Contractor Training Continued…
Let’s stop for one second and celebrate the fact that you made it to the third page of our contractor training. If you have received anything for these few short pages please fill out the contact form below and let us know how we did or how we can help. Now that we got that out of the way…
Here on the ChristmasContractor.com you can list your business for free and receive Christmas light installation leads absolutely free! Most of our residential clients that are not in our local service area area looking for “Self Install Kits” to do it themselves or are looking for that bundle in addition to a contractor in the area to assist them with the installation of those commercial products. It’s funny to hear some of our guys recommend to us that we should use Thumbtack or Home Depot’s lead generation system that only costs $35 each or something. That’s a HUGE WASTE of money! Secondly to think about the companies who spend money on Facebook advertising or Google AdWords is absolutely ridiculous. We at Kingdom Connection can help you with all of the advertising service and it’s absolutely free of charge.
Let’s talk about one of the most important parts of our business that seems to be the most expensive… INVENTORY! The materials that are used to decorate these properties are absolutely expensive and every mistake you make is extremely costly. There are many aspects and challenges of inventory and supply management and there doesn’t seem to be any simple solutions that can eliminate these challenges or streamline this process. Let’s dive into a couple of examples of what I’m talking about.
The most obvious and controllable thing you can do is to find the commercial grade quality products that represent your brand and secure them at the best price your volume can buy. The difficulty you find in this area is needing something right away “in season” and then having to make quick decisions in order to keep a customer. Last season an installer told me, “Hey, I forget to grab timers for this commercial project but don’t worry, I went to Lowes and purchased the 25 we needed.” Just that one retail purchase cost our company over $200. It will make you sick when you start multiplying those numbers with the amount of mistakes you’ve made in inventory.
It’s expensive but necessary to have a warehouse when you’re operating a Christmas light installation business. You as an existing contractor know this. Some of you have storage units to store you items and others of you are on a higher level and own or rent store fronts or large production warehouses. The point here is that warehouse workers are not free and the warehouse or storage space is not free either. Every dollar that’s spent to manage your product inventory needs to be accounted and justified. Last season our senior warehouse manager said, “Hey, Jose came by the warehouse and said that he needed 4 cases of warm white mini lights for a job. I went ahead and gave it to him so we could keep the company moving.” The truth about that project is that I had already assigned that project to someone else who already had that particular inventory with them so I could send Jose somewhere else. Those mini lights are roughly $13 each and there’s 24 to a case so this man just gave an installer that had only been with me for 2 weeks $1,248. That’s just one small mistake and lack of communication. Imagine having a half of a million dollars in a small warehouse and trying to remove yourself from the distribution of materials aspect of your company. It’s tough and mistakes can cripple your profits.
One of the most unpopular things to talk about in this business is the shrinkage between the materials that you buy, the materials that were installed and where the remaining materials went. Many retail businesses like Walmart refer to this as shrinkage. Maybe someone stole it, maybe it wasn’t delivered, maybe the person didn’t count it correctly, maybe it was mislabeled or maybe it was installed and the customer was never charged for it. There’s many different reasons WHY your bank account reflects the materials purchases but they have gone unaccounted for. The fact is, you have multiple crews running around time with over a thousand dollars of your material and you personally trained them how to make money with them right around Christmas time. That can put a man (or woman) in a compromising position when a persistent neighbor demands that they work under the table and then waves some cold hard cash in front of their face. The most important aspect of this encounter is the fact that your workers understand where you’re the most vulnerable. They know what you’re counting and inventorying and they also know the areas where you’re overlooking their and blindly trusting them. Shrinkage can be very expensive and most of the time it’s your workers stealing from you.
Let’s say that you’re the person who makes things happen at your company. You’re the top salesman (maybe the only one), you’re the head of the inventory department, you’re the hiring manager and you’re also in charge of the dispatching and daily assignments of your crews. That’s a mountain of responsibility to bear and it leaves very little time for you to be in the office doing the very thing that brings money into the company… answering the phone. If you think about it, every minute you’re not behind that desk or you’re not somehow in a position to take a new customers phone call that’s interested in your service, you’re not making money. The cash register of the business needs to be open or the overhead and inventory will eat you alive. Think about saving yourself $100 “in season” and you only have to made a 3 hour trip to deliver materials. Next think about the clients that you’re closing and scheduling over the phone in a 3 hour period. For me personally, it would be equivalent to closing the cash register and missing out on $10,000 or revenue so I can save myself $100. This is one of the main reasons that we’re turning a blind eye to some of the material distribution problems and accepting the occasional loss. It really doesn’t have to be like that but how do we manage both effectively at the same time?
My friends, whether you sell the lights to your clients or lease them (which I think is a better idea), there is a logistical strategy to your process. Let’s talk about companies who lease first. If you have 3 to 5 clients’ existing materials issued out to your installation crew, it’s becomes more difficult to reassign that project. This limits your ability to reroute a team when properties that are closer and more efficient become ready. You’re forced to reschedule the clients to another day or have another crew complete the install with new materials at those properties. That’s a tough call but we’re in the “RIGHT NOW” business. The companies that allow their clients to purchase and keep the decorations have a unique logistical advantage because they can organize their crews towards existing projects that are ready to be installed without having to consider the materials. For example, if one crew is taking longer than expected or another crew is looking for something to do, you have a list of properties that have their materials on the front porch and are ready to be installed. That can allow you to complete more installs and manage more crews with less headaches for existing projects. I think however we’ve found a compromise (Inventory Solution) that may be mutually beneficial for both scenarios below.
One of the most expensive inventory situations that we experience with our crews is when they are loaded down with products and then they don’t get their assigned tasks done for the day. It can be even more frustrating when they have specialized materials like pure white, multi-color, mini lights, wreaths or garland. These products that are specifically stocked for unique customer displays bring you ZERO VALUE in the back of your installers truck who went home. (or even worse, getting installed on the side without your knowledge) Underperforming crews who are loaded up with inventory will have you either rescheduling projects or having you repurchase or reassign the same materials to another crew so you can keep your daily schedule. That can be very expensive! We’re continually reinventing ways to counter “Crew Drag” and keep the materials enroute to your scheduled installs rather than sitting in line to pick the kids up from school because something happened with your crews personal life.
If you’re operating a small to medium sized Christmas light installation business that handles 200 clients a season or less, let’s explore another option that may allow you to avoid some of these inventory issues. We believe our inventory solution can both increase your productivity and also allow you to avoid some of these shrinkage issues that most companies face. Brace yourself because this going to be groundbreaking and a real gamechanger.
We believe our material delivery solution can ease the growth transition from starting a Christmas light installation business to becoming a retailer of commercial grade Christmas products in addition to your installation service. Let me explain. When a client gives you a deposit to begin the project (to buy materials), you can simply purchase the individual quantities needed on our website and then have the products delivered to their doorstep. Upon arrival, you’ll have a confirmation of deliver, a list of the products that are at each clients house and a list of homes that are ready for install. This will alleviate the logistical challenges (we mentioned above) that companies face “in season”. It may cost more for the raw materials but it will SAVE YOU MONEY in the end after all expenses are considered. This process will also allow you to focus on your business while having more control of your inventory. This is one of the many reasons WHY Kingdom Connection offers the best solution for growth in our industry today.