Budgeting

I am wondering how many out there make and follow a budget in their business. I have been in business for 15 years and have never done one. I have a good idea about how the business works and how much cash I feel I need to have on hand so I've never felt it was needed. I am making plans to grow a little and wondered if maybe I should work out a budget. Any thoughts?>>>

I would be inclined to think that if you run your own household on a fixed budget you could probably do the same with your business. I personally think that sticking to a budget would tend to stifle my risk taking to the point that I wouldn't be as profitable at the end of each year. JMO

PS: Happy New Year GAK :cheer:>>>

I don't know if i agree or not but i guess it doesn't matter! lol The problem is that in residential roofing the income changes so often. If you look at a chart it would be like a roller coaster up and down. As long as its up and down consistently everything is ok. But when it goes down and does not come back up for wayyy to long of a time frame that's when you have a major problem. If you're small maybe you only have a minor problem or no problem. lol>>>

I understand what you are saying Willie. Believe me. I'm still holding to what I said in the earlier post, but I know quite well what you mean about the medium size. I have no interest in entering that medium zone. Been there, done that. You have to really, really want that and really enjoy it and really have the personality that goes with it, or you are toast in that zone. It's like working with digital photos. The bigger you blow up the pic, the more it pixellates. My company holds its shape much better when it's small, but a person can make money at just about any size so long as the internal proportions are balanced.>>>

Whatever! All i know is for me and mine trying to grow larger has ruined what was a profitable business! In spite of the monies spent attempting to grow we were unable to increase our market share enough to cover it and make it all worthwhile. Now there is debt to overcome first of all then a return to the smaller version of business when it was much more profitable. So if you increase your costs trying to grow larger all i can say is pray like hell a level 5 exceptional drought does not immediately follow for over a year and then a bad economy directly after that! Good Luck! PS If not for all the extra costs the damage from the above mentioned 2-3 yr. downturns would have been minimal!>>>

Somewhere around 1900 Constantin Brancusi wanted to make the big-time in sculpture and struck off on his own. The words of his which I took the most interest in were 'Nothing grows in the shade of the mighty oak' in reference to his refusal of Auguste Rodin's offer to employ him in his own studio, and secondly 'Think like a king, work like a slave.'

As long as you are not under-capitalized, have a staff that can sell, produce a viable product, supervise the production, and keep track of the money, without burning itself out, you can be as big or small as you like.

What's a medium sized company? It's either a lean & mean big company or a clumsy disorganized small company.

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Thanks Old School, but it really isn't me so much as it's everyone else. If I had anything to do with it, it's putting the right people in the right place. Recognizing talent, being willing to trust good people to do a good job, then getting out of their way so they can do it. Without good people, I would be singing the same song as OLE Willie, fur shur.>>>

Just don't make the mistake i made. Which was assuming increased monies spent on advertising/marketing,more sales help, repairmen, secretary, etc. = increased work load which would = increased profits. WRONG! It equalled increased expenses and lower profits. And after the drought of 07 and the economy of 08 and the present it has equalled DEBT! Now they have all been laid off and/or quit and im out here killing myself trying to get the company out of the debt that was created by too much payroll/ payroll tax/ insurance etc. etc. And very little extra work than before all that was added. And the quality dropped off as well when i was no longer handling things as before! Its gonna take me all year to do it. So basically i will be working 10 hrs a day 6 days a week all year long to Pay for it. Nullifying 09 profit! Yuk Yuk Watch your step i think im gonna PUKE!>>>

I've been running 4 guys for the last 5 or more years. An occasional laborer thrown in during the busy season. Tried 6 guys a couple of times but it just made too much work for me with no added profit. This year I want my foreman more involved in selling and doing repairs as much as possible and add a laborer to the crew. Am going to sit down with my foreman next week and work on numbers, set some rates for certain types of repairs and work out a commision plan for what he sells. So I thought maybe there should be some kind of budget.>>>

At one time I was up to about 35 people. I was at about 15 for 8 years. What a hassle as far as I was concerned. 3 or 4 is great. we can do some medium sized jobs if we want to as long as that is the only thing we are working on. The gross profit percentage is good compared to the nothing you get with a bunch of people.

Mike, I really admire you for being able to deal with that many people and that much overhead. For me, small is beautiful!!!!!>>>

I guess that would depend on what type of roofing you do Mike. I think commercial and residential are not comparable. I saw a survey once that said as far as residential is concerned between 10- 20 is a death wish. For me personally most years i kept about 6-8 and made a nice profit. But later i increased advertising and marketing trying to grow the business, added a couple salesmen etc. and the profit went down but the headaches grew. Im still trying to get it back down to where it was. The cost that is! :woohoo:>>>

Yeah, bout same here, Colpaw. 1947, 5 mil, 40 employees. Gov't calls us small biz, I would say 'midsize', at best.

We use a budget for non-job related expenses, and have made money every year except 1992, and even then it was more paper loss than actual loss.>>>

Great question Mike H. We've been in business since 1958. 2008 we did did 3 1/2 mil with 22 field employees...I consider us small (but not very small). We've made it so far! >>>

ole,

how big is the slot that encompasses 'midsize"?>>>

I agree with "OLE Willie">>>

Yeah! DONT! If it aint broke dont fix it or it will be! The only way to make money in this business is be very small or very very large. The midsize buisness gets creamed! :unsure:>>>