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New Year, New Budget: What You Need to Know When Planning for 2022

Ewing Irrigation on November 23, 2021 in BlogNo Comments

New Year, New Budget: What You Need to Know When Planning for 2022 graphic

Budget planning is never easy, and with supply chain disruptions, labor shortages and rising prices all projected to continue well into the new year, it won’t get easier. That doesn’t mean, however, that you can’t put together a realistic, sustainable plan for 2022.

Figuring out where to begin can be daunting, but Ewing can help. We offer both in-person and virtual courses designed to help build your business and your employees’ skillsets. You also can count on the professionals at your local branch to provide the answers you need to determine how to spend your hard-earned money wisely in these challenging times.

Look at the Past to Plan for the Future

Multiple factors go into budgeting. If you haven’t started planning for 2022, now is the time to go through your business records from the past year and consider:

  • Income. How much money does your business bring in before costs are deducted? Where does the money come from? What months do you bring in the most money, what months the least?
  • Fixed costs. What are your monthly operating costs? Rent, supplies, debt repayment, payroll, taxes and insurance are all examples of costs you must pay regardless of your income that month.
  • Variable expenses. Variables are expenses that change each month. They include things like utility payments, owners’ salary, equipment replacement, office supplies, professional development and marketing.
  • Contingency fund. Do you have money set aside for emergencies or unexpected expenses? If not, is can you set some cash aside in higher-income months or open a line of credit so you can easily replace equipment or inventory without taking out a loan?
  • Profit and loss. How much did you make last year once everything was deducted? That’s what your profit and loss (P&L) statement will tell you after you add up your income and subtracting your fixed and variable costs. If you don’t have business accounting software, a good alternative is to download a free P&L template from SCORE, a national nonprofit that helps businesses get off the ground, grow and achieve their goals.

Now you’re ready to plan for next year based on this year’s bottom line. Start by answering the following:

  • What is our sales goal for the year? Is it realistic?
  • What is our profit goal? Can we reasonably achieve that goal?

To answer those questions, calculate your projected revenue, cost of goods sold, expenses and taxes. If you don’t want to use the aforementioned software, SCORE offers a free financial projections template and accompanying guide in both English and Spanish.

You also may want to consider the following when planning for the new year:

  • What new tools and equipment do we need? What big-ticket items?
  • Are there new services we want to offer our customers? What do we need to offer those services?
  • What do we need to do to retain good employees and attract new ones?
  • What education do we need to conduct for our crews and office staff? Do we need to renew or add new certifications?
  • Are there trade shows or other events we should attend, or association memberships we should add or renew?

Pricing

Should You Raise Your Prices in 2022?

No one likes a price increase, but the reality is that the cost of many things you use in your business are rising, so your prices should increase, too.

According to Lawn & Landscape’s 2021 State of the Industry Report, green industry professionals’ top two concerns going into 2022 are high fuel prices and the shortage of quality labor. Other concerns include the high cost of Workers’ Compensation and health insurance, economic recession, personal life stress, low-ball competition, bad weather and lower margins on work.

Ewing Market Development Manager Larry Giroux advises that landscape professionals who don’t factor increased costs into their bids in 2022 may put their businesses at serious risk.

“Supply chain and product availability issues are going to be around for 2022 and perhaps beyond,” Giroux says. “Fuel, labor, office expenses and equipment costs are all going up, and even the best economists cannot tell us how much and for how long. One thing that cannot be ignored in the current business environment is that your prices must go up as well. Any business owner who isn’t taking a very close look at their current pricing model will probably not be in business to see the end of the current storm.”

Giroux also advises looking at projects from a “do I need it?” perspective and learning which ones to walk away from.

“The bottom line is, raise your prices and be selective. Don’t be afraid to walk away from a project that doesn’t pass your smell test,” he says.

Ewing ProAdvantage Program

Make Your Money Go Further with ProAdvantage

Everyone is looking for ways to make every cent count, especially now, and loyalty programs are a big part of that strategy. If you’re not a Ewing ProAdvantage Program member, consider joining now so you can be part of a program that offers much more than points to redeem for things like gift cards, account credit, merchandise, travel and event tickets.

ProAdvantage membership gives you access to real-world solutions, business development tools and The Value Builder System™, all designed to help you grow your business and maximize its value.

As a participant, you can save money on services and back-office resources through our partnership with Savings4Members. If you’re looking for more ways to help your residential customers finance projects, we’ve got you covered through our partnership with Synchrony Financial.

You also can take advantage of Ewing’s 100 years of business growth, successes and key learnings through recruitment and development workbooks and information, marketing tools and educational webinars.

For more information on ways Ewing can help you navigate business challenges, visit our website, or reach out to your trusted local branch professionals today.

New Year, New Budget: What You Need to Know When Planning for 2022 graphic
Ewing Irrigation
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