Without looking, how do you think your business did this year? Are you feeling more profitable or less? Is your business running more smoothly or are the problems overwhelming?
It’s time to look at how your business performed, both financially and operationally, over the past year. This exercise is one of the more worthwhile things you can do. It’s easy to keep going, day after day, and not realize that bad habits have formed or that your business has taken a slow turn in the wrong direction.
Now is the best time to start that exercise. We suggest starting around November 15 so that by the end of the year, you’ve had the time to process the past and set your direction for the future.
We’ve revamped the two articles on our website that discuss year-end planning, they are now easier to follow. Download links for a printable format are available at the end of each article. (Year-End Planning Part 1 and Part 2)
There are three steps: collect data, make projections, and pull it all together.
Start now to collect the data. It’s not all financial data; you also need to review your leads-to-sales performance, completed jobs, and business relationships. You won’t remember it all in one sitting, so get started and add to it over the next few weeks.
Projections for next year are easier when you’ve collected the data for this year. Once you’ve made your projections, pull it all together by looking at your marketing, advertising, and markup. Now you have a plan for the coming year.
Don’t decide to take a day or two in December to do this drill. It takes time to do it right. If you’re in the habit of giving projects like this a lick and a promise, that’s the results you’ll get as well. You’ll get out of it what you put into it. Admittedly, it isn’t nearly as exciting as building a job, but it’s just as important.
Regardless of how you’ve done this year, the goal is to finish 2019 in better shape than 2018. If you’ve had a profitable year, that’s great but you can’t coast. In construction, you’re only as good as your next job, and 2019 will be profitable if you put the effort into making it profitable.
On the other hand, if you’ve worked your buns off in 2019 trying to make ends meet, and they didn’t, take a look at what happened so you can set a plan to change direction. You want to cruise into 2020 in the black and running a good business.
Take the time to do this exercise to see where you and your company have been and where you’re going. It can be a pivotal experience for your business; those who’ve done it have seen remarkable results in the coming year. Let us know if we can help.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.