Many pool service professionals do not evaluate their business or refine their business systems. If they did, most pool men would notice a reduction in the percentage of profit from year to year. Granted, they may be experiencing a larger bottom-line due to increasing the number of customers on service, but they are working harder and making less.
Many pool men are flying by the seat of their pants. Flying by the seat of your pants, or not having at least a simple evaluation and refinement plan, will place your business in jeopardy.
It is important to evaluate and refine your business systems, including but not limited to: software and billing, educational, revenue enhancement, response, expense tracking, marketing, and customer and employee evaluation systems.
For the New Year, let’s try to create a simple roadmap and see if we can’t follow the yellow brick road.
For our first endeavor at evaluating and refining, we should forecast revenue. Without the proper revenue, we have no business.
If you are an astute businessman, all things being equal, you should already know what your income will be for the coming year. Your new task is to forecast 2019 revenues after determining what revenue enhancement procedures you will implement and what new revenue dollars you will seek for the coming year.
For instance, if your service revenues are currently $5,000.00 per month, and you implement a twenty percent increase in April of 2019, your percentage of increase for the year, with a two percent fallout rate, is approximately thirteen percent. This is as close as I can approximate not knowing how many accounts make up the initial $5,000.00 per month service revenue. The great thing about refining and evaluating your revenue enhancement plan is you get close to the real numbers. Without real numbers, how can you plan for future events?
Many pool men believe, if they implement a twenty percent service rate increase on $5,000.00 per month service revenue, they pick up an additional $12,000.00 per year. Theoretically, this is true after the first year, and depending on when you implement the increase. However, even in the second year, you will not receive a net twenty percent revenue increase because the cost of doing business is going up every year. You are now comparing 2019 dollars with 2020 expenses. So, in addition to evaluating your revenue enhancement plan, you should also evaluate your expected expense increases based on wholesale expectations and expected chemical increases.
Believe me, chemical companies and wholesalers already know what increases they are expecting or plan on implementing for the New Year. Granted, there are some unexpected increases we suffer at times being in business, but most wholesalers have a general idea as to the increases they will implement for the New Year.
If you cannot get the numbers from your suppliers, you can use last years numbers as a guide to this year’s increase. At least you make some effort to stay ahead of the expense train.
This may sound like a lot of work, but it is not. Even if it were a lot of work, it is necessary for healthy survival. Healthy companies are happy companies. Successful pool men are more satisfied, as a rule than unsuccessful pool men. Many pool men say they do not have time to evaluate their business. I say, get up one hour earlier, one day out of the 365 days that make up a year, and work on refining and evaluating your business.
Evaluating and refining your business systems, as stated above, should be done at least once a year. Business expenses increase at different times of the year. There are new and better forms of servicing swimming pools invented at different times; better equipment and chemicals. How would you know what is available and what will work for you if you do not take the time to evaluate your business and the industry? Without evaluating your business on a regular schedule, you miss out on some great improvements. So, determine what wholesale increases you are expecting for the New Year; then determine what revenue you need to offset these expense increases, and then determine what percentage of profit you want for the year.
By making these evaluations and refinements early in the year, you get on track much faster and start experiencing better revenue growth sooner. Remember, you are the master of your domain. You cannot complain about how the industry treats you if you cannot treat yourself properly.
To learn more, call our office at 877-766-5757 to speak with a specialized Agent today.