NALP consultant member, Monica Muir of Muir & Associates, LLC, provides some good guidance about how to conduct a year-end review.
While the year’s not over yet, you probably have a somewhat good idea of your year-end numbers. As you look back over your year, take the time to list what worked – and what didn’t. Here are a few recommendations to help you review 2016 so you can plan for 2017:
- Profitability: Where were you most profitable? Where were you least profitable? I would suggest looking at profitability by:
- Service line, division, or department – You should be able to easily compare your different divisions. And total sales is not your only indicator! You want to compare AFTER your job expenses including field labor (cost of goods) and equipment costs.
- Type of customer – If you review your customer list and start looking for patterns as to the type, you may find you really like some and would love to drop others and your numbers support your decision. Some ideas for type could include residential, commercial, builder, HOA’s, property management, government, age or other demographics. QuickBooks can help you track this easily. Identifying the type of customer(s) you like (besides just those who pay quickly!) will also simplify your marketing.
- Location – Are you finding a certain municipality or county or subdivision or other location hasn’t been profitable? Or maybe it’s been a gold mine for you. Perhaps it’s time to consider moving to a new location so you’re more centrally located or it’s been so profitable it’s time to consider a second location.
- Type of jobs – Over time you’ll find that there are certain types of jobs you enjoy, are more profitable, and are easier to estimate. Think about all your clients and job types, maybe some aren’t the best because you lose money on them or you just really don’t want that type of work or that they’re too small – or too large. I know you may be afraid to turn away projects, but if you underestimate your costs or the crews are inefficient, you aren’t helping your business. When you narrow the type of work you do, you’ll find it will be easier to estimate and your crews will be more efficient. It will also be easier to market to the types of clients and jobs you prefer!
- Overhead: Have you reviewed your overhead costs lately? If not, maybe it’s time!
- Go through your list of overhead expenses and (1) examine if you still need the expense (it’s surprising how many pay for something they no longer need) and (2) look at what increased this year.
- I find it’s easy to forget about payments that are automatically paid by credit card or deducted from your bank account.
- Perhaps you can renegotiate phone plans or rates on credit card processing or loans. Are their better deals you can make with your suppliers or maybe it’s time to change suppliers?
- For subscription plans, it’s worth taking a look to see if you need to change the number of license for which you’re paying – or maybe they have new plans and haven’t reached out to let you know. I know I made changes in a couple subscription plans that saved money in my own business and I’ve helped clients reduce their costs on some of their accounting software and services.
- Staffing: Were there changes in staffing? Consider both out in the field and in the office. Sometimes a new employee could be a reason to add or drop something. For example, a new employee with certain skills may suggest you’d like to use more of those skills, which could mean different jobs or different clientele.
- Time: Many of you are conscious of time out in the field, but what about office time? I find few companies clock how long it takes to do office tasks and often there are inefficiencies.
- Are you still doing paper time sheets or using the old punch time cards for employees to clock in/out? Maybe it’s time to go mobile – there are lots of good products out on the market.
- Are you entering data in one place and then some version of that same data in a second place (like a spreadsheet and then in your accounting software – or vice versa)? Could there be a way to integrate the data so you don’t have double-entry resulting in saving time?
- Are you doing work-arounds? Maybe it’s time to re-assess – can it be done all in one place or will an add-in product solve your problem? Work-arounds can be expensive in time, labor, and increased risk of data entry errors.
- Are you running reports in Excel? If so, is that because you can’t get that information from accounting software? For my QuickBooks clients, I frequently find that setup and lack of training are key reasons you’re not getting some of the reports you want/need from your software and hence using Excel to generate the report.
- Are reports taking a long time to run? Perhaps there’s some file maintenance that needs to be done or upgrade in computers or networks. Slow computers add to your labor costs as people sit and wait – including you!
- Are there faster ways to get your work done? There might be features and/or “tricks” to get the information you want that you don’t know about and speaking with a professional might be worthwhile.
- Software: Is your current software solution still a good fit for you?
- Accounting software – Sometimes your software can do what you want – you just didn’t know it could or how to get the results you wanted. If your current version won’t do all you want, then perhaps upgrading and/or getting an add-on product will solve your issues. I recommend having a needs list and a wish list. Most times, you won’t find something that fits all of your needs and wishes so you have to decide what’s most important – and that’s unique to your business.
- Add-ons –Is it time to add a 3rd party product to solve for one or more of your pain points? Add-ons come in 2 “flavors:”
- Task specific – these often solve one issue – e.g time tracking, payroll, estimating, CRM, etc.
- Industry specific products typically solve for more than one pain point within your industry and they will use your lingo. You’ll find that add-ons have differences so there’s no “one-size fits all” solution – you will still have to decide which one best fits your business.
- And of course, how do the products integrate? Talk with people that use the products you’re considering to get an opinion other than that of the sales person. Sales people know their product, but often aren’t as familiar with certain aspects of product with which you want to integrate.
While gathering the information and reviewing it takes time (hopefully you can delegate some of this), it’s time well spent. You may even have some “aha’s” you didn’t expect! Taking the time to review will help you plan for a more successful 2017.