1. Chart Your Course to Business Success On Target Business Intensive: Session 6 May 1, 2012 Advisors On Target 1

2. 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 2012 If you already have a budget, review and revise as needed Use the cashflow projection model (at the bottom of the budget tool) 2 Implementation Steps

3. Session 4 Determine your breakeven point for your 2012 budget Annual For the month of February 2012 Define your target markets (Fill in Marketing Plan – Part 1) Do a competition analysis (Fill in Marketing Plan – Part 2) Session 5 Define Marketing Strategies (Fill in Marketing Plan – Part 3) Include a Customer Communications Plan Create a Marketing Budget using the template Additional activities Values Exercise Business Diagnostic Assessment Implementation Steps (cont) 3

4. Recap last week – Questions 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

5. Questions about anything so far? 5

6. Sales Forecast/Sales Goals 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

7. Marketing Strategies and Tactics are informed by: Your Target Market and the best ways to reach them The number of leads you need to reach your sales goals The strength of your CRM and your Customer Communications Plan Your Marketing Budget Use Marketing Budget tool to plan for marketing/advertising spending and timing of marketing activities Marketing Strategy/Budget 7

8. Why track leads and sales? 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.

9. Sales Tracking Tools 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

10. Let’s look at an example 10

11. Job Profitability & Productivity

12. 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 12

13. 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

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

15. Job Costing Example…

16. 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?

17. Set a target from your own budget 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%

18. 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

19. 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

20. Let’s look at an example…

21. 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

22. 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

23. 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

24. 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 24