Most of our readers are construction industry professionals in the commercial subcontracting space that are looking for ways to improve their business practices and do business better. Our experience developing software for them has led us to a number of insights into how electrical subcontractors in particular, but really any type of contractor, can start improving their business processes to achieve better results.
Rather than making a top-10 list, we’ve divided our top 10 actionable insights for electrical subcontractors into 3 separate categories – tips to help you make more money, tips to help you reduce costs, and tips to help you increase the overall efficiency of your business. What you’re likely to find is that many of these insights provide overlapping benefits, so the categories are just there to help organize the information. Enjoy!
Build Strong Professional Relationships
As a commercial electrical contractor, a lot of your best business opportunities come from large construction companies that can dole our big projects and big contracts to a reliable partner. A strong relationship with a growing construction firm or general contractor can put a lot of food on your plate but burning a bridge could see your business go barren.
It’s important that you go the extra mile for your customers and make sure they can depend on you to get the job done on time. If you show that you’re willing to go the extra mile to finish on-time and on budget, you’ll always have more work waiting for you.
Expand Your Service Catalog to Earn More Revenue
If you’re like most commercial electricians, private sector contracts with construction companies to install new electrical systems are probably your bread and butter – but that doesn’t mean you should restrict yourself from doing other kinds of jobs that could be even more profitable.
Learning to install charging stations for electric vehicles or electronic alarms for home security or fire safety can add additional revenue streams, up-sell opportunities and labor hours to your business every year. You could also choose to work on high-voltage power lines or focus on installing back-up power generators. Expanding your service offerings may require new certifications, but you may find that you already have a lot of know-how, and that a bit of new education can open a lot of new doors.
Manage Your Online Reputation
It’s common knowledge that 90% or more customers will search for a business online before visiting in-person or even making an initial phone call to request a quote. Some websites even allow your customers to post reviews or your work which could negatively (or positively in many cases) impact your business.
If you received a negative review that you believe is genuine, contact the original poster and try to make it right in exchange for having the review removed. If you have received negative reviews that you believe are fraudulent, contact the administrator where you found the review and ask for it to be taken down.
Start Selling Maintenance Agreements Today
If you’re used to working on a project basis, it could be time to beef up your recurring business stream by offering maintenance packages to your customers. Your firm could offer commercial kitchen maintenance package, regular inspections and audits of back-up generators and power supplies that serve critical functions, emergency lighting inspection and testing, or periodic inspection of electrical systems for fire safety.
Maintenance agreements can be positioned as a preventive service that reduces long-term costs for the customer. Maintenance agreements can help keep your business earning money during less busy times of year and give the customer peace of mind that their most important electrical equipment is being maintained in its best condition.
Reducing Costs/Expenses as an Electrical Subcontractor
Vehicle expenses are one of the most insidious sources of waste for many electrical contracting businesses. Although a work vehicle is a necessary expense, there are many ways for electrical subcontractors to achieve lower operating costs through fuel-cost reduction, not to mention the benefits of extending the life of the vehicle by using it for its intended purpose only.
Electrical subcontractors can reduce vehicle expenses by optimizing driving routes to jobs, driving at the appropriate speed limit, restricting use of the truck to business purposes only, traveling only in designated areas and reducing idling time.
Implement Electronic Time Sheets to Optimize Labor Costs
Companies that implement electronic time sheets benefit from an immediate 6% reduction in labor costs, simply because they ensure that hours are recorded as they happen, rather than reported based on the employee’s later estimate. Electronic time sheets introduce added accountability for your staff, help you monitor productivity on the job and reduce payroll errors associated with manual entry.
A software solution like eSUB time can reduce the time you spend tracking down time sheets every week while increasing your payroll accuracy and helping you get a handle on labor productivity.
Understand Your Most Important KPIs for Cost
Optimal KPIs vary from business to business, but you should develop an understanding of what KPIs work best for measuring effective cost management for your electrical subcontracting business. Two major ones are labor productivity and time taken to fix defects.
If you pay someone for 8 hours but you can only charge the customer for 6 hours of work, that’s eating a big chunk of your profits. In addition, if you bill for 8 hours of work but spend an additional 2 hours on reworking an error, you’ve lost all the profit. Understand what factors eat into your profits and develop solutions to address them and reduce their occurrence. For most electrical subcontractors, managing labor effectively is one of the best ways to reduce costs and increase profits.
Increasing the Efficiency of Your Electrical Subcontracting Business
If you’re like most electrical subcontractors, you’re probably pretty good at the product/service delivery aspect of your business and not as good at the management/accounting side. Digitizing your documents can help you stay organized and keep track of crucial data about your business, helping you make better managerial decisions and get a firm grasp on your company’s financial position and tax situation.
Don’t wait until tax time to start figuring out what’s happening with your company – grab an accounting program and upload your invoices and receipts to start seeing the big picture today.
Implement Electronic Change Orders
Losing a change order form is the cardinal sin of subcontracting – you should simply never do it. Still, most commonly on larger projects, it is common for electrical subcontractors to lose change orders and either forget to complete the work altogether or forget to bill for it (even worse!).
Implement a change order software system that allows you to create a change order and have it approved by the client as soon as they request it. Once a record has been created, you’re much more likely to remember to complete the work and it’s guaranteed to make it into your customer’s invoice.
Develop a Local Web/SEO Presence
If you’re a well-known local electrical subcontractor, you could be losing out on thousands of dollars in revenue every year if you don’t have your own website. Surveys indicate that 81% of prospective customers do online research before calling for a quote and if you haven’t developed a web presence for your business, you could be missing out on the opportunity to offer your products and services to thousands of local and international customers, all for minimal cost.
Investing in a website that showcases your service offerings and a little bit of monthly ad-spend on a major network like Facebook or Google could pay huge dividends for your business this year. Dedicate some of your marketing budget to weekly website content updates, new postings, social advertising and engagement activities.
There’s always a way to do something better – let us know how you’re implementing these insights (or your own) to improve your electrical subcontracting business.