On Target Contractor’s Blueprint Chart Your Course to Business Success On Target Business Intensive: Session 7 November 7, 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 Session 6 Outline Customer Communications Plan Implementation Steps (cont.) 3

Additional activities Values Exercise Implementation Steps (cont.) 4

Recap last week Sales Goals and Marketing Budget Tracking your marketing and sales Job Profitability Job Costing Job Profitability Tracking Working with your Production Team Client Process System (begin- finish next week) Lead Intake Sales Follow Up Job Process Ongoing Relationship Agenda for today 5

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

Let’s look at an example 9

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 11

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 23

Client Process System 24

Lead Intake What happens when someone inquires about your service? Call in to office Direct contact with owner/employee Contact via web/ Capture relevant information Fill out Lead sheet or Enter Directly in CRM and/or Enter in Sales Tracking Schedule an estimate appointment or Decline to bid Refer to another contractor

Name Address Phone How they heard about your company (lead source) Type of work (Interior, Exterior, Specialty work, etc.) Time frame Budget Scope of work/Size of job Age of home (pre 1978) Worked with professional painting contractor? What else? What info do you need to collect at lead intake? 26

Estimate Phase Ask pre-determined questions to further qualify client during estimate appointment Create detailed take-off sheet/work order to aid in creating proposal as well as provide more detailed instructions to foreman Create master proposal templates Create master paragraphs for language to include in proposals for standard items Create a appendix of PDCA standards to attach and reference standards by number in proposal to eliminate the need to add standards to proposal.

Pre-contract (Post Estimate) Ask additional predetermined qualifying questions if needed Prepare and send or deliver proposal to customer Enter Contact info in CRM (if not done previously) Update Sales Tracking and/or CRM with status Tickler for follow up

Job Sold Submit signed Proposal and Contract to office with deposit Submit Work Order to office Assign a job number Create Customer file in QuickBooks Enter Estimate and Deposit in QB Create Field File and Office File Schedule the job on job calendar Tentative time frame at least Send Customer a letter regarding schedule and payments Send Customer “to do” list File pre-lien if applicable Send Thank You to Referral if applicable Follow up communication with customer re schedule Update sales tracking or CRM

Job Scheduled Schedule walk through with customer Confirm Colors with customer Confirm customer “to do” list with customer Follow up with customer regarding schedule if needed Give file folder to foreman Order special equipment needed Materials ordered

Map Copy of contract, if appropriate Copy of scope of work Work Order Color Confirmation Sheet Customer Communication Sheet Blank Change Order Forms Customer Feedback form RRP info What else? What’s in the field folder? 31

Job In Progress Report hours worked daily Use customer communication form Give progress invoices to customer Collect progress payments Fill out change orders if needed Get customer signature Return change order to office Invoice change orders Collect Materials invoices/receipts

Job Wrap up Prepare final invoice Conduct a final job walk through with customer Give final invoice to customer Collect payment Ask customer to fill out feedback form Schedule return touch ups if needed

Post Job Return field folder to office Contact customer to thank them and answer questions Receive final payments Tickler for collections for outstanding payments Send thank you note (gift if appropriate) Complete Job Costing File completed job paperwork Update customer data in CRM Tickler for follow up

Ongoing Relationship Customer Communications Plan Newsletter Special Offers Letters/Greeting cards Gifts (as appropriate) Telephone calls (as appropriate) Warranty/Maintenance Follow up Schedule annual visit or follow up

Session 7 Sales & Marketing Set Sales Goals Start Tracking Sales and Marketing Job Costing 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 Client Process System (may move to Session 8) Review Job Process Outline and Job Process Checklist Customize Checklist for your company Start to implement a more organized approach to your job process – add structure a piece at a time Implementation Steps 36