To all partners,
As this year winds down and you have time to reflect back on the past year have you asked yourself “ what am I going to do differently this coming year that I did not do this past year?”
If you haven’t started preparing a budget for next year no is the time to get started. Regardless the size of your company you need to set sales goals and you need to review your expenses. To be successful you need to take into consideration that there are 22 working days per month and your goal is to fill each of those days with sales. I highly recommend you have a 2 month calendar on you wall in your office and write in every time you schedule a job. Then each day look at that calendar to see how many open days you have in any given month and FILL those days with sales. I have always been one to say “ I much can I afford not to make today.” Let’s say my daily sales goal is $500. Per day ( 1 man crew) and that technician makes $16.00 per hour x 8 hours that technician if not working will cost you $128. for every day he does not work. You average use of chemicals should not exceed on most stone jobs more than $40 to $50 per day , so hard cost you have $128 labor plus 40 to 50 in materials and supplies. Just to cover your expenses you could sell a job for as low as $168 to $178 per day. Would I sell that low no but I could sell a job for $ 325 to 350 and still cover my hard cost. I know you are all thinking well I have other costs associated with running my business, you are correct however you will incur those expenses regardless of the sales you do for any given day. The only thing I want you to think about is how much can I afford not to make today!!
This method of thought will add sales volume to your business. plus if you have employees this make them much happier and will probably stay with you longer if they know they have full time work.
When budgeting your sales take the above into consideration and FILL YOU CALENDARS.
Ok , once your sales budgeted out of the way, now it’s time to figure your cost of if you use averages based upon my experience you materials and supplied should not exceed more than 5 to 6 % of your sales. The other cost of sales would be your fuel cost to and from jobs, which should not exceed 3% of the sales. If you have actual numbers or percentages use those numbers. However if your cost exceed the percentages I mentioned then we probably need to talk.
Based upon you cost for last year you should know what your monthly overhead cost are and you can budget these expenses over the a 12 month period based upon averages or if you have certain months with higher costs put those numbers into your budget.
Without a budget and without monthly profit and lost statement you will be running your business with blinder on. This is a job most of us do not enjoy but its part of being in business.
Oh! One other thing to have effective monthly profit and lost statement , you do need to track your inventory on consumable items, yes this means monthly inventories and tracking orders coming in during the month. to have a true P&L statement you cannot have supply expenses hitting your statement when this consumable could last 2 or 3 months .
Now that I have totally messed up your holiday’s with all this budgeting stuff, I guarantee if you do it and track your P&L Statements next year you will understand your business better then ever before.
If anyone has questions, please feel free to contact me
Merry Christmas and Happy and profitable New Year
John E. Freitag
President/Director
The Stone and Tile School
Office 407-567-7652
Cell 407-615-0134
jfreitag@thestoneandtileschool.com
