On Target Contractor’s BlueprintChart Your Course to Business Success

On Target Business Intensive: Session 6

Oct

ober

31,

201

3Ad

viso

rs O

n Ta

rget

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.)

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• 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• Email 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

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• 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

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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

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• 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

Revenue 500,000- Labor (31%) 155,000- Materials (9%) 45,000- Other Job Costs (1%) 5,000- Subcontractors (3.6%) 18,000= Gross Job Profit 277,000

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

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