Work organization of service

Recently, Service Adviser have been contacted by people who would like to open their own service equipment maintain business. Usually, these are technicians- professionals, who through the years have accumulated certain customer based and asking themselves quite reasonable question: why should I work on someone, if I know everything and can do by mown and I have regular customers, who will be pleased to work directly with me?

We are trying to help to all addressing and don’t charge them for our advices. What is more, 2-3 times per moth our professionals conducting “open consultations” for free. It is enough just to send a request for a free consultation via email And our employees will contact you via skype in prearrange time. But since question are often repeated, we have decided to write the article for you consider the most typical situation using the example of one appeal.

How to start business development?

One week ago, Alexander referred to us for advice. Alexander is a specialist in repair and maintenance of gas piston power plants. He works as an employee, but he would like to switch to freelancing and develop his own service company in the Volgograd region. Alexander understands that only technical experience and personal connections to organize a profitable business may not be enough. Like many others, he doesn’t know where to start and whether to start at all, what is the probability of success? The goal that he sets himself: a service company of 150 to 400 people, bringing a stable profit.

So, we have a task. The first thing we did was search on the Internet how many companies offer repair and maintenance services for these kinds of power plants in the Volgograd region. They turned out to be a lot, more than 20, we considered, simply by entering this phrase into a search engine. Obviously, the market is highly competitive. Moreover, many companies offer a full range of services: from repair, maintenance and supply of spare parts to the sale of new equipment and the purchase of old by trade in. Alexander could offer nothing of the kind. His main advantage he saw was professional reputation, personal connections and lower prices than competitors. He asked us to give him a “system”, by working on which he would be able to defeat all competitors and achieve his goal.

Service development system

Systematic work, of course, greatly increases the chances of success, but firstly it does not diminish the importance of sales, especially at the initial stage of business development. And secondly, the advantages of the system, as a rule, are connected with the optimal tuning of all the processes of the organization in which there is a significant saving of time at each stage - from the development of sales to the performance of work and billing. All this allows us to offer customers prices 20-30% below the market, which, with the high quality of work, guarantees rapid growth and success of the service organization.

These advantages, of course, manifest themselves at a certain scale of business. If you have less than 10 people, then you will not get significant advantages over competitors due to the system. The benefits of system work are significant in a company that employs at least 10-15 technicians, a back office, a parts department, and management.

If, in the case of Alexander, it is assumed that the maintenance of one power station requires 10 working days per year, and the maximum load of one technician is 70% (productive time), then to load one technician it is necessary (247 * 0.7)/10 = 17 pieces of equipment.

Service profit

In order to obtain minimal benefits in systemic work, it is necessary to conclude contracts for servicing 17 * 10 = 170 pieces of equipment. Naturally, money was needed to hire, train, and provide all technicians with the necessary tools. To effectively coordinate their work would require an individual employee and a CRM system, an accountant, a warehouse, etc. As a result, the amount of start-up capital exceeded 25 million rubles. Alexander did not have that money, as there were no customers with so much equipment. It is easy to calculate that to solve the problem of Alexander (a company of 150-400 people) it would be necessary to service 150 * 17 = 2550 pieces of equipment. This is the scale of the company at the federal level, and not a separate region.

What is more, you don’t have to forget, that competitors work has been going for a long time. If you have nothing to suggest to clients except quality and low price, it doesn’t guarantee a success. It is necessary the detailed analysis and client’s segmentation, defining the priority segments. Obviously, that most of them are interested in complex way to solve all questions, connected to service equipment maintain. And without independent delivers organization of spare parts, as well as without the organization of sales of new equipment, the price advantages would not be enough.

Eventually, we recommended to Alexander, if he would decide to develop an independent business to concentrate on quality of service for excising clients, use the word of mouth and set up a supply channel for spare parts at competitive prices.

Few years will pass before his service business will grow, and we can really help him. Unfortunately, magic pills don’t exist, and we don’t take money for the work which won’t bring benefits. But we promised him a free help in certain questions related to company structure as it develops