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 4

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.) • Additional activities • Values Exercise

4. Questions about Budget Process?

5. Recap:How to Use your Budget Incorporate Budget into QuickBooks Monitor Monthly & YTD Progress Know what key numbers you need to hit Income Profit Margins Hours/Personnel Leads Make management decisions to achieve plan Identify Action Steps for upcoming month

6. Break Even Why Every Business Owner Needs to Know It

7. BEST PRACTICE GUIDE : Breakeven Sales Overhead Expenses* Breakeven Sales = __________________________ Gross Profit Margin Calculate by week, month, or year to manage your business effectively and keep a positive bottom line *Include Variable Costs, Overhead Costs and “Other Costs” if critical to business survival

8. Annual Budget Example

9. Annual Break-Even Revenue

10. Monthly Budget Example

11. Monthly Budget Break-Even

12. Calculating Break-Even Hours • Monthly Budget $48,000 • Based on 6 painters @ 160 hours each • Total Budget Hours 960 • Projected Sales Price per hour $50 (including materials) • If Break-Even Revenue is $37,333 • Break-Even Hours are 747 for month • (approx 174 hours per week)

13. What about other expenses? • Take into account other expenses that don’t hit the Profit and Loss • Owner Draws/Loans to Shareholders • Loan Payments • Credit Card Payments not included in monthly operating expenses

14. Changed Break-Even Break-Even Hours are now 780 for the month

15. What if your GP% decreases? Break-Even just increased by almost $5,000!

16. Using Break-Even Analysis to Add Infrastructure How much more revenue do you need for new overhead to at least pay for itself?

17. Adding a new overhead position

18. Knowledge is power • Knowing your numbers and learning how even small but timely changes affect your profitability increase your opportunities for success in any economy.

19. Marketing Your Business

20. Marketing • Marketing is a key component of your business plan and achieving the results you are aiming for • A Market Analysis shows your understanding of the market, your customers and your competitors. • A Marketing Plan to present the strategies to develop the leads for achieving the sales forecasts you are projecting.

21. Steps to a marketing plan Define your market Analyze your market and industry Identify your marketing and sales strategies Describe your advertising and promotional activities Your marketing plan is a key component of your business plan

22. Market Research – Why do it? • Obtain data about your geographic market • Obtain data about your customers and potential customers • Obtain data about your competitors • Ensure you are on the right track with your marketing efforts

23. How to do Market Research • Primary – Do your own research • Identify competitors via Yellow Pages or online • Conduct surveys • Do focus group interviews • Secondary – Use other people’s research • Published Information: Industry profiles, trade journals, newspapers, magazines, census data etc. • Sources: Trade Associations, Vendors, Chamber of Commerce

24. Document your research • Show statistics, numbers, and sources. • Your marketing plan will become the basis, for your sales projection.

25. Market Analysis - Economics • Facts about your industry • Total size of your market and Percentage share you have • Current demand in target market • Growth history • Trends in target market — growth trends, trends in consumer preferences, and trends in product development • Growth potential and opportunity for a business of your size • Barriers to entry for new competitors • Other factors that can affect your business • Change in technology • Government regulations • Changing economy • Change in your industry

26. Products and Services • Features - Tangible • What does your product/service do? • What is special about it? • Benefits - Emotional • What does it do for your customer • After sale services • Warranty, service contract, support, follow-up • What is your Unique Core Differentiator??? • What is really different about you and what does that mean for your customer • Try to think of things that your competitors can’t or don’t say

27. Who are your Customers? • Identify your customers • Characteristics • Geographic Location • More than one customer group? • Are there intermediaries? • Identify most important groups • Construct demographic profiles for each

28. Demographic Profile - Consumers • Age • Gender • Location • Income level • Social class/occupation • Education • Other • Home Value, etc.

29. Demographic Profile – Business Customers • Industry (or niche) • Location • Size of firm • Quality/technology/price preferences • Other

30. Competitors • Who are your competitors? • Products/services • Companies • List your major competitors • Do they compete in all areas of your business or just for specific customers or services? • What are key competitive factors? • Analyze your strengths and weaknesses

31. What is your niche? • Your unique corner of the market

32. Marketing Strategy • Promotion • How do you get the word out? • Advertising • Media • Frequency • Effectiveness • Other Marketing Methods • Networking • Home Shows • Website/Online/Social Media • Customer Communication Plan • Marketing and Advertising Budget • Pricing Strategy

33. Distribution Channels • How do you sell your products or services? • Retail • Direct (mail order, internet) • Wholesale • Your own sales force • Agents • Independent reps • Has your marketing strategy proven effective? • Do you need to make any changes or additions to current strategies?

34. Location • Here in the Marketing Plan section, analyze your location as it affects your customers. • If customers come to your place of business: • Is it convenient? Parking? Interior spaces? Not out of the way? • Is it consistent with your image? • Is it what customers want and expect? • Where is the competition located? Is it better for you to be near them (like car dealers or fast-food restaurants) or distant (like convenience food stores)?

35. Sales Forecast • Provide a month by month sales forecast for the next year based on • Historical Sales • Market Research • Seasonal Flow • Growth Assumptions • Consider providing two forecasts • Best case • Worst case

36. Implementation Steps • Session 4 • Determine your breakeven point for your 2013 budget • Annual • For the month of October 2013 • Define Target Market • Do a Competition Analysis