2025 will be a year of significantly increased equipment, refrigerant, and training costs. Make sure you put these increases into your 2025 budget. Don’t be afraid to raise prices so that your profits remain at least even with what they were in 2024.
Put your budget in writing – or at least in an Excel spread sheet. Before you begin, here are some questions to ask:
- Are you getting your monthly financial statements in a timely manner? If you are not getting your financial statements within 15 to at most 20 days after the month has ended you are doing yourself a disservice. It makes absolutely no sense to get January’s information in March. By this time any minor issues which you would have seen may have become major crises. I’ve made it easy to review financial statements in less than 10 minutes a month: www.financiallyfit.business
- Are your financials formatted in a manner that helps you operate your business rather than makes it easy for your accountant to do your taxes? Many accountants put revenues, expenses, assets, and liabilities in a format which makes it easy to do taxes but impossible for you to check your business operations easily. For example, an accountant combined many overhead accounts of one of my clients simply to make it easier for him to track…his reasoning: the client didn’t need that many accounts. My response: Who’s paying who?
You need the information so that you can make good decisions on labor productivity, gross margins, and overhead issues. If your accountant can’t or won’t put the information you give him in a format that helps you operate your business, your goal for 2025 should be to find another accountant.
- Are your financial statements accurate? This means that you’ve taken an accurate inventory at the end of the year, you have all of your payables and receivables current in the months that they were incurred, and accurate job costing for all departments. Remember that garbage in equals garbage out.
If you need to work on any of these areas, then they should be the initial financial goals that you set for 2025.
Other questions to ask:
- What are your gross margin and net profit goals? These are important and an integral part of budgeting for 2025.
- When you create your budget for 2025 look at what happened in 2024. Did you have revenues or lack of revenues because of situations out of your control (i.e. the economy, the weather, a competitor going bankrupt, one of your top employees going into business and taking your customers, etc.) or did you do some creative referral/marketing programs to generate new customers that caused sales to increase? Make sure you have service contracts/agreements to help you decrease the seasonality of the weather.
2024’s actual financial statements should be the basis for the 2025 budget…with the known pricing increases.
Look at what happened during the year and make reasonable assumptions about what you will accomplish this year. Then, commit to review the financial statements every month with respect to the budget you created. This way you can tell whether you are on track or need to adjust what you are doing.
2025 In Person Class Schedule –
Building Profit & Wealth
- February 27-28, 2025 Austin, TX
- April 2-3, 2025 Jacksonville, FL
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Ruth King is well known as “The Profitability Master.” She is passionate about helping small business owners become profitable and stay profitable. For over 40 years she has coached, trained, and helped contractors and others achieve the business growth and goals they wanted to achieve.
Contact Ruth by emailing ruthking@hvacchannel.tv.
