When should I hire a general manager for my electrical business?

It's time to hire a General Manager when you are ready to turn over the reigns of the business. Hire a general manager when daily problems take most of your week and when you can afford it. Your techs need to sell enough to pay for the additional overhead salary, on top of what you deserve as the owner of the business. At a coached electrical shops, the median tech sells $357K a year. A GM, like everyone else in the overhead, is paid out of that revenue generation. That being said, revenue volume alone is not the only indicator.

Most online advice tell you to picka a revenue number or a head count and says to hire your GM after that. That misses the real question and potential problem most owner's currently have. A GM needs something to manage. Some shops have no budget, no weekly numbers, and no managers to manage. A GM in a shop that lacks the financial wherewithal, and the processes, spends many unproductive years, if not months, trying to get there. And sometime's when the hand off is just too poor, there is no chance they can succeed.

Revenue alone is the wrong test

Picture two electrical shops with the same revenue. The first has a written budget, a service manager, and techs who follow one sales process. There is a operations segment which takes calls and handles human resources. The owner has a system and checks the numbers every week. The second shop has some, if any, of that. This requires every question to go to the owner.

The first shop is ready for a GM. This might sound crazy, a business likely not ready for outside management unless the owner has built a solid foundation. The GM should be taking over a working system and hold people to it. The second shop is not ready, even though the revenue may possibly match the first. A GM there would face the same problems the owner faces, with less power to fix them.

What a GM does that other managers don't

Owners often use these titles to mean the same thing. They are different jobs.

• Service manager. Runs the techs. Handles ride-alongs, training, call quality, and callbacks.
• Operations or office manager. Runs the office. Scheduling, billing, customer service reps, and all other back office considerations.
• General manager. Owns the results of the whole business. Works from the budget, manages the other managers, and is held to profit, not just tasks.

If your main problem is that techs don't sell or that callbacks are high, you need a service manager. If your issue is booking calls effectively, or organizing the back office systems, you need an Operations or Office Manager. If you have these positions in place, and manager exist to manage, you may need a GM.

Signs you are ready

• You have a yearly budget and you check it every month. The GM will be held to that budget. Without one, you have no fair way to judge the GM's work.
• Your techs follow one sales process. You track each tech's numbers every week.
• You already have at least one manager. A GM manages managers. If no one reports to the GM but the techs, you are hiring a service manager with a bigger title.
• Your week goes to daily problems, not planning. You have stopped thinking about next year because this week takes all your time.
• Your techs sell enough to carry the salary. More on this below.

Signs you are not ready yet

• You want a GM because you are tired. That is a real problem, but a GM won't fix it if the shop has no systems. Fix the systems first.
• You want a GM to fix sales. A GM can't make your techs close more. That takes a sales process, training, and ride-alongs. A service manager is the right hire for that.
• You won't let go of decisions. If you plan to approve every purchase and every hire, the GM can't do the job. Good GMs leave when that happens.

How to pay for a GM

A GM does not run calls, that much is probably clear. Every dollar of the GM's pay comes out of what your techs sell. At coached electrical shops, the median tech sells $357K a year. Compare the GM's full cost, with taxes and benefits, to that number. That shows you how much of one tech's work goes to pay the GM.

Then ask what the GM will change. A good GM should hopefully raise profit by more than the salary costs through growing the business. That can come from better close rates, fewer callbacks, tighter scheduling, or hiring techs sooner. A GM should be a force multiplier for your organization, and should allow you to take a step back and focus on the long term vision and direction of the company.

If you can't name where the budget will come from, wait. If you do not have the component managers is place, wait. Build the budget, the staff, and the weekly numbers first.

The first months with a new GM

The hardest part is not finding a GM. It is getting your team to follow one when you have been the face of the daily operations. We coached a shop through this recently. The new leader faced pushback from managers and long-time techs who were used to going to the owner for everything.

Here is what worked.

1. The owner introduces the GM to the whole team. Say which decisions now belong to the GM. Be specific, like hiring techs, setting the schedule, or approving overtime.
2. The owner sends questions back to the GM. When a tech or manager comes to you with a GM question, send them to the GM. Do it every time, even when you know the answer.
3. The GM meets every long-time employee one on one. Ask what works and what doesn't, but express commitment to the change. People follow a leader who listens before changing things.
4. The GM changes a few things first, not everything. Keep what works. Fix the one or two problems the team already complains about. Small fixes that work make people trust the GM.
5. The GM holds managers to their numbers every week. Use the same weekly meeting and the same numbers every time. Managers learn fast that the GM checks.

Expect some people to test the GM in the first few months. If you back the GM, the testing stops. If you overrule the GM in front of the team, it gets worse!

What the owner keeps

Hiring a GM does not mean leaving the business. Most owners keep a few jobs.

They set the yearly goals and approve the budget. They coach the GM in their weekly one on one meeting. They make the biggest decisions, like opening a new location or buying a building. Many also keep a few key customer and outside relationships strong.

The owner stops doing the daily work. The GM does it, and the owner judges the GM by the numbers.

What we recommend

Do not hire a GM to fix a business that has no systems. Build the budget and the weekly numbers first. Put a sales process and a service manager in place if your techs need them. Then hire a GM to run that system and grow it.

When you do hire, hand over clear decisions on day one and back the GM in front of the team. Not sure your shop is ready? Read how to make your electrical business run without you. It covers the systems to build first. The free owner assessment below shows which parts of your business are ready to hand off.