HVACR Business

SEP 2017

Help hvacr contractors master the critical components of business management.

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8 HVACR BUSINESS SEPTEMBER 2017 www. hvacrbusiness .com O ne of the more dreaded processes HVACR com- panies go through is bud- geting. Most of us dread it and, in the past, I was no exception. Now, however, I'm part of the minority that enjoys the budgeting process. I like to analyze the data to see where and how we can improve. But I didn't like the fact that it was a time-consuming process. e good news is that budgeting can be simplified. A few years ago, I had an awakening as it pertains to budgeting and forecasting. I remember being frustrated with the misses in my budget. en I had an epiphany. I had made the perfect budget. Everything had to be perfect for my bud- get to be perfect. But I had not taken into account that imperfect people, me includ- ed, would be executing the budget. And then there were those other imperfections, such as the weather. Temperatures are a big factor and didn't coincide with my budget. And neither did some of the real day-to-day issues we face, such as trucks breaking down, parts and equipment not being available when we need them and people out sick when we need them the most, to name a few. Needless to say, I was frustrated. I knew there had to be a better way, so I decided to go with my own version of budgeting. I thought it would be fun, and appropriate, to call it Knucklehead Budgeting — because it's so simple, even a knucklehead like me could follow it. Learn from History First, I knew I had to look at my compa- ny differently than I had in previous years. I had to get away from trying to build per- fection into my budget. Instead, I needed a budget and forecast based in reality. e answer to my dilemma was pretty easy: History. History showed me that my company was actually an annuity and should be treated as such. Year aer year, I had the history of it all — by month, by depart- ment, by cost category … you name it, I had it. I decided to reverse engineer my bud- get by looking historically at my least performing month. No surprise, it was February. I now knew the most important aspect of my budget, my low point from a sales and gross margin standpoint. Overhead e next step was to look at my over- head and decide what I could afford. It's important to decide what you can afford, not what you have or want. Too oen, businesses fall into an overhead trap and History shows you that your company is actually an annuity and should be treated as such. BY WADE MAYFIELD EASY BUDGETING A different, simpler way to look at your budgeting process and ensure profitability all year

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