One of the biggest challenges of a service business is managing your inventory. Now you might wonder what inventory, besides a few stationary supplies you may have, that need to be managed?

Well, unlike a manufacturing, retail or a distribution business, where you have physical inventory that needs to be stored, sold and then replenished, service businesses on the other hand have a single and very unique inventory -TIME!

 

3 people standing inside big clock

Time- It’s how you get paid!

Because as a service business, your product is the knowledge that you and your staff carry around in your head. Putting this knowledge or expertise to work is how you generate your revenue and that’s usually in the form of hours worked.

It can be argued that service technicians like appliance or auto repair have inventory, but for the most part you hire them for their knowledge and they in turn they charge you for the time it takes to fix the problem. Therefore, the parts although important, are secondary to diagnostic skills the technician possess, because without those skills, there wouldn’t be a part to sell.

Similarly, sales and marketing services companies also generate revenue by the hour, however, it is rarely shown as such as most fees are displayed as a total for a given project. But all the fees are calculated as an estimate of how much time or hours are involved in executing the project by the various staff members.

Establish some balance

One of the biggest issues with owners of service businesses is understanding that their inventory is finite and that they should be running their companies with that in mind. Unfortunately, this is contrary to how many of these businesses operate. They assume that they can just put in more time and work longer hours. Although feasible in the short term, it is rarely a long term strategy. Yet so many continue to do so.

There are some advantages to managing your business based on your available inventory of time. First off, it should bring a sense of balance to a business. Balance, as in work life balance.
Secondly, it would allow you to establish realistic delivery timelines to the customer. Let’s be honest, we all think we can complete an assignment quicker than reality dictates but that just stresses out your staff or annoys the client when we are late. So being realistic can reduce the occurrence of both.

Additional benefits of managing your inventory can be significant on the financial front. Foremost, you’ll quickly understand whether you are charging enough and whether your existing inventory of hours available can support your financial demands.

Calculate how much time you really have

Furthermore, you should also discover how efficient or inefficient your organization is and where improvements can be made. Increases in efficiencies can greatly enhance your profitability. A simple metric such as revenue per hour is great place to start in benchmarking any improvements. This calculation is done by simply dividing your total revenue by total payroll hours for any given period, including your own.

So, how do you calculate this inventory? Well, it is easier than you think, and it really doesn’t matter whether your staff is making $20/hr or $200/hr as it is the exact same calculation. Earning a higher hourly rate does not give you more hours in a day, as we all get the same 24hrs.

The following example is how you calculate your total available inventory of time in a service business.

1. Assume a 40 hour work week = 2,080 hrs
2. Assume 3 weeks vacation = (120)
3. Assume 11 statutory holidays = (88).
4. Assume 5 sick days = (40)
5. Assume 2×15 mins breaks/day = (12.5)
Total available hours 1855.5 hrs

So before doing this exercise, most owners assume they have 40 hours a week or 2080 hours per year per employee that are available to them. However, after taking into account vacations, stat holidays, sick days and coffee breaks, that number is reduced by 11% to 1855 hours per year or a loss of almost 6 weeks out of a 52 week year.

This number actually gets worse if employees are required to travel to clients as in the case of a repair technician or a salesperson. You can easily lose and additional 2 hours per day which is a potential loss of an additional 13 weeks per annum. So now we are down to 33 weeks of billable time in a year or 1335 hours from a high of 2080 hours. That’s a 36% reduction in available inventory or billable time.

Once you understand how much available time you have, you can now start to make realistic assumptions and projections. Of course, the challenge to all service businesses is the ability to maximize your available time inventory and make sure it’s productive.

Hiring more people not the best option

Unfortunately, the only way to increase your inventory in a service business, is to hire more people. But realistically, that’s not necessarily the best option, especially if you have demand peaks and valleys in your business throughout the year. So, finding tools or processes to increase productivity might be a better avenue to maximize your existing inventory.

Realistically, we are all faced with slack periods where there’s insufficient demand and people are not busy. Sadly, you can’t store any unused time for future use. Because once that minute hand on the clock moves forward, you have lost that inventory forever.

So, sit down with staff and explain the impact they can have on the business by being more efficient. Then ask them where the bottlenecks are and their suggestions to get rid of them, because once that inventory is gone, it’s gone!

You may also enjoy episode #59 Quit Digging!

 

Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.

The outbreak of Covid-19 has got the world on lock down and many employees have transitioned to working at home. With that, many entrepreneurs are holding daily conference calls to keep teams connected.

The upside is many employees are having greater communication with their managers than they previously had. Unfortunately, many owners have never participated or hosted conference calls and in my conversations with participants, I’m hearing that many of these calls are bit chaotic and frustrating.

So I thought I’d offer up the following 6 tips to have better conference calls.

1. Be on time!

There’s nothing more distracting than someone joining a call late only to declare “Hi I’m here!”. This usually happens without consideration that with a call in progress, someone may be already talking, and your arrival and announcement totally disrupts the flow. Login quietly and wait until there’s a break in the topic to let people know you’ve arrived.

2. The meeting Chair

Whoever is hosting or chairing the call, needs to set some rules or guidelines in order to control the conversation and keep it on track. One thing I did when chairing in-person committee meetings in my many volunteer roles, was to make sure everybody had a chance to speak. Many people have great ideas or want to contribute to a conversation but just don’t have the confidence to speak up. These same people tend to be a little more reserved and therefore remain quiet. Let be honest there’s always a core group of people who monopolize conversations, so the quieter ones are little intimidated and don’t speak up.

So, in order to give these individuals a chance to air their ideas or concerns, I would keep track of who has spoken on a given topic and then I would go around the table and ask the individuals who hadn’t commented, if they had anything to add. This way they were given the opportunity to make their thoughts known.

In a conference call, the chair should state the issue or ask the question and then ask each individual, one at a time to comment. This alleviates the typical free for all that usually happens, and the conference call becomes more productive.

As a caveat, some conference calling platforms have the ability for individuals to digitally raise their hand to comment. However, many of conference calls taking place today calls are being held on mobile phones without these functions.

3. Set out an agenda

Just like in person meetings, whoever is running or chairing the call should put out an agenda beforehand. Since these conference calls will be daily or twice daily events, the list will be small. It’ll help at keeping everyone focused on the issues at hand.

4. Put your phone on mute

There’s nothing more annoying than background noise during conference calls. Since many people are going to be working from home, with kids and dogs underfoot, this is a big problem. So, if you’re not talking, put your phone on mute until it’s your turn.

5. No speaker phones or hands free.

Usually the sound quality when talking on speaker phone is significantly reduced. Using the speaker phone setting makes it difficult for everyone else to hear what your saying and requires immense concentration. Get a set of headphones if you need your hands to be free during the call. It’ll make the call more comfortable for everyone else.

6. Assign a minute taker

Just like any formal meeting someone should be taking minutes of the meeting. They don’t have to be long dissertations. Point form is sufficient and is really just a summary of issues and actions required. Unlike an office meeting, there’s little chance to do face to face follow up, so these minutes can be distributed shortly after the conference call ends and serves to keep everyone on task. The minute taker should be rotated between the callers every day.

These are trying times for most entrepreneurs. Many have never faced such a dramatic shift in they way they are forced to do business. However, this is a wonderful opportunity to try out those ideas you’ve always had, but never had the time to test.

Using conference calls to keep your arms around everyone and provide clear direction is just one of the tools, that did not exist or were the exclusive domain of large corporations not that many years ago.

Stay safe.

You may also enjoy Are you Ready

Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.

Technology has been an amazing boon for businesses of every size, but none more so than for small businesses. Having come of age as an entrepreneur through the technology evolution, it’s truly amazing that what once took days by many, is now done in minutes by one person.

The development and ease of use of current technology now allows small businesses to compete with much larger organizations. Software applications that once would have cost the small business owner a fortune to purchase, along with the hardware to run these applications, are now available for pennies a day and hosted on the cloud. Heck, most can be managed on your smartphone, giving you true mobility and freedom.

Small screen and keypad restrictive

I admit that, try as I might, there are just somethings that I can’t manage well on a smartphone. Whether that’s because the screen size or fat finger syndrome, I just prefer a much larger interface. Don’t get me wrong I love having all this capability in the palm of my hand, but I find the small screen and keypad restrictive.

I read somewhere once that smartphones and tablets are for consuming information, whereas laptops and desktops are for inputting information. I guess the reason I remembered this, is because it certainly rang true to me. Hats off though, to those that can manage everything on their smartphones!

This simple app never gets credit

However, one the most powerful apps included in every smartphone that gets used less and less every day, is the phone app. This powerful, yet simple app never gets any credit or hype, yet has the ability to increase our efficiency and productivity many times over.

Unlike so many of our other available communication apps, this simple app can cut through the clutter that fills our inboxes and messaging apps. Aside from calling a customer service line, where you’re put in a cue, because our call is important, if someone is available, they’ll usually answer the phone. This then becomes an opportunity to create a personal interaction that is sorely missing in todays business environment.

Calling someone to get an answer, is far quicker than writing an email or sending a text message. Talking to someone on the phone reinforces the relationship and that’s a critical element in a selling situation. One major advantage a phone call has over just every other communication vehicle, except face to face interaction, is the ability to hear an individual’s emotions.

It reinforces relationships

This live interaction gives you the opportunity to clarify or reinforce your position based on the feedback you’re receiving. A phone call allows to adjust on the spot should the situation change or if someone is having a bad day. You can’t really do that once you’ve hit send on that email or text message.

In addition, when two people are having a conversation, you can typically benefit from added information that is shared during a conversation. This information can be personal or business and serves again to reinforce the relationship. This rarely happens in email or text communications.

Phone calls also have an immediacy. Once more, if the individual is available, you’re not having to wait hours or days for a response that is becoming the norm with many electronic communications. Most interactions via the phone are usually just a clarification on some outstanding issue. If necessary, a follow up email can always be sent later as a confirmation. Meanwhile, by making a call, you get your answer and can then move forward with your task at hand.

Phone calls are personal

I’m constantly having to remind clients to pick up the phone when I see them starting to compose an email or text message. As a small business owner, it’s incredibly important to connect on a human level as frequently as we can with our customers and prospective customers. It’s one more human touchpoint. In many cases it can be a point of difference between you and your competition, because a phone call is personal.

I’m not sure how we’ve managed to move away from this tool but as the chasm grows between human interaction, I predict that we may see a resurgence in it’s use. I for one hopes so. So next time you’ve got a question for a customer, pick up the phone!

You may also enjoy Look as Good as You Sound

Copyright © Greg Weatherdon 2019

Sign up above to receive email notification of the latest update to this blog.

Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.

Profit, that elusive goal that frustrates many a business owners. To be sure, many businesses are just bad ideas that never should have been started in the first place. However, there are plenty of others that are well run with decent revenues but for some reason they aren’t as profitable as they should be.

When helping business owners, one of the first places I look is their pricing model. Other than suggesting some adjustments, their pricing doesn’t appear to be the issue. Take a minute and checkout episode #47 Pricing For Profit for more insight into pricing.

A little probing into customers and marketing initiatives often uncovers a flaw in their sales and marketing activities – namely geography! The problem is rooted in the fact that these businesses are casting their nets too wide. As a result, they fail to generate critical mass for their services in a single geographic area. This is where the concept of clustering can help increase awareness for certain businesses and profits for most.

What is Clustering?

Clustering, is nothing more than grouping your service deliverables or offerings around key geographic areas. Clustering can be applied to many types of businesses and services.

Most major sales organizations have been using clustering for decades. Sales forces use clustering as a way of making the maximum sales calls with minimal travel time between each location. Most delivery companies do the same to generate the necessary efficiencies needed to stay competitive.

Although you would think the concept of clustering is common sense, it has been my experience that it’s not.

To better illustrate, the following are a couple of examples:

Clustering for Service Businesses

Consider the example of a service company. This could be anything from a landscaping business, to equipment repair or a roofing company. It’s not uncommon for many of these companies to be running all over the city, performing their services throughout the day.

For many this comes about because of their marketing and promotion activities. Countless businesses owners wrongly assume that they need to advertise to the widest possible group of customers in the largest geographic area. Often, they have been convinced that, for just a few dollars more, they can blanket the whole city or region instead of focusing on a tighter geographic area.

Appealing as that sounds, this shotgun approach can lead to huge inefficiencies as they now run around the city burning fuel and man hours going between jobs. When you consider that many service company use lawn signs to promote their companies, having many signs in a tight geographic area drives higher customer awareness of your company. As an added bonus, this may help your business development initiatives because people are familiar with your company name.

Granted, every city and business is different and focusing on just one area may not be feasible. However, clustering can still be effective in these situations by limiting your service to certain areas on specific days of the week. For instance, we work in the East end on Monday, South end on Tuesday and so on.
Clustering in this case, ultimately allows you to service more customers during a single day with a greater number of billable hours at reduced costs.

Clustering for Retail Businesses

Retail businesses can also benefit from clustering and save significant money in their advertising and promotions costs. The first thing you need to do is to understand where most of your customers are coming from. By simply collecting their postal or zip code, you’ll quickly see a pattern emerge from key geographic areas. One thing that may surprise you is that most of your customers aren’t coming from as far as you think.

A survey by Brightlocal found that the average time that people will spend in a car to travel to a business, ranges from 12-23 minutes. They have a wonderful infographic that depicts various types of businesses and the time people are willing to travel to them.

Graphic courtesy  of www.brightlocal.com

Driving Times to Local Businesses Infographic

In todays highly competitive environment, finding efficiencies in every part of your business is mandatory and can’t be left to chance.

So, if you want to increase your profits and the effectiveness of your promotions, you should consider the concept of clustering.

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Copyright © Greg Weatherdon 2017

Sign up above to receive email notification of the latest update to this blog.

 

Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.

Trying to increase the profitability of our business is always at the forefront of our thoughts and that usually revolves around looking for the next big idea, product or service that we can offer our customers.

Many times this makes perfect sense, especially if we’re confident we have maximized the opportunities within our current clients, products and operations. Unfortunately, more often than not, we have done neither and are simply looking for something new to play with, something to get us excited simply because we may be a little bored with the status quo.

So before we waste untold amount of time looking for that “new whatever”, why not look internally for those efficiency gains? Streamlining your processes can lead to increased productivity and reduced overheads by doing more with less and getting rid of waste.

Small Gains = Big Rewards

Here’s a couple of simple examples to prime your thinking.

1. Can you get a cheaper cell phone plan for your company? If you pay for three phones and reduce the monthly bill by $50, it’s an instant $600 to your bottom line.
2. Got dead inventory? Blow it out and turn it into cash because right now it’s worth $0 and tying up real estate.
3. Got vehicles, what kind of volume discount are you getting on fuel? Many national fuel companies offer volume discounts.

Taking the time to dig deep into the operational side of your business can free up thousands of dollars a year without having to find new customers. Is it exciting? Nope, but Small Gains = Big Rewards!

Copyright © Greg Weatherdon

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Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.