Plan Ahead

What is your plan for 2023

Tom CoffinsmartPRENEUR Blog Series

This week starts the beginning of the fourth quarter and the end of 2022 or as I like to refer to it twenty-twenty-TOO. A lot has happened over the last couple of years that has made planning a challenge for some. Are you one that had trouble trying to figure out what results you could reasonably expect? Uncertain times they kept saying.

But, were they, or did people just not plan for different challenges?

 

Let’s look at what the great minds in the universities, the talking heads on the TV, and the smiling politicians are predicting for 2023.

  • High inflation
  • Higher Interest Rates
  • Higher Unemployment
  • Learn to live with Covid It is Here to stay
  • Continued Supply Chain Issues

You’ve weathered the pandemic. You found ways around the supply chain issues. Higher prices also means increased sales numbers and profits. You can win, you just have to have clear plans with contingencies.

The Good News

Most systems integrators’s businesses actually grew during the last two years despite the pandemic, despite supply chain issues, despite labor shortages. Your customers were staying home and they wanted to enjoy their time there. As one would expect the systems integrators rose to the occasion and closed sales.

Great job, now what?

It is not too early to start to make your plan.

Gather some data:

  • What was your revenue in 2022? (You could use 4th quarter 2021 and add it to quarters 1, 2, and 3 of 2022 in order to get 12 months trailing revenues).
  • How many installation projects did you complete?
  • Divide your revenue by your completed jobs to get an average
  • How did service fit into your revenues? Deduct that from your total revenue
  • How many service calls did your team perform
  • Divide the service revenue by the number of billable service calls

 

This data will give you:

  • Your average installation project
  • Your average service call sales
  • The quantity of these that your company accomplished

 

Let’s talk employees

What is the make-up of your company?

  • Owner
  • Admins
  • Project Managers
  • Warehouse Staff
  • Salespeople
  • Programmers
  • Installers
  • Technicians

 

How many people does it take to run your business?

Do you know if each of those employees is providing value in the workflow?

Does everyone account for their time based upon what project, service call, travel time, office time, etc?

 

Take your revenues and divide them by the total number of employees. The industry has taken a hit as it transitioned out of retail and into custom installation and now systems integration.

It used to be the goal to sell $300K per employee back then.

 

Here is a scenario I have seen many times in the industry:

Sales $2.5M

Gross Margin 30 points

Gross Profit $750K

# of Employees 12

That is about $62,500 gross profit per employee. By the time you take rent, insurance, employee salaries out the owner is usually left with a fairly small salary.

 

Let’s plan to change that

  1. You must know your metrics
  2. Everyone’s time must be accounted for and reviewed each payroll period
  3. Trim your product lines, contrary to popular belief, you do not have to carry every speaker line and every control system. Pick a side. Less skus and more inventory returns
  4. Determine how many projects you will need based upon your averages to achieve your revenue goals
  5. Adjust staff level appropriately
  6. Implement a business operating system Yes, I think Simply Reliable’s smartOFFICE is the best and would love for you to use that. But, I’d rather see you using a competitor than just using QuickBooks. QuickBooks is a fine accounting software. It is NOT a business operating system.
  7. Write out your workflows and processes this will help you see where you need to tighten things up. This is where you can find opportunities in the cracks. If you need help reach out to our Guest smartPRENEUR Faculty members Jason Sayen or Chris Smith they are experts on process with Six Sigma and EOS backgrounds.
  8. Run a full company meeting every Monday. Take the entire team through your top 10 metrics and discuss how the company performed last week vs. this week. Get buy in.
  9. Review your plan every quarter, iterate as necessary
  10. Go home, relax, balance your life. You are way more effective with a clear head. Do all you can today to move forward. Focus on your financial, spiritual, physical, and mental health.

 

Anything the mind can conceive and believe the body can achieve.

Napoleon Hill

 

I think you and the entire industry are going to have a great 2023. Let’s go get it!

About the Author

Tom Coffin

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Tom Coffin is CEO/President/Co-Founder of Simply Reliable. He has owned and operated companies in retail, security, Audio/Video, Systems Integration, and Home Automation product manufacturing sector.

Website:   https://www.simplyreliable.com