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Planning Your Goals for a New Year // Insights with Mike Katounas and Rick Holtz === [00:00:00] [00:00:00] Introduction --- Scott L: Thanks for tuning into this episode of the Beyond $1,000,000 Podcast. We have Mike Katounas and Rick Holtz, who are coaches here at C4C back for another round of question and answer from our listeners. We hope you get some value out of our conversation today, so let's dive in. My name is Scott Lollar and I'm a 35 year veteran of the painting industry where I've been part of growing several multimillion dollar painting companies. I have worn all the hats and have experienced everything you have experienced, are experiencing, or will experience. There is lots of chatter about getting to a million dollars, but what very few focus on is what it takes to blast through Death Valley and create the multi million dollar company of your dreams. We don't focus on fads, tricks, or shortcuts. We focus on solid foundational business principles and data that deliver results. This is the Consulting4Contractors Beyond $1,000,000 Podcast. [00:00:57] Planning For A Successful New Year --- Scott L: All right, it's a new year and I wanted to [00:01:00] talk a little bit about best practices here for planning a new year. you know, what, what are the things you do? How do you think about it? How do you get ahead of it? What are the different things you do? Rick, why don't you go first this time? Rick: Okay. I think it's always important for me to look at how we ended the past year. So I think it's really important to look at your past year. What went well, what do you still need to improve upon? I think those are two things that are, that are really important to look at when planning the new year. Cause you want to build on the things you did well, and you definitely want to have a plan for tackling some of the areas that you still need to improve on for sure. Scott L: Do you do that first alone with your coach? Do you do it with your team? How do you, how do you how does that process work? Rick: It's funny because I really started looking at it before we had the C4C retreat. And so I did it alone this time. And then [00:02:00] when we got back from our retreat, we had our planning meeting at the end of November. And it was interesting how many things that I thought we needed to do were really consistent with what the team did. And the team being my management team, project managers, operations managers, the estimators, all those, all the overhead people. So we do that as a group at the end of November. Scott L: Are they operational issues? Are they financial? How, what, what, what are the components of how you move forward or project your goals for new year? Rick: Well, like we look at the year in review and then we, we look at our goals. What do we think we want to try to shoot for, for 2024? And we do it as a group. We vote on it as a group and to achieve those goals, what are some of the things we need to do? So like one of our things is we really need some better processes in our company. We're a large company and not everybody does things the same way. And it creates stress on the team. It creates anxiety, it creates inconsistent service [00:03:00] delivery and we really need to work on it. Last year we did their sales system and documented it. And so now we're really going to work on from the time an employee of Holtz shows up at a client's job until we final bill it and collect the payment. Rick: What does that look like? It needs to look consistent, no matter whether it's painters, wallpaper guys, carpenters. What crew it is, it doesn't matter. And, and believe it or not, we really don't have that standardized. And that's, that's really one of our big, big rocks that we're going to look at this year. Scott L: Nice. How does revenue play into this or is it not revenue as much as gross profit or net profit? Or, how, how do you look at money? Rick: Always look at a revenue goal, a gross profit goal, and a net profit goal. And we, we look at expense too. The expense is really more in my, in my bucket. That's really more me as the owner, really looking at all those fixed expenses and what, what can be tweaked and what can't be tweaked. The [00:04:00] team doesn't have a whole lot of influence on that, but definitely on revenue, definitely on gross profit and definitely on net for sure. So we have all those goals annually. Scott L: Okay, Mike, how about you? Mike K: We usually do a strategic planning meeting every December to plan for the next year. And, we have a, a document we follow and we, we go over like an overview of what happened during that previous year. The major achievements challenges we dealt with and then what do we want to improve upon going into the next year? And, and how will we do that? We do a SWOT analysis we come up with big rocks for all of the key personnel, ops manager, office manager, salespeople, myself look at our marketing, see where things need to be updated or changed. And then obviously looking at financials [00:05:00] of the last year. And I have a spreadsheet that I created years ago of like, what we would need to do to hit different numbers, whether it's anything from like a million and a half up to like, 4 million and just looking at it incrementally. And what does that mean in terms of. Paying for new staff, like key personnel positions, vehicles, office stuff, marketing. So it gives me an idea of if we have a certain goal, well, working backwards, how do we get to that goal? What, what, what purchases and what kind of spending do we need to do, Scott L: How about marketing? Does that tie in? Do you have a, make a plan or, you know, it seems to me that once you set a revenue goal almost always, and it's not, not necessarily have to be always, but most people are looking at some kind of a growth. And if you want to grow, that means you need something more than you had last year. So it seems that lead flow, [00:06:00] which comes from marketing. How do you, how do you plan your spend or how do you analyze it? Or do you do it more often than at the beginning of the year? Mike K: In that strategic meeting, we do look at the marketing and where we were spending our money and what got the most return best ROI in terms of not just leads, but also dollars produced, because sometimes those don't line up and try to determine, do we need to put more money into those stronger avenues for marketing, should we try new new types of marketing and what's the risks involved with that. And we'll talk that out as a team. You know, and sometimes what it is, is looking at as well as like the lead flow and how many of them actually turned into estimates and, and when, and, and jobs cause in, in years past, we've had sometimes where we've turned away so many calls just because we didn't have the capacity to even handle them in terms of just [00:07:00] doing an estimate. And sometimes it was just because we didn't have the capacity in terms of like time frame. And that, that varies from year to year, but I've sometimes made hiring decisions just because we've didn't necessarily have to turn on more marketing, we just needed to increase capacity to handle it. So it really is doing a full scale analysis of, is it just the marketing we need to ramp up, or is it something internally that we need to fix to handle the amount of marketing we we've done. Scott L: Interesting. So it's not just so you didn't have enough leads is that you had maybe sufficient leads. You didn't have enough manpower, or maybe you needed another salesperson. So it's not just a single lane analysis. There's, there's more to us, what you're Mike K: Yeah. I still remember, I don't know what it was probably two or three years ago now, but you would get on me during our mastermind meetings and look at cause I have an online schedule or schedule on our homepage. And you can see what [00:08:00] slots are available to schedule for an estimate and you go onto mine and say, Mike, I can't even get an estimate with you for three weeks, like, what the heck is going on here? And so, when it's like that you are going to lose people. You're going to, and some of that is hard to quantify because you don't know how many people just went onto your website and said, Nope, I'm not even going to, I'm not going to click anything further, or I'm not even going to pick up the phone because I need to get an estimate here this week or next week. And so, with that, that's, it's hard to quantify that exactly, but we would tackle that by just bringing on another salesperson to cut down on that lead flow and just in terms of estimates. But sometimes it's how far booked out you are, too. And, sometimes people will call and they don't mind waiting a couple of weeks to get an estimate. But when you tell them we're a month out, we're 2 months out, whatever it may be, that maybe turn off as well. So, it is a matter of managing your key personnel. Do you have enough salespeople, but also do you have enough painters, whether it's [00:09:00] employees or subs, to, to manage that C4C: Well, we are about halfway through this episode of the Beyond $1,000,000 Podcast from Consulting4Contractors, and we still have some great content left for you. Before we get to that, though, I wanted to let you know about some resources that are available to you via the show notes. You'll find links to our website, social media outlets, and highlights of this show. You'll even be able to schedule a discovery call with Scott and our team to find out how Consulting4Contractors can help your contracting business. It's very low pressure. We'll ask you just a couple questions, see what your current situation is, and then get you started toward the contracting business of your dreams. The best part about it, it's completely free. So just click on the link in the show notes, or you can visit our website www.Consulting4Contractors.com and reach out to us there. Again, that website is [00:10:00] www.Consulting4Contractors.com. Now here's the remainder of the show. Scott L: Yeah. Do you have a, a target, just this is something that everyone likes to talk about, is how much you spend on marketing or is there a percentage, or what's your tolerance or how do you decide? I obviously you'd already said it depends on what's working first of all, but is what is, what is your comfort zone with your spend there and how do you monitor it? Mike K: Ideally I'd like to keep it under 5% I'm okay, like if there are years where I want to like push it a little bit, maybe I might go up to six or maybe even seven. But as you can hear it in my voice there, I'm like going up to seven kind of gives me some pause. I, most often we're typically in the like 4 to 5 percent range. Scott L: Yeah, Rick, take us through your marketing thinking and how do you how do you plan for your growth? Do you need to spend more or how do you monitor your [00:11:00] marketing how it works? Rick: Our marketing this year was a little bit different when we had our marketing planning meeting. We use a marketing consultant, Andy McClure from California, and we've worked together for gosh, I almost 10 years. And our marketing is not so much this year, how are we going to increase leads? But he, he wants to be in our planning meeting to know what our work plan is, what our manpower plan is. A great example is we get better gross profit on exterior painting than we do interior painting. So last year we focused way more on exterior. We had more crews doing exterior, the weather was good, and our revenue and our gross profit went up because of our business mix. So he supports that he wants to hear that kind of planning so that he knows from a marketing standpoint, how to support that. If we're trying to do more cabinet work, because we have, cabinets, we can get them in and out, they are good revenue, they have good gross profit, we don't want him [00:12:00] marketing a lot of interiors only or wallpaper, for instance. Right? So he wants to know what we're doing as a company, what our goals are, so that then the marketing can be supportive of that. And he's always going to ask us how we're doing overall? How's the workload? What's the lead time on different types of business? We're trying to grow our carpentry business. We, we think that's a great opportunity. How can he support doing that? So those are the types of conversations we're having in our marketing, overall marketing plan. And then of course, with us, we have a lead time, a lot of times with some of our types of business, especially wallpaper. So how can he help that situation? Maybe we can do some marketing things of, of why we're worth waiting for. So we don't lose everybody cause that's a big concern. So that's really where he helps us. And he runs our marketing for the whole year. He has a marketing calendar. He's worked with us, like I said, for over 10 years. So [00:13:00] there's a bit of repetition to it. And then he can tweak it here and there, and I love it because, it's consistent. And I don't have to think about it, Scott L: Yeah, what what? What kind of budget are you allotting for this year for your marketing? Do you know? Rick: Say, about the same as what Mike said, somewhere in the four to five percent [00:13:22] Planning For Success In Different Quarters of the Year --- Scott L: yeah. Yeah Is it, at this time of year or December, both of you talked about planning before now, this is January as we're recording this, but sometimes, especially for those in cold weather climate, the first quarter can be a little bit soft, a little bit not as robust and you, you ramp up in the second and third quarter and then finish up in the fourth and depending on weather. Are you making decisions today about things that, you need to maybe do later in the year and set that as a target like, Hey, in Q3, we're going to hire a salesperson or Q2, we're going to do this, or is that part of the way you think, or, [00:14:00] how do you schedule a whole year at one time, or, what is, or do you? Rick: I don't I'm more thinking about this quarter. Historically my experience has been the first quarter can make us or break us. It can make our year or break our year. If we can really do all we can to jam as much good, profitable work in the first three months of this year, we're going to be successful because the second quarter, the third quarter and the fourth quarter, I know. Unless something economically catastrophic happens, the year gains momentum consistently. We're starting from a dead stop right now and that's hard to get that momentum going. So I'm, I'm trying to push this thing along and push it and push it and push it. And then by the time you get to March, you can let go at least in this region, because this is a hard time of year, January, February, March. It's hard to be profitable, very hard. And it takes a lot of effort. Scott L: Yeah. Mike. Mike K: Yeah, I I would agree [00:15:00] with Rick there. I do think a little bit long term this time of year. Like in order to really do well in the these cold months, if you start planning in December as it's happening, it's a little too late. So, we run a winter promotion that we've done for several years now. And but we start talking about it in, in like our newsletters in either August or September and just kind of plant that seed. And I have a handful of customers that are just what I call my winter only customers that are just looking for a little bit of a discount, which is fine with us. Keeps our guys working and we, we want to just get started off on the right foot for every year because like Rick said, like that first quarter can really make a big difference in terms of how the rest of the year goes. And for us, like if we even break even by the end of March, we know we're going to have a really good year. We just don't want to get too much into the red through the first quarter. And [00:16:00] then if we come out even profitable through the first quarter, then we know it's going to be a stellar year. So, we know it's going to be tougher, but just trying to do everything we can to, to mitigate the slowness because we can't do exterior work basically from like December through most of March. Usually we don't start our exteriors until the beginning of April. So, so we do give it some thought. I've even had some winter jobs that I have sold. In the spring, the previous year, it's just a matter of talking to the customers. And, I'll, I'll look at some interior work and, they'll say, I don't, I've been waiting two years, three years to do this job, Mike K: so I don't care when you schedule it. And the, light bulb goes off in my head, I'm going well. Right now it's May, I'm not dying for work, I got a, I got plenty of leads and plenty of work, but this job would suit me a whole lot better if I scheduled it in December or January of next year. How would you feel if I gave you 10 percent off and we just scheduled you for then? And I've had that happen. Not a lot, that, that can actually, just help fill up the [00:17:00] schedule. Scott L: Yeah. I agree with both of you. Q1 is really critical. Most people can't fight their way out of a terrible Q1. The last thing I'll say before we roll out of here is sometimes it can help, especially if you are in a really a big growth mode. I had a, actually a coaching call today with someone who is gonna, is projecting a $3,000,000 [00:17:22] Strategic Hiring and Planning for Growth --- Scott L: and I know that if they do that, which of course is why we do the projection, is that he's going to need some support in the third or for sure the fourth quarter. And it's going to either be another salesperson to alleviate some of what he's selling or it's going to be an operation person. But I've already planned in Q3 to start asking that question. So sometimes if you're in a big growth mode, it might make some sense to put it out there because if you wait until you are crushed and burned out to start hiring and to, to, to staffing up in a key person, it'll be too late. But great [00:18:00] comments. Hope this helps all of you out there. If you could, if you need any help or would like to talk a little bit about how to plan a year and how to do projections, give us a call. I'd be glad to help you. Mike and Rick, as always, thanks for being on, love your comments. And we're looking forward to great year together. Rick: Thanks, Scott. C4C: Well, thanks again for joining us on the beyond a million dollar podcast. If anything you heard on the show today intrigued you, or if you're just interested in getting in touch with Scott, please visit the show notes. You can click on the discovery call link to get started. We'd love to find out more about you, your company, and how consulting for contractors can help you grow your business to a million dollars and beyond. [00:19:00]