How Often Should You Review Performance Relative to Budget?

In a contractor survey, we asked:

How often does your company review performance relative to budget?

Of the contractors surveyed, 41% reported they conduct a monthly review, one-third said yearly and 20% reported that they don’t do reviews at all.

EGIA faculty member Gary Elekes began by saying that this kind of review process needs to be aligned with the goals of a company’s leadership and management team. “Personally, I like to run my company from the beach,” joked Elekes. “I like to spend time in the islands, and in order to still do that and run a company, there needs to be a process that we can communicate on that’s a language of consistency.”

By consistency, Elekes means that a company’s financial system and budget must remain steady, and measuring a company’s performance relative to budget is what allows management and leadership to start the conversation at all.

Many contracting business owners require themselves to wear multiple hats in a day in order to keep their business afloat. But with proper training, a company’s management team should feel empowered to conduct review processes in the best way to align with the company’s goals as they see fit, which could lead to more successful outcomes than if the owner is stretched thin attempting to make every decision on their own.

“Individually, I can be the person helping that process, but I’m not necessarily the one getting up every morning that has to drive that process,” said Elekes.

After that structure is in place, Elekes recommends conducting a review of performance relative to budget every week. “Monthly is a history of the month, weekly means you can actually influence the current month,” said Elekes.

Elekes continued by adding that most of the time, accounting reports aren’t finished until the 5th of the month or later. So a monthly review process would mean another 25 or more days where management cannot influence outcomes. With a weekly model, all accounting reports would be able to be reviewed much more frequently during the month, with more information to set goals for the company.

Gary Elekes is serial entrepreneur with a passion for helping others become more successful by sharing what he has learned over the past 3 decades working closely with all facets of the contracting industry. He also designed the very first web based learning platform for the residential contracting industry, which acts as a support system for training and learning in HVAC and plumbing trades, and has over 5,000 subscribers.

Our faculty members have also answered questions on other topics related to sales in the contracting world, including Accounting Methods for Financial Reporting and When Should My Accountant Deliver Financials?.

Hear more from our “Ask The Experts” faculty members on “Cracking The Code,” our weekly web series.

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