What's Wrong with the Traditional Job Shop Model?
I’m going to get real for a minute: you’ll never have a Radical job shop with the potential for increasing profitability and influence if you operate from the traditional service-based business model. Continually re-inventing the wheel to meet your customer’s every need is not profitable or scalable.
But the traditional service model is how the vast majority of shops run. They are:
doing custom work for someone else’s business.
charging for work by time and materials (T&M).
always in a position of reacting to the customer’s whims.
Traditional job shops that prove their worth are rewarded with consistent business from larger customers. While this offers a lot of stability and predictability in terms of cash flow, these job shops are ultimately treated like outsourced employees of the companies that hire them. That means you are never really in charge of your own destiny–and it makes you disposable.
My radical vision for all job shops is for them to be profitable and prominent so they can have a powerful positive impact on their communities and the world at large while at the same time maintaining their independence and freedom. We don’t need more corporations in this world, we need more small businesses!
But achieving this level of profitability and prominence requires you to stop acting like an individual selling services and start acting like a business.
1. Think Like A Business, Not A Service Provider
Even if you have employees and a real shop that’s not in your parent’s barn, the traditional model has you acting more like an individual service provider than a business. What is a business then? A business is something that brings value to the world while creating profit for its owners. As a service provider, you are creating value for customers, but are you creating profit for yourself or just getting a regular paycheck?
When you think and act like a business, awesome customers come to you for your expertise. You aren’t hired just to execute the work–there are many shops out there with the same technical capabilities as you–but instead, you’re hired because you bring valuable knowledge to the table on the how and the why to execute in a certain way.
Businesses thrive by implementing smart processes. Your business does better when you stick to and constantly work to improve your processes thereby increasing your profitability and customer experience. You don’t just do whatever the customer asks you to, selling your time at the market rate like the rest of the shops. You thrive by leading your customers through your proven process.
Customers then hire you because your process works and because you have a reputation for your expertise. They respect your knowledge, get more value from working with you, and become raving fans and spread the word!
Is this making you want to operate like a business instead of a traditional job shop? Well, I’m here to tell you that it’s all about how you do what you do and what you say about it. One of the best ways to act like a business and distinguish yourself from all the other job shops out there fighting over scraps is by creating a unique process that changes the game for both you and your customer.
2. Build A Smart Process And OWN It
Imagine you went into McDonald’s and they asked you how to make the Big Mac and fries you just ordered? You would be very confused. You went to McDonald’s because you wanted a Big Mac and those classic crispy fries–fast!
The same is true when customers come to you. You want to instill confidence in them from the beginning that you know very well how to give them exactly what they came for. Don’t let them run the show, this is YOUR show.
From that very first touchpoint, you need to figure out what problem they’re coming to you with, what other problems or misconceptions may be associated with what they’re asking for, and provide a simple and effective solution. Take a robotics integrator, for example. By asking your customer “what kind of robot do you need?” you’re signaling to them that you don’t have an opinion on the matter, which you and I both know very well is not true! Instead, ask questions like, “what do you want this system to accomplish?”, “What does your timeline look like?”, “What are your constraints and parameters?”, “What challenges are you trying to overcome?” This shows that you have knowledge and expertise AND that you have a process that can help solve their problems.
Maybe you do this already, but do you consistently ask all the right questions? Do you have a documented procedure that makes the customer’s experience fluid and evolves as you learn? Leading with your process, instead of just quoting a project by an industry-standard T&M rate keeps the customer focused on what’s really important, which is the outcome. It also gives you an opportunity to manage expectations.
Maybe more importantly though, your compensation is then disconnected from the hours you need to spend to deliver. This is a key element to creating profitability and freedom in your business model. If your income is based solely on how much time you spend on each project, then you will always need more projects to continue making the same amount of money, which is the opposite of freedom.
3. Move Past The Time And Materials Mindset
Let’s say you’re quoting a job that will take you 5 hours to execute. Would it have taken you 5 hours when you first started doing this work? No way, it probably would’ve taken a LOT longer! You have years of experience and training that have allowed you to become more efficient and effective, so try to keep that in perspective when you’re quoting work. And don’t worry so much about pricing yourself out of a job because cost-cutters are not the customers you want to work with anyway, right?
If your income is instead based on the VALUE that you deliver to customers, you can spend more of your precious time creating new ways to increase that value, which breaks you out of the old T&M model. This results in greater profit margins which allow you to further increase your value and streamline your processes instead of just selling straight machine time and man-hours.
More profit equals more independence and freedom, and more room for growth. More independence, freedom, and growth equal more passion and ability to make a bigger impact. This type of freedom and independence is only created by job shops that are able to break out of the service-provider mindset by showing up as an expert and thinking like a business.
4. Invest In Yourself And Your Business
When your business is only generating the minimum cash flow to survive and you’re grinding hard to keep that cash flow intact, it’s hard to prioritize things like training, learning new skills, developing processes, and marketing. But if you ever want your business to move beyond the paycheck to paycheck model, you HAVE to invest in things that will differentiate it from other job shops. It’s just as important to invest in the strategic growth of your business as it is to invest in things like machines and tools.
If you want to get really good at one particular thing, take the time to do that. If you’re always dropping the ball in a specific area, brainstorm with your team on ways to fix it. If you’re eager to get more work in a certain industry, start reading publications and trade shows in that area. If you need to hire people or create more employee satisfaction, sign up for a leadership workshop. If you’re somewhat new to entrepreneurship, look for a mastermind group of other shop owners that will teach you new strategies and perspectives–this was a huge game-changer for me. It was really hard for me to justify the time and money at first, but now I see it as a necessity.
The old proverbs, “you have to spend money to make money,” and “fortune favors the brave,” are absolutely TRUE. You have to have the courage to step outside your comfort zone and find ways to build a smart business model that has the potential to grow into something bigger and more sustainable.
So, how do you break free from the restraints of the traditional job shop model?
Think like a business, not an individual service provider.
Build a smart process and OWN it.
Move past the time and materials mindset.
Invest time and money into training and growing your business.