“I can get this big job if I buy two more tents”. I’ve said and heard something similar phrases countless times. We all get starry eyed at the allure of the next big sale. I’ve learned to call this my; “if I buy” syndrome. “if I buy” this thing or that thing then I will grow.
I usually got that next big job. My inventory grew and my warehouse grew. Yet at the end of the year my profits shrunk! So was I really growing? The only thing I did was to create more work for my company and I got paid less. Or put very simply, I worked more hours for less pay per hour. This is a sure sign of shrinking profit margins.
So what did I do? I decided not to take any jobs that required me to buy new tents. I either did not take the job or I sub rented what I needed to win the job. I only sub rented when I could make a good profit on the job. Once I made the commitment not to buy new tents, I made a larger commitment. I set out to study how profitably we were at setting up each size tent in our current inventory.
What I found astounded me! We were awesome, very profitable, and competitive in some size tents. While other sizes we really did not do well at all. This was great information. Now my management job became easier. Priority one was to increase sales of the most profitable sizes we had to offer. Priority two was to study why the other sizes were less profitable.
Selling more of the profitable ones was easy. We got creative when talking to our customers. We upsized them, downsized them, reconfigured their party, or changed the style of tent used. We worked with them so that we could provide what they needed and get the most profit for ourselves. Guiding them to select our most profitable size and type tents helped this process.
The study of the unprofitable ones was a little more time consuming. In a nutshell our rental cycle was suffering. We could not effectively get the tents to the jobsite, set them up, take them down, clean them, and return them to the shelf. We were doing all this at a profit level that would not be healthy for our long term growth. We had an efficiency problem. We had to completely redesign and change our thinking on how we did these jobs. We had to purchase new tools and machines to do them more profitably. Once we changed our methods and bought the right machines we became profitable in all sizes of tents we offered.
The year we decided not to buy new tents and instead focus on renting our most profitable tents we had the best profit margins ever. We worked less hours and got more money per hour worked. We got over our “if I buy” mentality and got focused on becoming profitable. Mastering a business with great profit margins is always the best way to grow into a bigger more successful business.
Master, grow and be smarter. I learned this the hard way and I learned that improving my methods and machinery to set up jobs was the only way to improve my profit margins.
If you would like to see what Steve and the Teeco Solutions team are up to, check them out at www.teecosolutions.com