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HURDLES IN THE PEST MANAGEMENT INDUSTRY – PART 1

In the first of a two part series, Peter Cox provides some tips on how to improve your profitability, cash flow and overall job satisfaction.

I have put together a list of what I see as the stumbling blocks in selling your services and ancillary products to your customers and as such have an effect on profitability, cash flow and your enjoyment in opening the door of your vehicle each day. How affected are you by these, and can you change the way you manage the business to overcome these pitfalls?

1. Solely competing on price

How many times have I heard over the last 25 years, and how many pest management operations have gone out of business structuring the way they do business on the false premise that consumers and commercial customers base their buying decision on one and only one thing – price. If this were the case you would not be in business.

Yes, there are consumers who spend their whole day on the phone ringing around the district to get a price on removing a European wasp nest, but fortunately they are in a minority. How about looking at developing a unique selling offer so that the customer wants to deal with you. You do have a unique selling feature, you just need to discover what it is and condense it to three or six words. Next time, while watching the television just look at the advertising by nationally based organisations and note the unique selling proposition at the tail end of the ad.

2. Not enough turnover due to location and level of competition and competitors’ location

If turnover is falling then there are two things you can do. As already mentioned, the first thing most businesses do is cut their price. Only problem with this is that you will probably not sell enough of your time to get back the gross profit you have lost, particularly if the competitor matches your price or goes below it. If you need to relocate make sure it is for the right decision and not because the weekly rent is cheap or the premises purchase price is the lowest in town. If moving location is out of the question, it is important to drive your unique features by way of service, staffing or product range, to name just a few.

3. Pricing again

I find it quite amusing that in every workshop I have conducted in this industry over the last 25 years – and I mean every workshop – competitors get a mention. And guess what is said to me in every workshop, how can we get our margins up while they are undercutting us on hourly rates, product etc. ‘We never do this, it is always them!’ Everyone points the finger at everyone else in this industry. Of course you need to be competitive but you also need to cover the overheads, if you don’t, you go under.

If you need to be competitive on price then you have to get your product/service mix correct and understand the importance of stock turns, debtor control, and negotiating with creditors. In summary, you need to understand your cash cycle, a subject I have previously written about in Professional Pest Manager magazine.

4. Not knowing the marketplace because there is no information available

It is quite incredible in 2015 that businesses compete in a marketplace but have no real time knowledge of the marketplace they are in. Today, more than ever before, information is available to develop marketing plans to change the sales mix to suit the customer mix. The internet is an excellent tool, and suppliers are also a useful source of local market data in the products they provide.

These are just four hurdles that need to be jumped. In my next article I will complete the list of 10 challenges to overcome, with some simple strategies to overcome them.

Peter Cox, Peter M Cox & Associates