Revenues Are Up, But Is Your Profit?

Some labor estimates are tracking way off by as much as 12% due to added time related to coronavirus precautions.

 •
Revenues Are Up, But Is Your Profit?

COVID-19 jobsite delays can eat away at profits if you don't account for the added time.

In many ways, the coronavirus COVID-19 pandemic has been fruitful for integrators. Most integrators tell me they are busier now than they have ever been. Demand for every category of technology in the home is skyrocketing.

Consumers are stuck at home and are realizing they need a faster and more stable home network, along with a better sound system and TV. They also discovered the wellness benefits of control of lighting, shade and climate systems, spurring demand for those products. Lastly, civil unrest and higher unemployment drove an increase in security installations.

Indeed, every aspect of the custom installation industry has been full bore for the past three months as integrators were declared essential workers by the government, allowing them to continue working without stoppage. So revenues are clearly up… but what about your profits?

Michael Wilson of Bethesda Systems in Bethesda, Md., has seen a definite shift in customers’ attitudes during the pandemic, which has put a strain on his service team and ultimately is hurting the bottom line.

Why Are Clients So Much More Impatient?

“Clients are more impatient than ever,” he says. Wilson says that pre-COVID-19 when a client decided he needed an upgrade, he might call on Sunday and Bethesda would schedule it and usually get out there in a few days. And normally that customer would wait patiently.  

But in the era of the coronavirus, that same client today is stuck at home 24/7 staring at the wall. Wealthy clients are not able to fly to Europe or jet off to a beach in the tropics somewhere, so instead of waiting a few days, the client immediately starts calling every day wanting to know why the installation is not completed yet. Those demands have forced Bethesda Systems to shift its schedules to keep clients happy.

“We have all our technicians working overtime,” says Wilson. “We are making more money than ever before… record-breaking… but we are earning less profit on that revenue.”

What Are Your Labor Estimates Off the Mark?

Another byproduct of COVID-19 that is hurting integrators’ bottom lines is inaccurate labor estimates for many projects.  There are two reasons this is taking place. First, many dealers are not accounting for the increased time it takes to deploy Personal Protection Equipment (PPE) on the jobsite. Technicians now have to suit up with PPE gear, including masks, gloves and booties, on every job.

That also means they have to take the time to either disinfect that PPE between jobs or dispose of it and don new PPE equipment. That technician also likely has to now wipe down everything he touches in the home, from touchpanels to racks to doorknobs. Throw in the wildcard of a picky homeowner that wants to see cardboard boxes wiped down and you can see how the time starts to add up.

Five minutes here and 10 minutes there means higher labor costs and less productivity. It might only be 5%, but if you haven’t accounted for that additional 5% of time with a higher labor estimate, it is draining your profit.

According to one social media post, dealers estimate one hour out of every 8 hours is being spent or wasted due to COVID-19 restrictions.

That time-suck is not just in existing homes, it is happening on new construction sites also. Wilson says Bethesda is running into restrictions on the number of contractors allowed on a jobsite due to COVID-19. Luis Rodriguez of WOW Media in Middletown, R.I., recently had a technician wait three hours to get into an MDU elevator in Boston because the building was restricting the number of people inside the elevator.

“Some construction sites are only allowing two contractors on site at a time,” he says. “That means we either have to wait around or reschedule.”

Either way, it’s lost labor profit. So before you get too giddy about how strong your revenues are during the pandemic… check your wallet.

What are you experiencing? Let us know.  

About the Author

Jason Knott
Follow
Jason Knott:

Jason Knott is Chief Content Officer for Emerald's Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California.

ARTICLE TOPICS:

Business SupportOperations

ARTICLE TAGS:

Business Resource