“Take care of the minutes and the hours will take care of themselves”
British statesman, diplomat, a man of letters, and an acclaimed wit of his time
The systems integration business is unique in many ways. However it has commonality with virtually every other business that sells products that need to be installed. You as the business owner, salesperson, project manager, or technician have very little control over the cost of the product or the price you sell it for. Meaning if a speaker has an MSRP of $100 one cannot just choose to sell it for $200. The risk of the client finding out that you charged more than the manufacturer suggested you should could ruin your reputation. With the advent of the Internet, a customer can do as much research as they would like and if they really want to know they can find the MSRP. Even worse, if they are really dedicated they can find out your cost.
The other profit center you have that you have complete control over is your labor cost and selling price. In this smartPRENEUR Blog I am not going to spend your time discussing how to set your labor rates. Other guest smartPRENEUR Faculty members have discussed this subject. If you’d like to learn more just do a search on our smartPRENEUR Blog page for labor. Suffice it to say, the utilization of labor is where success and profitability intersect.
The quote above from Lord Chesterfield, “Take care of the minutes and the hours will take care of themselves” is critical in the success of running a business where the sales and profits are made by your team’s productivity.
Time tracking is important for everyone in the Company, EVERYONE. This is not a pitch to micromanage your staff. But it is a plea for you as an Entrepreneur or manager to understand where the holes are in your time management process and find ways to improve them. What we measure, we can improve.
NO TIME TO COMMUNICATE
I hear this from many business owners. My crew say they don’t have time to clock in. They don’t have time to mark off what they have completed. They can’t remember when to click the button that tells me they are traveling to a jobsite.
But, they have time to stop for coffee on the way to the project. They have time to leave the jobsite to grab lunch at a sit down restaurant. They have time when they return to sit in your office and provide an update and stories from the day for a half hour or an hour.
These are excuses and a sign of bad time management. I don’t want to stop you from having a great lunch or a cup of coffee. I certainly do not want to compromise your relationship with your crew. But I do want you and them to be as successful as possible.
So it starts with documenting how much time each and every person spends doing their job and what they are doing during that time. If we know that a technician stops for say 10 minutes each day to pick up coffee on their way to the jobsite, what if we instead provided coffee at the office and to go cups or cups with the company logo that they could exchange out each morning. Or with the knowledge that there is one hour a week lost to the coffee stop, raise the labor time or labor selling price being charged by an increment equal to the number of technicians by the number of hours spent in a week to get coffee, or lunch for that matter.
WHAT ABOUT INSTALLATION TIME?
When creating work orders it is critical to have an objective expectation of the time it takes to complete a task. Most software allows the user to check off when a task is completed. Some provide an estimate of how long the task should take to complete. This is critical for proper estimating. The technician’s feedback is critical on this information. If some task takes much longer or shorter, very rare, the technician needs to communicate that in the job notes so that next time you can fix this number in your proposal.
EFFICIENCY IS THE KEY TO GROWTH
When you look at the time sheets at the end of the cycle there are three categories to look at:
- Total time: The total time the technician was clocked in
- Jobsite Time: The time that technician spent on job sites performing tasks that are accounted for via the sales contract, a service order, or warranty as an example,
- Non Jobsite Time: The time the technician spent in the office or traveling.
Let’s say the employee spent 40 hours at work. Of that 40 hours they spent 15 hours of non billable time; Lunch, coming to the office to load up, stopping for coffee, finishing the day at the office-the recap. This would give that employee an efficiency rating of about 62%. This does not take into account the efficiency of the amount of time it takes to complete a one hour task on their work order. That is a different conversation that I will cover in a later blog. This is just hard numbers. I got paid for 40 hours and I produced 25 hours of work.
PROCESS IS WHERE YOU MAKE OR LOSE MONEY
Implement a time tracking/time management process TODAY. This will make a huge difference in your bottom line as well as improve the customer experience for your clients. Investing time in documenting what each employee is doing throughout their day will provide a clear view of where you are leaking money. And, believe me, you ARE leaking money.
Implementing processes to track how time is spent empowers you to dry up those leaks and turn them into profits.