Chart Your Course to Business Success
November 7, 2013
Advisors On Target
On Target
Contractor’s Blueprint
On Target Business Intensive: Session 7
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Implementation Steps so far
• Session 1
• Create a working draft of your Mission Statement
• Create a working draft of your 1 and 5 year Vision
• Answer the 10 questions on the handout
• Session 2
• Review your own financial statements and chart of accounts with
what you learned in Session 2
• Session 3
• Create a budget for 2013 (or at least the last quarter)
• If you already have a budget, review and revise as needed
• Use the cash flow projection model (at the bottom of the budget
tool)
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Implementation Steps (cont.)
• Session 4
• Determine your breakeven point for your 2013 budget
• Annual
• For the month of October 2013
• Define Target Market
• Do a Competition Analysis
• Session 5
• Fill in information for Target Markets, Competition and Marketing
Strategy (Marketing Plan – Parts 1, 2, 3)
• Create a Marketing Budget using the template
• Session 6
• Outline Customer Communications Plan
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Implementation Steps (cont.)
• Additional activities
• Values Exercise
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Agenda for today
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Recap last week
Sales Goals and Marketing Budget
Tracking your marketing and sales
Job Profitability
• Job Costing
• Job Profitability Tracking
• Working with your Production Team
• Client Process System (begin- finish next week)
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Lead Intake
Sales Follow Up
Job Process
Ongoing Relationship
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Sales Forecast/Sales Goals
• Provide a month by month sales forecast for the next year
based on
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Historical Sales
Market Research
Seasonal Flow
Growth Assumptions ( Budget)
• Project Number of Leads/Bids required to achieve sales goals
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Average size job
Close Ratio
Lead to Bid Ratio (use 95% if you don’t know)
To calculate required leads: Sales Goal ($) divided by Average size
job, divided by close ratio, divided by Lead to Bid Ratio
• Example: $60,000 sales goal divided by $4,000 Average job,
divided by 35% close ratio, divided by 95% = 45 leads needed
Why track sales?
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Track effectiveness of marketing efforts
Track return on investment of marketing dollars
Track effectiveness of sale techniques
Track effectiveness of various sales people – owner, estimator,
outside sales person, etc.
Sales Tracking Tools
• Should help you measure:
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Close Ratio – Bid to Sales
Dollar Value Bid to Dollar Value Sales
Days to close
Lead to Bid Ratio
Lead to Sales Ratio
Cost per lead
Cost per sale
Effectiveness of Marketing Tactics
Let’s look at an example
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Job Profitability & Productivity
Job Costing
• Starts with a good Estimate and Work Order
• Inform your Production Team
• Expectations
• Hours
• Hours by task breakdown is better
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Collect Hours daily or weekly
Stay on top of Material costs
Job cost after every small job and during every big job
Debrief in a timely manner
Job Costing Example and Tool
• Quickbooks can also be used as a simple job costing method
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Put a system in place
• Use QuickBooks to keep track of employee hours,
materials & equipment charged to each job
• Implement a tracking system
• Job Cost each job in QuickBooks or Excel
• Summarize the data using the On Target Job Profitability
Template
• Or adapt your existing job costing system to be able to look
at all jobs
• Update monthly & review reports
• Use for evaluating employee productivity - monthly
• Use for evaluating profitability of types and sizes of jobs
– quarterly or semi-annually
Gross Profit by Job
Total Price
- Labor
- Materials
-Equipment rental/other pass-through item
= Gross Job Profit
Job Costing Example…
Components of Job Profitability
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Job Type
Invoiced Price
Materials
Equipment rental and other pass-through costs
Labor Cost (Hours x average rate or actual payroll for hours worked)
Labor Burden (payroll tax and Workers Comp)
Bid rate
Hours estimated (and added on)
Hours actually worked
Foreman/person in charge of job
Sales person who sold the job
Other relevant data – date of completion, job number
Other customized data you want to include or track
• Customer service feedback
• Materials estimated
• What else?
Set a target from your own
budget
Revenue
- Labor
(31%)
- Materials (9%)
- Other Job Costs (1%)
- Subcontractors (3.6%)
= Gross Job Profit
500,000
155,000
45,000
5,000
18,000
277,000
Gross Job Profit % Target
55.4%
This becomes a KPI
• Use budget target KPI as a starting point
• As you begin to track data, your actual company average will
emerge
• High/low performers will show up
• Re-evaluate & set new targets periodically – company &
individual
Profitability & Productivity
Tracking
• Track the Gross Job Profit % to analyze:
• Employee Productivity
• Profitability by job type, by size, by foreman
• Track the hours bid to hours actually worked by job to analyze:
• Employee Productivity
• Accuracy of Hours Estimated
Let’s look at an example…
Use the data for management
decisions
• Find out the size of jobs that are the most profitable for
your company
• Find out what types of jobs are the most profitable
• Discover your company’s average gross job profit
• Evaluate gross job profit by foreman
• Use this data as a management tool to encourage
employee productivity
Implement the system
• Generate job profitability reports monthly
• Meet with each foreman monthly to review graphs & reports
• Use the opportunity for coaching the foreman for increased
productivity
Coach for Success
• Share company targets
• Review data together
• Receive feedback from foreman
• What support he needs from you
• His ideas for improvement
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Together set personal targets
Discuss ideas for improvement
Agree on what will be done
Arrange follow-up
Implementation Steps
• Session 6
• Start Job Costing every job if you aren’t already
• Implement a system to track job profitability over time to
measure progress
• Coach foremen to improve
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Client Process System
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Lead Intake
• What happens when someone inquires about your service?
• Call in to office
• Direct contact with owner/employee
• Contact via web/email
• Capture relevant information
• Fill out Lead sheet or
• Enter Directly in CRM and/or
• Enter in Sales Tracking
• Schedule an estimate appointment or
• Decline to bid
• Refer to another contractor
What info do you need to
collect at lead intake?
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Name
Address
Phone
Email
How they heard about your company (lead source)
Type of work (Interior, Exterior, Specialty work, etc.)
Time frame
Budget
Scope of work/Size of job
Age of home (pre 1978)
Worked with professional painting contractor?
What else?
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Estimate Phase
• Ask pre-determined questions to further qualify client during
estimate appointment
• Create detailed take-off sheet/work order to aid in creating
proposal as well as provide more detailed instructions to
foreman
• Create master proposal templates
• Create master paragraphs for language to include in proposals
for standard items
• Create a appendix of PDCA standards to attach and reference
standards by number in proposal to eliminate the need to add
standards to proposal.
Pre-contract (Post Estimate)
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Ask additional predetermined qualifying questions if needed
Prepare and send or deliver proposal to customer
Enter Contact info in CRM (if not done previously)
Update Sales Tracking and/or CRM with status
Tickler for follow up
Job Sold
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Submit signed Proposal and Contract to office with deposit
Submit Work Order to office
Assign a job number
Create Customer file in QuickBooks
Enter Estimate and Deposit in QB
Create Field File and Office File
Schedule the job on job calendar
• Tentative time frame at least
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Send Customer a letter regarding schedule and payments
Send Customer “to do” list
File pre-lien if applicable
Send Thank You to Referral if applicable
Follow up communication with customer re schedule
Update sales tracking or CRM
Job Scheduled
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Schedule walk through with customer
Confirm Colors with customer
Confirm customer “to do” list with customer
Follow up with customer regarding schedule if needed
Give file folder to foreman
Order special equipment needed
Materials ordered
What’s in the field folder?
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Map
Copy of contract, if appropriate
Copy of scope of work
Work Order
Color Confirmation Sheet
Customer Communication Sheet
Blank Change Order Forms
Customer Feedback form
RRP info
What else?
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Job In Progress
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Report hours worked daily
Use customer communication form
Give progress invoices to customer
Collect progress payments
Fill out change orders if needed
• Get customer signature
• Return change order to office
• Invoice change orders
• Collect Materials invoices/receipts
Job Wrap up
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Prepare final invoice
Conduct a final job walk through with customer
Give final invoice to customer
Collect payment
Ask customer to fill out feedback form
Schedule return touch ups if needed
Post Job
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Return field folder to office
Contact customer to thank them and answer questions
Receive final payments
Tickler for collections for outstanding payments
Send thank you note (gift if appropriate)
Complete Job Costing
File completed job paperwork
Update customer data in CRM
Tickler for follow up
Ongoing Relationship
• Customer Communications Plan
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Newsletter
Special Offers
Letters/Greeting cards
Gifts (as appropriate)
Telephone calls (as appropriate)
• Warranty/Maintenance Follow up
• Schedule annual visit or follow up
Implementation Steps
• Session 7
• Sales & Marketing
• Set Sales Goals
• Start Tracking Sales and Marketing
• Job Costing
• Start Job Costing every job if you aren’t already
• Implement a system to track job profitability over time to measure
progress
• Coach foremen to improve
• Client Process System (may move to Session 8)
• Review Job Process Outline and Job Process Checklist
• Customize Checklist for your company
• Start to implement a more organized approach to your job process –
add structure a piece at a time
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