As you are wrapping your head around the whirlwind that was 2019 and preparing for 2020…how are you going to set your home improvement company up for success?
- What was your most successful lead source?
- How many projects finished on-time?
- Of the projects that went over, how much extra did that cost you?
- Did you get enough leads?
- Were you able to effectively contact the leads that came in?
- Do you know everything you need to know about your business?
Reflecting on your successes and failures is a key component to optimizing your business.
Along with that, defining what you want out of your business in the long term will help you establish an appropriate framework for making decisions based off the data you collected this past year.
For instance, let’s say we have two home improvement companies AA remodeling and AB remodeling (I know, super creative…that’s why I get paid the big bucks). After running their end-of-year reports they both found the same issue…there was a bottleneck in the project side of their business that was forcing them to miss completion deadlines and costing them money.
AA remodeling’s future goals include growing their company. They imagine opening new locations and eventually breaking into new markets.
The first thing they will probably want to look at is their scheduling efficiency. Creating efficient and effective processes early will make intelligent growth possible in the future. Could they change something in their process, or switch to a system more tuned to making their production scheduling process as streamline as possible? Any tweaks they can make would be an easy, cheap win regarding that completion rate problem.
Since growth will be a priority in the longer term, they can also use this opportunity to address what basically everyone in our industry must deal with…hiring more reliable, skilled, and competent installers. Increasing staff and adding efficiencies will set them up for the growth they are looking for in the coming years.
Now, AB Remodeling has that same completion rate issue, but their focus is going to be more on profitability. They have no real desire to deal with the headaches of scaling their business; they just want to make the most money they can with what they have.
For AB, their first step will probably be to look at how efficiently they are scheduling projects as well. In fact, it’s hard to imagine a situation where being more efficient would not be preferable.
However, they might also look at doing something that seems counter-intuitive. They may look at committing to fewer projects.
So how do you become more profitable while doing less work?
One option would be to run a report on source costs by lead source. This will show AB Remodeling how many leads they get from each of their lead sources and how much revenue they brought in from each. What they may find is that there is a lead source (let’s say radio ads) that brings in leads that for some reason tend to commit to larger projects. Now they have real-world data that shows them that if they focus on radio ads, and scale down elsewhere, they will:
- Save money immediately on marketing, which directly effects their bottom line
- Be able to focus on a lead source that brings in fewer projects but at a higher dollar amount
Thereby, doing less work for more money.
The data you are collecting in your day to day operations is vital for providing an accurate picture of the state of your company today. However, defining the direction you want your company to go will add color to that picture, and allow you to provide a path for your professional future.
This year why not combine these reports with deep consideration of your future plans to make your business resolutions a viable framework for future success and not simply an empty promise to improve some arbitrary numbers.