The little number you'll hate, then love: Revenue responsibility per hour

The little number you’ll hate then love.

 

RR/h

 

There is a number I talk about with business owners that often gets them confused and a little bit upset. It's part of the language of success they still don't teach in school.

 

But, 20 years later, I continue to bring it up- - even though it makes owners uncomfortable.

 

I learned this number from my old business partner,  Brian Tracy. He's a world-renowned author and public speaker on business improvement, sales, and management.

 

He doesn't really mince words - and when I first heard about this number I was getting the blunt end of his shiny shoe because I wasn't hitting projections in our business. 

 

Here it is. Your Revenue Responsibility per hour (RR/h). We simply take your annual sales and divide it by the number of hours you work in a year. 

 

If I have a 1 million-dollar company and I work 2,000 hours a year, my RR/h is $500 per hour.

 

And this is where the confusion comes in.  I'm not telling a contractor that they have to bill their own personal work on a project at $500 per hour. I'm not saying that the owner of the business is more important than any other person in the company.

 

What I'm reminding you is to use your time wisely.  Because if you run a $100,0000 company, the company needs you to make sure operations are running smoothly at a $500 per hour rate.

 

If you like business owner brain teasers like this one, join me in Dallas so we can talk the language of success together. 

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Author Dominic Rubino is the host of the CabinetMakerProfitSystem Podcast. At Wood Pro Expo Texas in Dallas, Dominic will be presenting How to Find (& Fix) the 8 ProfitLeaks in your CabinetMaking Business. Check out his site here.

About Cabinets & Closets Conference & Expo/Wood Pro Expo

The Cabinets & Closets Expo (CCCE) is the annual national event for cabinet and closet professionals and is co-located with Wood Pro Expo. The events are organized by Closets & Organized Storage and FDMC magazines respectively, both part of Woodworking Network.

 

The Cabinets & Closets event leads off with a full-day executive conference followed by the two-day expo featuring woodworking machinery and supplies. Additional educational programming is offered on both days of the expo. Tours of local manufacturing plants and the popular Top Shelf Design Awards reception are also key components of the event.

 

The 2020 CCCE is scheduled for March 11-13 at the Arlington Convention Center, Arlington, TX.

 

For information about exhibiting, and sponsorship opportunities, contact Patrick Filippelli of Hall-Erickson Inc. at ccce@heiexpo.com or phone 800-752-6312.

 

 

 

 

from https://www.woodworkingnetwork.com/management/little-number-youll-hate-then-love-revenue-responsibility-hour

Why we are losing deals we should get

Ever lost a deal - and then scratched your head wondering HOW “the other guys” can possibly build it that cheap?

 

If you’re losing deals to a successful competitor* they might have made a strategic move before you even knew it was an option. 

 

It happened to my client, George. He tells me things that I hear a lot from other guys in the industry… Costs are going up. Material prices are what they are. Labor rates are going up, and “the other guys” are just killing me on price.  (There’s a certain amount of  “W-T-F” in his voice but he doesn’t say it out loud).

 

If you’ve ever said…. “How the $#%^& were we high on that job?” this is certainly part of the answer.

 

The word is outsourcing and it’s the exactly the same as you doing work for ABC Megacorp.

 

Why outsource? Because you can subcontract little pieces of work to other people who are cheaper and faster than your team is. You don’t have to let any of your team go. What other shops are doing is getting their guys to do more estimates and outsource the finickey work.

 

Your fixed cost of estimating a job now becomes a variable cost, and you bid more jobs, faster. And it’s being used in places you wouldn't imagine. From getting 3-D renderings and takeoffs in Ukraine to Bookeeping in The Philippines .

 

This is a Profit Leak and job loss area a lot of contractors are ignoring - but I don't think you can anymore.

 

If you like staying on top of important trends (and winning the deals you deserve to win), join me in Dallas so we can talk the language of success together. 

 

If you lose to a bottom feeder, let it go. If it's a lost deal to a solid, smart, long term player, you have to dig deeper. Or it will keep happening to you!

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Dominic Rubino is the host of the CabinetMakerProfitSystem Podcast. At Wood Pro Expo Texas in Dallas, Dominic will be presenting How to Find (& Fix) the 8 ProfitLeaks in your CabinetMaking Business. Check out his site here.

About Cabinets & Closets Conference & Expo/Wood Pro Expo

The Cabinets & Closets Expo (CCCE) is the annual national event for cabinet and closet professionals and is co-located with Wood Pro Expo. The events are organized by Closets & Organized Storage and FDMC magazines respectively, both part of Woodworking Network.

 

The Cabinets & Closets event leads off with a full-day executive conference followed by the two-day expo featuring woodworking machinery and supplies. Additional educational programming is offered on both days of the expo. Tours of local manufacturing plants and the popular Top Shelf Design Awards reception are also key components of the event.

 

The 2020 CCCE is scheduled for March 11-13 at the Arlington Convention Center, Arlington, TX.

 

For information about exhibiting, and sponsorship opportunities, contact Patrick Filippelli of Hall-Erickson Inc. at ccce@heiexpo.com or phone 800-752-6312.

 

from https://www.woodworkingnetwork.com/management/why-we-are-losing-deals-we-should-get

How hiring cheap hurts your bottom line

When I first started my business, I was the King of Micromanagers.

 

The result?

 

I had so much control over the process that I didn’t really care who I hired, as long as they were cheap. I needed warm bodies that would fill spaces on my shop floor without costing the company too much.

 

We did make a profit during that time, but our growth had stagnated. My micromanaging made it impossible for the company to grow beyond what I, personally, could do on the shop floor. We also had a high turnover, so we spent a lot of time training employees who didn’t end up sticking around for long.

 

Several years ago, I decided that if I wanted to grow, then I needed to make a change. It was time for me to start hiring employees who were invested in the company, not just their paycheck. Instead of hiring ‘D’-grade employees, I started hiring ‘C’ and ‘B’ employees with the ambition of raising them to ‘B’ and ‘A’ employees.

 

A RECIPE FOR CHANGE

 

The process of making such a drastic change didn’t happen overnight for me, and it won’t for you either. The simple truth is that it takes time to find the right people when you’re pickier about who you hire. During that first year, we still had a lot of turnover because it took us time to find the hiring recipe that worked for us.

 

It takes trial and error, and many tweaks to your process to develop a formula that will help you find, train, and retain great employees. Here’s what we’ve found works best for us:

 

- We put out ads in several places, including Indeed, Craigslist, and local Facebook pages. We field applications for at least a week, but sometimes two — it depends on what we’re trying to find.

 

- After we end the ads, we bring in applicants for face-to-face interviews.

 

- Next, we narrow the field down to our top three or four applicants and invite them to do a three-day working interview. This always helps us learn a lot about them. We pay each applicant in cash at the end of the day as a contract laborer.

 

- After we complete all of the working interviews, we hit the shop floor to talk to our employees. I’ve found that the best way to make a hiring decision is to leave the hard part to my crew. They’re the best people to evaluate how well they got along with the applicants, how they fit into our company culture, and the quality of their work.

 

My recipe may be a little unconventional because I rely on my floor crew to make the final hiring decision. However, I don’t feel like it’s fair for me to make the final call since my employees spend such a huge chunk of their lives working together. In my opinion, it’s only fair that I let them choose who they want to work with based on who worked best with them.

 

MAKE THE MOST OF YOUR HIRE

 

Once I make a new hire, we train them in everything they need to know about their position. My company uses standard operating procedures, or SOPs, so we gradually train our new employees to understand and use SOPs. We don’t dump a pile of work on them and expect them to do it perfectly. That’s a recipe for disaster.

 

It’s hard to transition to gradual training, where you layer on a new task as they master the last one, but it’s the best way I’ve found to cultivate employees who are invested in the company and take ownership of their position.

 

THE TRUTH ABOUT TURNOVER

 

The flip-side of my recipe is hiring cheaply and quickly. It might feel like a cost savings in the moment, but hiring cheap means that you’ll have higher turnover. It also means more time spent hiring and more time wasted on training.  

 

Turnover is incredibly costly to a company. It can stunt your growth, and it makes it very hard to maintain your quality and output if you’re constantly training new people. Scheduling is a challenge because it’s hard to get products out consistently when your team is in a constant state of flux.

 

There may be a few positions where it makes sense to hire cheaply, but for most of the positions in your company, hiring cheaply will backfire and blow up your bottom line.

 

Read 5 steps to hiring better cabinet shop employees.

 

from https://www.woodworkingnetwork.com/management/how-hiring-cheap-hurts-your-bottom-line