Fifteen Things All Successful
Companies Have In Common
Tom Grandy
Grandy & Associates
Tom Grandy is the founder of Grandy & Associates. Tom is an industrial engineer by training,
has worked as the general manager of a service company and was previously the Director of
Company Development for Dial One franchise. Tom founded Grandy & Associates in 1987 to
teach contractors how to run profitable businesses
HPBExpo Education
March 5, 2014 – March 8, 2014
Salt Lake City, UT
Sponsored by:
A division of Innovative Hearth Products
Fifteen Things All Successful
Companies Have in
Common
Did you ever wonder why some contractors
seem to grow and prosper while others work just
as hard but seem not to be going anywhere?
Did you ever ask yourself “I wonder what they
are doing that we are not?” Well here is your
chance to find out! During today’s session we
will review fifteen things that all successful
companies have in common. You will go through
a “checklist” to see how you are doing and will
come away with all kinds of ideas to improve the
profitability of your company. Don’t miss this
exciting opportunity to begin to put together a
game plan for PROFITABLE growth.
“You are going to enjoy
this presentation.”
Tom Grandy, president
FREE Stuff Plus Conference Special to
help you grow and prosper!
Grandy & Associates will provide you the following FREE items just for
attending today’s program. Simply fill out the last sheet of this
handout and fax it back to 270-684-7425.



Free - “Danger-Trouble Ahead” - Audio program ($18.95 value)
Free - Monthly eNewsletter (four business building articles each month
Free - List of 24 Key Performance Indicators for your service
department (with definitions)
Tom Grandy
Grandy & Associates / 1020 Halifax Drive / Suite 102 / Owensboro, KY 42301
Phone: 1-800-432-7963 (Canada 270-926-3212) / FAX 270-684-7425
E-Mail: [email protected]
www.GrandyAssociates.com
2/7/2014
Welcome
Today we are going
to find out what
makes companies
successful.
You are going to
love this session!
“We have trained over 14,000
contractors, from coast to coast,
how to run profitable companies!”
Tom Grandy, president
Story of taxi
“We teach contractors how to run profitable businesses!
What is a Successful Company



Covers ALL the “real” costs of doing business,
from a cash flow standpoint including:
a) Paying the owner a regular
and reasonable salary
b) Retirement plan for the
owner/employees
Meets, and hopefully exceeds, the customers
expectations
Generates a 3% to 7% pre-tax net profit.
As Each Area Is Reviewed You Will Be
Asked To:


Rate your company on the
point scale shown. Point
values for each category
will change.
Write down one item to do
when you get back to the
office.
No one will see your
total score!!!
1
2/7/2014
Item Number
#1
Take this
page out of
your
packet (last
page) so
you can
write on it.
Points Earned
___________
#2
___________
#3
___________
#4
___________
#5
___________
#6
___________
#7
___________
#8
___________
#9
___________
#10
___________
#11
___________
#12
___________
#13
___________
#14
___________
#15
___________
Total Points=___________
“We teach contractors how to run profitable businesses!
#1
Know What Labor Rate MUST Be Charged
In Each Department to:


Cover all the “REAL”
costs of doing business (from
a cash flow perspective) and….
Generates a significant pre-tax
net profit
“We teach contractors how to run profitable businesses!
An Accurate Labor Rate Is The Basic
Building Block For Profitability
• Number one failure of most companies today is
failure to re-calculate profitable labor rates on a
REGULAR BASIS
• Company started by basically charging what the
rest of the market charged:
a) Little overhead, significant gross profit.
b) Company grows, rate stays the same,
profitability SHRINKS!
“We teach contractors how to run profitable businesses!
2
2/7/2014
How To Calculate Accurate Hourly Rates
1. Determine the REAL costs of doing business in each
department.
a) Overhead costs
b) Cost of non-billable time
c) Full amount of loan payment
d) Equipment replacement costs.
2. Determine the amount of GROSS PROFIT you make
when selling materials or parts in that department.
“We teach contractors how to run profitable businesses!
How To Calculate Accurate Hourly Rates
3. Calculate “billable” labor hours (total field labor hours
less non-billable hours).
4. Calculate your breakeven rate:
= REAL cost of doing business less gross profit on
material sales divided by “billable” hours
= ($225,000 - $30,000)/2000 hours
= $97.50/hour
“We teach contractors how to run profitable businesses!
How To Calculate Accurate Hourly Rates
5. Add profit to the hourly rate:
Assume you want a 15%
pre-tax net profit
= $ 97.50 / .85
= $ 114.70 / hour
“We teach contractors how to run profitable businesses!
3
2/7/2014
#1
Knowing Your Hourly Rate By Department
1. Have no idea what hourly rate needs to be -- 0 points
2. Know your hourly rate:
a) Re-calculated within 3 years ------------- 25 points
b) Re-calculated within 2 years --------------- 50 points
c) Re-calculated within 1 year ----------------- 75 points
d) Calculate more than once a year --------- 100 points
“We teach contractors how to run profitable businesses!
#2 - Develop a Month-by-Month, Departmentby-Department Cash Flow Budget and Track
Results Monthly
Why Develop A Cash Flow Budget?
1. Forces you to look at the company, in detail, maybe
for the very first time
2. Provides accountability
3. Helps you PLAN the growth of the company
4. Provides information upon which to base economic
decisions.
5. Basis for tracking the profitability of the company.
“We teach contractors how to run profitable businesses!
ABC Sample Company
JAN
FEB
MAR
APR
MAY
JUL
AUG
SEP
OCT
NOV
DEC
2
1
3
12
30
JUN
25
20
10
18
22
10
3
6
5
7
10
20
18
16
9
16
17
9
6
-4
-4
-4
2
10
7
4
1
2
5
1
-3
-4
-8
-12
- 10
-
7
11
12
14
19
20
17
Gross
Sales
Less Cost
of sales
Net
Profit/
Loss
Cum.
Profit/
Loss
“We teach contractors how to run profitable businesses!
4
2/7/2014
#2
Cash Flow Budgeting
1. Do not have a budget----------------------------
0 points
2. Create an annual budget------------------------ 25 points
3. Create an annual budget and its
month-by-month ---------------------------------- 50 points
4. Create an annual budget, month-by-month
AND department-by-department--------------- 75 points
5. All of #4 PLUS you track your budget
monthly --------------------------------------------- 100 points
“We teach contractors how to run profitable businesses!
#3
Business Plan In Place
Need to have a BUSINESS PLAN in place
If you don’t know
where you are going,
any road will get you
there
BUT
You will never know
when you arrived!
“We teach contractors how to run profitable businesses!
A Business Plan Will:



Set the direction of your company (where you are
going).
It will “spell out” how you are going to get there.
It will detail the cost of meeting your goals:
a) Labor
b) Equipment needs
c) Cash flow needs
d) Required funding
A written business plan is an excellent document
to take to your banker if funding is required.
5
2/7/2014
Business Plan Outline
1. Executive Summary:
a) History of your company
b) General market conditions
c) Status of competition
d) Company goals
2. Financial Plan:
a) History of company from a financial standpoint
b) Current financial statements
c) Capital expenditure forecast (what equipment will be needed and when)
d) Month-by-month cash flow budget for the next two years
e) Cash flow projections for the next five years
“We teach contractors how to run profitable businesses!
Business Plan Outline (continued)
3. Marketing Plan
a) How you will “market” your company (radio, TV, yellow pages, etc.)
b) Show the cost of each and the expected results
c) What will be done when and by whom?
d) What is the “cost” of the plan, your budget?
4. Production Needs:
a) Labor needs
b) Material forecast including inventory
c) Assets - what equipment will be needed?
5. Organizational Plan:
a) Organizational chart
teach contractors
how to run profitable businesses!
b) Training “We
- salaried
and technical
#3
Business Plan
1. No business plan ---------------------------------- 0 points
2. Written business plan for the coming year ---- 25 points
3. Written business plan for the next two years --35 points
4. Written business plan for the next five years --50 points
Give yourself
50 BONUS POINTS
if you share your business plan with
your banker at least once a year.
“We teach contractors how to run profitable businesses!
6
2/7/2014
#4
Marketing Plan For The Next 12-18 Months
A customer needs to hear or see something
nine times before they buy!
A Marketing Plan Should Include:
1. What you are going to do (yellow pages, direct mail, TV,
newsletters, etc...).
2. When you are going to do it.
3. An estimate of the cost (part of your cash flow budget).
“We teach contractors how to run profitable businesses!
Suggestions:
1. Track where your leads and/or sales are coming from
(find out what’s working).
2. Have a continuous and overlapping plan. It will help
minimize slow times.
3. Unless you are a large company and can devote
someone full time to marketing, have an outside firm:
a) Design and print literature
b) Do the physical mailings for you.
“We teach contractors how to run profitable businesses!
Consistency Is Important
When the customer is ready to buy it’s who
they REMEMBER that counts!
Why didn’t your
happy customers
of the past call
you again?
Sixty percent (60%)
could not remember
who you were!
7
2/7/2014
#4
Marketing Plan
1. No “marketing” is done outside of yellow
pages ----------------------------------------------- 0 points
2. Have an informal plan in place (not written)-- 50 points
3. A formal, written, plan is in place and it’s
part of your annual budget --------------------- 100 points
“We teach contractors how to run profitable businesses!
#5
Basic “Marketing Tools” In Place
Brag Book







Referral list of past customers with comments.
Copy of insurance certificates.
Pictures of past jobs.
Pictures of your building and people.
List of associations/organizations you
are members of.
List of licenses you have.
Product literature.
#5
Basic “Marketing Tools” In Place
Company Brochure
Be sure to include your company “slogan” on
everything you print
Annual Letter To Your Customer
Send to your current customer base
Newsletters
Send a company newsletter to all current (and potential)
customers at least twice a year
“We teach contractors how to run profitable businesses!
8
2/7/2014
#5
Basic “Marketing Tools” In Place
1. Brag book------------------------------------------- 20 points
2. Have and use a “Company Brochure”---------- 10 points
3. Send out annual letter -------------------------- 10 points
4. Mail company newsletters to:
a) Current customers---------------------------- 10 points
b) Potential customers-------------------------- 10 points
“We teach contractors how to run profitable businesses!
#6
Majority Of Customers On An Annual
Maintenance Agreement Program
Maintenance Agreements are
literally the foundation stone for
profitable growth in the 21st
century!
M/A
Maintenance Agreements are the feeder
system for everything else you do!
• Consistent service work
• Creates replacement sales
• Creates add-on sales
“We teach contractors how to run profitable businesses!
Why Would YOU Want To Start A
Maintenance Agreement Department?
1. Consistent cash flow
2. Work is pre-scheduled
(reducing non-billable time)
3. Nearly guarantees service
work during the year
4. Eventual equipment
replacement work
5. Improved job security
6. Happier customers
7. If tech learns to sell
S/A they can sell other
things as well
8. Ability to increase the
size of you customer
base
What’s happening
to your phone
during extremes
of hot and cold?
9. Increase selling price
of company!
“We teach contractors how to run profitable businesses!
9
2/7/2014
#6
Majority Of Customers On An Annual
Maintenance Agreement Program
1. Do not have a M/A program --------------------
0 points
2. 1% to 10% on program ------------------------- 10 points
3. 11% to 25% on program ------------------------ 25 points
4. 26% to 50% on program ------------------------ 50 points
5. Over 50% on program -------------------------- 100 points
“We teach contractors how to run profitable businesses!
#7
Network With Other Companies
& Other Trades
Networking Is A
Relatively New But
Very Powerful Concept
“We teach contractors how to run profitable businesses!
Networking With Contractors
Why are we called “independent”
contractors?

Create a “mixed group” from across the state/country
and meet on a regular basis (2-4 times a year)

Share ideas and mutual problems

Become best friends, call often!
10
2/7/2014
Networking With Other Trades
Set up a small “mixed trade” groups in your city,
town and/or area to:




Share leads
Recommend each other
Handout each others literature (company brochures,
coupons, etc.)
Do “Direct Mail” and “Home Shows” together and
split the cost
If your customer likes you and trusts you……
they will also trust your recommendations of other trades!
#7
Network With Other Contractors & Trades
1. If you occasionally meet with other
contractors to share ideas and/or
problems ---------------------------------------- 10 points
2. If you meet with other contractors on
“regular” basis ------------------------------- 20 points
a
3. If you network with other contractors and
other trades ----------------------------------- 40 points
“We teach contractors how to run profitable businesses!
#8
Plan The Growth of the Company!
Three Points Of Growth That
Can Put You Out Of
Business!

Owner moves from the field
into the office

Sales reach roughly
$1,000,000 per year

Any period of rapid growth
“We teach contractors how to run profitable businesses!
11
2/7/2014
#8
Plan The Growth of the Company
1. No plan in place ----------------------
0 points
2. Have a formal plan in place --------- 50 points
“We teach contractors how to run profitable businesses!
#9
Service Department is on Flat Rate Pricing:
Upfront (Flat Rate) Pricing is going to become
the standard of the industry
• Cost of labor going up (to hire and retain techs)
• Cost of benefits is increasing (again to hire and
retain techs)
• Cost of doing business in increasing
When time and material rates get to $75.00 to $100.00 per hour we
are forced (by the customer) into upfront pricing.
“We teach contractors how to run profitable businesses!
Upfront Pricing - “How It Works”






Customer calls.
Tech goes to location, finds
problem (charge diagnostic fee).
Quote “Total Price” to customer
from book.
Customer decides whether to
have it repaired or not.
Do job.
Collect money - go home.
“We teach contractors how to run profitable businesses!
12
2/7/2014
Customer Concerns/Benefits
Customer’s Concern:
How long will it take, therefore, how
much is it going to cost me?!


Eliminate worries such as how long job
takes, how many trips to the truck, how
“fast” is the technician, etc. and
therefore, “How much will it cost?”
Customer knows “Total Cost”
BEFORE the job is done.
“We teach contractors how to run profitable businesses!
Company Benefits





No longer have to quote an hourly rate
Better cash flow (can price on job and collect
money)
Tends to weed out problem customers
Excellent vehicle for selling service
agreements
Higher hourly rate (now internal
customer does not see it.)
Increased Profitability
(not a license to gouge the customer)
“We teach contractors how to run profitable businesses!
#9
Service Department on Flat Rate Pricing
1. Not on flat rate -----------------------------------
0 points
2. Going to create your own system ------------- 25 points
2. Service department is currently on flat
flat rate pricing ----------------------- 50 points
“We teach contractors how to run profitable businesses!
13
2/7/2014
#10
Send Out A Company “Newsletter”
2-4 Times A Year
A Newsletter Will:



Keep your name in front of your customer (potential
ones as well, if you include them in your mailings).
Inform your customers of new products and/or
services that are available (can’t buy what they don’t
know about!).
Make them “feel part of the company”, it builds
relationships.
Most manufacturers will co-op
the cost with you!
#10
Send Out A Company “Newsletter” 2-4
times A Year
1. Do not have a newsletter ---------------------
0 points
2. Send out newsletter two or more times
a year -------------------------------------------- 50 points
3. Send out newsletter two or more times
a year to your customer base AND potential
customers --------------------------------------- 75 points
“We teach contractors how to run profitable businesses!
#11
Set Goals and Measure Performance
What are the benefits of
setting specific goals?
 Everyone on the team has
something to work towards
 The goal provides a
benchmark to measure
your progress against
 Best of all….once given a
specific goal, most individuals tend to meet, or
exceed, the goal (Linda)
14
2/7/2014
#11
Set Goals and Measure Performance
Set Goals for Everything:
 Gross sales for company (monthly)
 Billable hours per service tech
 Units of various kinds sold
 Profit Margin by department
 Overall company performance
Set goals, measure
performance and celebrate
the victories!
#11
Set Goals and Measure Performance
The Principle is Simple
Reward performance you want
repeated!
Referrals….
#11
Set Goals and Measure Performance
1. No goals presently set ------------------------ 0 points
2. Goals are set and measured ----------------- 25 points
3. Goals are set, measured AND rewarded ---- 50 points
“We teach contractors how to run profitable businesses!
15
2/7/2014
#12
Regular Use Of Customer Response Cards
Highest Benefit To Dollar Invested Ratio
Of Anything You Do:
Cost:
$150 for 1500 Custom Printed Card + Stamp
The Company Gets:
1. Feedback on the quality of work in the field.
2. Positive comments for referral lists.
3. Referrals for additional sales.
“We teach contractors how to run profitable businesses!
How Did We Do ?
We Care!
Card Layout
Excellent
Timely Manner of Service ..................................
Overall Quality of Work ......................................
Value for Work Done .........................................
Technician’s Neatness/Cleanliness ...................
Courtesy of Technician .....................................
Courtesy of Office Personnel..................................
Good
Fair
Poor
Where did you hear about us? ________________________________________
Would you call our company again?
Yes
No
General Comments: (Problems/Praises) We want to know:
__________________________________________________________________
______________________________________________________________
Referrals - Please list names and phone numbers of neighbors, friends and
relatives that may be interested in our services.
__________________________________________________________________
__________________________________________________________________
“We teach contractors how to run profitable businesses!
#12
Regular Use Of Customer Response Cards
1. Do not use response cards ----------------- 0 points
2. Send cards out on a at least 50% of
the jobs you do ------------------------------ 25 points
3. Use cards on over 75% of the jobs
done ------------------------------------------- 50 points
“We teach contractors how to run profitable businesses!
16
2/7/2014
# 13 - Line Of Credit
Purpose of a Line of Credit
Short-term borrowing against
receivables!
 How large a line of credit should
you set up?
 What kind of repayment
schedule does the bank like to
see?
 Potential problems with a line of
credit!
“We teach contractors how to run profitable businesses!
#13
Line Of Credit Set Up With The Bank
1. No line of credit set up ------------------------ 0 points
2. Company has a line of credit set up with
the bank ----------------------------------------- 20 points
“We teach contractors how to run profitable businesses!
#14
Formal & Active Customer Service
Training Program
What Is A Happy Customer Worth To The
Company Over The Next 14 Years?
Assume:
 Customer “A” has an annual Service Agreement with
your company at a cost of $150/year.
 Once a year Customer “A” needs a service call which
runs $200 including parts and labor.
 Every seven (7) years Customer “A” has a major
repair that cost $1,500
 Customer “A” is a HAPPY customer and refers you to
others. Let’s assume this happy customer produces
one new customer every 2 years, with the same
buying history.
17
2/7/2014
Dollar Value Of One HAPPY Customer
Over The Next 14 Years
Customer Service
Agree.
Service Major
Call
Repair
Total
Value
A
$2,100
$ 2,800 $ 3,000 $ 7,900
B
1,800
2,400
3,000
7,200
C
1,500
2,000
3,000
6,500
D
1,200
1,600
3,000
5,800
E
900
1,200
-
2,100
F
600
800
-
1,400
G
300
400
-
Think Twice
Before You
Loose A
Customer
Over A $85.00
Service call!
700
$31,600
“We teach contractors how to run profitable businesses!
Customer Service Program Should
Include:





Happy calls after job is done.
100% money back guarantee, no fussing.
Thank you card and/or gift after any major
installation/repair job.
Christmas Cards (Valentine?).
Continuous “Customer Service Training” of all
employees.
Attitude
Over 80% of customers do not continue to do business
with a company because of one or more of the
employees they talked to!
#14
Formal & Active Customer Service
Program
1. Happy calls --------------------------------------- 10 points
2. 100% money back guarantee ----------------- 10 points
3. Thank you card or gift after installation ----- 10 points
4. Christmas (or other) cards -------------------- 10 points
5. Continuous “Customer Service” training ---- 25 points
“We teach contractors how to run profitable businesses!
18
2/7/2014
#15
A Few More Things
In addition to what has been discussed SUCCESSFUL
companies also:
 Get a deposit on every install job (10 Points)
 Provide vacations and holidays for their employees
(10 points)
 Have an Employee Handbook (10 points)
 Job cost every job (10 points)
Total your points!
Lots of “Free Stuff”:
• FREE – “Danger – Trouble Ahead” (Audio CD - $18.95)
• FREE – Monthly eNewsletter (four business building
articles a month)
• FREE – List of the 24 KPI’s (with definitions) in your
service department
Fill out the form in the back of your packet and fax it
back:
Fill out and fax
back today.
Fax number:
270-684-7425
$500 Discount
if scheduled by
end of next
week!
19
Conference Special
Software (totally re-written)! “Labor Pricing for a Profit with Cash Flow Projections”
This user-friendly Windows software is the ideal tool for modeling your company for maximum
profitability. Once modeled you will know what to charge in each department, you will have a month-bymonth cash flow budget at your finger tips and you will have your monthly cash flow projections for the
coming year! You can also model your retail store! When you are done, make as many copies as you
wish and start the “what if” process of changing things to MAXIMIZE your profitability. Price includes full
100+ page manual, two detailed Tutorial CD’s and Lifetime Support is FREE! All for only $399.95 +
$15.00 shipping
“Why Do We Need To Charge So Much” DVD explains to techs and office employees why you need
to charge what you charge! The cost is $99.95 + $10.00 shipping/handling
- A detailed Company Policy Manual is perhaps one of the most important
document a company produces. This 96-page document (on a CD in Word so you can make all the
changes/additions and deletions you wish) can either be the basis for creating an initial document or
serve as a checklist for a Company Policy Manual you already have in place. It is a bargain at $149.95
plus $10.00 shipping/handling
$414.95
$109.95
Company Policy Manual
Conference Special - Get it all and
Save $175 + Dollars!!!
$159.95
$684.85
$ 499.95
Send Us FREE Stuff
- Please send us the Free Stuff (Danger Trouble Ahead Audio
presentation, Monthly eNewsletter and the 24 KPI’s for your service department, with full definitions.)
One-On-One Company Overview (Create a profitable Financial
Business Plan for your Company)
I will come to your location, model your company (by department) and create a financial “Business Plan” for your company.
It’s like going through our two-day Planning for Profit program...but on a personal, more detailed, level. The overview takes
two days. The total investment is $4,500 + travel. One right decision will cover your investment many times over!
By the end of Day Two you will:
 Know what to charge per hour in each department, plus breakeven rates
 Create a month-by-month, department-by-department cash flow budget for tracking
 Be able to bid a job….accurately…..in less then 5 minutes (plus know the breakeven price)
 Ability to track billable hours against your budget
 Have a working software model of your company. When changes come enter the change/s into
how the change will affect your hourly rate, cash flow and overall profitability!
the model and see
We are very interested in the Company Overview. Please contact us with more details.
One minor change can produce profitable growth for years to come!
Method of payment: ___ Check enclosed ___ COD ___ VISA/MC/AMEX
Card Number _______________________ Exp. Date ________ Code____
Signature_______________________
Company Name _________________________________________
Address _______________________________________________
City ____________________________ State _____ Zip _________
Phone (
) _________________________________________
FAX Number: __________________________________________
E-mail: ________________________________________________
Send attention __________________________________________
Grandy & Associates
1020 Halifax Drive
Suite 102
Owensboro, KY 42301
1-270-926-3212 or FAX 1-270-684-7425
E-mail: [email protected]
www.GrandyAssociates.com
Item Number
#1
#2
#3
#4
#5
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#7
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#10
#11
#12
#13
#14
#15
Points Earned
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Total Points=___________
Comments/To Do
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