Are you wondering why your profits are taking a dip exactly when you expected them to grow most? There's no way around it, a disorganised office means money left on the table. Today we're looking at how to improve your business and avoid leaving money on the table.
In a previous post, we looked at three types of “disorganised boss” and how he can inhibit your own personal development as an office manager or project team lead. Today, we'll go through some of the practical impacts on your company’s financial results which help you in knowing how to run a successful electrical business. That's what matters at the end of the day, isn't it? Imagine the scenario where you win a major project to fit out a new office complex and your boss has not thought through responsibilities or the resources that will be needed to complete the project on time and on budget.
At best, you might complete the project at a loss; at worst, the project may fail, you will lose future business and your company’s reputation will be irreversibly damaged. Either way, the business will take a hit.
It could be that you saw this coming. But saying “I told you so” after the event is not usually a wise move. As we previously mentioned, blaming individuals, including the boss, is not a good idea. What you need is objective facts.
Moreover, you need to be able to drill down and find out the facts at a detailed level.
Even if the right decisions were taken at the strategic level and adequate resources were allocated to a project or expanding the business, the smaller tactical mistakes and oversights that result from a disorganised approach can chip away at profit margins.
Of course, there are leaders who have a firm grasp on every detail but these are few and far between.Lack of information and a systematic approach to managing time and resources from start to finish causes missed deadlines and lost opportunities.
Leaving money on the table
Longer term, the impact is on the bottom line. If you work at an electrical services company where everybody seems to be working flat out but at the end of the month or the financial year revenues and profits do not reflect the effort, in all probability the problem is not down to individuals but is systemic.
The real underlying cause is probably not what you invoiced but what you didn’t invoice – the money you have left on the table because you forgot to charge the full amount for services rendered.
Basically, your boss is giving “free gifts” to your customers.
Of course, the customers themselves won’t appreciate them as such – on the contrary they will be unimpressed by your inefficiency. But most importantly, these freebies leave the company out of its own pocket.
Here are just a few of the reasons why your boss might be robbing himself:
- Underestimating the true cost of the job
- Poor job tracking means jobs go uninvoiced
- Paperwork coming in late, after the job has been invoiced, which means time and parts are not fully charged
- Paperwork is lost so you have to guess the true cost – the customer will only complain if your guess is too high!
- Overestimating the time required and not reallocating engineers’ spare capacity
- High incidence of recalls, e.g. because the job was not properly briefed
- Customer dissatisfaction, e.g. because work is carried out behind schedule – customers are likely to demand compensation
If you believe your boss is disorganised, the worst thing to do is to get confrontational or personal about it. They are probably doing their best but are simply unable to cope with the number of demands on their time.
The solution is to make a positive and constructive proposal to invest in the technology that will enable your company to schedule work efficiently, track engineers’ time, manage paperwork and control your inbound and outbound supply of parts.
It is quite likely at this point that your boss will point out that you have an accounts system in place to track costs and perhaps a spreadsheet to schedule time. However, there are numerous reasons why reliance on these options alone may be giving your boss a false picture of the profitability of your company and/or individual engineers.
A spreadsheet enables you to schedule time, but it is not integrated with actual time and costs. An accounts system can only tell you about the money that is coming into and going out of the business.
They do not tell you what the company could or should be earning. They don't provide your electrical business with an automated electrical certificate like a PAT testing certificate. A financial statement will tell you what was charged for a job, but it will not tell you how much time the engineers actually spent. It will not tell you the amount of time spent on recalls or other unpaid rework. For this, you need to be able to track engineers’ time and other expenditures, ideally in real time so that nothing is lost.
This will already enable you to manage your business more profitably on an operational day-to-day level. With reporting capabilities you will be able to analyse where you are still leaving money on the table, and why, so you can take corrective action.
Once you have got day-to-day admin and management reporting under control, it will be much easier to raise employee motivation, expand the business and progress to the next level. And everybody – including your boss – will have more time to enjoy the rewards!
Would you like to see how an electrical business software like this works and helps you improve your business? Watch our demo by clicking down below and don't forget to let us know what you think via the social media buttons under it.