My buddy is an MMA fighter.

And he’s scary as hell.

He wears a shirt with a Mike Tyson quote that, according to him, perfectly explains the chaos of fighting.

The best fight plans fall apart the moment you get punched.

Fighting is all about reacting and adjusting. The plan you have in round 1 is different from the one in round 3.

Plans in your business are exactly the same.

Whether it’s an annual financial plan or just planning your day, plans fall apart pretty quick.

And this is why most contractors don’t bother investing time in building a financial plan.

Why spend the time and energy figuring out a spreadsheet to guess a profit number for the end of the year, if “No plan survives first contact with the enemy.’

Now it’s easy to justify not building a financial plan, but hear me out.

Most good craftsmen would never start a job without detailed plans, blueprints or clear instructions.

Almost every contractor or builder has argued with a customer over what the customer said they wanted.

Approved plans are absolutely necessary.

That doesn’t mean there won’t be some problem-solving, schedule shifting, and changes to the plan.

But a plan sets expectations and creates an endpoint.

A good financial plan analyzes past performance and forecasts future results.

It sets expectations, establishes guardrails, and outlines the actions you and the team need to take.

Will the initial plan be wrong?

Yes. 100% it will be wrong.

But the exercise of creating the plan, comparing results against it, and then making monthly adjustments will make you make more money.

In the book Psycho-Cybernetics, Dr. Maxwell Maltz explains how to reach goals with an analogy of a missile.

After launching, missiles go off course almost immediately. But missiles use a series of relays to determine the target’s position relative to the missile. When the missile goes off course, it corrects itself.

The missile is gathering data and making micro adjustments the entire way until it hits the target.

Missile technology is not precise in a single shot; it requires evaluating collected data and frequently correcting its position.

Successful contractors don’t execute a perfect plan perfectly.

They track data against a plan and course-correct FREQUENTLY.

Your ability to collect data and adjust your business is the best indicator of how fast you’ll sustainably grow.

At the end of the day, building a plan is crucial, but it’s only the beginning.

Precision Profit Planning Template

1. Prior Year information

The first part is entering your prior year’s financial information.

If you don’t have clear financial information, this will be hard.

Don’t expect to make better financial decisions if you’re looking at clear past financial information.

2. Seasonality

The template walks you through understanding the seasonality in your business.

Most contractors don’t have consistent work every month of the year.

The template takes that into account.

3. Direct/ Variable Costs

The template helps you dissect and analyze the key direct costs, especially labor.

It highlights how much of each type of labor you’ve used and will need in your plan.

Types of labor include general, skilled, and leadership labor.

So if you have apprentices, jmen and project managers or foremen, the template clarifies your labor burden at a granular level.

4. Marketing + Branding

Understanding the cost of a lead and a customer is crucial to know how much you’ll have to invest to increase your lead flow and ultimately your converted customers.

The template will take you through that step by step.

Your marketing function is your business’s engine. Checkout  the key metrics you need to track here.

5. Overhead/ Fixed Costs

The template breaks down your overhead and your breakeven revenue. Meaning, how much revenue will you need to generate before you get $1 in profit?

For most businesses, you have to make a fair amount of revenue before you’ll see a lick of profit.

6. Annual Budget and Plan

At the end of it all, you’ll have a monthly financial plan.

You can build scenarios that raise the average job price by 5% or invest more in marketing.

The dynamic template will clearly show you what you need to do, how many people you need to hire, and how early you need to start marketing.

Once you better understand how much of a $1 of revenue will end up in your pocket, you’ll start operating more profitably.

Grab the template here

Watch the YouTube instruction video here.