When I have a conversation with a Siouxland small business owner, it often starts with something simple. The conversation in my meeting today was no different. "My sales staff needs a quoting tool to ensure consistent margins," asked this particular Sioux City CEO. "Can you develop one?"
During the course of this discussion, and further discussions with sales and operations staff, I was able to see overarching trends that were causing 10% or more in lost margins. The sales team didn’t understand labor requirements, the operations team didn’t understand the expected hours of work for each job, and customers could get a different quote for the same order each time they ordered it.
It became apparent that the complex product offering provided by this company would not be served by a simple price list; it required a quoting system that could tie all the aspects of the business together to increase consistency, efficiency, and profit margins. To work properly, the quoting tool would also need to maximize technician productivity, especially since analysis uncovered labor costs that were 20% higher than required.
In the case of this particular Siouxland business, what seemed like a simple request for a quoting tool became something different entirely. And it came with some amazing results.
First, fill in the gaps.
My discussions with the sales teams uncovered concerns about a lack of technology and training coupled with an abundance of paperwork. The sales team agreed that they could do their jobs more effectively if they had access to the right information while they were visiting prospective clients, especially because their sales territories were large and they wanted to maximize the time they spent on the road and the profits they secured with each sale.
Then, find more time.
Sometimes profit margins are impacted by an inefficient use of team members or an inefficient use of time. In the case of this particular Siouxland small business, it was a bit of both. The sales team estimated that they spent about the same amount of time in the office as they did traveling to perspective clients. Because their territories were so large--as much as 100 miles--it was important to make sure they were able to make the most of the time they were in each area.
The team and I observed how the installation technicians made their days last the same regardless of the amount of work. In one specific example, a crew was scheduled to go out for a full day on a job. After using the quoting tool, the team discovered they could be back in 3.5 hours and then continue to complete another 3 hours of other billable work, almost doubling their productivity.
And recognize the resources.
It also became clear that the sales team benefited from the training and knowledge received from the on-site operations team. Everyone agreed that product and installation knowledge was important, and that the sales team could benefit from increased training. Opening up this communication allowed both sides of the profit equation to work together to see what type of tool would be effective for both teams.
From there, set the goal.
By going over the sales data and average installation revenue, I was able to demonstrate how adding just one more installation per day could equate to $1 million more in revenue each year, without the need to increase labor resources.
And get results.
The quoting tool I developed for this particular small business in Siouxland not only helps the sales team quote jobs faster, with consistent and profitable margins, but also helps manage the productivity of the operations team before they leave the shop on a daily basis. It not only helps make money, it saves money, and that's the kind of result every business can benefit from.
The truth of the matter is that this situation isn't unique among entrepreneurs. Often they can sense there is a larger problem, but they don't have the time or perspective necessary to develop a solution that will work for a long period of time. Sometimes it's about finding the right tools. Sometimes it's about properly using the tools you already have. And sometimes it's knowing when to stop trying to do it yourself and delegate it to a CFO.
That's the value of a firm like Timm Funk Associates. Hiring a part-time CFO is one way business owners can get the unbiased, professional help they need to solve the nagging concerns they have with the day-to-day operations. If you aren't sure where to start or just what to hand over to get operational or financial help for a small business, take a moment to download our business assessment. It will help identify strengths, priorities, and areas of concern. And it can help point you in the right direction.
Help is on the way.