Am I Over Staffed ? Or Under staffed ?

RW10

My question is for hvac contractors or possibly owners of home heating oil companies.
How did you decide on the number of employees you have ?
My wife and I own a small HVAC company that we started in 2004 .we have aprox 5000 active / repeat customers and maybe 10,000 total in our system . We have 6 licensed technicians and 3 apprentices .

First , is there an industry ‘ norm ‘ for tech to customer ratio? For some reason back when I worked for a full service oil company they used 1 tech per thousand customers . Does this sound logical?

Second , We Have 9 service employees, , And 4 Office staff , Basically they do all things phone Related , if it rings they are first contact . Plus the two owners , that run the office , All
Schedules , service calls , maintenance appt . Write proposals etc. Is there an industry’s standard for the ratio of office staff To service people ? My wife handles the accounting and HR , I supervise the schedule, do all sales , and do all estimates. Hire , and let go and be sure all techs are up on training . Etc.

STEVEusaPA

1 tech per thousand sounds pretty low. In theory that would mean that one tech needs to do 500-1000 pms, plus service calls, plus installations per year. That ratio may work for a company with 15,000 customers & 15 techs, but not one for 1000.

For my small heating oil business, data is the key. Collecting and managing statistics tells you a lot.
Simply, are your techs overworked/underworked? Do customers have to wait many hours or even days for service?
Can you jump on an install or a leaking oil tank/replacement almost instantly.
Are you techs crossed trained or do they move right into AC tune-ups in the spring/summer.
To give you a starting point. My small biz is 500+k gallons, about 350 active, continuous residential customers plus another 100-150 will calls that come and go. I do everything myself (which is getting old). I have one part time driver for night fleet-fueling, and mostly sub out my installs. In reality, if I had a full time driver, I could do all the installs too, with a helper, or just have the full time driver help me.
I do all the cleanings, all the service. I spend a lot of time on the PM's and average maybe 15-19 service calls throughout the winter season (Sept-Apr), in the Philly area. Half of those service calls are components, and last year, 5 of them were thermostats, 4 were water related.
If you subscribe to Oil & Energy or Fuel Oil News, one of them publishes these types of figures annual-customers, techs, drivers, gallons, etc.

GW

Everyone has their natural “ceiling” for amount of employees and profitability. I suspect many companies your size make small to no profit. The high rollers have large companies and high profit, to them I tip my hat 🎩 , must be cool to pull in a 7 digit.

I got to 10 employees (no profit) then reeled it back to 5 (profit)

Start chopping the stuff that make little to no money, you know what calls they are. Bigger companies run every call, small companies need to pick and choose

BDR529

Nowadays it all depends on location. Ambition counts for nothing when stuck in traffic.

hot_rod

I’m reminded of a comment from a large service shop in LA, 50 or 60 trucks at the time I visited years back.

“Some days 25 trucks are parked, some days he could use 10 more”

Determining the right number of employees, or trucks is one of the biggest challenges in business

Second maybe to staying profitable in those up and down cycles 😳

Depending on how tight you want your numbers, are you profitable every day, that amount of data crunching could require one office person for every 4 trucks.

GW

Wow Hot Rod, not too many people can stomach that type of swing

Fred

You know I used to work for a Corporation that had both a Service Organization and offered Professional Services (consulting, software design/development, etc.). The service side of the house did maintenance and break/fix. In both cases, the model we used to ensure profitability was to charge an hourly rate that factored in a typical amount of "down time" per technician, based on a typical year of history. That downtime plus a desired but reasonable profit margin, overhead (tools/space, truck fleet), vacation, benefits, cost of training/education, etc were all factored into the hourly rate. Parts were cost plus a margin that covered handling, inventory costs, profit.
Professional Services could be as much as 100% over and above the fully loaded cost.
Our Service Parts and PS organizations were always the most stable and profitable divisions in the company (30,000 employees and probably 10 to 12 divisions, all global operations).
You're in business to deliver value, which should yield profit, not just break even or marginalize yourself.
I think the issue you have to determine is how responsive you want to be; 4hr., one business day turn-around or something else. That will determine staffing (based on known volumes of business).

B_Sloane

every small biz has it's own dynamic, and profitability level
100 Customers per Tech ..?
Sounds like emergency service only, 'cause no tech could handle P's at that level

I got to 10 employess, found I was just a baby sitter
Jimmy Joe got woman problems, Bobby Ray gone fishin', Stevie Slouch gone on a drunk

I found I made just as much money with myself, and a helper working on bigger boilers ( think 100 - 1250 hp) where we could get a service contract, have parts in stock, sometimes even a gang box on site
and have an organized, profitable business model
We would test safety controls, test water treatment, and service condensate sets every month

B_Sloane

no edit button ..?
well, that was 1000 techs, and PM's

EdTheHeaterMan

You are at that critical point where you are working to keep everybody else working, with no time left to enjoy life. I was there in 1989 with 6 trucks on the street and 2 office staff. I did everything worked too many hours and made no money. in 1993, Sold my phone number to a competitor. I worked as a salesman for that company (I sold to) for 2 years and built up my savings account again.
You need to grow or get small. To stay where you are is a difficult business size to maintain. To grow you need to get with a program or business model that has proven profit potential. Look at National franchise or business groups that offer guidance in our industry.

If you don't want to go BIG... then scale down and just do the trade work. Keep it simple, do what you know and make a profit at it.

motoguy128

My limited exposure says you either need 3-5 techs including the owner and maybe one installer or apprentice. Or you need 20+. Hard to go in between and you have a step shift in supervision and overhead.

Downside of only 3-5 techs is one call is pretty frequent. We had 3 techs at my work... including myself and the owner even though I’m a 41y/o apprentice technically. Haha. Owner claims he brings in 6 figures gross profit from which he takes his draw.

B_Sloane

$160,000 per Tech

Pumpguy

For me, people problems were far more a challenge than other aspects of running the business.

ethicalpaul

B_Sloane said:

no edit button ..?
well, that was 1000 techs, and PM's

The Edit button hides behind a gear at the top of each post (of yours). You have to hover your mouse over your post to make it appear. It's slightly more visible on mobile.