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Business Solutions for Maximizing Profits

March 2009

Since 1992, NSPG has been providing the tools that allow contractors to increase profits and minimize business hassles. With our simple-to-use-tools, you can make being a business owner what you always wanted to it be - successful, profitable and rewarding.

Million Dollar Salaries and Your Prices  
Lately, the news has been filled with stories of financial executives making millions of dollars and constantly needing more.  Believe it or not, the reasoning that leads to these sometimes unreasonably high salaries is also used by many small businesses set their prices.  In both cases, the thinking is probably wrong.

In the financial industry, a business is often judged by the salaries it pays.  The higher the salary, the better the company must be.  Over the last few decades, executive pay at wall street firms has risen many times faster than other high level salaries. 

The reason given for these increases is that they are needed to attract and retain the best and brightest.  This is what makes the company the best.  We pay the most to get the smartest guys, so we're worth more than the other companies doing the same transactions.

The prestige of many financial companies is judged by salary level alone.

For financial firms, the fallacy in this thinking lies in the fact that they choose from thousands of qualified applicants for each job they offer.  If these businesses were run rationally, supply and demand would force their salaries to a much lower range. 

This does not happen because the people on the salary committee lose nothing by paying too much.  In fact, they can gain by setting salaries higher than necessary because their salaries are often set relative to other industry salaries.  When they give other people a raise, the are effectively giving themselves a raise.  The biggest losers in the scenario are the shareholders.

So, how does this relate to my business?

The service industry suffers from the opposite mindset.  In many markets, prices are dragged down by the companies that believe that their services are judged by price alone.  The lower your price, the more business you will receive. Anyone who charges a price that is higher than yours is gouging his customers.

The rationale for the low-price-at-any-cost business is that consumers will always choose the lowest price supplier.  Lowering your price will bring in more business.  You'll appear to be more successful because your people are always busy.  You have a huge customer database of people who have chosen the lowest cost company.

Who cares if you make little or no profit on each job.  You can make up for it by working more hours, hiring more employees, and paying lower salaries.  Your cash flow is tremendous, and it feels like you're doing well even if there is no profit at the lowest price point.

But, like the super high paying financial system, the owner of the company is the biggest loser.  No company can operate forever with little or no profit.  No employee can work forever at the lowest salary level.  No supplier will get paid when a no profit company has a slow down.  Even the competition is hurt by the lowest price operations who convince the market to expect to get more than they pay for.  Everyone loses.

The idea that ties the super rich financial industry to the rock bottom prices in the service industry is the disconnect from supply and demand.  The rich are paid more than they are worth because there is no connection between salary and performance.  The low price service business charges too little because there is no connection between the price charged and their costs.

Neither situation is sustainable forever.  The rich will eventually be reined in by the shareholders or government regulation.  The lowest price business will disappear because it will run out of money.  At least in the service business case, the solution is supply and demand not some outside entity forcing a solution.

The prudent course for any business is to know your costs, and charge a price that earns you the profit you need.  If the business you're in allows you to set your price so you pay yourself a million dollars a year, do it.  That's why you're in business - to do the things you want and to earn the money you deserve.

Paying yourself and your employees a ridiculously high or low salary makes no sense.  The market and the services you provide will set the limits for your business.  Know your costs, set your profitable prices, present your business professionally, and earn the rewards.  This should apply to Goldman Sachs just as it does to your business.

The products and services that we provide here at NSPG can help you learn the limits for your business, and improve the profits you can earn within those limits. The professional organizations we highlight at the bottom of each newsletter can also help you build you business so that you can achieve your service and profit goals.


National Standard Price Guide & Numbers Cruncher Hints
Here are a couple of hints on how to get the most out of your NSPG  software.

Free Online Updates
NSPG Flat Rate Price Book Free UpdateAt the bottom of the File menu are a couple of buttons you may not have used on a regular basis.  The On Line Updates button will open your web browser and take you to the Free Flat Rate software update page.

You can download the latest version of the Guide that includes all improvements and fixes. Just click on the link to begin the download.  Then run the install and you'll be up to date.  It's Fast, it's Simple, and it's Free.

Automatic Data File Transmission
Both the Price Guide and Numbers Cruncher have a button to easily send us your data files with just a couple of mouse clicks.

For the Price Guide users who want to have their Flat Rate Books printed by us, this is the easiest way to get your data files to us. You can also use this button to get your file to us to take advantage of our data evaluation services.

A single click on the Send File button will compress your data file and send it to our secure support server. No fighting your email attachment limits or trying to figure out how FTP works.  Just click and go.

Getting your data to us for your custom printed books, and the Premium Numbers Cruncher Review Service has never been easier.

- - - - - - -

Give Mike Conroy a call to discuss your business, your numbers, your performance benchmarks, or your flat rate books.  Take advantage of his experience working with hundreds of companies like yours to help you achieve your own business success. 


Measure Monthly, Adjust Quarterly
 & Achieve Your Annual Profit Goals


Click Here to Crunch your Numbers Today!


 On-Line News

Solar Powered Wine

Roger the Plumber

Burning Water

Sappy Electrician

New Iowa Electrical Law

 



Call 800 841-8542 today
to learn about our
easy, no interest,
multi-payment plans for
NSPG software products.

In This Issue

Phone 800 841-8542
Call today to get your own Flat Rate Price Books printed by the experts at NSPG. 
No software needed.
800-841-8542

Numbers Cruncher

National Standard
Price Guide

Performance Dispatch Plus

Call 800 841-8542 today to learn about our
easy, no interest, multi-payment plans for NSPG software products.

Keep your company name
where they can find it!
Wrench Magnet - Get them to call you again!


Freebie of
the Month

The freebie of the month is a web site or product that we feel gives you something worth looking at or using that costs you little or nothing.

This month's freebie could be something you pay for through your local taxes.  Free audio books from your local library.  Over 8,500 libraries offer large collections of books in electronic format that can be played on iPods, MP3 players, and cell phones.

For most libraries, you sign in with your free library card, select the books of interest, and download it with the Overdrive eBook manager.  You can then transfer the book to your portable device, copy it to CDs, or listen to it on your computer.

Listening to eBooks is a great way to fill the time while commuting, or when going from one job to the next. Whether it's complete Twilight Zone shows, or the latest business book, there's bound to be something to interest you.

If you have a favorite Free site, let us know.
nspginfo@nspgweb.com


Quotations

Play: Work that you enjoy doing for nothing.
                   Evan Esar

Opportunity is missed by most people because it is dressed in overalls and looks like work.
           Thomas A. Edison

What's the difference between a boyfriend and a husband? About 30 pounds.
                Cindy Gardner

Give a man a fish, and you'll feed him for a day. Teach a man to fish, and he'll buy a funny hat. Talk to a hungry man about fish, and you're a consultant.
                 Scott Adams

Last night somebody broke into my apartment and replaced everything with exact duplicates... When I pointed it out to my roommate, he said, 'Do I know you?'
               Steven Wright

For a list of all the ways technology has failed to improve the quality of life, please press three.
                     Alice Kahn


The next Money Mastersģ will be at the Renaissance Schaumburg & Convention Center near Chicago, IL,
June 5 -6, 2009.

This Money Masters will cost you just one business day and one weekend day to visit with owners of successful contracting businesses who will openly and honestly answer all questions you have about running a contractor business. Ask the employees any questions you have. 

Youíll learn about Nexstar - a world-class business development and best practices organization that is helping companies like yours in plumbing, heating cooling and electrical trades. You'll see a shop run on Nexstar systems. First, here a few facts you should know about Precision Plumbing Services:

  • Their service trucks averages almost $400,000 for the company each year
  • Bottom line profitability is 10% on $5 million in revenue
  • They have a vendor managed inventory. They donít own a penny of it
  • They operate comfortably in a 10,000 sq. ft. building
  • One of their biggest growth areas is trenchless main line sewer replacement

All the training, materials and new friends you find at Money Masters are yours whether you join Nexstar or not.

Friday:
7:00 - 7:30 a.m. Breakfast & Registration
7:30 - 12:30 Money Masters Seminar
12:30 - 1:30 Lunch
1:30 - 5:30 Tour of Cole Services
6:00 - 10:00 Dinner & Entertainment
Saturday:
7:00 - 7:30 a.m. Breakfast
7:30 - 12:00 Money Masters Seminar
12:00 - 1:00 Lunch
1:00 - 3:00 Money Masters Seminar

Register for Money Masters Here


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Numbers Cruncher and NSPG Flat Rate Price Books training

 

Wrench Magnet - Get them to call you again.
Truck Magnet - Get them to call you again. 


Ever Wonder

Where Did the Money Go?

    

HVAC Service Invoice                      Portable Desk for forms and invoices
 

    

Call 800-841-8542 now so we can answer your questions and show how we can help you build a more profitable business.

NSPG, Inc. PO Box 1168, Manahawkin, NJ 08050
800-841-8542
201-767-5520

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