It’s that time of year again…time to put together your company projections for 2012! You may be in the process of crunching numbers to let your partners, bankers, and other stakeholders know your company’s outlook for 2012. Hopefully, 2012 will shape up to be a great year!
Instead of rewriting what has previously been written in past articles, below are some articles to reference to assist you in creating your 2012 plan:
So how do you go about figuring out where you are going to be? First let's look at the easiest part to the puzzle, Flow Work. Flow work is simply defined as the revenue you are going to churn each and every month and is not so dependent on project or Cost-to-Complete work. A simple definition of this work is T&M service calls for your mechanical or electrical subcontracting business. Every year in a typical subcontracting business…READ MORE
In this part, let's take a look at the next part of the business that you have built, the backlog. Over the course of the year, you have been bidding and hopefully winning work, not all of which will be completed by the end of the year and that amount that you take over into next year is your starting backlog. So we need to project that work across months to understand when the manpower and the revenue will actually happen…READ MORE
In Part 1 and Part 2, we looked at projecting the flow work and the backlog, now to get a total picture of 2010, we need to look at work we don't have yet, our pipeline. The pipeline for any company is critical and should be viewed in construction as far out as possible. A lot of times, we as subcontractors are only looking at the projects we are bidding immediately and not at all of the known work out there. This is a critical mistake in…READ MORE
As a review, we have come up with the revenue for each of the different categories utilizing the different methods in Part 1, Part 2, and Part 3 of this series. For each of the revenue numbers, I am typically utilizing a percentage gross margin for each category. For Flow, I utilize historical numbers of gross margin for that type of work, for backlog and pipeline I utilize the actual per project gross margin percentage. It is dangerous to…READ MORE
If we have taken time to calculate each of the numbers and analyze each step we have a very realistic look at our 2010 revenue, gross margin, and net profit items. When I say analyze, I mean dig deep. Too many times, this process takes a lot of time and we create multiple line spreadsheets that become cumbersome to the point where we don't look at the numbers in depth. Make sure you don't get caught in this trap…READ MORE
Watch Projecting Your Future Work Outlook Video!
We hope these series of articles and video help you in developing your business plan and projections, so that your business will have a successful 2012! Happy New Year!