Okay, so the holidays are over and it's time to get down to serious business and make 2014 a thriving success. Are you ready? Have you established your success goals for 2014 and the plans to reach them?
Let me remind you of one important area that needs your attention as it will affect your profitability and competiveness during the year. That is knowing exactly what an hour of labor is really costing you as you prepare your proposals. Have you checked the following before you do any pricing this year?
1. Has your average wage rate per hour changed this year vs. last year?
2. Has your average production rate increased or decreased this year? Have you invested in high speed equipment that will increase your production rate and consequently your ability to price more agressively in tight situations? If you haven't checked into some labor saving equipment, don't you think you should?
3. Have you double checked your insurance rates for 2014? Have any of the following increased or decreased?
3A--Workers compensation insurance--what is you modification rate now? Has it gone up? Were you able to negotiate a discount or did you just accept what the agent brought on the last day of the year?
3B--Unemployment insurance--what is your new 2014 rate? Did it go up? Is your state one of those that is paying a surcharge to the federal government? There are 14 states that are saddled with this surcharge that can be anywhere from 25% to 75%.
3C--General Liability--Did you negotiate a flat rate for the year or do you have a rate that is a percent of your labor. Either way be sure you factor that rate into your labor loaded rate.
3D--Don't forget the 7.65% for FICA and medicare.
3E--What about bonding? What about special state mandated taxes and or insurances? Several states have a variety of taxes that just add to the bill. These little ankle biters can add up to a sizable amount by the end of the year.
4. I don't need to remind you of the increase in the minimum wage if you are in one of those states that was affected January 1. That, plus the items I mentioned above make it even more critical that you review ALL of the insurance and taxes that are related to the wage rate you pay.
And the list goes on and on. I am confident that most of you have taken a close hard look at your loaded labor costs but I feel it incumbent on me to remind you since so much of our expense is labor and the taxes and insurances connected with each labor dollar.
That brings me to another area that I believe you should be reviewing closely---your average production rate that I touched briefly on in number 2 above. Have you been able to increase your production rate throughout the years. As I said earlier, the latest equipment innovations can help you in that area but one more thing can help a great deal--A DETAILED,ORGANIZED TRAINING PROGRAM.
In addition to faster equipment, the one way you can become more efficient is to assure that all of your people are trained to do a quality, effective job in the least amount of time so look at your current accounts to see if there is some labor you may be able to reduce without affecting quality. Reducing labor without affecting quality only comes if you have a systematic company adopted way of cleaning.
So let me encourage you to look at your rates here at the first of the year-- Your rates of production as well as your insurance and tax rates. It just may secure an extra account or two for you this year.
A couple of reminders for you.
1. We have added a page to our web site called "worksheets" where you can download FREE of charge various forms that may be helpful in your business. You can get those at www.consultantsincleaning.com.
2. This week's tripodcast is all about what 5 minutes of wasted time costs you. Go to www.tripodcast.com to listen to this FREE pod cast.
Till next time and HAPPY NEW YEAR.
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