Contractor Corner

20 Mar

Posted at 08:00h in Business Tips, Contractor Resources, Customer Service

As a business owner, you spend a lot of your time serving customers—yet it’s also important to support your technicians and other team members with their HR needs. A proper focus on human resources ensures that your team is cohesive and your employees are happy; meanwhile, HR hiccups can not only drain your precious time, but they can have a corrosive effect on your entire company.

Some HR pitfalls are more common than others. Here are three that are especially dangerous to service trades.

Problems with the Hiring Process

Some of the most common HR issues start before an employee is officially on your payroll—either because you hire the wrong person for the job, or because you inadvertently turn the interview into a legal headache. Some ways to avoid issues in the hiring process:

  • Conduct pre-employment testing to make sure the people you’re recruiting are good fits for your business—both in terms of their skillsets but also in relation to their personalities.
  • Make sure that your job descriptions are clear and detailed; leave no uncertainty as to what the position requires.
  • Avoid asking sensitive questions concerning religion, age, race/ethnicity, or disability; even one slip-up can lead to questions of discrimination, and potentially land you in a legal mess.

Problems with Communication

Simply by ensuring clear, consistent communication with your team members, you can stop the majority of HR issues before they even begin. It’s important to communicate any modifications to your company’s procedures, and also any changes to your own expectations.

Sometimes, communicating with employees can be unpleasant—especially when it comes to disciplinary action. With that said, providing a clear and easy-to-understand explanation of any such actions taken, with paper documentation, can help you avoid any problems with future disciplinary action, including termination.

On a more positive side, it’s vital to have an employee manual that lays out your expectations as clearly as possible. Spend time walking through the handbook with all new hires; take any questions they have; ask them to sign off on the handbook, saying that they have read and understand it.

Problems with Terminations

Most employers don’t like to fire people—but when an employee is underperforming, or has a toxic impact on your team, termination can be necessary. Of course, it is important to go about this the right way.

Some recommendations:

  • Be calm and professional—no matter how badly the employee messed up, blowing a fuse is never helpful.
  • Provide clear documentation to show any past disciplinary actions taken.
  • If possible, have an additional person in the room during the termination to help moderate.
  • Accept any feedback the employee wants to give, but don’t turn it into a conversation; once you’ve made up your mind to terminate, you need to stick with it.
  • Treat the employee respectfully; he or she may not be a good fit for your company, but it’s still important to acknowledge basic human dignity.

Get Help with Your HR

A smooth HR department helps your business run smoothly and efficiently—but a lot of trade service businesses feel as though they lack the proper HR experience. At Contractor in Charge, we can help your company with some of the administrative issues that arise from hiring, firing, and employee communication needs. Reach out to us directly to learn more!

13 Mar

Posted at 08:00h in Accounting, Business Tips, Sales

It’s not uncommon for service businesses to practice bank balance accounting—essentially just looking at how much money they have in the bank to determine whether or not they’re financially healthy. There’s something to be said for that approach, but in the end, it really doesn’t offer an accurate window into your company’s financial health.

Are You Looking at the Right Dashboards?

There are a number of financial dashboards and documents you can use to better assess where your company stands from a monetary perspective. Actually, there are arguably too many dashboards to choose from, and for some entrepreneurs this can be overwhelming.

But just like in your car—which also has a number of gauges—there are really just a handful that you should be reviewing consistently:

  • Balance sheets and P&L statements help you determine your overall financial performance;
  • Budget versus actual analysis can help you with long-term planning, and it also shows you areas where you’re spending too much; and
  • Reports showing your overhead percentage can help you keep your spending in check.

Are you Making a Profit from Your Jobs?

Something else that business owners should ask themselves is how much profit they are making from different jobs—and, which type jobs and services tend to be the most lucrative?

Simply put, knowledge of which services are the biggest money-makers for your company can help you with decisions about marketing, pricing, and more. If you don’t have a clear sense of the profit margins you have for each of your service offerings, that’s something to stop and calculate today.

How is Your Cash Flow?

Cash flow is another critical factor in determining your financial health. Hopefully, your business is consistently bringing in new revenues—and if it’s not, it could be due to any number of problems, such as poor markup of costs and overhead or overrun of actual hours to estimated hours.

Know the formula for covering overruns and non-billable hours in your business.  Most pricing models recommend using a 50% non-productive factor.  The fewer nonproductive hours, the more profitable a job or service will be.

Are You Generating Cash Profits?

A final question to ask yourself: Are you actually generating cash profits?

If your savings account isn’t growing, then your company isn’t profitable—plain and simple. The solution here is to make sure you’re setting aside profits from each deposit you make, even before you pay off your expenses. That’s what the Profit First accounting system is all about, and it’s something Contractor in Charge is pleased to show you.

In fact, we’re available to help you with any financial health questions that are stumping you; whether you need a skilled accountant or a Profit First coach who can turn your business into a money-maker, reach out to us today to schedule a free consultation.

05 Mar

Posted at 19:40h in Business Tips

Nobody likes to fire an employee—but sometimes, it’s what has to happen. When one of your team members is underperforming or exhibiting toxic behaviors that impact the rest of your team, disciplinary action may be required. And, if that doesn’t resolve the problem, you may be left with no real choice but to terminate.

Even when you know it’s the right move, you still might not like it—but there are steps you can take to make the process as smooth as possible.

Our Tips for Firing Employees

Here are a few of our recommendations—things to keep in mind for the next time you have to have that tough conversation with an employee.

  • First and foremost, make sure you have clear documentation. This is, frankly, to protect yourself against any potential lawsuit. Keep a written record of all the facts—what happened? What previous disciplinary actions were taken? Why did you decide to terminate? Which company policies were broken by this employee?
  • Always meet with employees in person to fire them. As a business owner, there’s a certain level of courage that’s expected of you; firing someone by phone or by text just doesn’t cut it. If at all possible, meet somewhere other than in your office. That way, when it’s all over, you can leave and allow the employee a few minutes to sit and collect themselves.
  • Have a third person in the room—an office manager, perhaps. This helps keep you on track; it ensures that you’re firm, but also fair; and, it gives you a witness—another valuable protection against legal threats.
  • Give honest feedback and provide the employee with some sense of why they are being fired—even if you’re pretty sure they already know. With that said, try to be brief. It shouldn’t become a full-fledged conversation.
  • Allow the employee a minute or two to speak up; an angry employee may want to vent a little, and while you don’t have to spend hours enduring a tirade, it’s not unreasonable to accept a little feedback.
  • Finally, always be respectful. Even when an employee disappoints you, he or she is still a human being, and deserves some basic level of kindness and dignity.

Be Wise in Hiring and Firing

Of course, a good hiring process can help you avoid terminations altogether—but that’s a topic for another day.

If you’re struggling with sound HR practices at your company, give us a call. We provide a number of administrative services that can lighten your load. Reach out to Contractor in Charge to ask us more!

20 Feb

Posted at 18:30h in Accounting, Business Tips

Contractor in Charge is committed to making sure you know about important events that help you know and love your numbers. This is what prompted this special blog to our customers and community regarding a change in 2018 pertaining to the Travel & Entertainment, Business Meals, and Fringe Benefits expenses in your business activities.

We were recently made aware by our sister company and franchise headquarters, Supporting Strategies, that the new tax reform law will have effects on your 2018 tax preparation.  Even though we are not tax professionals, our tax and CPA partners advised us to make this information available to our clients and recommend that we revise our client’s chart of accounts to better organize and clarify these expenses beginning in 2018.

Tax reform law, commonly referred to as H.R. 1 Tax Cuts and Jobs Act of 2017, has changed the deductibility of certain meals, entertainment, and transportation expenses. Prior to the Tax Cuts and Job Act, taxpayers generally could deduct 50% of expenses for business-related meals and entertainment. Meals provided to an employee for the convenience of the employer on the employer’s business premises were 100% deductible by the employer and tax-free to the recipient employee. Various other employer-provided fringe benefits were also deductible by the employer and tax-free to the recipient employee.

Under the new law, for amounts paid or incurred after December 31, 2017, deductions for business-related entertainment expenses are disallowed. Meal expenses incurred while traveling on business are still 50% deductible, but the 50% disallowance rule will now also apply to meals provided via an on-premises cafeteria or otherwise on the employer’s premises for the convenience of the employer. After 2025, the cost of meals provided through an on-premises cafeteria or otherwise on the employer’s premises will be non-deductible.

To maximize tax deductions and save time for tax preparation, we recommend setting up separate general ledger accounts for business meals (50% deductible), entertainment (non-deductible) and recreational/social employee expenses (100% deductible).

  • Travel & Entertainment: Business Meals – Meals associated with a business meeting.*
  • Travel & Entertainment: Travel Meals – Meals provided to employees while traveling for business. (50% deductible)
  • Travel & Entertainment: Staff Meals – Office Holiday Parties, lunch with staff, etc. (100% deductible)
  • Travel & Entertainment: Staff Meals – Local Office Work – Meals provided to an employee in the course of their work (i.e. working late, working weekends, etc.). (50% deductible up until 2025)
  • Travel & Entertainment: Entertainment – Entertainment provided to clients (no business conducted, i.e. tickets to a ball game, etc.). (not deductible)

*According to our CPA, it is unclear how the IRS will interpret the difference between deductible business meals (i.e. a business meeting over lunch) and entertaining a client over dinner where no actual business is conducted.  We will be recommending that all “Business Meals” in this account but clearly mark those that are related to a meal where business was actually conducted vs those where it was not.

Here is a chart for your reference.  We recommend you discuss this with your tax preparers and professionals regarding your business needs.

For more information you can refer to IRS Publication https://www.irs.gov/pub/irs-prior/p463–2017.pdf

If you have any questions, please reach out to Lynn Wise at lynn@contractorincharge.com.

19 Feb

Posted at 18:30h in Business Tips, Customer Service

Customer service isn’t just about making your customers feel good; in a very real and direct way, it can have an impact on your bottom line. For example, one of the key cash flow problems plumbing, HVAC, and other service trade companies experience is meeting the needs of their existing customers; acquiring new customers can be costly, but good customer service encourages loyalty—and thus, recurring revenues.

With all that said, it can be challenging to know how best to improve your customer service, beyond simply coaching technicians to be courteous and mannerly. That’s certainly important, but there are further steps you can take to ensure your customer service standards are sky-high.

Ensure a Live Customer Service Agent During Normal & Extended Business Hours

This may sound obvious, yet it’s amazing how many service trade companies allow incoming calls to go straight to a voicemail box or an automated system.

The bottom line is that, when a homeowner calls your plumbing or electrical or HVAC repair company, it’s probably because he or she is experiencing a problem and needs it to be resolved quickly. In some cases, it may be a true emergency.

A live operator can offer assurances that the problem will be addressed quickly, and even provide a specific time when the technician can be expected. Voicemail boxes cannot do this and might simply encourage the customer to call your competition.

Make sure you’ve got a real person answering phones, or outsource to a call center service that can act on behalf of your office and have access to the customer database.

Offer Incentives for Returning Customers

An easy way to show that you value customer loyalty? Offer coupons and discounts for existing clients.

You can provide them on invoices and receipts, or mail them out through your email list. And it doesn’t necessarily have to be much; even something like a five percent off coupon can make a customer much more likely to trust you for future service needs.

Be Transparent in Your Pricing

It’s difficult to quote customers the exact amount you’re going to charge, especially when it’s unclear how long the repairs will take or how much the needed parts will cost you.

What you can do is provide a basic framework—some up-front estimates for your time and labor, and some set prices for standard diagnostic fees or tune-ups on equipment.

It’s especially helpful to have a pamphlet or some other visual aid to show customers your consistent pricing.

Do Some Follow-Up

A final tip: Build customer loyalty into the culture of your business.  Assign the customer loyalty to each employee’s job roles and responsibilities.  Designate a person to have the job of making outbound calls to follow up with customers after a job is completed, ensuring the problem was fully resolved. Also ask if the technicians left the house tidy, if they treated the customer courteously, etc.  Create a 10-point customer loyalty questionnaire to be used during these calls or to send out in an email survey.

Show that you’re invested in seeing the problem fully resolved—not just in getting paid and then moving on. That’s ultimately how you win customer loyalty in the long term.

And again, that’s something that can have a meaningful effect on your revenues and your cash flow—so it’s certainly something to take seriously. If you’re ready to step up your customer service offerings, we’re ready to lend a hand. Contact Contractor in Charge today, and ask us about assistance with taking phone calls, scheduling, or other customer service musts!

08 Feb

Posted at 08:00h in Accounting, Business Tips

On paper, cash flow is a simple concept. Your business should be bringing in revenues, and its expenses shouldn’t be exceeding those revenues. In other words, there should be more money coming into your business than going out.

 

That’s easy to grasp, but sometimes reality gets in the way—and business owners find that their cash flow isn’t as strong or as consistent as it should be.

There are a number of potential reasons for this. It’s helpful to know what some of those reasons are, and to prepare for them accordingly. In this post, we’ll highlight just six of the most common sources of cash flow tension.

Late Payments

See if this sounds familiar: You invoice a customer for $800, and immediately start planning what you’re going to do with that money—whether investing in employee training, buying supplies, or putting it aside as profit.

But then, the money doesn’t come. A month later you send a follow-up invoice, and it still doesn’t come. You had high hopes for that $800, but now it’s nowhere to be found.

Of course, this is ultimately a problem for your bill collections department—and something you can address through better invoicing software, among other things.

Pricing Model for Products and Services

A common problem we see in the service trades is that businesses are not marking up their products and services to cover their costs, overhead expenses, and desired profits.

If your pricing model is not sufficient you will find you will constantly be struggling with having a positive cash flow.

Billable Hours vs Actual Hours

Are you paying your service technicians to clean their trucks, pick up parts at the warehouse, or attend meetings? Of course you are!

Consider the time you are paying your technicians for non-billable hours on a daily basis.  Do the math and consider the costs it adds to your products and services and PRICING MODEL! Yes, you have to add these costs to your pricing model and markup to cover your costs, overhead expenses, and profits.

A 50 percent Billable to Actual Hour is generally accepted as a good Key Performance Indicator for the trades.

Tip: measure this in your company for a month by having the technicians track their time spent on jobs and tasks. You may find that lack of billable hours could be a reason to change your marketing to increase leads; or, you may need to determine why your billable hours are below that 50 percent KPI.

Declining Sales

Sometimes the problem is as simple as declining revenues. This could be due to economic conditions deteriorating, but it could also be due to something like insufficient marketing, a bad online reputation, or a new competitor who’s siphoning your business.

If you notice a downturn in revenues, it’s important to explore the possible reasons why; in the meantime, anything you can do to decrease expenses will be helpful.

Tax Troubles

Depending on your business, you may file taxes monthly, quarterly, or annually—but no matter when you file, it’s important to be punctual.

If you’re late, or if you file improperly, you could find yourself hit with some big penalties—and that can obviously cut into your cash flow!

Make sure you don’t create cash flow problems for yourself; work with an accountant who will be rigorous in timely and proper tax filing.

Too Much Spending

Low revenues are bad, but so are high expenses. If you’re spending more than you’re bringing in, that’s obviously going to stifle your cash flow.

This is where the Profit First mentality becomes invaluable. With Profit First, you always set aside some savings first, then adjust your spending in kind. It’s a simple accounting paradigm shift that can transform any business from a cash-gobbling monster into a money-generating machine; at Contractor in Charge, we can coach you through it! Just give us a call to learn more about adopting Profit First.

Addressing Cash Flow Problems

As a service professional, you’ve gone to great lengths to master your craft. Likewise, we’ve gone to great lengths to master ours—namely, helping small businesses become profitable and successful.

No matter your cash flow problem, we’d like to help you take a look and develop a solution. Start the process today. Contact Contractor in Charge!