As a business owner, you know that keeping a thumb on the pulse of your company’s finances is essential. The ebb and flow of expenses and revenue are a significant part of your company’s vitality. Getting your business finances on track is necessary if you’re aiming to achieve your first (or next) million-dollar milestone.
So, when do you check in on the financial health of your pest control business?
If you’re like many PCOs, you live by what’s in the bank account. If there’s money, then all’s well. You might glance at monthly or quarterly reports, but chances are they don’t hold a place of prominence. If you had to pinpoint the most unstable area of your company finances right now, you would probably struggle. If any of this sounds remotely familiar, then your business finances need work.
The second step in The Million Dollar Climb pushes PCOs to reevaluate the financial workings of their business and pinpoint areas in need of improvement. In this blog, I will walk you through the financial “musts” you cannot afford to ignore.
The Foundation for Financial Success
Getting your business finances on track starts with having your Chart of Accounts (COA) laid out properly. Doing so allows you to compare your company’s performance to industry benchmarks.
What you track is critical. Dan Gordan of PCO Bookkeepers recommends tracking:
- All costs related to performing/delivering the service. These include service labor, taxes, benefits, service materials and supplies, service tools and equipment, service vehicle expenses (fuel, repairs, etc.), and other items like GPS, cell phones, and uniforms.
- All costs related to sales and marketing in a separate cost area. These include marketing campaigns, digital marketing investments, sales commissions, and costs pertaining to salespeople, such as cell phones, iPads, vehicles (fuel, GPS, repairs, maintenance), and uniforms.
- All general and administrative expenses. These include management and office payroll, taxes and benefits, rent, and other costs to operate the office.
If you’re using QuickBooks, it’s easy for you or your bookkeeper/accounting firm to modify your current COA to match Dan’s recommendations.
It’s essential to know the financial health of your business every month. Monthly reviews allow you to improve in areas where performance may not be up to standard, but you will never find those areas without tracking and reporting.
Establishing Financial Supports
If tackling the financial side of things is daunting, you have options for getting help.
- Hire Out: You can use a company like PCO Bookkeepers to do your finances—they can help you get everything in order.
- Expand Your Team: If you don’t already have a dedicated financial manager on staff, you might consider adding one. They can handle the day-to-day financial operations and be responsible for compiling the monthly financial reporting clearly and concisely for your review.
- Establish Policies and Procedures: Getting and keeping your business finances on track will require establishing clear policies and procedures that are easily understood and accessible by your team. Two tools that can help are the Business In A Box and the Pest Control Business Tools Apps.
Set Financial Goals
As a PCO, you should have a personal goal of reviewing financial reports monthly. So many companies base their financial health on how much money is in the bank, not on how the company is performing. To set goals and meet benchmarks, a PCO must monitor how their company is actually performing.
Remember, the wrong time to figure out the company’s performance is when the bank balance is out of money.
The Importance of Industry Benchmark Comparisons
Benchmarking your company’s performance against the industry offers the chance to find new growth avenues. For example, if your company’s revenue is lower than the industry standard for recurring revenue, then you have an opportunity to increase profits by focusing on your recurring services.
Likewise, if any area of your pest control business is falling short of industry benchmarks, then a comparison will reveal weaknesses that can be turned into strengths.
Score Your Pest Control Company Now
Have you made your first million? Are you working toward making your next? Regardless of where your business is now, the Million Dollar Climb Challenge can help you pinpoint areas in need of work so you can achieve your goal, continue to expand, and do it efficiently.
Why not start the challenge now? Use the Million Dollar Climb Quiz to get started.