Page 9 - Compass Issue 3

MANAGEMENT
by Paul Riddle
7 StepS to repairing Your groSS Margin

Hello friends. Summer's around the corner. For many of you it means 4. iMprove Your average invoice—thiS iS a Big one.
life is about to get much busier. And that’s a good thing. You’ll be fo- • Be sure your pricing and closing ratio are where they need to be.
cused on getting your techs out on calls and making cash. That doesn’t • Review your dispatching and implement a call-priority system.
mean you should ignore your numbers. We often encounter members • Emphasize to your techs the importance of building relation-
struggling with their gross margin. Here is the gross margin by trade: ships and providing complete service.
AirTime: Replacement: 58.5%; Service: 52% • Have someone riding along with your techs periodically to keep
PSI: 60.3% them accountable.
ESI: 64% • If you’re not offering financing, start!
RSI: Replacement: 45%; Service: 65% 5. exaMine Your inventorY control.
To make sure we’re all speaking the same language, your gross • In addition to examining your POs, examine truck-restocking
margin is what’s left over after costs associated directly with the procedures.
sale of your service—like materials and direct labor—are paid. • Increase the level of security in your warehouse
Now, I realize most of you know that, but what many struggle • Take advantage of any vendor-incentive programs available.
with is how to FIX that number. So, if you’re stuck in that situa-
tion—where your gross margin isn’t quite right—Here are the 6. reDuce call-BacKS & warrantY callS!
“7 Steps to Repairing Your Gross Margin”: • Analyze your techs’ call-back percentage and see if you need
more training.
1. MaKe Sure You’re priceD properlY. • Develop a quality checklist that must be completed by your techs on
• Review your pricing formula. You may need to increase them. every call.
2. aSSeSS Your laBor. • On warranty calls, see if you’re having reoccurring issues with a
piece of equipment or material.
• You may have too many call-backs or warranty calls. Your techs
may need some technical training. • If a problem persists, switch to another brand.
• Maybe you’re paying your techs too much. You should be on 7. aSSeSS Your returnS & allowanceS.
performance-based pay. • Review how much you’re giving in the form of advertised discounts
• Make sure you’re dispatching properly, and make sure your techs and financing discounts.
aren’t spending too much time running to the supply house. • Examine call-backs and minimize by following steps listed earlier.
3. evaluate SpenDing on eQuipMent & MaterialS. Ensure you’re operating at a proper gross margin—it is very critical
• Contact your suppliers and see if they have any available to your success. If you’re gross margin is off, so is your profit margin.
discounts! Even better, shop your business! If your profit margin is off, your not making as much money or grow-
• Examine your POs to make sure you’re not buying too much. ing. If you need help addressing these points in repairing your gross
margin, give us a call.
• Process warranties as quickly as possible

FLEXIBILITY IN

WATER HEATING! It took over 20 months and
hundreds of people to make
®
The ElectriFLEX the first Goodman brand
Series of condensing unit at our new
™
facility in the United States.
Commercial
Electric Water …but it took only a
Heaters few seconds to make
the next one,
and the next one,
• Includes light duty, and the next one.
medium duty, and This is further proof that
heavy duty models.
an HVAC workforce in the
• Simple conversions U.S.A. is good for you and
of voltage, phase, your customers.
and kW input.

Scan here to download
a copy of the ElectriFLEX
Series ™ brochure! At Goodman, we believe in American
dependability. Units are designed,
engineered and assembled in the U.S.A.
Ready to join a successful team?
www.goodmanmfg.com/become-a-dealer
Built to be the Best ™
Our continuing commitment to quality products may mean a change in specifications without notice.
© 2017 Goodman Manufacturing Company, L.P · Houston, Texas · USA · www.goodmanmfg.com
©2017, Bradford White Corporation. All rights reserved. www.bradfordwhite.com

THE COMPASS | Issue 3 | 2017 9