Many plumbing businesses have lots of customers and plenty of cash flow but little to show in the way of profits. We are going to look at how to reduce your overhead in order to realize more money on your bottom line. Hidden costs are a problem in many businesses but they do not have to be. You can reduce plumbing business overhead by more effective tracking, outsourcing your bookkeeping to someone with a higher set of skills, and use of business intelligence tools.
It used to be that running a plumbing business was simple. You did good work, built a customer base, charged fair rates, and your customers rewarded you with loyalty for years. But, now the price of plumbing supplies has gone up. Your fuel costs, rent, costs like health care, and more take away from your bottom line. But, more damaging are the hidden costs due to business inefficiency. Every project takes all the money that you budgeted and more. Every task takes all of the time allotted for it and more. You need to be able to track what is going on in your business in order to maintain control and eliminate those hidden costs.
When you find yourself fixing small issues in your plumbing business again and again, you are probably fixing the wrong things. At Exigo Business Solutions we use the Fix This Next system to identify and handle basic business issues that constantly drain the profits and life out of your business. When you work with a Fix This Next coach like Exigo Business Solutions, you will get an objective view of just what your business needs. This is because your coach will have years or business experience as well as being a certified coach in the Fix This Next system. What will happen is that you will get out of the “survival trap” in which you have been running in circles fixing the wrong things.
With Fix This Next you will address the business hierarchy of needs starting with sales, profit, and then business organization and efficiency. The key insight of this approach to managing a business is that virtually all problems are rooted in the basic aspects of your business. When you fix something that is not basic, you are dealing with a result of the basic problem and not the root cause. With a Fix This Next coach at your side you will find and fix the basic problems.
The next step in the Fix This Next system is to make sure that things that you fix stay fixed. And, you want to do this efficiently. When sales and profit issues have been addresses, it is time to deal with the organization and efficiency of your business. We will help you set up simple to use and powerful business tracking systems that will let you make sure that problems that you have fixed stay that way.
The sorts of issues we will help you address include bidding jobs for the right price, assigning workers to the tasks at which they are the most skilled and profitable, and tracking lost time due to inefficient scheduling.
A big part of making a profit in your plumbing business has to do with taking a profit. This is where the Profit First system of budgeting, cash flow management, and tracking expenses is useful. A common issue in any business is that the owner views profit as a possibility or variable instead of making it a habit. This way to doing business starts with how you view your bookkeeping.
The generally accepted accounting practice way to do bookkeeping says that you take revenue, subtract expenses, and profit (or loss) are what are left. Unfortunately, this way of looking at things leaves profit up to chance. You may have lots of customers and lots of revenue but excessive overhead kills your profits.
Profit First turns this bookkeeping formula around. It says that revenue minus profit equals your expenses. There is nothing magic about this approach. It simply makes you take charge of your budgeting and cash flow. Because inefficiencies creep into any plumbing business, they tend to eat up your profits. By taking your profits off the top, you learn to control unnecessary overhead costs as you go.
In any business there are many ways to cut costs. The trick is knowing which things to cut that will not result in problems later on Here is where it helps to get the advice of experience. At Exigo Business Solutions we are not only the top accounting firm in the Kansas City area but professionals in regard to effective ways to reduce overhead and increase profits. If you would like help reducing your plumbing business overhead, increasing profits, and running a more efficient business, contact us today.
