7 business builders

Excerpts from From Technician to CEO show how paying attention to simple areas of everyday business can help your company grow.

What defines success? How does one achieve it as an owner or manager of a pest management company? In my book, From Technician to CEO – The Evolution of a High Growth Pest Control and Lawn Care Company — published by Pest Management Professional magazine’s parent company, North Coast Media — we explore the journey of the Halls, a fictional family that owns a pest control company that is transitioning to the second generation. The son, Peter, has grown up in the industry watching his mother and father work diligently to build a moderately successful firm. Peter goes off to business school and returns home with a college degree and a working knowledge of some of the strategies that are employed at many of the most profitable and best run companies in the world. Upon his return, he is eager to show his dad what he has learned and implement many of those strategies.

With the information age well under way, business is more sophisticated and competitive than ever. The next generation of pest management professionals (PMPs), who are different from their parents, are engaged in creating and implementing strategies conceived to move quickly into larger, more profitable enterprises. They’re using technology as their beacon.

My book was written to share the thought processes and business tools turning the industry into a well-respected market segment of the economy by those inside and outside of the industry who ask the question: “Is there money in bugs?” Well, Wall Street has recognized the power of our recurring revenue model, and has pooled money to create portfolios of high-growth pest companies during the past several years. Clearly, much of the smart money that used to look past our industry is flowing in.

The book catalogs several of the following functional areas of business, explaining how they work and how successful PMPs use them as tools to build their firms. Here are some excerpts from the various chapters.
 

1. The core of your business

What are you going to do, and how will you do it? Most services are intangible and can’t be packaged or put on a shelf. The customer can’t hold or touch it. So, here’s the most effective approach to marketing your company’s services: Sell them based on perceived value and the end result you offer. Focus your marketing efforts on the results of the delivered service. If you can convince prospective clients that you can ease their worries, then you’re on your way to making the sale.

You might think you’re offering a service, but you’re really offering something much more important and extremely valuable: peace of mind. Focus on areas in which you excel. Set up a service program based on your company’s core competencies. Spend most of your time playing the games you’re good at so you’re better positioned to dominate them.
 

2. Pricing for profit

Staying successful by employing an effective pricing policy means increasing profit, beating the competition and creating wealth. Price increases or decreases have a magnification effect on profit. The reason is simple: Price increases usually reach the bottom line in one piece, while the advantages of lower unit costs or higher sales are diluted. Once breakeven is achieved, price increases are extremely powerful and affect the bottom line significantly.

Thus, for a company with 10 percent margins, a 10 percent price increase could produce a 100 percent increase of profit to 20 percent. This works the other way as well: A 10 percent decrease of price decreases profit 100 percent, taking a 10 percent margin to zero margin, or breakeven.
 

3. Marketing your services

Test, execute and monitor your marketing efforts. “Ready, aim, fire!” is much better than “Ready, fire, aim!” In marketing, the approach is similar. Rather than blowing all your money on unproven marketing tactics that deliver poor results, you’re better off testing several approaches. To test how effective your marketing is, you need to determine how you’ll track the results, which will help you to identify which tactics provide the highest return on your marketing investment, minimizing your losses and maximizing your gains.

Today’s marketing arena is crowded, which is all the more reason to track and measure marketing to see what works best. Take action based on your results. So many people are afraid to abort a marketing campaign because they already spent money on it. Well, consider it a sunk cost; get back whatever money you can and move on.
 

4. Effective routing

Optimize your routing to get the most out of your technicians’ time. Efficient routing will keep your technicians on-site, providing services to your clients for a higher percentage of the time they’re available. This metric of efficiency, called utilization, measures the efficiency of a technician’s time. The only thing more important than pricing for profit is efficient routing. This point will make you or break you! Even if you were to make $500 per hour, you won’t make any money if you work only one hour a day. Your technicians should be as productive as possible, and your managers should stay focused on tightening routes to increase productivity.
 

5. Accounting and finance

Accounting is the language that communicates the health of a business. When many people think of accounting, they think of April 15, tax day. Regarding the company owner, however, there’s much more to the accounting function than taxes. A competent Certified Public Accountant (CPA) should be able to file taxes and prepare statements for banks, creditors and other stakeholders in a business. He or she also should be able to help create budgets and represent you in a tax audit. The overall goal of your accountant should be to help you accumulate and preserve wealth. Saving taxes is just a small part of the task. A competent accountant recognizes the need to be a valuable member of your management team, and is able to provide many more value-added services than just tax preparation. A growing company needs help with many of the financial aspects of its business.
 

6. Operations and systematizing your business

You want your business process to be in a format you can print and put in a book or a binder. Build a manual you can hand to new employees as you expand. This will help train them about the acceptable policies and procedures your company follows. In this manner, each service, as well as each step to process new sales, accounting and other paperwork, can be performed in a uniform manner. Using this approach, you can build your business machine in a way that’s entirely systematized. Once you’ve reached this point, where the business is completely systematized and the work is performed entirely by your workforce, you can start working on growth strategies for the future — as well as how those strategies will be implemented.
 

7. People management

The key characteristic common to all successful operations can be summed up in one word: management. In the service business, it’s all about managing people. If you start out as a one-person operation, managing people is easy because you need to manage only yourself. As your organization grows, you have to manage technicians, salespeople and office staff. Good employees are your greatest assets in the service business because companies don’t offer a product, they offer people and their expertise. A company that offers a good product can sometimes be successful with marginal people based on the merits of the product alone, but service professionals can’t do that. Their product is their people.

The service industry is full of opportunity and profitability. We operate in an industry with a simple business model. I say simple, but it’s definitely not easy to execute.

Contributor Dan Gordon, owner of PCO Bookkeepers, can be reached at info@pcobookkeepers.com.