Made any New Year’s Resolutions for 2017? Here’s one that might help you to keep all the others:
“In 2017 I will work less but work smarter to make my company more profitable.”
To work smarter you need knowledge. If you have better insight into what drives profitability and what creates unnecessary costs, you can grow your company while freeing up more time to relax.
So here are five knowledge-based resources that can help make you and your company more profitable.
#1 Look at the figures that matter
Every manager or owner of a business looks at the monthly, quarterly or annual financial results. Unfortunately, these only tell you what happened in the past, and provide few clues about where to take your company in future. You wouldn’t try driving to work by looking only in the rear-view mirror, but that is effectively how most managers run their companies.
The figures that really matter provide answers to questions like, “Which jobs and which engineers are most and least profitable?” Of course, you have to act on this knowledge to increase your profitability, but without the knowledge you cannot even start.
#2 Take a holistic view
Profitability can be rather more complex than first appears. For example, maybe you buy certain parts at a good price and make a lot of money on mark-up. But what if those parts have a high failure rate, and your engineers often have to go out on (unpaid) recalls to put things right? What appears to be a money-spinner is actually losing you money. If you have job management software that allows you to take a holistic view of profitability you will be able to take better decisions.
#3 Get a clearer picture of cash flow
Poor cash flow can cripple an otherwise successful business. If you always seem to have less money in the bank than you think you should, it’s a good idea to ask why. In all likelihood you have an issue (or more likely, several issues) with your invoicing and credit control processes.
On top of this, poor stock control and supplier management can lead to excess funds being tied up in inventory that simply sits on shelves or in the back of your vans for months on end. This might be obvious from a trip to the warehouse but you won’t be able to take effective action to correct the situation without detailed knowledge. With better insight into parts management you will also be in a better negotiating position with suppliers.
#4 Clear your debts
Yes, that’s easier said than done. But interest payments are a real burden and most plumbing companies could do more to reduce their reliance on bank loans and other sources of credit. Here are a few ideas. First, get an accurate picture of your financial situation and make a sensible decision prioritising debt repayment. Tackle the highest-interest debt first. Otherwise, it is just going to pile up year-on-year. If your business is going through a tough patch, talk to your creditors, they may be able to help.
But you are far more likely to secure better repayment terms if you can demonstrate a thorough understanding of your company’s current situation and an action plan to turn things around.
Again, knowledge is power!
Make sure you can keep your end of the bargain on any new repayment terms – if you default, that will make future loans more expensive as your credit rating suffers.
At the same time, you should be looking for sensible ways to cut costs and free up cash. Most companies can identify equipment that is no longer used and sell it off, if only as scrap (which is better than leaving it to clutter up storage).
Are you taking advantage of technological change to reduce overheads? If you can manage your engineers remotely via their smartphones, you can dramatically reduce your need for office facilities.
#5 Communicate with your clients
Timely communication with your clients boosts revenue and with the right knowledge it is not difficult to automate the process. Service reminders are the best and simplest form of marketing communications: send them out at appropriate intervals to increase activity in otherwise flat periods.
These are just a few ideas – but the common thread is knowledge. A workforce management solution not only puts knowledge at your fingertips but also helps you turn it into actionable business intelligence.
Interested in a job management software? At Commusoft, we also integrates with powerful accounting software and payment solution, have a look here