Addition By Subtraction: Reducing Your Business’s Service Area

business-servicesA few years ago, towards the end of the year, I got a voicemail from a frustrated business client. The profanity laced message went something like this: “I’m sick of this $hit and want to sell this f___ing business. I can’t take it any more. I want to get together to talk about closing or just shutting it down because I’m sick of this f___ing $hit.”

The business owner was a service provider. He provided a service to homeowners and was perhaps the best in the country at what he did (that’s not an exaggeration). He was based in Iowa, but he would get calls from people in other states, and would often travel to serve people outside of Iowa

Like most business owners, including myself, he felt an obligation to help 100% of people who inquired about his services. But now he was burned out, not to mention that he was having trouble keeping up with the compliance side of his business.

I remember a conversation he and I had, just a few months prior to his profanity laced voicemail. He was bragging about how he’d gotten a call from someone in Connecticut, and had driven out there (from Iowa) to do the job. He got paid $6,000 for that one job — normally he gets paid $1,500 for this same job in Iowa. He was really proud of himself.

But here we get into the crux of his problem.

In our conversation about selling or shutting down his business, I discovered that he didn’t really want to quit, he was just burned out.

Of course he was. He wasn’t just taking on jobs in Iowa, he was traveling all over the place.

Michigan, Ohio, Indiana, northern Wisconsin, multiple jobs in Nebraska and Minnesota, a job in Florida, the job in Connecticut.

Here’s where proactive planning comes into play.

This was the advice I gave him:

  1. Reduce your service area; just because someone contacts you, it doesn’t mean you must take them on as a customer. It’s okay to say no.
  2. Using Connecticut as an example: it took him 2 days to drive out there, 1 day to do the job, and 2 days to drive back. That’s 5 days down the drain. Yes, he got paid $6,000 for that one job. But if he’d stayed in Iowa, he could have worked 4 days and got paid $1,500 per day (or $6,000 total) and slept in his own bed every night. Plus he wouldn’t have had the stress of traveling and being on the road and all the associated travel costs, and he would have made the same amount of money — in 4 days instead of 5, thus giving him an extra day to either take off and relax, or get caught up on paperwork, or take on another local job and make even more money.

I’ve had to learn this the hard way myself. It’s okay to turn down clients or customers sometimes. It seems like blasphemy to turn down a chance to help people and make money. But as illustrated in point #2 above, the “one off” jobs might seemingly pay more … but it might not be the best overall business decision to make.