Most remodeling companies do very little forecasting. To a great degree, the system used is whether or not “the guys” are busy.
This “system” works pretty well when a company is young and/or small. The fewer employees and the less risk, the less need for looking ahead exists. But continuing to use this system as the company grows can create stress and, in the worst cases, disaster.
Here are some suggestions on how to forecast better.
Have Your Sales Team Track Their Time
When running our company, we knew that our designer and our estimator would each take about 32-40 hours to produce the needed results for a good sales package. That package included preliminary drawings, preliminary specifications, a well-written scope of work, and a firm price for the project. We also would agree on the maximum number of projects each of them could manage effectively at one time.
Using that data, we laid out on a dry erase board how far out they were committed. I would use that constraint when interacting with potential clients so that I could give them a more accurate date when we could start planning their project.
As the salesperson, I knew I was limited to a certain number of initial meetings. I had other responsibilities, among those being one of the owners of the company and the person the production manager reported to. Keeping all that in mind and wanting to be effective, we agreed upon a cap for those meetings.
Track the Length of Every Project
We also kept a dry erase board for the production department. Being realistic about the capabilities and limitations of each of our lead carpenters, the production manager would determine which lead carpenter was the best fit for a potential project and then tell me when that lead carpenter was going to be available. With that information, I could then more accurately tell a potential client when we could start their project.
To do this accurately, the lead carpenters and the production manager had to be honest and realistic about the respective strengths and weaknesses of each member of the production team. Yes, it would be easier to have only 100% capable rock stars as lead carpenters. The only place that exists is in your dreams.
Set Realistic Expectations You Can Exceed
When talking with a potential client about a possible start date or when laying out a schedule for a project, always under-promise so you can over-deliver.
That means telling people you can start a bit later than you think the company actually will. By doing so, as you get closer to having the job completely planned, scoped and priced, you can ask the potential client if it is okay if we start earlier. That makes you look like a hero. If you have to tell them you need to start later, they will never forget that they can’t depend on what you say.
Define “Backlog”
In our world, a signed production contract meant that project was now part of our backlog. We did not have a lot of fallout while projects were in design but when it did happen, if we had been counting on getting that job, our world was rocked.
Some folks do percentages of the likelihood of each project moving from sales to production. I did not find that useful or worth the time.
The best way to reduce the likelihood of a project going away was to make sure the client’s idea and your idea of the scope of work and the investment range were aligned. This meant slowing down and “selling” the project before any fulfillment work was done. Only by doing this could we be fairly sure we would actually get to build the project.
Even if you do all that I am suggesting, forecasting is still more of an art than a science. Frankly, most of life is.
So periodically “go outside and look up at the sky.” Reality can teach you a useful amount about what might happen in the near future. Couple that with being realistic, and you will know if you need an umbrella or sunscreen.