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What are the biggest barriers to our success? Why is it that some companies flourish while others struggle? We, in the industry, have access to similar information. We use similar advertising mediums. We attend the same seminars, belong the same trade groups, read the same trade magazines, hold the same licenses and use the same equipment. What is it that stops one company from being successful while other similar organizations in the same neighborhood grow and prosper?

I don't think it's money, nor any particular business practice. Some would suggest that the barrier to a company’s success is that they do not like to take on new challenges — they never go beyond their comfort zones. They never learn anything new and lock themselves into some sort of time warp, imprisoned by Murphy's Law and countless what-if scenarios. They are stifled by what they have learned in the past and don't take the initiative to stay current in the industry. Others will say that it's a matter of proper pricing to enhance profits. Then there is the group who believe it's a matter of advertising, marketing and sales enhancement coupled with new services that enable companies to grow. I'm inclined to agree [in part] with all of the above.

Annual company growth is the measuring stick used to plot our progress along our path to success. Without continued growth, over a sustained period, success is far less likely, if not impossible. Annual growth is the incremental steps a business takes towards arriving at its goals. Growth is not necessarily measured by the number of trucks in your fleet or the number of service calls you go to, but it is certainly measured in terms of how many dollars your company generates (after expenses) — the bottom line. A certain level of growth is necessary to just keep up with rising costs and inflation.

If your goal is to remain a small organization (whatever that means), that's fine. A small company that is efficient and business-smart can be quite profitable and difficult to compete with. However, you must still grow.

Our barrier to success is two fold — fear and lack of business acumen.

The employee syndrome:
Many tradesmen learned the ropes by hands-on experience. They learned by watching others in the field, by riding along in the truck and learning how to be a helper. After a little while, they switch roles with their trainers and take a more active role while their trainers look over their shoulders. Over time, they become very good at the skills of being a field person and leave their trainer's side to fly solo. Then, one day, they look up and say, "Why should I make all of this money for my boss? After all, I'm doing all the work while they just sit in the office." So, they leave their job and venture out on their own.

Now, reality sets in. It's time for the big scramble. Trucks, tools, insurances, licensing, advertising, replacing lost benefit packages, etc., etc. Does any of this sound familiar?

Finally, the new entrepreneur comes to realize the tremendous burdens of a new business start-up and the importance of research and preparedness. How do we get the phone ringing?

Many individuals are not prepared, nor can they afford to do start a business correctly at the outset — assuming they know what to do in the first place. Business plan? — what's that? Accounting terms such as: profit and overhead per hour are alien terms. Well, the phone hasn't been ringing and the mortgage is due — oh no! And so it goes. They start using the business's gross receipts like a paycheck. The taxman will shock him soon enough. Financial pressure builds to the point where what usually happens is this poor soul either goes back to being an employee or slashes prices just to get some work. Is this person on a success path? Not usually. He just wasn't prepared. There was no knowledge of how business works — business acumen. If he does manage to survive, he becomes very protective of what he has accumulated and fears losing it. He doesn't want to take any risks. He gets into a daily groove and wants to stay there. That's his comfort zone. In reality, all he's really done is to create a new job for himself, not a business. If you think an education is expensive, try ignorance.

So where do you get the business acumen? There are plenty of ways to get it. Perhaps the fastest way is with a conversion franchise in this case. At least you'll have a formula, a recipe to follow to get on the right track. That's what franchisors do. They fill the voids and "convert" an existing company into a profitable business.

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Peter Morici - [Intro] | [Articles] | [Email] | [Website]

The views expressed in this article are those of the individual author and do not necessarily reflect the views of the management or staff of MasterPlumbers.com


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