Are you making money?
There are two ways you can make more money: Decrease your expenses and/or increase prices. Preferably both.
1. Expenses: Review every expense in your business.. Utilities, Business Insurance, Rent or Leasing Costs, Automobile Costs (Payments, Insurance, Maintenance, Fuel), Payroll Expenses, Mobile Phone Expense, Eating Out, Software Costs, Accounting, Marketing, Taxes, Product Costs.. Open up your profit & loss statement and go to work.
As a former dealer the first expense I am looking at is payroll. Are your employees stealing time, even unintentionally? Are you paying attention? Or, do you even care as long as the work is getting done? Payroll can eat you alive. I finally opted to switch from paper time cards to an electronic time clock. This change ended up savings us $1000’s.
Where are you spending your advertising dollars? Hopefully its not in paper, print, or radio. Some TV can be helpful, but it is not the best form of advertising in today’s mobile world. You should be funneling all of your advertising budget into updating or building your website and social media. If you haven’t noticed people are walking around and, unfortunately, driving around while simultaneously looking at their phones. They are aimlessly thumbing through Facebook, Instagram, Twitter, & LinkedIn. They are googling what they want and viewing websites researching products they have found online. And you should want your business first on the list when they are searching for anything that pertains to what you do and/or the services you offer.
Price Increases: If you’ve been paying attention this year, prices rose on anything manufactured with steel & aluminum. In early 2018, the U.S. Government implemented tariffs on steel and aluminum imports into the United States. That significantly increased demand on North American sources. In addition to the tariffs, the raw material components for steel and aluminum continued to escalate. As a result, the pool & spa industry experienced increased costs upwards of 25%. Steel prices could continue to increase in the 1st quarter of 2019.
The steel manufacturers were first in line to raise prices. It didn’t take long for the rest of the industry to follow suit. If you haven’t noticed, prices have increased on everything you purchase to stock your retail stores &/or service trucks. Price increases are just part of business. When manufacturers raise prices, distributors have no choice but to pass that increase on to the dealers. Therefore, you have no choice but to raise your prices to your end customers.
If you are implementing price increases on your service rates, it is best to make a personal phone call to each of your customers to inform them of your new rates. Hand written letters are acceptable, but I would recommend following up with a phone call.
You may lose a few customers. I have always said if everyone is saying yes, your prices are too low. You will always win some & lose some. Especially when you have competitors in your market. You can always find new customers that will sign at your new rates. Don’t be afraid to raise your prices.
In closing, I recommend the following.
- Pay close attention to your P&L: Manufacturers & Distributors will continue to raise prices throughout 2019 & beyond.
- Job cost every project. What did it cost you to install the last pool? What did it cost you on the last liner replacement? Tracking your real costs of doing business will tell you if you are making any money.
- Buy products from a distributor that treats you well. You can buy from whoever has the lowest price, but I recommend buying from a distributor that has the best value; Do they offer an annual rebate? Do they help with marketing & building your business? Do they have your best interest at heart? Do they have a knowledgeable staff? Diversification is not always helpful in the pool business.
- Don’t rely on last years pricing to quote this years work.
Follow some simple guidelines now and you are sure to be profitable in the future.
If you are struggling in your business I bet you could use some help with your personal finances also.. I highly recommend Dave Ramsey’s Book, “Complete Guide To Money”. Free up some financial peace in your life.
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