Fence Building . . . (gasp) for Profit! by Tony Thornton

by Tony Thornton

President, Thornton Fence Consulting Group

Fence Building . . . (gasp) for Profit!

Profit is not a dirty word. All fence professionals should place more focus on profit as a short- and long-term sustainable goal. Many make the mistake of looking into the bank account and see if there is enough money to pay the bills and keep the suppliers at bay and this is not a sustainable option for most companies.

Company profitability starts with a mindset of the owner or business partners and must be part of the culture for the company, but how do we establish this mindset? First, we must determine what gross and net margins we wish to build our company on and never drop below this threshold just to get the job. With this stated, a company will have to determine minimum and maximum margins for different aspects of the operation. We might establish a different min/ max margin for residential than commercial and we should be nimble enough to change as local market changes occur and monitoring the global volatility of the market, as well.

To maximize profitability, a company must evaluate the procedures and workflow in three key areas: sales, operations, and installation. If we develop efficient procedures for these areas, we will maximize our profitability.

Efficiency equals profitability and every company can find areas of weakness or challenges that should be evaluated and acted upon. Most owners or management members know where these challenges are and usually know how to improve, but we settle for the getby method, because we are so busy letting the company run us and not running the company. Successful and profitable companies work on the business everyday by being in control and understanding the overall goals and objectives that have been established for the company.

To create a more efficient process for these key areas, owners should build out a workflow chart for each area. A workflow placed on paper and all steps required from start to finish allows owners and team members to evaluate the hot spots that can be modified and changed to offer a most efficient process. I call this the domino procedure and if we have a hot spot that either holds up the dominoes from falling or takes too long to continue, we need to correct immediately. If you require a workflow chart example, please contact TFCGroup and we will be happy to support you.

An open and honest discussion with your management team will help understand the challenges/weakness and the strengths of your company. With this information, a workflow evaluation can be done in each of the areas mentioned above: sales, operations, and installation.

Fence build profitability started at the company profitability level as we determined that we are going to run the company and establish our min/max margins that we expect to achieve. My opinion is that more $100 bills are burned due to the lack of operations procedures. The second area of wasted money is the inefficiency of our installation when using in-house labor force. Companies that use sub-contractors know exactly what they have contracted for and, regardless of work hours, we have an established total. The cost of goods (COG) and operations are the vital areas that must be evaluated.

With an in-house labor force, any time that a crew is not loading for a job, on the job, or returning from the job, this crew becomes overhead and must be calculated into the overhead percentages of the company.

Another area of efficiency for fence build profitability is the actual on site/on job method of installation. Production levels will vary across the country but a min/max average and footages of installation for all types of fences can be established. The most successful in-house workforce companies place a huge emphasis on training for their crew members. When a company trains the industry best-practice methods and holds them accountable to perform these methods, a company enhances production levels on all fence builds.

A philosophy for me when I was installing was to never take a wasted step; there is always something to carry, pick-up, or take back for a more efficient installation. The same domino procedure is used here, as well; always ask yourself what the next task is and look two to three tasks ahead. Learning the best practice methods for efficient installations will maximize company profitability.

Remember, profit is not a dirty word! Let’s embrace methods to enhance our company’s profitability. This content is an excerpt from the Fenceline to Success training manual provided as the Fence Contractor Super Summits.

Tony Thornton is a 45+ year veteran of the fence industry and is a subject matter expert in all areas of fence and gate automation. His passion is to elevate and promote the fence industry in a professional manner and provides consulting services to support fence industry owners in understanding how to implement effective procedures into their operation and maximize their profitability.

Thornton Fence Consulting Group 4261 East University Drive PMB #30-108 Prosper, Texas, 75078 Phone: 972-533-3658 Email: info@fenceconsultinggroup.com Website: www.fenceconsultinggroup.com