I’m going to go out on a limb here and say that if you are in business and reading this publication, you are in it to make a profit. I’ve never met anyone in this industry (or in most other industries, truth be told) who was working at it for fun or some noble purpose other than the profit motive. After all we are capitalists. We take our money and invest it in a venture that, we sincerely hope, will provide profits and a “return” on our investment.
There are other benefits to the capitalistic model, not the least of which is providing livelihoods to your employees and their families. As well, the purchasing of materials, vehicles, maintenance on said vehicles, office space, furniture, computers and other consumables all flow from the single adventure we call “business.” In other words, at least today, business is what makes America tick. As anemic as things have become lately, that is still the paradigm here.
This fact has not been lost on the various levels of our government. If you want to really get apoplexy, sit down and try to figure out what percentage of your profits go to various taxes. The answer is upwards of 60% of every dollar you make. You read that correctly: roughly $.60 of every dollar you sweat to earn goes to paying a tax of one kind or another. Almost takes the fun out of being in business, doesn’t it?
Get a Handle on Labor Costs
So, when you consider how difficult it has become to make and hold on to a buck, you would naturally look into ways to maximize your profit picture. I have covered several different ways of maximizing your business’ profit, on each and every job you do, in past columns. I’ve talked about controlling overhead (always a good way to save $$$), and covered things like vehicle maintenance, material ordering and control as well as a few other mechanisms that are designed to stop the bleeding of your profits. These methods and ideas work not only in this especially nasty economy, but as models of good business in any economy.
When labor for a particular job is estimated, there is always a certain amount of guesswork involved. No matter how good the estimator is, there are variables within each and every project that make pinpoint accurate labor estimating a virtual impossibility. Still, a good estimator can get pretty close to actual labor time. Throw in a small “fudge factor” and you can get a darned good picture of your labor expenses on any given job. With some of the new software packages available, estimating labor has gotten very accurate.
Do it Right…the First Time
Whether you are a large company with many employees or a one-man shop, callbacks are one of the largest drains on profitability you can have. You can call it anything you like, do-overs, oopsies, screw ups, it doesn’t matter. Having to re-do work which has already been done is obviously an exercise in flushing profit down the drain. Sometimes a callback cannot be helped, and in fact many estimators and owners will allow for a certain amount of labor for this issue. However, frequent instances of having to revisit portions of a job cannot be tolerated.
Many years ago, during one of our housing booms here in the Phoenix area, there was a company doing tract homes that ran several crews of men who did nothing but drive around with an air hammer and compressor, breaking up slabs on new homes. Their job was to relocate misplaced drainage, waste and vent lines, as well as copper water lines (this is before PEX, but the issue is the same) that were positioned outside of walls or otherwise damaged by the guys who did the original installations. This was the worst instance of waste of profit I’ve ever witnessed personally, but I’m quite sure some of you have other horror stories that would rival it.
The whole point is, rather than address the root cause of the problem, (i.e.- lack of skill and training on the part of his “plumbers”) the contractor chose to fund and equip cleanup crews. The reasoning, at the time, was the contractor was doing so many houses that he needed to get the undergrounds in place so he could bill for them and to keep his cash flow going. Needless to say, that contractor went out of business pretty quickly.
Addressing the Problem
When you have recurring issues with work that has to be done more than once, the best thing to do is to isolate the foreman, crew or the man involved. If you are a service shop, evaluating your servicemen is a simple matter. Figure out why the work needed to be redone. It might be supervision. It might be the man or a whole crew. It won’t take long to understand what you need to do to correct the problem. It will usually come down to either inattentiveness, lack of skill or simply sloppy work habits, all of which can be addressed and corrected. Simply allowing the problem to continue by turning a blind eye to it is not an option. You are in business to earn a profit. Callbacks rob you of that profit potential and anything you, as an owner, can do to mitigate them will put money back in your pocket.
The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].