Higher margin jobs mean greater profit. It’s a logical assumption – but do they actually deliver on the promise?
With the industry moving to bigger installations, higher specked and growing sales of aluminium it’s an important question but answering it – at least accurately – is far from straightforward. Installers are losing money on job costing”, says Ryan Schofield, Managing Director, Thames Valley Windows. “They may think that they’re making money on one product or material type but when you get real visibility of what you’re actually doing, you can often find out that it’s not what you think.
In my business it’s not aluminium where I make most money. It’s PVC-U. If you asked me which retail companies are making the most money in this industry – it’s the guys selling PVC-U. Those who have a very simple model, who are efficient at what they do and who don’t complicate or dilute their market proposition. There are lots of reasons why that model doesn’t work for everyone or everywhere and why we don’t just sell PVC-U. Demographic, end-user demand, homeowner aspiration – and even what we want for our own businesses also come into it. Taking all of that into consideration, I still know that my profit is higher on PVC-U than it is on any other material type. This statement may appear bold – but it’s based on fact.
In addition to his role at Thames Valley Windows Ryan is a founding partner of Business Pilot. Its USP, according to its founders, who also include Cherwell Windows’, Jim and Ryan Breslin, as well as system development specialist and Business Pilot MD, Elton Boocock, is that the platform has been developed by installers for installers.
You know that white board on your wall that’s covered with barely decipherable hand-writing and post-it notes? Well imagine your aspirations for it when you started, the control that you hoped that it would give you over your business – but in the cloud. Oh, and with drag-and-drop capability, remote access from wherever you are, links to drawings, specifications and images, supplier orders, cost of install, helicopter and detailed analysis of your profitability – and well, just about anything you could ever possibly need.
In short, its creators argue, Business Pilot pulls in all of the best bits from processes developed from decades of experience in window and door retail installation. It then mobilises them with the power of cloud-based technologies, to give installers complete visibility of each and every element of their operation allowing them to be more profitable and avoid the plentiful pitfalls of running a home improvement business, maximising profitability.
As a business [Thames Valley Windows] we were very process driven already. We had a customised CRM, we had financial systems in place but what we were missing was a front-end solution and integration of that with our scheduling process and financial systems. We also wanted everyone to be able to access it from wherever they were”, Ryan continues.
I met Ryan [Breslin] at an industry event and he and Jim were working on the development of a solution with Elton and I decided to invest because there wasn’t anything out there – and we looked at a lot of different options – that did what we wanted it to do.
There’s a saying, ‘you can’t know that you don’t know something if you don’t know it’. Business Pilot has been designed to not only tell you what you don’t know but also do something about it, through safeguards, checks, improved organisation, and most importantly complete transparency of each and every aspect of your operation. The biggest sink hole for your money is job costing”, Ryan continues. “It would be great if you got the job, priced it on what you thought it was going to cost, did the install and got paid. You don’t need me to tell you that it doesn’t work like that but do you actually know how much those additional things along the way actually cost? Because if you don’t you can’t budget for them and price jobs at a sustainable level. Were your supply costs accurate or was your product cost higher than you expected. Was it fitted in line with projections, what was the time on site or were there additional costs. Did the specification stay the same or did the colour or finish change and what were the cost implications? Are you building in budget in your model to carry a bad debt or a bad sales month?
There are a lot of businesses who believe that they’re profitable because they’re bank balance is increasing. If you’re a truly profitable business, you need to understand your operations in far greater detail and based on that transparency plan for your business and its sustainability in a different way”, Ryan adds.
He argues that Business Pilot delvers a ‘snapshot’ of installation businesses, their sales pipeline, leads, financial control, operational data, including scheduling and the cost of installations, tracking performance of each element of operation to allow installers to identify and avoid, ‘black holes’.
This brings us back to Ryan’s first point. Unless you know and have visibility across all of the above, you can’t possibly know which of your products are most profitable. He argues the unseen costs associated with bigger and higher profile installations can erode margin. The other side of this coin is that if you understand these costs, you can not only price these jobs at the right levels but also make an informed and, therefore strategic decision about where you apply your energy. “The order value on a large aluminium job may theoretically represent greater margin but if the fit doesn’t go to plan or there are unseen costs, then that margin can be quickly eroded”, Ryan continues.
If you’re fitting a bog-standard PVC-U window, you’re less likely to encounter those complications. I’m not arguing that everyone should drop aluminium for PVC-U. It’s a big part of our business and we have aspirations as to where we want to go in the market but Business Pilot has given us a different understanding of our business, where we make our profit and the prices we need to charge to do the same in other product areas sustainably.
“We’ve changed our processes but also our mindset.”
