The Joy of Budgeting and Breakeven #1

Dec 30, 2015

Guest Blog By: David Romano, Benchmarkinc Founder

The holiday season is filled with such special moments, such as the smile on the face of your children as they open the most perfect Christmas presents, and the awesome kiss you get from the one you love on New Year’s Eve!  With all of those wonderful events comes the proverbial reality smack on the face for many entrepreneurs – it is also time to plan for next year by building a budget and determining breakeven (the killer B’s).

For many restoration owners, this activity is deemed either unnecessary or uncomfortable because they either feel like they are in such control of the business (which is never true), or it is so hard to do that they would rather just plod along as usual and be content with the ebbs and flows of the year.  Now for those that are truly driven to win, creating budgets and determining breakeven is just as rewarding as the most special holiday events.

Creating budgets sets the stage for what you believe is winning in your business and builds the guidelines for which your team should operate within.  I ask all of you who do not create budgets, “How do you know if your business is doing well if you didn’t even define what good looks like” and “How are you going to hold your team accountable when they don’t even know what is expected?” Going into an NFL game without a playbook would tag your team as one destined to fail, right?  So isn’t that the same thing for your business?

Breakeven tells you what your business has to generate, at its current gross profit level, to not lose or make money.  This number must be closely monitored, because if expenses are added or decreased and/or the gross profit changes, so will the breakeven.  This number should be top of mind and at all times and must be the catalyst for all sales efforts.  Staying below this number for a prolonged period of time will highlight a business that may not be sustainable.  Additionally, once breakeven is achieved the rest is pretty much gravy because all of your fixed expenses are covered; and after variable expenses are paid, all that remains flows to the bottom line.

As a New Year’s resolution, make it a priority to build that budget and calculate your breakeven.  You owe it to yourself, your staff and your business.  Vince Lombardi once said, “The quality of a person’s life is in direct proportion to their commitment to excellence, regardless of their chosen field of endeavor.”  This is as true in football as it should be in your business.  Happy Budgeting!

The Joy of Budgeting and Breakeven #2

Jan 5, 2016

Guest Blog By: David Romano, Benchmarkinc Founder

News flash:  You don’t need an MBA to build a robust budget and calculate breakeven.  When broken down into small bit size chunks it is actually pretty simple.  One caution is not sweat the small stuff because trying to figure out if the utilities should be .5% or .51% of sales won’t make enough difference to waste time being to analytical.  Additionally, hiring or acting like an economist who graduated from MIT when building a sales forecast is also an exercise in frustration with not much return.  Here are the simple steps:

  1. Build a historical picture of sales and expenses
    • Most would tell say that you need at least five years but with the volatility of the industry three years should suffice
    • This will provide the framework to determine your variable expenses such as cost of goods sold and other operating expenses such as vehicle gas and maintenance, office supplies, utilities, etc.
    • It will also map out your sales curve that will be used to spread out the projected increase or decrease in sales
  2. Spend no more than an hour determining if the next year is going to be better or worse in sales volume
    • You may also want to determine the mix of business (mitigation, reconstruction, contents, new construction, etc.) to make necessary adjustment to your cost of goods sold
    • Plug your projected sales into your sales curve to properly spread out the volume throughout the months
  3. Once you have determined the volume now use the historical expense percentages to build your operating costs
    • It is easiest to treat all expenses as variable until you complete the next step
  4. Calculate your fixed expenses such as salaries, occupancy expense, insurance, and advertising; yes, advertising should be a fixed expense because you should have planned this out for each month as well
    • Override all of the pre-calculated lines of the budget with these fixed numbers
  5. Say a prayer, cross your fingers, and hope that what you outlined is going to show a profit
  6. Meet with the key members of your team and fill them in on the financial plan and ensure everyone is on the same page and agrees what you set is achievable

Now that we got that out of the way there is one task left – calculating breakeven.  Many of us consultants like to overcomplicate things to make us look more important to the success of your business and a breakeven calculation is one of the areas we tend over engineer.  There are two simple calculations, that will get you very close to the over-engineered versions.

The first is what I call the Operating Breakeven, the amount of sales required for a company to breakeven on paper.  OPERATING BREAKEVEN = TOTAL OPERATING EXPENSE $’S / GROSS PROFIT %.  If you have $1,000,000 in operating expenses and your gross profit is 36% then your operating breakeven is $2,777,778.  The second calculation I term Cash Breakeven and it is even more important than the first because it forecasts the amount of sales required to produce enough cash to operate.   CASH BREAKEVEN = TOTAL OPERATING EXPENSE $’S + CASH REQUIREMENT FROM BALANCE SHEET / GROSS PROFIT.  If you have $1,000,000 in operating expenses, and principle payments to loans that equal $100,000 per year, and your gross profit is 36% your cash breakeven is $3,055,556.  Big difference right?

The Best Christmas Present You Can Buy for You

Dec 22, 2015

Guest Blog by David Romano, Benchmarkinc Founder

For those of you who find yourself constantly overwhelmed at work, I have a great gift suggestion.  Grab a cup of coffee, settle down in your most comfortable chair, and crack open the book, “The E-Myth Revisited” by Michael Gerber.   If you haven’t read this book, it just may change your life as a business owner.   If you have read it and you are still stuck working in your business instead of on it, time to read it again.

The book teaches the reason most small businesses fail is that they are run by a technician, someone who knows how to do the work but doesn’t understand how to be an entrepreneur or a manager. An owner should have all of these traits, but must know when to take on the role of each. It is critical that for no extended period of time can the owner get stuck in one role.

  • The technician is an expert in his/her craft (a Project Manager, Estimator, Superintendent, Water Tech, etc.). This often leads these people to go into business for themselves – they’re good at what they do, and they know it; so why not reap the rewards of their labor? The technician is happiest doing the work they are good at and ignoring the rest, which is in the end, a recipe for failure.
  • The entrepreneur is the dreamer, the one who sets out to do something new, who reaches for the stars. The entrepreneur lives in the future, thinking about what could be (rather than in the present). The entrepreneur is often frustrated by how slow the world seems to move.
  • The manager is the detail-oriented one, who dots the i’s and crosses the t’s, the one who remembers to pay the bills, and wants a well-organized world without surprises, a world where things happen in an orderly, predictable manner.

All of these components are necessary in the founder of a business: without the entrepreneur, you might as well keep working for someone else as a technician. Without any technical ability, the entrepreneur must rely on others to get anything done, and without the organizational abilities of the manager, the other two would probably find themselves without power in the company because they had other things to do than pay the bills.

If the business is to thrive, it must move beyond the founder: a business that is wholly dependent on the founder and their abilities is not really a business, but rather a very burdensome job for the founder. Every time you are out sick or take a vacation or are otherwise absent, the business stops too.

A real business is one where the founder has created a system so that the business can run itself without their constant presence, and where he/she spends their time observing and managing the performance of their team within those systems. In fact, data shows that the most profitable owners take over three weeks of vacation per year!

So the question now becomes, what is the best system? Quite simply, the right way to run a business is to do just that – run it. Run it through managing people and systems. Meet with the team, design agreeable systems, and then ensure protocol is followed by observing and measuring. If this is done, it will allow an owner the luxury of being more of an owner and manager than getting dragged into the constant technician role.  And isn’t that what you envisioned when you had the crazy idea of starting your own restoration business?

DRS and Sal’s Clothing Restoration Team up to Provide Winter Warmth to Connecticut

December 21, 2015 – DRS1DKI, North America’s largest disaster restoration contracting organization, today announced that one of its member companies, Disaster Restoration Services (DRS), of Middletown, CT, sponsored their first annual Button up Connecticut’s coat drive for those throughout Connecticut in need of winter clothing.

Button Up Connecticut, founded in 1992, is an organization that collects new and gently used coats all year round from various donors, then distributes them to those in need throughout Connecticut. Over the last 23 years, more than 750,000 coats have been collected and distributed. DRS recently heard about Button Up CDRS2onnecticut, and wanted to help give back to its community. With the help of their clothing restoration partner, Sals Clothing Restoration and their other business partners, DRS was able to collect and clean 492 coats for Button Up Connecticut.

“We are thankful for all of the donations that we received and for everyone’s help with this great cause! We will be sponsoring the drive again next year, starting in October of 2016,” said DRS President Danny Strong.

To donate to Button Up Connecticut or learn more about the organization, visit www.buttonupconnecticut.com.


About Disaster Restoration Services

Disaster Restoration Services can take any disaster clean up from start to finish. DRS is available 24/7 and services all of Connecticut. DRS provides services for: Water Mitigation, Fire Damage Clean Up, Storm Damage Clean Up and Mold Remediation. Not only can DRS do the mitigation, but DRS can also handle the remodel. Doing Restoration Strong! For more information, visit www.drscleanup.com or www.facebook.com/drscleanupllc.

About Sal’s Clothing & Restoration

Sal’s Clothing Restoration specializes in restoration dry cleaning. Whether damaged from fire, soot or water, Sal’s is here In your time of crisis to take care of your family like one of our own. We handle losses quickly, efficiently and with the utmost compassion. Sal’s is family owned and operated and covers all of New England and the metro New York area. Give us a call toll free at (877) SAL–SOOT and see why we are “A Trusted Name In Dry Cleaning.”

About DKI
DKI, headquartered in Chicago, is the largest disaster restoration contracting organization in North America. DKI Franchise Member companies provide full service restoration to their customers: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year. DKI returns damaged property to its pre-loss condition quickly and efficiently, delivering complete satisfaction to our consumer, insurance, and corporate customers. For more information about DKI, visit our website at www.dkiservices.com and download DKI’s Red Cross Emergency App www.redcross.org/mobile-apps/emergency-app

A&J Specialty Services, Inc. DKI Continues to Restore Kindness for the Holidays

December 18, 2015 – AJholidayDKI, North America’s largest disaster restoration contracting organization, announced today that one of its member companies, A&J Specialty Services, Inc. DKI of DeForest, Wis. continued its Restoring Kindness Movement by trading in their Christmas presents to spread some holiday cheer through Operation Christmas Child (OCC).OCC, sponsored by Samaritan’s Purse, collects shoeboxes filled with gifts and sends them to children, ages 2 to 12 around the world. Kent and Lynn Rawhouser, owners of A&J Specialty, along with a few other employees have been donating filled shoeboxes to OCC for several years.

In the past few years, A&J Specialty, as a company, has decided to forgo team gifts and use that money toward toys, art and writing supplies, toiletries, shoes and more to fill shoeboxes to donate to OCC. Last year, the team packed 8 boxes. This year, however, everyone donated even more money to donate a full 12 boxes.

“Lynn and I are happy to be part of such a great cause, and excited about the continuous generosity of our team making this a holiday tradition within our entire company,” said Kent Rawhouser.

If you are interested in learning more or donating a shoebox, visit www.samaritanspurse.org/what-we-do/operation-christmas-child.


About A&J Specialty Services, Inc. DKI

Founded in 1984, A&J is now a leader in the restoration industry serving all of south-central Wisconsin. As a full-service restoration company, they are experts in mold remediation, water, fire and sewage damage restoration, as well as carpet, rug, upholstery, and tile cleaning. To learn more, visit www.ajrestores.com.

About DKI

DKI, headquartered in Chicago, is the largest disaster restoration contracting organization in North America. DKI Franchise Member companies provide full service restoration to their customers: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year. DKI returns damaged property to its pre-loss condition quickly and efficiently, delivering complete satisfaction to our consumer, insurance, and corporate customers. For more information about DKI, visit our website at www.dkiservices.com and download DKI’s Red Cross Emergency App www.redcross.org/mobile-apps/emergency-app.

K-tech Kleening Gives Back for the Holidays

ktechgivesbackDecember 17, 2015 – K-tech sponsors their 15th annual food drive for the local community

DKI, North America’s largest disaster restoration contracting organization, today announced that one of its member companies, K-tech Kleening Systems of Weston, Wis. will be giving back to those in need through their 15th annual holiday food basket program.

Launched in 2000, the program initially assisted 20 different local families. This year, with the help of the 5th grade class at DC Everest Evergreen Elementary, 400 holiday food baskets have been assembled.

On Sunday, December 20, K-tech Charities and several volunteers will distribute the food baskets to prequalified local families in need.

“The holiday food basket program is a success because of the wonderful support and generosity of our community.  The holiday season is about being able to give back to the community that has given so much to us,” said Craig Kersemeier, president of K-tech Charities.


About K-tech Kleening

Headquartered in Weston, WI, K-tech has been serving Central and Northern Wisconsin customers since 1975. It still thrives today as a 2nd-generation family-owned business with superior commercial and residential cleaning and restoration solution services. Through its K-tech Charities division, conceptualized in 2006, K-tech prides itself in giving back to the community in which it serves. For more information, visit its website at www.k-techkleening.com.

About DKI
DKI, headquartered in Chicago, is the largest disaster restoration contracting organization in North America. DKI Franchise Member companies provide full service restoration to their customers: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year. DKI returns damaged property to its pre-loss condition quickly and efficiently, delivering complete satisfaction to our consumer, insurance, and corporate customers. For more information about DKI, visit its website at www.dkiservices.com and download DKI’s Red Cross Emergency App www.redcross.org/mobile-apps/emergency-app.

DKI Supports Toys for Tots

December 15, 2015 – DKI, North America’s largest disaster restoration contracting organization, announced its remote office in San Ramon, CA donated several bags full of toys to the United States Marine Corps Reserve Toys for Tots Program today for its second consecutive year.toydrive_2015

Sunset Development Company’s Bishop Ranch, helping sponsor the Contra Costa County program, is a business complex for several companies, including DKI. They are accepting donations of new, unwrapped toys for Toys for Tots December 7-17, 2015. The toys are distributed to underprivileged children living within the Contra Costa County.

“We are happy to continually be a part of this event, and make it a holiday to remember for these children,” said Dan Cassara, DKI’s CEO.

For those interested in sponsoring or contributing to a Toys for Tots program, find your local drop off location. All donations must be new, unwrapped toys; toy weapons, food and stuffed animals will not be accepted.


About DKI           

DKI, headquartered in Chicago, is the largest disaster restoration contracting organization in North America. DKI Franchise Member companies provide full service restoration to their customers: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year. DKI returns damaged property to its pre-loss condition quickly and efficiently, delivering complete satisfaction to our consumer, insurance, and corporate customers. For more information about DKI, visit our website at www.dkiservices.com and download the DKI-sponsored Red Cross Emergency App www.redcross.org/mobile-apps/emergency-app.

Complete DKI Helps Fill Sa’fyre’s Christmas Card Tree

December 11, 2015 – DKI, North America’s largest disaster restoration contracting organization, today announced that one of its member companies, Complete DKI, of Pensacola, FL., spread some holiday cheer by writing and sending 40 holiday cards this week to young Sa’fyre Terry.

Over two years ago in Schenectady, NY, a fatal fire killed Sa’fyre’s family and burned 75 percent of her body. The now 8-year-old has only one wish for safyrexmascardsChristmas – to fill her Christmas tree with holiday cards. When the request went viral on Facebook, Complete DKI’s entire team got together to spread some holiday cheer to this little survivor.

“It’s the least we could do for this brave little girl. We hope she gets enough cards to fill her tree and her heart. May this be her most magical Christmas yet,” said Ashlee Carpentier, business development manager for Complete DKI.

If you would like to help fulfill this little girl’s Christmas wish, you can send cards to P.O. Box 6126, Schenectady, NY 12306. Or, create a special card for free on www.shutterfly.com by Saturday, Dec. 12, using code: CARD4SAFYRE.


About Complete DKI

Complete DKI is a leading restoration contractor in the Pensacola, FL area with 10 years of experience in disaster restoration. Providing restoration services to commercial, insurance and residential clients, the team is fully insured, licensed, and is registered to do business in Santa Rosa and Escambia counties in Florida and Mobile and Baldwin counties in Alabama. Available 24 hours a day, 365 days a year using the most up-to-date technologies and quality professionals with superior skills and certifications, their customers count on Complete DKI when things appear at their worst. For more information, please call 850-225-5354 or visit www.completedki.com. 

About DKI
DKI, headquartered in Chicago, is the largest disaster restoration contracting organization in North America. DKI Franchise Member companies provide full service restoration to their customers: emergency response, water damage mitigation, fire and contents cleaning, mold remediation, complete reconstruction and much more, 24 hours a day, 365 days a year. DKI returns damaged property to its pre-loss condition quickly and efficiently, delivering complete satisfaction to our consumer, insurance, and corporate customers. For more information about DKI, visit our website at www.dkiservices.com and download DKI’s Red Cross Emergency App www.redcross.org/mobile-apps/emergency-app

Are You and Your Business Prepared for Your Permanent Vacation? Part 1

Dec 7, 2015

Guest Blog by David Romano, Benchmarkinc Founder

Eighty-eight percent of current family business owners believe the same family or families will control their business in five years, but succession statistics undermine this belief. Only about 30 percent of family businesses survive into the second generation, 12 percent are still viable into the third generation, and only about 3 percent of all family businesses operate into the fourth generation or beyond. The statistics reveal a disconnect between the optimistic belief of today’s family business owners and the reality of the failure of family companies to survive through the generations. Research indicates that family business failures can essentially be traced to one factor: an unfortunate lack of family business succession planning.  (Family Business Institute)

An increasing trend in the industry is that the next generation has no interest in continuing the family legacy because they witnessed the level of commitment from their parents and value “having a balanced life” more than owning a business.  Now let’s say that there is the interest from the next generation and that they are indeed equipped to assume the reins; these new entrepreneurs face a more complicated world than their parents did when they founded and built their businesses.  In contrast to publicly owned firms, in which the average CEO tenure is six years, many family businesses have the same leaders for 20 or 25 years; and these extended tenures can increase the difficulties of coping with shifts in technology, business models, and consumer behavior.  Couple these issues with the fact that the founder may still be actively involved, and the job of running a family business becomes monumental for the successor. (Harvard Business Review)

This information is not intended to shock or depress, it is meant to wake up or fire up restoration owners to come to the realization that now, more than ever, having a Succession Plan of when and how to sail off into the sunset is critical and taking the proper steps will minimize the risk of transition failure and increase the likelihood that outside investors will take a sniff.

Keep in mind that “Succession Planning” is a process, not an event. Even when the formal Succession Plan is in place, it must be a living, breathing and evolving document which is reviewed and updated from time to time to reflect changes in the marketplace, competitive conditions and the health or capabilities of the current leadership.  Building this plan should occur when owners still have enough “gas in the tank” to properly prepare those who will run the business or do their best to instill sustainable systems to make the business attractive to potential buyers.  Waiting until you cannot take it anymore and rushing this process is most likely going to lead to you having to reenter the business at a later date to provide resuscitation or draw less investor interest and/or a lower purchase price.

3 Tips to Save Your Business in Winter

December 2, 2015

By: Chelsea Haley, DKI Ventures, LLC

With the frigid weather and winter quickly rolling in, your business may be in jeopardy if not properly prepared. Follow these quick tips to get your facility in winter-weather condition to avoid any repercussions of business interruption.

  1. Inspect the building

Roof: Reduce leaks or roof collapse by inspecting all components of your roof for any damage, such as cracks, holes, buckles, defective flashing and clogged drainage systems. Be cognizant of rooftop debris buildup to keep your gutters clear for melted snow and ice to drain properly. It is also vital to continually monitor your roof throughout the winter months and gauge its snow/ice accumulation.

Windows & Doors: Inspect your windows for poor insulation or damage. Cold drafts can significantly increase utility bills. Replace damaged windows and doors or apply weather-stripping and insulating film.

Pipes: Check for leaks, cracks and buildup. Shut off outdoor plumbing so remaining liquid doesn’t freeze and break your pipes.

Heating and AC: Schedule a professional inspection and maintain your HVAC system to ensure proper air flow and air-quality.

  1. Create an emergency plan

Communication: Collect the emergency contacts of all your employees and clients, as well as the numbers for your local restoration company or a national contracting organization like DKI (844-DKI-CALL).

Inventory: Take photos of your belongings, furniture and equipment. Keep records of these in a safe place, away from the building, in case the facility and all its contents become damaged.

  1. Equip your business

While it is essential to have an emergency kit on hand throughout the year, filled with flashlights, clothing, blankets, nonperishable food, water and first aid supplies, it is also important to have the following safety equipment:

  • Generator or other reliable power source
  • Smoke alarms (monitor regularly)
  • Weather sealing
  • Insulation film
  • Battery-operated radio

HUDSON VALLEY DKI – NEW LOCATION RIBBON CUTTING

December 1, 2015 

HUDSON VALLEY DKI – NEW LOCATION RIBBON CUTTING
Tuesday, December 15, 2015 promptly at NOON
Location: 534-544 Broadway, Monticello, NY 12701

Join Hudson Valley DKI and the Sullivan County Chamber of Commerce for the ribbon cutting for their new office location at 534-544 Broadway, Monticello, NY 12701.  The office will be open and visitors will be welcome at 11:30 am for refreshments; the ribbon cutting will take place promptly at noon.

We are certified restoration contractors, specializing in environmental services: Mold Remediation, Water Mitigation, Fire Restoration, Board Up & Tarping, Sewage & Bio Hazard and General Contracting and Consulting Services.   

We compliment these services with 24/7/365 emergency on-call capabilities.

Our mission is to restore, not replace!

‘’BETTER THAN IT WAS BEFORE

Our goal with our new office is to better serve the municipalities and people of Sullivan County.

For more information, please contact Matthew V. De Maio at (Office) 845-294-8919, (Cell) 914-850-3219 or email [email protected].


If you’d like more information on this topic or to plan your ribbon cutting, contact Cathy at 845-791-4200 or[email protected].