Lori Stuckert

PART 1 OF 2 | Determine How Your Profit Will Be Spent Ahead of Time

By Tom Grandy, Founder

Nearly all dollars a company spends have been predetermined…except profit.   Labor and materials dollars are predetermined based on the job.  All overhead costs have been directed where to go.  Specific dollars have been pre-allocated for rent, utilities, insurance, etc.  However, profit tends to be the redheaded stepchild.  It sits around until somebody decides to buy an extra tool or perhaps the owner takes a weekend trip with the family.  The profit literally gets fritted away until it’s gone.  That needs to change.  As Dave Ramsey said, “We need to tell every dollar how it will be spent ahead of time.”

This will be a two-part article.  Part I will deal with determining what “real” profit the company has from a cash flow standpoint.  The second article will deal specifically with what percentage of the “real” profit should be allocated for what.  Profit from an accounting standpoint is far different than the “real” profit viewed from a cash flow perspective.  Below is a simplified P/L statement from an accounting perspective.

Obviously, from an accounting standpoint the company generated a $21,500 net profit or 13.5%.  Everything looks great.  The bottom line is that the company will pay taxes based on the “accounting” net profit of $21,500.  However, there is a slight problem.  Additional money flowed out of the company (from a cash flow perspective) that accounting literally ignores.  By the way, it’s not the accountant’s fault, the rules are set by the Internal Revenue Service.  Your accountant is simply following the rules.

Below we will discuss what needs to be considered from a cash flow perspective to come up with the “real” profit.

  • Equipment Replacement Cost – Depreciation is an accounting term and it deals with what the company paid for a piece of equipment and/or vehicle years ago. Equipment replacement costs deal with what it’s going to cost in the future in order to replace that piece of equipment when it wears out.  Let’s assume the vehicle will last the company four (4) more years and it will cost the company $40,000 to replace it four years from today.  That means the company will need to build $10,000/year ($40,000 / 4 years = $10,000) into its overhead in order to be able to pay cash for the new piece of equipment four years from today.  Equipment replacement costs are typically 25% to 50% higher than depreciation.
  • Debt Repayment – Debt can take many forms. It might be repayment of a line of credit, money owed the owner or a family member, or perhaps overdue taxes and penalties.  Any principal payments on these items will NOT show up on the company’s P/L Statement, however the dollars actually did flow out of the company.
  • Loan Principle – Loan payments are made up of principal and interest. The interest shows up on the company’s P/L statement as an overhead expense, but the principle does not.  Again, the principal part of the payment really did flow out of the company but it does not show up on the P/L statement.
  • Hill & Valley Account – This will be a new term for most readers. The Hill & Valley account is literally money held back for those typical 90 slow days most trade companies incur each year.  During those slow times the bills still need to be paid.  The Hill & Valley account basically saves money back to cover those slow times.  There are two ways to fund the Hill & Valley account.

The first is included here where the company literally picks a dollar figure and treats it like any other bill via putting a specific amount of money back into a saving account each month.  We will deal with a second way to fund the Hill & Valley Account next month.

Below you will see what the company’s “real” profit looks like after accounting for the above four items.  These are real costs of doing business and the money literally flowed out of the company but were NOT considered from an accounting/IRS perspective. 

Note:  the accounting P/L statement showed a net profit of $21,500 of which the company will be forced to pay taxes on.  However, from a cash flow perspective the “real” net profit (money left in the checkbook) is only $13,021 or a net profit of 8.2%.

We now know what the company’s “real” net profit is.  The next step is to predetermine how that “real” profit will be allocated each month.  This will be the subject of next month’s article.

Keeping track of dollars is one thing.  Keeping track company policies is quite another.  Every company should have a Company Policy Manual that details everything from vacation policies to drug testing.  Once created, every employee needs to sign off on it.  However, that takes time, right?  Wrong!  This month’s Website Special is our 96-page Company Policy Manual provided in Microsoft Word so the company owner can easily add, change, modify or delete sections in order to customize the manual.  The normal investment is $134 but this month it’s only $97.00.  Order today!

Six Power Habits

By Patrick Chapman, Grandy & Associates

There is a reason top-performing companies are successful. You would already be enjoying the profits you want for your company and experiencing the life you want for your family if just hearing good information was enough. As Jim Collins famously said, “the distance from Good to Great is not that far but it is a few strategic steps consistently taken that lead you where you want to go.” This article focuses on the six power habits of top performing companies.

Power Habit Number One:

Know your why. Simon Sinek has done a masterful job over the last few years helping people discover their why. Long before Simon however, the most successful companies went on this journey of discovery. When you know your why, everything changes. You begin to live out of purpose and become far more productive. Let’s do this exercise together.

First, what is your what?

The literal thing you do.

Second, what is your how?

What is your process or propriety advantage that sets you apart?

Third, what is your why? This the foundation. It supports everything else. What is your passion, motivation, inspiration? What is the difference you want to make in the life of your customers?

Discovering your why is a big step to unlocking your full potential and creating unity on your team.

Power Habit Number Two:

Establish a clear set of Key Performance Indicators that are critical for your company’s success. There are industry KPI’s for every sector of business. I encourage you to go beyond broad-based numbers and generalities. Make it personal to your company. The more your team sees the relevance of these Key Indicators the more buy-in you will experience with your team.

One tremendous benefit of tracking Key Performance Indicators is they will produce Key Training Opportunities. Training for many companies is a mile wide but only one inch deep. Training around the performance of your team’s execution of KPI’s will ensure you are training in specific areas of the company that need attention for you to succeed.

Power Habit Number Three:

Create an Interactive Buying Experience for your customers.  The best example I can give you on this point is a company we all know very well. Amazon has become the go-to shopping preference for millions of people. Think about what you experience when you shop on Amazon. You will see pictures, product descriptions, ratings, reviews, size and application assistance, etc. Everything you need to make a decision is right in front of you. That is completely by design. Amazon does not want you to leave their site and go to other places to make the purchase.

Conventional wisdom says a buyer has to get 3-4 bids before making a decision. Every wonder where that came from? Years ago, when customers would get a quote for a product or service, it was common for companies to provide only one bid. Since people need choices to make good decisions, they would have to go elsewhere to get additional bids before making a decision. That is not the case anymore. Interactive buying experiences provide the customer with everything they need to make a decision. How can you incorporate this strategy into the buying experience with your customers?

Power Habit Number Four:

Creating professional proposals to help your customers understand their choices and make good decisions. Let me share some hall of shame proposals with you that I have seen over the years. Coffee-stained napkins. Back of business cards written so small you couldn’t even read it. Crumpled up piece of paper from their truck. Sad but true, these actually happened.

There are several options to choose from as it relates to professional proposal software. Many of them are offered through your local distributor partner and will tie in directly to their inventory. Whichever solution you choose, make sure the software platform has the following: Scheduling tools for the CSR. Customizable options to include promotions, rebates, and financing.  Ability to capture digital signature and reviews through the platform.

Power Habit Number Five:

Leveraging the power of ratings and reviews. Reviews provide social proof that you deliver what you promise. You naturally are going to say you are the best choice in town. Who else can verify that is true? According to a Northwestern University Marketing Study, when multiple options are presented, the option with most reviews tends to win. The optimal number is 15-20 positive related reviews collected over time to show consistency. As a rule, customers look for 4.4 or higher out of 5 stars with 73% preferring a written review to stars only.  93% hesitate to buy if no reviews are available. Make it easy for customers to discover that others are saying about your company and include these across all your marketing platforms.

Power Habit Number Six:

Incorporate promotions, rebates, and financing into your proposal options. The goal of any promotion is to help solve the affordability issue for your customers.  66% of consumers consider promotions to be important and/or vital to the purchase. 58% have less than $1,000 in savings and 73% have less than $5,000 of available funds on hand. It has never been more important to offer promotions and financing to your customers. The more you help customers find ways to make the purchase affordable and stay within their budget numbers, the more sales you will close. 

At Grandy Associates, we have been helping business leaders for over three decades with one goal. Helping you be profitable in what you do. Please let us know how we may provide additional resources to you and your company by contacting me at:  pchapman@grandyassociates.com.

Time to Hire a CPA?

By Dave Ramsey, CEO Ramsey Solutions

You’re running a small business and serving your customers well. In return, they’re rewarding you with the one thing every business needs to thrive—money. Maybe you’ve started making so much money, and your business is growing so fast, that it’s time to get someone to help keep track of that money. Maybe it’s time to hire a Certified Public Accountant (CPA).

An accountant is a professional who takes care of all the detailed and essential math tasks that go along with running a business. They do bookkeeping, prepare financial documents like tax returns and profit-and-loss statements and do financial planning. A CPA is an accountant who also meets your state’s educational and experience requirements, and has passed the state’s Uniform CPA Exam.

In other words, all CPAs are accountants but not all accountants are CPAs. And while a CPA shouldn’t make business decisions for you, they can offer good advice and help you make the right decisions. In addition, they can handle other tasks:

Bookkeeping – Handling invoices and accounts receivable, making sure bills get paid on time and paying vendors.

Payroll administration – Making sure everyone gets paid on time, and all payroll withholdings are handled correctly.

Tax advice and planning – Helping your business save on taxes now and planning for future tax situations.

Audit and assurance – Finding problems with your tax returns before the IRS does.

Management and consulting – Serving as your chief financial officer (CFO), helping with budgeting, risk management and preparing financial statements for shareholders.

Forensic accounting – Digging into the books to help you prevent or discover fraud or embezzlement.

Questions to Ask

You’ll want to ask some questions about your potential CPA’s experience, size of the teams they’ve worked with, if they have a specialty and what that specialty is. Here are a few to get you started:

How long have you been a CPA? If you have a complicated accounting situation, you don’t want someone who just graduated from accounting school. Get a CPA with at least two solid years of experience.

Are you available year-round? If you just need a CPA for a one-time audit or to file your taxes once, this may not seem like a big deal. But if something comes up, you want to make sure this is their full-time job, not a side hustle they work only during tax season.

Can you represent me in front of the IRS? Many CPAs are also Enrolled Agents. This means if you get into trouble with the IRS, they can represent you at hearings and speak for your business. Getting audited by the IRS can feel like the Spanish Inquisition, so having someone in your corner is important.

Who will I be working with? It’s not uncommon for a CPA to have a staff that helps them. Find out how big their team is, what qualifications they have and how they prefer to communicate.

How much do you charge? It’s perfectly acceptable to ask about fees and how they bill. Some services may be a straight fee-for-service charged by the job, while others might bill hourly. Get an estimate in writing.

I don’t have to tell you that running a business is hard work. You live it every single day. Most small business owners spend 120 hours or more on bookkeeping alone every year. And that’s time you could spend serving your customers and growing your business!

 * Leadership and small business expert Dave Ramsey is CEO of Ramsey Solutions. He has authored numerous best-selling books, including EntreLeadership. The Ramsey Show is heard by 18 million listeners each week on more than 600 radio stations and multiple digital platforms.

Appreciated People Will Always Do More Than Expected

By Tom Grandy, Founder

Most reading this article are or have been parents.  Let’s assume you are a parent and you have two children, Larry, who is 16 and Mary, who is 18.  When they were 10 and 12 respectively you have vivid memories of taking them with you to shop.  Their continuous nagging for you to purchase a toy, or perhaps a piece of candy was so frustrating you finally said yes.  To put a bit of icing on the frustrating cake, neither of them said thank you!  Your attitude as a parent was most likely something like “That’s the last time I am going to give in.  They didn’t even appreciate the toy and/or candy when they received it.”

Now fast forward to today.  You invite Larry to go on a weekend trip with you to attend a professional sporting event.  Larry is thrilled.  The trip goes great and Larry can’t thank you enough for taking him. 

Mary likes to shop and as a senior in high school there are very specific stores she loves to go to but the nearest one is two hours away.  Mary’s mom asks her if she would like to drive to that special mall with her on Saturday.  Mary, like Larry, is thrilled and the trip is a total success.  Mary can’t thank her mom enough.

When both trips have been completed mom and dad sit back and reflect on what just took place.  Both had gone out of their way to bless Larry and Mary and the best part was that they both really appreciated it and said so.  If you are a parent, the next thing that goes through your mind is, “What else can I do for or with the children that would bless them?”  Being sincerely appreciated makes a huge difference in any relationship.  A person who feels appreciated will always do more than what is expected.

Do your employees feel appreciated?  What have you done lately to make them feel like you care?  It doesn’t take a $250 bonus for that to happen.  Sometimes it’s just a sincere thank you for working overtime to complete a project.  Other times it’s stopping by the job site with a pizza.  Can you image the reaction of a spouse if they received a handwritten note from the boss telling them how much the company appreciates them with a $50.00 gift certificate to a local restaurant?

People who feel appreciated not only feel like family, they are also willing to do a bit more for the sake of the family.  It’s really not all that complicated.  It’s simply the golden rule, do unto others what you would have them do unto you.  Give it a try with your employees and watch their attitude improve.

We all know the key to growth and profitability is education.  If you are interested in learning from the top trainers in the industry, at your own pace, consider signing up for Contractor Academy.  The program currently includes over 50 hours of interactive online training with additional programs routinely added.  There is no contract or time commitment.  Individuals can sign up for $29/month or register five people for only $138/monthSign up today and start growing tomorrow!

What Percentage of Companies Fail Each Year?

By Tom Grandy, Founder

What percentage of companies fail each year and why?  Well, that depends on whose statistics you read.  If you check out the Internet there are as many opinions as there are organizations.  According to data from the Bureau of Labor Statistics approximately 20% of all businesses fail within the first year. By the end of the second year, 30% of businesses will have failed. By the end of the fifth year, about half will have failed. And by the end of a decade, only 30% of businesses will remain — a 70% failure rate.

The actual percentages may vary but the bottom line is that there are a lot of companies that fail each year.  The question is why?

Perhaps looking at franchises may just give us a few clues.  Statistically, 97% of all franchises make it through their first year and 95% make it through their first five years.  What is the difference between a franchise verses the rest of us.  Let’s look:

  • Investment – Who owns most franchises? Right, rich people!  The total investment in a McDonald’s franchise is between $1,000,000 and $2,000,000.  Sure, there are some minor franchises out there for less but the nationally known ones require a huge investment.
  • Training – Does the owner run the franchise? Not at McDonalds.  The managers are hired and are sent to McDonald’s University in Chicago for training.  Other franchises may not have their own University but they do have extensive training programs.
  • Budgets – Before a franchise can be purchased, the potential owner needs to create a budget for at the least the first year and often for the first one to three years. Within that budget they are told what percentage should be spent on marketing, advertising, etc. When the budget is completed, the potential owner will have a clear picture of the costs of running the business as well as the potential profit, if goals are met.
  • Accountability – Once the franchise is open the new owner will be required to submit monthly reports based on their budgets. It’s called accountability.  If profit goals are not met, the monthly review will pinpoint what areas need work.
  • Cash Flow – Cash is king in any business. As a company grows, significant amounts of cash will be needed to fund growth.  In addition to the initial investment, a stated amount of “cash” must be available to cover everything from increased inventory to slow times during the year.  Each franchise has specific amounts of cash the new owners must have on hand BEFORE the doors are opened!


Now, think about the typical trades company:

  • Investment – The only investment needed to start a trades company is the willingness to work, a supplier willing to provide 30-day terms and enough cash or credit to buy a new or used vehicle and a few tools.
  • Training – Training for the new company owner usually consists of their experience working for someone else…usually as a technician. Business training.  What is that?
  • Budgets – Creating a budget is another way of saying “Count the cost”. Very few new trades company owners have ever created a budget, therefore have little idea of what it takes to run a company much less what profit might be expected.
  • Accountability – About the only accountability most trades companies have is their spouse who might ask questions like; “How are we going to meet payroll this week?”, “Our supplier wants to put us on COD.” or “Dear, how are we going to pay the mortgage this month, we haven’t received a paycheck in three weeks!”.
  • Cash Flow – Trades companies have huge needs for cash. Cash is needed to fund increasing inventory and receivables.  Cash is also needed to fund those slow times during the year, not to mention funding the increased costs of doing business as the company grows and expands.  How much “cash” does the typical trades company start out with?  Usually between zero and borrowed! 

Are there some things failing trades companies could learn from successful major franchises?  You bet there are.  Check out the fruit of each and then glean what makes sense to you in your situation.

Did you know that the most profitable trades companies are owned and run by people who understand the business side of their businesses and who may or may not understand the technical side?  If you are serious about learning the business side of your business, then I would strongly encourage to you to attend Grandy & Associates two-day Planning for Profit workshop.  It can be attended in person or through online, instructor- led training, whichever best meets your needs. 

Mastering Follow Up

By Patrick Chapman Grandy & Associates

In his book “Good to Great”, author Jim Collins makes it clear the distance from good to great is normally not that far for most organizations or individuals. It is however, a series of very specific, strategic steps that produce significant outcomes. That principle holds true when it comes to mastering follow up. Being strategic in this key area will put you at the top of your field. The missing ingredient for most companies to achieve higher sales percentages is developing a clear follow up process.

Here are the facts:

  • 48% of people in Sales admit they have no clear follow up plan.
  • 25% of businesses make no more than two follow up attempts, then they QUIT.
  • Only 1 in 8 ever consistently make more than three follow up attempts.


Webster defines “follow up” as:  pursuit in an effort to create further action.  In essence, it is the process of assisting the client through the decision-making process culminating in a definite decision.  An effective follow up strategy should include three groups. Those who did not purchase at your initial offering, those who have made a purchase, and those who said no.

Many sales professionals have no clear plan if the client does not purchase on the first appointment. Let’s say you have 500 appointments this year and you close 60% on the first appointment. That still leaves 200 clients that did not make a decision.  Why give away that volume of leads annually? Adding two additional follow up steps to those remaining 200 clients, provides you with 400 additional opportunities to close the deal.

What about the client who did make a purchase from you? Do you have a follow up plan for them? It is easy for clients to feel important to companies until the transaction is complete. Do you respond with the same urgency after the sale is complete as you did before? Make certain you reach out to your clients after the sale is complete. Doing a walk through after an installation job is a great first step.  Do you also do a six month or annual follow up to check in?  If you want loyal customers, they must continue to feel important after the sale is complete.

The most overlooked category is the buyer who told you NO. We assume that a no means no to everything else we offer. That is a grave mistake. Let’s say the purchase was for a new comfort system.  If your competitor closed the sale for a new system install, you certainly want to highlight the fact that your company has a team of highly skilled technicians who are ready to provide the factory recommended spring and fall maintenance to the system. At the very least you will want to provide the client with your company resume highlighting all of the other products and services that may be of interest in the future.  Always remember, a loss today may become a win in the future if you keep the door open.

Let’s conclude by looking at Follow Up Best Practices.

First, decide the answer to these important questions. Who will follow up? What will be the method of follow up?  When will the follow up take place?

Second, remember the golden rule of follow up:  Time kills deals!  For example, if you present an option to a client and they do not purchase, it is ideal to set a time for the follow up to take place before completing the appointment. You want the client to know their time is valuable and you want to honor that by setting a follow up time that will be convenient to them.  If you don’t do this, you may get the dreaded “I am too busy to talk now, try back later”. This can become an endless phone tag session or even worse the first step to losing touch with the customer.  Remove the awkward follow up by setting the follow up expectation in advance.

Third, never follow up without adding something of value. The more you add value with every interaction the more you show yourself to be an expert. For example, rather that call and say “Hey, just checking in”. Follow up and say “Hey, I was thinking of you today and I have some additional information to share about the system you are considering.  It really highlights many of the concerns you shared with me”.  Be strategic with what you share and your follow up will be much more effective.

Fourth, always leave a message. You want the client to know they are important to you and you very interested in earning their trust and their business. In addition to the sales professional, consider a team approach to follow up. This shows the client your company has an expert team at every level in the organization who stand ready to serve and assist with any questions they might have.

Use these suggestions to develop a clear follow up strategy today!

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