5 Vital Systems that Every Contractor Needs

by Corey Philip
March 20, 2018

Systems can be powerful tools that transform the way that you run your company. When put in place and followed regularly, systems can lead to smoother operations and greater profitability. They can be the key to finding your business’s weak spots and strengthening them to improve the overall health of the company. When you have a streamlined and organized way of doing things, you’ll find every aspect of the business operating more efficiently. Here’s an in-depth look at the 5 most vital systems that every contractor needs:

  1. Marketing & Sales System

    Yes, this one is first!  Without an inflow of customers, YOU HAVE NO BUSINESS.

    Marketing your business can be tough if you aren’t really sure how to go about it. With so many different avenues and options for advertising today, it can be confusing to know where to spend those limited ad dollars. What you don’t want to do is blow through your marketing budget for methods that prove fruitless and give you little return on the investment.

    You want a system that consistently brings in leads and a target price per lead. Do your homework before testing a marketing system, and set up a budget for it. Try out different ideas, and run split tests on ads. Once you find the formula that works best, turn it into a streamlined process that you can follow.

    I suggest trying many forms of marketing, in small doses, but tracking all the leads, so that you can quickly get a handle on marketing costs.

    With sales, you want to have a system for managing them from start to finish. This includes providing estimates to clients and organizing and managing all contracts. If you have a sales team, they’ll likely welcome a more structured approach to the process.

  2. Operations/Scheduling system

    Ideally, you want to have a scheduling system that allows you to create a work order and to schedule tasks. Hopefully you’re already using some kind of digital field service management software, like Kickserv or Jobber. Many business owners find themselves bogged down in the minutia and details of the day to day. It takes up too much time, and doesn’t give you the ability to focus on the bigger picture. Eliminate the chaos for both you and your team by implementing a structured operations process that can be followed on every job, every work day. By having a system in place, you can turn your attention to clients, rather than spending your time managing every aspect of the daily operations.

    Consider creating a “Job Jacket”, which is recommended by contractor Phil Sarros. This is literally a folder that contains all of the important documents related to a job. Basically everything that your crew needs for a project should be kept safe in this one folder, like work permits, a signed contract, material checklist, specific instructions, etc.

    It really doesn’t get much easier than buying durable folders and instructing your team to place every relevant document for a job inside of it along the way. For contractors, it’s an ideal solution so that necessary paperwork is neatly organized and easily accessible. The last thing that you’ll want to put in to the Job Jacket is a final project completion checklist to be done at the end of a job. By going through the checklist, you’ll be able to confirm that standards have been met.

  3. On-site system

    Every home service operation needs to have an on-site system. With an on-site system, your team will be able to follow a process on jobs to ensure that things run smoothly each work day. It can include things like a visual inspection of the job site to check for damage (so that your company is not left responsible), setting up the work area, and setting up equipment.

    An on-site system gives your team a set of guidelines to follow that are the same or similar for each and every job. This, in turn, makes work easier, since your team knows exactly what to do and what to expect when getting set up and started at work. It also makes training new employees that much easier, since they’ll basically have a checklist of steps to follow when they arrive to the work site. It allows you to take a structured approach to every project.

  4. Bookkeeping System

    Bookkeeping SystemHaving an organized bookkeeping system in place is absolutely critical for every business in any industry. It’s where you record the money that you spend and the money that’s coming in. Your bookkeeping system gives you the ability to see where every dollar goes on a daily basis. Since it’s where you input all of the financial transactions that are taking place every day, it’s the place you need to look in order to get the clearest picture of how much money the business is making on each job, and how much money it’s spending in every area.

    Essentially, you want to have a daily bookkeeping “dashboard” where you can quickly and easily see the numbers that you need to know to assess the health of your business, such as your labor efficiency rate. From there, you’ll be able to find out where you need to make changes. Looking at the numbers for things like material, overhead, and time will let you measure your estimations against the actual numbers. Study the differences between the actual and the estimated to see where modifications can be made.

  5. Accounts Receivable System

    Accounts Receivable SystemFor many contractors, the accounts receivable system is simply picking up the phone and calling everyone with an outstanding balance when the bank account is looking a little frail.  A more structured approach is needed to the bad debts to a minimum.

    Many home service providers, have lien rights to the property on which services were performed and exercising them increases your chances of getting paid, but usually this process must start before you even start work.  Most states require some type of notice, or verbiage in a contract to enforce lien rights.  This is where your accounts receivable system needs to start (if applicable).  Once completed notices of the balance due, should be issued at regularly scheduled intervals.  The consistent and persistent reminders, let customers know that balance still exists, and that you haven’t forgotten about the outstanding balance.  Notices to seriously delinquent accounts might include a reminder of your right, or intent to lien.

Suggested Reading: 5 Mistakes You Might Be Making With Your Accounts Receivable

Not every business’s systems are going to look the same, and that’s a good thing. You need to create and test different systems in order to find the ones that work best for you and your team. Commit to trying one at a time, and if it proves helpful, stick with it. Focus on developing a process that works for each of these essential areas. Chances are that you’ll find implementing these 5 vital systems will transform your business for the better.


About the author

Corey Philip

Corey Philip is a small business owner / investor with a focus on home service businesses.

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