5 Enemies of Growth: What is Hitting Field Service Firms Hard?
In this third feature of a series of excerpts from a recent white paper published by BigChange, we analyse the key issues that hit field service businesses in the past 12 months.
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Despite rapid growth, businesses with field-based teams reported three key issues that had materially hit their business in the past 12 months.
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1. Covid-19 and its consequences
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81% of businesses said the pandemic had hit turnover or profits in the last 12 months. Four in ten reported that it had led to staffing difficulties.
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2. Expensive materials and fuel:
Three-quarters of companies say the rising cost of materials (76%) and fuel (74%) are hurting their business. In the 12 months covered, pump prices for petrol rose by 18% t o near-record levels; diesel leapt by 16%.
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Firms expect the same factors to dampen or even eliminate profitability in the next 12 months.
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3. Staying within the rules and regulations
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Compliance challenges – including those stemming from the pandemic – are hurting firms. Two-thirds of field service companies say that new regulations hit their profits in the year to July 2021.
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In the last 12 months, more than half breached industry regulations in ways that led to a fine, loss of reputation or loss of work. A quarter (25%) incurred financial penalties for breaches.
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The risk of accidentally contravening rules and regulations increases as companies expand rapidly. Two further issues for firms also emerged in our analysis.
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4. The productivity pinch point
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When it comes to employment, the trades have outperformed the rest of the economy in the last year. The number of people working in field service firms increased by 48%.
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But this increase was slower than the 70% rise in workloads.
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Firms anticipate further growth in workloads (74%) in the next 12 months, and a lower increase in the extra employees they will take on (54%).
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There will be pressure on already busy field service teams to work even more efficiently.
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5. Rising debt levels
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The amount of debt taken on by field service businesses increased by 50% over the last 12 months.
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While some businesses have used finance to underpin their expansion activities (average debt increased by 43% at firms reporting good profit and growth prospects), the biggest increases in debt levels were among loss-making firms borrowing for survival.
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Average debts were up 117% over the last 12 months at businesses that said they were struggling and feared going out of business and increased by 61% at loss-making firms where leaders believed a turnaround was possible.
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Access to Government-backed finance made it easier for most businesses to borrow last year. This debt will add an additional cost burden to some already struggling firms.
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STATE OF THE FIELD SERVICE SECTOR
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Demand and workloads are soaring. Essential costs are on the rise. And recruitment is challenging. Many firms in the survey have addressed these challenges by pushing hard to improve productivity.
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Where is time and money lost in field service businesses?
Poor management oversight: 27% said difficulties getting complete and up-to-date management oversight stops them from working as efficiently as possible. 82% want oversight of all parts of operations in real-time.
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Outdated technology: Clunky legacy workforce-management systems that couldn’t keep pace with the demands of today were an efficiency issue for 27% of firms.
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Poor planning and workflow: 24% say that wasted time between jobs, including travel, is harming efficiency efforts.
As a result, many are now looking to optimise operations with technology.
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Less strain, efficiency gain: The rise and rise of job-management technology
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73% of field service businesses increased investment in technology in the last 12 months. Technology spending increased by an average of 54% year on year.
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Firms expect to keep up these rates of tech-spending growth into 2022 as they turn to technology for management oversight, process automation, job scheduling and route planning.
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Year on year company growth was faster, on average, for users of field service management technology. And those growing quickly are doubling down on technology: they are more likely than other firms to invest in it over the next year.
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Productivity
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Where is time and money lost in the field service business?
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- 27% say difficulties getting real-time insights harms efficiency
- 27% of firms felt outdated technology was an efficiency issue
- 24% say wasted time between jobs is harming efficiency
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Further Reading:
This content is sponsored by BigChange
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