Lori Stuckert

Quality Work Over Time Brings in New Customers

By Tom Grandy, Founder

Our family has been using a local auto repair shop for well over 35 years.  Why?  They consistently do outstanding work at reasonable prices.  They actually “repair” things when able not just replace parts.  However, their customer service far exceeds just doing quality work.  Over the years, they have gone over and above board to help us.  As an example, one of my daughters was in college when her car broke down.  The owner actually drove to another city over 3 hours away to fix her car.  As you might image, they are always busy.  In the old days I could call and get in the next day or two.  Not anymore.  Today the wait is often a week or more.

Recently my daughter and family moved from the mission field in Cape Town, South Africa to a mission in Colorado working with prison wardens.  They came by our home for two weeks on their way to the new assignment.  Having left nearly everything in Cape Town they were in need of transportation here in the United States.  Graciously, one of their supporters in Florida gave them a 2006 Honda van.  It was in need of a few repairs but was gratefully accepted.  When they arrived in Owensboro, guess who we called?  Right, our faithful repair shop.  Their stay was going to be short so I called our friendly auto repair shop.  They joyfully rearranged their schedule to get the repairs done in a timely manner.

My daughter and family also needed of a place to stay when they arrived in Colorado in order to have some time to look for a house.  Again, another couple my daughter did not know, graciously offered for them to stay in a home they had just bought free of charge for as long as they needed it.  Is God good or what!  The only minor problem was that it was 45 minutes from where they would be working.  The place they will be working was already an hour from any large city.  Their new home was going to require a four-wheel truck to access it.  While they were with us, they looked at several trucks and our faithful auto repair shop “made time” to check each truck out.  One looked perfect.  However, the tech at the auto repair shop heard a ticking sound that most others had not noticed.  His expertise indicated that the engine might have an internal oil leak.  Without their willingness to check it out, coupled with their technical expertise, our children would have invested in a truck that likely would not have served them well for long.

The point is simple to understand.  Providing quality work over long periods of time is the foundation stone for building a long-term successful business. 

Are you having trouble convincing your techs and/or employees that you “need” to charge what you are changing?  If so, take advantage of this month’s first website special.  The streaming version our Why Do We Need to Charge So Much? is normally $114.95 but this month it’s only $99.95.  This program will walk employees through the process of understanding why the company needs to charge what it is charging.  Order today!

If you prefer a shorter, online version, of Why Do We Need To Charge So Much? check out our online version normally at $39.95 but this month is only $29.95.  Order today!

The Tech Shortage is Really a Pricing Problem

By Tom Grandy, Founder

This is an updated version of an article that was published back in 2007.  Guess what?  Techs are still in short supply but it’s not a tech shortage problem, it’s a pricing issue. 

Have you talked to other contractors lately or perhaps attended a local or national trade association/conference?  No, I don’t live in the dark ages, I know there is a pandemic going on, therefore most conferences have either gone virtual or have been cancelled.  Humor me anyway and I will get to the point.  If you have been in any conference where contractors meet, the conversation soon comes around to techs. Most contractors are saying the same thing.  “We have more than enough work but we can’t find qualified techs.”  Guess what? It’s not just a problem in the plumbing, HVAC and electrical industry, it’s a problem within the entire trades industry! 

Now let’s switch our thought pattern a bit.  Let’s assume you paid your techs a base wage of $30-35/hour, paid all their medical, dental and vision insurance plus a 401K plan and a year-end bonus.  Then throw in another week’s vacation and let them earn education and tool credits based on billed hours.  Do you think you would have any problem finding a qualified tech?  If you were honest, you would say “No, we would have no problem finding techs if we offered that kind of a benefit package.”  As a matter of fact, if the entire industry offered those kinds of benefits, something else wonderful would begin to happen.  High school grads would be looking at our industry as a very viable career path.  At $30/hour that equates to $62,400 a year with GREAT benefits.  Who needs college! 

What kind of benefits does the average contractor offer his or her tech?  Usually the hourly rate is $18.00 – $25.00/hour and the company pays a portion of the medical benefits.  Vacations? Usually one week, and if they have been there a long time, perhaps two with a few holidays thrown in.  Are you noticing a difference in your company and the one described above?

Ok, I can hear you now.  “Great idea, Tom, but what contractor can afford to pay $30-$35.00/hour with all those benefits.”  Well let me ask you this.  Have you had an internet, copier or computer tech work on your equipment lately?  If you have, did you look at the bill?  The hourly rate was likely somewhere between $100 and $150/hour or more – and you paid it!  When AT&T, IBM and Microsoft set rates for their techs, they don’t just pick the rate out of the air.  They charge those rates because they have run the numbers and found out that they have to charge that much to cover their costs and generate a profit.  Guess what, so do you! 

At one of my full day labor pricing seminars recently, I did an exercise with the contractors – just for fun.  I asked each contractor to list all of the benefits they would like to offer their techs, just so we could see how much it would increase their hourly rate. The results were amazing.   To keep things simple, let’s do our little exercise, but let’s limit it to the service techs.  The principles however, are the same for all the departments. 

Let’s get started.  We will begin by increasing the hourly rate we pay the tech by $8.00 an hour.  That should get most of you in the $25.00 to $35.00 per hour range.  In order to put some numbers together, let’s further assume our hourly rate is now $30.00 per hour including the company matching taxes.  Now, let’s give the techs an additional week’s vacation at a cost of $1,200 a year ($30/hour x 40 hours).  How about holidays?  Let’s give them four (4) more holidays at a cost of $960/year (4 days x 8 hours/day x $30/hour).  Now for the fun part – insurance.  Let’s pay all the medical insurance for a family of four at a cost of $400 per month or $4,800 per year.  Dental and vision insurance will run another $200 per month or $2,400 for the year.  How about a 401K plan for retirement?  Let’s assume the company contributes $1,500 a year to the plan.  It’s Christmas time!  How about a year-end cash bonus of say $750?  Is this fun or what?  I can just see the techs coming from across town, from another city or perhaps even from across the country.  They are lining up at your door, waiting for the company to have an opening so they can be hired.  No shortage of techs here!

What else do techs like?  Well, everyone loves tools, right?  How about building in $1.00 per billable hour for an “earned” tool allowance. Let’s also build in $.50 an hour for education so the two will add $1.50 per billable hour to our rate.

So much for the benefits.  Now the question is:  How are the extra costs going to affect the hourly rate we charge the customer?  Let’s find out.  The first question is how many hours we have available to charge the customer.  The normal non-billable time for service techs is 40%-55%. To keep it simple, let’s assume we have 50% non-billable time.  That means of the 2,080 hours the company pays for during the year, it can actually bill out 1,040 hours, or half the time.   So let’s total the additional costs for the above benefits:

Raise in base hourly rate ($8/hr x 2,080 hr/year) —- $  16,640

Additional week of vacation ———————————    1,200

Four more holidays ——————————————         960

Medical insurance ——————————————-      4,800

Dental and vision ——————————————–      2,400                                                     401K plan ——————————————————   1,500

Year-end bonus ———————————————-         750

                                                              Total ———————  $  28,250

If we take the additional $28,250 and divide it by the 1,040 hours, we can bill the customer, it means the company will have to increase its hourly rate to the customer by $27.16/hour.  We are not quite through however since we need to add the $1.50 per billable hour for tool allowance and education which now makes our rate $28.66.  The range for the average service tech on a time and material basis is $60-$80/hour.  If we assume the current rate is $70.00/hour and then add our $28.32/hour for the extra benefits, the company will need to charge $98.32/hour.  “But Tom, my customers will not pay $98.32 per hour for service work.”  You may be right. So, what is your current alternative?  Right again. Switch to flat rate pricing.  The average internal hourly rate on flat rate pricing is $125-$175/hour.  If we switch to flat rate pricing, is our $98.32/hour rate a problem – NO!  

Let’s face it.  If we are going to solve the tech shortage issue in our industry, we have to offer the pay and benefits that will attract the best talent in the industry.  Our country’s economic system is based on the law of supply and demand. If the computer, internet and copier industries are going to offer the best pay and benefits, guess who is going to get the techs that are available? If the young people of the future are going to consider a long-term career in our industry, the pay and benefits are going to have to be there to attract them.  Bottom line-Do the math for your company and then see what changes you are going to have to make.  The question then comes up, “But Tom, if we all do this, then there will still be a tech shortage.”  You’re right, but we all know by experience that everyone will not run the numbers and few will increase their rates where they need to be.  Those that make the changes will attract the top techs and will go on to be successful and profitable companies. 

Are you having trouble convincing your techs and/or employees that you “need” to charge what you are changing?  If so, take advantage of this month’s first website special.  The streaming version our Why Do We Need to Charge So Much?  is normally $114.95 but this month it’s only $99.95.  This program will walk employees through the process of understanding why the company needs to charge what it is charging.  Order today!

If you prefer a shorter online version, of Why Do We Need To Charge So Much? check out our online version where the normal investment for this module is $39.95 but this month is $29.95.  Order today!

What Motivates You to Go the Extra Mile?

by Tom Grandy, Founder

Years ago, I was the general manager of a service company.  Part of my job was to create incentive programs to help maximize the efficiency of our technicians.  There were lots of options but I really didn’t know what would motivate our techs because they were all different.

Guess what?  Your supervisor is in the same position!  He or she, doesn’t really know what motives you either.  So, what does motivate you as a tech?  Is it more money in your paycheck?  Perhaps you value more time off or have the option of not being on call as often would be an incentive.  How about a great meal at a local restaurant or tickets to a ballgame?

Each person if different.  My suggestion is to literally tell your supervisor what would motivate you to hit a goal that has been set.  There is nothing wrong with creating different reward systems for different techs.  Remember, what is the objective of incentives?  It is to increase productivity.  Who cares how unique or personalized the incentive is to reach the goal?  The objective is to reach the goal and if a dinner at a nice restaurant would inspire you, then go for it!

What’s your long-term career goal?  If that goal involves management, at any level, now is the time to begin preparing or it.  Take advantage of our two Website Specials this month.  As we all know, in class training has come to a screeching halt over the past year.  The good news is that we have a huge variety of online courses available.  <u>Check out the list and take advantage of this month’s special</u>.  <strong>Normally</strong> each module is <strong>$39.95 each but this month they are only $29.95</strong>.  Why not purchase several while the price is right?  <a href=”https://www.grandyassociates.com/online-training/”><strong>Order today</strong>.</a>

Our second offering this month is our well-known <strong><em><u>Service Managers’ University</u></em></strong> full day training.  This program has been turned into a self-paced online program.  <strong>The normal investment is $299.95</strong>.  However, <strong>this month it’s only $239.95</strong>.  <a href=”https://www.grandyassociates.com/online-training/service-managers-university-3/”><strong><u>Order today</u></strong> </a>and work at your own pace.

Business Tips for New or Relatively New Businesses – PART 1 of 3

By Tom Grandy, Founder

This three-part series is going to focus on several “tips” for new company owners.  These are things to think about as your company begins, as well as considerations when setting those first, all important hourly rates.  Let’s get started.
<ul>
<li><strong>Positioning Yourself within the Labor Pricing Model</strong> – All new company owners are going to begin by working in the field. Likewise, nearly all company owners will eventually make the transition from the field into the office.  You may recall that when that transition takes place the company typically needs to increase its hourly rate by $8.00 to $12.00/hour just to make the same profit.  Think about this.  When setting your initial hourly rates consider building yourself in as field labor <u>and</u>, at the same time, putting yourself in overhead as the owner.  The net result will be that your salary will be built into the pricing model twice.  You will be in the field and in the office.  Why would you want to do that?</li>
<li></li>
<li><strong>Cash flow</strong> – The “extra” salary will build up the company’s cash reserves. Do you remember previous discussions on cash flow?  We talked about the need to fund inventory, receivables, paying suppliers on time (when customers don’t pay on time), funding growth and a whole lot more.  The “extra” cash will help fund these things during the initial critical years.</li>
<li></li>
<li><strong>Transition from the field to the office</strong> – When the owner is already built into the model as an overhead cost (while also being in the field) there will be no need to dramatically increase the companies hourly rate when the transition is made. The additional dollars will already be accounted for.</li>
<li></li>
<li><strong>Chart of Accounts</strong> – Setting up a formal chart of accounts, right from the beginning, will prove invaluable as time goes on. Very few companies track their gross sales, by department or by the type of service they offer.  However, Cost of Goods is the big one.  Companies that do track sales by department, seldom break out material purchases by department.  Having worked with companies one-on-one since 1987 I can honestly say less than a handful have tracked materials purchases by department.  Most companies start out doing only one thing.  However, as we discussed before, most end up providing service, new construction, commercial work, retail or any number of other services.  At some point in the company’s life they will want to begin departmentalizing the company.  It’s tough going back to break things out.  My suggestion: track sales and costs of sales by department to begin with.  Years from now, you will call to tell me how glad you are to have done that from the beginning!</li>
<li></li>
</ul>
<strong>QuickBooks</strong> – Roughly 80-85% of all trade’s companies use QuickBooks. It’s a great program and I use it myself. Having said that, spend a few extra dollars and hire a QuickBooks representative to help you initially set up your chart of accounts.  Good record keeping from the beginning pays off down the road.
<ul>
<li><strong>Don’t Let Your CPA/Accountant Enter the Companies Monthly Revenue and Expenses</strong> – It seems simple and easy to have an outside person enter data into QuickBooks. However, they literally don’t know where costs belong.  Have someone inside the office enter the data.  If there is a question where an expense goes, the answer is a few steps away.  The real benefit is when the owner/staff wants to review the P/L Statement at the end of the month.  The “internal” person will be able to instantly click a couple buttons in order to view any detail desired.</li>
<li></li>
<li><strong>Review Financials with CPA monthly!</strong> – Finding a really good CPA is both difficult and vitally important. The trades industry “assumes” since CPA’s work with numbers they understand their business.  That is a false assumption!  If you are able to find a CPA that understands your business as well as the accounting side, hire them.  No matter what they charge, they will save you money.</li>
</ul>
With that said, be sure to review your financials with your CPA by the 10<sup>th</sup> of  each following month.  If the CPA isn’t asking you questions about your business at each meeting…find another CPA!
<ul>
<li><strong>Recalculate Hourly Rates At Least Twice A Year and/or Whenever A Significant Cost of Doing Business Occurs</strong> – Let’s face it, the cost of doing business goes up month after month. Any increase in the cost of doing business is going to <em>necessitate</em> a change in pricing to the customer.  Review the company’s cost of doing business at least twice a year and adjust pricing.  However, if any significant increases in the cost of doing business occurs during the year, the company best adjust their hourly rates.  Remember, any increase in the cost of doing business will result in one of two things happening:  <em><strong>Option 1</strong></em> is to pass the additional cost on to the customer in the form of an increased hourly rate.  <em><strong>Option 2</strong></em> is to do nothing.  In that case, the extra costs will be absorbed by the company, therefore lowering the company’s net profit.</li>
<li></li>
</ul>
Ok, this should provide a few things to think about over the next month or so.  My suggestion would be to pick at least one of the above areas to work on diligently.  Next month, in Part 2 of this article, we will provide a bit more food for thought.

Do you want to grow a little be more…in the comfort of your home or office?  If so, take advantage of our two Website Specials this month.  As we all know, in class training has come to a screeching halt over the past year.  The good news is that Grandy &amp; Associates has a huge variety of online courses available.  <u>Check out the list and take advantage of this month’s special</u>.  <strong>Normally</strong> each module is <strong>$39.95 each but this only they are only $29.95</strong>.  Why not purchase several while the price is right!  <b><u><a href=”https://www.grandyassociates.com/online-training/”>Order today</a>.</u></b>

Our second offering this month is our well-known<strong> <em><u>Service Managers’ University</u></em></strong> full day training.  This program has been turned into a self-paced online program.  The <strong>normal investment is $299.95</strong>.  However, <strong>this month it’s only $239.95</strong>.  <a href=”https://www.grandyassociates.com/online-training/service-managers-university-3/”><strong><u>Order today</u></strong> </a>and work at your own pace.

Being A Servant Leader Doesn’t Mean Being Subservient

By Dave Ramsey

What do successful companies like Southwest Airlines and Chick-fil-A have in common? The answer is servant leadership. And based on the unprecedented growth and stellar reputations of both over the years, the approach has paid off big time.

The benefits of servant leadership go beyond growth, higher profits, and great reputations. These benefits include a rock-solid company culture, lower turnover, and extraordinary performance at all levels. When it comes to culture, trust is a defining part of servant leadership and an end result. That’s a great thing, because an organization with high levels of trust among team members and leadership can’t help but strengthen the culture and increase efficiency, too.

Servant leadership also creates team members that are more engaged, purpose-driven, —and less likely to leave. Lower turnover also saves time and money. An empowered team is a happy team, and happier team members are a source of increased performance. They are also more innovative, and more creative.

At this point, you may be wondering if servant leadership has any downsides at all. While the concept and practice of servant leadership is super effective, it’s only realistic to be on the lookout for possible pitfalls. After all, nothing’s perfect. Some things to beware of include:

Encouraging a sense of entitlement

Supporting and encouraging your team does not mean catering to indulgent requests or doling out special privileges. The last thing you want is to foster an entitlement mentality. Without exception, servant leaders model the type of behavior they expect from team members.

Developing compassion fatigue

A hallmark of servant leadership is caring deeply for your team, but not at the expense of your own well-being. Make sure you put healthy limits and boundaries in place.

Ignoring poor performers

A servant leader should do everything they reasonably can to put the needs of the team first, but that doesn’t mean excusing or overlooking underperforming employees. Ignoring poor performance discourages the rest of the team and kills morale.

Becoming a servant leader isn’t easy, but being a better leader and building a better team, starts with you!

Leadership and small business expert Dave Ramsey is CEO of Ramsey Solutions. He has authored numerous best-selling books, including EntreLeadership. The Dave Ramsey Show is heard by 16 million listeners each week on more than 600 radio stations and multiple digital platforms.

Was It A Mistake or A Choice?

By Tom Grandy, Founder

Think about your last couple of callbacks.  Why did they happen?  Were you rushing to get to the next call?  Did you take a shortcut, hoping it would work out?  Did you make a mistake or did you make a choice?  There is a big difference between the two. Mistakes happen when we simply do something unknowingly wrong.  Perhaps we lacked the training or expertise.  If so, that was a mistake.  However, if we choose to take a shortcut while performing a repair, hoping the customer won’t notice, that is a choice! 

Mistakes can be corrected by simply admitting it and correcting the situation.  However, choices are a lot more serious.  Each choice we make to do the wrong thing has consequences.  As Joyce Meyers says, “We have the freedom to chose but we don’t have the freedom to choose the consequences.”  What is done in the dark will be brought to the light, it’s simply a matter of time.  If we have been going the wrong direction on purpose, it takes more than admitting it.  It takes asking for forgiveness and then consistently going a new direction. 

Character takes a lifetime to build and only a couple instances to destroy it.  Keep in mind someone is always watching.  It may be your customer.  It might be your boss.  It might even be your children.  Honesty and integrity are sorely lacking in today’s world, however it doesn’t have to be that way.  We may not be able to control how others act but we have total power over our own decisions. 

Doing the right thing all the time may not seem to pay immediate dividends but long term it wins every time.     

Would you like to pick up a few more “tips” on how to be a successful person in business?  If so, check out our Profit University Audio Series.  Each month features a different business topic by a different national speaker.  Currently there are over 300 past presentations with a new one coming out each month.  This month’s Website Special is only $19.95/month instead of $24.95/month.  Cancel at any time!  Order today.

Having trouble explaining to your techs, and/or office staff, why you need to charge so much.  This short, straight forward, online presentation entitled Why Do We Need to Charge So Much? explains it all with realistic examples.  This month’s Website Special is only $29.95/month instead of the usual $39.95/monthOrder today

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Service Managers - Learning Path

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