Business Acceleration Program Fall 2015 Session 10 November 19, 2015

Check in

Course Outline Weeks – Long Term Focus Weeks – Quarterly to Monthly Focus Weeks – Nuts and Bolts of running your business Weeks – Gaining Traction

8 Questions from Traction What are your core values? What is your core focus? What is your 10 year target? What is your marketing strategy? What is your 3 year picture? What is your 1 year plan? What are your quarterly Rocks? What are your issues?

Job Profitability and 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 7

Put a system in place 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

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

Job Costing Example…

Components of Job Profitability 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?

Set a target from your own budget Revenue500,000 -Labor (31%)155,000 -Labor Burden (5%) 10,000 -Materials (12%) 60,000 -Other Job Costs (1%) 5,000 -Subcontractors (3.6%) 18,000 = Gross Job Profit $252,000 Gross Job Profit % Target 50.4%

This becomes a KPI 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

Profitability & Productivity Tracking 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

Let’s look at an example…

Use the data for management decisions 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

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

Coach for Success –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

–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 19

What you can measure you can manage!

Action for the week Traction Read Chapter 9 Keep working on your Vision Traction Organizer with what you have identified so far. Action Keep working on your budget, sales goals and metrics, marketing plan, & systems list Job cost 1 job this week

Next Week Traction –Rocks –Issues –Meetings

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