There are many ways to increase the profitability in your restoration business. Some owners struggle with these while others do not. While I mention 5 methods, there are many more ways to increase the profitability overall. These are based on issues I’ve commonly seen over the years and have chosen to mention.
1. Accuracy Within the Scope
While the amount of leads coming into your organization may be vast, the scope of work being performed needs to be accurate. Whether you have a “write and run” system (Project Managers that write the estimate and run the job) or separate estimators, each individual needs to be experienced in writing the loss correctly. Many times, there are not enough hours to train staff correctly, leading to a misinterpreted scope being written. When estimators are trained properly, they tend to succeed far more than those that are not.
2. Supply Chain (Vendors)
Subcontractors and suppliers are the backbone of any organization. Organizations can carry a competitive edge when the right vendors are selected. One of the biggest strategies is to create a system that reviews over each subcontractor and vendor. Looking over items like: Pricing Structure, Specialization & Quality of Workmanship, Degree of Quality Control, and Flexibility & Cooperation are key to ensuring the best experience with vendors.
3. Job Scheduling Efficiency
Job scheduling is very important in the project management process. Managers need to proactively plan and execute the job schedule. Ideally schedules need to be completed within 2-5 days of the contract signing (larger jobs will take more time to pull the schedule together). One of the biggest benefits of job scheduling is that once the schedule has been completed the project manager just executes the schedule. In the event of a change or delay, project schedules will need to be updated as the tasks change. Keeping a close reign on the project scheduling will help the profitability of the organization going forward.
4. Quality Management
Managing the quality of work can ensure that the organization not only stays relevant to lead sources, but also remain profitable. When a client has a warranty issue (some are inevitable) this creates more cost on a job and a loss of productivity on current jobs. However, the client needs to be taken care of immediately. One way to manage quality consistently is to ensure that the right subcontractor is doing the right job. Too often project managers are looking to reduce the number of subcontractors on the job. This can lead to a drywaller/painter performing the tile installation as well. While there are some good tradesmen out there, most drywaller/painters do not install tile very well. You will hear it too when they say, “I can do it” versus “That’s my specialty.” That’s two different responses and project managers need to take note.
5. Job Costing
Job costing is another very important method to increasing your profitability. I’ve worked with contractors in the past that cannot tell me the real numbers on the jobs. This isn’t acceptable. You need to know where the actual job cost is at on every job. Subcontractors, suppliers, direct job labor, etc. are typically associated with accurate job costing. Furthermore, your project managers and estimators should be costed directly to the job. Every sales commission that’s paid out needs to be costed to a job. There are a lot of variables to job costing besides working out the numbers with subcontractors. Take possession of your costing and ensure that you’re reaching your highest potential in this industry!