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Ruth King

Ruth King has over 25 years of experience in the hvacr industry and has worked with contractors, distributors, and manufacturers to help grow their companies and become more profitable. She is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. Ruth has written two books: The Ugly Truth About Small Business and The Ugly Truth About Managing People. Contact Ruth at ruthking@hvacchannel.tv or 770.729.0258.


Articles by Ruth King

Protect Yourself Against Employee Embezzlement

If you don’t have systems in place, it’s easy for a stressed out bookkeeper or stressed employee to get tempted. They make stupid choices they never would when thinking rationally.
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Your Inventory Days Ratio: Do You Have Too Much Inventory?

The Inventory Days ratio lets you know how quickly inventory is increasing or decreasing in your business. Since inventory is a bet, it’s important to know how much of your hard earned cash is being spent on inventory.
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Your Receivable Days Ratio: Do you have a Collection Problem?

The Receivable Days ratio tells you whether you have a collection problem or are heading toward one. It lets you know how quickly you’re being paid, and whether you’re being paid on time.
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Your Compensation Percentage: Are Your Employees Productive?

Even if liquidity ratios are stable or increasing, showing increasing profitability, compensation percentages may show a different story. If compensation percentages start to increase, there’s a productivity problem.
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Your Debt Ratios - Do You Have Too Much Debt?

Like the liquidity ratios, it’s the trends that are important. The goal is to get your debt to equity ratio stable on a monthly basis.
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Your Accounts Receivable to Accounts Payable Ratio: Do You Have a Collection Problem?

Use the accounts receivable to accounts payable ratio to determine if you have enough money to pay your bills.
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Your Acid Test - Do You Have Too Much Inventory?

Your Acid Test - Do You Have Too Much Inventory? Track This Indicator to Get a Clearer Financial Picture
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Do You Have Enough Cash to Pay Your Bills on a Long-Term Basis?

Check Your Liquidity Ratios
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Why I Hate KPIs

Comparing KPI ratios to industry standards alone can be a risky move.
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Finishing and Implementing Your 2014 Three Page Business Plan

In the past two months you’ve created your 2014 goals with your employees and your 2014 marketing plan. This month you’ll complete your three page business plan by estimating your 2014 budget. I’ll end this series with some implementation suggestions so that you make 2014 your best year ever.
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Four Steps for Developing a One-Page Marketing Activities Plan

How to create page two of your three-page 2014 Business Plan
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Involve Your Employees in Your 2014 Business Plan

In the first of a three-part series, Ruth King explains why setting goals is the first phase of business planning and why it's important to involved your employees.
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How to Double Your Commercial Maintenance Agreements

Here are six actions you can take to increase your commercial maintenance agreement business.
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6 Considerations When Hiring a Bookkeeper

Owners are usually experts at operating their companies, but not about the details of bookkeeping. So a good bookkeeper can be a tremendous asset. Learn how to identify and hire one.
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Methods of Decreasing Vehicle Expenses You Might Not Think About

Vehicle expenses are a major component of overhead expense. Here are seven tips you may not have thought about that will help you keep these expenses as low as possible.
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6 Strategies for Reducing Debt

Calculate your debt ratio, then act if it is too high.
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Drive Sales with Daily Tracking of Maintenance-Agreement Success

Tracking maintenance-agreement enrollments and renewals is critical to growing a strong maintenance customer base. Tracking forces you to focus. Focus gives you the best chance for success.
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Tracking and Accounting for Commercial Maintenance Agreements

Accounting for commercial maintenance agreements is performed differently depending on the type of agreement sold and how that agreement is billed. I’ll cover full maintenance agreement accounting and planned maintenance agreement accounting separately.
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Accounting for Residential Maintenance Agreements

A good maintenance agreement program will help even out cash flow, increase your company’s bottom line, and keep your field employees productive throughout the year.
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Do You Have the Courage to be Profitable?

Once you understand your financials and start consistent monthly reviews, you must boldly implement changes based on what you see.
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Can you Afford to Hire a New Office Employee?

Last month I wrote about how to determine whether you can afford to hire a field employee. This month I’ll give you the calculations to determine whether you can afford to hire a new office employee.
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Can You Afford to Hire a New Field Employee?

Your company is growing. You feel the need to hire another field employee. Can you afford to hire this person? Find out by using this mathematical calculation.
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Play It Smart After the Busy Summer

Here are the stupid things that I know you, the smart contractor, won’t do now that the unusually hot, humid and demanding summer is over.
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How to Keep Inventory and Receivables Balanced

Editor’s Note: This is the fourth and final in a series of how to use graphical depictions of financial ratio trends to help contractors spot potential problems early and make proactive decisions about financial management. The first article, which covered liquidity ratios, appeared in the May 2012 issue. The second article, which covered debt ratios, appeared in the June 2012 issue.
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Percentage Compensation Measures Productivity of Labor Force

Editor’s Note: This is the third in a series of how to use graphical depictions of financial ratio trends to help contractors spot potential problems early and make proactive decisions about financial management. The first article, which covered liquidity ratios, appeared in the May 2012 issue. The second article, which covered debt ratios, appeared in the June 2012 issue.
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Debt Ratios: Look For Short- and Long-Term Warnings

Editor’s Note: This is the second in a series of how to use graphical depictions of financial ratio trends to help contractors spot potential problems early and make proactive decisions about financial management. The first article, which covered liquidity ratios, appeared in the May 2012 issue.
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Cash Needs Should Drive Revenue Goals

Without profits, cash runs out. Yet, your business could have an unprofitable month or quarter and still survive. Many contractors that operate with Dec. 31s as their year-end, state that the first quarter always is unprofitable. They spend the next nine months catching up — just so they can have another unprofitable quarter the next year.
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Liquidity Ratios: Trends Key to Profitability Outlook

Every month you should receive accurate and timely financial statements. Looking at one month’s financial statements (balance sheet and P&L statement) does not tell much. To see where your business is headed, you must look at your business trends. Then you can choose to continue on the current path or make the necessary changes to alter the direction of the business.
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Why You Need Both Profits and Cash To Survive

Each month your P&L tells you whether you earned a profit or had a loss. It does not tell you how much cash you have! You must turn your profits into cash by collecting your receivables and paying the expenses incurred to produce those revenues.
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Keep Employees Honest, Part 1

When faced with stressful situations, even honest people can do things that are wrong, most notably stealing. If you don’t have systems in place to prevent theft by employees, you won’t be able to control it once it starts.
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Long-Term Benchmarking

Long-term benchmarking tells you how your company is doing over time. It takes out all seasonality so you can see the long-term trends.
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Sales Price Using Net Profit Per Hour, Part 2

Ruth King offers examples of how to better estimate your selling price to the customer.
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Apples to Apples

Your job as the owner or manager is to review accurate financial statements on a monthly basis. You don't need to know the intricacies of how each entry is made. You do need to know enough to question if the statements don't appear to be right.
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Be Proactive – Sell IAQ Products

IAQ products differentiate your company from your competitors. However, it takes being different, educating, and explaining to create and install the best possible, not least expensive, products for a customer.
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How Much Should I Charge?

This pricing methodology uses gross profit per hour, overhead cost per hour and net profit per hour decisions.
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Time To Think About Winter

Ruth King offers 12 things you should do during the summer to prepare yourself for slower winter months.
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Three Things That Can Put You Out of Business

Lack of attention to these key areas will eventually lead to business failure. Ruth King says take care of your customers, take care of your employees, and watch your cash.
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Update on Inventory Issues

Ruth King offers reminders for proper inventory management. You are betting that you can sell the parts or equipment that you are purchasing with your hard earned dollars.
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When It’s Time To Stop Cutting and Start Growing

In lean times you can decrease cash spending by using inventory in your shop and on your trucks. Ruth offers a break-even formula to calculate what your company needs to sustain its overhead.
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Review Your Pricing Strategy

Decide where you want to position your company in your marketplace. If you want to be known for the “lowest prices in town” then you will most likely have “the lowest profits in town.” If you want to be known as “the highest quality in town,” then your pricing must reflect what is required to have “the highest quality in town.”
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9 Things HVACR Contractors Should't Do In Slow Times

Over the years I’ve seen contractors do some really stupid things — both in slow times of the year and busy times of the year. Since it’s January, I’ll cover the stupid things I know you, the smart contractor, won’t do in the upcoming slower season.
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3 Ways To eliminate Low-Productivity Habits

Ruth King offers three suggestions to help you get the most profitability and productivity from every dollar that comes in the door.
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How to Calculate Overhead-Cost-Per-Hour By Department

Departmentalizing is the fairest way to allocate overhead to different departments.
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As The Year Ends, Review Your Pricing Strategy

Determine your position in the market; then define desired profitability.
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A Good Financial System

A good financial system is based on both the monthly financial data and weekly information you gather at your HVACR company.
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Take Advantage of Barcoding's Benefits

Tracking inventory and counting it once per year (or more often) takes time, labor, and money. Barcoding, which has been used in supermarkets for years, has evolved into one of the most efficient ways to track inventory for all types of businesses.
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Are You Ready To Take Advantage Of Barcoding’s Benefits?

Once implemented and used correctly, you’ll be making much better inventory bets, saving time and — as a result — increasing profitability with barcoding.
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Pulling It All Together: A Good Financial System

A good financial system is based on both the monthly financial data and weekly information you gather. These five activities will help you discover whether your company is moving in a positive, profitable direction.
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Is Debt Good? Only You Can Decide

The reality is that debt usage is an emotional decision. Some company owners are comfortable with a lot of debt. Others can't sleep at night if they owe anybody anything. They pay cash for their trucks and other assets as well as their suppliers. Each of us has to determine our debt tolerance. Only you can decide whether debt is right for your company.
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Is an ESOP Your Best Exit Strategy?

ESOP may be for profitable companies with high cash flow and skilled, engaged employees.
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Use Overhead-Cost-Per-Hour, Not Just Gross Margins for Measuring Profitability

Calculating prices based on gross margin may do you a disservice. Ruth King says the key to successful pricing is to know your company’s overhead-cost-per-hour.
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Understanding Profit and Loss Statements

A P&L, or income statement, is a vital document for good fiscal management.
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More Balance-Sheet Basics: Liabilities and Net Worth

Liabilities are debts that your business owes. Like assets, liabilities are divided into two segments: current liabilities and long-term liabilities.
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New Year’s Resolution: Befriend Your Financial Statements

Properly formatted financial statements — along with accurate information in those statements — is critical to making good financial decisions for your business.
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2010 Results: Attitude and Focus Beat the Economic Blues

Many contractors I know did very well in 2010 despite the economy and despite all of the bad news in the media. What made the difference for those who did well and those who didn't? Attitude.
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Set Maintenance Agreement Goals To Cover Overhead

You need enough maintenance agreement customers to cover the entire overhead of your company so that you won’t have to worry about a flailing economy causing your company to go out of business. Here are six activities to do this fall to start seriously building your maintenance agreement base.
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Boost Technician Confidence To Sell More Service Agreements

Customer-service training must be continuous and thorough. If you just tell your technicians what you want, they will only think about what they are going to say and never say it.
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Coming This Fall! A Chance For Bonus Profits

Invest additional time and resources to inform customers and prospects about the expiring replacement tax credit.
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Take Action to Correct Bad Financial Statements, part 2 of 2

7 ways to fix financial statements that are wrong.
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7 Dead Giveaways That Your Financial Statements are Wrong

Your financial statements are your scorecards. If they are not accurate, you might make the wrong business decision based on incorrect information. Here are seven things that clearly tell you that your financial statements are wrong.
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6 Ways to Proactively Raise Cash

Making calls to past-due customers, former customers, and happy customers helps to keep the cash flowing.
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3 Easy Ways to Improve Your Bottom Line

Businesses can improve profitability in many ways. Some require making substantial investments, such as buying new equipment or expanding marketing efforts. But there are inexpensive ways as well. Here are three.
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5 Ways to Boost work Year-Round

Take a tip from farmers. Plant seeds in the spring t decrease your dependence on the weather and increase customer loyalty.
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Increase Profits Without Price Increases

One of the toughest things owners and managers have to do is to productively manage a labor force. But companies that manage their labor and their inventory effectively are among the most profitable.
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Downturn Made Contractors Stronger

I observed five trends in 2009 that helped contractors not only survive in a bad economy-but thrive in a bad economy.
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What Profitable HVACR Contractors Did in 2009

Everyone knows that 2009 was not a great year economically. Some contractors did well. Perhaps they were not as profitable as they were in 2008, but they still were profitable. What did they do differently?
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Make Big Plans for The New Year

If you want to improve your business, skip resolutions and change what you are doing.
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8 Questions to Ask Before Investing in Training

Not all training will benefit your bottom line, but it should. Have a solid understanding of methodology, cost, and benefit before making training choices.
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Keep Employees Informed of Business Costs

Sharing this information will open their eyes to waste and the true value of benefits.
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5 Ways to Boost Fall and Winter Sales

Fall is the time to be proactive and make sure your customers understand that heating and air conditioning are necessities, not luxuries. Make sure they call you for the repairs and replacements by working on customer-loyatly programs now.
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Preventing Employee Theft, Part 2

Most employees are honest. However, when faced with stressful situations, even honest people can do things that are wrong, most notably stealing
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Preventing Employee Theft, Part 1

If you don't have a system in place to prevent theft by employees, you won't be able to control it once it starts.
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Spot Trouble Quickly with Trend Data

Financial benchmarking, both short and long term, is critical to making good business decisions that will keep your company financially healthy. When you see the numbers trending in the wrong direction, take action immediately. It could save your company!
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Financial Benchmarking, Part 1

Financial benchmarking provides you the assurance that your business is going well, or the clues to when it isn’t so that you can take action.
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When the economy struggles, you don't have to

When the economy struggles, you don't have to. Keep making telephone calls, talking with clients and prospective customers, and keep a positive attitude. If you do this, the tough times won't be so tough
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Cash vs. Accrual Accounting

If you account on a cash basis, you record a sale when you get the money in the door. You record an expense when you write the check for that expense. There are no accounts receivable and accounts payable. There is no inventory.
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To Discount or Not to Discount

Whether you should take a discount is totally dependent on the terms of the discount, your cost of borrowing, and plugging the numbers into the formula.
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Avoid Down Cycles

Smart money management protects your business in slower times.
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Thinking About Selling?

To get your business ready for sale, good due diligence asks questions in all areas of your business.
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Top Four Marketing Buys

Direct mailing, reminder pieces, referral programs, and surveys are good uses of marketing dollars. Be sure to track results!
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Flattening Out Seasonality

Service agreements, marketing and diversity will decrease dependence on the weather and flatten out the seasonality.
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Stop Running A Warehouse Supermarket

Limit access to the warehouse. You may need to hire a parts runner or a warehouse person. It’s the best way to save your hard-earned cash. Make the time to do the paper work necessary to get warranty credits
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Up For Bid

Look to your financial statements to see what's going on in your company. This will tell you whether you should raise prices or make adjustments in areas like productivity, marketing, or sales closing rates
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Become the Contractor of Choice in Your Area

7 keys to a more productive and profitable work force that will put you on the map as being the Contractor of choice in your geographic area.
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Lease vs. Buy Conundrum

There is no one correct answer to lease versus buy. Since cash is the life blood of all businesses, look at leasing versus financing versus buying outright from a cash position.
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Get Ready For Summer

Now is the time to put the plan in place to decrease your dependence on the weather and increase customer loyalty. Here are four action items for your plan.
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Drip Marketing Critical To Cash Flow

Whether busy or slow, you should do some marketing activity every month (phone book advertising doesn’t count). The activity can be a major campaign or a small reminder about your company’s products and services. The small reminders, or drips, keep your company’s name in front of your customers and prospective customers each month.
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How To Boost Revenues With Price Increases

It is possible to increase revenues per service ticket without increasing your hourly rate. Ruth King describes how.
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Spring Cash Mistakes

Start preparing for the busier months ahead while you still are experiencing the slow, late winter months. This slower period gives you enough time to think and plan so that all you have to do when you get busy is execute your plan.
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Three Things That Kill Your Business

Being proactive, eliminating non-productive employees, and watching cash flow are three critical resolutions to keep in 2008.
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How Do You Want To Operate Your Business?

The best way to operate your business is by plan. Implement your plan. Keep your plan out, communicate it and track it.
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Involving Employees In Goal Setting

Companies that focus their entire team on goals and communicate how they are progressing to reach those goals usually have better sales and profits, and lower employee turnover rates.
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Maneuvering Holiday Cash Mistakes

Ensure that your marketing message is heard by thinking differently then your competition. Stand out by sending mailers at unique times throughout the year. And, distribute bonuses in February rather than in December so as not to have your employees mistake profit sharing for a holiday bonus.
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A good savings strategy will help prevent you from experiencing a financial hardship in years to come.

Make sure that you are earning enough on your jobs and service work to generate reasonable profits, and that you save some of the money you generate.
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Keeping Productivity High As Summer Ends

Ruth King offers To keep productivity high, you must plan some end-of-the-busy-season activities.
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It's Summer - Time to Think About Winter

Extra effort during the busy summer season stockpiles work for slow times
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Cash Management Especially Important In Busy Season

Paying strict attention to cash in busy and slow times keeps honest people honest. When you get lax, honest people get tempted and can start a pattern of theft.
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Analyzing Financial Statements, Part 2 of 2

If you are generating accurate, timely financial statements, and the ratios are in line, you know that your company probably is healthy. If the ratios aren’t in line, then do something about them so that you won’t have financial difficulties!
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How to Plan Your Marketing Budget

Marketing drives sales. So plan now to boost sales with a spring marketing plan. Be advised, however: As you ramp up for the busy spring and summer months, you’ll spend money marketing before you see a return on those dollars. A budget is your roadmap to prudent spending.
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How to Achieve Your 2007 Goals

To make the changes easier, break down your major goals into monthly, weekly, and daily activities.
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Business Planning, Part 2

When you track your results, you’ll have a better chance of making corrections as events unfold.
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Business Planning, Part 1

The most successful companies in our industry — and no doubt in most industries — plan, execute, and measure. That means they create, execute and track a business plan.
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Set Your Profitable Price

To calculate your hourly rate consider the direct wages of the technician, the associated labor expenses, a truck, the associated truck expenses, non-productive time, and overhead.
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Maintenance Programs Protect Profitability

Creating a profitable program requires planning and persistence. You must get your staff on board, develop and deliver direct mail and advertising pieces, and train the office and field personnel how to sell and fulfill the agreements.
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Inventory is a Bet

Ruth King reveals what happens when you don't manage your inventory and how to do it so you don't get hit with a surprise loss.
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Calculate Your Sales Prices Using Net Profit per Hour, Part 2

Clear cut examples illustrate the best ways to calculate sales price.
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Sales Price: Gross Mistakes, Part 1

Dual overhead recognizes that there are different costs associated with materials and labor, and it is more accurate than gross margin.
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Analyzing Financial Statements, Part 1 of 2

Unfortunately, many contractors pay more attention to blueprints than financial statements. To make good business decisions in your company, you must analyze your financial statements each month. Ruth King presents the first of 10 ratios that can help you analyze your business.
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