Construction Business Planning for the New Year

It’s 2019 and you need to have a plan for the New Year especially if you run a construction business.  Construction business planning can help you look honestly at the past year and what you can expect in the New Year.  You can start off by asking yourself some tough questions.

Collecting Data

You need to collect a lot of data regarding the business practices of the year that have gone by and this can relate to sales and profits, overhead expenses, production, employees, etc.

Sales and Profit

1. How many leads were followed upon?
2. How many of them turned into appointments?
3. What jobs did you sell?
4. Was your sales to lead ratio what you expected?
5. List all your lead sources, sales and leads in every category.
6. Calculate the cost of every lead in every category and every customer’s obtaining cost.

Financial Performance

1. How many projects were sold and built by the last date of the year (31^st December)?
2. What was the Net and Gross Profit?
3. What was the total owner’s compensation?
4. What was the Average sale price? What did you pay yourself for owning and running your business each month?
5. How close were your estimates to the actual job costs?
6. What markup or gross margin did you use?
7. If your estimates were not close to the actual costs, what can you do to improve them?

Overhead

Overhead Expenses

1. How much was the total cost of overhead last year? Was it over or under budget?
2. What unexpected expenses were incurred?
3. How much did the expenses in the miscellaneous or the other category in the P&L count for?

Office/Staff

1. How many staff members do you have that can function in another space in the office?
2. How smoothly does your office run?
3. Are things in your office found easily or is there better organization needed?
4. What is the level of traffic in your office? What can be done to improve it?

Other Expenses

1. Look for expenses that fall under no specific category but were essential or nonessential.  See if you can’t find a way around them and save on them next year.

Production

Employees

1. What specific skills do your employees possess that give you an edge over the competition?
2. Do you have a program to cross-train employees if necessary?
3. How many of your employees have gone for that program?
4. Do you have recurring problems with some or all of your employees?
5. What can you do to rectify those problems?
6. Can something be done to change hiring practices to make them more efficient and less taxing?
7. Have you emphasized safety at the workplace?
8. How many seminars for safety are held in the year?

Subcontractors

1. Do you have any continuing relationships with your subcontractors? How many are on your call first lists?
2. How dependable are each of your subcontractors and what is their record of on-time performance?
3. If you have a signed agreement with each sub, do you have a manual that outlines the specifics of that agreement?

Suppliers

1. Do you have a set list of suppliers and how has your relationship with them developed?
2. How is their customer service? And are their materials released on time?
3. What suppliers are on your last resort list and why?

Projecting Future Annual Volume

If you’re not sure how much business you’ll do next year, you should use the owner’s compensation method. If you’ve been in the field less than five years, determine exactly how much money you need as the owner, or need to make next year.

Overhead Expenses

Here is a list of things that should be resolved in terms of overhead expenses in your planning sessions.  With the stats and data that you’ve compiled over the last year, this should be an easy task.  If you work through the overhead, you should not have the attitude of what you can cut, but instead, what you can save.

Like in the previous sections, there are some questions you need to ask here.

Staff

1. What’s your budget for salaries for the next year?
2. Are there classes and seminars available for the staff that comes in next year?
3. Is there someone you can bring in such as a virtual assistant, remote CA, who can provide professional services without the overhead expense and cost of a full-time employee?
4. Is there someone you can bring in such as a consultant or a coach, who can provide training for your staff and you personally?
5. Have you scheduled a year-end review for every member of your staff?

Paperwork

1. What is your budget for paperwork next year?
2. Are there contracts that need to be updated?
3. Do you have any pre-printed change work order forms or are you using any other forms?
4. Are there any pre-printed right of rescission forms available?
5. Is your company manual up to date?

Tools and Equipment

1. What is the budget for tools and equipment for the next year?
2. Is there a special order coming through that you haven’t budgeted for?
3. Was there a need for a special kind of tool or piece of equipment that you needed this year but didn’t have?
4. What is the budget and estimate for your maintenance cost for the next year?

Office

1. What’s the budget for the office supplies next year?
2. What new equipment is needed?
3. If there is a showroom, part of the plan needs to include what is to be fixed, renovated, repaired or just replaced.  This can include cabinets, countertops, chairs, screens and

Vehicles

1. What is the plan to replace or repair vehicles next year?
2. Is there a need for a special type of vehicle?

There are a lot of things to be planned out for a construction business for the New Year, but if you stick to the basics and plan out accordingly, you should enter the new year with a plan to succeed. 

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