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Quality Versus Quantity: Tough Dichotomy

What Defines Your Company?

A poor QC policy can destroy your company

A poor QC policy can destroy your company

 

I recently read an article on Foreclosurepedia regarding Quality versus Quantity  in the Property Preservation Industry. It reminded me of how we developed our company’s QC policy. The quality of a product is extremely important. People whom work with tools avoid the “Made in China” tools as they are seriously inferior when it comes to quality. If you have children you know the quality of “Made in China” products made for children and many that I speak with that  have children will not purchase items for their children from China as they know the quality and safety of the products are…for lack of a better word…crap.

We had to analyze our company procedures as we were starting to sacrifice quality because of the volume of work we were doing. Trust me,  when things started going south in this area the lady that signs my check made it very clear things had to rectified and she made it very simple, she said “Fix it now”. Understanding that her name and reputation as a business was on the line because of the poor quality workmanship being turned in and the fact this would damage the company’s future, changes were put into place within 48 hours.

It requires a lot of integrity to sacrifice dollars to maintain an image and company brand that demonstrates how one wants to be recognized in their respective industry.  This issue creates a tough dichotomy for business owners.  After all you are in business to make money, aren’t you?

As business owners we have all heard the catch phrase, “Ya gotta spend money to make money”. I speak with small business owners all the time having difficulty implementing a QC policy as it can cost revenue that sometimes cuts into the profit margins.

However, I take issue with that. I say that because that is sacrificing your image for a dollar and eventually you will be in the unemployment line, usually a lot sooner than you realize. A good quality control procedure for your company will provide a solid company infrastructure and foundation. In addition, sacrificing revenue now to implement a good QC policy will allow your business to grow and be recognized as an industry leader.

Recognizing quality is something that hiring managers are trained to do. Unfortunately the state of the Property Preservation Industry does not recognize quality. The National Asset Management Companies want everything for nothing. Asset Management Services (AMS) are demanding that companies remove 35 yards of debris for $345 to $500 dollars minus a 20% discount.  I will be kind with the math here to spell this out for those that do not understand the value of a break even analysis and break even point on their services and use the $500 number…actually that’s kind to AMS.

$500-20%=$420/35=$12….$12 dollars per cubic yard. A $10 per hour employee will cost you, in Nevada at least, $12.50 per hour when you’re finished with your payroll liabilities. Even if you could remove 35 cubic yards of debris with 20 man hours you still have your transportation and disposal fees. However, the reality for a debris removal of that magnitude will require 35-40 man hours.

Yesterday I had three AMS vendors call me puzzled that they would be called to provide initial service on properties 62 miles out of the respective coverage area when there are people in the area to providing coverage. They were concerned that saying no would hurt their chances for future work.

I made some inquires and what I found was that even with a trip fee to those being asked to go out of their way for AMS, they had lower initials service fees than those in the immediate area. In addition, I had to tell these terrified vendors that thinking that way is an employee mindset and I reassured them they had made a solid business decision. They were, as many vendors are currently being asked to lose revenues while AMS profits at their expense.

This is how quality is sacrificed for quantity. AMS could care less about the quality as they will back charge the vendor at the same time collect from the client. So the reality here is they get paid twice.

So when you consider passing up on implementing a solid QC policy consider the scenario above. It may cost you $5 a property to implement a policy, but let’s say it costs you $50 a property, is it better to spend that $50 today or be back charged 6 months from now on those initial service fees? We have all heard the horror stories about the back charging. The NAMC  as members of NAMFS have been discussing them for at least two years that know of the legalities of said back charges.

Let us add that up:

$50 today makes that $420 $370…

Six months from now you’re back charged $420 fee, you have paid your labor $250, you disposal fees were $65, plus $40 in fuel charges. You are now out, $775. This is what accountants classify as a negative revenue stream. Negative revenue streams become “Lost Revenue”. It is this, lost revenues, that force businesses to close their doors.

Again I will say, I truly believe that if more Boots on the Ground Contractors would start thinking like a business person and not like an employee that the control exerted over the industry by the NAMC would come to a grinding halt. There are many of us out here offering services and products to help the small business people for dirt cheap…dirt cheap…as a consultant it would be a very poor business decision not to advise people to take advantage of the pricing on products and services that will help strengthen your business.

While many people are banging the idea of the IWW’s offer to assist with organizing the labor in the industry, none of the nay-sayer’s are offering solutions. None of them are stepping up to offer assistance to educate anyone. Perhaps the concept of a union is farfetched, however is it to much to ask that if you have a business license that you throw out the employee mentality and conduct yourself in a business manner and learn some of the basic principles of business.

Here are three videos that will help…Happy New Year.

https://www.youtube.com/watch?v=iSrZwgN8SXA

https://www.youtube.com/watch?v=jIKMflInRgM

https://www.youtube.com/watch?v=2Gl4h5NS410

 

WrittenBy: Aaron Aveiro

Photo courtesy Google images

Opinion expressed ar not necessarily those of Aladay LLC ownership

 

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COO at Aladay LLC
Organic Farmer, Property Preservation Specialist and Custom Glass & Wood Worker. Blogger extraordinaire...Business consultant, Instructor for NAARPI International. Advocate for the BOTG of the PPI
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