Your Budget is More Than a Math Problem

HVAC Contractors Should Adhere to the "5 Ws"

STICK TO YOUR GUNS: An HVAC contractor’s greatest weapon can be a well-thought-out budget. (Courtesy of Getty Images / coffeekai)

As the fiscal year draws to a close, you probably already know that you need to create a budget for the year ahead. Sounds simple, right? Of course, you need a financial plan so your business can continue to grow and be successful. But projecting staff levels, scheduling available working days, setting performance benchmarks, and estimating gross margins and overhead expenses are all part of the formula for your success – and that’s not exactly simple.

Understanding the formula for creating a budget and punching numbers into a spreadsheet is the easy part. The hard work comes from crafting a budget that coincides with those numbers. To do that, I recommend using an easy outline that we all learned in elementary school: the five Ws. (That’s “Who, What, Where, When and Why,” if you’ve forgotten.) Taking the time to answer the five Ws will provide a framework on which you can build an excellent, workable budget for your business in the coming year. So, let’s begin:

1. WHO

Who is helping you to create your budget? Chances are you have a management team that’s constantly working to help grow the business. Where are their fingerprints as this budget is being created? Do you have your team’s input, their buy-in, and their ownership? Does each team member understand the specific actions that must take place for the business to succeed? Who is accountable for said actions?

2. WHAT

What areas of your business need focus and improvements? What will be the measurables that will let you know if you’re on track for success? What actions will need to take place to hit goals? What are the expected timeframes for each action to be started and completed? There must be achievable goals put in place if you want to continue to grow, whether they involve training, recruiting, marketing, or any other aspect of your business.

3. WHERE

Where will you allocate resources in your business? Where will new capital expenditures be needed to execute this plan? Where will your focus be for the greatest impact on your business? Be mindful that too many initiatives can be just as detrimental as too few.

Where will you create your plan? Get outside of your business, away from the distractions of the daily hustle and bustle. An offsite strategic planning session where your team can focus, collaborate, and commit will yield greater results for your company.

4. WHEN

When will you start planning? If you wait until it’s too late, the likelihood of rushing to create a budget that looks great on paper but falls apart in the real world is high. If you start too early, you may not have all the necessary data to make sound decisions. Each company is different in its diversity of trades, as well as scale, so there’s no one-size-fits-all time to begin. Give yourself enough time to collaborate as a team and carefully go over the plans for the budget together.

5. WHY

Why should the budget matter? As the leader, it’s your responsibility to create a vivid vision of the company’s future for your employees. Your vision should paint the picture of what is possible and explain why what your employees do matters. Employees engage and perform at a higher level when they believe they’re contributing to something greater than just their job. Therefore, your budget is not just numbers on a spreadsheet; it actually answers the questions about how you and your employees will accomplish the vision of the company.

As a business coach, I’m always emphasizing the importance of knowing your numbers and forecasting for the future. This should take top priority during budget-planning season. During our budgeting onsite sessions and planning workshops with Nexstar Network members, our business coaching teams reinforce the non-negotiables associated with having a solid plan in place before the start of your new fiscal year. With a finalized budget set and ready, you’ll be much further ahead than most of your competitors, and being further ahead will improve the longevity of your business, the strength of your impact as a leader, and the stability and morale of your team.

Intentionality creates reality. It’s easy to lose sight of the big picture when faced with day-to-day challenges, but strategically planning on an annual basis is one of the most important steps you can take toward reaching your financial goals. Take the time to be intentional. After all, the plan you craft with your team will be the blueprint to your success.

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Business Coach Craig Bennett has more than two decades of experience in the HVACR industry. Coming from a technical background, with experience in customer service, call center, dispatch, sales, and leadership, he works to ensure Nexstar Network members' management and employees have the highest possible levels of support.

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