TRANSCRIPTION
--- CLIP 5: Sales Goal ---
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[00:22:54]
alright so once you kind of have a rough idea on this we totally understand like you might not know how much in materials because it depends on what jobs you do right so we recommend just to base it off of last year or if you don't have that data then just look at the last couple months on average how much you're spending in materials doesn't have to be perfect alright same thing on subcontractors if you use any subcontractors you would put in an average monthly or annual cost I'm gonna say that we're gonna spend about 60,000 in subcontractors this year for whatever items by default it's going to spread
[00:23:41]
that out over 12 months you can leave it like that it doesn't really matter if you want you can go and adjust them per month or maybe I know in January and February we're not going to have any so and December whatever you can spread it out over the rest of the months and when you're happy with that when we go back to overhead recovery you will see here that the materials and the subcontractors can have a percent added here that gets allocated towards overhead okay so it says right here markup percent to recover overhead 20% materials 15% on subcontractors and the rest of it goes towards the field labor alright and how this works is you can see that the overhead recovery and the break-even
[00:24:31]
point has been reduced on the field labor compared you can see here it's at 43 an hour break-even versus if I do it all through field labor it's at 49 50 an hour and the reason that this is getting to reduce is because some of the overhead is being recovered through the materials and the subcontractors now it's up to you if you want it on materials or not some users will zero this out and they'll just keep it on their subcontractors that way if they subcontracted a job it's still out recovering overhead and if they do field labor of course it's recovering overhead but the materials they don't need a recover overhead and through so that's up to you on how you want to set that up
[00:25:16]
totally customizable for your company all right like I said if you don't use any subcontractors then you can just stick with the field labor only recovery so I'm going to do that for now but I'm going to leave it on weighted overhead recovery for now and we're going to put in the overhead being recovered to the subs but we're going to zero it out on the equipment and the materials in this example and you can see my break even on labor 90% of my overhead is being recovered through my labor 5% is being recovered through subcontractors so you'll be able to see out see what these numbers are looking like for your company when you're happy you can click over to sales goal and you can see where it's calculating everything out at all right so you can see here the break even
[00:26:07]
this is your total cost to cover your materials your subcontractors overhead all your different expenses and then you can see that broken out between labor materials etc alright then you can set your profit margin goals for how much profit you want to make on labor materials subcontractors etc and over here on the left side you're going to see the average as well as a estimated sales goal based on the numbers that you have entered now if you want to edit this you can I could type in I want to do a million in sales here and it'll tell me what percent profit I need now this will be automatically applied to each of these but most people would have a higher percent on labor for example
[00:26:54]
maybe 35 and then 20 on the materials or whatever it is to get to that goal so you can type in the number here or you can adjust these percentages here and it'll recalculate on the left side now as you're entering this profit percent for field labor you can see this man hour rate is going to be calculated out so this is going to be based on what your break-even is and how much profit you want to make on labor to calculate out what you need to be charging per man hour for your company to cover all of your expenses and make the profit you're aiming for now you can skip over this part if you don't do subcontractors but for example I can go back to overhead and maybe I have some overhead that I
[00:27:44]
haven't added yet maybe I have an office person that we haven't added in here so I'm going and I click invite and I would put in office manager I put in their name here admin office put in their email select salary maybe this office person makes 70,000 a year and hit next and save so now what we what we just did is we add an additional $70,000 in overhead right so now when we come back to overhead recovery all of a sudden our break-even point went up all right you also will need to readjust this and when you make certain changes so if you don't
[00:28:32]
want it on materials make sure you just that you can see our break-even is up to 57 an hour so now when we come back to the sales goal if we put this at 30% we're going to be at 74 an hour if we put it at 40% gonna be at 86 an hour so you can see how the the by adding more overhead will directly affect what your rate is that you need to be charging to make the amount of profit you're aiming for so in my case I'm going to leave it at 30% on labor 20% on the rest it's 25% average million-dollar sales goal 74 per man-hour and but you can adjust that based on your your location what you need what you're charging what your profit is and your specific numbers for your company all right last thing here
[00:29:21]
and the sales goal is we'll give you some additional graphs here also give you some overall reporting as far as gross profit and net profit and we'll also show you monthly reporting on what your sales goal needs to be per month to hit these different numbers when we scroll down to the roadmap that sales goal is going to be translated here you can click this average job price this little pencil icon right here set your average job price maybe $15,000 and it will calculate out how many jobs you need to sell per month to hit that sales goal now based on this how many jobs you need to sell per month and your closing ratio right here you can click that pencil icon to edit that it's going to tell you how many estimates you need to be sending out each month to hit these
[00:30:08]
different numbers and then based on what percent of leads you actually have turned into estimates it'll tell you how many leads you need to be receiving so this is really just kind of breaking it out for you to plan things out this doesn't actually have any direct effect within the system other than just giving you kind of some roadmap to plan out how many leads and how many estimates you need to be sending out finally we have some additional reporting and options down here to show you how all the numbers break out and what percent is going towards what so that's the full budget right there when you're ready you can click save budget hit save as default and this budget will be now activated all right if you're not ready to activate it you can click save as
[00:30:57]
draft instead so when we click save we can do it as draft instead and you can always come back to it later by just clicking on the budget from the left side and then clicking into the budget so that's how the budget works please reach out if you guys have any questions as things update in the future you definitely want to revisit and update this when needed so you can always come in here and make adjustments you can also go to the three dots and you can duplicate this budget if you want to compare different scenarios what happens if I add another employee what happens if I buy this piece of equipment what time what happens if I increase our ad budget and you can see how that's going to affect your numbers you want to be proactive with your budget the reason is because the estimates you're sending out now you might not be doing the job
[00:31:45]
for a couple of months so that means you always want to be a couple of months ahead of when you're actually because you're because you wanted this to be included in the estimates you're sending out now right so just keep that in mind always be proactive and updating the budget whenever something changes if you have an updated budget you would definitely want to be doing this on a quarterly basis all right so reach out to us with any questions you have and we hope this is a helpful tool to plan everything out and get more insights into your overhead recovery and how the system works as far as that goes please reach out with any questions and we will see you in step 3 thank you