SPRAYFOAM Professional - Spring 2015 - (Page 34)

MAKING MONEY HOW TO MAKE MONEY AND HAVE FUN DOING IT BY MAC SHELDON T his is the first in a series of articles to help company owners and managers better understand and operate their business. In this article we talk about some key performance numbers, and how we use them to make intelligent decisions. In future issues we'll talk about how simple changes in operating efficiency can add rather dramatically to profitability. of business after the week or month displayed on the job board. The spray crew knows how to professionally and safely install foam on the job site, and they depend on management to keep the job coming. So how do you know what your crew and your business will be doing a month or two or three months from today? The Job Board As a business owner or manager, I'm sure you know your average margins, your overhead percentage and the volume of business needed to keep the crew working and the company profitable. No doubt your sales people know their closing ratio with leads from different sources, and with this information, we can project to the future to help make informed business decisions. Let's assume Sam Salesman closes 75% of the sales presentations he makes. Let's also assume that for every 5 leads the company gets from a home and garden show, the salesman is able to make 2 presentations, or 40%. If Sam's average sale is $4,000 and the company needed $100,000 in monthly sales to Every SPF contractor I've visited has a job board somewhere in the shop. Some show the next week's jobs, some go out a month, and some show jobs they're hopeful for but aren't yet fully committed. The board is great for morale as it shows the crew there's work on the books and, depending on how it's kept, the board might show the type of project or which rig is going where. It also offers an idea of the material needed in the very near term, but for the business owner and managers there's much more information needed than most job boards display. If your banker walked into the shop and saw the board he or she might assume your company is essentially out Staying on Ratio stay healthy, how many home show leads would we need to stay afloat? $100,000 ÷ $4,000 per sale = 25 sales per month to meet the company goals. Since Sam only gets to make a presentation to 40% of the people met at the home show, he'd need over 60 home show leads every month if that were his only source. Fortunately, Sam does a great job asking for referrals from his satisfied customers, and he closes 80% of those referred to him. The company also has an active marketing program involving direct mail, cable TV and some targeted radio ads, so Sam has a predictable source of leads. For simplicity sake, let's assume Sam's combined closing rate is 75% and his average presentation to leads ratio is 70%. Using these numbers, Sam would need 48 leads per month to meet goal. (25 sales at $4,000 average ÷ 75% close rate ÷ 70% lead to presentation rate) While the job board tells the crew what's going on for the near future, a "sales board" or spreadsheet can be extremely valuable to management for forecasting chemical purchases and labor requirements. While the job board tells the crew what's going on for the near future, a "sales board" or spreadsheet can be extremely valuable to management for forecasting chemical purchases and labor requirements." 34 SPRAYFOAM PROFESSIONAL | Spring 2015

Table of Contents for the Digital Edition of SPRAYFOAM Professional - Spring 2015

Executive Director’s Corner
President’s Post
Foam Business News
SPFA Today
Industry by Design
Legislative Update
Why I Support SPF
Safety First
Energy Codes and the Benefits of SPF
Behind the Foam
SPF Industry Prepping for Code Changes in Sweden
How to Make Money and Have Fun Doing It
What You Need to Know Before You File in 2015
Tips on Spraying Foam – Are You Doing It Right?
Choosing the Right Strategy for Complex Construction Claims
10 Ways Your Company Can Use Instagram
Ask the Expert
Calendar of Events
Index of Advertisers/ Advertisers.com

SPRAYFOAM Professional - Spring 2015