In this episode you will hear from Chris Crew from the Blue Collar Success Group as he and I discuss the intricacies of profit and cash flow in-home service businesses. Chris, with his extensive background in the industry, shared insights on the dangers of “top line intoxication,” the significance of understanding profit margins, and the importance of managing labor costs and customer experience. All these things can prevent profit leaks. We also touched on the role of technology in enhancing efficiency and profitability in blue-collar jobs.
In this episode you’ll learn:
- What are profit and cash flow leaks in home service businesses?
- The difference between profits and cash flow
- The risks of operating a business without a clear understanding of cash flow and profit margins
- Tips for managing the challenges and cost of labor expenses
- What it means to fully burden the cost of employees and tracking labor expenses effectively
- How to get your customers to help you identify profit leaks and stop them
- Power of small improvements in many areas of your business and their effect on your profits
- How technology is helping blue-collar jobs with big potential to increase revenues and profits
- Why maintenance on your service vehicles can impact your profits
Key Moments:
- [00:02:19] The focus on revenue
- [00:03:07] The value of education and experience
- [00:04:19] Understanding profit leaks
- [00:07:14] Challenges with team costs
- [00:08:13] Compensation plan complexities
- [00:11:34] Efficiency and tracking of team activities
- [00:17:20] Customer experience and systems
- [00:21:01] Overcoming objections and increasing revenue
- [00:22:03] The power of 1% gains
- [00:22:49] The impact of technology on blue collar jobs
- [00:24:08] Profit leak: Truck inspection checklist
- [00:25:41] Benefits of a truck inspection process
- [00:28:30] Multiplying small profit leaks
Chris Crew’s Journey to Success
Chris’s story is nothing short of inspiring. Starting as an apprentice electrician at 16, he climbed the ranks to supervise a fleet of 18 trucks, generating over $4 million in revenue for a residential electrical company in Atlanta. His journey didn’t stop there; he went on to coach a large electrical company in Sarasota, Florida, and later managed a coaching team for over 90 locations nationwide. Before joining the Blue Collar Success Group, Chris owned an electrical business that he expanded from ten trucks to 65 locations, with a staggering $18 million in revenue.
The Hidden Profit Leaks in Home Services
During our discussion, we delved into the critical issue of profit and cash flow leaks that many home service businesses face. It’s easy to get caught up in the day-to-day operations and revenue generation, but as Chris pointed out, there’s a dangerous allure to “top line intoxication.” This is where businesses become so fixated on revenue that they lose sight of actual profitability. Chris shared his strategic shift from focusing solely on revenue to prioritizing profits, a lesson that many business owners could benefit from.
Profits vs. Cash: Understanding the Difference
One of the most common pitfalls for hardworking home service professionals is not seeing significant profits despite achieving substantial revenue milestones. There is a difference between profits and cash. It’s important to have a clear understanding of cash flow and profit margins.
Labor Costs: The Major Expense on Your PNL
Labor costs often represent a major expense on the profit and loss statement. Chris discussed the ideal key performance indicator (KPI) for labor costs and the challenges businesses face in managing these expenses. He shared a cautionary tale of a client who overpaid $100,000 in compensation due to a spreadsheet error, underscoring the importance of accurate and effective management of labor expenses.
Enhancing Customer Experience to Plug Profit Leaks
We also talked about the customer experience as a critical factor in identifying profit leaks. Chris says to treat every customer interaction as if it’s the most important part of your selling system. From handling phone calls to addressing objections, creating a seamless customer experience is key to maximizing revenue and profitability.
The Power of Small Improvements
Chris and I are passionate about the compounding effect of performance increases on overall profitability. Small improvements in various areas of the business can lead to significant growth and success. Recognizing the need for improvement and seeking help when necessary is essential for any business owner looking to thrive.
The Impact of Technology on Blue-Collar Jobs
Chris says technology will not replace blue-collar jobs but rather enhance them, making them more efficient and increasing revenues and profits. I loved his story about a business owner who saved thousands by implementing a simple truck inspection checklist. This not only saved money but also instilled pride in the fleet and reduced inventory shrinkage.
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