regarding behavioral communication styles, and the assessments that you can use to determine where your current employees and staff fall, contact me at 877-202-8891 or visit the Hiring Solutions Informational Home for more details.

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Navigating Through Times of Change

By: Mike Langenhorst

Short Description of the Presentation:

Change is inevitable. A good captain always keeps ahead of his vessel, continually gathering and evaluating information from every available source to anticipate dangerous situations well before they arise.

Key Points:

One of the best places to learn is to learn from those that have already “walked the walk.” Michael has walked that walk and briefly shares the core of how to handle change within an organization. Following his presentation, Bill Kinnard interviews Michael to pinpoint specific ways organizational change should be handled.

Organizational Leadership is a four-part process:

1. Understand your employees and how DISC profiles can help.

2. Clarify the mission (who we are) and value system (how we do things) and the vision (live core values)

3. Understand the process of change and how we react to it

Realize that change is necessary.
Know what to do when change begins to occur.
Understand the breakthrough phase.
Competence – Change becomes standard procedure.

4. Understand your specific market.

Interview questions:

1. Can you change an individual who does not seem to fit based on the DISC assessment?

2. How does vision impact the organization and the coming change?

3. How do you instill the vision within the company?

4. What do you mean by the statement: “The problem is never the problem?”

5. What are some specifics of how to realistically introduce change within a company?

6. Why is celebrating success important as change takes place?

7. What happens when an employee really cannot handle change?

8. How do you deal with massive change within the industry?

9. How important is an advisory board of individuals who are “outside” your industry?

The Service Contractors Business Presentation of the month features a new trade focused audio presentation every month. These programs are designed to provide the trades contractor relevant information that can help their business immediately. Get more information on this program or sign up for a monthly subscription today!

The Small Business University features a new trade focused audio presentation every month. These programs are designed to provide the trades contractor relevant information that can help their business immediately. Get more information on this program or sign up for a monthly subscription today!