Challenges of Service Businesses

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    By Joe Bonacci

    joe

    Every business faces challenges. Technology, industry changes, changing consumer base, costs.  All these things affect business. Any service industry has its own set of challenges; but the trade industries’ challenges are often unique. 

    The number one challenge is hiring skilled, qualified technicians.  It is also harder to retain trained workers, often because wages are less than they might earn in other types of businesses.

    Without question there’s a shortage of skilled labor in the HVAC industry. It’s not just the HVAC industry, there is a shortage of skilled labor, period.  A lot of it is a result of an emphasis on four-year college degrees over trade schools.  The population of skilled tradespeople is already older than the age of the general labor force and not enough are entering the trades to replace those leaving.  But finding them and keeping them can be difficult. But, they may be closer than you think.

    Another big challenge is usually cash flow.  Most small business owners have a tough time coming up with the cash to expand their business.  Sometimes just covering the day-to-day expenses is difficult. Make sure you are keeping tight bookkeeping procedures to allow you to get a handle on your cash flow.  Posting income and expenses when they occur helps. However, you can really grasp your cash flow by posting expenses that will occur in the future so you can assess where cash flow currently is and where it is going. Also, having an automatic payment processing system can help improve cash flow.  You will not have to wait 30, 60 or even 90 days to get paid.  Card swiping and automatic payment systems can assure you get paid instantaneously.

    Unlike most businesses where employees are stationary and work consistently throughout the workday, the trades industry has to deal with unapplied time. Unapplied time can be a service department killer.  Flat rate pricing takes unapplied time into consideration when determining pricing and helps take the sting out of what could be potentially hurting your business.

    Although not a challenge, but something to watch, maintain and grow your business are KPIs. Key Performance Indicators need to be defined and followed.  In the coming weeks, months and years, KPIs will be a large part of determining strengths and weaknesses within your organization. Every company needs precise and clear data to compare their performance against goals and make decisions that move the business forward. Do manual methods (like spreadsheets, paper documents, and calculators) provide accurate analytics? Maybe, but only after a mountain of manual data entry and research.  This is a future challenge and it's best to get ahead of the curve.

     

     

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