By the Price of Business Show, Hosted by Kevin Price. The Price of Business is a media partner of this site.
Traditionally at this time of year I write about planning – and how simple it can be. So, I’m being the Grinch – reminding you that there will be no Christmas if you don’t plan and don’t track. And, if you don’t plan and don’t track, you can’t complain about what happens to your business!
Listen to the conversation Kevin Price and I had about these questions.
So, how do you get the Grinch to go away?
Invest only an hour or two in each of three areas…and track the results. To make it even easier, you don’t have to do the entire hour at once…15 minutes a day for a week can do that.
Where to find 15 minutes:
- Think for 7 minutes in the shower…that’s half the day’s 15 minutes.
- Close your door, shut off your phone, and research for 15 minutes…not at the busiest times of the day
- Or, stay home when everyone is gone. The quiet time will feel weird at first. You will begin to enjoy it.
- Record an idea into the audio app on your phone.
- Plan while you are eating
- Plan while you are walking your dog (I have many, many conversations while I am walking my dog, Blackie)
- Get your kids to help – they have heard you talk about business at the dinner table…get them involved. They probably will come up with ideas you would never think of
Over the next few weeks I’ll give you the three planning areas…each turns into a page. And, unless you need a bank loan, these three pages are all you have to do!
First, here are some of the best profitability areas to track:
Productivity – For every dollar you take in the door, how much do you spend on payroll and payroll taxes? This ratio includes all payroll – field, office, and owners. Don’t include any benefits in this calculation. Payroll taxes are FICA, Medicare, and unemployment. This percentage should be under 40%. The lower the better.
Net profit per hour – For each billable or revenue producing hour how much profit do you generate?
Overhead cost per hour – for each billable or revenue producing hour, how much overhead cost is there? To determine this number, take your department or company overhead and divide by billable, or revenue producing hours.
Average project/job revenue.
Sales closing ratio – are you burning leads or are your leads profitable?
Job cost. You need to know that all of your jobs are profitable.
Once you know the answers to these questions, decide whether you like the answers. If you don’t your goals should reflect the changes you want to make.
