It’s an easy question to ask, but getting the answers you need, as well as taking the necessary actions to get the results you want, can be tricky...
After all, despite your best efforts, your plumbing company might be losing money for all sorts of reasons.
On the other hand, you might even be making a profit, but a number of inefficiencies mean those profits aren’t working for you as much as they could be.
And then there're circumstances (say, a pandemic) which are entirely out of your control...
Specific reasons for financial loss can vary and some problems are more subtle than others, but if you are losing profit and aren’t sure why, it helps to explore a variety of causes and resolve to relace the culprit with more profitable solutions.
This includes asking questions about profit loss, like:
- Is it to do with mismanaged inventory and stock?
- Is your appointment schedule disorganised?
- Do you know your costs well enough to be sure you’re breaking even?
Ironically, it’s often successful companies that suffer most from inefficiencies.
That’s because as they’ve grown, they’ve not implemented appropriate ways to track and manage their success. In some cases, they may even try to carry on with business as usual, but managing a large business like you’re still running a two-man-band will be problematic. Processes become messy and that makes it easier for pound-after-precious-pound to slip through the cracks.
It’s undoubtedly a challenge, but one we’re here to help you overcome! We’ve listed 5 points to consider when it comes to profit loss, as well as 5 ways to help you save money!
Let’s take a look and make sure you’re running a tight ship.
5 signs you may be flushing money down the drain:
5 ways you can work to save money (and earn more!):
- Increase customer return rate
- Attract new customers to your service business
- Integrate your finances and improve invoicing
- Take a look at stock management
- Get a job management software (or upgrade your current solution)
5 signs you may be flushing money down the drain:
While this isn’t an exhaustive list, the points below are some of the most common issues that we've found ail plumbing companies and other field service businesses alike.
If issues aren't addressed they can frustrate your company, meaning you risk losing more than money. Your employees, your customers, and your reputation can also suffer.
With a step-by-step approach though, you can figure out what’s ailing your business and then work to administer a cure! Here are 5 signs you may be flushing money down the drain:
Losing paperwork: Old habits die hard, and there are still far too many field service businesses out there who do things the old fashioned way. While paperwork still has its place, it’s safe to say that banking, invoicing, and all sorts of other financial processes have gone digital. It’s time you did too. Why risk handwritten mistakes when a digital tool can help you work faster, more securely, and provide all sorts of great tools to make getting paid an absolute breeze?!
Inefficient job management: Similar to the above, paperwork doesn’t just run the risk of slowing down your finances; if you’re still using paper diaries, contacting customers by post, or waiting for engineers to file paperwork at the end of every shift, it’s not an efficient process. Whether it’s assigning jobs from the office, or not getting them done in the field will increase the odds of letting customers down, underperforming engineers, and missed opportunities.
Slow invoicing and payments: Waiting too long to get paid is an absolute killer to profitability. “You can spend up to 10% of your work time creating, sending and chasing invoices” - Xero. You want payments to be as snappy as if customers were buying from any other major business, whether it’s Amazon or even Tesco online. The slower your process, the less likely customers are to pay on time.
Poor communication: From missed opportunities for revenue, items not being recorded properly in stockrooms, or even charging customers incorrect rates; these and more will affect your bottom line. If you’re lucky, you might get the odd customer pointing out mistakes (though really it’s your fault if you’re charging too little), or have engineers who realise an error (but this can be frustrating if customers are suddenly asked to pay more). Why leave it all to luck, though?
Failure to report accurately: As a CEO or Operations Manager, or similar senior role, you’re going to have a hard time establishing a clear picture of your business productivity overall if all of the above aren’t recorded and reported well. It’s these reports that will point to any issue and in their absence, money leaks will easily go unnoticed until it’s too late to fix them.
With templates, advice, and helpful guidance, you can use this free guide to see how you can transform the invoices you send to customers!
5 ways you can work to save money (and earn more!):
While the problems above can be significant, there are more than a few ways you tackle a variety of issues all leading to a boost in profits, too! After all, I’m sure you’d agree that while holding on to profit is good, going on to secure more is even better!
Focus on customer retention: One of the best ways to boost your profits is not by working exclusively on bringing in new customers, but by focusing on getting your old ones to come back. If you’re doing good work (and we’re sure you are) you’re already encouraging customers to return to you, yet sometimes you may need to put in a little more effort. Offering a discount, some sort of giveaway, or even just the promise of knocking it out of the park (again!) are simple and effective ways to win them over.
The good news is that returning customers are often more inclined to spend more than they did the first time round. Not to mention acquiring a new customer is 5 times more expensive than it is to retain old ones, so in terms of saving and earning more money, it’s an excellent place to start.
Entice new customers to your service business: Okay... I know we just said focus on customer retention, but if growth is on your mind and you’re looking to expand, then you’ll eventually need to think about how to attract new customers as well. This is a great way to boost profits if you’re in the position to do so, and by enticing customers with positive reviews (gathered from the advocates you’ve been able to retain), you’ll find you may not even have to spend so much money after all.
This is especially true if you’re making use of software tools that make it easy for new customers to interact with your business online and go on great customer journeys; from how they inquire, get an estimate, booking you in and even make a payment. If these steps are easy, the price you charge appealing, and the experiences you provide well reviewed, how can they say no?
Integrate your finances and improve invoicing: We mentioned above that without the right processes you risk leaving money on the table. The right job management software can very well be that right process you’re missing out on. Tracking all your business costs comes close to ensuring you’re doing everything you can to stay profitable but doing this manually is a huge time burden for your staff.
By contrast, job management software, like Commusoft, makes it easy to keep accurate costs against each job, including labour, travel, sub-contractors, parts, and any miscellaneous expenses. Integrate this with accounting software like Xero and Quickbooks, and you’re off to an even better start; instead of trawling through books, spreadsheets and multiple apps, you can track financial information in one easy-to-view digital location, accessible from anywhere with an internet connection!
Take a look at stock control: If you’re serious about cementing the growth you’ve worked so hard to secure, it’s essential to take control of your stock. Whether you’re running a plumbing business, work in heating, fire & security (or really any field service business) that stores parts in a designated location, you don’t want their mismanagement to cause your profits to fall.
With great software you can stop both overstocking and understocking, as well as prevent parts from being forgotten and damaged in vans. Software workflows make it easy to only order what you need, when you need it. With this level of control you can be more certain that your money is spent as efficiently as possible! You can learn more about stock control in our post “Take Responsibility for Profit Loss With Stock Management Software".
Get job management software (or upgrade your solution): The short answer that we could have written is that job management software could well be the answer to all your problems.
That said, you understandably want more information than that.
Of course, you don’t just want any piece of software: what you need is a comprehensive tool that grows with you. In this way, you can be more certain that you’re using the right tool to take care of your essential tasks so that you can focus on the bigger picture: customer satisfaction, employee wellbeing, and growing the business!
After all, you might be using software already, but perhaps you’re not using it to its full potential, or may even have a system that’s not quite right for you (which can be a problem with bespoke vs. off the shelf).
These 5 problems and 5 solutions are a great starting point if you’re looking for ways to save your plumbing business money. It helps to take a methodical approach because more often than not, it’s easy-to-miss details that cause the most money to be lost.
Even with a job management software you want to take the time to learn to use it correctly so that the changes you make have an impact—like any other tool.
If you think your business could do with more solutions to help you succeed, then look no further than Commusoft. You can explore our list of features by clicking here and seeing how other features like service reminders, estimates, customer portals, and so much more can transform your business.
You can also take a look at our demo video to learn more and see the software in action.