How do you eat an Elephant?

By Paul Starkey
Published on: October 4, 2019

Let me share some thoughts from our first Bi4Ci User Conference, sponsored by ProSource. We had one elephant-size objective: Help companies find five points of additional bottom line profit. Given that the 24 companies in the room totaled over $104M in Annual Revenues, this seemed like a big hairy aggressive goal. In reality it is not.

Attendees were shown multiple ways to achieve the $5%+ in additional profit…

Three strategies were the personal winners for those attending:

  1. Raise parts prices on every project by 4 percent of revenue (if you are less than 7 percent total revenue today, you can).

  2. Enforce every bid over $20K to a minimum of 35 percent of the total bid amount being. Stop believing your proposal tool; it falls short on too many jobs.

  3. Find two hours per week more billing for each tech on your team; that’s typically more than $800 per tech per month more profit. Bill minimum eight hours for every eight hours paid. Do not give away time: planning the project, travel time, or any time on the project even if it is not on site.

How to verify success?

i.   Keep total payroll costs below 35 percent of Revenue

ii.  Top-line Gross Margin (revenues less what you pay for parts and equipment) should be 65 percent. Select products and categories with better margins.

So what does this mean to a $3M a year (12-15 person company)?

1 = $120K  from Parts Mix (add’l 4 points)

2 = $150K from Labor Mix (add’l 5 points)

3 = $86K (9 techs) from Billing

That’s $356K of additional profit on $3M of revenue – over 11 points of improvement with zero added cost. If you do only half of this you’ll get that extra 5 points.

The results are in the doing.  Both selling and installing sides of the business can improve. It starts with your next proposal.

Paul Starkey

Paul Starkey

Paul Starkey is a 28 year CI industry veteran who led ELAN from infancy to a 150 person company. He is a visionary, keen on innovation, pioneer of on-line training, and numerous product innovations. He is co-founder of VITAL MGMT, the BRAVAS cooperative and now PrepTech a workforce expansion service for CI.

Pin It on Pinterest

Technology Insider
Paul Starkey
Paul Starkey
Mike Anderson
Pete Baker
Joe Barrett
Tim Bigoness
Carol Campbell
Stephanie Casimiro
Doug Cole
Buzz Delano
Web Dev
Dawn Dickson
Jennifer Duke
Veronica Esbona
Jeremy Glowacki
Steven Greenberg
Leslie Greve
Robert Heiblim
Doug Henderson
Sam Horn
Technology Insider
Maureen Jenson
Joe Kane
Franklin Karp
Tim McLain
George McClure
Barrie McCorkle
George McKechnie
Mike McMaster
Jay Miller
Bruno Napoli
Susan Pechman
Joe Piccirilli
Andrea Reiner
Clark Roundy
Paul Sabbah
Marilyn Sanford
Claude Schmidt
Karyn Schoenbart
Lisa Schroeder
Eric Schwartz
Andrea Smith
David Solomon
Angela Speziale
Paul Starkey
Laasya Sudhakar
Jason Takahashi
Katee Van Horn
Andrew Vorster
Brian Wattier
Ed Wenck