The Edge - Q4 2012 - (Page 21)

BUILDING BUSINESS PROFITS | by Ron Derven ARE YOUR LABOR RATES THE NUMBER ONE cause of busiown businesses, they will check with other companies in the business to gauge the hourly rate to charge. This strategy may even work for awhile until the company begins to grow, hires employees and moves out of the garage into rental space. That’s when the problems begin. Why? “When it comes to setting proper hourly rates, what costs are most often left out?” asked Grandy. “They are nonbillable time, equipment replacement expenses and the full amount of the loan payment.” Grandy, who will speak at an all-day specialized business session at the Atlantic City Pool & Spa Show on Monday, January 28, 2013, said that the issue of non-billable time alone could be enough to destroy a company’s profit potential. “The typical service technician can only bill out an average of about four hours a day,” he cautioned. “That means non-billable time is also four KILLING Your Business ness failure in the trades industry today is improper labor pricing, according to Tom Grandy, president, Grandy & Associates, Owensboro, Kentucky. “Every successful company I know of has gone through a detailed process of setting profitable hourly rates,” he said. “If hourly rates are not set properly from a cash flow perspective, the business will never be profitable.” According to this small business expert, when enterprising pool and spa service professionals leave the company for which they work to start their hours a day. Non-billable time includes sick time, holidays, vacation, shop time in the morning and afternoon, travel time between calls, warranty work, callbacks and customer no-shows. Non-billable time is any time the company pays the tech for time that cannot be billed directly to the customer. Assume your service tech is making $18.00/hour, or roughly $20.00/hour when matching taxes are added in. If half of their time is non-billable, that means the cost of non-billable time for one service tech is approximately $20,000/year (1000 hours x $20.00 per hour). The cost of non-billable time is the single highest cost of doing business a company has.” Grandy will speak on setting proper pricing and 14 other things that all successful companies do at this specialized business session. | For more information on registering for the Atlantic City Show, click on: ? Sparkling Water Simply & Easily Celebrating 65 Years 185 Van Winkle Avenue • Hawthorne, NJ • 07507 1957 Rutgers University Blvd • Lakewood, NJ • 08701 Toll Free: 800.843.7876 • Tel: 973.427.8500 608989_Seaboard.indd 1 READ THE EDGE ONLINE AT WWW.NAYLORNETWORK.COM/NSP-NXT 21 PM 10/10/12 10:53 AM 586603_Fix.indd 1 11/06/12 3:49 http://WWW.NAYLORNETWORK.COM/NSP-NXT

Table of Contents for the Digital Edition of The Edge - Q4 2012

The President’s Message
Marketing to the Affluent at Higher Margins
Transparent Selling
Project Focus
Are Your Labor Rates Killing Your Business?
Chlorine in the Air and What to Do About It
Index of Advertisers

The Edge - Q4 2012