What is the definition of a service business?
Basically a service business is one that sells (invoices) labour time plus parts or materials, if applicable. For example, a plumber or electrician invoices labour and parts; a drafting service or surveyor would generally only invoice labour.
We use the term, ‘tradies’ so you can picture the customers we serve.
Why do we call Profit Rescue, Profit Rescue?
Our name is a bit challenging but it is kind of self explanatory!
The bottom line is simply this – few service businesses (maybe 20%) actually achieve peak performance in terms of labour productivity and hence profitability.
To some degree yours is likely to be such a business which means you can do better. There are two issues here – we know exactly what’s holding you back and we know what you need to do to fix it – to ‘rescue the lost profit’ as it were.
The reason we prefer to work privately and directly with owners and managers is to avoid the notion that a business is ‘in trouble’ and the rescuers have moved in. It’s not like that at all.
Generally our work involves taking a business from reasonable productivity (say, 65%) to excellent productivity (say, 75%). There are no revolutionary disruptive processes involved – just a better way of capturing, selling and managing time. In fact, compared to what you are doing now, very little needs to change.
Are you suggesting I am not a good manager?
No way. What we are saying is that most service businesses (owners, staff and systems) do a good job booking in work and getting the jobs done. But often the owners have not been trained or mentored on how to capture, sell, monitor and manage the primary unit being sold in their businesses, namely time.
I’m always flat out so how can I work any harder?
We are not suggesting you do! Please understand that being extremely busy (eg. you working after hours and weekends, your guys working overtime) does not necessarily mean your business is achieving a high level of labour productivity; it just means you’re all busy! Capturing and selling the time is another matter…that’s what the Profit Rescue System is all about.
What is the definition of ‘productive’ staff?
We appreciate your whole team (admin, sales, management, factory and ‘tradies’) work really hard but the Calculator is based only on the tradies – staff and contractors whose time is charged and invoiced directly to customers…
* So, for example, in a plumbing business the plumber’s time, the guy that drives the backhoe, the apprentices, the trade assistant who does the roofing & repair jobs are ALL productive. Mary, the office manager is not
* May also need to include a portion of the owner(s) or partner’s time spent on the tools
* Note: Some ‘productive people’ may actually be paid as sub contractors
* Staff classifications, experience, hours worked and rates of pay are not relevant – if their time is charged to customers they are productive.
What does ‘full time equivalent’ (FTE) mean?
An employee is paid for 38 hours per week for 52 weeks (although only about 45 are actually available on the job) – that’s equal to ONE Full Time Equivalent. Generally that equals 1,710 hours available to be sold (38 hours per week x 45 weeks). FTE’s equals total hours available to be sold divided by 1,710 hours.
* Part timers and casuals work less than full time; so for example, a person working 3 days a week equals .6 of a FTE
* Apprentices are away for several weeks at school and receive varying levels of unchargeable on-the-job and in-house training; it might be that two apprentices equal one FTE
* Owner’s time on the tools will be less than one FTE – for some it might be .5 or as low as .2 (indeed it may be nil if there is no ‘tool time’)
* Agency contract staff would be calculated based on hours paid; so for example, 1,000 hours of agency time bought and charged to customers equals about .6 of a FTE.
* Absolute perfection to the nth degree may not be possible; a reasonable estimate will suffice.
How come there are so many ‘lost’ hours?
Basically it’s due to what we call ‘productivity leakage.’
There are at least 13 ways labour time can be so easily lost in your business; and once it’s lost it can never be recovered.
* In the end your problem is not that people aren’t doing their best or working hard
* The real issue is your system for capturing, selling and managing time is not as efficient as it could be.
What if the service division is one of several in our business (such as retail, wholesale, export and service)?
No problem – as long as you can identify or isolate the relevant numbers applicable to the service division they can be entered into the calculator. Thus the results belong to the service division only, not the whole business.
Is the productivity rating calculator confidential?
Yes absolutely – your business name is not entered into the calculator and there is no ‘save’ facility on the web site. So, once you’re done…it’s done!
What if I am not interested in the numbers (that’s the realm of my accountant)?
We understand; you’re busy with a ‘million-and-one’ other issues…especially in relation to getting the work done. But as owner you need to understand the basics of what’s happening in your business…
a) Our work ‘compliments’ what your accountants do. For example – their financial statements are required in our BPR calculations; and you will need their help with your (future) tax problem due to increased profitability!
b) The financial statements you get monthly, quarterly or annually from the accountants are great for tax purposes; however they are not very helpful for management purposes [one reason: they are too late – you need to manage WEEKLY.
c) The MYOB, Quickbooks or Xero reports are not very useful for management because there are no productivity measures. So, while these reports (eventually) show you WHAT happened they do not tell you WHY it happened…or HOW to fix it.
d) We guarantee the Profit Rescue System will get you very interested in the numbers!
What happens next?
The Profit Rescue System is a unique program that will transform your service business and your life, guaranteed!
There are SIX stages in our 6-month program; we…
1. MEDITATE on business principles
2. MEASURE you past performance
3. MAP your future with three key targets
4. MONITOR your progress against targets
5. MANAGE variances from target
6. MULTIPLY your business with targeted marketing strategies.
How much does it cost?
Our tax deductible fee is based on your profit increase and is negotiable.
For example, if we can show you a way to add at least $70,000 to your bottom line every year what would that be worth to you as a one off fee…payable in monthly instalments over 6 months?
What are the potential returns if we introduce the Profit Rescue System?
RETURN ON INVESTMENT: We would be disappointed if we could not help you put at least ten times the (one-off, negotiated) cost onto your bottom line every year!
CASHFLOW: If you can sell 5%, 10%, or more additional hours each year your cashflow problems will surely be overcome; and you will have the opportunity to build your business and change its destiny.
EXAMPLE: Assume 10 productive staff with an average charge rate of $90 per hour: a 5% increase in hours sold puts around $76,000 onto your bottom line, every year; 10% adds around $150,000. This additional profit can be used to reduce debt, fund business expansion or contribute to your superannuation. Whatever you do, your wealth increases.
What is the guarantee of success?
Providing (a) your productivity rating indicates potential for improvement; (b) you are prepared to commit resources to the program; and (c) you continue the Profit Rescue System…you will increase annualised hours sold by at least 5% with a commensurate increase in net profit before tax. If anything is likely to go awry we will pick it up very quickly and either fix it or implement our ‘no gain, no pay’ guarantee.