An example of a hidden job expense is items you use when you provide customer service (not items you sell them). For example, trash bags, paper towels, gloves, or tools. The cost of all of these items (not to mention wear and tear on your service truck) can add up over time. In this article, we will discuss how these considerations should be integrated into your business strategy.

Why is it important to track hidden costs?

The materials, products, and time your company invests in your services are all aimed at ensuring work gets completed properly and your customer remembers you when they need something else in the future. Whenever you make an investment, you should monitor and manage it, right? You should consider your expenses in that way for each service you provide. After purchasing unnecessary supplies, a thin profit margin can disappear entirely. Additionally, profits made during the month can easily be swallowed up by restocking supplies at the end of the month. You will need to perform some maintenance on some items, and some items will break, but if you have to replace them too often you should consider setting your prices higher to cover this cost.

Maintenance schedules not being followed, equipment being used improperly, and “extra” supplies being left on the job site or in the dumpster all contribute to hidden costs. Now let’s examine each of them in more detail.

• Overlooked Maintenance Schedules – To keep maintenance and replacement costs down, it is important to keep your equipment up to date and in good working condition. You should keep a schedule of maintenance and cleaning for your company’s equipment, so you do not have to purchase new equipment in the middle of the job. Whenever you can, think about what your company’s vehicles and tools look like.
• “Extra” Job Supplies – The tendency to come prepared for a job can result in lost or wasted materials if not controlled. Ensure that any job materials brought to the service truck or onto the job site are taken back to the office, or accounted for if partially used. Although a box of trash bags doesn’t seem like much, if 12 technicians each lose one a month, that adds up! Examine what supplies, job materials, and tools you use faster than others, as well as items that technicians tend to keep in large quantities on their trucks. Do not spend more than you have to!

How do I find hidden costs?

Now that we know where these hidden costs are hiding, let’s look at how we can eliminate them. The best place to begin is with your sales process and move downward. Do your sales representatives know all the little bits and bobs the service technicians use to complete these services? You should make sure your quote accurately reflects the job and incorporates all the small details that you’ll need to complete the work.

Next, you should consider the service side of the business. Are you keeping track of who has which tools? How about the truck’s supplies and materials? While we want to make sure our techs have the tools and parts they need, we also want to ensure items don’t get left behind. You should have a routine “cleaning” schedule so that your technicians will be able to remove fast food wrappers and also find that screw box they were sure was in the truck last week.

How do I avoid hidden costs?

Knowing what you are buying is one of the first steps to avoiding hidden costs. Track how much of each item you purchase each month and how much you have left over from the previous month when purchasing general materials for your trucks. By performing these regular checks, an overstock of an item won’t continue to grow; instead, the oldest items will be used first.

Be sure to discuss your company’s inventory with your team. The technicians will be able to give you insight into how they use common items so they can answer your questions. Find out what tools they currently own and the condition of their tools periodically. Have your technicians clean and organize their service vehicles regularly. Taking all of these steps will allow them to be fast, efficient, and good representatives for your company!