acca 2012 austin, tx october 11-12, 2012 growing your service business blast through the next...
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ACCA 2012
Austin, TXOctober 11-12, 2012
Growing Your Service Business
Blast through the next plateau!
NATFH FMS Profit Enhancement Partnership Austin, Texas October 2012
Bill BernickDaimler Management Services25 years Carrier and Trane8 years as an entrepreneurEuropean Automotive Service Co.Business Consulting CompanyPCA Racer/Travel/Boating
NATFH FMS Profit Enhancement Partnership
Objective today
• A look at how to ‘Bust Through’ some very traditional Service Revenue and PBT Plateaus and improve your overall Service Business!
Profit Enhancement Partnership Austin, Texas October 2012
Agenda• Review Agenda and objective (5 min)
• Review Standard Plateau points (5 min) Why
• Compare and Contrast $2M, $5M and $8M (15 min)
• Discuss differences in a $2-$5M and a $5 -$8M.
Report GraphCatalog InputFields
Office CockpitAs of October 31, 1999
YTD YTD
J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec Actuals Budget
Service Revenue 103,415 127,555 182,440 253,234 158,480 229,358 130,930 196,951 181,915 179,293 1,743,570 2,374,574
Cost of Sales 50,794 60,179 93,531 129,718 50,708 115,201 70,426 84,418 92,208 100,115 847,299 1,220,079
Standard Gross Margin 52,621 67,377 88,909 123,516 107,772 114,157 60,504 112,533 89,707 79,178 896,272 1,154,495
Standard Gross Margin % 50.9% 52.8% 48.7% 48.8% 68.0% 49.8% 46.2% 57.1% 49.3% 44.2% 51.4% 48.6%
Overhead Expense 60,582 55,212 51,408 40,010 51,860 56,541 66,945 34,232 45,628 49,498 511,915 605,341
Overhead Expense % of Revenue 58.6% 43.3% 28.2% 15.8% 32.7% 24.7% 51.1% 17.4% 25.1% 27.6% 29.4% 25.5%
Gross Profit (7,961) 12,165 37,501 83,507 55,912 57,615 (6,441) 78,300 44,079 29,679 384,357 549,154
Operating Expense 27,645 26,665 37,492 40,658 23,904 34,751 30,116 38,718 38,509 28,757 327,215 336,204
Operating Expense % of Revenue 26.7% 20.9% 20.6% 16.1% 15.1% 15.2% 23.0% 19.7% 21.2% 16.0% 18.8% 14.2%
Operating Profit (35,607) (14,500) 9 42,848 32,008 22,865 (36,557) 39,583 5,570 922 57,142 212,950
Revenue per Technician 9,401 11,596 16,585 23,021 14,407 20,851 11,903 17,905 18,191 17,929 161,442 202,955
Optng Prft per Total Service Prsnl (2,374) (967) 1 3,061 2,286 1,524 (2,437) 2,474 371 61 3,835 13,564
Prior Year ActualsMonthly BudgetMonthly Actuals
Contracts Gross Margin and Man Hours
0
0.2
0.4
0.6
0.8
1
1.2
0
5, 000
1 0, 000
1 5, 000
20, 000
25, 000
30, 000
35, 000
40, 000
45, 000
50, 000
Total Contract Technician Hours
Contracts Average Gross Margin YTD
Man Hour Analysis
0
0.2
0.4
0.6
0.8
1
1.2
Unapplied Technician HoursWarranty Technician HoursTotal Technician Overtime Hours
Overhead and Operating Expense % of Revenue
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
OverheadOperating
Backlog Analysis
0
0.2
0.4
0.6
0.8
1
1.2
0
0.2
0.4
0.6
0.8
1
1.2
Technician Backlog HoursOther Revenue Backlog DollarsPrior Year Backlog Dollars
Service Revenue
0
250,000
500,000
1999 Actuals
1999 Budget
1998 Actuals
Operating Profit
(250,000)
0
250,000
1999 Actuals
1999 Budget
1998 Actuals
Revenue by Service SalesPerson
-20,000
0
20,000
40,000
60,000
80,000
100,000
1999 Actuals
1999 Budget
1998 Actuals
Revenue by Technician
5,00010,00015,00020,00025,00030,00035,000
1999 Actuals
1999 Budget
1998 Actuals
Goal
Standard Gross Margin % of Revenue
30.0%
50.0%
1999 Actuals
1999 Budget
1998 Actuals
Revenue Streams
NATFH FMS Profit Enhancement Partnership Agenda
Agenda continued
• Plateau Buster Actions (30 min)– $2-$5Maus and grow profitably. (stress Personnel, management,
span of control, process, etc.)
• Question and Answer (20 min)
booked volume as of 12/31/99
# of New Agreements
New Service
Agreement RenewalIncrease
IncreaseCoverage
Decrease Coverage
Agreement Total
January -$ -$ -$ -$ -$
February -$ -$ -$ -$ -$ -$ March -$ -$ -$ -$ -$
April -$ -$ -$ -$ -$
May -$ -$ -$ -$ -$ -$ June -$ -$ -$ -$ -$ -$ July -$ -$ -$ -$ -$
August -$ -$ -$ -$ -$
September -$ -$ -$ -$ -$ -$ October -$ -$ -$ -$ -$ -$
November -$ -$ -$ -$ -$
December -$ -$ -$ -$ -$
Total 0 -$ -$ -$ -$ -$
Lost Agreements by Category
# of Lost Agreements
Change Owner
CompetitiveService
New Trane Jobs
Owner Service
Time &Material
Lost Agreement
Total Net
Change January -$ -$ -$ -$ -$ -$ -$ -$
February -$ -$ -$ -$ -$ -$ -$
March -$ -$ -$ -$ -$ -$ -$ -$0April -$ -$ -$ -$ -$ -$ -$
May -$ -$ -$ -$ -$ -$ -$
June -$ -$ -$ -$ -$ -$ -$
July -$ -$ -$ -$ -$ -$ -$
August -$ -$ -$ -$ -$ -$ -$ -$0 -$ September -$ -$ -$ -$ -$ -$ -$
October -$ -$ -$ -$ -$ -$ -$
November -$ -$ -$ -$ -$ -$ -$ -$0 -$ December -$ -$ -$ -$ -$ -$ -$
Total -0 -$ -$ -$ -$ -$ -$ -$
# of contracts as of 12/31/99
Service Agreement Tracking ToolInput Worksheet
NATFH FMS Profit Enhancement Partnership Austin, Texas October 2012
• What does a Plateau look and sound like?
“We just can’t handle any more work” - Service Manager
“Sales are growing but profit is stagnant”! - Controller
“Sales are not growing because the darn ops group can’t do any more” - Sales manager or Sales people.
“You sure are losing a lot of people” - HR Manager
“You used to do a lot better job taking care of me” -Customer
“I could sell more but I don’t have any faith that Ops could deliver more” - Salesman
“It’s not as much fun as it used to be…..we were like family!” - Administrator
“We sure are working hard but I don’t see any additional profit!” - District Manager
“You used to give me enough time with my customers but now it is chaos” - Technician
NATFH FMS Profit Enhancement Partnership
Exceptions to the Thresholds
• Strong leadership can delay the effect….for a while
• Skimming (a potential $10m business only doing $4m)
Let’s Look at Trend for the representative business for a $2 Million Plateau
0
500
1000
1500
2000
2500
$2 Million Plateau
Revenue
PBT
ACCA Service Managers Conference Oct 2012
Profit Enhancement Partnership Austin, Texas October 2012
• Let’s Look at Trend for the representative business for a $2M Plateau Breaker
0
500
1000
1500
2000
2500
3000
3500
4000
$2 Million Plateau Breaker
Revenue
PBT
Profit Enhancement Partnership Austin, Texas October 2012
Let’s Look at Trend for the representative business for $5M Plateau
0
1000
2000
3000
4000
5000
6000
$5 Million Plateau
Revenue
PBT
Profit Enhancement Partnership Austin, Texas October 2012
• Let’s Look at Trend for the representative business for $5 M Plateau Breaker
0
1000
2000
3000
4000
5000
6000
7000
$5 Million Plateau Breaker
Revenue
PBT
Profit Enhancement Partnership Austin, Texas October 2012
• Let’s Look at Trend for the representative business for $8 M Plateau
0
2000
4000
6000
8000
10000
12000
$8 Million Plateau
Revenue
PBT
Profit Enhancement Partnership Austin, Texas October 2012
• Let’s Look at Trend for the representative business for $8 M Plateau Breaker
0
2000
4000
6000
8000
10000
12000
$8 Million Plateau Breaker
Revenue
PBT
NATFH FMS Profit Enhancement Partnership Austin, Texas October 2012
Like a FamilyOne Man Show
Strong Technical Leader10 Technicians1 Admin / Dispatcher1 Service Sales
Family RunMany Manual SystemsSome SpreadsheetsCompensation Driving Ind.
PerformanceGood Cust. Relations (All “A”
Accounts)
NATFH FMS Profit Enhancement Partnership Austin, Texas October 2012
Like a FamilyOne Man Show
Strong Technical Leader10 Technicians1 Admin / Dispatcher1 Service Sales
Family RunMany Manual SystemsSome SpreadsheetsCompensation Driving Ind.
PerformanceGood Cust. Relations (All “A”
Accounts)
Business is in Transition from “Family” to a Professional Business
Manager Tech & Business
2 Team Leaders
25 Technicians
2 Administrative
1 Dispatcher
3 Salesmen / 1 Sales Leader
Automated Service Accounting
Dispatch Board and/or Computer
May have Teams
Comp. May Drive Teamwork
Has “A/B/C” Customers
Not w/ Customers as much
Family Transitioning to Business
NATFH FMS Profit Enhancement Partnership
Like a FamilyOne Man Show
Strong Technical Leader10 Technicians1 Admin / Dispatcher1 Service Sales
Family RunMany Manual SystemsSome SpreadsheetsCompensation Driving Ind.
PerformanceGood Cust. Relations (All
“A” Accounts)
Business is in Transition from “Family” to a Professional Business
Manager Tech & Business
2 Team Leaders
25 Technicians
2 Administrative
1 Dispatcher
3 Salesmen / 1 Sales Leader
Automated Service Accounting
Dispatch Board and/or Computer
May have Teams
Comp. May Drive Teamwork
Has “A/B/C” Customers
Not w/ Customers as much
Family Transitioning to Business
Truly a Professional Business
GM of Service Operations4 Team Leaders40 Technicians2 Resource Coordinators2 AdministrativeSales Manager5 SalesmenPossible Project Manager
Many SpreadsheetsManagement by ExceptionCommunication Challenges“A/B/C” Customers layeredProjectsComp. Drives Teamwork
NATFH FMS PDrofhancement
DifferencesWe are a Business now. More
PoliciesNeed to think about changing
Is Service Manager the “Right Guy”?
Do we need Team Leaders?Enhanced Communications
Compensation must drive working together
Some sophistication needed
NATFH FMS Profit Enhancement Partnership
DifferencesWe are a Business now.
MOPP’s PrevailNeed to think about changing
Is Service Manager the “Right Guy”?
Do we need Team Leaders?Enhanced Communications
Compensation must drive working together
Some sophistication needed
DifferencesTask / People Management are equal
Meetings need to be more effective
Service Leader has P&L strengths over Technical
Communications extreme importance
Promote from within? Team Leader Service Manager, Admin?
Sales Management is a Force
Modular Teams are in place
Comp Plan fosters Teaming
PCT Dollars PCT Dollars100% $5M 100% $6.5M
(30%) 1.5M (30%) 1.95M
(20%) 1M (20%) 1.3M
(42.2%) 2.11M (34%) 2.21M
7.8% 390K 15% 1.04M
5 Key Service Measurements
• Non Revenue producing time
• S/A compliance• S/A renewal rate• GM deviation vs. est. for
S/A• GM Deviation vs. est. for
Quoted
What role does sales have?
• Productivity Bench Marks Total Sales Volume Per Service Sales person• 1-2 year 200-400K• 2-3 year 400-600K• 3 plus 750K and up
Productivity Measurements• Closure Rate/Calls per week-New /Existing • Quotes per week Do You know your number!
• Backlog Hours: 3 month minimum desired• New S/A’s Sold $125k-$175K per year!
Summary of findings
• Processes• Systems• People
All these must grow and develop for you to bust through the plateau
NATFH FMS Profit Enhancement Partnership Dallas, Texas September 2000
DifferencesWe are a Business now.
MOPP’s PrevailNeed to think about changing
Is Service Manager the “Right Guy”?
Do we need Team Leaders?Enhanced Communications
Compensation must drive working together
Some sophistication needed
DifferencesTask / People Management are equal
Meetings need to be more effective
Service Leader has P&L strengths over Technical
Communications extreme importance
Promote from within? Team Leader Service Manager, Admin?
Sales Management is a Force
Modular Teams are in place
Comp Plan fosters Teaming
Summary of findingsBy looking ahead, you can avoid the next plateau……
It is all about the people, processes and your organization…..
..and taking the time to work ON your business rather than in your business
What can you do?What can help you
manage through these Plateaus?
• Profit Enhancement Partnership
• Organizational Design• Make the changes that will
allow you to go to through these plateau.
• Be ahead of the game for the next plateau!–
Report GraphCatalog InputFields
Office CockpitAs of October 31, 1999
YTD YTD
J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec Actuals Budget
Service Revenue 103,415 127,555 182,440 253,234 158,480 229,358 130,930 196,951 181,915 179,293 1,743,570 2,374,574
Cost of Sales 50,794 60,179 93,531 129,718 50,708 115,201 70,426 84,418 92,208 100,115 847,299 1,220,079
Standard Gross Margin 52,621 67,377 88,909 123,516 107,772 114,157 60,504 112,533 89,707 79,178 896,272 1,154,495
Standard Gross Margin % 50.9% 52.8% 48.7% 48.8% 68.0% 49.8% 46.2% 57.1% 49.3% 44.2% 51.4% 48.6%
Overhead Expense 60,582 55,212 51,408 40,010 51,860 56,541 66,945 34,232 45,628 49,498 511,915 605,341
Overhead Expense % of Revenue 58.6% 43.3% 28.2% 15.8% 32.7% 24.7% 51.1% 17.4% 25.1% 27.6% 29.4% 25.5%
Gross Profit (7,961) 12,165 37,501 83,507 55,912 57,615 (6,441) 78,300 44,079 29,679 384,357 549,154
Operating Expense 27,645 26,665 37,492 40,658 23,904 34,751 30,116 38,718 38,509 28,757 327,215 336,204
Operating Expense % of Revenue 26.7% 20.9% 20.6% 16.1% 15.1% 15.2% 23.0% 19.7% 21.2% 16.0% 18.8% 14.2%
Operating Profit (35,607) (14,500) 9 42,848 32,008 22,865 (36,557) 39,583 5,570 922 57,142 212,950
Revenue per Technician 9,401 11,596 16,585 23,021 14,407 20,851 11,903 17,905 18,191 17,929 161,442 202,955Optng Prft per Total Service Prsnl (2,374) (967) 1 3,061 2,286 1,524 (2,437) 2,474 371 61 3,835 13,564
Prior Year ActualsMonthly BudgetMonthly Actuals
Contracts Gross Margin and Man Hours
0
0.2
0.4
0.6
0.8
1
1.2
0
5, 000
1 0, 000
1 5, 000
20, 000
25, 000
30, 000
35, 000
40, 000
45, 000
50, 000
Total Contract Technician Hours
Contracts Average Gross Margin YTD
Man Hour Analysis
0
0.2
0.4
0.6
0.8
1
1.2
Unapplied Technician HoursWarranty Technician HoursTotal Technician Overtime Hours
Overhead and Operating Expense % of Revenue
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
OverheadOperating
Backlog Analysis
0
0.2
0.4
0.6
0.8
1
1.2
0
0.2
0.4
0.6
0.8
1
1.2
Technician Backlog HoursOther Revenue Backlog DollarsPrior Year Backlog Dollars
Service Revenue
0
250,000
500,000
1999 Actuals
1999 Budget
1998 Actuals
Operating Profit
(250,000)
0
250,000
1999 Actuals
1999 Budget
1998 Actuals
Revenue by Service SalesPerson
-20,000
0
20,000
40,000
60,000
80,000
100,000
1999 Actuals
1999 Budget
1998 Actuals
Revenue by Technician
5,00010,00015,00020,00025,00030,00035,000
1999 Actuals
1999 Budget
1998 Actuals
Goal
Standard Gross Margin % of Revenue
30.0%
50.0%
1999 Actuals
1999 Budget
1998 Actuals
Revenue Streams
booked volume as of 12/31/99
# of New Agreements
New Service
Agreement RenewalIncrease
IncreaseCoverage
Decrease Coverage
Agreement Total
January -$ -$ -$ -$ -$
February -$ -$ -$ -$ -$ -$ March -$ -$ -$ -$ -$
April -$ -$ -$ -$ -$
May -$ -$ -$ -$ -$ -$ June -$ -$ -$ -$ -$ -$ July -$ -$ -$ -$ -$
August -$ -$ -$ -$ -$
September -$ -$ -$ -$ -$ -$ October -$ -$ -$ -$ -$ -$
November -$ -$ -$ -$ -$
December -$ -$ -$ -$ -$
Total 0 -$ -$ -$ -$ -$
Lost Agreements by Category
# of Lost Agreements
Change Owner
CompetitiveService
New Trane Jobs
Owner Service
Time &Material
Lost Agreement
Total Net
Change January -$ -$ -$ -$ -$ -$ -$ -$
February -$ -$ -$ -$ -$ -$ -$
March -$ -$ -$ -$ -$ -$ -$ -$0April -$ -$ -$ -$ -$ -$ -$
May -$ -$ -$ -$ -$ -$ -$
June -$ -$ -$ -$ -$ -$ -$
July -$ -$ -$ -$ -$ -$ -$
August -$ -$ -$ -$ -$ -$ -$ -$0 -$ September -$ -$ -$ -$ -$ -$ -$
October -$ -$ -$ -$ -$ -$ -$
November -$ -$ -$ -$ -$ -$ -$ -$0 -$ December -$ -$ -$ -$ -$ -$ -$
Total -0 -$ -$ -$ -$ -$ -$ -$
# of contracts as of 12/31/99
Service Agreement Tracking ToolInput Worksheet
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