Transcription

Hey, Mike Callahan here, back again with another installment of the 30-day challenge, how to get out of your business and leave it for 30 days and let it run the same way it does with you there or, potentially, even better if you’re a bottleneck for implementation or growth. What we’re going to be looking at today is a process to share job performance and profitability with your crews without the business owner having to get involved in the day-to-day process that would happen here. So we’re going to dive in and I’m going to pull the screen out and show you how we actually track this and give the crews daily feedback and create buy-in from the teams for production and quality standards. So I’m going to shrink down the screen here and show you how we do it.

So first thing we’re looking at here is– basically, this is our KPI sheet. So we do daily versus actual and budgeted time. So I’m going to zoom in here a little bit here, and basically, this one cell is the budgeted time. So what we’re proposing here, on a daily basis, coming from the office, we want a daily budgeted hours for the whole entire day. So, in this instance, the crew would be budgeted for 18 hours for the whole entire day. So that’s total hours divided by how many guys or girls are on the crew. So 18 divided by 2 would be your total budgeted time for a two-person crew. Now, as we’re looking at this– so that’s our long term goal.

Our short-term goal is our budgeted time including drive time for each and every job that we do. So each and every job including drive time should add up to that total 18 hours or whatever that is for the crew. Now that we’re going to do that, we’re going to either use our CRM or a hard piece of paper and clock in and clock out of each job to track the start and stop times and the non-billable drive time, and then that’s going to be entered in the system, and then we’re going to take the total budgeted versus actual time and enter that into this sheet or something you made yourself. So basically, right now, we said they were budgeted for 18 hours, and they started at 7:00 AM, ended at 5:00 PM. They worked a total of 10 hours, had a half-hour lunch. We put the crew members names in here and the number of people on the crew. So what we’re looking at here is we’ve got a two-person crew. They worked a 10 hour day. They had a half-hour lunch. The sheet here will take the gross hours, subtract the total lunch. Budgeted are the work hours. The payroll hours were 19 hours, and the budgeted was 18. So we’re over budget here by 1 hour.

So what we’re going to do is put this in, and you can see this percent of budget is 94.74%. A really easy way to explain this to the crews and make it very simplistic is, “If you didn’t give 100%, you didn’t do your job,” and that’s what this is showing. So if I bumped out the budgeted time here to 19 hours, and it took them 19 hours, the sheet’s going to update and then basically say they were at 100% efficiency. So it’s a really easy conversation with the crews to say, “Hey, if you gave 100% today, you did your job. You hit your budgeted time. If you only got 94% and only gave 94%, you weren’t giving 100%. You didn’t do your job.” So if we bump the budgeted time out to, let’s say, 20 hours, when the sheet updates, it is at 105%. So now the crews know if you gave 105%, more than 100%, they’re under budget. So in this example, they’re 1 hour under budget.

So this is a way to track the daily wins for each crew. As you scroll to the right of this sheet, we’ve got crew one, two, three, four, five, and so on. We’re able to track the daily wins or losses on each crew and then sum total each crew, whether they’re winning or losing for the week. What you’re going to find is, in a larger organization, a lot of your crews, the lion share, hopefully, are making money and doing right and beating their budgeted time or hitting it, and you’re going to have two or three crews, hopefully only one or two, that are probably either hitting their goals or underneath it or are bleeding you dry. So this is going to basically cause the management team without the owner having to dive in, to jump in, and fix the situation as far as systems and processes training, or maybe just not a good fit for the company, as far as employees. So this is going to be able to track each crew daily with a sum total for each crew. And then on the far hand left we’ve got a total average for all of our crews. And now we know if we’re making and losing money as a company as a whole. So this is going to give you that granularity, but where I’m going with this as far as the crews buy-in now it’s transparent. Everybody knows that percent of budget, that 105 or the 94, or the 100% is the number that goes on your shop wall, the TV monitor, the chalkboard in the shop, whatever that is we have each crew, their percentage. We don’t want to put an hour on there, so if their budget for 40 hours or 55 hours or 35 hours, inherently the crews are going to start creating animosity because some crews are going to get more hours than other crews, so whether they have 5 hours or 100 hours it doesn’t matter, it’s an apples to apples comparison. So now we’ve created a production standard, and then with that production standard we want to tie in a quality standard; a plus and minus system for compliments, complaints and then also one of the managers not the business owner will go out in the field and do random ratings each week on a select group of properties to add a compliments and complaints or point system behind that as well. So we have internal QC and external compliments and complaints from the customer. So this is part of the 30-day challenge, how to track your profit, how to know where you’re at internally and then share it with a team to get buy-in. Now this can be all filled out by either an admin or even a virtual assistant if you’re running a clock-in and clock-out of all your job.

So the 30-day challenge is how do we create the processes and systems for a profit business that’s scalable, and be able to delegate those to other people in the business, and be able to hand those off and get buy-in from the whole entire team. This is one process, we call this our KPI in accountability. So we’re going to go in, we’re going to track actual versus budgeted on each and every day for each crew, and then we’re going to show the percentage of over or under budget to the crews on the shop wall and eventually this is what we turned into a piece-rate pay system. So we ended up paying the crews on the budgeted time not the actual time. And that was a win-win because now the management and the crews are on the same team working together to drive a production standard and a productivity standard and put more money into employees pockets at the same time as the company. The next step of this is usually in July and November/ December in a lawn care company if not every six months in home cleaning company. You definitely want to run a job cost report. So what a job cost report is going to do is basically take the two stops here on this fictitious job here, but basically you have all the jobs you’ve ever done. It would go in and say, How much are we charging per cut or per visit; the actual revenue per man-hours. So this is the time from the clock-in to clock-out. So on average we rate $57.30 and if our goal was $60 per hour the sheet is going to tell us we need to raise our price by $2.56 with no motion. So this is– the next thing it builds upon that data, but the main thing for today is focusing on public accountability, crew buy-in, and tracking your actual versus budget for each crew on a sheet, and then going out publicly displaying that and including it in with their payroll tickets, or payroll information as far as their checks when you hand that out. And then the next step, twice a year, we want to go in to do a job cost report with the same data and raise the prices on only the jobs that aren’t hitting our financial hourly threshold. When a lot of people on Facebook groups go, “I’m raising my price by $3 a cut across the board,” or “3 to 5 percent across the board”. I think that is the craziest thing you possibly ever could do because I’ve gotten jobs that we’re making well over $100 an hour on, and if my goal is $60, why would I ever mess with that account? We’re only raising the non performing accounts, and going out and creating a profitable business. So we don’t

want to invite the competition in the back door by having a price increase across the board. Now, if we have this account here and we’re making $57 per man-hour and I put 55 in when the sheet updates, it’s literally going to tell me that I do not have to change the price. This price stays static at $54.28. This is the next step. We’re going to make a more in-depth video on this in the 30-day challenge, how to delegate this how with non-emotion. It includes YouTube videos, how to do it as well. But the main point here is this KPI sheet. You really need to go out, in my opinion, and build something like this and create a public accountability, include it with their paycheck stubs, and then have it up on the dry-erase board or chalkboard in your shop. So we’re going to have your production standard. If you hit your budget, at times 100%, anything below, anything under budget is over 100% because they gave 110%, 108%. And if they’re over budget, it’s lower than 100% because they didn’t give their all that day. And that’s an easy way to explain it to the crews and get buy-in around that. And then we want to throw a quality standard with the production standard so we’re driving forward, making money with a quality product. Another thing here is a lot of people have asked me, what’s on the top of the sheet that we have here? Fictitiously, if you have $400 worth of expense here, the sheet basically goes in and gives you a really rough break-even. So what it costs you to operate before you make a profit. Now, there are better ways of getting at this, but this is just a rough way of tackling it if you don’t know your budgeted hours. Basically, what it is, you put your total expenses in there for the month after you reconcile your checkbook and you pull out your materials and subcontractors. So it does the math and divides it out each month. So let’s say in January, in this example, we’re breaking even at $21.50 per hour last year, and we go into in 2019, we’re breaking even, let’s say $35 an hours. That’s another KPI, key performance indicator that you want to be looking at, because that’s a red flag going, “Holy cow, if my break-even point has gone up almost $15 an hour, is it something I did intentionally?” As far as equipment or labor or payroll, or is there something I need to dive in and fix before it’s too late? Because a lot of people don’t look at these numbers until the end of the season. And they don’t have any money in their bank account or they’ve lost money. By doing this, it’s going to focus on what needs to be done to hit your goals and keeps you driving forward each day and every week. And by doing so, this is a process, it can be delegated where the business owner can just get those report daily. And then if things shift and they’re not looking good, the business owner can jump back in and make sure things are back on track. So we break down the break-even for each month. That’s another thing that could be delegated and shared and a team buy-in. And then in the far left here, we’ve got an average of all the months, how much we break even for the whole entire year. So you want to have those benchmarks each month, especially in a long period of break-even. It’s going to be significantly high on the spring because our costs are front-end loaded. If you’re in the home cleaning industry, on average, we see those spread out being pretty consistent. But basically, we want to track it each month, and then we have an average for the whole entire year here. And that break-even is going to be the one you use in your pricing matrix and your job costing. So productionary-based estimating, for instance, in a lawn-mowing example, it could be from 1 to 5,000 square feet, we’re charging 50 bucks. It’s going to take us one hour to do it. And if our break-even cost is $21, it’s costing you $21 in expense before you get the delta of the profit from the 21 to the 50. And averaging it across the year, it’ll take out the highs and lows, and give you the number you want to work with. So 30-day challenge, my challenge to you today is create a document here that will track your start and stop times to give you a percentage that can be shared with the team, with compliments, complaints, plus and minus, and then the ability to see the whole entire company, as we have it here in the left as an average, if you’re making money or losing money. You really want to buy a dial-in for each day, for each crew, and then the sum total for each week, for each crew, and then the whole entire company, share it out, get buy-in. And then twice a year, we go into a job costing report here and raise the prices only on the jobs that we’re losing money on it. By creating a process and system like this, it doesn’t revolve around the business owner. This is something that can be delegated to a virtual assistant or an internal office staff member, extremely easy, with precision, and it’s not emotional, and the numbers are numbers. When we start running the business by the numbers, in my opinion, it’s fun. It’s just really a math game to drive profits and help build a culture that is driven by numbers and production and goals. So any comments or questions, drop them below. And I’m happy to answer any questions. Thanks a lot.