If you live on either the East or West Coast, business may still be brisk, and 2008 may be looking good. However, if you live anywhere in between, you may have already experienced a work slowdown. The market has changed. The sub-prime mortgage market collapse is bringing numerous stories about foreclosures and their economic costs. Due to this, potential customers may be postponing getting a certain project done. That, and the general slowdown in the economy, makes planning for 2008 a necessity. Here are some necessary steps that you should follow to prepare yourself for a tougher business climate:
1. Know your numbers
Know your cost of doing business. Prepare a budget for 2008 and identify all of your costs of doing business. Ask a construction accountant or bookkeeper to help you do this. You must know what you need to sell and produce on a monthly basis to stay in business. Identify all of your overhead costs, and then add all payroll expenses. When you have identified that total, identify how many jobs or projects you must sell on a monthly basis to have a gross profit that will allow you to meet all payroll requirements and overhead expenses.
2. Create a low-cost marketing plan
Marketing is a numbers game. Once you have identified how many jobs or projects you need to sell to meet all of your payroll and overhead expenses, create a plan to generate enough sales calls to generate that number of sales. You do this by looking at your closing ratio. How many sales calls do you make to close one sale? If you close one in three sales calls and you need to sell five jobs on a monthly basis, then your marketing plan has to generate 15 sales calls a month. You want a proactive plan that can generate those calls.
3. Track your marketing
You must track where your leads are coming from to know what marketing is working and what isn’t. If one part of your marketing plan is working better than the others, you may want to pay more attention to that area. Put your time and money where it is getting the best results. Done correctly, you can fine-tune your marketing to increase or decrease your lead flow as necessary. Tracking your marketing has an additional benefit. If you regularly monitor your leads, you can know ahead of time if work is slowing down. If your lead flow starts tapering off, this may be telling you to take action to generate additional leads. This can allow you to make adjustments before you run out of work. You can proactively increase your leads before this becomes a problem.
4. Develop a ‘fall-back’ budget
Develop a “fall-back” budget in case you don’t meet your required sales and income. Proactively, begin to think about where you can cut expenses and save money. This is preparing for the worst, but every successful company has a fall-back plan. Think about this ahead of time, so that you know what you will do. By tracking your marketing and sales, you will know when this may be happening, and you can respond effectively.
The year ahead
Tough times are not necessarily bad. Tough times allow you to “sharpen your sword,” and force you to focus on what you do best. Think about these issues ahead of time, and you may eliminate a crisis before it ever becomes a crisis. Good companies survive tough business climates. They do this by planning to survive. This doesn’t happen by accident. It happens with careful and thoughtful planning. Follow the steps above, and you can do the same!