MYOB: Will your customer base be around five years from now? Will you?

Every jobber, at one point or another, goes through a time of self-doubt as to their future financial stability.

The facts of our industry show that an average of 65% of a jobber’s revenue comes from independent installers. It is tough when more and more installers are not paying their statements in full each month or falling further behind each month. It is even tougher when other jobbers insist on playing the time- and profit-wasting game of pricing their commodities at levels that make you wonder where they got their business training. With this combination of factors, it is understandable that feelings of self-doubt and questions of future financial security and stability play on your mind.

In such times it makes sense to review your current customer base and determine which ones you would like to keep–and ensure you get all their business by securing absolute first call–and which ones you should be sending to the competition.

Do the math: a jobber’s business seldom makes any money consistently selling an installer $100 to $1,000 per month, once you factor the cost of delivery, paperwork (including credits), staff time, and carrying accounts receivable. That is working hard, not smart. Jobbers get these customers because at the time they perceived that for their business, a sale was a sale, was a sale, was a sale. Mathematically, what a mistake.

Jobbers know it makes more sense to have “clients” who purchase $6,000 and more per month, pay in full, and have a great business relationship in place. This is a given. This kind of installer shop is a client, not a customer.

How, then, does a jobber determine if the current garage is going to be financially successful and be around in five years’ time, so they don’t put their eggs in the wrong set of baskets? To start, you must invest the time and have a solid interview with the owner of the shop to see if he is on track toward growing a prosperous business. Then determine what value your business can bring to the table to help him meet his objectives or overcome obstacles. The successful installer business will have many common denominators, and the jobber should embrace these owners’ businesses by strengthening the value and relationship that you could offer them.

The common parameters of shops that will be thriving in the years 2002 to 2010 will be the ones whose owners are able to sift information, identify threats to their business, and devise strategies that turn these threats into opportunities.

1. Identifying key outside issues affecting the installer’s shop. The fact is, an installer will have outside issues arise that will affect him and are beyond his control. He is capable of becoming aware of these things, getting fully informed and dealing with them. A perfect example of this is Ontario, where the best-run shops were able to evaluate and dissect the introduction of the Drive Clean emissions testing program and how it would affect their business and income. The jobbers who were on top of their game brought great value to these clients, by assisting them in discovering the facts of the program and killing any rumors that were in the marketplace by doing research on behalf of the client.

2. Measuring the key trends of the industry. The better installers are very capable. They regularly read SSGM magazine, Jobber News magazine, and other industry journals to keep abreast of what is going on in the industry. They participate actively in industry associations, trying to keep their hands on the pulse of their sector of the industry and at the same time understand the other sectors. They are very aware of future trends and are now thinking about plans for the next two to five years for their business, to meet the challenges coming up.

3. Measuring the key trends of their business. The better installers know the facts about their business. They don’t run their business by their bank account balance or gut feeling. They measure their business in detail, with many producing a full monthly operating statement, including balance sheet, and analyzing gross profit, productivity, and cash movement within their shop. The maximum time frame between financial statements for the best installers is three months. They produce at least a quarterly financial statement. They also charge the correct labor rate and hire competent technicians for their shop. They do not run any facet of their business based on price. They focus on quality and service to their customer base. By measuring key business trends, they then can make sound business decisions and meet future industry issues.

4. Develop a plan to shore up weaknesses and build enhanced value into their business. Progressive installers understand their weaknesses and are in perpetual motion to always attack the most cancerous points within their business. They also understand time frame management. Not all financial or business issues can be resolved overnight; however, a plan to better their future two, three, or five years from now is either in place or vigorously being developed. They know who they are selling to, and consequently the value of what they bring to their client base is very important to them. It is important to repeat that they do not run their business on price. They also understand and don’t expect their jobber to win on price all the time by any means; however, they do expect value from their jobber.

These common denominators should excite a progressive jobber, because this type of installer brings real value to a jobber’s business and also brings a great way to conduct day-to-day business affairs.

The first question a jobber should ask himself is simply, “Am I doing for my business what the best installers are doing for theirs?”

If you aren’t, I have some disheartening news for you. The better installers know you aren’t and keep their distance from you. They are very loyal to the jobber they perceive to have his act together as a person and a business owner. These are the installers who are going to be here and thriving five years from now.

Perhaps it is time in your jobber business to re-evaluate what you are doing and what value you are prepared to bring to the table to earn the privilege of selling to the best in your market area and have the best installers as a loyal first call client.

It is perhaps time for some jobbers in our industry to come down from their high horse, as it is time also for many installers to re-learn their business and really get a full grasp of what is required to ensure a profitable, enjoyable business is built and sustained.

The easy-come-’80s are long over. It’s a new world out there. It is time jobbers and installers in this industry came together, opened up, and communicated to each other how they can grow and sustain together; jobbers need to show how they cannot sell to just anyone who calls their store and still survive.

This is the new relationship that is required. Math is a very precise science. Math proves it right or wrong in business. So, do the math. You’ll see that it is the right way to go.