Operations: Follow the Money
Money is either made or lost in the operations division of any company. It’s often the most overlooked area of the roofing business. Here are a few tips that will help your operations division succeed.
• Separate divisions by territory. With the price of gas there is no need to have supervisors, crews or even sales staff passing each other on the road. Segregate your company into regions to reduce overhead and optimize time management. Depending on the size of your coverage area, this may be split by state, county, town or zip code. Once step one is complete, try scrutinizing the production schedule to maximize efficiency.
• Deliver superior customer service. Make your sales team responsible for the entire project’s process, including collections, and pay only when cash is collected. This will reduce the typical blame that exists between sales and operations. Sales professionals will work with operations to deliver what was promised, increasing customer satisfaction.
• Protect your jobsite so others will notice.Surround the site with bright yellow caution tape and turn it into a scene neighbors will be curious about. Use plywood to protect garage doors, outside equipment and bay windows. Place fan-fold insulation on screen enclosures to show you are concerned about even the smallest detail. Use magnets and metal detectors to find all the loose nails in the yard. Cover driveways, walkways and lanai areas with plastic sheeting for an added bonus touch.
• Hire a personable groundskeeper.Reward the groundskeeper for communicating with the customers and neighbors. Use the person as a same-street canvasser when time permits.
• Encourage upselling.The best chance for new sales are from your existing customers. Capitalize on the potential by encouraging your crew leaders and supervisors to upsell while the job is going on. Siding, windows, insulation, skylights, ventilation and gutters are great add-on items. Pay a percentage of the sale and watch the revenue increase.
• Minimize loss through protection and routine. Protect the jobsite as outlined above. The key is to make it a standard practice on all jobs to ensure profits are not spent fixing minor damage caused during the job.
• Turn customers into an active sales force. Under-promise and over-deliver is a simple, yet effective, way to win over raving fans. Do it well enough and your customers will go out of their way to talk you up to their friends, family, co-workers and neighbors. Fine-tuning your operations division with small tokens of customer service will make your company stand out in an age of over-promising and under-delivering.
• Collect insurance dividends. Safety is a hot topic right now with the new regulations slowing production and increasing labor costs. Turn those losses into profits by working with your insurance carrier to qualify for premium reductions and dividend returns. A company with zero losses is an attractive client to insurance carriers. Use your record and proactive approach to safety to negotiate zero loss premium returns. Play your cards right and you could get as much as half of your money back the following year.
• Keep a tight production schedule.Your office staff, equipment and overhead are not cheap. The good thing is your competition has them, too. The difference is how you utilize your overhead. By pushing production, keeping a tight production schedule and always pulling jobs forward, your company will lower its overhead costs and be more competitive in the market.
• Communicate. Weekly turnover meeting between sales, inside administration and operations are a must. Having input from all parties ensures no details are missed and everyone is on the same page. Set a standard agenda and time limitation for each project. Require attendance and promptness.
• Remember that e-mail is your friend. Use e-mail to share project specific details with your team instantly. Rather than calling each person separately about a changed detail, simply e-mail for maximum efficiency. On-site photos of the job should be sent daily to the team so everyone is on the same page. Include job projects notes and crew performance for better tracking.
• Require daily reporting.Crews should check in throughout the day as their work progresses and detailed notes should be added to the customer’s record. Supervisors should send daily reports on the status of ongoing jobs so the team is in the know. Use these reports to update the customer in real time. Doing so will allow the team to proactively respond to changes as needed rather than reacting to customer complaints.
• Use preprinted forms. Utilize crew introduction letters, extra work orders, progress payment requests, existing condition exception forms, daily jobsite status sheets, thank you notes, survey and payment request envelopes to ensure your team is communicating in the most effective way. Standardized forms ensure ideas are perfectly relayed without misinterpretation. Make it official by requiring the use of these notices throughout each stage of production by your operations team.
• Make sure crews are performing at peak efficiency. Crew structure is an art, not a science. Crew leaders are the key. Find a solid crew leader and then give the crew leader the authority to find quality crew members and the responsibility to deliver a quality roof. Doing so will ensure the crew will work together well, without infighting.
• Pay by the job, not by the hour. Pre-setting pay gives the crew a goal. Breaking the pay down by the square, foot of flashing, distance from the shop, pitch, layers of tear-off, type of roof going back on, etc. will show the crew the pay is fair, if not better, and give them the ability to make more if they improve efficiency. You will still need to track hours and pay overtime for any hours above 40. To pay, take the sum and divide by the number of hours worked for an average hourly wage. Create a weight factor for each crew member so the pay is proportionate to skill.
• Train crews to do all types of roofing. This will help with scheduling, response and customer satisfaction. It also limits liability to one crew, as opposed to using different crews for tear-off and installation.
• Pay a bonus on each job.Create two percentage-based bonus systems, one for safety and one for production. Safety should be based solely on safety-related items such as ladder tie-off, harness attachment, etc. Production should be based solely on production-related items such as quality of work, customer satisfaction, site protection, etc. For each violation, deduct a percentage of the potential bonus. No job is perfect, so rarely give the full bonus so the crews are always improving.
• Assemble a single-rig setup. No sense sending multiple vehicles to the job. Utilize extended cab dump trucks to transport crews and haul debris. Use enclosed trailers to carry tools and common extra materials to prevent time away from site. Benefit from only needing one licensed driver, lower fuel bills, low insurance costs and minimal maintenance expenses.
• Set up the repair division as its own profit center. Repairs, service and maintenance teams should be dedicated and separate from the re-roof division. They should have their own employees, vehicles, equipment and tools. Teams should be made up of no less than two men for safety, efficiency and billing reasons. Box trucks are the perfect service vehicles, as they can carry just about anything that may be needed so the team doesn’t need to make a supply run once they are at the site. They are also secure and weatherproof.
• Pre-bid all service work. Try to bid all service work using a sales professional and then dispatch the crew. This will help ensure accurate pricing, proper preparation and efficient scheduling. Pay service crews a percentage of the total project cost with the chance for bonus for upselling additional work.
This short list of suggestions on how to improve operations does no good unless the steps are implemented. This month’s homework is to separate your company’s service area into territories and assign them to separate salespeople, making them responsible for the entire project. Create standard forms of communication focusing on e-mail and preprinted forms. Protect the jobsite and speak to your insurance agent about divided premium returns. Consider paying by the job and implementing a bonus structure based on percentage for performance and safety.
If you would like more detailed information about any of the ideas listed above or help with implementation please e-mail me at the address below.