I wrote an article about budgeting early in 2021 that addressed whether a budget is necessary and how to go about it. As you can imagine, since I’m diving back into the ever-exciting topic of budgeting, the short answer was yes, and it’s easier than you think. In this article, I will elaborate on that further and help you nail down your game plan for 2022 to plan your work and then work your plan.  

Credit: Lezlie Tiarks

Naturally, because none of us got into this game to be a finance expert, budgeting tends not to be our favorite thing to do. Hence, don’t sweat it, I already created your budget for you, and you can get it for free at yourblueskies.com/window-cleaning-budget-template/. Even better, this is a pre-completed budget on exactly how much you need to spend on every line item of your business and the exact line items and groupings that you need to have in your books. However, it would be boring if I just ended this article there, so while I encourage you to grab that badass free resource, I’d like to drop some context on you here so you can get the most out of your game plan. The hardest part of the budget is just getting it started. The free resource above will do that for you. Step 1 is complete!

The numbers part of budgeting is, first and foremost, an exercise of estimating capacity vs. demand. First, we start with demand and estimate or set our sales goal for the year.

We get demand from 3 general sources:

  1. repeat clients
  2. referrals
  3. new clients

For our repeat clients, we need to determine our average job size from the prior year, adjust that for any price increase we are putting in, and then calculate our repeat percentage. There are a few different schools of thought as to how to get an accurate repeat rate. I like to take an all-inclusive approach and think of repeat clients as anyone in our client database and getting our emails and text blasts. If we have their info and they book work, I put them in this group, naturally. Hence, when I look at our repeat percentages, I am typically looking at the revenue from this group of clients as a percentage of our total revenue in a given quarter. Since repeats might vary throughout the year, I like to have a different percentage for each quarter rather than an average for the year. Once I know that repeat percentage based on prior years, I’ll calculate it for the coming year by taking last year’s same quarter repeat revenue and increasing it by the level of any price increases.  

Next, come referral sales, my favorite new clients, because they are essentially zero acquisition cost new clients. You can come up with an estimate of referral revenue by looking at prior-year referral clients as a percent of total clients in any quarter and then multiplying that number of clients by your average job size. If you weren’t in business last year, then repeats won’t come into play, and referrals will be a guess, and that’s fine. Just make your best guess. The same goes for if you didn’t keep track of your referral source clients. Make your best conservative guess and keep tabs on them as a specific source this year. Generally, as your business grows and your client base increases, so too does your ability to get and convert referral revenue.

Lastly, your new client revenue will be based on your expected marketing spend divided by your average client acquisition cost (how much money you spend on marketing for each new client you bring in – you can get this by looking at last year’s data, how much you spent on all marketing spend divided by the number of new clients you brought on). You may have just noticed that because your new client revenue is based on your marketing spend, you can’t get true sales to estimate without first budgeting this expense line item. It’s an interesting give and takes. Marketing is the first expense you need to budget and is essentially the starting point of your entire budget because it’s hard to dial in a revenue target without a marketing plan. So, start here and tinker with it. Use the Sales & Marketing tab on the budget sheet you downloaded from our website to mess around with the inputs and see what that does to your revenue.

This demand-side effort should give you a sales revenue target for the year, and if you are using my budget template, it will be laid out by month. The interesting thing about setting that sales goal is it can’t be executed with a few different expenses (better thought of as investments in this case). On the capacity side, we need to think about the trucks/equipment we have, what needs to be replaced, and how much we need to add. 


More importantly, we have to think about how many guys we’ll need to run those assets effectively.


Credit: High Plains High Rise

So, the next step is to figure out how many technician employees you need to produce that revenue and how you’re going to pay them, and then how many assets you need and how you will finance them. I’m not going to get into the science of all that in this article, but I’ll specifically cover both of those topics in-depth in future articles. In the meantime, the budget sheet has specific tabs and videos for how to estimate those costs. Once you come up with a realistic revenue target, this is logically the next step, making sure you have the human resources and capital resources to execute your plan.

Surprisingly, your budget is damn near fully built at this point. Because budgeting is half art, half science, the rest of the activity is partially based on what you think will happen and partially on what you need to make it happen to run an effective business. A budget based on spending frivolously only confirms that you probably need to spend less money to run a profitable business, which reigns you back into more reasonable spend targets to get back in line with a proper business model. Hence, for this part of the budget, whether supplies, repairs, maintenance, rent, insurance, you name it. I prefer to start with the percentages you should generally target for each expense line item. And tweak from there to align with reality if we know we have something already locked in (for instance, you may already know your rent, insurance, or some larger equipment purchases). All of the specific percentages you should target for each expense line item are already included in the target budget, so I’m not going to list them all here. If your percentage is a little different, or if it needs to be a fixed amount per month, you’ll see that it is super easy to adjust and define your amounts in the target budget.


Your budget is now complete


You have a realistic sales target based on math and reality, not just some number you made up and threw against the wall. Plan the work and then work the plan. As the year progresses, so too should your budget. I adjust our budgets quarterly based on renewed expectations given existing market conditions. If you feel like getting nerdy enough, I suggest you do the same as well.


As always, don’t forget to head to our website and grab our other free resources out there, including the chart of accounts downloaded that will get your QuickBooks to align exactly with our target budget sheet.


Dan Platta – CEO – Blue Skies Services


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