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Short of labour and struggling to meet demand? Try this…

By: Dennis Keay

Most business leaders I speak with are caught in a vicious circle, suffering the same fundamental issues.

Can you relate to any of these?

  • They hate saying ‘NO’ to more work…mainly due to the fear of what may happen if they do say NO. So, they say YES and take on more work…then worry about how they’re going to complete it on time.
  • Demand is higher than their ability to meet it so they try recruiting more people. They have trouble getting suitable candidates to apply, so, they work overtime trying to keep up
  • The overtime costs kill any expected profits (since overtime wasn’t budgeted for in the quote) and working capital decreases
  • They try hiring casuals from labour hire agencies…the prices are excessive and the quality unimpressive. The costs weren’t allowed for in the original quote on the work!
  • Cashflow becomes an issue, so they desperately take on more work to boost revenue, but short-term deposits immediately go to paying existing bills and they’re under even more pressure than they were before.
  • Poor cashflow means they need to use over-draft and credit facilities, further increasing their costs. Ouch!
  • Poor cashflow also means they delay paying bills and sometimes they’re put on Credit Hold by their suppliers…making it difficult to get the materials they need to complete the next job on time, so they can’t finish it, invoice for it, and receive payment from clients. Meanwhile, the costs of input materials keeps going up and that wasn’t allowed for in the original quote. Doh!!
  • Extra pressure on cashflow comes when the end client is experiencing the same nightmares and who is also slow in paying you for completed works. That kills your cashflow even more!! Sh#*!
  • Any quality problems, or rework of any kind (which of course wasn’t budgeted for in the quote) just adds to the cash drain. The stress and pressure mounts even further! Grrr!!!

If you can relate to these scenarios, then here are some things that may help get your business back on track…

Breaking the vicious cycle

You need to break the vicious cycle. This starts by confronting the brutal truth, because doing the same thing over and over again and expecting different results is a sign of madness.

A couple of things to consider:

  • If you can’t get the labour you need at a sensible price, then you need a different strategy to solve your problems.
    • Taking on additional labour also means that there’s a risk that, if, down the track you don’t get sufficient work coming in, you’ll have the extra labour costs on your books while people twiddle their thumbs.
    • If, like most business leaders I speak with, you try hiring casual labour, you’ll still struggle because it often comes at a premium cost for sub-standard results. The costs outweigh the benefits.
  • Learn to say NO! Don’t simply take on more work in desperation. Understand that taking on more work for no financial gain just makes you busier and life harder, not more profitable.

There’s a better way!

One element is Labour and Resource Sharing

  • ONE of the things we’ve started doing is facilitating Labour AND Job Sharing amongst some of our clients so that when one has some temporary excess labour they can ‘sell’ it to another company in the group, and vice versa. That helps one party reduce costs associated with over-time and hiring casuals, and increases labour utilisation for the other. It improves cashflow and profitability for BOTH!
    • It means they can effectively pool resources and skills and jointly work on a client’s job to get it done faster. This also means it can be delivered and invoiced earlier. (It’s not just limited to Labour sharing.)
    • It needs to be done carefully to protect both businesses, and does require trust and agreement between the parties. It tends to be us that introduces the businesses to each other, and we’ll only do it where we see a win-win for each of the parties
    • There’s also some ‘secret-sauce’ we add to the mix to ensure that:
      • The type and scale of jobs taken on are appropriate
      • The roles and responsibilities of each party are clear and optimised for each party
      • The terms and conditions with the end customer are clear and conducive to the arrangement so that it’s set up for win-win-win at the outset
      • The job is managed with over-all efficiency in mind, with right-first-time quality all the way from marketing / customer enquiry, through the sales and quoting process, through to delivery and invoicing. That’s where our expertise really kicks in, reducing overall job costs and delivery times and freeing up capacity to take on more profit generating work for each of the parties.

There are several other essential elements to consider that we don’t have time to go into here…things that bypass many of these common issues listed above and stop the madness of doing the same thing over and over again and expecting different results.

If you’d like to understand more about our unique approach, and how we may be able to help your business implement it, then contact us on 0431 927 337 or at to arrange a brief discovery call.

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