Do you know why your moving company is losing money? No?
Well, your moving company is losing money for one of seven reasons. From damages to your payroll is too high.
What I am going to attempt to do is give you those seven reasons, with what I hope are good ideas in preventing the loss.
Seem fair to you?
Then let’s get started, shall we?
Damages and loss
Damages and loss are some of the biggest contributors to your moving company losing money.
Those dollies and pads aren’t cheap…as you know. So when your guys decide to get lazy one day and fail to do a simple walkthrough to get everything you lose money because left something behind.
And don’t discount the small stuff, either. It all adds up.
And the reason for this is because you don’t have a clear process to prevent this. You don’t have clear and enforceable rules that ensure compliance to a simple 1-minute action that could save you literally $1000s a year.
The solution is easy:
- Establish rules
- Create a checklist assigned to one person
- Have penalties (typically loss of money or work) when it is not done.
The key to making this all work is that you have one person that is responsible. That is typically your crew leader. And it is this person that bears the brunt of any penalties…
Something gets damaged or lost and the crew leader has to eat it…I guarantee two things is going to occur:
- The guys quit. Which is good because that proves he was an idiot
- Or it never happens again and he starts doing his job of training and ensuring those under him do what they are supposed to do.
Preventing loss starts at the top. Meaning you. Ultimately you are the boss and the buck stops with you.
So man up!
Poor Sales Closing Ratio
One of the biggest reasons your losing money is you‘re just not closing enough sales.
The money lost in sales that were not closed is tremendous. Not to mention the money lost in procuring that lead, the time and money spent in either going to the home for an in-home estimate or the pay you had to give to have someone to talk with them on the phone…
That all adds up.
If your closing ratio is less than 60% then you need to change what you’re doing when it comes to sales…
Up to and including firing your salespeople.
(If you have a poor online reputation could also be a factor in this…but we’ll discuss this a little bit later.)
The most common reasons for poor closing ratios are:
- Shitty sales script.
- Little to no follow-up.
- No sales training.
- And no support for the salespeople.
Or, it’s a combination of all those reasons above.
To correct this you just need to get the point(s) above in that are out. Simple.
Your Prices Are Too Low
This happens more often than not. Movers setting their prices way too low to be anywhere close to being profitable.
If you’re good to a great mover, then why are you discounting your services?
If you have a cheap mindset then your only going to attract cheap customers. So, one of the first things you need to do is change your mindset and recognize that you should be paid for your skill level.
Seth Godin says that there is no winner in the race to the bottom…and it’s even worse if you come in second place.
You should pay your guys well. And you should make enough profit to support those higher wages for them.
I have a few articles which you can read here and here.
Quantity over Quality is a myth.
If you think that you’re going to make more money by charging less so that you get more moves you’re highly mistaken.
It is commonly known that cheap customers tend to be the worst customers and more prone to complaints, leaving bad reviews over silly shit, insurance claims, and just plain scams.
I too fell into this trap when I first started my moving business…but quickly learned the facts.
By catering to the high-end white-glove moves I made far more money in one move than I would in doing 5 cheap moves…
Plus my guys got tipped more often…and better.
The Wrong Demographics
A large reason why you’re not charging enough is that you are targeting the wrong demographic.
Like I mentioned above cheap customers will be your biggest headache. They’ll be your problem children.
Not only that…they can’t afford movers. This is why they are always trying to scam you out of rates that you charge.
Instead, you should be targeting the people that can pay you and pay you what you’re worth.
Stop nickel and diming.
Join the big leagues where you should be. Let the Two Meth-Heads and Rusted Pickup guys handle those cheap-ass customers. You handle the guys that can appreciate your service.
And laugh your ass all the way to the bank.
Poor Financial Planning
One for one, every time I talk with a mover and they claim they are not making enough money, or indeed losing money…I find that they have no — and I mean none — financial plan.
I can’t understand how you can know what money is coming in and going out without a financial plan.
You have to be spending money that you don’t have truly to spend without a plan. There are no two ways about it.
With a good and complete financial plan, you can control spending. Because if it’s not on the plan you shouldn’t be spending the money.
Hard, Do-able, Realistics Goals
A major factor in doing financial planning is setting realistic but hard, doable targets and goals…
You can’t hit what you don’t aim at.
When I ask movers, “do you have an FP?” They’ll inevitably ask me, “what’s that?” I tell them and they’ll respond, “yeah… I have a P & L.”
Hey dumbass…that’s NOT a financial plan. What part of “plan” did you not understand?
I mean, setting targets and goals are literally in the name “Financial Plan” but yet few, if any, ever do this one vital step.
I don’t get it.
Have To Make Your Plans Known
Finally, when you do get to the planning part of the financial plan you then have to share them with your crew and staff.
This is vital. If you keep them to yourself then the team can’t help you achieve the goals nor can they help celebrate the successful completion of the goals.
That violates what a team is. You can’t run your business without a team.
If you were a coach of a high school football team and you never shared with the players you excellent plays…how well do you think that team is going to do?
Not well, right?
It’s the same for your company.
Bad Reputation and Customer Service
Poor customer service with a Bad company reputation will spell disaster for every company…not just a moving company.
If your movers are causing a lot of damage as we mentioned above you’ll not only lose money due to damage claims and such, but you’ll start to lose money because of no one calling you.
This will also contribute to a poor closing ratio…
So you can see quickly that having bad customer service/bad reputation will kill your profits and cause you to lose money like water through a sieve.
Just hiring anybody off the street with a pulse because you’re slammed and you need bodies is the worst decision that you could make.
And if you’re keeping track, as you should be, then you’re going to know who the bad apples are…
You need to replace them NOW!
Don’t wait. Don’t pass “Go”.
Hire slowly…fire quickly should be your motto when it comes to bringing people into the company.
Too Many Bad Reviews
Review sites like Yelp, Angie’s List, the BBB and so on are a double edge sword.
In one respect we need them because they’re a great source of business…
In quite another respect, they can kill our business if we have a lot of bad reviews.
Bad reviews are caused by many things the chief amongst them is a bad crew that is causing a lot of damage.
If you have a bad reputation, then you need to handle that. You need to admit that you have a problem, fire the guys causing the problem, re-hire as many or all if you need to…
It’s time to get drastic.
And you need, personally, to have the discipline to do this. You can’t be a pussy and be a nice guy…
Trust me, it doesn’t work. I speak from experience.
Being Cheap With Damage Claims
Oh…this is a big one.
I know when you’re a new company and you don’t have the cash a large damage claim can seem like the end of the World.
And we all know that customers will take advantage of this and you.
You have to let them.
When you’re a young company with not a lot of 5-star reviews you are kind of held hostage. It’s a shame but it’s true.
So being cheap with what you’re going to pay on any damage claim is like cutting your own throat.
Pay that claim…it’ll be cheaper in the long run.
Because if that customer gets pissy…and they will…you’ll get a bad review and that one review could kill or severely hurt your online rating causing you to lose business.
So if you tell the customer that they are only getting the basic $.60/lb/item bullshit because they are an f**king loser (or some other offensive wording) you can expect a poor review…
Can you afford that bad review?
Well, unless you have at least 100 5-star reviews the likelihood that you can absorb that one bad review is minimal.
Buy them a new friggin’ TV fer cryin’ out loud.
Bad Marketing Sources
A huge area where your moving company is losing money is that you are spending money on shitty leads and sources.
I can’t believe how many times I’ve heard people say that they buy leads. What!? Are you kidding me?
First off, those leads are shared between all the moving company lead providers. Did you know that? I doubt.
Not Tracking Your Lead Sources
Many of you are not tracking your lead sources. And this is fundamentally the largest reason why you losing money in your moving company.
Oh sure…you may be asking everyone when they call or email “how did you hear about us?” But are you actually recording them in a spreadsheet or some other option? No…you’re not.
This is where a good CRM comes in. Most of the CRMS on the market will not only capture this data for your they’ll record and analyze it too. The best software on the market IMHO is Movegistics.
But almost any CRM worth their salt will have this function.
Knowing if those bought leads are producing the ROI that should expect will save you countless time and money.
And that leads me into…
Not Monitoring the ROI of Your Sources
You have to know what ROI is and how it can help determine exactly which leads source is worthwhile and which is not.
Originally I was dead set against ever sending out postcards because 1) they were expensive to send out. And 2) I heard that I could only expect a 1% to 2% reach from the cards…
When I started keeping track of ROI versus cost what I found was that postcards far outperformed bought lead hand over fist.
Most of you will determine what leads sources you want to use based on cost…that is the dumbest shit ever.
You have to track ROI (Return On Investment).
Payroll to Profit Percentage is Off
This should be common sense after this long article.
But paying your guys too much is a large contributor to why your moving company is losing money.
And the fix is raising your rates so that you are paying the right ratio.
Your payroll should not be more than 35% of your total money collected or hourly rate.
What this means, assuming you pay your guys by the hour, your hourly rate should be 70% to 75% higher.
Let give you an example: If your hourly rate were $100/hr then your payroll would take up $35 dollars of that every hour.
This goes for paying flat rates as well.
If you collected a $1000 for the job – as an example – then payroll would be no more than $350 total.
Anything other than this you’re losing money and profit.
You would want to be only 25% of the hourly or total collected.
You will be surprised at how many times I’ve noticed that some of you are paying 40% and even 50% of your hourly to payroll…
And most of you doing this are cheap movers.
Simple fix: Raise your rates. Get a better class of customers.
This is a huge article with a lot of very useful information. Not to mention the links scattered throughout to other articles and videos that will really clarify what I am speaking here.
You quite literally got a college course of info in this one simple — but long — article.
If you study this well, apply it, you’ll stop the bleeding and start making a lot of money…
THe kinda money that will build that lifestyle that you’ve always wanted and created your business to accomplish that.
Can you imagine a year from now after applying this data to what your life could be…?
I know that I can…
Go and do something great today!