From your experience, where are most construction companies missing it, when it comes to the business side of things?
Most construction businesses are started by tradesmen who know a great deal about putting work in place. They pride themselves in delivering quality projects “on time and under budget,” as the industry goes.
Some struggle in getting work; but they don’t last long if they don’t figure it out. Necessity, being the mother of invention, most contractors find a way to land work. Whether they become adept at pricing the work is an another matter altogether.
This brings us to where I feel most contractors miss their best chances to make REAL money. Perhaps, they view financial management as a matter for the bean counters and bankers. Not often, but I’ve heard it said, accounting is a necessary evil of business. Spend as little money on it as possible and keep the bankers pacified.
Sadly, this perspective overlooks one very important truism: Making money is largely about managing people and data. All business owners understand the importance of good relations with customers, employees and vendors. However, they often miss out on one of their most valuable resources: their own financial data. Timely and relevant financial information provides valuable insights into so many aspects of a contractors business.
For example, the company’s cash flow is not merely a reflection of unpaid receivables. The company’s cash flow is comprised of each project’s cash flow. Measuring and reporting project cash flow of Operations managers has a direct and noticeable affect on company cash flow.
We work with our clients to help identify deficiencies in reporting; then work backwards with accounting to identify and correct deficiencies in process or procedures.
