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Work Smarter, Not Harder:Identify your Opportunity Costs

Most flooring professionals have a seemingly logical approach to taking a job: any flooring job is better than no job at all right? Well, not necessarily. Following this misconceived notion may not show up on your company’s year-end financial statement, but the hidden costs are there. It’s called opportunity cost. It means that those small, complex jobs cut into your profit in labor, materials, and overhead when they require too much time consuming detail. Eliminating those hidden costs by working smarter, not harder, will make you more successful in the long run.

Many polishers aim to please the client by whatever means necessary. In some projects, this means many hours of project preparation, complex hand tooling, and concrete repair work. Although you can’t just leave a crack in the middle of the floor, your profit is generated when that machine is running, not when you are filling cracks.  Every second you are off the grinding machine is an opportunity cost affecting your bottom line. A job with heavy stud removal, hand-tooling, and other time-consuming scopes means less time making money.

For example, let’s say it takes ten hours of effort for every project sold.  That includes your time on the phone with the customer, calculating square footage, sending out quotations, walking the floor, etc.  Add to that the expense of the materials required to complete the job, the labor expenses, and your time managing the project throughout.   At the end of the month, you will have to sell twice as many small profit jobs to equal the same amount of money made on one large job.  Understanding how to evaluate your business opportunity costs plays a crucial part in ensuring that scarce resources are used efficiently. These costs are not strictly limited to a monetary value, but may also be loss of time or other benefits.

Opportunity Selection

Choosing the job

Polishers make the most money when the machines are running, therefore, looking for jobs with high ratios of machine hours to total labor hours will be most lucrative. Let’s compare two jobs up for bid side-by-side:

Job (A) has 400 man hours with 200 being machine hours (the remaining hours are in hand tooling and repair work). Job (B) will bid a little lower but has 300 machine hours out of the 400 hour project. Job (B) has the most favorable labor ratio. Recognizing jobs that have the highest volume square footage with the least overhead investment, (i.e. labor, tooling, detailed repair work) will result in increased profit opportunity.

Don’t Oversell your Job
Recognize that not every floor requires the same high polish scope.  If the customer would be happy with a matte finish, why spend more time and money polishing to a glossy shine?  It doesn’t make sense. Here are two very challenging and common circumstances to illustrate this point:

Scenario 1: Budget Constraints

A customer is choosing the polished concrete flooring option in a new construction project because they want a smooth, easy-to-maintain floor, however, their budget is very tight. 

Solution- Sell the customer on a topical polish with a low sheen.  This will give them the aesthetic they need at a price that works within their budget.

Scenario 2: Poor Floor Condition

A customer’s floor is pitted and porous - basically, an extremely stressed slab, such as in a heavy machinery plant. Aesthetics may not be a concern, however, clean ability is.

Solution: This customer has no need for a high gloss. A scope of work running 40 grit metals through 100 grit resins, ensuring that adequate densification was completed (perhaps with a grout coat to address the pitting) leaves the customer with a smooth, easy to maintain floor. Getting off the floor quicker by recognizing the right scope, frees up your time and resources to go on to the next job.  

These tips will help you to focus your sales efforts and help you to narrow-in on your biggest opportunities.

Job Prep

This step can make or break how smooth your project runs and how quickly you can finish. There is nothing more costly than down time on a job.  Being prepared for any situation will keep your crews working productively, not sitting around waiting for a tool to arrive or a part to come in.  Here are a few tips on preparation for a job:

  • Pre-load your diamond plates to cut down on changing time.
  • Verify and make sure a steady water and power source will be turned on by the first mobilization.
  • Have the right arsenal of tools. It can be expensive to have numerous sets of tooling, but will be cheaper than shutting down your crews to wait for new tools to come or using incorrect tools.
  • Identify your dumpsite and arrange for it to be as conveniently located as possible.
  • Request 24hr access to the site. This allows your crew to work at night when the other trades have left and no one is in the way of the machines or workers.

On the Job Efficiency:

Keeping your machines running

Polishers only make money when the grinding machines are running so make the most of your time on the floor: 

  • Perform correct overlap widths and choose long paths as opposed to shorter ones.
  • Find the right diamond. A critical way to save time is to test a 10x10 portion of the floor. If it is not cutting the floor, ensure you have the right bond or drop to a coarser grit.
  • Don’t rush the initial cut - this is what the rest of the project will build upon, so take your time and make it right. Typically, 60% of the total job is your initial cut.
  • Don’t allow your crew to break at the same time. Keep the machine running by having a backup person step in.
  • Minimize tedious tasks such a repair work and hand-tooling.

Get Paid.

Some jobs are going to have repairs to do: joint filling, crack repair, and hand-tooling.  Although these issues were there long before the polish job was done, the customer stills views this as the polisher’s problem. To ensure payment for the bulk of your services, a separate contract should be made for the grind and polish work and another for the problem areas. So many times, it’s the work required outside of the grind and polish scope that holds up payment. Making separate contracts can expedite payment.

Turning down work in a slow economy isn’t realistic, but being able to recognize your opportunity costs, and bidding them appropriately, will earn you more success in the long-run.