The Profit Builder Unscripted

Financial Control is Closer Than You Think: Why Your Business Needs an Operating Budget

• Vicki Suiter • Episode 34

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Ever feel like you're working incredibly hard in your business, but the financial results just aren't matching your effort?

It's time to ditch the guesswork!

This week's episode reveals how creating and USING an operating budget will let you have more financial control, AND, peace of mind!

The breakthrough?

Turning financial anxieties into a clear, actionable plan for growth and profitability.

Here's what you'll discover:

  • Why you NEED an operating budget: It's not just numbers; it's your roadmap to intentional success.
  • The Backlog Advantage: Learn how tracking your backlog can build confidence in achieving your revenue goals.
  • From Worry to Clarity: Shift from financial stress to strategic action with regular budget check-ins.

In this episode, I share actionable steps and FREE backlog template (link in show notes!).

You'll see how reviewing your budget regularly puts you in the driver's seat, just like managing a project budget.

Ready to take control of your business finances and create a more profitable, predictable future?

Let's build some serious profit!

Resource mentioned in this episode: 

Free backlog template

How to Read a Profit & Loss Statement

How to Build Your Budget

Resources:

Connect with Vicki on social media:


If you love listening to this podcast, please leave a review in Apple Podcasts.


welcome back to the profit Builder unscripted today we're talking about how do you get more profits on your bottom line and be more intentional about how you plan for that in your business all right let's jump[Music] in in our last session I talked about what is the value of putting your goals down on a piece of paper and uh identifying in in writing what your measurable strategic goals are whether that's like Revenue gross profit margin goals cash in the bank goals uh how you're going to grow your team how you're going to invest in your business sort of like some big picture goals that you want to accomplish in this year in your business and today I'm going to talk about how do you start with that document I I had shared with you this goal sheet that I I have all my clients filled out every year that helps you kind of think through what are some questions that you might want to answer about how you want to be working in your business this year from a financial perspective or from an investment perspective or from a growth and development perspective and then this session I want to talk about like why do a why do an operating budget why take it to that next step and create an operating budget for your business and a lot of times I think that people think that an operating budget is just like oh I put numbers on a piece of paper I don't know if they're going to come to fruition or I've done that before and it hasn't turned out so I don't want to do it at all because I don't want to be disappointed and what I'm going to share with you is that I have a different perspective on all that one of the things that I have seen over the years and doing this with clients is that when you have an operating budget and when you pay attention to how you're doing compared to your operating budget as well as set in place some feedback systems to help you actually accomplish those goals it is the difference that makes the difference in being able to be more profitable and more successful in your business um there are there is a such a great correlation to how we run our businesses and how we run projects right so just like in a in doing a project you start with being really clear about like all right what's the current conditions when somebody brings you on and says want you to do a project you look at what's working that's not working what needs to be different and then you look at and have this conversation about what would they like it to look like and then you create a blueprint or a schematic that identifies what's it going to look like and then what's the next step you do you start with the end in mind you look back at what your starting point is and you ask the question what's it going to take to get from where they're starting out to to where they would like to be and in that process you develop an operating bud or a budget for a project budget right and you develop a schedule and you develop some you know you identify what resources you're going to need materials and labor and all that right the same thing is true for our businesses right like you know from doing projects that when you plan it well at the front end when you have a clear idea of what it's going to cost the process of developing that helps you understand what it's going to take to do it first of all second of all is that ideally you're looking up on regular intervals to go in my on track with the budget that I set when you do those two things in your business as a whole just like when you do that with projects you're more successful on projects you're more profitable on projects the same thing is true in your business and doing an operating budget isn't just about taking last year's numbers and throwing you know throwing 2% or 10% on top of it and going hey that's good right just like when you do a project budget for a project you look at it and you go hey like what what's really the scope here what is it going to cost um you know one of your an example for your business would be one of your largest line items is labor to actually look up and go all right what's what's my labor cost going to be for non-billable time right billable time is all up under cost of goods sold and there's a direct relationship with revenue and cost of goods sold um that if your Revenue goes up your cost of good sold is going to go up but all the rest of the labor of when I pay people vacation holidays my office staff my estimator my um you know administrative person like marketing person all those people are part of your overhead cost your salary those costs are very much uh uh something that you want to plan for right you want to look at like what's it going to cost me more often than not that is your largest overhead cost line item and then also looking at like what do I want to spend on marketing what's our plan for marketing where are we going to spend dollars and cents in all of that just like a project budget when you're doing a budget and you're figuring out what's it going to cost and you're figuring out what's it going to look like you keep in mind the whole thing that the customer said at the front end which was the customer said hey uh this is my budget and I want to stay within that budget and you're mindful of that when you're building out the budget for that project well the same thing is true for your business right so last time I my in my last recording I I talked about setting goals right you have a revenue goal gross profit margin goal a net profit margin goal you have a cash Reserve goal you have a goal for how much money you want to make you know personally your salary your take home so as you're looking at this you're going to compare and you're going to build your budget according to that now this isn't a session on I'm not going to show my screen I'm not going to go through a spreadsheet like I I'll drop a couple links below of uh of a couple of resources that I think will help you out in this regard but I I'm really wanting to just encourage you to set a financial plan for yourself because and and I was really compelled to do this because it was interesting you know at the end of every year I sit down well actually more often than that but particularly at the end of the year we I sit down with all my clients and we look at like all right what do you want to create this year but we're also looking at what how are you how did you do last year how did you do compared to your budget um the great thing about doing that is that uh you know it's always so great to see how when people have planned for what they want to have happened they're much more likely to actually be able to have it happen because they had a plan for it now you might be thinking to yourself well it's great I can put any I can put anything down on a piece of paper in terms of the numbers of what I want to create in Revenue but how do I know if I can do that I'm I'm thinking of a guy in my contractor's Collective group and and um you know Danny asked this question like how do I know if it's a good number to you know to set as a revenue goal and I say well here's a couple of things I would say one is what did you do in the previous years right what do you know that you have have been able to generate in terms of Revenue that that's one acid test the second acid test is I said let's look at what you have in backlog this was such a great process to do with him too and I'm going to drop a link to below for where you can get my template for for tracking your backlog backlog is what do I already have in contract and the first number he gave me when we were talking I'm not going to share the numbers with you but the first number he gave me was I was like oh that's pretty good all right so that's your starting number but then when we started to fill out this backlog worksheet that said here's what he had in contract here's what was remaining to be build for the year here's what was in contract that hadn't started that would be build in this next year and then there's another section on there that's like hey what do you have that's like 90% or more that you really have a good confidence level that they've given you the deposit they they've verbally given you a yes that it's going to go and when we started to tally all that up it was quite a bit more like 30% more than what he told me originally was his backlog and and like as we did the process he was like oh my gosh that's really amazing and I was like okay now now if you and and he set a goal of a certain amount of money and this backlog actually was going to take care of about 7 75% of it now he's like oh that's a much more reachable number now I can do that because I think about like there's going to be a certain amount of change orders and it's the beginning of the year and I know I can sell more projects now his projects have long durations and so it's you know you you take that into consideration like how long does it actually take until you can bill but when you can see it it gives you such a different relationship with your numbers that now looking at a revenue goal of you know let's say for you it's you know maybe it's 2 million maybe it's 5 million maybe it's 10 million I don't know whatever it is but look up and go what do I have in backlog what do I have an already signed work so that I can start to build a little more confidence of what would it take to sell that much more work so I'm going to just recap what I just said because this is super important one is have some big goals on Revenue gross profit margin net profit margin cash Reserve build an operating budget that will support being able to reach those goals a really key way to know if that Revenue goal is achievable is to do a track what your backlog is write it down look it up go look at all your open contracts what have I not build yet what am I going to build what have I not started that I'm going to build so that you can know what am I starting out with in booked work and then how much more do I have to sell and what would it take to sell that and if you do it by month which my template will it's free so you know grab it it's worth it uh you if you start to track it by month now you can see oh I got to drop off in six months or three months or whatever that is for you and then you go all right what do I have to do to sell that much here's the other cool thing that happens when you do that now the whole this is the great thing about doing a backlog report and I recommend that you keep this updated like every month it starts to take you out of the category of worrying all the time and puts you into the into the category of I have Clarity I know how much it is I know when I need that work now when you're having conversations with people everything doesn't become of equal importance now you're starting to focus on oh I need 300,000 in that month I need a half Million by that month all right what do I have in my pipeline of potential work how am I going to get that work in now I can be more strategic when I know how much I have to fill in backlog of additional work to sell so the more you have feedback like that it will really help you get more confident and being able to build your budget and build your Revenue goals terms of gross profit margin goals I would suggest that you look at the last few years what have you done in gross profit margin that's a good place to start we could have a whole conversation here for two hours about gross profit margin and I'll probably do another a different episode about that uh because it as a contract you live and die by it but it at least to give you a benchmark you can start and look at your historical information and then there's one more piece to all of this which is just like when you build a when you build a budget for a project and that project begins you start to pay attention to and look at how am I doing compared to how I budgeted this project to start with the same thing is true when you build an operating budget for your business if you're in QuickBooks put your budget into QuickBooks if you're in some other software put it in there and then every month look at your budget versus actual and go how am I doing am I on track am I off track what's working what's not working am I spending too much money for the amount of money I have coming in do I need to cut expenses do I need to sell more is that work delayed you know I always look at when I'm looking at budget versus actual Financial reports right it's got the actual p&l data and the budget p&l data I always ask the question are we on track or off track and then I asked the question if we're off track and under budget did the revenue just push out or did it go away is it just a delay or is it going to go away and the same thing with expenses just asking those two simple questions alone will start to have you have a better sense of how is the year going to turn out now why that along with doing a backlog report why is that important it's the same thing like doing a like looking at your job cost reports um looking at where you are budget versus actual or doing cost to complete on projects to see where you're going to end up and looking at the end of the project the more you can see where you're headed before it's history the more you have choices and options about intervening in that future before its history that's where real control comes so um so I I I'm I'm just going to kind of I know I've been talking about a lot in this session so I'm just going to recap really quickly couple suggestions that I have here for you um and this is if if you're somebody who wants to increase the profitability of your business if you want to increase your cash flow if you want to feel like you're in more control over the results that you create in your business this is one of the keys to doing that so it's starts with what I talked about in the last session which is just get really like set some goals about Revenue gross profit margin net profit margin cash reserves where you going to invest in your business where you going to do training where you going to hire people so on and so forth get that down and then create an operating budget where you're going to take that information and you're going to make a plan just like you do for a project you're going to take that information and go what's it going to take to do that right what's it going to cost me where's that Revenue coming from uh do a backlog report so that you can see what you already have and what you're starting out the year with and then look at like all right come up with some thoughts and strategy about how am I going to fill the empty spots right how am I going to if I still need $2 million in work or whatever that number is for you where am I going to come where's it going to come from so make a make a plan for that and then just like a project track your results every month look at get your budget once you're done with it put it into QuickBooks and then look at your budget versus actual where you on track where you off track what do you need to do to change that how do you still reach those core goals you set just like you do on a project um I encourage you to include your bookkeeper in this process or whoever's doing your accounting make this collaborative process you don't have to do this on your own uh down below I'm dropping a link to a couple of different resources that will help you in this process um and I hope you'll give it a shot I you know I just um you started this business because uh you wanted to be able to have choices and options about how much you make how you spend your time do what you love to do this is one of those key core things that will really help you be able to accomplish those goals so uh feel free to reach out to me if you have questions pop a comment below if you want to c pop a comment below if you know somebody else who would get value from this please share it um and I look forward to seeing you next time on the profit Builder unscripted thank you for being here

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Vicki Suiter

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