Podcast Summary: To The Point - Home Services Podcast
Episode: Budget For 2025 With The Boys
Release Date: November 5, 2024

In this episode of To The Point - Home Services Podcast, hosted by RYNO Strategic Solutions, the discussion centers around effective budgeting strategies for home service companies aiming to grow in 2025. The panel, consisting of Chris, Chad Peterman, Aaron Gaynor, Thomas Mello, and Travis Riggy, delves into various aspects of budgeting, team engagement, financial management, and strategic planning to help HVAC, Plumbing, Electrical, and Roofing businesses thrive.

1. The Role of Budgeting in Creating Vision

Chris opens the conversation by emphasizing that budgeting is not just about numbers, but a strategic tool to create vision and hope within an organization. He articulates how a well-crafted budget provides purpose, aligns team efforts, and fosters excitement.

Chris [00:00]: "Budgeting is the opportunity to create vision, right? And without vision, the people perish in your business..."

This perspective shifts the focus from merely tracking KPIs to using the budget as a foundational element that inspires and guides the team towards common goals.

2. Engaging the Team in Budgeting

A key strategy discussed is the importance of involving the entire team in the budgeting process. Chris suggests scheduling dedicated days for team collaboration to facilitate meaningful conversations and ensure that everyone understands and buys into the budget.

Chris [08:19]: "Number one thing, schedule a day with your team."

Travis adds that reviewing last year's budget performance is crucial before setting new targets. Reflecting on what worked and what didn’t helps in formulating a more accurate and achievable budget for the upcoming year.

Travis Riggy [05:17]: "One of the biggest and most powerful things I learned from budgeting is that it made bonusing my management team really easy..."

3. Setting Realistic and Achievable Goals

The panel discusses the significance of setting realistic budgets that teams can actually achieve. Aaron emphasizes the need for data accuracy and grounded KPIs to create budgets that serve as a reliable North Star for the business.

Aaron Gaynor [12:55]: "But the only thing I disagree is that you know the cortex... what do we know for certain?"

Chris concurs, highlighting that budgets should be achievable yet challenging, fostering a sense of accomplishment and continuous improvement within the organization.

4. Departmental Budgets and Incentive Structures

Travis and Aaron explore the concept of departmentalizing budgets, ensuring that each department has specific targets aligned with their roles. This approach allows for tailored incentives that motivate team members based on metrics within their control.

Travis Riggy [22:49]: "You gotta bonus people on things inside their control..."

Chris further elaborates on balancing incentives by tying bonuses to major metrics like revenue and gross margin dollars, while ensuring that managers are held accountable for essential behaviors such as conducting one-on-ones.

Chris [24:16]: "The point of creating incentive is to create a behavior..."

5. Navigating Seasonality in Home Services

For businesses affected by seasonal fluctuations, Thomas and Travis share their approaches to budgeting around unpredictable weather patterns. They stress the importance of relying on historical data and establishing flexible budgets that can adapt to varying lead volumes throughout the year.

Thomas Mello [30:25]: "We live in the Midwest, so yeah, you never know what you're gonna get..."

Travis introduces the idea of makeup bonuses to compensate for lower performance in certain quarters by exceeding targets in others, ensuring overall budget adherence.

Travis Riggy [33:08]: "...makeup bonus so that if the weather doesn't hit on the months that we think it's going to hit..."

6. Planning for Unexpected Expenses

Aaron and Thomas highlight the necessity of allocating funds for unexpected expenses. They discuss strategies like building financial buffers, controlling overhead costs, and negotiating with vendors to ensure the business remains resilient against unforeseen challenges.

Aaron Gaynor [41:34]: "We built a lot of different department hires, technology, other costs..."

Thomas Mello [43:24]: "I spend probably two hours going literally through every line item and looking at what are we spending money on."

7. Importance of Regular Financial Reviews

The panel underscores the frequency of financial reviews as crucial for maintaining financial health. Aaron shares his company's practice of weekly financial check-ins and detailed monthly reviews to stay ahead of potential issues and capitalize on opportunities.

Aaron Gaynor [53:15]: "I knew within 1% what our EBITDA and revenue will be."

Chris adds that timely financial reviews allow for swift decision-making and prompt corrective actions, ensuring the business remains on track.

Chris [55:35]: "If you're not doing that, you're missing a huge part of the operational side of the business..."

8. Leveraging Educational Resources and Workshops

Chad and Travis advocate for educational initiatives to enhance financial literacy among business owners. They mention upcoming budgeting workshops and encourage listeners to utilize resources like YouTube tutorials and industry workshops to better understand financial statements and budgeting techniques.

Chad Peterman [59:05]: "There's help out there to help you understand how to read these things..."

Travis Riggy [61:52]: "If you're not doing that, you're missing a huge part of the operational side..."

9. Closing Remarks and Call to Action

As the episode wraps up, the hosts reiterate the importance of proactive budgeting and encourage listeners to participate in workshops and educate themselves to effectively manage their finances. They also remind the audience to vote in current elections, emphasizing civic responsibility.

Chad Peterman [67:25]: "Just go and do it. Get figured out."

Chad Peterman [67:46]: "Go vote."

Key Takeaways:

• Budgeting as Vision: Utilize budgets to create a clear vision and purpose for the organization, beyond just tracking numbers.

• Team Engagement: Involve the entire team in the budgeting process to foster ownership and accountability.

• Realistic Goals: Set achievable yet challenging budgets based on accurate data and historical performance.

• Departmental Budgets: Tailor budgets and incentives for each department to align with their specific roles and responsibilities.

• Seasonality Management: Use historical data and flexible budgeting strategies to navigate seasonal fluctuations effectively.

• Financial Buffers: Allocate funds for unexpected expenses and continuously control overhead costs.

• Regular Reviews: Conduct frequent financial reviews to stay informed and make timely decisions.

• Education and Resources: Leverage available educational tools and workshops to enhance financial literacy and budgeting skills.

This comprehensive discussion provides actionable insights for home service companies aiming to optimize their budgeting practices and drive sustainable growth in 2025.