Contractor Corner

Last week, we introduced the concepts of Profit First—a whole new formula for handling your small business’ accounting. A quick recap: The generally accepted accounting practice is SALES – EXPENSES = PROFITS. This might seem like it checks out, mathematically, but the problem is human nature. If you view profits as “leftovers,” you likely won’t have any; everything you bring in, you’ll find a way to spend.

Profit First flips the formula on its head: SALES – PROFITS = EXPENSES. In other words, you set aside some savings (profits) from each deposit, and then you adapt your spending to whatever’s left.

Among its many virtues, Profit First takes advantage of human nature—and in this post, that’s what we’re going to look at in greater detail.

Understanding Bank Balance Accounting

Frankly, a lot of business owners just don’t have time to read through all the different accounting statements they generate each month. Certainly, you could review and correlate your balance sheet, your cash flow statement, and your income statement, setting some time aside for these documents monthly or even weekly—but doing so takes time and commitment that a lot of entrepreneurs just can’t afford.

What this means is that many business owners do what’s called bank balance accounting. Simply put, they check their bank balance every day and see how much money they’ve got—and make their financial decisions accordingly.

Now, it’s easy to understand how this is ultimately unwise, if you’re also doing those generally accepted accounting practices. You’ll look at your bank balance and determine how much spending you can do, but may not feel as confident or as committed to setting aside profits.

But with Profit First, you can actually use bank balance accounting to your advantage. Here’s how: You set aside your profits first—and from there, you keep checking your bank balance as usual, and make spending decisions accordingly. The only difference is that you’ll have already set aside your profits, and your spending will change accordingly.

Profit First Works with You

To a large extent, then, Profit First allows you to maintain your existing financial habits—something that many entrepreneurs and business owners love! But even as you continue your bank balance accounting practices, you can also be sure that you’re actively growing your business, putting money in the bank with each and every deposit.

That’s the beauty of Profit First: It’s a simple paradigm shift, yet it can transform any business from a cash-eating monster into a money-making machine. And we’d love to show you how. At Contractor in Charge, we are Certified Profit First Professionals. Contact us today to learn about how we can coach you through these important financial disciplines!

As the owner of a small business—whether it’s plumbing, HVAC, electrical, or another trade altogether—it’s vital that you invest every precious minute in adding value to your company. That means focusing on the things that only you can do: Leading your team, serving your customers, and strategically growing your business. Meanwhile, simple and repeatable tasks—things like bookkeeping and payroll—are frankly things you don’t need to be spending your time on.

But if you don’t do them, who will? Often, the answer is to hire and delegate—but there are some problems with this model. Not only do you have to find the right person, which can consume both time and expense, but you have to train them, then provide them with all the proper benefits, in addition to their regular salary.

Introducing the Virtual Contractor Model

There is an alternative method, and it involves what we call the Virtual Contractor model. You may have heard of a Virtual Assistant—a “cyber secretary” to whom small business owners can outsource some basic appointment-setting and record-keeping services. Well, virtual contractors work along similar lines—only our job is to empower the owners of plumbing/HVAC/electrical/remodeling companies through such services as payroll, dispatch, accounting, and beyond.

When you outsource some of those simple and repeatable functions to a Virtual Contractor, like Contractor in Charge, you get a team of experts who will handle the important operational and financial tasks, freeing you to do those value-adding things we mentioned above. There are some key benefits to choosing this method.

Five Benefits to the Virtual Contractor Model

  1. You don’t have to spend time or money training us. You’ve spent years developing the skills and acquiring the certifications you need to apply your trade—plumbing, electrical repair, or whatever else. Well, we have the skills and certifications needed to help you get a handle on your accounting, to ensure cash flow, to prioritize profits, and to help you grow your business. There’s no learning curve required; a Virtual Contractor is ready to go on Day 1.
  2. You don’t have to pay us benefits. Outsourcing can save you a great deal of money, plain and simple—and one of the main reasons is that you don’t have to pay a full-time salary or benefits. We don’t need sick days. We’re here to help you maintain and grow your business, day in and day out.
  3. You get additional expertise on your team. We work with a lot of contractors, and we have the utmost confidence in your skills and abilities. But mastering every angle of a business is simply not possible—and when you spend all your time on the job, it’s hard to have time left over to master things like cash flow. But we have the expertise to cover you, such as certification in Profit First and a number of other key disciplines. It’s not just that we help you with certain aspects of your business; it’s that we do so expertly.
  4. You get a team. With Contractor in Charge, you’re not merely hiring one person to come work for you. You’re enlisting an entire crew of experts who bring different areas of specialization—and our job is to work together on your
  5. You can reclaim your time. Because you no longer have to worry about doing the administrative stuff on your own, you can handle those tasks that you’ve been putting off, like training employees or mapping out a strategic plan for your business. Or, perhaps even better, you can actually enjoy your life as a business owner. Get more sleep at night. Take a day off every once and a while.

The Virtual Contractor model is empowering—and the benefits go on and on. We’d love to talk with you more about how it could help your business. For a free consultation with one of our experts, reach out to Contractor in Charge today!

You’re probably familiar with the tried-and-true formula for calculating business profits. You start with all your revenues—the money you’ve brought into your business. You subtract the expenses. What you’re left with is profit—at least, in theory. As many business owners have discovered, however, it’s not so much fun relying on “leftovers” to grow your business. And, as additional expenses pop up, it’s all too easy for those profits to evaporate altogether, reallocated to other things.

This conventional model, though mathematically sound, doesn’t account for some basic human behaviors—and that’s why it’s ultimately lacking. The good news for business owners is that there is an alternative cash flow system, known as Profit First.

At Contractor in Charge, we’re certified as Profit First coaches, and we’ve used this system to unlock staggering hidden cash profits in a wide range of businesses. Today, we’re going to offer just a few introductory thoughts on what this system is, and how it could impact your business.

Parkinson’s Law

The Profit First system comes from a book of the same name, written by Mike Michalowicz. It advocates for a simplified accounting process—combined with a few mindset tweaks—to result in a far more financially successful business than you’ve dared to imagine previously.

There are no tricks or gimmicks—just a new way of looking at things. And it all starts with something called Parkinson’s Law.

The Law is often summarized in this way: Work expands to fill the time available for its completion. In other words, if you’re given eight hours for a project, you’ll probably use the full eight hours to get the job done—just as you would if you were given four hours, or 10 hours, or even more.

Profit First extrapolates from this that the demand upon a resource tends to expand to match the supply of it. Business owners know this to be true: Have you ever noticed how, no matter how much money you bring in, you always end up spending exactly that much money on various expenses?

What this means is that you never have those “leftovers” for profit, or at least not as much profit as you should have. Profit First offers a new way of doing your accounting—one in which, when you bring in new money, you immediately set aside part of it to go into a savings account. Those are your profits—cash in the bank. Then, with whatever is left over from that, you cover expenses.

A Paradigm Shift

This new perspective can take some getting used to—but it’s not as extreme as you might think. In a lot of ways, it’s just a retooling of priorities. You take your profits before you do anything else, rather than leaving it until last. As a result, you are always growing your business; you are always profiting.

The Profit First system can change the way you handle cash flow—and we’d love to talk more with you about how to implement it. Reach out to Contractor in Charge to schedule your free Profit First consultation!

Why You Need To Offer 24 Hour Customer Service For Your Plumbing Business... If you are dedicated to growing your plumbing business, one of the first things that comes to mind is offering 24 hour customer service!

If you are dedicated to growing your plumbing business, one of the first things that comes to mind is offering 24 hour customer service!

How often do your customers have a plumbing emergency in the middle of regular business hours? Not often! They tend to happen at odd hours when you aren’t open for business.

Without 24 hour customer service, you don’t get the message from your customers until the next morning.

Not a big deal, you think…

Really? It’s an emergency situation so do you honestly think they will stop with a message to you? No, of course not! They will call another plumber who has 24 hour customer service to come and help them immediately.

That’s a big deal to your bottom line. Lost business is a problem. Annoyed customers who will be very happy to tell other people that you aren’t responsive in emergencies.

Now, how you handle those calls is another matter. Do you have guys that you can dispatch at 2AM? Maybe your business model isn’t set up that way (yet). Or maybe you are hungry and willing to leave your bed to catch those calls.

Another thing you could do is partner with a local company that does have 24 hour service. You could possibly get referral payments, but at the very least you will have provided an excellent experience for the customer that called in with a problem.

It is easy to think that will turn into a lost customer, but in actuality, it may turn into a lifelong evangelist for your company!

So how great is a 24 hour customer service company for your business?

If you are doing those in-house, possibly it is you who are getting woken up at all hours of morning, not good! If you (or one of your employees) is the one taking those calls, you might want to think about hiring a Customer Service company who can solve some of your problems.

Let’s start with those lost emergency calls. Not lost anymore. The best customer service companies also have the ability to dispatch for you as well. Now those customers will be yours and see you as super responsive. That’s a win/win for sure. That service continues during business hours as well meaning you can keep your focus on your customers and business.

Tired of all of the bookkeeping chores as well? A top notch customer service company will be able to handle that chore for you as well.

Don’t lose business because you don’t have the resources to be responsive. Hire professionals to help and watch your business grow.

Find out more about how to hire an amazing customer service company like Contractor In Charge! We work nationwide and are available 24/7 (how great would that be to say about your business?) Check out our In Charge Services TODAY!

Why You Need To Offer 24 Hour Customer Service For Your Plumbing Business... If you are dedicated to growing your plumbing business, one of the first things that comes to mind is offering 24 hour customer service!

A successful business is a profitable one. They bring in more income than they spend in materials, supplies and other bills. The point where your income equals your output is your break even point. Do you know yours for your HVAC business? If not how can you set goals for your business?

Discover your break even point

To discover your break even point you need to have a complete handle on your business finances. Do you know what you are spending? How about what you are collecting? What about jobs in progress? Do you have a bookkeeper or use bookkeeping software?

You MUST track your numbers. In order to plan for your business, set goals or even know how many jobs you need to be bringing in each month you need that information. So start by gathering your bills, receipts and deposits and get it in gear.

Related: 9 Key KPIs In Your HVAC Business

The numbers will show areas that need improvement

Once you have the numbers entered you can see where things stand and have a clearer picture of your business and what your breakeven point is. You will be able to see where you need to make improvements.

  • Are jobs taking too long or being bid too low?
  • What about the number of jobs, do you need more?
  • Are there places where you can shave costs?
  • Could you shop around for better utility rates?
  • Phone and internet high?
  • What about your supplies and suppliers?
  • Do you buy more than needed or pay more than you should for those supplies?
  • How about your payroll?
  • While you may not be able to cut back on techs, what about office staff?

Not sure how? A customer service company can be a big help there. They could cut out your entire office staff and give your customers better service. They could also take over those bookkeeping chores and keep you up to date on your numbers.

Find a customer service company

Find your break even point, then use it to improve your business and make it a success. The answer to doing that may well be finding a customer service company to consolidate some expenses: answering service, dispatch and bookkeeping.

Learn more about how to get all this done for you! Check our In Charge Services

Do You Know Your Break Even Costs For Your HVAC Business?

You started your HVAC contracting business to help people. What you didn’t expect was all of the things that you needed to know and track to keep your business viable. Things like what your 9 KPI’s were. You don’t even know what a KPI is. You know that what you don’t know can hurt you, so here is what you need to know.

KPI is an acronym for key performance indicator. It’s a numbers tool used to evaluate the health and success of a business. As an HVAC contractor there are some that are universal KPI’s. They involve knowing your financial numbers as well as knowing how they can be used to improve your business.

Sales vs costs

One of the first two KPI’s you need to know are how well your trucks are doing, meaning the sales per truck and the cost per HVAC truck. If the sales outweigh the costs, you’re doing well. If the costs start to outweigh the sales you will need to determine if it’s because of the age of the vehicle or because sales are down.

Profit and loss per HVAC truck

Next, look at your fleet. What is the profit and loss per truck? It means taking the first two above and looking at the fleet as a whole. Again, if the trucks are older they may be the problem. If not, it may be your techs, sales or other thing making your fleet responsible for losses instead of profits.

Look at your HVAC techs

What is the cost to keep each? What that entails is their salary, vacation and sick time, health insurance costs, payroll taxes, 401K costs or whatever else is included in their benefits package. This can help you figure out who is benefitting your business and who is not. It also will help you know one of the other KPI’s involving your tech, their break even. What this means is what is the point that the cost of the tech is even with the sales or jobs attributable to them.

The next few deal with your revenue

What is the revenue generated per department? Your break even sales per month (or revenue minus costs so the answer equals zero)? How many jobs do you need to sell per month to get to the break even? What about your GMP or gross profit margin?

All of these will tell you a few things

One, the number of jobs you need to sell and perform in order to get above break even and make a profit. Another is how well your techs are doing their jobs. If you have any that aren’t investigate why, provide more training or let them go. Put your KPI’s together and you will know where you need to improve or how you can expand your business goals.

If you would like to find out the easy way to have us track your KPIs for you! Check out our services TODAY!

Key KPIs In Your HVAC Business - You started your HVAC contracting business to help people. What you didn't expect was all of the things that you needed to know and track to keep your business viable. Things like what your 9 KPI's were. You don't even know what a KPI is. You know that what you don’t know can hurt you, so here is what you need to know.