need a way to make higher labor rates attractive, pretty ‘em up with some value- add features. Point is, making labor a higher percentage of your total sales can pay big dividends. (If you don’t track la- bor revenues separately from equipment revenues, you need to. Starting now.) • Add an “Install Parts” allowance to all jobs. If you don’t already have a “misc. parts” allowance of 2-3%, implement one right away. Go even further — increase it to 5% or even 10% of the job, and have it include all wire, cables, connec- tors, labels, solder, supplies, tape, rags, disposals, etc. Customers have no idea what your costs are, or what the charges should be. This is an easy place to add a point or two of profit. • Sell better (more expensive) speak-
ers. Make this very profitable category a higher % of the total, and make more money.
With the strategies defined, you then go to work implementing and encourag- ing and measuring your way to a better outcome. And maybe by year-end your Mix|Margin Matrix looks more like the lower chart. You can make this work for any mix of product categories you sell. In- stead of saying, “Let’s increase GP
on the pieces that can most easily be im- proved. The few changes reflected above represent $30,000 in added GP
. That’s
a lot of GP from a few subtle improve- ments. And note that, in this example, sales of electronics actually declined! What I’m talking about here is not im- probable. I have seen a focus on category Mix & Margin enhance profitability many times. It can work for your company, too. May you grow and prosper! ■
*Fast-Forward’s Top-Line Management
System is a highly efficient methodology for managing company productivity, prof- itability, and cash flow. TLM disciplines cover daily administrative processes, monthly measures and metrics, and for- ward-looking planning and prediction. For more information, visit www.ffbizcoach. com, or e-mail Steve Firszt at steve@ffbiz-
coach.com.
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