Talking to many business owners it is often the same old story, either they had a great year and took a vacation or couldn’t afford one! Unfortunately, it is usually “couldn’t afford one” more often than not. This really should not happen and if it is in your business you probably have other related issues. These issues probably mean you couldn’t afford the truck you needed or the piece of equipment that will help you do a better job and be more productive. For this group the answer is always the same, didn’t have the money or need to save. What if we looked at this from a proactive stance and not reactive stance? What if we incorporated these items in our business plans and budgets PRIOR to beginning a new year or season?
Let’s address the mindset, if you were working a job for someone else or a company you would expect vacation time every year. There is nothing wrong with this and it is expected however, when business owners think about a vacation the decision usually has to do with how much money is in the bank. What if we decided where we were going to vacation and how many people are going ahead of time? We could assume a family vacation for 4 might cost $8,000-$10,000 and everyone’s scenario may differ. How will we get the business to pay for that vacation if it hasn’t been able to do this before? Let us take the $10,000 figure and assume we will work 50 weeks out of the year, if your business is open while you are on vacation use 52 weeks, we must then divide $10,000 by 50 to equal $200/week. Most business owners work more than 40 hours per week but we can assume that it is either you or an employee working for you and divide the $200 by 40 hours and you get $5/hour extra that is needed. If we are estimating our job by an hourly rate, we need to add $5/labor hour and we will be able to afford our vacation at the end of the year. In other words, if you charge at a rate of $65/per man hour you need only bump up the pricing to $70/man hour to afford that vacation. You will find that you don’t lose many jobs by charging $5 more per man hour. Getting jobs has as much or more to do with knowledge, sales, references, and so many other things. Finding an extra $10,000 at the end of the year can be tough but doing it by $5 extra every hour of work is not so bad!
Now that we have a new mindset maybe we could apply this way of thought to the entire business? Do you need a new vehicle for the business? What about a new piece of equipment that increases quality and production? What about adding another crew or another location? If we plan these items ahead of time by figuring out estimated coasts we could then apply the same formula to our entire business. This will make you a proactive business owner and not a reactive “fireman” in your business. This is the difference in being an entrepreneur business owner and someone who is just creating a job for themselves. By spending more time planning and budgeting we can create a road map that will make our businesses healthy and profitable while adding quality of life for ourselves and our families.
To start this process, it helps to first identify needs as well as what has not been working so far. Then incorporate these into the company plans so that what was failing can now succeed. This is not always an easy task for an owner, you must be honest with yourself and really take a look at the items that are not working and either tweak them or plan a new strategy. By looking at these items first we can begin to see areas of opportunity and what will make us better. We then come up with real goals and plans, realistic costs and expenses, and then ways to achieve our desired results. We then should post them and communicate them with others so that we are making ourselves and the people we need to achieve these results accountable. We have a plan, we have buy in, and now we just need to follow through. What will be the result? I don’t know for sure but if this article helped you feel free to send me a postcard from wherever you are vacationing next year!