Do You Have Enough Business?
November 13, 2012
You need to have the answers to three questions when a new job comes to you:
1. Has your company met their yearly volume budget goals with this job?
2. What effort, on your company’s part, triggered this job being given to us?
3. How long has it taken for the job to be assigned to your company from when you started pursuing it?
A lot of companies wait for the phone to ring from an adjuster for a new job or for a program to send them a new job. That’s not necessarily the best way to go about securing work.
You should be busy and hopefully you are! But the real question is: “Why are you busy?” One of your answers as to why you might be busy is because of weather. Another answer might be that your name came up in rotation on a program that you’re on. The smaller your volume is, the easier it is for you to be busy.
When you are still working in the field, you usually feel that you can get it all done yourself and that you can always get it done quicker than anyone else! As your company grows, you begin to hire people to do the work that you used to do. A lot of owners have a tendency to think that the field cannot run without them, and therefore, they stay too connected to the field. The owners also rediscover that they don’t like going out and looking for new business, so they hire someone to seek new business. As a result of these two actions, they begin to get frustrated with the people that they’ve hired. They feel that these new hires are not doing things as good or as fast as they remember themselves doing them. As a result, a lot of owners start the cycle of hiring and firing people.
There are four basic functions that need to happen in a successful and profitable company:
1. Sales, estimating and business development
2. Management of the company
When companies first start, it’s the owners that usually do all of these functions, both for economic reasons and due to a lack of qualified personnel. But as the company grows, the owner usually hires help - first in production, then in administration and then in estimating. While this growth is happening, the owner is managing the entire company and searching for both new and additional business. As soon as the owner can do it and feel comfortable doing it, they hire someone to run production and then someone to run administration. That leaves the owner still in charge of managing the company and continuing to get new business.
The next hire usually comes in the form of hiring someone to go out and bring in new business. Most of the time, no one works as hard as the owner and where that usually shows up the most is in the process of obtaining new business for the company. The owner is able to judge whether or not production or estimating is effective, due to having done that work themselves for so long. Conversely, the owner usually cannot judge what is going on in administration, due to the fact that they never did much in administration. But where they really lack knowing what is going on is when they try to judge the effectiveness of the employee who is out looking for new business. A major reason for this is that owners have “skin in the game” and they know that without new work, the owner will be the first one to go without a check. The employee knows that they are going to get a check each pay period, regardless of whether or not they bring in new work.
Usually, the owner doesn’t notice until it’s too late that new business is slowing down. It takes time to realize that there is a need for new work. With some effort, program jobs will come in on a rotation basis, but all other jobs need a lot more effort by someone in the business to generate it. If an owner is slacking regarding efforts to bring in new work - they know it. If the owner has not installed a system of accountability for monitoring those responsible for getting new jobs, the owner won’t realize that new work isn’t coming in until production starts to whine about not having enough to do. So here’s the message: Every time a job comes in, you - the owner - need to know where the job came from and what action or actions caused that job to come in. Not knowing that information will, as they say in the south, come back to bite you!
The next thing that you need to know is how long it takes from the start of your efforts to get a job to when the job is actually ready to be started. So let’s run some ideas by you for your thought process:
• Take an adjuster to lunch, they send you their next job. The time expended was likely somewhere between one and three hours and the cost might be $30 dollars.
• Take an adjuster out for drinks. It’s the same time frame as lunch, but usually it’s done at the end of the day, when employees typically head home. The cost could easily be much more than $30 dollars.
• Take an adjuster out for 18 holes of golf (3-5 hours). The cost could easily be more than $200 dollars.
You know the interesting part of the cost of these three efforts is that most companies never figure in the cost of the retail labor rate of the company representative making the effort to get together with others for potential future business.
As a result of this knowledge you should begin to pay attention to what is being done to get new work, at what cost it is to the company to get new work and, very carefully, watching the time frame as to when the company will be needing new work!
Wishing you good luck and good profits, you work too hard to receive otherwise!