If you run a service based business you most likely share something in common with the vast majority of all other businesses in your field – Time is Money!
In the service game your employees’ time is crucial usually above all else and can make or break any job you work on. Labour is usually a very high cost item (if not the highest) and is the easiest to run away from your budget.
With the right tools in place you can easily turn time into your strength rather than a weakness and increase your bottom line.
The key to all the following tips is to have a good reliable system in place to allow you to achieve your goals. Systems such as MYOB Exo Business ERP will allow you to report on your key business data in real time and with the integrated Job Costing module you can monitor all the data on a job by job basis.
Invest in systems to ensure you can see potential issues immediately rather than at the end of the job (or end of the year!). By identifying that a particular job is running overtime or over budget early you can minimise the damage by:
- Investigating the cause and rectifying it – How many times have you said “If I knew that was the issue I would have just…..”. It’s when you don’t know the cause then you can’t act and there is no point finding out after the job is done.
- Rearranging staff to get the right people on the job. Not all staff are the same and despite sending the right person to the job in the first place, you may find that jobs change and another team member may be better and faster if they take over.
- Identifying customer caused issues and variations (see tip 3)
Tip 2: Be more competitive!
That sounds easier said than done but is crucial in today’s market. The key to be able to do this and not lose money on projects is to learn from the past and use your data to ensure you can quote as lean as your market may require.
When you don’t have a good system or accurate reports in place on the performance of past jobs the tendency is to overestimate job costs. This overestimating leads to higher quotes and as a result can lose sales if your competitors are better informed.
Tip 3: Capture variations!
In most service based businesses it is normal (and in fact critical) to capture project variations and charge for them. We all know that customers can change their minds and often there can be unforeseen items that are out of your control. These variations are normal and most time there is no choice but to complete them but if not managed correctly they can end up being your cost.
- Setup up a good system to track variations and ensure they are documented.
- Ensure staff are trained on recognising variations and do not just complete extra work without authorisation
- A good way to track variations is to set up a specific “sub job” or “task” in your ERP system and ensure each variation is added and sent to the customer for approval if possible.
- Discuss variations in pre project meetings and stipulate the handling process in the contracts.
Tip 4: Monitor individual staff hours!
Managing staff performance and hours can be a tedious task without the right tools in place. Often staff members don’t want to do it and businesses can spend hundreds of man hours per year just trying to gather and capture time sheets. Trying to then tie those time sheets to projects and payroll is then even harder.
To make this job as easy as possible ensure your staff can record their time easily and efficiently. A mobile solution is the way to go here as most people already have smart phones and they can do their time sheets anywhere.
A fully integrated solution will also allow staff to select from valid job codes and data can flow directly into your ERP and payroll system (after approval of course) ensuring you don’t need to rekey them and risk data entry errors and wasted time.
Learn more about MYOB EXO Job and Project Costing here.