Smart ways to improve your bottom line: Part 2

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It has been another busy month with plenty of progress on key industry initiatives. One of the pleasures of my role as president is visiting our members in the different regions and attending interesting events.

Over the past few weeks I have attended meetings in Auckland, Coromandel and Nelson, and the passion exhibited, and issues confronted by our various associations are always similar.
We have formed our weathertightness solution group and have scheduled the first meeting for July. We will keep you updated on this important initiative.

Last week I was asked to attend and officiate at the opening of a fabulous new sustainable display home on Waiheke Island. It was a great event and provided an example of what can be done in the key area of sustainability. This home is designed and specified to provide every possible comfort while, at the same time, using natural resources. It is a home worth a visit, and one we are bound to hear more about.

By the time we go to print, I will have embarked on a round of House of the Year regional events, and I really look forward to seeing the high standard of work undertaken by our members.
It’s our 20-year celebration of this competition — a huge milestone for Registered Master Builders. A big thanks goes to those sponsors who have supported us along the way, in particular those that have been there right from the beginning.
Last month I covered the first nine of the 18 ways to improve your bottom line. Here’s the second nine:

10

Programme your work
Time is money and there is a direct correlation between job time line and profitability. This has been proven time and time again. Although quantities remain the same irrespective of building time, the reality is that a job that maintains momentum is finished faster and requires less management overhead.

11

Standardise and systemise procedures
Wherever possible, settle on systems that work and keep to them. It is important that things are done in an orderly fashion and can be followed by most, if not all of your staff/team. This applies to all tasks, from filing, costing and ordering, through to completion and maintenance checklists.

12

Watch staff levels — an obvious one
It generally goes without saying but can be hard to get right. There is always an optimum number of personnel required at any particular time. As a simple example, four carpenters will not always build a particular home twice as fast as two carpenters.

If your workload is a little inconsistent, try to take on people on a more flexible arrangement so you can release them when workload reduces. Also, to retain key people during quiet times, think about other tasks they can attend to. For example, your building supervisor could work on the tools for a period.

13

Sales volumes — vitally important
Set a sales target at the start of the year and regularly track actual sales versus plan. Again, this is a fundamental one. You need an annual target and be able to measure performance on a regular basis. This is not difficult.

14
Monitor advertising and promotions
Find out which promotions are working and set a realistic budget for advertising and marketing. Any advertising is expensive so you need to find out what works for you. When you receive enquiry (foot traffic, phone calls, show home visitors, web site hits) make sure you find out what brought them in. You simply need to ask and record the answers. This will tell you where you should be spending your advertising dollar.

15

Actively develop your referrals
Work hard to gain new business from existing clients. There will be no more cost-effective sale to make than that based on a referral. These can come from existing customers as well as other people you are regularly in contact with.
Suppliers and real estate agents are good examples. Try to form and maintain good working relationships and take advantage of networking opportunities in your area.

16

Look at your management systems
You need systems that monitor job performance, cashflow and other key performance indicators. These can be purchased and/or developed. They do not need to be complex. They simply need to give you required information at important times.

17

Build the project right the first time — try to avoid mistakes, they cost money
It’s worth the effort. Mistakes not only cost to rectify, they also slow down progress and cause frustration for all concerned. In some cases, they also break down the level of confidence your customer has in you and your team.
This alone can turn a co-operative customer into a tough, uncompromising customer looking for faults and reasons not to pay you.

18

Manage variations properly
Variations either cost money or make money, so ensure job changes are recorded and charged out correctly. Keep your customer updated to avoid debate at the end of the project.

It is absolutely imperative that you record all key discussions leading in to variations, and try to provide your customer with an estimate of the likely cost implications. Use a variations book on site and/or simply confirm all relevant discussions by fax or email on your return from the site.

Then, try to calculate actual figures as soon as you have them so you avoid a battle at completion. Document everything and develop a system for capturing relevant time sheets and invoices to make cost collation and justification easier.