Ecmweb 6102 Electrical Construction Residential Service Basics Pr
Ecmweb 6102 Electrical Construction Residential Service Basics Pr
Ecmweb 6102 Electrical Construction Residential Service Basics Pr
Ecmweb 6102 Electrical Construction Residential Service Basics Pr
Ecmweb 6102 Electrical Construction Residential Service Basics Pr

Residential Service Company Basics

Feb. 18, 2014
Why focusing on too much at once can bring business down.

Residential service can be a profitable addition to your business, but there are certain steps you must take if you plan to move your business in this direction effectively. The first thing you should do is separate your construction department from your service department — both financially and operationally. Let’s discuss the financial side first.

You must separate all of the general ledger accounts on your income statement. This allows you to properly track your sales and costs for each department. By doing this, you can see if you made money each month — and where the dollars truly came from. A lot of contractors don’t take the time to do this; therefore, they don’t really know if their service department is carrying their construction department, if it’s the other way around, or if both departments are healthy.

Patrick Kennedy

In my experience, most electrical contractors are not charging a high enough hourly rate in their service department. There are more costs to cover when you have a service technician driving around town than when he is on a construction job site. A good service tech is typically only 50% to 60% efficient. There’s lost time spent on training, picking up supplies, and managing a mini warehouse. Plus, add in drive time and even time spent discussing the different job options and pricing with the customer. All of this happens before he actually gets to do any “work.” If you don’t separate the numbers each month, how will you know what to charge?

Operationally, most electrical contractors use the same electricians for both service work and for new/remodel construction jobs. They send electricians to a construction job in the morning, and then expect them to clean themselves up and get themselves ready for the homeowner in the afternoon. This is a common — and understandable — practice in a small company because there may not be enough service calls to keep your electricians fully busy. However, I highly encourage you not to do this.

Being “ready” for the customer means they must be physically prepared (clean and tidy in appearance — from polished shoes to clean shaven face) and mentally prepared (ready to discuss Mrs. Jones’ problems with her in a professional manner). Think about it from your electrician’s position. It’s a lot to ask of him to be able to handle these two different fields of work and be equally successful in both. So keep your service electrician in the service department — don’t expect him to do construction work too.

Service, quality, or price?

Decide what it is you are going to offer your customers. You can offer incredible customer service, quality products/warranties, or the cheapest price. You can’t deliver all three and be profitable and successful. Pick the top two — don’t try to offer all three! I choose to offer awesome customer service and the best quality products and warranties. We are not going to be the cheapest guys out there. However, we will be the best, and we will be around years from now to support our customers and honor our great warranties. Let the customers decide what they want.

The right fit

You must pick the right electricians for the job. If you don’t have them, then hire them.

Not all construction electricians fit in the service world. In all of my years of experience, I have found the following characteristics work well for a residential service electrician. They need to be:

Clean cut. This means short tidy hair, no visible tattoos, and they must be willing to shave each day before coming to work.

Personable. Have a happy, warm smile. Be able to fit in with all types of people.

Comfortable dealing with the public. It’s not acceptable to just be “okay” with dealing with the public. He/she must actually like it and thrive on it.

Trainable, open-minded, and willing to try new things. Running a successful service company requires a very different approach to business today.

Able to pass regular drug testing and thorough background checks. In other words, this electrician must be someone I would be comfortable sending out to my grandmother’s house at 11 p.m. at night.

According to Kennedy, the most successful service contractors separate all of the general ledger accounts on their income statement, enabling them to properly track sales and costs for each department.

My ideal candidate is a qualified electrician who has between five to 10 years of experience. They are technically knowledgeable but still eager enough to learn new ways to deliver our services.

What traits do you look for when hiring a new service technician?
Share your thoughts with us in our new Electrical Discussion Forum.

Sales training

The way service is delivered and expected by today’s customers requires a whole new way of doing business. To succeed in the residential service business, you have to step out of the box and refrain from old ways of thinking.

Are you going to hire sales people for this service department, or are you going to have your electrician handle sales? This is an important consideration. Most will have their electrician additionally trained in some “light” sales. If your electrician is also going to handle those sales, you need to hire a person who likes doing this. Remember that most electricians didn’t get into the industry to do sales, although it is a necessary part of the service world.

You need to train your electricians not only in technical skills and how to deliver awesome customer service, but also how to educate the customer that your business and your service is the best choice for them. That means your electrician must be able to close the sale. For some electricians, this is a sensitive and difficult topic — one that deserves an entire article, which will be addressed in a future issue.

Price your services correctly

The old way of doing business is the “time and material” method — where you charge an hourly rate for time spent on a job and an additional charge for materials used. I have found that a straightforward pricing process is the most successful pricing method for my business. From my customer’s perspective, they get a set price up-front, and they know what to expect no matter what happens. They can approve or disapprove the job before the work is done and not get sticker shock/hefty bill presented to them after the job is finished. From the electrician’s standpoint, once the customer has made a decision, it gives the technician freedom to do his or her job. Customers are not looking over their shoulders, watching the clock, and asking, “Are you done yet?” For the company, it allows you to charge properly for the work being performed without getting into a discussion on the fairness of your hourly rate. I feel this pricing method allows you to be profitable and properly cover all your costs.

Stay tuned for more tips on how to successfully grow your residential electrical service business and be profitable in the process.             

Kennedy started Mister Sparky in 1996 in Atlanta. That location is now one of the largest and most successful residential electrical service companies in the Direct Energy Services portfolio, based on sales volume. Kennedy currently owns and operates the Mister Sparky franchise serving the greater Sarasota, Fla., area. He can be reached at [email protected].

About the Author

Patrick Kennedy | President and Owner

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