are you running your business or is your

Presented byRichard Wilbert

and

Are You Running Your Business or

Is Your Business Running You? A frank discussion on managing

your business for success

The Business Plan

Goals of the Webinar

• Discuss the key ingredients to running a successful business

• What to watch and track as the owner/ manager

• Key elements – Strategic Plan– Budgets

– Key indicators

Developing a Strategic Plan

• The Strategic Plan is your operating guide for your business with a future looking forecast

Elements of the Strategic Plan

• Vision Statement– A statement of where the company will be in 3

to 5 years

Elements of a Strategic Plan

• Mission Statement– Statement of the business you want to be,

express your values, overall characteristics of the company

– Express the values and attitudes of the stakeholders

– Stakeholders are: Employees, customers, vendors and the community in which you operate


• Goals– Goals are ongoing and what we strive for long

term.– Example of a goal: To increase market share

in the maintenance business.


• Objectives– Goals and objectives go hand in hand– The Objective is the subset of the goal which

should be measurable and have a timeline

– An example is: Increase the market share in the Maintenance business 10% by June I, 2012


• Action Plan is created for each objective– Who, what, by when?– A chart is developed to assist with

measurement of the actions. Track your progress.


• Risk Analysis– Evaluate the risk of each goal from internal

and external factors– Develop contingency plans if the risk is to

great to the business– Track the progress


• Market and competitive analysis– Who are the competitors and where do they

rank in your market place– Entry and exit barriers to your goal

– Is your pricing structure reasonable?– Evaluate yourself using the eyes of

competition, customers and suppliers

– What resources are necessary to move, people, finances, technology, facilities, etc


• Financials– Develop a budget based on your plan and

evaluate the reality of the budget and resources available.

Budgeting

Budget

• The Budget is your financial road map and is used to determine whether you are on track or not.– Annual budgets are spread over 12 months of

the fiscal year– Based on the projected revenues of each

month and business activities of each month– Example: May is most likely busier than

December, your budget should reflect that activity

Budget

• Start by creating a Chart of Accounts:– Most software packages will assist with the

Chart of Accounts, but make it unique to your company.

– Planet has sample Charts of Accounts in it’s publications available for you to purchase.

Budget

• Budget layout:– Revenues or Sales– Costs of Goods- Direct labor, Materials,

– Gross Margin – Sales minus COGS– Expenses – Rent, Insurance, Office expenses– Net Margin (Profit)- Gross margin minus

Expenses

Budgets

• Create a list of costs that you include in each account item for future reference

• Once annualized, create a monthly spreadsheet based on fiscal year- 12 budgets by month

• This becomes the outline for your Profit and Loss Statement or Income Statement

Profit and Loss Statement


• A Profit and Loss Statement is sometimes called the Income Statement or the P&L

• This is your Chart of Accounts with actual numbers added to the document.


• The P&L serves as the report card of your company’s performance each month.

• Many software packages will compare the P&L to previous years/months, year to date and offer percentages for easy comparison of numbers.


• The P&L can lead to a number of other financial ratios such as: Return on Investment (ROI), Return on Assets (ROA) and many others that we will not discuss at this time, but be aware that these calculations are important to investors and bankers.

Key Financial Indicators

• These Financial Indicators are important to managing your business and can provide a quick look at your business and tell you about your company’s performance.


• Direct Labor– Labor is your largest expense in most cases– Create benchmarks from past years to

compare your labor percentage to your current statement

– Watch the percentage as it moves up or down, it is a good indicator of the health of your business and whether you are making a profit.


• Material Expense– Materials are an expense in the Design Build

and Bid Build world that can create large swing in your P&L

– Look at this number percentage on the yearly average, compare to your monthly statement

– This number can indicate whether you missed something in monthly invoices, or over expensed a budget item on a project or mis- coded an account for an item.


• Gross Margin– This is direct cost minus revenue– Most landscape contractors are running

between 45 % to 55% depending the mix of work.


– Operating Profit• Funds remaining after all expenses are paid• This can range from 0% to as much as 10% or

more for good companies• The average Landscape company is between 3%

and 5%


• Job costing– This is a report of how a specific job is doing against budget– Construction contractors should be running this information

weekly on large projects– 2 keys elements again are labor and materials– This information is gathered from daily time sheets from the field– You need to know your financial position on project to determine

issues that may be out there– Labor overruns and material overruns are what you are looking

for on this report.– You want the opportunity to make correction before the project is

complete.


• Job Costing– Maintenance contractors should review

projects on a monthly basis to determine labor issues.

– Materials are not as important on maintenance projects.

– You need to determine how detailed you want to be on your projects, whether it is just man hours or to be broken down by job function: such as Mowing, Pruning, Weeding??


• Payables– What you owe the suppliers and vendors for the goods

purchased for a project.– Most vendors and suppliers offer terms of net 30. Thirty days

from date of purchase they expect payment– You need to develop a rolling chart of when you can make your

payment to them, referred to as cash flow report.– Include such things as payroll, taxes, equipment payments– Knowing when and where the funds are coming from to make

these payment is a necessary part of your business.


• Receivables or Aging– These are the payments from your customers to you sometimes

referred to as aging.– This will help determine when you can make your payments– Knowing how your customers pay is important in you meeting

your obligations to your suppliers, employee and good ole Uncle Sam.

– Watching this closely is a method of knowing if there may be an issue with a customer.

– Most contractors will invoice net 30 or pay in 30 days– If you allow this number to grow from 30 days it will cost you

money– It is important to get on top of these numbers and collect the

money owned your company


• Days of Sales Outstanding (DSO)– This term refers to the number of days from

invoice to collection.– The longer the days outstanding the slower

the customers are paying you.– This needs to be monitored by someone in

your office

Are you Running your Business or is your Business running you?

• Running a business is not an a science it is an art!


• But being prepared to manage your business will make it much easier


• Use the tools that we have discussed and it will be easier to manage. Have a plan.


• You can run a successful Business using the right tools

SiteSource Business Coachingand Consulting• Richard Wilbert

Email: [email protected]

www.sitesourcebusinesscoaching.com

303-909-0798

mailto:[email protected]

http://www.sitesourcebusinesscoaching.com/

are you running your business or is your

Documents

strategic planmarket

strategic planobjectivesgoals

strategic plangoalsgoals

maintenance business

strategic planaction

business activities

successthe business

loss statementprofit