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Uncovering YourDisadvantage
DollarPart Two
Finding the disadvantagedollar in your business.
http://nextlevelup.com.au/
In part two, I’ll talk about a business that was missing quotes (resulting in
missed business), and one which had mistakes made too often that were
causing stress or overtime on the part of the owner and causing him/her to
miss out on things like valuable family time.
I worked with a landscaper who had plenty of leads, but was only winning 1 in 5 of the quotes that he was quoting on. He was submitting on average 5 quotes a month. Each took him about 5 hours to do and the average value of each of the quotes was around $11,000. So, winning 1 in 5 meant that he was leaving $44,000 on the table every month. That’s $528,000 a year. Being realistic, he said that even winning 50% of his quotes, he’d still be leaving 2.5 times $11,000 times 12 months. That’s $330,000 a year on the table. Not knowing a better way to win quotes he realized was costing him $201,000 a year, which is what he would be winning if he could increase his wins to 2.5 wins a month.
Having those figures staring him in
the face was enough for him to
realize that he needed a better
quoting system and a better lead
conversion system. We worked on
it and had it in place within a week.
The result was that his winning
quotes went from 1 in 5 to 2.5 to 3
in 5 in a matter of months. Actually
less…it was about 6 weeks.
Before he analyzed and
quantified it, he was just putting
it down to the market. It’s the
way things are. You win some,
you lose some. There’s not
much I can do about it. When he
saw how much he was leaving
on the table over a year, he was
galvanized into finding a better
way, which is what we did.
Another example of someone I worked with was a plumber whose people keptmessing up jobs. Every time they did, he usually had to step in and fix it, eitherafter hours, in the evening, or on the weekend and/or he had to compensate
the client or give them a discount.
He found it hard to measure. One week, ittook him two hours after hours to fix up a jobthat had been messed up. Two hours of histime that he costed at $100 an hour was$200. But how does he put a cost on thestress, the reputation of his business, thepossibility of losing that client, or missing outon time in the evening with his family? Whenhe thought about it like that, he got quiteangry. He said if he put a notion value on allof those things, he would save thousands ofdollars. That’s what he thought it would beworth to him to have it fixed and not have ithappen again. His guess was that it wascosting him about $50,000 a year.
The missing systems were to do withaccountability. Believe me, they weredeveloped, worked on, and introduced inquick smart time. The staff were actuallygrateful for them and welcomed theaccountability. The truth was, they wantedresponsibility, but because the owner hadalways taken the responsibility and neveractually given them any, they began tojust shrug their shoulders about it and notcare because the boss always looks afterit and he doesn’t really trust us to do it.
It was a very interesting learning experience for the plumber.
Until next time...
Now there are some frustrations, issues, problems that when you measure andquantify them, have only a minor impact. Hardly enough to measure. So clearly,they won’t take priority on your “need to fix” list. Nevertheless, there will alwaysbe symptoms of missing systems that should be addressed so they no longerirritate you. The fewer irritations in your working day, the better so let’s dealwith them soon.
What difference would having those problemsand issues solved make to your life? The thingis, being human, we’re all happy to let them keepexisting…those frustrations andproblems…because we think it’s just the way it isand we can’t do much about it. Until youmeasure it and translate it to dollars. That’s thewakeup call to say, “Hey, this is more seriousthan I thought. I need my business to be moreefficient than that. I need to find a way to addressit.”
If we add up those disadvantage dollars:
While these examples are from different business owners, they allcould very easily have been from one. Let’s say they were. Let’s
add up the disadvantage dollars.
$13,500(in Part One)
$201,000 $50,000
What difference would $264,000 make to your business? I thinkthere’s hardly a business that would say that’s insignificant.
$264,000 over one year.