Several weeks back one of HMI’s customers contacted me and asked me to look critically at his business. After successive years of growth he had two simple questions: How am I doing? What else should I be doing?
After being tickled by his request (everyone likes to be asked for their opinion) I had him send down financials, management reports, sales and estimating reports and more. He was taking the time to formally budget for 2020 and using the discipline to CRITICALLY EVALUATE and PLAN.
Over time I have remained in continuous awe of the fact that over 50% of the small business’s I evaluate, under $5m in sales, have no budget. Entrepreneurs still tell me it is because budgets are: stifling, burdensome and constraining. Too many entrepreneurs are missing the message that a budget is a tool to illuminate goals and a benchmarking mechanism to help you evaluate how far you have come and how far you need to go.
I like starting budgets small – that is daily – and working my way to monthly, quarterly and annual if appropriate. Examples of questions you can ask yourself to get started:
- How many business days will I work next year?
- How many jobs per day will I do? Can I do? Do I want to do?
- What is my closing ratio from leads?
- How many leads do I need to hit my daily goals at various closing ratios?
- How much do I expect to spend on marketing? (% of Revenue?)
- What are my acquisition/sales costs for one sale?
- What profit margin do I want to make?
- What new initiatives, services, do I want to launch next year?
- What will my business mix be (residential, commercial, and governmental)? What do I want it to be? What will I have to spend and what do I have to do to change the mix?
- Which of my expenses are variable and which are fixed?
When you answer these questions and start multiplying by days you have a budget and the framework of a plan.
During the Discovery and Training Seminar HMI owners openly share tons of statistics relative to bench-marking:
- Lead Volume per market
- Closing Ratios
- Projects per day
- Revenue per day
- Margin Expectation
- & MORE
HMI account managers talk to customers continuously and remain an outstanding resource for perspectives on what others in the business are experiencing. Ask them questions about “the business” when you next call in a poly order. If they do not have the answer to your question on the spot they have the capability and resource pool to get you an answer.
HMI’s Marketing Department may be one of the most underutilized resources available to you. Annie and Fay are the experts and talk with most of HMI’s customers. Things they can do for you, nearly all at no cost:
- Biz Cards
- Case Studies
- Customer Communication Templates & Sample Copy
Counselling & Referrals
- Web Design
- Web Enhancement
- Web Optimization
- Participation in HMI’s National Foamjection Lead Program
If you have not talked with them before you build your 2020 plan you are missing an opportunity.
WHERE DO I START
If you had to prioritize what is your rank order of priorities next year?
- Get more customers?
- Maximize my margins for higher net profit?
- Introduce a new service for diversification and increased upsell?
- Gain efficiency/productivity by mining small geographies?
- Increase my closing ratio for lower cost of sale?
- Increase my upsell for each job?
- Change the mix of my business between; residential, commercial, governmental?
Pick “2” and make a list of tactics you want to aggressively pursue. These could include: more alliance/referral agreements, upsell training for your estimator, demo programs for target segments like Engineers, DOTs and Property Managers.
Budget for it – do it – measure it – modify it.
- “If you do not do something – don’t expect something!”
- “What gets measured – get done!” (A BUDGET)