There are two areas of your business that will determine your success or failure for the remainder of this season: Financials and Operations. Your financials act as the “symptoms,” giving you the first signs that something is wrong. Once you can determine where the problem may be, you can review your operations to help guide you to the root cause – telling you what actions to take in order to make corrections.
Having a company budget is the first step, as it allows you to determine when a financial symptom is developing. However, whether you have a budget or not, you can start to implement the below financial best practices today.
- Between February and April evaluate your unit margins by product and segment and meet with the team members responsible for these performance targets weekly.
- Create a cash flow forecast, being sure to validate your assumptions against your actual historical data, and review your forecast periodically to determine if adjustments are required.
Once you have addressed the financials, the next step is to calculate key performance indicators for your operations and know what they are telling you. It may seem simple to calculate metrics like stops per hour or gallons per stop, but once you calculate these metrics do you know what they’re telling you? Here are a few reports and metrics you can use in order to start to dig deeper into some potential problem areas.
- Callback audit by technician – run a report by technician to find out if a large number of the callbacks seem to be related to the same technicians constantly misdiagnosing problems.
- Callback audit by customer – run a report by customer that includes the contract renewal date and number of calls to find out if a large number of the callbacks seem to be at the same houses. Begin with contract customers whose renewal date is coming up and then analyze the accounts with a high number of service calls. This will give you a good starting point in order to schedule your technicians to service, upsell and renew contracts.
- Stops per hour – Calculate this by dividing the number of stops by the number of hours on the truck. If your number comes out lower than 2.8, it could mean that you’re experiencing routing issues or driver efficiency issues.
- Miles per stop – Calculate this by dividing the number of miles driven by the number of stops. If you are coming out with more than 5 miles, it usually indicates that you have a routing issue.
Although these best practices may seem daunting or unattainable at first, keep in mind that these are suggestions as to where your company should be heading over the long term, so don’t expect to get there overnight. Start by picking one area to focus on and begin to work your way up to these best practices. Our financial experts are standing by if you need any help getting your company on the right course.
Disclaimer: When applicable, advice from Angus Energy may include a discussion about risk mitigation via commodity and/or weather hedging.
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