In today’s issue…
The new year – even when it’s already two months old! – is always filled with hope.
Hope for better health, perhaps, more business, and/or improved personal relationships. Plus this…
Hope that your competitors don’t have a plan for 2020.
Plans help business owners make things happen. Plans have goals, and deadlines. Plans have strategies. If any of your competitors have a plan for 2020, they are likely to have a better year than your competitors who don’t.
Of course, you can only hope your competitors don’t have a plan. But you can do something about having your own plan.
Here are some steps to help you develop a plan for 2020 success…
Grow Revenues. How much more business would you like to do this year, than last? 5% is kind of a minimum number, and you should aim higher if you’re willing to do the work required.
Plan for Greater Profit. Your profit goal for 2020 should exceed the profits earned in 2019. If you earned 5% net profits in 2019, you should shoot for 7% or 10% in 2020. (Or more!)
Become More Productive. Revenues per employee is a common productivity metric, but we like Gross Profit per Employee even better. There is also the critical CI goal of Labor Revenues per Tech.
Your annual goals won’t be realized until year’s end, so you need to set monthly targets to help you chart your progress through the year. Divide the annual goal by 12. Not sophisticated, but effective.
The strategies for achieving goals will help determine the management actions that need to be taken. Here are proven methods for achieving the 3 goals above..
Sell more to existing customers (implement marketing activities to increase repeat business)
Sell more to each customer, by selling more expensive products and/or adding on to each sale (this really works!)
Pricing – strategically raise prices (most CI’s do NOT charge enough for install parts or labor)
Sales mix – sell more high-margin products/fewer low-margin products (you might even add a new high-margin category)
Staffing – “right-size” your company to maximize overall GP-per-employee ($120K per year is a very good number)
Efficiency – train salespeople so they each sell more, installers & technicians so they each bill more. Streamline admin processes.
Billing Practices - Drive time, office time, staging, delivery time; all defeat productive hours. Look for causes of overruns, avoid repeating them. Fix bad estimating practices. Your billing rate should be 4 to 5 times your average wage rate.
Measure & Review
Whatever the improvement activities your company employs, you must regularly measure to determine if they are working (there are metrics for almost every strategy in the list above). This is what the Bi4Ci dashboards are all about. You must check your monthly progress to stay on target!
Here’s hoping your company will do more than hope. Here’s hoping that you’ll set goals and develop a plan and implement new strategies. Because hope, alone, is not enough.