Mike Andes shares five operational strategies for scaling a service business: budget hours on all projects to track capacity, choose between profit and growth mode based on your constraints, use pay-for-performance with penalties, measure efficiency (budget hours divided by clocked hours, aiming for 90%), and know your booked out date to manage demand.
If you're trying to get out of the field and work on your business instead of in it, here are five secrets to make sure that happens. Number one, you've got to use budget hours on all your projects, all of your jobs, all of your estimates to be able to accurately know what's on the schedule. Two, you've got to make sure you have profit mode versus growth mode. You got to choose one or the other. How is that determined? When you hit capacity. If you're getting more trucks, equipment and hiring more people, you're in growth mode. If you raise prices when you hit capacity and you have tons of jobs coming in, then you're in profit mode. Number three, have pay for performance, where you pay employees more the harder they work. And make sure it's balanced out with yellow slips, so if they make mistakes or damage cases, that money comes out of their paycheck. Number four is know your efficiency score. Budget hours divided by clocked hours is gonna give you a percentage. Make sure that's over 50%. Ideally, get it over 90%. That means there's very little waste in their day. And number five is know your booked out date, which means when a customer accepts the job, I know exactly when the next day of service I can put them on the schedule is.
