How Moving Companies Boost Profits in 2023 - Part 2 - Labor Percentage

The second way that we're able to boost profits is the labor percentage, right. When we see companies that are having profit issues, meaning they're either not profitable or they're profitable below standard, it's. We look at some of the things where they're basically the ratios are out of whack, right? And so let's say their booking percentage is great, they got that up, but they're still not making money. Well, the labor percentage is the difference between what you're charging for the move and then what you're paying your movers, right? This is part of your cost of goods sold or your cost of servicing the move. Every single move that you do has a cost associated with it, right? You have other expenses in your business as well, like your rent and, you know, trucks and everything else. But the cost associated with the move, labor, which is one of your highest percentages, right. Is let's say it's around 30% for labor. So that means for $1,000 job, right off the bat, 300 is going out the door, right? But what happens when that thousand dollar job, 500 is going out the door for labor or even 400 is going out the door for labor? It doesn't leave enough of the pie to get to this place where you're able to get to 20% or even 15% for that matter, right? So what do you do if you've got a labor percentage problem? Meaning what do you do when it feels like you're paying too much out to your movers? Well, what a lot of people will do is they'll look to cut back the movers pay. And usually that's not the answer. And it usually ends in, you know, you've got disgruntled employees, you've got, you know, bad morale, and sometimes you get a mutiny on your hands because you know, to take away something that you've already given somebody isn't the answer. And I understand the man, the desire to do that, right? The we're not making money. What do we got to do? Let's cut cost here. This is one of our highest costs. Let's cut cost there. But there is another way to reduce the labor percentage and that's by increasing what you charge for your moves. Now, I know this is a tough one. I know a lot of people, there's a lot of deeply held beliefs about the customer only cares about price, right? I used to think that too, right. I used to, you know, I used to say, well, I've got no brand, right? I'm brand new you know, I'm working out of a truck rental yard with two rental trucks, right? How could I charge more? I'm in a competitive market where there's people that are given low prices, whether they honor them or they don't honor them, they're still given the low price. So how could I actually charge more? And I felt like I needed to charge much less at the beginning in order to just get business. And then at some point, I realized that I didn't want to continue to bust my ass in this business and not make any money, right? I didn't want to book moves for the sake of just booking moves. I didn't want to focus on just revenue and not profit at the end of the day. So in order to be able to raise your rates that you also have to come in and strengthen the sales process as well, right? And it's all about selling value and service over price, you know? So now my belief is, when I used to think customers only cared about price, now my belief is customers only care about price. If I make it about price, right? Or if my clients make it about price, then they care about this, right? And you might say, Louis, I've literally helped hundreds of people transform this and start getting paid what they're worth to be able to actually go. And I mean, look, this is a hard business to be in, right? And so you need to be able to make some money. And that fear of nobody's going to book with me is totally understandable. And it's true. If nothing else changes in your sales delivery or your sales process or your sales techniques. And so the idea is, you know, from your marketing to your scripts, you've got to weave in why your company is worth more, what's your unique value proposition, what are the things that you do that other companies don't? To where you could have the customer or the prospect seeing more, why they should pay more. Look, if people only cared about price, there wouldn't be Mercedes on the road and Kia's on the road, right? There's a reason people are willing to pay more. And our job is to get them to see the difference in that, to get them to understand why when you're comparing movers, it's not apples to apples, right? You can go and shop for a new TV and you could go to Best Buy and you could go to Walmart, Walmart, and you could get shop on Amazon and see who's got the cheapest TV and order that TV at the best price. But with movers, and this is really, how you want to explain it to the customer is with movers, it's not an apples to apples comparison. And what I mean is, in order for us to send you out, highly trained quality movers, they're going to come there and not only handle all your stuff with care, but have the skill set to be able to load it on the truck, bring it to your new home and set it up exactly where you want it without damaging everything. You know, we need to pay our movers a little bit more to do that, right? So imagine you go with that cheaper company and imagine they come out and they make the whole process more stressful. Imagine they damage things. And I'm not saying that's going to happen, but there's a reason we pay more for our crews and there's a reason that we charge more. And it's because we deliver a quality service, right? Check out our reviews, the whole thing. And that helps the customer make sense of it, right? Because otherwise sometimes they're just, you know, I get it, right? You said customers only care about price. And if they call in and all of a sudden they're like, what's your rates? And you're like, oh, these are our rates. And they're just writing your rates down and looking at them next to somebody else's, and I'm like, okay, thanks, I'll call you back. And nobody's taking the time to educate them on what they need to be looking for. And again, this isn't hardcore trying to close the deal right there. It's not about being aggressive. It's about being helpful. It's about understanding that we're the professionals. We do this every day as moving company owners. This is what we do. So when a customer comes in, think about if that customer was your grandmother or your mother's friend or somebody that you really wanted to look after, and they said to you, wow, your, your price is high. You would have, you would have no hesitation to look out for them and explain the difference, right? You know, explain why they need to pay more. Not because you just want to make more money, but because that's what it actually costs to run the business. So when we're able to charge more, we're actually able to either maintain what we're paying our movers, or even if you're struggling to find quality movers, be able to pay more. Right? And so the big thing here is to be able to charge more money, to be able to pay your movers. Well, it's going to take extra effort on the Sales end, right? And this is the stuff that, like, when times were good, I was like, ah, yeah. No, but what I realized is I realized I left so much money on the table for those first seven or eight years in business because I wasn't focused on these things, right? And what I believe is when we're on the hill, right, we're just, oh, this is great. We're making money maybe like 20, 20, 20, 21. And then, you know, when you're in the Valley, that's the time to really dial things in and do the things that are a little uncomfortable, do the things that are a little extra work. So you build that strength and build that capability. And then when it comes back up, that's how you take the market share and really take over, right? That's how, you know, from the recession, we went from 9 to 10, 11 million, whatever it was, to $20 million because of the additional capabilities and the skills and the things that we built into the business that now strengthened all these weak areas. So use this as an opportunity to strengthen those weak areas. Right? If you've got some of them, this would be the time to do it. And the last one I want to share with you today is rpm or revenue per move. So when you think about what you're charging, this kind of goes back to what we just talked about, being able to charge more, right? That's going to, right off the bat, that's going to help increase your average move, that's going to increase your revenue per move. But there's other things that you could do as well. One of the areas that over and over and over again, in my locations originally and now in, you know, the hundreds of companies we work with, that boosts revenue, that then boosts profit, is making sure that you get paid for every minute you're on that job. And I know this sounds obvious, but let me tell you how this works is when, and I'm sharing this from experience, right? It's when you send out a crew, if you let that crew clock themselves in, in and out. Let's say you're, you're a local mover, you're, you're an hourly rate. This could work too, for long distance as well. But let's say, let's use this as an example. And that crew gets to the job and it's, you know, they get there like 1:55. But by the time they, you know, pull the ramp out, by the time they, you know, go into the house, by the time they get the paperwork, you know, now it's, it's a little past two and they're starting the time at 2:15. The customer, right. Time should have been started at two. They're starting at 2:15. Okay? No big deal. You think? Right. And then let's say on the end of the job now the crew should be clocking out at, let's say, I don't know, five o'. Clock. Right? But they actually clocked the customer out at 4:45. Okay? Whatever the number, whatever the time is, they clock the customer out 4:45. We used to go in 15 minute increments, right. So every 15 minutes is how we charge. Right? So I'm giving you this example. And now you've got 30 minutes on that job that are uncollected right now. You might say like, Louis, why would they do that? My movers get paid by the hour. That's 15 minutes. You know, we pay them the time that we collect for, so that's 30 minutes they want to get paid for. Well, there's a few reasons. Number one, they're just not paying attention to it that closely because it doesn't seem like it really adds up. Right. And we'll do the math in a second. But it doesn't add up. Second one is they're working to get extra tips too, which is understandable. And they, you know, they say to the customer, hey listen, I'm going to go ahead and you know, I know we're, you know, going to be done here at 5:15. I'm going to go ahead and clock out at 5:00'. Clock. Right? Just, you know, take care of us type of thing. Or there were many times that we caught, and clients caught movers just straight up working off the clock. Hey, you know what, we're going to clock you out. And I know the rate's 150, just you know, maybe give us, you know, 50 bucks an hour for the extra time that we work. So those three scenarios happen all the time. Okay. And I say this because there's always people like, no, not me. It's not happening here. And then they're like, Louis, you're right. We found this and we found that. So if you think about it, if you've got, you know, let's say you do $150 an hour, maybe a three man crew, 150. Or maybe you got a two man crew at 150 and you're missing out a half hour on every job. That's $75 a job, right? Let's say you do 100 jobs a month, 7,500 bucks a month, right? So the idea here is clock your crews out from the office, right? Every time crew would, you know, get to a job, they'd call in and we'd have one clock that we'd work off in the office, right? And then as time, you know, cell ph started to have a standard time, we would use that. But there was one time that we clocked them in. They'd ask, we just got here. What's the start time? Give them the start time. Hey, we're going to be done in 10 minutes. What's the finish time? Finish time is this. I personally, in my own offices, in locations that where this fell off and we brought it back, it was equal in like an extra 20 grand a month. So wherever you're at, you know, if you're just getting started or you've got 20 locations, you dial this in, it's all gonna start to rise up, right? So that's one way to raise your revenue per move is to get paid for every minute you're on the job. Then you could also be selling packing, right? I know you probably know this and you probably sell some packing as well. But what we did is I took a look at what we were, what our average packing per move was, right? Ppm Packing per move. And I said, okay, how can we. Let's. Let's set a goal to raise this by $50 per move, right? And so, you know, you're making sure that when you go out there now, of course, your customer needs to be explained everything in advance, right? Here's what we're gonna move, here's what must be packed. But then you get out there and, you know, the pictures aren't packed. You know, there's. There's tabletops that need, you know, mirror packs or whatever the case might be, right? This isn't go out there and put pillows in a dish pack. It's not what this is about. This is about legitimately trying to secure their items that you told them in advance needed to be secured, but when you get there, they're not secured. And so if you're able to. And you could also do this over the phone while you're doing your confirmation call, right? Because so many times customers will think that they're going to do their own packing, right? They'll say that when they book their job. And we used to call them a week in advance to do a packing checkup. How's the packing going? Right? And by doing that, you know, a week out they're like, oh, shit, the moves coming up, like, we're not packed. We thought we were going to do it. But they're so overwhelmed that you're able to say, well, you know, we offer some packing, right? So there's a few ways to go about it. The point is, if you got, again, 100 jobs a month, I'm just, you might have 500, you might have five, whatever your number is. If you said, okay, let's. Let's increase that by $50 a job. On 100 jobs, that's another 5,000amonth, right? So on 100 jobs a month, you're talking, you know, between that and the money you weren't collecting on. And maybe you are right. These are some tips to boost profits. The $50 for the packing, and then you've got the other money for collecting every hour that you work for. That's 12,500amonth right there, right? What else? You've got, you know, upsells on moving insurance. You've got upsells on valuation, right? You got upsells on storage. There's so much that you could be doing for every move to boost that RPM. And the reason I'm sharing these metrics, these KPIs, really, booking percentage, labor percentage, and RPM are if you start focusing on those numbers, determine what your baseline is, like, where are you now? Right? And then look to incrementally make small improvements. I wasn't talking big numbers. 5%, you know, increase in booking percentage, right? You're talking $50amove in packing, which, you know, that's a few boxes, right? It's not a lot. These are the things that will start to help you be able to increase profits even if jobs aren't coming in the way that they were before, right? So imagine you're able to now at the same time when everybody else is going, hey, the market's slow, and they're kind of sitting back. I don't know what to do. What you know, you know, and you come in here like, you know what? Let me build this strength. Let me build this capability, right? Let me plug up these holes that, you know, and you listen, you might know all this already, and hopefully this serves as a good reminder for you, you know, to kind of take action and go after this stuff. But when you build that up, you plug those holes, and then all of a sudden the market starts booming again and the moves start coming in again. And possibly some of the other companies that weren't doing some of this stuff aren't even there anymore. Now you gain market share. But not only do you gain market share, you're now more profitable as well. So I hope this serves you right now. I hope this helps you get through this time. I hope you enjoyed this video. My name is Louis Massaro. I'm founder and CEO of Moving Mastery. If you enjoyed this, please subscribe. Please follow and if you know somebody that would benefit from this video, whether it's somebody on your team or moving company owner you know, please share this with them and until I see you next time, go out there every single day. Profit in your business, thrive in your life. Take care. I'll see you later. Hey my friend, before you go, you've got to hurry and watch these next few videos over here. They will absolutely help you take your moving company to the next level. Go watch them now and I'll see you over there.