Many businesses are claiming their success by focusing on high sales numbers and while high sales figures are important, the reality of success lies in how profitable a business is, not only their sales numbers.
Today, business viability is becoming more important for all companies, across all industries. About 62% of business leaders consider the development of a healthy business strategy a necessity to be competitive today, and another 22% think it will be in the future.
Below, we outline the 8 “Ps” of business viability for home service professionals to create long-term value and foster company longevity.
The first step in business viability is proper pricing. Most service providers price too low, subsidizing their customers, yet they worry more about overcharging than undercharging. If you overcharge, you might lose customers and if you undercharge, you take the risk of either losing your business or unnecessarily constraining your lifestyle and business prospects.
If consumers readily accept the prices you charge, then your pricing is reasonable. Even the government agrees. In Regulation §20.2031-1, the IRS defines fair market value as:
“The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”
The IRS is referring to estate valuation, but the principle is the same. A fair price is whatever a willing buyer agrees to pay from a willing seller.
Closely intertwined with pricing is profitability. Let’s say you charge at the high end of the market; you can still lose money if you are not properly managing your overhead costs. Businesses that are profitable make it a top priority to review their numbers regularly and have effective control of overhead costs while investing in future growth. When making decisions that impact profitability, your plan is only as good as the data. It’s important that the business information being referenced is up-to-date and accurate.
Pro tip: If you want to learn how to establish profitable pricing for your home services business, we’ve developed a Pricing for Profit Kit to help you create the right rates and increase your profits. By downloading the kit, you’ll gain access to the Pricing for Profit eBook and Webinar recording and discover exactly how to calculate the most effective pricing for your business.
Charging enough is not enough. Service providers must also deliver services appropriate to the prices they charge. In other words, this means upping your game. To charge more, you must do more. Everyone may not value a premium service, but offering premium packages can take your business to the next level.
You don’t need a large marketing budget to hold a unique position in the marketplace, but you’ll need to take some important steps to build authenticity and set your business apart from the hundreds and hundreds of other service-industry companies. Hone in on the type of person or business you can get the best results for and clearly define the market segment you should target, and the problem you solve for that segment. Lastly, you’ll also want to define your business’s competitive advantages and understand your competition’s shortcomings.
Without promotion and without marketing, you’re playing in the dark. You know what your strategy is but no one else does. As we mentioned before, getting in front of the right consumer doesn’t necessarily need to come from a high-dollar ad campaign. Other alternatives can include personalizing your vehicles, asking customers for Google reviews, attending tradeshows for unique networking opportunities, being active on social media, direct marketing, affinity marketing, and an array of other marketing tactics to spread the word about your business.
No matter the field of work, professionalism should be one of the top priorities to ensure your customers are pleased after a service job. A professional display doesn’t just start when a customer places a phone call to your business when they need help, it should be displayed the minute when technicians arrive at the job site by looking as sharp and professional as possible. Even your trucks should be well identified through clear branding and advertising. Both of these factors represent the public face of your business and both should demonstrate professionalism.
Remember, professionalism extends to the way the phone is answered, the way problems are resolved, and the way your collateral (I.e., website, invoices, literature, marketing, signage, etc.) appears. It is also the way you operate, including human resources management, development and training, and so on.
Your business is either people-centric or process-centric. It’s impossible to operate a viable business that is people-centric, without processes. The people or personality-centric businesses undergo a complete transformation whenever a key player leaves and takes all of their knowledge with them.
By contrast, the process-centric business has identified detailed procedures for every step of the operation. There are processes for holding a service meeting, conducting a service call, answering the phone, conducting an employee review, and so on. Change personnel and the processes remain constant, leading to continuity, which leads to a healthy business.
Business viability is not happenstance. Healthy and profitable businesses follow a well-organized structure and plan. There are long–range plans, annual plans, marketing plans, hiring plans, training plans, and succession plans. While circumstances will always change and you will always have to make changes on the fly, the plans point the direction and keep everyone focused.
In sum, business viability efforts need to be an organizational priority, with clear support from leadership. Although this takes time and effort, a healthy business strategy is essential for service providers to thrive and remain competitive in the marketplace.