Successful businesses tend to break down their business into smaller pieces so that it can be viewed as a series of simple, easy to handle processes.  This reduces a complex operation into easily understood components that can be accomplished in a timely basis.

The problem with this idea is that many businesses don't have the time or experience to set up all of these processes.  Here's a quick tip on how to create a process for setting and tracking your Sales Goals simply by creating your Flat Rate Price Guides. 

Why Set and Track Sales Goals?
Many businesses set their prices and then go to work.  The only time they have any idea if they're making a profit is tax time when the have to get everything together for the accountant.  There are two things wrong with this scenario.  First, can you really tell how much profit you made from what you get from your accountant?  Second, if you decide that you're not making enough profit, you've wasted months waiting to find out. 

You need to know as soon as possible if you're losing money.  Cash flow can cover a money losing enterprise for only so long.  As we say every month in the newsletter - Measure Monthly, Adjust Quarterly.  For many businesses, this sounds like a lot of work, but there is a way to simplify the process so that it takes a minimum amount of your time. When your business is set up this way, tracking your performance to see if you're meeting your sales and profit goals is simple. 

Here's how to do it.
Start creating your process by setting up your pricing with Numbers Cruncher or whatever tool you use that you are sure includes all of the costs (both time and dollar costs) of your business.  This will tell you two important things: what to charge, and the efficiency of your field workers.  Knowing these two numbers is critical in setting up the process.

Now you can print your Flat Rate Price Guides and begin making money.  Or, so you assume.  Without measuring your performance, you're flying blind.  That's where the tracking process comes in. 

One of the few numbers that every business knows is their total sales.  Using this number and the two numbers you established using Numbers Cruncher, you can see how close you are to meeting your sales and profit targets.  When you print out your Flat Rate Price Guide, your Sales Goals can be calculated based on your profitable hourly selling price and the estimated productive hours (the efficiency ratio of your employees) as automatically calculated in Numbers Cruncher.

If your book is based on selling at $240 at 50% efficiency (20 hours sold / week / tech), your tech should generate about $240,000 in annual sales.  With material sales factored in, it should be close to $300,000 per year or $25,000 per month. If the the tech is pulling $25,000 a month, then you know that you are probably hitting your sales and profit targets. (Numbers for illustration only, set your own prices).

Adjust Quarterly
If your sales are off target by more than 10%, you should probably go back to Numbers Cruncher, recalculate your selling price and efficiency, and, if needed, print new Price Guides.  Of course, you will also need to take a look at your operation to see where you can make improvements, but that's another process

So, by accurately setting your prices and efficiency in Numbers Cruncher, and printing your Flat Rate Price Guides, you have a system to track your business' performance just by tracking your sales.  Since most of you already track your sales, why not take advantage of all the information you have and use it to really measure your performance on a monthly basis?  Once you're set up, it will only take a few minutes each month..

Now you can easily measure your performance and adjust your pricing without spending a lot of time on paperwork.  You can have the peace of mind that you're working towards your profit targets every month by using this simple process.

Measure Monthly, Adjust Quarterly
 & Achieve Annual Profit Goals

Call us at 800-841-8542 to schedule a Numbers Cruncher Review so you can be sure that you are making the profits you need every day.      

The Next Money Masters™ will be at the Adam's Mark Hotel near Buffalo, NY on June 24 & 25, 2005

This Money Masters will includes the high quality Nexstar seminars, a visit to successful Nexstar member Roy's Plumbing, and the opportunity to talk with other successful Nexstar members.

Registration deadline: June 9, 2005

NJ State League Convention

I'll be at the next New Jersey State League of Master Plumbers Convention at the end of June in Atlantic City, NJ.

I'd like to invite anyone in the area to stop by and say hello.

Mike Conroy

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