6 Metrics To Always Know About Your Home Services Business
Running a small to medium sized home services business has probably never been tougher. The competition in the space is fierce and the way consumers shop is changing everything. While everyone seems to have small business advice, here's a few important numbers for business owners to always keep top of mind as you navigate the waters.
1. OVERHEAD COSTS
Good ‘ole overhead. If you are like most small to medium sized businesses, this number never seems to go anywhere but up. Tracking this number monthly will help you to understand where spending can be trimmed to increase margins. This number can tend to get forgotten for a few months at a time because it’s not tied directly to sales revenue trends.
2. CASH ON HAND
The phrase “Cash is King” was coined for a reason—without it, your business is toast. When it comes to home services businesses that are project-based like kitchen and bath remodeling, landscape design/builds, architects and interior designers, and pool installation companies, cash flow is a huge and challenging problem to keep in check. As they say, knowing is half the battle and it is very true when it comes to your cash on hand. Don’t just know how much you have, know how long it will last based on your overhead expenses.
3. SALES REVENUE/MONTH
This one’s often easy for small business owners. They look at the dashboard view of their accounting—most often Quickbooks—and there it is. While this is certainly important for trending sales and making decisions, the real magic happens when you dig deeper using this metric. In order to calculate more detailed and telling metrics like return on sales, your sales revenue needs to be spot on.
4. JOBSITE PRODUCTIVITY/EFFICIENCY
Quite possibly the hardest metric to keep in check with the most moving parts, this is also where margins get chewed to shreds in a matter of days. Business owners in the home services space are often spread extremely thin, managing an overflowing plate of responsibilities. An installation crew’s efficiency is absolutely key to keeping healthy margins and growing a business.
5. COST OF CUSTOMER ACQUISITION
Ah Yes…all those late evening appointments at the dining room tables of prospects spanning your entire geographical coverage area. These are often chalked up to something businesses operating in the home services space just need to do to close jobs. Well that may be. But these meetings—and the time spent preparing for them— are so time-consuming and so expensive to your business and work-life balance. Your cost of customer acquisition is important because it can identify opportunities to become more efficient in your sales process. This number is simply all the expenses a business incurs while landing sales. Total marketing and sales expenses divided by the number of new customers in a given time period.
6. ROI PER MARKETING CHANNEL
What are you spending on marketing every month and what portion of it is actually working? That’s the golden question. And for businesses with annual revenues between 3M-8M, this marketing spend is very valuable and limited. The best marketing money spent today comes in the form of marketing automation software with dashboards that provide you up-to-date information on where your leads and customers are coming from. HubSpot—the leading software company in this space—will literally transform the way you run your business. In today’s new world of the super independent, educated consumer, knowing what is working in your company’s marketing efforts has never been more important.