On Target Contractor’s Blueprint Chart Your Course to Business Success

1. On Target Contractor’s BlueprintChart Your Course to Business Success Advisors On Target On Target Business Intensive: Session 6

2. Implementation Steps so far • 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)

3. Implementation Steps (cont.) • 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

4. Agenda for today • 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

5. Questions about anything so far?

6. Your Customer Communications Plan

7. Start with Your Database • Customer List • Prospects • Referral Partners

8. Other Tools QuickBooks Microsoft Excel Microsoft Access Tools to Manage Your Contact Data CRM Software • ACT! • Goldmine • Salesforce • Microsoft Outlook • Google Apps • Custom Software • Others

9. Key to Success – Commitment!!! • 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

10. Database Segments • 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

11. Classify Your Customers • Classifying Your Customers • Characteristics • Buying Patterns • Interests • Types of Services purchased • When services were performed

12. Rate 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)

13. Develop a Communications Plan – 1 • 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)

14. Develop a Communications Plan – 2 • 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

15. Develop a Communications Plan – 3 • 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!

16. Develop a Communications Plan – 4 • 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

17. Conclusion • 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!

18. Using Customer Information In New Ways • 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.

19. Sales Forecast/Sales Goals • 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

20. Why track sales? • 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.

21. Sales Tracking Tools • 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

22. Implementation Steps • Fill in information for Target Markets, Competition and Marketing Strategy (Marketing Plan – Parts 1, 2, 3) • Create a Marketing Budget using the template

23. Sales Tracking Tools • 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

24. Let’s look at an example

25. Job Profitability & Productivity

26. Job Costing • 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

27. Put a system in place • 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

28. Gross Profit by Job Total Price • Labor • Materials -Equipment rental/other pass-through item = Gross Job Profit

29. Job Costing Example…

30. Components of Job Profitability • 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?

31. Set a target from your own budget 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%

32. This becomes a KPI • 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

33. Profitability & Productivity Tracking • 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

34. Let’s look at an example…

35. Use the data for management decisions • 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

36. Implement the system • Generate job profitability reports monthly • Meet with each foreman monthly to review graphs & reports • Use the opportunity for coaching the foreman for increased productivity

37. Coach for Success • 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

38. Implementation Steps • 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