Archives for March 2019

The Importance of Creating a Business Plan

In October’s article, we took a look at how most business owners spend more time planning a vacation than they do planning for the future growth of their company. This month we are going to take a closer look at how to create a written business plan.

The starting point of any family vacation is determining where we want to go and when. Your business plan starts the same way. Where do you want the company to be in one, three or five years? Do you want to double in gross sales, pick up additional products and services, or simply increase the bottom line profit in percentage and/or dollar amount? You can’t create a plan to reach your goal until you know where you want to go. Most families know the destination of their vacation before they start their trip. Your business is no different. Step one is to answer the following question: what do you want your company to look like several years in the future?

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Ok, we now know what our five-year goal is. The destination of the family vacation was set months before the trip took place. Why? Because it was going to take some planning. Mom and dad had to plan the route, get the vehicle checked out, purchase games for the kids and make reservations at hotels along the way. This all took place before the trip began. It’s the same principle for your business plan. Once the goal is set, it’s going to take some planning before the game plan moves forward. The end goal might include hiring additional techs and/or support staff. How many will you need and when? Few company owners can hire that perfect employee within 24 hours. The process must begin weeks, and perhaps months, before the employee is hired. What process will be used and when does it need to begin in order for the right people to be on the team, at the right time?

Let’s back up a step. If you are going to need two more techs and one additional staff member in 12 months, wouldn’t it be nice to have work for them to do? If the plan calls for additional employees, that means the company needs to increase its gross sales. Increasing sales won’t just happen. Marketing and advertising plans need to be developed and implemented. Remember, marketing and advertising cost money so keep your budget in the back of your mind.

As the company grows, additional inventory is going to have to be purchased including additional hand tools and vehicles. What will you need when? Go back to the budget because these investments, again, will cost money.

Each stage of growth needs to be planned and each stage involves spending additional dollars, so we need to create, and constantly update, our budget. The budget will include our projected sales and every dollar you expect to spend. Our basic overhead costs (rent, utilities, insurance, gasoline, vehicle maintenance, yellow pages, etc.) will need to be adjusted. We will also need to put in additional dollars for marketing, advertising and those new employees we will hire.

As you can imagine, the cost of doing business a couple years from now looks a lot different than what we are spending today. So our pricing needs to be adjusted as well. Please listen to this next statement. Whenever your cost of doing business changes, your labor rates will, by necessity, also need to change. I strongly suggest you review your labor pricing at least twice a year. Nothing ever stays the same in terms of your costs of doing business.

Growth takes planning, and planning requires a vision of where you want your company to be several years in the future. Reaching your goal will be a work in progress. The work will begin with step one, then step two, and so forth. You have probably heard this little phrase, “Plan your work, then work your plan.” That is what a detailed business plan is all about.

We have just touched the tip of the iceberg in terms of creating a detailed business plan. Below is an outline of a basic business plan to get you started. If you are serious about profitable growth you might want to use this outline as a guide.

1. Executive Summary
a) History of your company
b) General market conditions
c) Status of competition
d) Company goals

2. Financial Plan
a) History of company from a financial standpoint
b) Current financial statements
c) Capital expenditure forecast (what equipment will be needed and when)
d) Month-by-month cash flow budget for the next two years
e) Cash flow projections for the next five years

3. Marketing Plan
a) How will you “market” your company (radio, TV, yellow pages, pay for click, etc.)
b) Show the cost of each and the expected results
c) What will be done when and by whom?
d) What is the “cost” of the plan, your budget?

4. Production Needs
a) Labor needs
b) Material forecast including inventory
c) Assets – what equipment will be needed?

5. Organizational Plan
a) Organizational chart
b) Training – salaried and technical

The following quote from author Lewis Carroll perfectly sums it up: “If you don’t know where you are going, any road will get you there. The only problem is that you will never know when you arrive!” Growth, all by itself, can lead to failure. However, planned growth, via the development of a detailed business plan can lead to profitable growth!

Now THAT’S Customer Service!

In November, my wife and I arrived in Myrtle Beach, South Carolina for our semi-annual month -long working vacation. We were staying in the same 15th floor condo we had rented for many years. We parked on the third level of the parking garage right in front of the well-lighted elevator, and we unloaded our van. The next morning, we returned to the van to find the back side window smashed and several items stolen. Great way to start a month at the beach!

There is always a silver lining if you look for it. My old GPS is now replaced with a new, large-screen model. My large LCD projector needed to be replaced anyway, so the break-in forced that issue as well. The money … well, that’s just gone. So what’s the good news? The replacement of the window of the van was an outstanding example of great customer service.

Custserv Image

My first call was to the police. We answered lots of questions and filled out lots of paperwork. The process was complete, and we never heard from the police again.

The next step, however, was calling my insurance company back in Kentucky, who patched me through to the claims department. The Customer Service Representative was nice and understood that our need was simple, but important. The window of our van was shattered, and we needed it replaced before we could go anywhere. My rep asked who I would like to replace the window. Since I had no knowledge of window replacement companies in Myrtle Beach, she read me a list. When she mentioned SafeLite.com, my ears perked up … their catchy little jingle immediately popped into my head: “SafeLite repair, SafeLite.com!” I had heard it dozens of times on the radio. The provider was selected!

Point #1 – Marketing works, but it needs to be continuous and overlapping. Marketing is NOT a call to action like advertising. Marketing is keeping your name in front of the customer, so when the customer needs a product or service, they think of you.

While I was still on the phone, my insurance company called SafeLite and patched me in. It was a national call center, but the rep was well trained and spoke clearly. He scheduled me for 8:00 – 9:00 a.m. the next morning.

I have taught contractor business training for 27+ years. The number one customer complaint has always been, and still is, the same – contractors seldom show up on time! Well, at 8 a.m. the next morning, I received a call telling me that Barry was on his way and would be there in about 30 minutes.

Point #2 – Integrity in communication and showing up on time instantly raised my expectations. I thought, “They called and will show up on time. This must be a GREAT company. I now expect an outstanding job, done in a timely manner.”

Thirty minutes later Barry called to tell me he was five minutes away. He was the poster child for customer service. He was friendly, in a clean uniform and had joined SafeLite nine months earlier. His initial step was to vacuum the van. However, he didn’t just vacuum the area where the window was broken — he vacuumed the entire van. Wow, that exceeded my expectations!

Barry then gently disassembled the interior of the van around the window area. To him it was like a sunny walk on the beach. To me, it was an impossible task. The van had one or two minor scratches near the window where the robbers apparently used a bar to get in. I mentioned them to Barry, and he instantly shared a trick of the trade to rub them out. He not only told me about it, he took the scratches out before my very eyes.

Point #3 – Barry exceeded my expectations even before the actual window was replaced. Again, my expectations of him doing an outstanding job were rising. If he was willing to vacuum the entire van, and take out the scratches, he must do an outstanding job replacing the window itself.

I was not disappointed. Barry was fast and his work was flawless. Now for the unexpected! The window was motorized to open and close; the thieves had broken the motor. My heart sank thinking the worst. “He won’t be able to finish the job today and will have to re-contact the insurance company for approval of the added part. All this will continue to interrupt our vacation.”

But, Barry handled it all. He called the local Chrysler dealership about the part. He called the insurance company and got approval for the additional cost. He then ordered the part, which was going to take a couple days to get. Next he taped the area around the window since it would not fully close without the motor. He was taking care of everything … without my having to get involved. He told me they would call when the part arrived and would schedule a time to complete the project, around my schedule.

Point #4 – Barry handled the unexpected. He could have had me call the insurance company and could have thrown the part-ordering process in my lap, but he didn’t. I was impressed with Barry and, therefore, the company.

The part arrived a few days later. The local office called to schedule around my timetable and Barry returned to complete the job flawlessly.

Point #5 – The company sent the same tech to complete the job. I had built a relationship with Barry and I was thrilled to have him return to finish the job, as opposed to some other technician.

Now that is what customer service should be like. I thanked Barry for doing a great job and gave him a $10 tip. I also told him I would be writing this article and that I would be sending him a copy.

I am now a raving fan for SafeLite.com but the real star was Barry. From my perspective he “was” the company. I will now tell everyone I meet what a great company they are and will suggest they give SafeLite a call should the need arise. As a matter of fact I just did, to thousands of Grandy & Associates readers!

Create a Business Plan – Your Roadmap to Success

The starting point of any family vacation is determining where we want to go and when. Your business plan starts the same way. Where do you want the company to be in one, three or five years? Do you want to double in gross sales, pick up additional products and services, or simply increase the bottom line profit in percentage and/or dollar amount? You can’t create a plan to reach your goal until you know where you want to go. Most families know the destination of their vacation before they start their trip. Your business is no different. Step one is to answer the following question: what do you want your company to look like several years in the future?

Business PlanOk, we now know what our five-year goal is. The destination of the family vacation was set months before the trip took place. Why? Because it was going to take some planning. Mom and dad had to plan the route, get the vehicle checked out, purchase games for the kids and make reservations at hotels along the way. This all took place before the trip began. It’s the same principle for your business plan. Once the goal is set, it’s going to take some planning before the game plan moves forward. The end goal might include hiring additional techs and/or support staff. How many will you need and when? Few company owners can hire that perfect employee within 24 hours. The process must begin weeks, and perhaps months, before the employee is hired. What process will be used and when does it need to begin in order for the right people to be on the team, at the right time?

Let’s back up a step. If you are going to need two more techs and one additional staff member in 12 months, wouldn’t it be nice to have work for them to do? If the plan calls for additional employees, that means the company needs to increase its gross sales. Increasing sales won’t just happen. Marketing and advertising plans need to be developed and implemented. Remember, marketing and advertising cost money so keep your budget in the back of your mind.

As the company grows, additional inventory is going to have to be purchased including additional hand tools and vehicles. What will you need when? Go back to the budget because these investments, again, will cost money.

Each stage of growth needs to be planned and each stage involves spending additional dollars, so we need to create, and constantly update, our budget. The budget will include our projected sales and every dollar you expect to spend. Our basic overhead costs (rent, utilities, insurance, gasoline, vehicle maintenance, yellow pages, etc.) will need to be adjusted. We will also need to put in additional dollars for marketing, advertising and those new employees we will hire.

As you can imagine, the cost of doing business a couple years from now looks a lot different than what we are spending today. So our pricing needs to be adjusted as well. Please listen to this next statement. Whenever your cost of doing business changes, your labor rates will, by necessity, also need to change. I strongly suggest you review your labor pricing at least twice a year. Nothing ever stays the same in terms of your costs of doing business.

Growth takes planning, and planning requires a vision of where you want your company to be several years in the future. Reaching your goal will be a work in progress. The work will begin with step one, then step two, and so forth. You have probably heard this little phrase, “Plan your work, then work your plan.” That is what a detailed business plan is all about.

We have just touched the tip of the iceberg in terms of creating a detailed business plan. Below is an outline of a basic business plan to get you started. If you are serious about profitable growth you might want to use this outline as a guide.

1. Executive Summary
a) History of your company
b) General market conditions
c) Status of competition
d) Company goals

2. Financial Plan
a) History of company from a financial standpoint
b) Current financial statements
c) Capital expenditure forecast (what equipment will be needed and when)
d) Month-by-month cash flow budget for the next two years
e) Cash flow projections for the next five years

3. Marketing Plan
a) How will you “market” your company (radio, TV, yellow pages, pay for click, etc.)
b) Show the cost of each and the expected results
c) What will be done when and by whom?
d) What is the “cost” of the plan, your budget?

4. Production Needs
a) Labor needs
b) Material forecast including inventory
c) Assets – what equipment will be needed?

5. Organizational Plan
a) Organizational chart
b) Training – salaried and technical

The following quote from author Lewis Carroll perfectly sums it up: “If you don’t know where you are going, any road will get you there. The only problem is that you will never know when you arrive!” Growth, all by itself, can lead to failure. However, planned growth, via the development of a detailed business plan can lead to profitable growth!

IRS Announces 2015 Mileage Allowances

Adams Mileage LogThe IRS has updated the standard mileage rates for 2015. Remember you can claim a deduction on your personal returns for business miles that you drive in your personally owned vehicle. You just need to keep a log of the date, where you went and the total miles. You can buy a small log book to keep in the vehicle or you can just use a small pocket notebook as well.

The new rate for business mileage is slightly higher than it was last year. Beginning on January 1, 2015, the standard mileage rates for business mileage is 57.5 cents per mile.

If you dont think that’s worth dealing with, consider the numbers. If you put 2000 miles on a personal vehicle for business perposes, that means you could recieve a tax deduction of 2000 miles x 57.5 cents/mile = $1150.00. If you’re in a 28% tax bracket, that would be a direct savings on your Federal income taxes of $322.00.

If you’re going to drive the miles, claim the deduction.

Where will you get your next Tech?

The following article was posted in the December 4th Wisconsin PHCC Pipeline newsletter and was worth sharing.

Much has been written about the skilled worker shortage.  Frankly, it’s hard to believe that there could be a shortage when it wasn’t that long ago that plumbers and HVAC technicians were working short weeks or being laid off.  If that group simply returned to the industry, there would be plenty of skilled tradespeople, right?  Sadly, many aren’t coming back.

The problem that existed a few years ago – recruiting young people to the trades – still exists today, but it was disguised somewhat by the reduced demand for workers during the weak economy of the past few years.  Now that things have picked up, the urgency has returned.

Governor Walker, in a speech earlier this week, committed to making two-year technical degrees and apprenticeship training a priority.  Surveys show that there are jobs available, but that there is a mismatch between the skills of our workforce and the types of jobs with openings.

Here’s a sobering statistic:  For every four skilled workers that leave the construction industry, only one enters the field.  If things don’t change, there won’t be anyone to train….

One contractor has come up with a pilot program to introduce young people to the trades.  The “Ride & Decide” program pairs students with various trade contractors to provide paid jobs during schools’ breaks.  While the trades may not be for everyone, the “Ride and Decide” program helps young people get a first-hand look at the industry.  A high school counselor said this of the program:  “We’re moving into in area that’s going to have a major shortage. This is going to give students the knowledge and the tools to make a better informed choice about what they want to do.”

Another program of interest is the Boy Scouts of America and their merit badge programs in plumbing, welding, and other technical trades.  Scouts are invited to visit with local businesses and try hands-on demonstrations highlighting the work done by plumbers and HVAC mechanics.  The hope is that this exposure to the trades might lead some of the Scouts to pursue a trade and technical track in high school and a technical degree or apprenticeship after high school.

The take-away from all of this is that there are some new and interesting ideas about how the industry can attract and retain its future workforce.  What are you doing in your business and community?  Lets get a dialogue going about this important industry issue!

Contribution Updates for 2015

Contribution Updates for 2015

Thursday, November 6, 2014

An Update for you on FICA Withholding and 401(k) contribution limits as posted in the Wisconsin PHCC eNewsletter:

Contribution Changes For 2015

For 2015, 401(k) Contribution Limit Rises to $18K 
The IRS has announced its 2015 adjustments for 401(k) and other retirement plans. Employees may contribute up to $18,000 to their 401(k) plans in 2015, with a higher total contribution limit (employer plus employee) of $53,000.

Income Subject to FICA Payroll Tax Increases in 2015 
High-earning employees will find more of their salary subject to Social Security payroll taxes starting on Jan. 1, 2015. Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax will increase to $118,500 from $117,000 for 2015, the Social Security Administration has announced.

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