Do you like sports? Follow any particular teams? Play any sports?
It’s remarkable how clearly all who watch or play in a game understand who won. The rules are laid out in detail. Both teams agree to follow them. Usually there is a limit on the amount of time a game can take.
Define your win
Among remodeling company owners, a lack of clearly defined rules is often the norm. When I say “rules,” I’m thinking: What does a win look like at year’s end? How many net profit dollars does the company plan to earn? What are the overhead costs? What salary does the owner need to earn?
Add net profit dollars to overhead dollars (including the owner’s salary) for the company’s gross profit dollar (GP) goal. At what GP (or margin) percentage can the company sell?
Divide GP dollars by GP percentage for gross sales the company needs to produce for the year. How will the company do that work? What size workforce is needed? and so on.
By addressing those and related questions before the game starts, before the fiscal year gets under way, the owner gives herself and her employees a clear idea of what a win looks like. Most of the answers to these questions are in the company budget.
What’s the likelihood of achieving success if the company doesn’t create a game plan — a budget — for the year? Very low. Never done a budget? Well, there’s no time like the present to create one. Don’t you want to increase the likelihood of winning the game of business you’re playing? —Paul Winans is a facilitator for Remodelers Advantage.
Your New Best Friend: It’s easier to make cost-cutting decisions when you have a budget to back you up