Plumbers are great at turning a wrench. Few people in society today have the mechanical aptitude, trade skills, and technical knowledge of the average plumber. Unfortunately, turning a wrench is not the same as turning a profit. To win in the business of plumbing, plumbers must learn the following seven business skills.
1. You Deserve Prosperity
Victor Davis Hansen is one of America’s leading intellectuals. He is a classicist, in that he is extremely well versed on classical Greek and Roman literature. He reads the ancient works in the ancient languages. He’s one of the country’s top historians. He was also a farmer. Accordingly, he understands the value of hard work. He understands the difference between people who can actually do something and his colleagues on the Stanford University faculty, who Hansen says specialize in whining. Hansen refers to plumbing as one of the muscular occupations, one that provides real value, and one that no aggrieved studies professor could do on his own or live without.
Hansen sees plumbers and the muscular class as more essential and valuable than the Stanford faculty. Accordingly, plumbers deserve to prosper. You deserve prosperity. You protect the health of the nation and few have the ability, aptitude, and expertise you have. The only people who fail to value plumbers are plumbers themselves.
If you run a plumbing business, you deserve prosperity all the more. You are risking your capital whether from reinvesting in the business or personal sweat equity. You created jobs from nothing. You buy from local suppliers, supporting your community. You pay the local taxes government needs to function. Your payroll supports families. If you fail, no one will help you. If you succeed and sell your business one day, you can bet the government will suddenly become your partner and demand a fifth or more of everything you receive. That’s a double tithe at the point of a gun. You deserve to prosper.
2. Charge Enough
Pricing right involves understanding costs. How much does it cost to get a fully stocked truck, driven by a well-trained professional to an address? How much does it cost to fairly compensate the service professional, pay his benefits, payroll taxes, and cover his downtime? How much must material be marked up to cover carrying costs? How much is the overhead? Don’t forget profits and taxes.
There’s more to it than one might think. Accordingly, many plumbers say screw it and charge what their last employer charged or what a buddy is charging. But who says these guys know what they are doing? Most don’t since most plumbers undercharge. You can see the results in crappy trucks and reduced lifestyles. Charge enough to pay your team well, to be able to offer top service to customers, to reinvest in your business’ future growth, to reward yourself as investor for putting your capital at risk, and to pay yourself well for running the business.
3. Learn to Read Financial Statements
John LaPlant, business coach extraordinaire for the Service Nation Alliance says the numbers will speak to you if you will only listen. Operating without getting prepared financial statements that you review and understand is like playing a basketball game without any scoreboards. You won’t know how well you’re doing until the game is over and it’s too late to take corrective action.
Your income statement or profit and loss statement tells the story of how much money the company made for a period of time. Did you make money? Lose money? Is your labor too high for your revenue? Your overhead? The balance sheet is a snapshot of how valuable the business is at any point of time. Is the business worth more than it owes? Reading financial statements is as simple as replacing an angle stop, but without anyone to show you how, it can seem intimidating. Get help. Get coaching. Attend a seminar. Learn to read your financials.
4. Know Your KPIs
Key performance indicators (KPIs) are similar to the warning indicators and gauges on your truck. What do you do if your engine starts to overheat? What if the oil pressure drops? Do you continue driving merrily along or do you take action to prevent catastrophe? KPIs can let you know at a glance how well the business is performing and when they are off, they point you in the direction where you need to probe to resolve a problem before it blows up. There are universal business KPIs, like your current ratio. There are plumbing KPIs, like your average ticket. There are also company specific KPIs that you must develop.
5. Use Incentives
Business professor and motivational speaker, Michael LeBoeuf declared the greatest management principle is what gets rewarded gets done. In short, incentives matter. How are you incentivizing your team in your business?
Incentives can be tangible rewards like money or intangible rewards like praise or recognition. Some people are motivated by one. Some by the other. To create a high performing plumbing company you need to understand what motivates each person on your team and to the degree possible, incentivize them the way they want to be rewarded.
6. Network
Build your personal network. By and large, plumbers are not particularly good at networking. They are too busy playing firefighter over the crisis du jour. Yet, networking is one of the fundamental ways plumbers build their business. Plumbing is a neighborhood business. People prefer to find a plumber through the referrals of friends and neighbors first, social media second, and reviews third.
Make a conscious effort to network. Get involved with the chamber of commerce. Attend the mixers. Join a leads club like LeTip, Netweavers, or BNI. Join a service club like Rotary, Lion’s, Kiwanis, Optimists, or Civitan. These clubs typically meet over lunch or breakfast. You are probably going to eat lunch or breakfast most days anyway, so why not eat with community centers of influence?
Don’t stop with the above. Get involved with alumni groups, clubs, booster organizations, the PTA, and any other group you can find with potential customers and people who can refer potential customers. Don’t forget to network with the industry too. Join a local trade association and/or plumbing business alliance or best practices group.
7. Recruit
Recruiting people is one of the most important things a business owner can do. Your ability to grow is limited by the number of qualified plumbers you can put in trucks. Recruit ahead of the game. Recruit tomorrow’s plumbers today. Bring them in as apprentices and put them on trucks as helpers. In a few years, they will be ready for their own trucks.
Recruiting is not something done when you have an idle truck, but something done week in and week out. Have a method for staying in touch with every qualified plumber you meet. Build a network of prospective employees. Use your customers to help you recruit. You never know who might have a plumbing relative the next state over who might like to relocate.
Winning in the plumbing game does not require doing one thing right. It requires doing a lot of things right. Running a successful plumbing business is not easy. Not everyone or anyone can do it. This is why you deserve prosperity.
For 20 years, the Service Roundtable has been helping plumbing contractors win the plumbing game. There’s a reason the Service Roundtable is contracting’s largest business alliance. Learn more at ServiceRoundtable.com or call 877/262-3341.