The Most Efficient Trades Business
Efficiency can transform your business, so we’ll show you how we make trades businesses more efficient. We are going to use a fictional case in order to turn a very inefficient trades business into the most efficient in its industry. We’ll look to reduce material costs, fuel costs, utility bills, and look to improve personnel efficiency. And don’t worry, a more efficient business is a business with higher quality services so we’ll cover how we implement efficiency measures that also improve the quality of the service.
Our fictional business will be an outdoor construction and remodeling company. Anything outside a building, they do it. They also have an office with warehouse space to hold 2 weeks of materials and the entire building is lit with CFL tubes. They have 10 vehicles, all the same make, model, and age.
If you want to see how we tackle each area individually you can check out our other blogs on that here.
Let’s get started by tackling the biggest expense first. We can make very small changes here that bring a ton of savings in order to help improve other areas. As you know, its materials. Every time you have a job, you are paying a big part of what you earn on the materials for that job. So we’ll start by making changes here. Free changes to implement. These will be small changes but highly profitable as they have no upfront cost.
Using the calculations we covered in our blog about material efficiency, we’ll determine the best suppliers and deliver/pickup methods for each material. Then we’ll make organizational changes in the warehouse to make sure we can store the materials in the way that we need to purchase them. This will reduce material costs by up to 20% in some cases. That will be enough for now. There are more things we can do to improve material efficiency but we will tackle them later as they require a bit more implementation and could be expensive to implement.
Now that we have a lot of extra money from our material efficiency, we are going to fish for some more free savings, and the fish we want always go for the bait. This is the lighting. The entire building is lit with CFL tubes which means we can save a ton of money by simply managing the lights properly. Firstly if a light is not required it goes off. So any rooms not in use, the lights go off. We won’t instal automatic switches yet but we’ll make an effort to always have any lights not in use off. Another area we’ll look at is turning off any redundant lights. Most rooms in older buildings tend to have too many lights so especially during the day we can turn off some lights in areas that get plenty of natural light. These two changes should see our lighting costs go down by 30-65% and we did not spend a single dollar to get those savings.
Let’s tackle fuel now. This we can also do some free changes but they are extremely complex. Check out our free guide on fuel efficiency for that, it’s a lot. We’ll calculate which potential changes are the most impactful and we’ll implement them with 0 to minimal costs. With these free changes we should see about a 5-15% reduction in fuel usage.
Now we’ll go into the paid changes. We’ll firstly plan out what that will be and we’ll stay in fuel for that. We are going to replace certain vehicles. So this company does have 2 project managers that use the same vehicles as everyone else in the company. However, they do not need vehicles of that size as they do not carry any sort of equipment or materials, they simply go job to job to monitor each site. This means that we can replace them for something smaller. At the time of writing this you can get a lease on a Nissan Leaf for only $100 a month on the preimum version or $60 a month on the standard version although those are sold out. So we’ll replace the two vehicles for two of the higher trim ones. We have much more than $200 a month in savings at this point so they will be super easy to purchase without any added funds. These will also save an additional $200 per month each on fuel costs on top of any other earnings made by selling the other vehicles. This will be anything from 12-16% of total fuel costs.
We now have a much more efficient fleet that is also managed more efficiently, let’s make changes to the building. We are going to change out all the lighting for LED lights and then add in automatic switches. We do have a specific method for changing out lighting that puts it into phases. This makes each section of new lighting pay for the next one. In this case we will calculate whether that is required or not as we do have a lot of savings in other areas of the business that we can invest into this change. This change will bring down lighting costs by around 80-90% of the original costs of lighting.
Lets get back to material costs. We’ll talk about purchasing amounts and design limits. These go hand in hand. So for our outdoor construction and remodeling company we have a lot of control with what we do in terms of design. We can set limits on the dimensions of structures based on what size we can buy materials at so we do not have any unusable pieces left over. For the remodeling side, we can always go bigger in terms of the size we purchase as long as the left over scraps have use on other jobs. This should save anywhere from 10-50% on material costs on each job. Some jobs more than others.
Employee efficiency wise we do have some issues. All scheduling and follow up is done by an employee instead of automatically. We’ll calculate to see how much of a loss this is which usually is about 50% of that persons yearly sallary. So with that number in mind we can find a scheduling system that is cheaper than that. This will save some money but most importantly get rid of any small errors that a human can commit by having to do these actions manually.
That is it for this example. We should be seeing about 80-90% reduction in lighting costs, we’ve reduced material costs by 20-30%, reduced fuel costs by 17-32% and we’ve completely improved the scheduling experience and quality control of it.
If you want to see these savings in your business, get started today. We plan and implement all of this for you and we only charge a percentage of what we save you. So you are already paying for our service and losing out on tons of savings. Book with the button below.
Trades EIP Package
Improved efficiency to reduce the biggest expenses of any trades business.
Included is a Material Efficiency Improvement Plan, Fuel Efficiency Improvement Plan, Building Efficiency Improvement Plan, and a Personnel Efficiency Improvement Plan.
Price: 35% of first 36 months’ savings.
