If it feels as if words like uncertain, unprecedented and even recession have been catching your ear more and more lately — it’s because they are. While anticipating exactly what comes next is never straightforward, being prepared is always in your company’s best interests. With that in mind, the next step is determining how you can prepare for the future when it’s not crystal clear.
To hone in on the best ways pest professionals can take action now to prepare their businesses for a potentially bumpy financial future at large, we sat down with WorkWave’s own SVP & GM for Fintech, Jacob Olins, to talk with Dan Gordon, CPA, a founder and managing member of PCO Bookkeepers.
With their deep well of knowledge and experience in all things finance, business and, of course, pest, Olins and Gordon were able to distill the complexities of navigating tough financial times into four distinct areas.
Streamlining Recurring Revenue & Cash Flow
As Gordon notes, the best defense against economic uncertainty is a good offense. For field service businesses, this means taking action to ensure the cash that should be coming into your business is not just flowing, but flowing on a predictable schedule.
Olins elaborates, noting how the pest and green industries are perfectly positioned for subscription services. “Most of the services that our customers are providing, they’re providing to recurring customers,” he points out. “Helping a sales rep know that they should be talking about a subscription plan, encouraging them to collect a payment instrument during that sales project, ensuring that’s all set to autopay — those small steps have a tremendous impact on a business’s growth.”
When recurring payments are handled automatically, you create a situation that’s mutually beneficial for your business and your customers, reducing touchpoints and manual effort on both ends. Even more importantly for your business health, automatic payments minimize the need to chase down payments, enabling the predictable cash flow you need to plan ahead.
Gordon expands on the implications of outstanding invoices from a mergers and acquisitions (M&A) perspective: “If you’ve got your 90-day column that’s way out there, and that column is sitting in the revenue — in other words, you’re counting it as revenue but you haven’t received it yet — your books might not be as stellar as your profits and losses (P&L) says. So, the idea that you can control this is huge.”
Increasing EBITDA Through Cost Strategies
With recurring revenue in order and fewer outstanding invoices, Gordon points out that a business is immediately more attractive for potential buyers down the road. “Purchasers appreciate that, and that also reduces office costs — which ups your EBITDA, which ultimately ups your valuation.”
Of course, increasing EBITDA isn’t only a priority if you’re interested in selling your business; as a key indicator of overall financial health, increasing your EBITDA is always a good move — particularly in uncertain times or shaky situations.
When it comes to honing in on a target EBITDA for your business, Gordon points out that it’s all about wealth maximization; even if you’re not looking to sell your business, a rising valuation is a benchmark of good financial health. As Gordon notes, “A company that’s building and that’s profitable is able to do things like take care of their employees, give them upward mobility, do things in the community; a company that’s not can’t do any of those things.”
Focus on Diverse Services and Profitable Growth
Profitability for recurring services benefits from a higher customer lifetime value; when you sign a customer for recurring services, your cost to acquire them is locked in while their potential value for your company is only limited by how long you can keep them on board. With a one-time service (assuming you don’t succeed in converting them to a recurring model), your profits stop after that invoice is paid.
In keeping with that logic, it’s especially important to focus on services and service areas that are the most profitable for your business when it comes to one-off work. For instance, taking a low-value job that eats up time and fuel to reach may not always be a great choice if it’s not going to be recurring, since it eats up more resources than it’s worth. On the flip side, one-off services can be particularly worthwhile when they’re high-ticket services.
Tools that allow customers to finance purchases over time can ensure they’re not passing on services they want or need due to financial elements, helping you close on more of those high-ticket services. “Buy-now-pay-later for a concert ticket looks a little different than for green or pest control services. So we’ve rolled out WorkWave Pay Over Time solutions to help our customers finance jobs for their customers.”
“The one-time work has to be real high-margin work,” Gordon expands, noting some examples that occur in the pest industry. “Bird jobs, termite jobs, any type of wildlife — those lend themselves great to buy-now-pay-later.”
Put Tech to Work in Your Operations
Your technicians work hard — but what about your technology? “Leveraging the technology, it’s going to insulate you from issues with the economy,” Gordon notes. “I think it’s also keeping up with the Joneses — your competition, everybody’s employing technology.”
Getting a leg up means not just using technology, but truly employing it as part of your strategies and ensuring you’re getting the most out of the tech at your disposal. Whether it’s optimizing routes for better efficiency or baking in credit card processing, it’s a game-changer.
“If I’ve got 10,000 customers and I’m using an outside merchant service, after I collect the money, first I have to reconcile it to those programs; second, then I have to enter it or bring a batch in to apply all the payments,” Gordon says, noting how PestPac and RealGreen by WorkWave eliminate those needs entirely.
“Whereas it’s built into these programs, he goes on, “you can just press a button and all the routes get produced, and all the money gets collected and attached to the invoices; it makes your accounts receivable neat and tidy.”
“That’s significant when you add up thousands of invoices per year for a lot of our customers,” Olins adds. “That’s real, material time savings. I totally agree with Dan: businesses that are growing fastest are deploying all of these.”
You can’t predict the future, but with the right prep and the right tools you can be ready for whatever comes your way. To see all of the ways you can deploy tech today to be ready for tomorrow’s field service landscape, visit workwave.com and book your personalized demo today.
PCO Bookkeepers & M&A Specialists handles financial operations for pest management professionals looking to take their businesses to the next level and eventually exit with maximum after-tax value. More than $1 billion of annual pest control revenue flows through PCO, and they’ve brokered more than $1 billion in sell-side transactions, netting some of the highest valuations in the pest control industry. Find them online at pcobookkeepers.com.
