Volume 38, Issue 9, September 2003

GlaziersGuild

Ahead of the Game
    Essential Tools for a Well-Equipped Glazier

by Andrew T. Gum

Hopefully the sky is parting and the sun is starting to peak out from behind the clouds in your area. I am, of course, referring to the economic climate. It appears that we have weathered the storm and are beginning to emerge from what has been a very economically challenging period. It also appears that there is another nice expansion ahead of us. The question is, will your business be in a position to take full advantage of it?

If you found yourself asleep at the wheel as a business manager in the late 1990s, youíre not alone. Itís easy to get complacent when youíre regularly the only bidder and you consistently have more work than you can handle. Isnít it funny how almost overnight, small things like your operating percentage and installation efficiencies became important again? Now that youíre once again awake with your hands at 10 and 2 oíclock on the steering wheel, hopefully your full attention is focused on the road. 

We canít blame the economy totally for the performance of our businesses over the last two years. I agree that there has been a reduced amount of work available and the competition has been fierce. So letís assign 50 percent of the blame to the economy, another 20 percent to the idiots in our market and letís belly up to the table as managers and accept 30 percent ourselves. 

One of the positive aspects of a difficult economic period is that it exposes the weaknesses of our businesses and provides a unique opportunity to make well-received adjustments. Thereís no better time to do a top-to-bottom assessment of the people and processes that fuel your business than during tough times. Instead of focusing on outside factors, letís take a look inside.

Most likely, sales have become a pretty hot topic in your office over the last 12 to 24 months. I am a big believer in segregated estimating and project management, and now would be an excellent time to consider if this approach is right for your company. In our organization, we have a dedicated and organized estimating and sales effort. As a contract glazier, sales fuel your business and an accurate estimate is the cornerstone of a successful project. Be sure to treat sales and estimating as if it is the most important part of your business, because it is. Create a six- to 12-month labor schedule so you can see where work is needed and when you are at capacity. This will allow your sales force to develop bid strategies that are consistent with the needs of your business. A consistent flow of work is much easier to manage and plan for, so monitor your monthly and quarterly sales goals along with your available manpower. Oh, one last thingóit helps to have a salesperson who customers like. (It took me a while to figure this one out.)

Number Crunch
If youíre like me, you have probably been crunching the numbers pretty hard lately. Now is the time to ask yourself if you have the financial information that you need to make adjustments to your business properly. Meet with your accountant and take a good look at your accounting process and see if there are any improvements that can be made. If youíre not currently utilizing work-in-process accounting, you may want to consider it (see illustration, below). Our work-in-process report may very possibly be the most useful piece of information in our business. It shows our contract backlog, amount billed to date, estimated and actual costs, gross profit and letís us know if we are over- or under-billed. We produce this report monthly and we make a general ledger entry for our over and under billings so our financial statement and balance sheet are accurate. Our contract department meets monthly to review the status, financial health and cash flow of each and every job. Not only does this accounting process take away much of the guesswork, but also provides the business with a critical management tool. Your bonding agent and banker will love you and you will also be prepared to provide them the information they need to support your future business activities. If your accounting system does not have work-in-process capabilities, you can create a spreadsheet in Excel easily. 

Hopefully by now you have a computer on your desk. If not, I hope youíre planning on retiring soon. If you donít have a computer on your desk and youíre not planning on retiring, trust me, you will be retiring from the business sooner than you think. There are so many great tools available to us today that not only improve efficiencies, but also help to reduce some of our risks. Talk to your customers, vendors and industry peers and see what theyíre using. One of the great advantages that we enjoy from our networked computer system is the communication and exchange of information. With everybody constantly on the go, the ability to correspond with customers, vendors and co-workers electronically is invaluable. Many suppliers are even replacing binder style catalogues with CDs and web pages. Take a moment to review your system and software and see how it fits into your future plans. Having the right hardware and software will be a big factor in your ability to take advantage of the good times ahead.

Afraid of the Unknown
If your business has tightened up, youíve probably noticed that you have some pretty nervous people on your staff. This is to be expected. I think that people are much more afraid by what they donít know than by what they do knowóI know I am. In times like these it is more important than ever to keep the lines of communication open. We have a monthly meeting with the entire company and we discuss openly the business climate and how the company is doing. We do not discuss financial results, but we do communicate a general understanding of our performance. 

When things are tight, everyone has to buckle down and help meet the goals of each project and department. Even if you are not able to provide raises, continue to conduct regular performance reviews. 

Reviews are essential to the growth and development of a company and itís workforce and they help to get everyone involved with the goals and direction of the company. They also give your staff valuable feedback and an opportunity to let you know how the company is working for them. Let your staff help you run the business.

I have only touched on a few of the key areas of our business that are essential to success in a good and bad economy. Donít get caught up in what your competitors are doing. Focus on your bidding strategies, relationships and business efficiencies to move your company forward. There are better days ahead, so take the time to make sure that your business is prepared for them. 

Work-In-Progress

Recogized gross profit = % complete x est. gross profit   Cost incurred to date + recognized gross profit - billed to date = + or - billings    
Project Name

Contract Amount

Total Est. Cost Gr. Est. Gross Profit Profit % of Contr. Cost Incurred to Date % Comp. Recognized Gross Profit Billed to Date Under Billing Asset Overbilling Liability   
New 
High School
$966,500.00 $680,219.00 $286,281.00 29.62% $519,963.00 76.44% $218,834.71 $637,315.00 $101,482.71    
Fire Station $23,704.00 $18,979.00 $4,725.00 19.93% $18,979.00 100.00% $4,725.00 $23,704.00      
New Tenant 
Build Out 
$5,821.00 $3,705.00 $2,116.00 36.35%  $0.00 0.00% $0.00 $0.00      
New Office 
Building
$1,231,000.00 $1,023,499.00 $207,501.00 16.86% $807,284.00 78.87% $163,666.24 $1,021,671.00    $(50,720.76)  
Research 
Facility
$320,000.00 $241,881.00 $78,119.00 24.41% $171,469.00 70.89% $55,378.42 $167,765.00 $59,082.42    
Zoo $95,427.00 $50,859.00 $44,568.00 46.70% $50,859.00 100.00% $44,568.00 $95,427.00      
Municipal
Building
$126,000.00 $93,774.00 $32,226.00 25.58% $76,773.00 81.87% $26,383.50  $90,802.00       
Urgent Care 
Facility
$55,654.00 $34,428.00 $21,226.00 38.14% $0.00 0.00% $ 0.00 $ 0.00      
Mall Front $22,967.00 $18,281.00 $4,686.00 20.40% $ 18,281.00 100.00% $ 4,686.00 $ 22,967.00      
Subtotals $2,847,073.00 $2,165,625.00 $681,448.00 23.94% $1,663,608.00 49.50% $518,241.87 $2,059,651.00 $172,919.63 $(50,720.76)  


Andrew T. Gum
is president of Thomas Glass Co. in Columbus, Ohio, and chair of the Glass Association of North America's Building Envelope Contractors division.






USG

© Copyright Key Communications Inc. All rights reserved. No reproduction of any type without expressed written permission.