Topic: How to Create a Common Sense Budget
Guests: Dan Gordon & Donnie Shelton
In this episode we discuss:
Why budgeting is so important, especially when the economy is shaky
How the William Blair/PCO M&A Specialists Pest Index for July is at 11 percent year over year, but that is likely due to widely implemented price increases across the industry, not real growth
How Dan is also hearing about an increase in cancellations for the first time in several years
How there are pest control industry-specific considerations when it comes to budgeting
A trick Dan shares for quickly making a budget using QuickBooks
Why you should assess your goals and risk tolerance before making a budget
How it all starts with a revenue forecast
The difference between revenue and sales
The three buckets of revenue:
Route work (monthlies, quarterlies, etc.)
Renewals (termite, carpenter ant, etc.)
Why you can't forget about attrition
How you factor in the cost of new sales and what it takes you to generate a new customer
How to account for gross margin
How to set up your revenue line based on your goals
Why it's important to be realistic with your revenue budget
How to find average percentages for expense categories
The difference between saving a dollar out of G&A and selling one dollar more
Why to enter your budget into QuickBooks Online
How a great company like Massey Services does budgeting
Donnie's video about understanding marketing costs: Grow Your Service Business: How Much Should I Spend on Marketing?
Donnie's book: Grow!
PMP Industry Insiders Episode 90 (on gross margin): The Most Important Ratio for High Profitability
PCO Bookkeepers' Pest Control Industry Cost Study
PMP Industry Insiders Episode 83 with Tony Massey: How to Develop a Culture of Execution
Notable: "If you're a smaller company, this is such a difficult thing to do. If you're a larger company, this is such an essential thing to do." —Donnie Shelton
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