The pandemic is ending, if not over. Still, 2021 will pose its own set of challenges. Here is how you can compete and win the plumbing game this year.
Do Not Be Surprised by Inflation
Inflation seems inevitable. Commodity metal prices are soaring. The demonization of fossil fuels by our government leadership and announced executive actions restricting hydraulic fracturing have caused oil prices to increase dramatically. This is unlikely to be a short-term price spike. Not only does spiking oil prices mean an increase in transportation costs, oil is used in thousands of other products, including many that you sell. Rising energy prices means rising prices across the board.
In all likelihood your suppliers have already raised prices. If you have not increased your prices enough to pass the new costs along while maintaining your margins, you are leaving money on the table. In essence, you are subsidizing your customers. Can you afford to subsidize your customers?
And remember, it is not just the products you sell that cost more. Basic costs of business, such as gas prices, are higher.
Check with your suppliers. Find out their expectations for future price increases. Many manufacturers have announced mid-year price hikes, which the supply houses will inevitably pass along. Adjust your pricing in advance of the increases.
If your prices seem high to some consumers, do not back down. These are not your customers. If you try to serve everyone, you cannot afford to serve anyone well. Let some customers go and focus on the ones who appreciate your service.
Expect Supply Chain Problems
Covid exposed the fragile nature of the global supply chain, which had adopted just-in-time principles that eliminated room for error. Problems upstream in the supply chain cascade downward and multiply. As a result, the Wall Street Journal reported that 44% of small businesses faced some form of shortages in March.
Eventually, the supply chain issues will be worked out, but unpredictable shortages are likely to persist through 2021. Accordingly, plumbers should stock more products than is customary. This has the dual impact of protecting the company against supply chain disruptions and inflation. Just make sure the excess inventory is protected
Step Up Your Recruiting
Despite somewhat high unemployment, companies across the board in industry after industry find it a challenge fill job vacancies. In part, this is the result of the government’s lucrative unemployment policies that make it profitable to stay home and maybe, earn cash off the books. With the current Covid bonus, unemployment pays $600 to $700 per week in most states. As bad as that is, the president is proposing to bump this by another $100 a week. A top shelf plumber may make considerably more, but this still serves as a disincentive at the apprentice of helper level.
The ability of any plumbing service company to make money depends on the ability of the company to but butts in trucks. Company owners should devote more time to recruiting and pair an apprentice with a journeyman or master plumber wherever possible. As the apprentices develop, the company is protected against a plumber leaving in the worst case and ideally, setting the stage for growth.
To recruit better, the company needs to have good pay, good benefits, good training, and good working conditions. The latter means late model vehicles in good repair, company supplied uniforms, and a place to relax at the shop. This also needs to be communicated well. If the company does not have a recruiting brochure for prospective job candidates, the owner is not serious about recruiting.
Remember That Plumbing Remains a Great Profession
Count your blessings every day that you do not run a restaurant or other non-essential business. When the world shut down in 2020, you were able to keep working. When problems arise in 2021, you will be able to work through them. You protect the health of the nation. People need your service. Press on. Do not let them down.
If plumbing seems too hard, you are not doing it right. Get the help you need to make business more fun and profitable at the Service Roundtable. Visit www.ServiceRoundtable.com or call 877/262-3341 for more information.