Running your business without emotional influence is easier said than done.
One current trend among integration companies is the return of old habits—especially as we get back into the swing of things and return to “normal” after COVID-19.
While your priority is always to stay in business so you can be of value to employees, clients, and vendor partners, don’t use regress to poor practices like:
- Low-margin box sales
- Offering services below true cost
- Selling things that you don’t know will work
- Taking projects from unvetted electrical and general contractors
To maintain good decision-making, remember these seven business guidelines:
- Vendor Management: Get out our vendor scorecard (contact us for a copy) and see who has the highest “channel-friendly” profiles. In good times and bad, these are the companies you want by your side.
- Box Sales: Don’t do it … unless you’ve created a separate P&L for the activity. Remember how badly a “cost plus 10” transaction impacts your financial metrics and the benchmarks you use? If the margin is below your selling, general, and administrative expenses, then have a purpose for every order placed.
- Pricing Labor: Know your true costs before setting a discounted rate just to get people employed. To do that, you must know your burdened costs (which means you have to know your utilization percentage … and you must have an accurate schedule).
- Pinpoint Inefficiencies: Identify constraints and determine adherence to processes. We’re seeing many companies ignore the processes they worked so hard to establish. Shortcuts to reduce time on the jobsite shouldn’t create more return trips after the cutover.
- ERP and CRM Updates: Evaluate what you need in order to run your business more efficiently and profitably. There’s no doubt you’ve collected lots of data. Figure out how to use it! Data without a purpose is useless; data that drives great decisions is invaluable.
- Scaling Up/Down: Most integrators have spent the last decade scaling up—and now many NSCA members are scaling down. Key indicators and proven metrics must be used. Tough decisions must be made. It’s time to project your year-end revenue and match fixed and variable expenses. You can’t allow your company to go broke to avoid matching employment levels to revenue.
- Emerging Technology: Figure out what’s next for your business: staying relevant to clients, building recurring revenue through managed services, introducing problem-solving technology, etc. –Chuck Wilson, NSCA CEO