Business Sense

[Mr. Wizard]

Good morning, or afternoon, wherever you're at. After reading many posts on this forum, it seems everyone has their own take on how things should or shouldn't be done (business-wise, of course. There is no opinion on electrical installs, it's either done right, or done over). What experience or training do ya'll have? What bit of advice were you given that seems to help you out? I don't have any formal business training, but I read as much as I can on small business and management, and I rely on advice from people who have been down the road I'm just starting on. It seems an MBA with no electrical experience could open and run a successful shop, but a good electrician with no business skills whatsoever would be doomed from the jump. Just curious :roll:

 

[charlietuna]

The success in any business begins with "COMMON SENSE" ! Owning a MBA degree doesn't guarentee success in anything. And having the highest level of electrical experience doesn't mean much when it comes to business sense! It requires a balance of both.............

 

[bradleyelectric]

If you plan on running a business you should be looking at your business as if it is a business.

Wikipedia: Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk.

Notice it does not refer to a business as a way to maintain the wealth of owners. It in fact says to increase the wealth of owners. The first thing to know about business is to know what 1 is. If that is not your goal, that is fine. Just understand that you don't have a business, you have something else and possibly should not be giving business advise. That is not directed at the OP.

If at this time you are having trouble doing that than look internal and see why not. Is your marketing lacking? Is your focus lacking? Are you having trouble closing? What are your defined goals? What is the business formula? What are the 5 drivers? How do they effect your business? How can you improve them so you can increase your wealth?

 

[satcom]

If you plan on running a business you should be looking at your business as if it is a business.

Wikipedia: Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk.

Notice it does not refer to a business as a way to maintain the wealth of owners. It in fact says to increase the wealth of owners. The first thing to know about business is to know what 1 is. If that is not your goal, that is fine. Just understand that you don't have a business, you have something else and possibly should not be giving business advise. That is not directed at the OP.

If at this time you are having trouble doing that than look internal and see why not. Is your marketing lacking? Is your focus lacking? Are you having trouble closing? What are your defined goals? What is the business formula? What are the 5 drivers? How do they effect your business? How can you improve them so you can increase your wealth?

Good way of presenting it, just about every business owner I know is producing profits that, grow and live a they live a decent life, it appears the electrical types don't understand the concept of earning a better then average income.

 

[electricmanscott]

-There is no opinion on electrical installs, it's either done right, or done over

You need to spend some more time here. You will see just how wrong you are! :grin:

 

[Mr. Wizard]

You need to spend some more time here. You will see just how wrong you are! :grin:

I'm seeing quite a bit of that sometimes to the point to where I want to pull up my pants legs

 

[cadpoint]

I'd like to suggest a more extensive use of advance search here, use your own combination of terms...theres plenty of Books, Articles, and plenty else of various substance about the trade.
Business is all the things both bad and good thats been said here and in other format's.

Book, Article, of an substance about your trade could only help.

There's great linked material, and your favorite search engines can lead one to other places, the answers and the link can be as deverse as the crowd, sometimes you'll have to search into the pages some are closer to the desired quest.

Business Sense = well, I guess your realizing its just more work , it will be more work, and generally more things that are different!

Other than the Devil, I don't think Jesus ever stopped extending a Hand, :roll:
But the Devil will be in the details!

I wish you luck in your presuits!

 

[hardworkingstiff]

It seems an MBA with no electrical experience could open and run a successful shop, but a good electrician with no business skills whatsoever would be doomed from the jump. Just curious :roll:

I think you have it correct.

An electrician can get a business up and running. The problems often come down to not understanding how much it takes to stay in business. Don't realize how much they really should be charging.

There are usually people that can help. If you look around you may be able to hire a mentor.

Electricians are often afraid to lose a job. I believe you need to lose some to know where the price ceiling is (not plan and spec work, that's often a public opening).

Remember when dealing with customers:

Listen! Understand their desires.

You don't get a 2nd chance to make a 1st impression.

Think about it from their perspective (without losing yours).

 

[bradleyelectric]

An electrician can get a business up and running. The problems often come down to not understanding how much it takes to stay in business. Don't realize how much they really should be charging.

The high school kid next door can start an electrical contracting business and probably has about as much chance of success as an electrician. An electrician decides he wants to be in business because there is no reason for the boss to be making the money instead of him. Problem is he doesn't know the meaning of the word. He knows he used to be making x and if he makes xx he's making a killing.

The high school kid isn't burdened with this fallacy and might just figure out how much his costs are and base a price on that. Than someone might teach him how to do a business equation based on how much he wants to make in a year.

He'll probably just do like an electrcian would do and figure he can use the truck sitting there that's paid for, no reason to factor in money for repairs or a replacement. Health insurance? Still under Daddy's. No reason to factor that in even though that money could be put into a fund for expanded health concerns, long term health insurance, or if the company that is supplying it goes bankrupt and as part of the proceedings drops health insurance and retirement. Happens. Did at the steel mill I was at. Municipalities have money problems. Same result.

He could figure his expenses with real numbers and add in normal benefit package. Than he could see what it would take to make what he needs to make by using a business equation. http://www.carrollbiz.org/sbdc/resources/EquationforBusiness050108.pdf

Instead he'll probably do what an electrician does and figure that is just to much money to ask for and focus more on what it would take to make his customers happy instead of what it would take to actually be able to afford what would be best for his family. After all how would the chief of police or the guy at the counter at Home Depot feel if he charged what his family deserved?

Could figure what it would take to give the family what they deserve than work on raising the level of service. Than when some people start saying that the price is high you can tell them they are right, everything is expensive nowadays. All you'd be charging is enough to cover costs and make a decend living.

 

[Mule]

What amazes me is a local union shop that charges the same rate we do. They provide really good benifeits for the guys plus the owner does well to boot. The have a huge shop, office, lots of trucks, bucket trucks. I watch them close, as I try to model our business after them, as I admire them alot.

 

[emahler]

What amazes me is a local union shop that charges the same rate we do. They provide really good benifeits for the guys plus the owner does well to boot. The have a huge shop, office, lots of trucks, bucket trucks. I watch them close, as I try to model our business after them, as I admire them alot.

their overhead per man hour is probably less than you (not their wages and burden, but their overhead)

additionally, they may lose money on every T&M service job, but make it up on projects...that's a very common business practice....

 

[Mule]

their overhead per man hour is probably less than you (not their wages and burden, but their overhead)

additionally, they may lose money on every T&M service job, but make it up on projects...that's a very common business practice....

They have around 10 Jman and trucks, at least 2 trucks doing low voltage com work, at least 2 estimators/management, and 1 secretary. I always figured their total payout per billable hr would be quite a bit more than mine, especially being a union shop, and the benny's which I figure is at least 40-45% of their billable rate.

 

[charlietuna]

Muley,
Do you really think 40 to 45 percent of their billable rate goes to pay benifits because they are union?

 

[Mule]

Muley,
Do you really think 40 to 45 percent of their billable rate goes to pay benifits because they are union?

Charelietuna'ey....Absolutely Not, and I didnt mean that............however one would expect that a union shop would have maxium labor and benefiet cost. Not saying anything negative toward union at all, in fact I respect them tremendously. Just contrasting speculative cost to mine......take a deep breath, it will be ok..

 

[jimmyglen]

I worked as outside sales for a supply house and I really got to see a lot of operations and how they did things

I am working now as an estimator and project manager - I have done this workfor 3 companies now

there is a lot to running any business and more with an electrical contractor

just because you got your license doesnt = making money / running a business

One thing that you cant assume that all your employees are just like you were when you were in the field. You have to know people and how they work / operate

you also have to know your customers and they work / operate

try to get some experience working for others in a leadership role

 

[Rewire]

their overhead per man hour is probably less than you (not their wages and burden, but their overhead)

additionally, they may lose money on every T&M service job, but make it up on projects...that's a very common business practice....

It is easy to see that if I have ten men working I only need to charge $10.00hr each over wages and burden to make $100.00hr
if I only have two men that changes to $50.00hr over burden and wages to make the same $100.00hr

 

[charlietuna]

I had a union shop for over 25 years and never worried about any other contractor's labor rates. I maintained a very low overhead, used a very competative journeyman/apprentice ratio along with "HAPPY" productive crews and knew what my average hourly burden was. After the second year i actually lowered my markup 2 percent to build a strong customer base and at that time i could take any job in my field-union or none union. In the long run i believe that was a good move -- we always had plenty of work while making a good profit which i attributed to high productivity and a low overhead. It allowed us to shed bad customers(slow payers). There is a price to pay for business headaches--we had a very nice 25 year run!

 

[emahler]

Charlie,

What were you able to trim in order to keep your OH low? Define "competitive" in regards to you JW/Apprentice ratio?

 

[Mule]

I had a union shop for over 25 years and never worried about any other contractor's labor rates. I maintained a very low overhead, used a very competative journeyman/apprentice ratio along with "HAPPY" productive crews and knew what my average hourly burden was. After the second year i actually lowered my markup 2 percent to build a strong customer base and at that time i could take any job in my field-union or none union. In the long run i believe that was a good move -- we always had plenty of work while making a good profit which i attributed to high productivity and a low overhead. It allowed us to shed bad customers(slow payers). There is a price to pay for business headaches--we had a very nice 25 year run!

Most of the IBEW guys I've been around have been have been productive and very knowledable...........I have had some negative experiences as a supervisor in a union B ticket shop.....but all in all very impressed.....in fact I wished that in the earlier days I had been a union member.......

 

[Rewire]

some things we have done to reduce overhead
Having our copy machine toner refilled instead of purchasing new
lower thermostate in office
use supply house delivery to job site and to shop
tighten inventory control to reduce shrinkage
ensure routine vehicle maintenace is performed on time