You may not want to hear this, but you need to start planning for next year today.
Now, before you tell me to **** off, keep reading.
Many contractors avoid planning in their business.
Not because they think it’s a waste of time.
Those same contractors who avoid planning in their biz won’t start a job until there is a completed plan from the customer.
Without a plan, drawings or instructions, most know the job won’t go well.
We all know the value of a plan.
So what holds most of us back?
We don’t plan when we don’t have the right information or data to build a plan.
Planning in your business is mostly looking at the data about what happened, and determining what needs to be done to improve.
It is that simple.
Now, simple isn’t necessarily easy.
The first step in understanding what has happened is to gather a few data points on each job.
- Job date (when did the job happen?): This helps you plan around the seasonality of your business
- Job location (where did the job happen?): This determines if there is a trend to where you’re working.
- Job revenue (how much revenue did the job cost?): This calculates average job revenue and is the basis for the financial plan.
- Job gross profit (how much profit did the job produce?): This is the gold standard for effective planning, but most contractors can’t get close to the correct number here.
- Job lead (where did the job come from?): This focuses your attention on where jobs (good and bad) are coming from.
Most of this data can usually be pulled from your bookkeeper’s information if you don’t have a system in place.
I say usually, because the quality of the info that the bookkeeper entered determines how useful the data coming out will be.
In addition to job specific data, you need marketing and lead details.
- Lead cost (how much does it cost to get one lead): This frames the needed investment to the same or increased levels of revenue.
- Lead conversion (how many prospects converted to customers): This, as well, is a variable in determining your investment for new customers.
Lead generation information won’t be available unless you consistently use a CRM (Customer Relationship Manager) system.
I like Jobber for this, especially for service-based contractors.
One Jobber feature I like is the data it tracks.
Each month, my clients and I receive snapshots of results and critical planning data.
This monthly email lays out what has happened for one my clients.
There were 25 new leads. Almost one lead per day.
53 quotes converted into 24 jobs, a 45% conversion (not including quotes approved the following month)
25 jobs were completed for $71,482, or an average job price of $2,859.28.
And on average, the customer payment was received within 16 days of the invoice date.
Now, let’s look at how we can use this info for a plan.
When it comes to planning for June, the total revenue was $71,482 for 25 jobs.
If he wants to increase revenue to $120,000 for June, that’s a 68% increase in revenue.
Based on the average job price, that is 42 jobs.
And if the lead conversion rate is 45%, he’ll need 94 leads.
If each lead costs him $45, he’ll need to invest $4,230 just to hit his June planned revenue.
We won’t get into planning for labour costs for that $120,000 revenue, or other project costing here.
I get there’s a bit of info to digest above…
But the biggest takeaway is START COLLECTING DATA NOW.
Jobber is a great tool. (Save 20% via the link)
In addition to better managing your jobs, it will gather and organize all the data you need to plan next year.
Another CRM will work as well.
A spreadsheet is a tool of last resorts, but it’s something.
Planning for next year will be impossible if you don’t have data from today.
Good luck.
