Know your numbers before Summer Hits w Jim Kruspe
Is your business thriving, or are you just getting by? How would you even know if you do not know your numbers?
You need not worry because your favorite Service Business Mastery Podcast is back with a topic that is crucial yet rarely discussed- “Know Your Numbers and How to Do Right Pricing”!
- Your PRICING is the most foundational element of your Business, and having a clear idea of your pricing strategy and profit margins (Gross / Net) will allow you to pivot quickly when your business slows down or spikes when demand increases.
So come, Join Tersh Blissett and his co-host as they talk with Jim Kruspee (CEO of Profit Solutions Group) about how to properly price your service offerings and why having the right pricing is so important for your business!
Let his nuggets of wisdom goals guide you in owning a thriving, profitable, and ever-growing business.
(“Jim Kruspe is a business coach and consultant who specializes in working with small business owners, entrepreneurs, and multi-million dollar companies. Jim helps small businesses and entrepreneurs achieve work-life balance, pursue vision and strategy, and focus on priorities. He graduated from the University of Kentucky with a BS and BA.
He spent his early career doing inside sales on the warehouse floor and then moved up to territory management and mid-level management with one of the nation’s top HVAC suppliers.
In recent years, Jim has partnered with savvy business professionals and been a minority owner in several businesses. He took a unique approach to growing their market share in new markets by showing them how to run a profitable business.
Jim has more than 20 years of combined experience in management, sales, and coaching in the trades and professional service. In addition to his vast knowledge of starting, growing, and improving businesses, you gain access to his large network of colleagues that can help in various aspects of your business..”)
Are you a business owner who wants it to succeed, or is your business doing well, but you’re unable to measure its effectiveness? Then this podcast is for you.
In this episode of the Service Business Mastery Podcast, you will learn how to set your prices correctly and how to know your numbers.
Jim advises that in addition to investing in the skills required to run your business effectively, you should also invest in the financial skills that every business owner requires to thrive.
Financial information may intimidate you, or you may rely on your accountants and bookkeepers to handle all of your financial work for you, which is why OUTSOURCING such work has its own set of benefits.
[00:36:00] “I love numbers, but bookkeeping and taxes are unbearable to me, so I strongly recommend that you do what you do best and delegate things you can outsource, such as accounting and payroll. There are advantages to doing so, especially if you are the CEO of a company,” Jim Kruspe
[00:39:00] “I don’t recommend anybody to do their taxes. Instead, I recommend getting accounting done by somebody who is an expert and knows everything about tax liability. My job is to make you pay more taxes than you ever have to the IRS, right? Because what that means is we are making money, right? And to reduce your tax liability. That’s the accountant’s job, right?” further he adds.
Jim says it is possible to determine where your business is losing money by looking at the numbers.
[00:44:00]- Jim talks about the importance of going through your financial reports.
- Regular financial reports give you a clear picture of your particular expenses, so you’ll be able to take action when they’re higher than what you expect. For example, you may be surprised at how high your marketing costs are; once you identify them, you can keep a close eye on them.
- Moreover, you would have a clear understanding of how much your business needs to earn to meet its’ financial goals, right?
- It is important to know your business numbers because doing so makes you a better business owner. It doesn’t have to be scary either. Business owners who invest in this knowledge will have an unshakable sense of self-confidence.
Pricing is based on the service industry.
[01:04:00] “We often forget basic concepts of business, and the most basic is supply and demand. It’s like the red light in your car When the RPMs start going crazy. You’re like, ‘Oh no, I’m overheating!’ But to drop those RPMs you’ve got to increase your speed. That is how the theory of supply and demand works. If your demand is high, your price has to go up because your capacity has reached its limits,” says Jim Kruspe.
Jim Kruspe recently joined Service Business Mastery Podcast which included his thoughts on:
- Why knowing your numbers is important to excel in any business?
- What value would your numbers bring to the table?
- If you know your numbers better, how much easier would your business be?
- Get to know which products/services your business offers are making you the most money
- Pros and cons of delegating work
- How can you PRICE rightly the service that you offer?
- Ultimately, you know your business better than anyone, so how can you build and promote a highly profitable business for you and your team?
To find out how Jim’s vast business knowledge can help you start, grow, and improve businesses, here are some Key Resources from his interview:
- Learn more about PROFIT SOLUTIONS GROUP, LLC.
- FREE CONSULTATION
- BUSINESS COACHING
- Connect with Jim Kruspe on LinkedIn
Listen to this podcast and get equipped with essential business advice from this impactful conversation.
So, what’re you waiting for? Tune into this episode right away and get one step closer to becoming the successful owner of your dreams.
- Learn More about Jim!
- Here is a link to more about Jim.
- Video of our recoding hosted on YouTube
- Email us at Podcasts@ServiceBusinessMastery.com
- Learn all about the Hosts of Service Business Mastery here!
About The Guest:
Jim Kruspe is a small business coach and consultant working with motivated small business owners to multi-million dollar companies. He helps small business owners and entrepreneurs achieve a healthy work-life balance, lead with vision and strategy, and focus on priorities.
After graduating from the University of Kentucky with a BS and BA degree, Jim entered the wholesale distribution business. He started on the warehouse floor, handled inside sales, was promoted to a territory management position, and later obtained a mid-level management position with one of the largest HVAC suppliers in the country. Jim took a unique approach to grow their market share in new markets by showing them how to manage and run a profitable business. In 2013, Jim decided to fill a need for full-time coaching and consulting in the trades and professional services industry. In 2015, he co-founded with two other partners, an executive coaching firm with an emphasis on enhancing their networking skills. In recent years, Jim has partnered with savvy business professionals and was a minority owner in several businesses.
With more than 20 years of combined experience in management, sales, and coaching the trades and professional service, Jim brings a wealth of practical knowledge to his coaching work. Along with Jim’s vast knowledge of how to start, grow, and improve businesses, you also gain access to his large network of colleagues that can help with different aspects of your business.
Jim lives in Hebron, KY with his 3 children. When Jim is not working, he loves to play golf, hunt, and fish.
Subscribe to Service Business Mastery on Apple Podcasts, Spotify, our website, or wherever you get podcasts to hear more such fascinating and insightful stories.
For a complete transcription of the interview, Read More
Know your numbers before Summer Hits w Jim Kruspe
Josh Crouch: Happy Wednesday morning, Service Business Mastery Podcast fans and those watching live. We are back with a guest today that is going to talk about something that is I don’t think can ever be talked about enough in your business. And that is talking about pricing and your numbers all too often. This is one of the largest things that companies get wrong and they get it wrong right from the get go because they’re small. They don’t think they have a lot of overhead and they don’t price themselves appropriately. So they have to continue to chase that hamster wheel of finding the next new job.
Tersh Blissett: So, Josh, Josh, whenever you talk to people, what is what’s what’s the reasoning behind the pricing that they have?
Josh Crouch: Well, they think it’s just them in a truck. So they only price themselves to have no overhead. They don’t price themselves for growth.
Tersh Blissett: You know, what I hear most often when I’m talking to people is I can’t charge any more [00:01:00] than that because that’s how much everybody else around here charges.
Josh Crouch: Well, my favorite is everybody asking these Facebook groups, well, how much do you charge for free on? Everyone’s like, well, I’m going to charge the same thing because that’s what everyone’s charging. That’s the going did it.
Tersh Blissett: Well, I get the idea and we’ll talk to Jim more about this, too. But it’s good because we can sound ignorant before the expert comes on and then he can correct us. But whenever I think of that, I understand why they’re asking what they’re asking because I, I kind of thought the same thing. I still can at times think the same thing. And that’s like almost as a loss leader because we know how many times somebody calls and says, how much is free on? We’re like, Well, it’s more than that. And you try and have this conversation. But there’s some people that are just calling around and want to know the price of Freon because their cousin [00:02:00] told them or their uncle told them that you need to be shopping.
Josh Crouch: You need to recharge.
Tersh Blissett: It. Yeah, yeah. And see, the thing about it is, is some people would say, some people would argue, well, that’s not my client. And I used to have that same exact mentality until I went out on a call and I was like, Well, how much are you? How much are you willing to pay for Freon? And they’re like, Well, I don’t know. This person said it was $95. This person said it was $85. This person said it was $375. So I feel like they’re ripping people off and I’m like, okay, well then let me come out there for $75 a pound and we get out there and sell them a new system. So it’s like they don’t they’re not trying to be cheap. That’s just what they knew as a consumer to ask that question.
Josh Crouch: Well, because the customer is uneducated, they don’t know. They don’t realize that the the fact that it’s a closed system and if they need freon, there’s a problem or refrigerant like there’s there’s a bigger problem at play. They don’t know that. They just think, well, I’ll just get a recharge. So it works.
Tersh Blissett: Our girls try to educate people on [00:03:00] the phone. But sometimes, I mean, you know this you talk to people and it’s like, okay, thanks. Like, I don’t really want education today. I just want to know the price of Freon, you know? And so it’s like, well, shit, I’m trying to educate, but at the same time, I just let’s get out there and then build a relationship and just really wow them with our service. And then if they I mean, that’s why we have financing. If you if you don’t have cash on hand, which most people don’t have that much cash on hand, we have financing available and sell that system to them. So yeah.
Josh Crouch: And this is what Jim, not necessarily the Freon question, but as a as a larger concept, he’s going to be talking about pricing. He’s going to share some some things on screen, Excel documents and things like that. Yes, I might even have some some free resources. So you guys can actually start put together your pricing if you haven’t already. And honestly, if you have and you haven’t touched it in over a year, you need to look [00:04:00] at it again because things have changed drastically in the last 12 months. So we’ll be right back with with Jim.
Tersh Blissett: Yeah.
Announcer: Are you looking for valuable business advice to reach that seven figure revenue mark? Do you want actionable tips to properly navigate through every business challenge you encounter along the way? Let Tersh Blissett and Josh Crouch be your guide in getting you to the top here at Service Business Mastery. Tune in as they sit down with world renowned authors in business leadership and personal growth who share valuable insights about management, marketing, pricing, human resources and so much more. Let their nuggets of wisdom gold guide you in owning a thriving, profitable and ever growing business. Here are your hosts, Tersh and Josh.
Jim Kruspe: Welcome, [00:05:00] Jim. Good morning, guys. How are you all doing?
Tersh Blissett: Good. How are you?
Josh Crouch: I’m freezing my ass off, but the rest of y’all are probably fine.
Jim Kruspe: Well, I’m on location here in my hometown of Lexington, Kentucky. I live up near Cincinnati today. Oh. Throw that in there for all you.
Josh Crouch: By the time this actually gets out and airs, they’re definitely going to be the chiefs are going to annihilate them this weekend. So.
Jim Kruspe: But it’s a balmy nine degrees here in Lexington.
Tersh Blissett: So I got to check your thermostat again or the temperature outside, because when I took the kids to school this morning, two of my kids had shorts on. So pretty sure it was in the fifties.
Josh Crouch: Anyone that’s watching that, that’s what I’m dealing with right now. Oh, yeah. We 15 we.
Tersh Blissett: Have we have a high of 60 degrees here today. [00:06:00]
Jim Kruspe: So yeah, the kids wear shorts down to about 20. So it’s all.
Tersh Blissett: Good. Good point. That’s a good point.
Jim Kruspe: New school, you guys in the millennial and all that. And I’m a I’m a Gen Xer. I think my kids think I’m a boomer but but I always, always happen to them. I was born in 1969. Not now. I’m five years from the boomer age.
Tersh Blissett: Holding strong. Holding strong.
Jim Kruspe: Strong.
Tersh Blissett: So.
Josh Crouch: So, Jim, you’ve been in the industry a long time, so why don’t you kind of take us through that, that history and what what has brought you to this point today where you’re consulting for other people?
Jim Kruspe: Sure. Yeah. Well, I started at the University of Kentucky in Engineering, Mechanical Engineering. And the summer after my freshman year, I was fortunate enough to make a connection with an alumnus of the fraternity I had joined. They had just started a mechanical contracting company, and [00:07:00] they did plumbing and heating. So my first introduction into the mechanical realm was in the plumbing side, and I worked actually where the Bengals used to do summer camp up at Georgetown College and Georgetown, Kentucky, redid all their facilities, you know, and I got into the mud and had the waders on. And, and I mean, I pretty much carried pipe because I was a big guy, so and laid it down for the for the license guys, to put all that stuff in. But it intrigued me from an engineering perspective on, on how things went together, how water flowed, how all these things came together to make a big system. Right? And then I got to know some people in the supply side and the wholesale side. And when I graduated, I went I went in the wholesale business. You know, I didn’t take the normal, normal route because I continue to work there all through college [00:08:00] in the mechanical contract. And so I learned some business. And I, you know, one of the he’s retired now, but my mentor was Scott Davis. And, you know, Scott owned still called Davis and plumbing and mechanical here in Lexington. You know, Scott is God has been a mentor of mine for four years. So I’ve been in the industry for for a little over 30 years, you know, from boots on the ground to where I’m at today. And, you know, I went into the wholesale side of it and worked my way up and was able to spend some time in Indiana and got my MBA up at a little university called Notre Dame.
Tersh Blissett: Little tiny one.
Jim Kruspe: Yeah, a little tiny one.
Josh Crouch: Thing it I don’t think anyone listening has heard of that.
Jim Kruspe: Probably especially the Buckeyes.
Tersh Blissett: So you know.
Jim Kruspe: The Buckeyes.
Josh Crouch: I knew it was going to be I knew there was going to be.
Jim Kruspe: A Buckeye and the Louisville Cardinals there. By the way, they’re looking for a new coach right now. Anyway.
Tersh Blissett: So my my wife, she [00:09:00] went to the Ohio State University.
Josh Crouch: So this episode is over.
Jim Kruspe: Yeah.
Tersh Blissett: Well, you guys almost. I almost wore her Ohio State scarf, but no, I was going to sweat. I was like, no, no, it’s okay. It’s okay.
Jim Kruspe: So. So I came back and I was I actually went to work for the company and got stationed there in Cincinnati. And what I did was I got tired of the of the corporate arena. And I had a fellow engineering student of mine that that was running a business, wasn’t running it successfully, and decided to quit what I was doing and invest in his company and get operational control.
Tersh Blissett: And so let me ask you some questions about [00:10:00] your your history and everything that’s going that you went through. We’ve all seen if we were in any of the HVAC Facebook groups. We’ve all seen you chime in and help out a lot of people. Some people may not know who you were or anything and understand your background of education and everything. So I want to really kind of dove into that a little bit. Almost to help people understand that you are an expert in this field and not just a guy who worked at a company or ran a company that did a half million dollars or something like that, because there’s there’s a lot of gurus out there that have they never actually been successful in a business. But did you did you ever use your mechanical engineering degree after the fact? The reason I asked that particular question is I went to Tech, I went to Georgia Tech and never used anything that I learned from. I wouldn’t say never use anything I learned, but I [00:11:00] was never an engineer, quote unquote, an engineer. I went straight into the HVAC industry and was working for a service business and and worked my way up to running that company. Is is that a similar story to you and then your MBA? Like, how long ago was it that you did your MBA through Notre Dame?
Jim Kruspe: Nope, 96. So so basically the wholesale companies that I’ve always worked for, I tried to be different because the box and the wholesale business of boxes of boxes and boxes. Just with a different brand. And we were trying to sell a service. So I loaded up on because in graduate school, whether you’re in law school, MBA, dentistry, medical, the one thing they don’t teach you how to do. Is to own a business.
Tersh Blissett: Right.
Jim Kruspe: Right. So but what they do teach you is how to strategically think [00:12:00] that everything flows in a way that is a very process and systematic, systematic way. Mm hmm. That’s where the engineering background comes into play. Because as, as, you know, Tersh in engineering, everything has a process, right? Everything has a flow chart of the way things flow. So I went to when I was in sales, which again, engineering, you see sales engineers and things like that. But typically they call sales engineers for guys that had liberal arts degrees, right?
Tersh Blissett: Yeah. So.
Jim Kruspe: You know, I enjoyed the interaction with relationships. So I basically learned through dealer classes and things like that how to price. And, you know, you have to learn something from somebody.
Tersh Blissett: Oh, yeah.
Jim Kruspe: Right. And and I learned a lot from my mentor because they were in the commercial realm of mechanical contracting. And that’s a that’s a minimal there’s [00:13:00] minimal margin for error in the in the new construction and in commercial. Right. Those guys are only making probably 6 to 10% net profit, you know, at the end of the day. But they’re they’re doing these and the cash flow is not there. Right. So that’s where I learned a lot. But you know what I knew? I knew I needed help and that we needed help when I when I invested. So we hired a coach. We hired somebody that was that had been to where we’re wanting to go.
Tersh Blissett: Yeah. That’s the biggest thing that I find is is it rather than getting, I don’t know, failing on your own, like learn from other people’s failures and the experiences that they’ve gone through and and things that they’ve learned from other mentors. Because like I have several mentors. I mean, Al Levy, Mike Aguilera, like tons of people within Tommy Melo. I mean, these guys, [00:14:00] they’re great mentors. And these guys have all learned from people like Tommy introduced us to Al and everything else. I mean, so it’s almost like compound interest in your, your, your investments, you know, because you’re learning everything that they’ve learned from everybody else. And so it’s just a wealth of knowledge there. I wholeheartedly believe in having a mentor and a coach.
Jim Kruspe: Right. And that’s that’s where we said, hey, because as a business owner, it’s it’s like being married or emotionally and having kids. You’re you’re emotionally involved in the relationship with your business that you don’t see the forest through the trees.
Tersh Blissett: Oh yeah.
Jim Kruspe: And where that was, what was able to be brought to us was where, where was our, where was our flaws and where did we need to improve? And it wasn’t like we were going to, you know, flip the switch tomorrow. If we improve, the mantra was if [00:15:00] we improve 1% every day, the compounding interest is huge.
Tersh Blissett: Oh, yeah, absolutely. Absolutely.
Jim Kruspe: And he he made a comment to me and it’s funny because Scott did the same thing. And I always say, what, what what does a successful company. Look like to you. And I didn’t know how to answer that question.
Tersh Blissett: That’s a that is a really good question. And and for anybody that’s listening to this show, I challenge you to ponder that, because I’ve been asked that same thing, and I was asked that from a mentor of mine, a friend, Jessie Cole, who owns the Savannah Bananas, if you haven’t heard that story.
Josh Crouch: Definitely look it up.
Tersh Blissett: It’s a it’s an amazing story. But Jesse, you asked me, he said, what’s your goal? And and what’s at what point do you find that you’re going to be successful? And I was like, Oh, Jesse, I don’t know, man. I’m just trying to put out fires and make it to the end of the year and reach the target that we set for the year. And [00:16:00] he was like, Just stop and think about that. Stop and think about what at what point is is successful. For me, at that point in my life, it was just, okay, let’s not live paycheck to paycheck. Like I don’t I want to have six months worth of bills, you know, in my savings account or something. Like I just, I don’t want to be stressed out about money was the biggest thing for me. Like that’s in my mind at that point that was successful, but then that changes over time. And so I challenge you as a listener to stop and even pause this right now and just think about that question. That’s a big question right there, Jim.
Jim Kruspe: And here’s the answer that I got from them. And it was amazing that both of them answered very similar. And they said, I know that my business was successful when it operated and ran without me in it.
Tersh Blissett: Oh, yeah, that’s what I’m talking about.
Josh Crouch: That’s so true. It’s actually it’s funny because I’ve been talking about this book, Replaceable Founder by Ari Maisel. [00:17:00] Yes. And some of it’s automation, it’s systems, it’s automation, it’s delegation, it’s all these things. But the key point is that. Getting freedom back in your life. But I think you kind of a different twist on that is that’s when your business is successful, when you can go away for a day, a week, a month if you want to, and your business doesn’t suffer. You have all the places, the people in places they know how to handle any problems with customers that come up, bad reviews, callbacks, all these things that come up and they can handle it without you having to stick your finger in it and touch it.
Tersh Blissett: Have you heard have you read or listened to the book Clockwork By? Yes. Yeah. So volume I wrote that in several years back and that he challenged me. So 24 months from now, can you take a full 18 weeks? I think it’s eight weeks off. Eight weeks. 18 weeks. Good Lord. 18 weeks. Yeah. Eight [00:18:00] weeks off because it was by then you’ve gone through a full cycle of, ah, A.P. you know, you’ve gone through all your payroll cycles and everything else. And now, now when you come back, is it still there or is the.
Josh Crouch: Place is it on fire when.
Tersh Blissett: You get back.
Josh Crouch: Functional?
Tersh Blissett: Yeah, right.
Jim Kruspe: You know, and then then the other things that they had said and again, when you when you most of the earlier you all had said that, you know, most of it’s one guy we call it I and it’s no disparage to the one person, person, company or job is it’s chucking a truck. Right. And. They own a job at that point, right?
Tersh Blissett: 100%.
Jim Kruspe: Pretty much what what they own. And, you know, I was always told a job is just over broke.
Tersh Blissett: True story. That’s true. That was a good blow.
Jim Kruspe: So, you know, [00:19:00] and a lot of times, you know, we’re going to segway into this pricing in that, you know, as a business owner, you have to have a different mindset. Your mindset has to be totally, totally different than what you have ever were taught anywhere for. Working for somebody or working with somebody, you have to have a different mindset. And it’s hard because change, number one is hard, right? But it’s also fear. Fear. There’s a saying that I heard at one of the things that another coach had mentioned. This colleague said false expectations appearing real.
Tersh Blissett: Oh, yeah. Mm hmm.
Jim Kruspe: That’s what fear.
Tersh Blissett: Is. Yeah.
Jim Kruspe: You know, and we I try to take a look at a lot. I come from my my family. I my dad was a World War Two vet. My brother was in the Marines Special Forces. And, you know, and I’ve heard Simon Sinek does a lot of [00:20:00] nice talks about about things and how how. But if we take a look at the military side from what their their major objective is, they manage processes and systems and lead people.
Tersh Blissett: You know, Jim, that’s a great point that you make. And I know that you have a little bit of background with what I’m about to say, so I’m going to that’s the reason I’m going to interrupt you on this. But we in Savannah, we have every branch of military, even the the Department of Transportation, Coast Guard, and we get people that come on board with us and they are like. Used to military processes and procedures. I mean, Julie’s still I mean, she’s a captain in the Air Force, still in the Air National Guard. And so she she understands it. Whenever my wife she whenever we’re talking to new team members that are coming in from the military. But it is a real a [00:21:00] real challenge when we bring on new team members that they are used to when they see policies and procedures, it’s every single step. I mean, super redundant. And then for us it’s like it’s 80% there. And so you have 20, 20% worth of interpretation and some some of that I did on purpose because I didn’t want us to be absolute robots. And some of it is I just haven’t finished it yet and it’s on me 100%, you know, so and I’m 100% good with, you know, owning up to that. But it’s it’s crazy how much people deal with when they transition from the military into civilian world and then go to businesses that that.
Josh Crouch: Have.
Tersh Blissett: No policies. Yeah. No process is show up here.
Josh Crouch: Here’s your calls for the day. Good luck. We’ll see you at the end of the day.
Tersh Blissett: Exactly. Exactly. So, yeah, that’s I mean, I know you talk a lot [00:22:00] on on culture and everything else too. So yeah, I wholeheartedly believe and feel you’re right there.
Jim Kruspe: Right. And the thing is, is getting you know, we’re going to segway into knowing the numbers. But, you know, people the the business owner, again, he doesn’t want to know what because he’s he’s made 30 bucks an hour. Yeah. As a as a technician or things like that. Well he doesn’t really know. He just thinks that I can go out. You can go out and just charge that right or charge what? His old boss.
Josh Crouch: Or you can charge a little bit more than that. So you can take home 30 bucks an hour, right?
Jim Kruspe: Yeah. So, you know, and you’re always discussion earlier about, you know. Here’s what I will say. You have regions of the in my in my experience, you have regions of the of the of the country that have different costs of living.
Tersh Blissett: Yes, very much so. 100%.
Jim Kruspe: If because I see, you know, I, I use your site as an educational piece [00:23:00] for me because I always want to learn.
Tersh Blissett: Yeah.
Jim Kruspe: I never I never feel like I know at all. Never going to. So I find it very intriguing that the guys out west can charge 25 grand for a for a system when back here in the Mid West they’re charging 13 or 14 for it. Right. Yeah.
Tersh Blissett: And or 3000.
Jim Kruspe: Point in time where what can the market bear. Because I’ve had seen companies priced themselves out of the market before.
Tersh Blissett: Yeah, that’s a good point too. Yeah.
Jim Kruspe: And that’s why it’s so important to know the numbers. But here’s the thing. And, Josh, if you can, you can put up the three rings.
Josh Crouch: Yeah, give me 1/2. You only pull it up, but.
Jim Kruspe: This is one of the things that well, these are the things that that I try to accomplish when working with a client is at the end of the day, we started our business to have a different [00:24:00] life. Right, a better life. And I tell them, we’re going to focus. We’re going to we’re going to focus on you making money, but we’re really going to focus on getting you here to freedom. Right. So in order to get the freedom, you’ve got to have confidence. Well, in order to have confidence, you’d have to know your numbers. You have to have the right, right clients, profit time and delivering quality. So now let’s step over here, because it all starts with numbers. If you can’t price yourself correctly, then if you price yourself incorrectly, you’re going to go out of business quicker. If you sell a lot. Oh I’ve got it in volume. Well that just shows me you’re going to probably run out. You’re going to you’re not going to end you’re going to end in business quicker than what most people would do.
Tersh Blissett: So go ahead, Josh.
Josh Crouch: Go ahead, Josh. I was just going to say, I think one of the biggest things that I [00:25:00] mean, for the last 13 ish years, things have been on an uphill trend in the business. And in the last two years especially, I mean, it’s been a boom for the home service space. Sure. That’s not going to last forever. So right now, money’s good. Business is good. Everybody’s growing. Everybody feels like they’re untouchable. Right?
Jim Kruspe: Right.
Josh Crouch: But we all know at some point and it could be soon with the way inflation is going and everything else, where we’re going to have a downturn and people are going to start saving that money and the housing market’s not going to be what it is. And knowing those numbers is going to allow the companies that actually go through these exercises that you’re going to you’re going to share and stuff are actually going to continue to operate. And they’re going to be the ones that are actually going to be the ones way ahead of the game. Come, let’s say, three years from now, when a lot of these guys that don’t know their numbers are going to they’re going to go under. They’re going to go back to work because they don’t have enough they don’t have the right stuff in place.
Tersh Blissett: So with that being said, Jim, let me ask you this. These two questions really [00:26:00] for people who don’t know their numbers or maybe they’re just kind of winging it based on like where they were before, like they knew what their sold our was, where they were before. So they just pretty much plug the same solar power in for those people who don’t know their numbers. How to how do they find their number? How do they know what their sold hours should be or their sold days should be? And then what happens when we run our numbers and the capacitor that we used to sell for $125? All of our competitors are selling the capacitor for 125 to 225. When we do our pricing, we see that the capacitor is 375. Like, we just like it’s like, oh crap. Like I have to charge way more than what I used to charge before. Is there a way that we can reduce that price by doing something else somewhere else? Or are we just going to have to [00:27:00] muscle through until we have enough people to cover the additional overhead that you have?
Jim Kruspe: Right. Great question. So the only two ways that I know of to reduce reduce that cost. Right. Is to add capacity because let me let me go back into explaining how how you got one guy truck in a truck, right. 261 days a year of capacity. Working days.
Josh Crouch: If they want to have a life or.
Jim Kruspe: They want to have a life. So now you subtract the holidays out of that. So what’s that? Eight days. So now we go down to 253. Right. So what I’m getting to is, is that if I only want to work 180 days out of the year, I have to price accordingly based upon what my billable how is my billable efficiency? Right. [00:28:00] And and there’s there’s things.
Tersh Blissett: And how do we figure? How do we figure the billable efficiency? I mean, you hear. Rule of thumb as like 55% efficient, blah, blah, blah. But that’s also that’s that’s all. Yeah, exactly.
Josh Crouch: Everybody some guys some guys don’t mind running ten calls a day. Some guys only want to run three.
Jim Kruspe: So. So here’s what I have found to be on the technician side. Right. So on the technician side, in the service world, if if the client if the technician is doing what they’re supposed to do, 4 to 5 calls a day is the maximum because they want to give their utmost attention to that client. Because what I’m looking for and knowing my numbers, because I’m going to tell you about KPIs later on is about average ticket. Right. And then average flip sale to the install department. Right.
Tersh Blissett: Yeah.
Jim Kruspe: So. [00:29:00] What we want to what we need to do is we need to find out the direct cost of of of what the job owner is. If he wants to make 30 bucks an hour, he’s still going to have to pay taxes.
Tersh Blissett: Yep.
Jim Kruspe: Right. He’s going to have to pay gas. He’s going to have to pay.
Tersh Blissett: And here’s here’s here’s one thing. Sorry to interrupt you, Jim, but really fast. I want people to understand what you’re saying, what you’re getting into, the overhead expenses and whatnot. If you say, I’m working out of my garage, if I hear that one more time, if I hear my truck is paid for, so that’s not an overhead expense, I’m just going to pull out whatever remaining here I have left because.
Josh Crouch: It’s not much.
Tersh Blissett: It’s really not much. But it’s one of those things where like you are going to have to buy a new truck one day. So price, price yourself now as if you’re paying for the vehicle. So then you can even potentially have that additional cash flow so you don’t have to use it up [00:30:00] it. If interest rates go up, if something happens, you have that cash to just purchase a vehicle or I mean, I don’t always advocate on doing that because it’s so cheap to get loans right now. But there are times where it’s not and you have to. You might be better off to buy the truck outright. Same for your working out your garage. At some point are you going to work out of your garage forever? Like for me, yes. That’s our target is to stay remote and we’re doing other things to we spend money in other areas.
Josh Crouch: That way you still have the storage units and you still. Exactly. Inventory in the storage unit. So there’s still overhead there.
Tersh Blissett: Exactly. And and if you want to have a warehouse or a shop, I mean, around here for a decent sized place, it’s about $2,500 a month. So even if you’re working out of your garage, you should still be figuring in that $2,500 a month. Okay. Keep going. Keep going. Jim. I just wanted to get in on that.
Jim Kruspe: So there’s a direct cost per man and [00:31:00] then there’s the overhead burden that each man will carry on to that. Right. So in theory, what happens is, is when you increase capacity and your overhead doesn’t change, it might change just a little bit. But then that cost per hour comes down.
Tersh Blissett: Yeah.
Jim Kruspe: But again, you’ve got to be careful because all that un applied time on build time dumps right back into overhead. So that’s where we, where, where we talk about, you know, those things of of. If people aren’t tracking their even their own time, the easiest way to get into this habit, we’re creating a habit now, even with the one man operations right track your time and with the automation and all the apps now you can automatically do and figure out what your time is on everything.
Tersh Blissett: I think that I believe I wholeheartedly believe that every [00:32:00] person should track their time for two weeks, at least once a year, so that you can see like, am I actually productive or am I just busy?
Jim Kruspe: Bingo. Productive. Busy word in my and my company. When a client walks into my door, I walk into theirs. I we get rid of the word busy. We don’t glorify that word.
Tersh Blissett: Absolutely. I’m right there with you.
Jim Kruspe: Right. So we look at we look at the growth, what we call gross profit per mandate. Right. We also where I see some some some issues is to say OC, you know, in pricing, we know that we don’t have three quarter days. Right. So if you have two guys on an install, which should be the case, you’re going to have at least, at least 16 man hours tied up into that job.
Tersh Blissett: Repeat that one more time for me.
Jim Kruspe: So [00:33:00] let’s say let’s say that a so Tersh Let’s, let’s take a look at an average install crew, okay? Because all we’re going to be doing is talking about averages because if you have five install crews, some some work quicker, some work slower. All right. We want an average. We’re. We love numbers and stuff and trying to get real specific. But at the end of the day, we want easy, easy what I call cookbook pricing for our sales reps to go out there and give a price and investment to the homeowner on what the investment is going to be to put in their new system. Right. So we figure out that average by obviously combining all the average numbers of of what that labor rate is. Right. So let’s say that we want that in that cookbook pricing with a furnace. Well, that furnace. Right. It’s going to eat up a day. It depends if they’ve got to do new flues with 80% [00:34:00] furnace out and put in a 90% firmness, and then we have a little bit of extra time. However, I still price a full day in that furnace.
Tersh Blissett: Well, I do also. And the reason that I do that and this might not be right, I don’t know, maybe I’m doing this wrong. I do it because in my mind I don’t have like I can’t put another guy. Like if it’s three quarters of a day, I can’t put that guy on a quarter day’s worth of credit somewhere else.
Josh Crouch: He’s done for the day pretty much unless he wants to take a second job and work overtime.
Jim Kruspe: My recommendation on payment of install crews is based upon a performance basis.
Tersh Blissett: Yeah. Okay.
Jim Kruspe: So I’ve had technicians make 120,000 are installation crews make 110. One person. So because they’re knocking it out and they’re but they’re. But their quality hasn’t diminished and their callback rates [00:35:00] are less than 2%.
Tersh Blissett: Yeah.
Josh Crouch: Hey, Jim, we got a couple questions here. I want to before we get into anything else, I want to make sure we go back on. So I’ll put up on the screen here so you can see it. So we all need to know our numbers. So for a small business, would you recommend outsourcing all the accounting or doing it in-house? And what are the pros and cons of either?
Jim Kruspe: Great question. So here’s what I’m going to tell you. I love numbers. But what I do hate is bookkeeping. And what I do hate is taxes.
Tersh Blissett: So.
Jim Kruspe: So I recommend. Well, I strongly recommend to everybody that do what you do best and delegate. Something relegated to somebody else. Outsource your accounting, outsource your payroll, especially. Because there are some advantages, especially if you get into companies that are CEOs. You [00:36:00] know what I mean by that? You know what those are, right? Tersh Josh.
Josh Crouch: I don’t know if I do.
Jim Kruspe: So you’re basically leasing your employees, but you’re basically leasing the employee from like a like an ADP or a Paychex or. Oh, sure. Or something like that. You know, but I recommend outsourcing those simply because now they’re on the hook for any mistakes and things like that. Now you still have to keep a tab on everything. And that’s this is where this freedom goes. I can I can be in Florida down in my condo in Florida. Right. And I can still see the numbers based upon the case. I don’t need to need to see a profit and loss. I can look at my KPIs and know that we’re doing fine.
Tersh Blissett: Mm hmm.
Jim Kruspe: Right. So hopefully that and pros and cons. I mean, one of the and I don’t think it’s really a con, but what you’ll find an [00:37:00] owner say a con is I don’t have control of my bookkeeping and stuff like that.
Tersh Blissett: Here, let me see.
Josh Crouch: Probably a good thing that they don’t.
Tersh Blissett: Well, let me share a con in my mind. That’s a recent con for me. And I think I shared it with Josh the other day, but there are things that come through that I catch. If I if I have my hands in things, I’m like, Whoa, that’s not what we were quoted. Blah, blah, blah, like, or we have recurring services, we have some subscriptions and one subscription snuck up like they increased their prices, doubled them. And the bookkeeper that we have that’s remote like or actually the CFO, they just paid it and didn’t realize that I didn’t approve the fact that it it doubled in prices and that went on for an entire year and we overpaid by, oh, almost $20,000 on stuff. And that was something that [00:38:00] if I if I had my hands in it, then I would have called it quicker. But I also blame myself because I wasn’t I more frequently I should have been going through all of our expenses and stuff, but well, and.
Josh Crouch: That can be so.
Jim Kruspe: Everyone will reach a level to where they can bring it. Now, let me let me rephrase what my answer is. The normal, the 90% of the of air conditioning companies are less than 2 million in revenue. Everybody knows that, right? They know that.
Josh Crouch: I didn’t know the numbers. I assumed it was more on the small side than under one or 2 million.
Jim Kruspe: And and the thing about it is, is that once you do hit a certain. Wall. I call it walls because we’re all trying to get over that next wall. Right. What I see is, is that now it makes sense for somebody now. Keep in mind, a CFO type person [00:39:00] that can do the bookkeeping, that can do all the things to get that prepared for the CPA to where the CPA just comes in and signs and moves on. Right. Is going to be quite an investment because you want to be able to trust that person to handle all your books and everything. Right. Yeah. But it makes sense at some point where that where that falls into line of putting it in the house. But I don’t recommend anybody doing their own taxes.
Tersh Blissett: Right.
Jim Kruspe: But I also recommend somebody actually advising them on their accounting and getting that consulting from from somebody that’s an expert in tax liability and things like that. My job is to make you pay more taxes than you ever have to the IRS. Yeah, because that’s a good thing, right? It means we’re making money, right? That’s the accountant’s job is to is to is to decrease your tax liability.
Tersh Blissett: Yeah. So we’ve had several tax lawyers and CPAs on the show [00:40:00] and that’s something that I challenge you to have as someone who you regularly communicate with, not just once a year. Here’s my taxes or a couple of times a year, like, here’s my paperwork, sign off on it. And then because if they know what you what your plans and goals are for the upcoming year, they can advise you on. You need to make these purchases throughout the year too.
Jim Kruspe: Right. But Tersh to to go in a little bit further, what you are talking about and catching those surprises, you know, as as the you’re not going to again tomorrow. If you’re if you’re a business owner that’s still working in the company tomorrow, you’re not going to just wake up and say, I’m totally out. It’s not going to happen because you’re going to have to fill some kind of role that that that puts you in an advantageous and as an asset to the company whether it’s, you know, the service manager piece of helping the service manager review invoices, review all [00:41:00] those things because the owner can’t just kind of step away. Step away.
Tersh Blissett: Yeah. Delegation by abdication. That is the worst thing in the world. And I’m guilty of doing that. Like, Oh, you got this piece, like, I’m not checking in on you anymore. And then all of a sudden it’s like, oh, like.
Jim Kruspe: Keep in mind, I said, without the successful one, why aren’t you in it? Yeah, you should be on it. Working on the business.
Josh Crouch: I have a I have a point to make if you’re out, especially if you’re considering outsourcing. First of all, I think outsourcing this stuff, you need to have a consultant that knows the industry and the benchmarks and the KPIs so you can actually track that, but set a date in your calendar every month. Yeah, like maybe the 15th of the month or something after, you know, the financial statements are done. Set up a call once a month, especially until you start to understand this stuff yourself. Go over it with somebody who really knows this stuff and can advise [00:42:00] you.
Tersh Blissett: Honestly, I would challenge you to do it more than once a month. I would do it.
Josh Crouch: That’s minimum once a month.
Tersh Blissett: I would do it the first week of the of the month so that you and your your bookkeeper, CFO, whoever that person is, your accountant can go over all the expenses and be like, okay, this needs to be go here. This needs to go here, this needs to go here. And then after the 15th, after or whenever they’ve finished putting everything in and finalizing the books, go over it again and say, All right, this is where we are. This is what you got to do, blah, blah, blah, have that conversation. But like for us, when we’re, we’re using so we’re on service titan and so we class everything for labor and everything else. And I don’t want to get in the weeds with, with, with QuickBooks and anything like that, but like we spent two solid months of testing and having constant conversations. Okay, that’s broke. We need to fix this. We need to change that. And [00:43:00] we could have really been in bad shape if we had just said do this and then left it alone. Because what we said is not what came out of our mouth. Like what was coming out of our brain was not coming out of our mouth. So we had to have constant communication there for, for a good bit.
Jim Kruspe: So let’s get let’s delve into some numbers here and let’s make sure that we, you know, people listening in and know exactly what I hopefully I answered this gentleman’s questions, the pros, especially it I’m dumping and delegating something that is that is I don’t want to minimize it, but that is busywork. It’s data entry from a bookkeeping standpoint. Right. However, the analyzation of the books is what you don’t want to give away, if that makes any sense. Because if you have real time accounting, whether it’s weekly, you’re going to catch those things first. You’re going to catch all those things to to make sure that that nothing’s ever 100% right. So [00:44:00] in Josh, to your point, we you would like to know and deal with somebody that knows the industry, but, you know, they don’t here’s the difference. They’re going to know what the average company does. But they don’t know what a successful company does.
Tersh Blissett: Oh, that’s another great point.
Jim Kruspe: That’s that’s one of the points now everybody feels that it’s tax time, right? When we when we do our taxes in the in the in the in the accountant gives us our taxes and we’re complaining. There’s a thing that we got to fill out called NAICS code. That’s where the industry gets all the data. Not only for audit purposes for the IRS, but this is what the industry average is doing now. I caution everybody to look at when they when they get those and say, well, you know, you’re doing really well because excuse me, you’re doing 2% higher than the average in the HVAC world when the HVAC world is reporting 5 to [00:45:00] 6% in net profit before tax. Right. Well, keep in mind, that’s the filed tax tax bill.
Tersh Blissett: Right, right, right.
Jim Kruspe: All look and know where our real ones are at. And then we decide and say, hey, we need a new truck. We’re going to go ahead and buy that. We need to do this because that’s what we do. I’m not a big fan of of of buying something just to get a tax credit.
Tersh Blissett: Right.
Jim Kruspe: Because the IRS will do that all day long with you. Hey, all I got to do is give you a quarterback for every dollar that you’re you’re spending. I’ll do that all day long. Right. But that’s where I think those numbers are skewed. But that’s Josh, that’s where we get those industry averages. Right. But I’m looking for successful companies. I’m not looking for the average company. I’m looking for the successful companies that are consistently in that 25, 22, 25% net profit before tax, because that’s where McDonald’s, that’s where Home Depot, that’s where all the big [00:46:00] major corporations operate in that realm.
Josh Crouch: That’s a great point. Yeah. No, it’s like like he said. And this is something that I mean, I literally have it on my calendar once a month now that I’ve had some training and stuff to go through our numbers. But we go through our numbers once a month, every single month. And I look at and honestly, I look at QuickBooks periodically through the month to just to make sure things are okay. But it’s, it’s so important to know that stuff. And I, I know some people that I talk to regularly. They, they outsource their books and maybe the fit wasn’t perfect because the person wasn’t getting them their numbers or their statements on time. That needs to be something. You need to set that tone right from the get go. If you have any sort of a remote arrangement where I need it, I need it by this date, and we need to have a call either on that date or the week after something set that arrangement, especially as you’re growing your business because it’s so this is literally the most important part of your business. If you don’t know your numbers, you’re never going to be able to grow and you’re never going [00:47:00] to be able to get more help.
Tersh Blissett: And I would caution you caution you also, if you’re if you’re relatively new to this whole thing, if you’re new to outsourcing a bookkeeper and you’re new to the business side of things, don’t assume just because they have a bookkeeping remote business that they know what they’re doing. I fell into this trap early into my career. I was like, I don’t know, QuickBooks Online, so I want someone else to do it. Well, then I had an audit six months after I was I had hired this person and the person auditing it was actually a guest on the show. And he was like. Bro. What in the hell have you done for the past six months? Like. This is just like a kindergartner. Just put this stuff in here. I was like, okay, good. Because I didn’t understand anything that was here. So I’m glad that it’s that it’s not just me. And if that would have gone on for a couple of years, I could have been in a world of trouble for [00:48:00] sure, especially come tax time. But he fixed it for me and went back and fixed everything that that they had messed up. And so don’t don’t just assume that they know what they’re doing. Whenever you just because they do remote bookkeeping, because they might just be a data entry person and garbage in. Garbage out. So.
Jim Kruspe: Right. Right. So so getting into the numbers now is if you’re looking at your statement, you have an income, then you have your cost of goods. My company, my my coaching practice doesn’t have cost of goods. Right. I don’t I don’t sell products. I sell what’s in between my ears, my knowledge. Right. But those are direct costs. Those are payroll. You know, I consider those all direct cost to to income. Now, some accountant will drop that below the line, what we call below the line. But my income minus my [00:49:00] my cost of goods, which is labor supplies, all those things that will give me my gross profit. Before tax. Now everything else below the line is expenses that are paid regardless of there’s any revenue brought into the business that your leases. Right. That’s your payments on your trucks, the tools that you’re your admin staff, all those things. So that’s what we call overhead, the things that we need to run and operate the business on a daily basis. Even those even though there’s no revenue coming in, especially in the world of HVAC, where you have the states like Florida, where you’re in Georgia, you’re kind of in between and you don’t really [00:50:00] need, you know, heating air conditioning and things like that.
Tersh Blissett: So yeah, so like we have three months out of the year that it’s just 70 degrees outside, right?
Jim Kruspe: So you’ve got to, you’ve got to, you’ve got to you’ve got to think about those things, take those things into account. Right. So I’m going to throw I’m going to put this up and I go.
Josh Crouch: Yeah, once you share it, I’ll, I’ll add it to the stream here.
Tersh Blissett: Real quick, Jim. George Childers in the Facebook Live stream. He asked elaborate some more on increasing capacity, please. And I don’t want to dove into a rabbit hole too much about that. But back earlier in the conversation, we were talking about increasing capacity is a way to reduce pricing or our cost so our pricing can be lower than what it is now. You want to dove into that?
Jim Kruspe: You got that, Josh? Because I’m not going to be able to see you all as this is up on my screen.
Tersh Blissett: Yep, [00:51:00] it’s there.
Jim Kruspe: So. So what I mean is, is that you if you know your numbers. Let me let me think about this. The way that that that makes it very simplified and clear. So increasing capacity is I base my numbers off of.
Tersh Blissett: Here’s the way that I would explain it, and I could be completely wrong on this. And if I am, just correct me. So my overhead expenses are pretty consistent every single month. And if I have one guy that has to cover all those overhead expenses, then my pricing has to be $375, correct? Well, if I have two guys doing it, then my pricing could be $275 to cover the same overhead expenses, get the same profit, because they’re going to bring on some overhead expenses, but they’re not going to like you can’t cut it in half, but they’re going to bring on some overhead expenses. But then if [00:52:00] you have five people and there’s not necessarily like a huge influx of more overhead because of having to have more office staff or anything like that, if you can keep the same overhead, theoretically, you’re pricing would be next to nothing because you had five people versus one person doing that same class.
Jim Kruspe: Correct. And that’s the spreadsheet that I just brought up. It’s kind of he’s like clairvoyant, right? George is clairvoyant. So if we everybody can see this, I’m.
Tersh Blissett: Assuming that’s correct.
Jim Kruspe: So watch what I change. And what I want you to watch is, is the break even for everybody in the daily the daily break even and all this other stuff over here on the right. So if I change that and increase my revenue producers. Now my break even per mandate is lower. See that.
Tersh Blissett: Change? Yep. Yeah. Drop down. What, 100? 100 bucks?
Jim Kruspe: Yep.
Tersh Blissett: Yep.
Jim Kruspe: Yep. [00:53:00] So that’s what we mean by now. Keep in mind, there’s there’s some other things that if you’re not keeping your guys full. Then we have a marketing issue. Right? My.
Tersh Blissett: Yep.
Josh Crouch: So give me a call.
Jim Kruspe: Give me a call. Right. So, you know, I’ve there’s there’s something that is, has some has some teeth to it of your salesman. Keep on selling. Keep on selling as long as they’re as long as they’re the right customer. Keep on selling.
Tersh Blissett: That as we price. Right.
Jim Kruspe: As long as your price. Right.
Tersh Blissett: Yep.
Jim Kruspe: You know, that’s hopefully I’ve answered George question just with this spreadsheet on how and you’re you’re very simplified explanation, right, Jim.
Josh Crouch: With with our notes. Would it be possible to get like a, you know, like make a copy of this and just if people want to play around, I mean, obviously, I know you probably have some stuff on the back end of the spreadsheet that makes it all work. I [00:54:00] don’t know if we could do anything like that. Just if people want to play around with their numbers and maybe they know their monthly overhead and their average gross, probably just kind of want to play around with this a little bit and see what it looks like. Now or do you not recommend that?
Tersh Blissett: It’s $1,000,000 question there.
Jim Kruspe: So here’s my here’s my here’s the challenge there. I they can I can probably set them up with with some certain securities on there to to be able to do things. But, you know, I don’t.
Josh Crouch: Destroy your pretty spreadsheet.
Jim Kruspe: Well, it’s sometimes we all have proprietary information, right?
Tersh Blissett: That’s 100% true. Sure. Yep.
Jim Kruspe: So but, you know, I don’t mind. They can give me a call and I don’t mind spending some and spending some time, you know, going over this so that they can understand it. But, you know, I always [00:55:00] say there’s there’s. There’s some things I can give. There are some things I would love that I would love to give this spreadsheet away for for no cost at the end of the day. But they have to understand their numbers first.
Tersh Blissett: Yeah. Yeah. Garbage in, garbage out.
Jim Kruspe: Right.
Tersh Blissett: And then we’re going to all go and blame Jim because we got garbage out.
Jim Kruspe: Bingo. Bingo.
Tersh Blissett: Can I ask you a few questions about KPIs and your thought processes or your thoughts on what the target should be?
Jim Kruspe: Yes, I stopped sharing that, by the way, so I can see you all again.
Tersh Blissett: Perfect.
Jim Kruspe: So go ahead, Tersh. So.
Tersh Blissett: So what should you what do you believe that gross profit per mandate should be, or is there a.
Jim Kruspe: There’s no there’s really is no, I think I think from a gross profit percentage, you need to be at least 50% or higher.
Josh Crouch: And then [00:56:00] how about that?
Jim Kruspe: That’s a general statement, because I can’t. Oh, yeah. Because everybody else has their gross profit per mandates are going to be different based upon what they pay their guys and then things you find.
Josh Crouch: So let’s say you you figure out the gross profit part when it comes to like the actual KPIs on how many service calls. Like you start diving into like the really deep numbers, how many service goals, what’s your average ticket average sold.
Jim Kruspe: And that’s what I can give you. I’ve got I’ve got some information and I can give like, like what’s, what’s the targets that you want to be able to hit. Yeah. The general from a general purpose. Right. Four calls for calls a day. On a service technician. And that’s about probably at about 80% capacity. Right.
Tersh Blissett: 80% capacity.
Jim Kruspe: Well, my pricing is based upon the service industry. 50% capacity.
Tersh Blissett: Okay.
Jim Kruspe: Because I know that, again, service work, even in even in the northern part of Kentucky and touching [00:57:00] Buck Island, you know, we’re we’re still not being able to to sell all of our hours into, you know.
Josh Crouch: The travel time, time on the office and stuff like that.
Jim Kruspe: Right. Right, exactly. And then it also gives me an idea, if I’ve got a tech that’s that’s that’s run in five and six calls a day on a continuous basis.
Tersh Blissett: Oh, they’re burning you out.
Jim Kruspe: I need to hire. Right.
Tersh Blissett: Yeah.
Jim Kruspe: Either that.
Tersh Blissett: Go ahead. Either that or they’re. They are burning through your leads. They’re burning like if it’s if they’re running six calls a day. Ten calls a day, and they’re all diagnostic onlys or consultation onlys. We’re going to have a conversation.
Josh Crouch: Well, I’ve seen that process.
Jim Kruspe: Right.
Josh Crouch: Being the dispatcher and handling the board and everything else in my past, I I’ve seen that as soon as the guy as soon as I know the day is going to be late because it it’s it’s crazy. Our marketing has been great and all of a sudden it’s really cold. Like [00:58:00] today, phones are blowing up. Like you take what you can do and you just try to help whoever you can. I know as well as everyone else here, as soon as it gets busy like that, what the technicians do, they fix it and fix it and move because they know they’re going to be out till eight, nine, 10:00 and they want to get home at some point, which you can’t blame them. But that’s also why your repair pricing needs to be in line with that too, and probably have some kind of an idea where, hey, if it’s really busy, we’re going to be paying overtime and all this stuff has to be factored into like maybe a level two or Tier two pricing structure. When it’s super busy, the stuff gets really deep in the weeds. And I love these conversations because there’s so many things that people don’t think about. They’re like, Well, I’m just going to be 95 bucks an hour. I’m good with that.
Jim Kruspe: And we’re not going to be.
Josh Crouch: How did you come up with that?
Jim Kruspe: And we’re not going to be able to cover everything in an hour here. Right. So, you know, those are things that we can talk about later on.
Josh Crouch: But I think Jim just invited himself back.
Tersh Blissett: Yeah. Oh, yeah. He’s definitely got to come back on the show.
Jim Kruspe: But [00:59:00] the other KPI, Tersh is just general terms. You’re looking at average ticket.
Tersh Blissett: Yeah.
Jim Kruspe: You know, that’s hard to say. But when you look at now, what I can tell you is a service truck should be the service truck should be able to produce between 250 and 300,000 a year.
Tersh Blissett: Here’s one. Here’s one thing that I will challenge people with. And I can only do it because I, I was in this boat. So I came to my small group that we meet every Friday. Other. A couple of other business owners with this badge of honor. I was like, Dude, our average service ticket’s 885. And I was like, That’s where we’re at. Like, Boom, big dog in the room. Like, guess what? We’re at 885 a ticket. And the guy, there’s a buddy of mine, he’s not actually very far from you, but he was like, Well, I would say your ticket price is way too high. And I was like, What do you mean too high? I didn’t think [01:00:00] there was a there was a too high when it comes to your average ticket price, he said, how many leads are you flipping? And they all knew that was my challenge. I couldn’t get the techs to flip leads and they were like, You’re not flipping leads. Your guys aren’t flipping leads, they’re just fixing every call you go on. I was like, Damn it, man, why do you got to be right all the time? And it’s so true.
Jim Kruspe: Know it gets those get into to different scenarios with the sales process but that’s, that’s where it comes back into just managing those processes.
Tersh Blissett: Yeah.
Jim Kruspe: And then you take the process and say, okay, here’s what the deal is. There’s a breakage there, we need to improve that and then it comes what you as a business owner need to do and that’s coach your employees.
Tersh Blissett: Yeah. Oh yeah. And after that point, I mean I think it’s dropped down to 500 and something dollars and a ticket now average, but the leads are getting flipped more where like we just we created an incentive program [01:01:00] and also we we have rules that if it’s over this age and this dollar amount, leads got to be flipped. And so that’s that’s changed up a lot. But just knowing that and but I never would have known that that was one of the main reasons why we weren’t getting system replacement leads flipped over to us if I wasn’t tracking that KPI right to start with.
Jim Kruspe: And keep in mind those numbers is just like the number I’m going to give you on an installation crew. They should be able to put with no problem, $1,000,000 worth of revenue in.
Tersh Blissett: Oh, yeah, absolutely right.
Jim Kruspe: But I hedge that because it all is going to depend upon your average install price.
Tersh Blissett: That’s true.
Jim Kruspe: Now you sell higher. Now in Kentucky. In Ohio, the utility rates are so low. And the incentives to buy high efficiency is so low we sell up here on comfort.
Tersh Blissett: Yeah. Got to.
Jim Kruspe: High humidity. It’s it’s humid. Not as humid as Florida, but [01:02:00] it’s humid here in the Midwest. Right. So, you know, with financing and things like that, know, you should be averaging and again, work smarter, not harder. The higher your average ticket.
Tersh Blissett: Your less, the less jobs you have to do. That’s right.
Jim Kruspe: Pure, pure profit off those things.
Tersh Blissett: Right.
Jim Kruspe: And that’s why I say, you know, and then here’s here’s at the end of the day, is this your job as a business owner? And whether you’re a you know, or your to give to your dispatcher, I need to sell you you need to sell these slots. Yeah. If you know your numbers, you can actually run a special. You can actually do a loss leader or whatever you want to do to get in the door.
Tersh Blissett: Yep. As long as you’re technically converting.
Josh Crouch: You and I talked about that on the phone yesterday. We didn’t even get into that. We’ve been talking about so much. Other good stuff is everyone thinks we’ll have a service feed. That’s my service fee like. Nobody’s touching that service fee. Yes. If anything, [01:03:00] it’s going to go up. But you don’t realize, like if you’re not busy, drop that sucker down.
Jim Kruspe: Give it away. Get. Why do you think gas prices are low in 2020?
Tersh Blissett: Yep.
Jim Kruspe: No one was driving.
Tersh Blissett: That’s right. Yep.
Jim Kruspe: All these things, guys and ladies, is this. We forget the fundamentals of business. And the one thing that they teach in any Econ 101 class is that the theory of supply and demand, if your demand is high, your price has to ask because your capacity is going to reach. You can max out, right? And you can. It’s just like the RPMs in a car. They start going into that red. You’re like, Oh, no, I’m stressing my motor. But you’ve got to go up in speed in order to drop those RPMs down. Right.
Tersh Blissett: That’s true.
Jim Kruspe: But it’s we get a we tend to get away and it’s been bred into our industry as far as the [01:04:00] plumbing as well. And that we all have to be the cheapest guy out there because we’re all not in new construction.
Tersh Blissett: No.
Jim Kruspe: Right. We’re providing a service that actually comes to your house. Right? Yeah, well, the guy that can be the savior when when it’s, you know, it’s hit me at home. So I’ll take I’ll give you an example. I used to have a I used to have a feeling that that because I grew up without air conditioning, my parents didn’t have air conditioning until I was a senior in high school in Lexington, Kentucky. They had a window.
Josh Crouch: And so you were gone before they splurged.
Jim Kruspe: At Window Unit, right?
Tersh Blissett: So.
Jim Kruspe: So but you know that people in people that don’t have the use of their arms and their legs, their paraplegics and things like that, their body temperatures can’t get up past a certain point. Though, sometimes can be emergency situations.
Tersh Blissett: That’s a good.
Jim Kruspe: Point. You know, [01:05:00] so we have to. We’re the only ones that do house calls anymore. Think about it. We come to you. And you have to you have to atone for that and way lately is this traffic.
Tersh Blissett: Now windshield time you have to you really need to be tracking that. And that’s something that a lot of people don’t track is travel time. What’s your average travel time? And it’s not necessarily like, okay, it needs to be 5 minutes, it needs to be 15 minutes. It just you need to know what it is so that when you’re figuring out your pricing, that’s on a supply time.
Jim Kruspe: Well, and then also where people get caught, too, is if they call it a diagnostic fee. I really I really don’t like that term.
Tersh Blissett: Yeah. We use charge. We call it a consultation.
Jim Kruspe: Right. But I always coach my clients in their dispatch to say look or their person answering the phone get [01:06:00] a little leeway because you might have to look a longer time. Typically, 90% of what we find can be diagnosed within 15 to 20 minutes of arriving on site. However, there are some things that we run into that just don’t make sense. Yeah, right. So then we’re going to have to step back and say, okay, Mr. and Ms.. Client, I can go further and further into this. Right? But it’s going to cost you X amount of and I always say, you know, if, if we can find it, it just depends upon how you, how you term it and things like that. That’s, that’s another discussion for another.
Tersh Blissett: Oh yeah, that’s a rabbit hole. We can dove in for sure right now. I appreciate, I appreciate all this information Jim. And the people in the comments, they’re all they all appreciate it, too. I mean.
Josh Crouch: George, guys, for bringing your questions. Georges, Georges always got something good for us. We appreciate you guys interacting with us. And and if you guys that listen to this want to see that spreadsheet go on, these videos are always on our YouTube channel [01:07:00] and our Facebook group. So go look at those.
Jim Kruspe: We can and they can call me or email me and I will try to I mean, the only the only caveat I will give them is I will I will give them a similar spreadsheet that they can work on, but they’re going to have to have a conversation with me before.
Tersh Blissett: Oh, yeah.
Josh Crouch: And Jim, if you want to, I have your email and number, so we’ll I’ll get that to Tersh so we can get it in the show notes and stuff like that. So people want to call. Otherwise his website’s been scrolling at the bottom of the screen. It’s P and I don’t remember what it is.
Jim Kruspe: It’s called Hey Y folks in Wisconsin.
Josh Crouch: Yeah, yeah. There you go. So you can certainly visit that, too and reach out that way. I know he’s usually LinkedIn, Facebook. I mean, you probably reach Jim on a number of ways, but a lot of really good information. You’ve been doing this a long time. Jim and I have been talking on and off for God probably a couple of years now.
Jim Kruspe: Yeah, yeah.
Josh Crouch: So always, always good to catch up with you and really appreciate you. Bring in some insights, some really good conversation [01:08:00] topic today.
Jim Kruspe: Well, no problem. I sound like a midwesterner to people below Kentucky and sound like I sound like a good old Southern boy for the people up north.
Josh Crouch: You sound southern to me. So tell your tell your client I know you’re on site. Tell your client thank you for letting us a few extra minutes here because I know we went over when you were supposed to start with him. So.
Jim Kruspe: You know, it’s not it’s not an HVAC company. It’s a landscaping company. So. Well, that’s cool. We’re just selling a different widget, right? Yeah. Oh, yeah. So so I’ve got to know your numbers on the owner and selling time, right. Time for money and that is providing a service. And you know, we’ve got to it’s up to guys like us to really kind of not glorify what we do, but show the importance of what we do for our economy. Right. If things go down, there’s a lot of problems that can go down and we can fix them. So.
Tersh Blissett: Absolutely.
Jim Kruspe: All [01:09:00] right.
Tersh Blissett: I appreciate it. We appreciate it. And if anybody has any questions at all, don’t hesitate to reach out to Jim. Josh, myself. And we get you connected with Jim. And until we talk again next time, I hope you have a wonderful and safe week. And next week we will actually be at the Air Expo. So we’ll be.
Josh Crouch: There. Come. Come say.
Tersh Blissett: Hi. Yeah, absolutely. Absolutely. All right. Be good. We’ll see you.
Jim Kruspe: Go, doll.
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