Do you often wonder why even when you’re making a profit you still have poor cash flow? To help ensure you have plenty of working capital to fund day-to-day operations without coming up short, here are three sure steps to improving your day-to-day capital.
Step 1: Improve the Technical Competency of Your Technicians
Technical training and improved competency should be an ongoing endeavor for all of your technicians. A well-trained service tech performing with operational excellence will have fewer callbacks, shortened diagnostic times, and improved trouble-shooting skills. This, in turn, leads to the technician being able to run more calls, and running more calls equals more cash flow. Make sure your technicians have access to quality online or in-classroom training so they are always learning and enhancing their technical competency and striving to provide operational excellence.
Step 2: Communication Competency Training
From your call center to your technicians, knowing how to effectively communicate with clients is key to having a successful HVAC business. Client service representatives who have been properly trained on taking calls and communicating with clients generally book a higher percentage of calls and have happier customers. Besides technical skills training for your technicians, effective communication skills training should also be mandatory. Eighty percent of a good technician’s performance is directly related to their communication skill. That’s why technicians who possess the skill to relate to clients, listen to what they’re saying, and ask the right questions, not only produce better than average tickets and have increased productivity, but also sell more replacement systems with higher conversion percentages. They also have a higher percentage of club memberships and new customer retention.
Step 3: Price Correctly, Buy Better, and Control Inventory
It’s important to know how to price in order to optimize your margins. Undercutting your profit or under-valuing your services in the quest to just “get the job” is a costly mistake. It’s imperative you properly price your parts and services with enough of a profit margin (usually 50-60%) so that your cash flow remains healthy. It’s also important to take advantage of national buying power programs so you receive rebates on equipment you regularly purchase. Finally, be sure to utilize your inventory and monitor it on a regular basis to reduce shrinkage, which cuts into your net income. If you discover the main reasons for shrinkage, you can develop solutions to keep it at a minimum and protect your cash flow.
Knowing how to price your services, reduce parts’ cost, monitor and track your inventory, and improve overall operational excellence amongst your team members will result in higher productivity, increased efficiency, and improved cash flow. If you would like more information about how to put these steps into action or need access to a world-class training system, click here to visit our Management & Leadership Training page or schedule a Success Call here and never worry about your cash flow again!