Homebuilder confidence fell for the ninth straight month in September as elevated interest rates, ongoing labor shortages and supply chain disruptions continue to weigh on the housing sector. While nothing is certain and even the most seasoned economist cannot predict how the next year will play out, there are steps you can take to ensure the future of your business. Green Building Advisor contributor Laura Dodde recommends the following to put your organization in a favorable position to navigate uncertainty.
Numbers, numbers, numbers
Knowing your numbers is the number one key to running a successful business. Having clarity on your company’s target annual gross profit margin and knowing your estimated mark-ups, along with a good estimating tool and sound job costing methodologies, can make all the difference to you and your company. Not only does this help you to accurately forecast the gross profit needed to sustain your business, but these practices allow you to be within 2% to 5% of your estimates, giving your customers peace of mind and allowing the business to meet its target margins to achieve continue operation.
How do you determine your target annual gross profit margin? By creating and tracking an annual business operations budget. An operating budget is prepared by forecasting or estimating the annual revenue for anticipated projects, the cost of goods required to complete those projects, and the overhead required to operate the business. The operating budget should be reviewed monthly or quarterly and compared to actual figures and may be adjusted if major changes have occurred.