It’s Time to Get Curious!
I’ve been writing a lot about how technology can help Kitchen and Bath Dealers streamline their business and become more efficient. Now it’s time to talk about how the impact of productivity gains will improve profitability and allow your Designer/Salespeople to make more cheddar! (Yes, embracing technology can have a positive effect 😊)
First though. I’d like to address the current mindset of many of the Owners/Managers of these Dealerships. The conversation typically goes like this “I know we need to bring tech/systems into our business, but we are way too busy right now to do that”. Hmm, way too busy? Let’s test that theory for a second. Yes, there is going to be math involved so dust off that abacus and roll out some numbers.
Let’s get a head count going so we know who on your team should be included in the math.
- Owner or Sales Manger
- Support People for Sales
- Receptionist (if you have one)
- Project Manager/Field Support
- On Staff Installers- If you put their cost into COGS/Don’t count them
Basically, anybody that is not in G & A (payroll, accounting, HR etc.) or Operations. Now let’s total it up. In our example. We’ll say it’s 6 people. Now for the math:
Pretty straight forward, right? Okay, let’s break it down a little further. Which is exactly what you need to do to get a true understanding of Productivity:
Alrighty, moving on to Sales Per Person $2,500,000/6 = $416,667.
Hang in there, $416,667/1724 hours = $242 an hour in sales.
So, here’s the cool part. How many hours does it take to sell $10,000? This would include time spent on quotes that don’t get sold. Sharpen those pencils again!
$10,000/$242 an hour =
Drum roll please…. 41.3 hours. Almost exactly one week…. and I didn’t even cheat to get there.
If it’s okay by you, just to keep it in round numbers, let’s call it 40 hours. The idea behind measuring productivity is to find where you are and how you can improve it. Simple Simon, right? What areas of the process do you think can be improved… to say…get that number down to 30 hours for $10K in sales?
We’ll dive into the weeds more next week (break-out hours saved) but for now, let’s address a few places where technology can really cut down on the time of certain activities.
- Measuring and conversion into your design software
- Our new partner Rendr has an app that you can use to scan a room with your iPhone (iOS PRO) in less than 5 minutes. Then it can instantly generate an XLM, DFX or PDF file and then you are off to the races with designing.
- Margin Erosion
- Knowing that the average Dealer has 3+ points…. well let’s just say the time on rework can easily exceed 20% of their overall time. How many Dealers are using a system to track it so they can see the issues and address them? A few words come to mind, and these are technical terms – “Diddly squat”, “unfinity”, & my fav “Goose Egg”
- Quoting & Ordering
- One day in the not-too-distant future, this will be done with a direct connection to the manufacturer or supplier. The days of going into a portal to order will be a thing of the past. Anybody that tells you that it won’t be so….well, they might just find themselves on the island of misfit toys…..
Good gracious it’s time to close, but let this tidbit wet your whistle before you go:
Based on 30hrs to sell $10K: 1726 hours available divided by those 30 hours = $575,000. Take that times 6 people and you get $3,450,000. Yowzah! Here’s what that would look like even with adding $20,000 to each person’s compensation. (Put me on that team coach!) & yes how the talent will flock…
So, are you busy because you lack technology or are you busy making money
Last note: I spoke with a lady this week…let’s just call her Patti 😊 and she said, and I quote “I need to start running my Dealership as a business and not just like a thing I do”. Amen Patti! Amen!