A danger area for all contractors, especially in this recession with declining sales opportunities, is eliminating or laying off outside techs and installers without addressing the need to do the same with people on the “inside”.

Rule of Thumb: For every two techs or installers out there doing the work, there should be one inside (support) person. This is the best of staffing ratios, which is 2:1.

Example: Ten techs (or installers) each billing for their work for five inside people who don’t install or bill for their work.

With rare exception, a company that has a 2:1 staffing ratio is very profitable because the company isn’t too bloated with overhead expenses.

Guess what! You count as inside staff unless you’re spending the majority of your time working in the field and making the company money by selling. Having others do the work is better, but still counts toward inside staff.

The problem comes with companies that once had a number of techs and installers out there making money and got used to having all the staffing positions filled on their organizational chart by someone other than themselves. It’s nice to have a personal secretary or a service manager or someone else doing the books besides you or your spouse. But, if the outside sales falls and outside staff is cut, you must take the steps to cut your inside overhead.

By the way, if you have a staffing ratio of 1.5: 1 you can still be a profitable company.

Example: Nine techs (or installers) each billing for their work for six inside people who don’t install or bill for their work.

BUT if your staffing ratio drops closer to 1:1, which would be:

Example: Nine techs (or installers) each billing for their work for nine inside people who don’t install or bill for their work.

You are in a very precarious position!

What can you do?

Start by tallying up who’s on the outside and who’s on the inside. Count yourself and any sales staff, warehouse people and such who don’t bill directly for the work they do (a.k.a. don’t install). Then, think about what job positions can be combined and, if necessary, done away with or sub contracted out until you get back to a profitable and sustainable staffing ratio again.

Ultimately, the goal is to get back to growing your marketing and sales opportunities and building your staff the right way with the right resources and in the right proportion.

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