On Target Contractor’s Blueprint Chart Your Course to Business Success On Target Business Intensive: Session 6 October 31, 2013 Advisors On Target 1

Session 1 Create a working draft of your Mission Statement Create a working draft of your 1 and 5 year Vision Answer the 10 questions on the handout Session 2 Review your own financial statements and chart of accounts with what you learned in Session 2 Session 3 Create a budget for 2013 (or at least the last quarter) If you already have a budget, review and revise as needed Use the cash flow projection model (at the bottom of the budget tool) 2 Implementation Steps so far

Session 4 Determine your breakeven point for your 2013 budget Annual For the month of October 2013 Define Target Market Do a Competition Analysis Session 5 Fill in information for Target Markets, Competition and Marketing Strategy (Marketing Plan – Parts 1, 2, 3) Create a Marketing Budget using the template Additional activities Values Exercise Implementation Steps (cont.) 3

Recap last week – Questions Customer Communications Plan Sales Goals and Marketing Budget Tracking your marketing and sales Job Profitability Job Costing Job Profitability Tracking Working with your Production Team Agenda for today 4

Questions about anything so far? 5

Your Customer Communications Plan

Customer List Prospects Referral Partners Start with Your Database

CRM Software ACT! Goldmine Salesforce Microsoft Outlook Google Apps Custom Software Others Tools to Manage Your Contact Data Other Tools QuickBooks Microsoft Excel Microsoft Access

Keep Your Master Database Up to Date EVERYONE who handles customer information must be committed to maintaining the database Auxiliary Lists in other software must be updated from the Master Database Newsletter Software (Constant Contact, etc.) QuickBooks Maintain Segmented Lists so you can reach out to a subset Key to Success – Commitment!!!

Define Groups Customers Home Owner Customers Business Customers Contractors Commercial Property Owners Prospects Bid a project Inquired about your services Referral Partners Contractors Designers Property Managers Business Contacts Database Segments

Classifying Your Customers Characteristics Buying Patterns Interests Types of Services purchased When services were performed Classify Your Customers

Rating Your Customers A - Best (Ideal) Customers B – Pretty Good/Average Customers C – Substandard (Upgradable?) D – There shouldn’t be any (Fire them) Rate Your Customers

Who Customers Prospects (Prior bids) Referral Partners How Often Depends on the “Who” At least 4 times per year, probably no more frequently than monthly When Peak interest periods Slow business cycles Natural touch points (holidays, at the end of a job, at “X” period following a job) Develop a Communications Plan – 1

Media – What’s best for your “who” lists? Direct Mail (Postcards, brochures, flyers) Letters Newsletters (Print or Electronic) E-blasts (Specific Purpose – Special Offer) Greeting Cards Telephone Calls In Person Meetings (lunch, coffee) Social Media (LinkedIn, Facebook, Twitter) Variety – Mix up media Reach more people where or how they like to participate Manage costs with less expensive media Develop a Communications Plan – 2

Cost Review Annual Budget If needed, time larger expenditures to projected cash flow Choose marketing media that fits your budget Refine Monthly Budgets to reflect marketing plan costs Action Steps Set Action Plan so you can deploy communications on schedule Keep Marketing and Keep Your Brand Alive! Develop a Communications Plan – 3

What do I say? Relevant information to customer’s needs/wants Highlight timely services Provide value (Educate, Inform, Inspire, Entertain) Offer specials Ask for referrals Call to Action How do I say it? Be customer centric – make it about them Be yourself, use your own voice Develop a Communications Plan – 4

CRM really comes down to this – it’s a way to store the sort of information that adds value for your customers when they do business with you It needs to be supported by a team trained in a customer- centric approach You must be committed to the process With a solid CRM system, you can create a customer communications plan that’s easy to implement When you communicate with your customers you get more business! Conclusion

New CRM possibilities can make a business more customer- centric It can work for Small to Medium Businesses If you can identify your most valuable customers and market to them more effectively, you can increase your revenue substantially. Using Customer Information In New Ways

Provide a month by month sales forecast for the next year based on Historical Sales Market Research Seasonal Flow Growth Assumptions ( Budget) Project Number of Leads/Bids required to achieve sales goals Average size job Close Ratio Lead to Bid Ratio (use 95% if you don’t know) To calculate required leads: Sales Goal ($) divided by Average size job, divided by close ratio, divided by Lead to Bid Ratio Example: $60,000 sales goal divided by $4,000 Average job, divided by 35% close ratio, divided by 95% = 45 leads needed Sales Forecast/Sales Goals

Track effectiveness of marketing efforts Track return on investment of marketing dollars Track effectiveness of sale techniques Track effectiveness of various sales people – owner, estimator, outside sales person, etc. Why track sales?

Should help you measure: Close Ratio – Bid to Sales Dollar Value Bid to Dollar Value Sales Days to close Lead to Bid Ratio Lead to Sales Ratio Cost per lead Cost per sale Effectiveness of Marketing Tactics Sales Tracking Tools

Fill in information for Target Markets, Competition and Marketing Strategy (Marketing Plan – Parts 1, 2, 3) Create a Marketing Budget using the template Implementation Steps 22

Should help you measure: Close Ratio – Bid to Sales Dollar Value Bid to Dollar Value Sales Days to close Lead to Bid Ratio Lead to Sales Ratio Cost per lead Cost per sale Effectiveness of Marketing Tactics Sales Tracking Tools

Let’s look at an example 24

Job Profitability & Productivity

Starts with a good Estimate and Work Order Inform your Production Team Expectations Hours Hours by task breakdown is better Collect Hours daily or weekly Stay on top of Material costs Job cost after every small job and during every big job Debrief in a timely manner Job Costing Example and Tool Quickbooks can also be used as a simple job costing method Job Costing 26

Use QuickBooks to keep track of employee hours, materials & equipment charged to each job Implement a tracking system Job Cost each job in QuickBooks or Excel Summarize the data using the On Target Job Profitability Template Or adapt your existing job costing system to be able to look at all jobs Update monthly & review reports Use for evaluating employee productivity - monthly Use for evaluating profitability of types and sizes of jobs – quarterly or semi-annually Put a system in place

Total Price -Labor -Materials -Equipment rental/other pass-through item = Gross Job Profit Gross Profit by Job

Job Costing Example…

Job Type Invoiced Price Materials Equipment rental and other pass-through costs Labor Cost (Hours x average rate or actual payroll for hours worked) Labor Burden (payroll tax and Workers Comp) Bid rate Hours estimated (and added on) Hours actually worked Foreman/person in charge of job Sales person who sold the job Other relevant data – date of completion, job number Other customized data you want to include or track Customer service feedback Materials estimated What else? Components of Job Profitability

Revenue500,000 -Labor (31%)155,000 -Materials (9%) 45,000 -Other Job Costs (1%) 5,000 -Subcontractors (3.6%) 18,000 = Gross Job Profit277,000 Gross Job Profit % Target 55.4% Set a target from your own budget

Use budget target KPI as a starting point As you begin to track data, your actual company average will emerge High/low performers will show up Re-evaluate & set new targets periodically – company & individual This becomes a KPI

Track the Gross Job Profit % to analyze: Employee Productivity Profitability by job type, by size, by foreman Track the hours bid to hours actually worked by job to analyze: Employee Productivity Accuracy of Hours Estimated Profitability & Productivity Tracking

Let’s look at an example…

Find out the size of jobs that are the most profitable for your company Find out what types of jobs are the most profitable Discover your company’s average gross job profit Evaluate gross job profit by foreman Use this data as a management tool to encourage employee productivity Use the data for management decisions

Generate job profitability reports monthly Meet with each foreman monthly to review graphs & reports Use the opportunity for coaching the foreman for increased productivity Implement the system

Share company targets Review data together Receive feedback from foreman What support he needs from you His ideas for improvement Together set personal targets Discuss ideas for improvement Agree on what will be done Arrange follow-up Coach for Success

Session 6 Start Job Costing every job if you aren’t already Implement a system to track job profitability over time to measure progress Coach foremen to improve Implementation Steps 38