3 Ways Plumbing Contractors Can Improve Profitability
Plumbing contractors seeking long-term profitability cannot neglect their bottom line and contributing factors to its improvement – or for many, its probable fluctuation between red and black. Bear in mind, the goal is profitability, not just a satisfying revenue figure on the bottom line. Even if growth of your company isn’t a current priority, increasing your profit and stability should be. Focusing on how to achieve long-term profitability will reveal your company’s true health and areas needing more focused attention.
There are 3 important ways plumbing contractors can improve business profitability and these are relatable whether you’re currently struggling or thriving, or even if you’re not sure!
1) Look at your data
You don’t need to be a trained data analyst to extract value from the information you’ve collected about your business performance, estimates, clients, and other operational areas worth measuring. The important step of “looking at your data” doesn’t need to involve deep diving into apps and spreadsheets. Of course, if you have those tools and trust those analytics to guide your decisions, absolutely use them! Yet, for many plumbing contractors, a comprehensive review of important questions and thoughtful, objective answers may be a simple and sufficient exercise to gain insights about your business, such cash flow problems, obstacles impacting time and budget, opportunities for revenue where you’re leaving money on the table, profit leaks, and more.
The number-crunching and analysis start when your eyes assess a plan! That is to say, understanding how your estimates impact your profit, for better or for worse, you can look for patterns that can be illuminating. You may realize how you can focus more on those projects that drive revenue and avoid those that ultimately end up costing you. You may see which estimators are out-performing others. You may see where there are miscommunications, missed revenue opportunities, and ways to tighten up for bigger financial benefit or successful bids.
2) Leverage technology
Most construction accounting teams have finally turned to software (at the least, spreadsheets) to move beyond the old-fashioned ledger or paper scraps in a shoe box. It’s essential for any reliable accuracy and accountability. Project managers and their teams have also come to embrace technology, especially tech for mobile devices, to have important details on hand wherever the day takes them.
Yet, accurately forecasting the cost of projects is imperative to improving profitability, as well as to make budgetary and feasibility determinations that will drive the project should you win the bid. Now, more and more construction estimators are tapping into the power of technology, such as digitized estimating software, to do more in less time and with greater accuracy for a competitive advantage. This relates back to having data you can trust, access quickly, and use for valuable insight into how your business is operating.
As an early step in any project, estimators in the plumbing contracting trade must have a comprehensive, detailed, and accurate takeoff. While manual takeoffs can produce accurate estimates, they can also be complex and time-consuming, as well as yield errors when any measurement, count, or calculation is wrong. This is why many estimators turn to technology.
With onscreen takeoff software, plumbing contractors can streamline and automate for powerful advantage. Upload plans and perform takeoff right on the computer screen, while also using symbol recognition tools to quickly count kitchen and bathroom fixtures assemblies. This technology alone can make your takeoff process five times faster and allow unsurpassed accuracy.
Taking those advantages of speed and accuracy a step further, plumbing contractors can continue with integrated plumbing estimating software to send counts and measurement quantities automatically into the estimating process. With this technology, plumbing estimators can precisely and quickly estimate horizontal and riser piping, fittings, labor units, material prices, and more to ensure you calculate costs accurately and eliminate chances of expensive oversights and mistakes. When it comes to technology improving your profitability, don’t underestimate the importance of takeoff and estimating software.
3) Invest in your best assets
Building on the knowledge gained by exploring your data intelligence and by integrating takeoff and estimating software into your practices, you now surely have greater insight and appreciation of your company’s best assets and the impact of investing wisely. Your decisions on how to budget and invest time and money can be driven and supported by actual data about your business.
For example, based on awareness of which projects perform at or under your estimates not only informs your ideal opportunities for improving profitability, but also can help you identify your ideal customer. Determining your target audience profile can inform how you invest in marketing – whether email, social, direct, or a mix—it’s important to continually drive awareness of your services to new and existing customers.
With insights of your client list, such as how varied and diverse it is, you can ensure your business is ready for any economic environment – whether that’s a downturn or an opportunity for you to scale up quickly. Your data may expose if you have one client that makes up a disproportionate percentage of your revenues, which could put you in a risky position if they face financial hardships due to a recession or required cutbacks. You want your data to show you a diverse client list to support your long-term sustainability goals.
Whatever your client makeup, you want to deliver excellent service and quality work. Yes, that is good for your profitability and your ethical priorities, but it should also be quantified, tracked, and measured to provide valuable data outputs for more decision-making. Track what it takes to perform at the level that surpasses the competition and measure the success of that effort to understand how that investment contributes to your profitability. In addition, don’t let an exceptional project success go uncelebrated; secure valuable happy customer quotes and case studies to support your marketing outreach as well as word-of-mouth marketing.
Likewise, continually satisfying customers may require a method and technology to track all customer interactions and managing those communications for strong relationships. Your choice may be a bells-and-whistles Customer Relationship Management (CRM) software system, or perhaps Office 365 and/or Google G Suite would work for you. Main point here … if you don’t manage it, you can’t measure it; if you don’t measure it, you can’t be sure the effort or spend is worth your investment.
As you focus on diversifying, serving, and satisfying your client list, do not neglect another best asset – your employees. Retaining top talent is a key to your profitability and longevity. Is retention and recruitment part of your company culture? Do you have methods for knowing what is effective? What’s your method for balancing workloads with service technicians, for example? Your business profitability and growth should not come at the expense of the people representing you in the marketplace. Your employees are your ambassadors, your brand, and your top assets. You won’t have a shot at delighting customers with disgruntled or overworked technicians. Plus, your sustainability will suffer and any growth opportunity the economy might present would likely be for naught because you’ll be trying to keep up with the project demands you have, continually recruiting to help move projects forward, and lacking the essential decision-making time and data analysis you require for moving your business toward greater profitability.
In summary, plumbing contractors mustn’t get lost in the day-to-day operations and neglect long-term goals of profitability. Forgive the pun, but your profit and sustainability are not a pipedream. Consider these 3 key takeaways:
- Increasing your profitability requires measuring your efforts and investments now. Utilize your data analytics to drive decisions, identify problems and risks, and recognize what you’re doing well.
- Don’t underestimate estimating as a competitive advantage – automate the takeoff and estimate process for greater speed and accuracy. Mistakes and oversights can be incredibly costly. Turn to technology to ensure your bids are precise for better confidence against competitors and have peace of mind knowing exactly what you’re getting yourself into when you win the work.
- Your clients should be diverse, well served, and offer glowing testimonials. That requires you to understand your ideal client roster and invest in ways to foster their satisfaction. Delighted customers also require a culture that nurtures retention of top talent – so don’t burnout those high-performing employees; look to metrics and technology for the insights and tools that foster success of everyone on the team and profitability is often a natural byproduct of that effort and investment.
With an eye on the financial health of your business and diagnosing ways to improve profitability – from analytics, to estimates, to employees – you are better equipped for a beautiful bottom line.