Keeping Track of Hidden Job Costs when Running a Field Service Business

Do you profits just seem to vanish sometimes? Learn about and avoid these common revenue drains.

As a business owner, you need to remember that the money that comes in the door isn’t 100% profit. You have expenses and overhead that chip away at that revenue, a lot of which gets written off as “the cost of doing business.” To some degree, you can’t avoid this. However, identifying the excesses your business has can help you minimize them and ensure profits.

Let’s look at one common example of a hidden job expense: the items you use when providing service to a customer (not the items you sell them). Think trash bags, paper towels, gloves, or tools. All of these items (not to mention wear and tear to your service truck) can add up over time. In this article, we’ll examine how these considerations should factor into your overall business strategy.

Why track hidden costs?

Your company invests a lot of time, materials, and products into your services to ensure work gets done correctly and that your customer thinks of you the next time they need something. Any time you make an investment, you should monitor and manage it, right? That’s how you should think about your expenses on each service you perform. A thin profit margin can vanish entirely after the purchase of unnecessary supplies. By the same token, profits gained during the month can easily get swallowed up restocking supplies at the end of the month. Some items require maintenance, and some items will break, but if you replace them too frequently, you should consider forming your prices to cover this cost.

Overlooking maintenance schedules for equipment, using equipment improperly, and “extra” supplies getting left on the job site or in the dumpster all contribute to your hidden costs. Let’s take a closer look at each of these items.

Overlooked Maintenance Schedules

Keeping your equipment up to date and in good working condition is an important part of keeping maintenance and replacement costs down. Nobody wants to make surprise purchases of new equipment in the middle of a job, so it is a good idea to create and maintain maintenance and cleaning schedules for your company’s equipment. Think about the vehicles and tools your company uses every day and their condition. 

“Extra” Job Supplies

Everyone likes to come prepared for the job, but this tendency can lead to lost or wasted materials if not kept in check. Make sure that additional job materials brought to the service truck or onto the job site make it back to the office, or that they’re accounted for if partially used. A box of trash bags doesn’t cost much, but if 12 technicians each lose a box a month, that cost adds up! For this section, take a look at what supplies, job materials, and tools you use faster than others, as well as the items technicians keep large quantities of on their trucks. Never spend more for a job than you have to!

How to Find Hidden Costs

Now that we have an idea of where these hidden costs hide, let’s discuss how we can eliminate them. Start with your sales process and work your way down to the final service. Is your sales team aware of all the little odds and ends the service technicians use to complete these services? Make sure your quote accurately reflects the job and takes into account all the small things that you’ll use to get work done.

After considering the sales side, move on to the service department. Do you keep track of who has what tools? What about the truck’s inventory of materials and supplies? While we want to make sure techs have the parts and products they need to get the work done, make sure items don’t get left behind or lost in the truck. A routine “cleaning” schedule can help your service technicians get rid of fast food wrappers floating around, and also find that box of screws they were sure that had in the truck last week.

How to Avoid Hidden Costs

One of the first steps to avoid hidden costs is to always know what you’re buying. When your business purchases general materials for your trucks, make sure to track how much of each item you purchase each month and how much you have left over from the previous month. Performing these regular checks will ensure that the oldest items get used first, and an overstock of an item doesn’t keep growing. 

Talk with your team about your company’s stock of items as well. Technicians will have insight into their needs that might help answer some of your questions about how and when they use common items. Check with them occasionally on the condition of their tools, and find out which tools they currently have in their possession. Have your technicians go through their service vehicles regularly for cleaning and organization. Doing all of this will make them fast, efficient, and good representatives for your business!