Navigator Podcast: Understanding Variable Costs with Joel Harris

By Julia Baillie

On this episode of the Navigator Podcast, Brad Malone is joined by Joel Harris to introduce our new 4 Part blog series: Understanding Variable Costs is Wildly Important for Your Integration Business.

The power of variable costs is a topic that Harris is very passionate about, yet it is not a well understood concept by the integrator community.

As the COO of HB Communications, Harris has had the opportunity to put these concepts into practice. In this blog series, he shares some of the trials, the techniques, and the results.

The integration business is seasonal by nature

If your integration business has any seasonality, you really should investigate how you use subcontractors, temps, or other outsourced labor to allow you to meet your peak demand in season, while keeping your costs under control in those low seasons.

“The integration business is seasonal, by nature,” says Harris. “Most integrators typically see less revenue in Q1, with a lot of revenue in Q3. So, when I talk to owners I often hear, ‘We lose money in Q1, but man, we make it up in Q3.’”

This begs the question:

“Why do you settle for losing money in Q1, and what can you do that would allow you to increase your profits?”

Understanding variable costs can help you manage growth

“Integrators often have big opportunistic growth. We have a big project shows up, some years we have double digit growth and we are simply not prepared to achieve that level of growth. So we have to either forgo demand, which is a really hard thing for any us to do, or we take it on and then we do a lot of damage to our customer base because we’re not prepared to take on that extra demand.”

“I’ve found that managing your variable costs with intention requires a lot of work before you just go do it,” concludes Harris. So, don’t miss our blog series, it could change your business.