Jeff Tews is a franchisee of BrightStar Home Care. He has 6 physical locations, with 4 home-based Bright Star Home Care branches, 1 assisted living community and 1 medical staffing facility. Jeff has some great tips for franchisees who want to know how to help managers understand profit and loss below!
Jeff and his wife Susan were recently chosen by CNBC as one of the top 50 franchisees in the United States. Congratulations Jeff and Susan!
Jeff joined BrightStar 8 years ago, coming from a background in banking and telecoms. He is very focused on customer service, working on projects in both large companies centered around customer service. After the working in the corporate world Jeff wanted to change to a career where he could really help people and make a difference in people’s lives.
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The business is focused around a mission statement of ‘Peace of mind’ and Jeff shared his personal story on how that mission developed. Thank you Jeff for sharing with us!
35 managers & supervisors including 6 branch managers comprise Jeff’s corporate infrastructure. They are looking to be an employer of choice and thus offer PTO, full healthcare and flexible hours to employees.
Slight margins means a focus on profit and loss
With very slight margins typical of the service industry, and 2500 shifts a week with 350 caregivers on the schedules, Jeff needs to keep everyone in the organization focused on profitability. All his managers are fully engaged because Jeff is transparent with them; he shares the profit & loss statements with managers. He has some great tips on how to help managers understand profit and loss below.
To incentivize his people to increase revenue and decrease costs Jeff has a great way of aligning incentives with profits. He incentivizes based on earnings before interest, tax, depreciation and amortization or EBITDA. This guides managers to think about not just increasing revenue but decreasing costs. Jeff details how to help managers understand profit and loss below. In Jeff’s words,
“The decisions are different when you incentivize on bottom line revenue, not just top line.”
Jeff’s worst moment in business
Jeff’s worst moment in business came when he handed back an $800k contract which was 10% of his top line revenue at the time. He chose not to lay off any staff after this hit to revenue because he believed the business would come back. It did – but not quickly! For a full quarter they were below cash-positive and at times it was difficult to make payroll. What a position to be in after 8 years in business with $10m in revenue!
Ultimately handing back the contract was the right decision because the internal surveys showed that employee engagement and customer service metrics picked up significantly after the handing back of the contract.
How to help managers understand profit and loss
Jeff had a few knowledge bombs to drop on how to help managers understand profit and loss! His method is:
- Dump out a bag of 100 pennies on the table and have each of the managers estimate how many of the 100 go to profit, paying staff, corporate overhead, advertising and rent
- Have them write down each of these numbers
- Reveal the real numbers
- Have the staff count out the pennies in the true proportions
This gives managers a true and tangible representation of what the numbers on the P&L mean and helps them understand profit and loss.
Exciting developments for Jeff are the opening of his own assisted living community with 30 residents. This is BrightStar’s first foray into communities and they needed a forward-thinking franchisee to run the community to break-even to prove the model. It has gone well, and Jeff is opening more communities in his cities.
The piece of advice Jeff has for business owners is all about delegation. Get out and work on the business, rather than working in the business. At a certain point the business will be successful because of your hard work, and you need to step out and realize that you time is limited. Opening another store will be impossible if you’re always on the front lines yourself.
I needed to hear that piece about delegation! I’m spending 3 hours doing these episodes when I could delegate the editing and posting to a virtual assistant and spend time getting better quality guests for you, Franchisee Nation! (believe it or not this is the hardest part of this whole show!)
Feel free to reach out to Jeff at [email protected] for advice.