The jelly basket. I travel a lot and I’ve learned how to spot a good breakfast restaurant by applying these two benchmarks to the jelly basket at the table. The first deals with quantity, while the second addresses presentation. If the jelly basket has lots of brand-name strawberry jam (preferably Smucker’s) and some grape jam, you’re probably going to get good service and a good meal. If the basket is filled with grape but no strawberry jam, you might go elsewhere. If the basket is filled with no-name orange marmalade but neither strawberry nor grape jam, you definitely should go elsewhere.
Second, but of less importance, is the presentation of the jelly basket. If it’s in disarray, that’s strike one. If it’s missing altogether and the waitress has to go find it, that’s strike two. If, when she returns with it, it’s filled with orange marmalade, you got it – strike three.
No stooge here.
I met an irrigation contractor from the East Coast at a seminar I conducted. He wanted me to benchmark his company. However, his wife thought my services were a waste of time and she didn’t hide her feelings the morning of my one-day visit with them and their company. I told them not to tell me how much they were charging for their products and services. During the remainder of the morning, the three of us reviewed financials and prepared a thorough budget for the upcoming year.
After lunch, I calculated their irrigation service technician’s rate and told them they should be charging at least $75 per man-hour. The wife grinned, looked at me and mockingly pronounced, “We’re already charging $85 (per man-hour).” I could tell she wanted to put her thumb on the end of her nose, give me a Three Stooges’ salute, and say, “See, we don’t need your services after all.”
I knew this was a good rate to charge. It handily beat my national minimum service technician benchmark rate of $60 per man-hour. I also knew I really wanted to humbly say to the wife, “Gee, don’t I look foolish.” But I held my tongue and asked, “Tell me. How do you present your rate to your clients?”
The husband volunteered that they charged the $85 to show up for a service call and the technician would spend up to one hour on the client’s property. Time after that was billed out at the same rate on a pro-rated basis.
As I had previously thought, their service technicians were working a nine-hour payroll day but were only charging for seven or eight of the nine man-hours. Each day they should have been billing $765 (9 x $85) but were missing one to two man-hours of billing per day.
I recommended they keep the $85 show-up rate but only give the client up to thirty minutes for it. After the thirty minutes, they should bill the technician’s time in fifteen minute increments, or parts thereof, at a rate of $21.25 per fifteen minute increment ($85 ÷ 4). The husband said that would be fine and the clients would willingly pay it. I then added that this would give them at least one more billable man-hour per day per technician at $85 per man-hour.
I then said, “That’s an extra $85 per day for 22 days per month or an additional $1,870 per technician per month.
“That’s $1,870 multiplied by seven months per year or an additional $13,090 per technician per year.
“That’s $13,090 multiplied by your 11 technicians or an additional $143,990 of revenue per year.”
I wanted to give the wife the Three-Stooges’ salute and say, “I guess you don’t need my services.” Fortunately, my good angel and professionalism prevailed, and I let the arithmetic do the talking.
It amazes me how many irrigation contractors have good service rates but have no clue how to present their rates to their clients. It had cost this contractor hundreds of thousands of dollars over the previous five years. And that was all profit.
Stay out of trouble.
Not all restaurants serve good breakfasts. The trick is to find the good ones and eliminate the bad ones. Studying the right little things like a jelly basket can help you in your quest.
Not all irrigation service companies make money. This company was making money, but it could have made a lot more. Many irrigation service companies get themselves into serious jams because they don’t study the right little things. You not only need to have a good rate, but you also need to know how to present it to your customers.
You have to study the right benchmarks because, as we all now know, not all jams are created equal.