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| LR Swadley, President |
Happy New Year Everyone!
2012. Has a nice ring to it. Let's hope this is the year we all will remember as the year that our economy finally saw sustained improvement and the housing industry in Michigan continued on its slow recovery. I know many of you are quite busy with yearend accounting and getting caught up on the many office details that seem to get put off until winter. This is also the best time for any business to plan for the New Year. Regardless of the nature of your business, there are time honored best practices in business management that should be considered at this time of year.
Do you have a Business Plan? They can take many forms and can be short and simple or long and detailed, depending on your business needs. As we review our last year's financials, two important documents, the balance sheet and the income/expense or profit and loss statement are key tools to review and understand. It is always surprising to me how many businesses think that this is for the world of their accountants' for tax purposes. However it is vital that any business look at some key numbers every month at least to monitor their business goals during the year.
Do you know your breakeven point? This is the amount of sales revenue needed at what gross margin percentage in order to generate enough income to cover your general administration and overhead. It's expensive to have a business in the State of Michigan and one need to know their true cost of doing business. Your total overhead expense includes salaries for you and any staff, insurances, vehicle expense, rent, utilities, fees, licenses, etc. This total amount divided by the average gross margin percentage you charge on top of costs will give you the minimum sales revenue total needed this year to cover your cost. You can see quickly how higher margins lower your breakeven point or vice versa. Once we meet our breakeven point at any given point in the year, any margin of sales beyond that is net profit (which we share with the Federal and State governments of course!).
A key component of any business plan is in understanding your breakeven point and how and what it will take to get there. You can figure out what you need to generate on a monthly basis and can set sales goals and activity accordingly. Another component of a business plan is marketing; how you will find your customers, improving your "brand" in the eyes of the public and how to wisely spend money to achieve that. If you don't have a website yet, you'd best consider getting one. Its quickly becoming the number one source for buyers turn to for research whether its homes, services, appliances, vehicles, products.
There are many aspects to business planning and management, but one of the primary uses is to help business owners chart a course for their short, intermediate and long term growth and even survival. Use your NAHB.org resource online for help in learning more.
Speaking of NAHB, there is still time to register and attend the NAHB International Builders Show. This year it's in Orlando, Florida, February 8-11. If you haven't been to this, the largest home show in the world is something to experience. Might be just the time to recharge your batteries and jump start a new building season! You can register online at nahb.org. Everyone in this profession should attend this at least once in your career.
Our own UP Builders show is coming up as well. March 9, 10, and 11th at the Superior Dome in Marquette. Here is the opportunity to get your name and products in front of 7-9,000 people at one time. Every year the UP Builders show seems to signal the kickoff of the community's interest in the building and remodeling season. Go to upbuildersshow.com or 906-225-1216 for more information on being an exhibitor.
We appreciate your support of our association and encourage you to bring someone to our next general meeting where Colin Herren, MAHB President, will be speaking. Save the date 5:30 Wednesday February 15 at Wahlstroms in Harvey.
All the Best,
LR Swadley
President
Above: The Hubcap award for Volunteerism and Community Service presented by Past President Mark Pynnonen and President LR Swadley 
