I am not an expert in the appliance repair business (NAICS 811412). I spent about three years helping two inexperienced technicians improve their financial performance in gas dispenser installation repair for C-stores. There are similarities between the two businesses, but there are enough differences to cause me to be a novice in appliance repair.
I will reveal my flaws and imperfections as I attempt to share ten tips for every business owner in the appliance repair industry. Some of these ideas are generic, but owners in this specialty niche will hopefully cull some tips they have never seen before.
1st Tip – Nail Down Your Accounting
I’m 100% certain that 99% of all appliance repair businesses have poor accounting processes, terrible reporting, and non-existing management scorecards to measure, monitor, and improve the business.
All have a tax accountant, and many of them set up the accounting system to support the year-end tax return. Unfortunately, that means the accounting system is not created from a management perspective. Had a gifted controller of a larger business set up your accounting system, it would radically differ from what the tax person set up.
In other cases, I’ve seen owners set up the accounting system and run it like an electronic checkbook where it’s impossible to glean any useful information whatsoever except for maybe the current bank balance, which is sporadically reconciled.
In the tips that follow, you are going to be exposed to terms such as HLP (High-Level Planning), weekly financials, TFRs (Technician Focus Reviews), and operating cash flow metrics. In order to use these tools to maximize the fun and profit in this business, a strong accounting system is needed and built on three primary pillars:
In the video below, I briefly describe these three pillars.
The best way to nail down your accounting is to find someone with previous experience that has set up accounting structures as a controller or long-time accounting manager. This is not a job your tax accountant can perform adequately.
2nd Tip – Take Treasury Management Seriously
Treasury management is an extension of getting your accounting right from the outset. But what is treasury management?
In short, it’s the completion of about ten to twelve daily and weekly tasks that are performed at the same time using documented checklists. Treasury management includes but is not limited to daily cash and credit card reconciliations, vendor invoice approvals and processing, vendor payments, and draws and pay downs on the line of credit.
Every business owner should review their weekly financials every Monday at 6:30 a.m. This allows the owner to share the numbers in the weekly tech meeting so that they get to see last week’s performance and what needs to be improved.
Without treasury management mastery, there will be no weekly financials. Additionally, monthly financials completed by the first of the month will never happen, and once they are done, the numbers will probably be inaccurate and incomplete.
I’ve written a longer article about treasury management where you can compare your current activities with the practice I recommend.
3rd Tip – Step Through Your HLP
I love HLP. HLP is short for high-level planning. HLP is a form of cowboy arithmetic where the focus is on a few inputs in any business model that yield results that are surprisingly accurate.
In the context of appliance repair businesses, only a small number of inputs are needed to complete an HLP:
- average ticket
- average calls per week
- days worked per week
- weeks worked per year
- number of reps
- operating cash flow (OCF) margin
In the video below, I show you my simple HLP model.
Before moving on to the next tip, determine what your HLP will look like. More importantly, don’t forget to answer those questions with each vital input that I mentioned in the video.
4th Tip – Implement a Simple Weekly Scorecard
Every game we attend or watch includes a scoreboard. Why not do the same thing in your business?
Scoreboards are the output, but the input starts with a simple scorecard I show in this video.
5th Tip – Keep Building Your Bench
In my opinion, the hardest part in the appliance repair industry is finding, getting, and keeping great technicians. Accordingly, always be building a bench of future techs.
That doesn’t mean hiring them right away once you have found someone. Instead, it’s a process of continually adding names to a list that will be the first reference point when you go into hiring mode.
Where you find that bench is through trial and error. Before we move to the sixth tip, below is an idea for assessing your current team. I call it the TFR, short for Technician Focus Review.
Unfortunately, this tip is not about how to build the bench. Instead, it’s about creating a heightened sense of awareness and never getting comfortable with your current situation, even if you have a great tech crew. Remember, they are volunteers until something else comes around that will lure them away from your business.
6th Tip – Understand The Three Cs of Your Most Important Relationships
Appliance repair is a relationship business. Those three critical relationships include customers, our employees (the crew), and our vendors, banks, and other needed third parties (contributors).
In these critical relationships, three vital questions have to be answered frequently, as I discuss below.
7th Tip – Fill Out the G3 Marketing Matrix
There are three defining traits of any entrepreneur as defined by Derek Lidow in his book, The Entrepreneurs:
- They are self-directed
- They are innovative in ways that create perceived value within their local culture
- They entice others to offer them something of value in return for delivering their innovation
Go back and reread that last bullet point.
In short, entrepreneurs are marketers. They have to be. Unfortunately, that’s not the case for many small business owners I’ve worked with over the past. And that’s why I have created the G3 Marketing Matrix.
8th Tip – Learn What Other Appliance Repair Service Businesses are Selling for On the Open Market
When I start working in a new industry, one of the first exercises I will perform is to see what similar businesses are selling for across as many business brokerage websites as possible. I think it makes all the sense in the world for the owner to go through this same exercise about annually, even if there is no desire to sell the business.
When I go through this exercise, I’m looking for tidbits that jump out that I’m not expecting. I also use these insights to complete an exercise with every new owner I start working with during the first year of engagement, as shown in this video.
9th Tip – Review the Websites of the Best Competitors, Locally and Nationally
This tip is closely related to the one above. Instead, we’re looking at the websites of your competitors and those that have a national presence.
I’m going to use the site below for my talking points:
When I study sites like the one above, I’m looking for three things:
- What’s their top focus on the homepage where they only have a few seconds to make a strong impression?
- Is the product and/or service offering wide or narrow?
- How fleshed out is the FAQ section on the website?
Regarding the FAQs, that’s my favorite content to study. In this case, the list is too long and needs to be broken up into question categories.
Incidentally, my favorite tip for creating a strong FAQ section on your website is to read. They Ask, You Answer by Marcus Sheridan. Not only will this book give you good ideas on fleshing out your website’s FAQ section, but you can also start writing longer-form content, such as blogs and videos for each question you answer.
After reviewing the website, I like to look at Google ratings. Occasionally, I’ll check Glassdoor ratings and customer feedback on Facebook fan pages.
10th Tip – Create a One-Page, Five-Year Plan
There is nothing unique about this idea. Yet, the stress and strain of running an appliance business keep a business owner from thinking ahead. Let’s change that by creating a one-page document that spells out your three financial objectives over the next five years.
Let’s roll the tape as I show three questions that need to be answered in this document.
To summarize your one-page, five-year plan:
- Make your mission statement as personal as possible.
- List no more than three broad financial objectives or goals.
- For each objective or goal, list up to three obstacles that will keep you from achieving your desired outcome. After that, start formulating tactics to overcome these obstacles. Obstacles are the mother of invention for great strategies.
If you made it this far, you are nothing short of remarkable.
Overwhelmed? Not sure what to do next? My suggestion is to scan the list of ten tips again and pick no more than three items you can start tackling immediately. About every two weeks, repeat the process.
The appliance repair business is hard, and the industry is contracting. However, I’m hoping the tips provided can strengthen the odds of your success.