Business Owners: Year End Evaluation

[Jalvis]

Now that 2013 is upon us how are you evaluating business for the New Year?

After attending a class at the JLC live event in Portland, Oregon earlier this year we were asked to "list our top three most profitable projects and ask ourselves why they were the most profitable."

Naturally many other qualified questions continue and has really helped me concentrate my efforts for 2013.

So what are doing to gather data and evaluate this last year?  What questions or techniques are you implementing?

 

[Jonhilgen]

Wait, wha? 

I usually pore over my quickbooks and try to set realistic financial goals (savings and investing) .unfortunately, I don't spend enough time being a businessman/business owner, but spend my time being busy instead.  Not a great recipe for growth.

But to add to the discussion, who here is looking to hire at least one employee?  I would love to, but fear gets in the way.  It seems like a catch-22 to me.  If I had some help, I could find more work.  But I don't have enough work to justify hiring someone...

Jon

Jon

 

[harry_]

getting myself up to 'full employment' would be nice

 

[Kev]

I'm a DIYer on the tools, so I don't make my bucks from using my Festools ... so treat anything I say with due consideration.

From a general business perspective, demand creation and service differentiation are the things that make one business succeed when other's may be failing.

Demand creation can be as simple as making people aware of a way they can fulfil a need or a want.

Differentiation is the manner in which your product of service differs from others (even something as simple as quiet and clean can be a big thing for prospective clients).

Using an "autopsy of last year" and looking to isolate good and bad only works if the conditions remain constant and the opportunities that drove the business give you the latitude to improve (but frankly, small operations tend to be more opportunity driven rather than strategic).

Jon's point is interesting - it's ironic that the best time to increase staff is before you need them, you can't train someone if you're too busy yourself ... often you make no profit when you grow because the resources you need end up being another contractor (you didn't plan to grow strategically).

 

[peter halle]

I don't typically take a vision back at the last year in a formalized way.  I am going to invest resources into reinventing myself in the coming year.  I have become typecast in what customers believe that I do, and although that can be good for cash flow it isn't the best for profitability.  Word of mouth has kept funds flowing for the last 13 years but many of my customers are older and their needs are diminishing.  The new year will bring a new company name, a website, and more involvement in social media.

Regarding Jon's situation and adding help, after going thru the helper route a few times over the years I have made the decision that I will not add help until I need two helpers.  I know that sounds stupid, but every time I have added a helper, at the end of the year my billings were up, but the net amount was the same as without a helper.  In other words more work was performed, more pressure was present, less flexibility was to be found, and no more dollars stayed in the bank account.  And I had great helpers.  So, if there would be two then the scope of jobs could be increased and there would be time for separation and multiple jobs running concurrently if possible.  Then it would be such that profitability off of the "crew" would add into the equation.

Of course this is just me and other's situations would differ.  

Peter

 

[Scott B.]

For me, the obvious is to study the "dashboard" of the business...the year end financials, looking mostly at year to year comparisons, where we spent more or less, made more less. I don't look at gross numbers so much anymore, focusing more on net margins.

Our model is largely built upon repeat customers, offering deeper and more frequent services to our best customers, which leads to figuring out who the best customers are, and phasing out customers who don't have potential as great long term relationships, which I wrote about recently here:

http://digital.turn-page.com/i/97806/7

Thats number one on my agenda.

 

[RonMiller]

My experience with helpers is just like Peter's. One good helper doesn't make me more money but does raise my work level.

 

[Scott B.]

I agree, guys. One helper is not a good model. Yourself +2 is usually where critical mass starts to occur. But of course, that comes with other burdens.

 

[Jalvis]

I agree with Looking at 'Margins' as Scott stated.  This to me is better understanding of whats really happening.

This year I'm focusing on marketing a stronger image.  Unlike most business I have not yet "lettered" my truck and trailer but I haven't felt it necessary.  This is something that may or may not be of real value to me but for the client.  I think clients want to see someone who is dedicated to there trade.  This is a simple way to show my commitment.

Secondly I'm going to push towards more custom cabinets and built-in solutions as those ended up being some of the most profitable.  Sadly this always means more money spent on Festools.....looks like a will have to balance between the two.

 

[Jalvis]

Where are all the guys from across the pond? 

What are you doing for the years end in evaluation?