Sales and profit are two very different things – as a construction business owner, you can find yourself without the cash to pay bills despite making sales you knew were profitable. You may also be startled to discover that solid cash flows from sales deliver little profit.

 

A cash flow forecast tracks cash flowing in and out of your business. The timing of these flows enables you to identify cash-rich and cash-lean periods. This helps make the right decisions, such as buying assets or preparing for cash shortfalls.

 

Cash flow is essential to the survival of your business – arguably more so than profit in the short term. Profit may be necessary for the longer term, but cash is needed to pay bills and operating costs quickly.

 

For example, if you're a plumber with reasonable cash reserves, you can survive until your business becomes profitable. However, if your business runs out of cash, you'll need to find a solution quickly to avoid going bankrupt.

 

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Topics: Construction Cash Flow, Cash Flow, Construction Accountant Who Listens, Contractor Cash Flow Problems, Contractor Tips, Improve Construction Cash Flow

Cash is king! Construction Company cash flow is the movement of money in and out of your Construction Company; these movements are known in accounting circles as inflow and outflow. Inflows for your Construction Company primarily come from selling goods or services to your customers, but keep in mind that inflow only occurs when you make a cash sale or collect on receivables. Other examples of cash inflows are borrowed funds, income derived from sales of assets, and investment income from interest.

Outflows for your Construction Company are generally the result of paying labor, material, other direct and indirect costs of goods sold, and overhead expenses.

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Topics: Construction Cash Flow, Cash Flow, Construction Accountant Who Listens, Contractor Cash Flow Problems, Contractor Tips, Improve Construction Cash Flow

Starting a construction business is not for the faint of heart. A certain level of stress comes with ensuring your company's success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.

With good planning and strong business practices, you can avoid the pitfalls and drive your trade business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you.

1. Poor cash flow

Not bringing enough money in is the main reason why businesses fail. You must have more money coming in than is going out, or you're on the express train to bankruptcy. This might mean increasing your prices, decreasing costs, or combining the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income. 

 

Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there's a problem–or to prevent one before it happens. The earlier you catch a cash flow problem, the better.

 

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Topics: Construction Accountant Who Listens, Contractor Tips, Bankruptcy, Construction Company Bankruptcy

Most business owners receive plenty of well-intentioned advice and 'helpful opinion' from family and friends. However, good business advice spoken from commercial experience is another matter entirely.

That's not to say it's hard to find, but finding a reputable source in the Internet age is sometimes less than straightforward – especially if you have a specific problem to solve and limited time.

This is why, for good times or bad, developing a network of peers or seeking out a business mentor can be a great idea.

 

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Topics: High Profit Repeat Construction Clients, Construction Accountant Who Listens, Clients or Customers, Contractor Tips

Raising prices can be a sore subject. Many construction business owners like you assume doing so will spell the end of your competitiveness. But by not raising prices, you're simply letting inflation and your suppliers' maintenance of your margins quietly eat away at profitability. The bottom line is that costs will always rise long-term - at least with inflation.

That means you have to pass on the costs to your customers or consume those costs yourself to the point where one day, you'll have to either suddenly raise prices or accept the eventual failure of your business.

The worst thing you can do is avoid measuring your costs by sticking your head in the sand. Cost rises will catch up with you eventually, so take action to maintain your margins.

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Topics: Marketing Tracking, Construction Marketing, Construction Accountant Who Listens, Contractor Marketing, Contractor Tips, Pricing Jobs, How To Raise Prices

A USP (Unique Selling Proposition) is a compelling reason for your target market to choose your construction business over your competitor's. Examples range from cutting-edge service and product features to simply being more convenient and easier to find for the target market.

 

But it all boils down to meeting your local market's needs in a more accurate and improved way than the competition and being able to market these points more effectively.

 

By doing this, your business can stand out in the marketplace with a strong reputation attracting more clients.

 

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Topics: High Profit Repeat Construction Clients, Construction Accountant Who Listens, Clients or Customers, Contractor Tips

When you go into business as a tradesperson, you often focus on performing your trade to the best of your ability – as it should be. With time, the quality of your work will speak for itself, which is the most valuable testimonial of all.

Before the internet was commercially available, just as many experts advised contractors about the layout and design of yellow page ads and which books to spend money on, I say you spend money because that is what it was - Marketing.

Many of us who owned and operated construction companies spent thousands of dollars on these experts. Based on their recommendations, we spent tens of thousands of dollars annually in full-page yellow page ads as close to the first position.

 

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Topics: Marketing Ideas For Contractors That Work, Marketing Tracking, Construction Marketing, Construction Accountant Who Listens, Contractor Marketing, Contractor Tips, Inbound Marketing For Contractors

How often have you hired someone with the expectation that they know how construction works, and then you found out they did not know about it? You are a master in the construction industry, so you recognize what to look for in your particular field and quickly observe if someone has the skillsets, and you proceed accordingly.

You know what happens when you send your best Rough Carpenter that you pay piece work for framing spec from the ground up in all kinds of weather and working conditions to install some custom-made cherry wood cabinets with gold plated pulls and knobs in the home of your best client (who happens to be in the wealthiest neighborhood in your town). It is not a pretty sight.

Have you pictured a crew with muddy work gear and boots stepping onto your client's pristine floors? The dirty secret is that Tax Accountants operate like Rough Carpenters because they work fast and furious, and they are paid piece work. The main difference is that they earn the bulk of their annual income in three and a half months. This means they do not waste any time going through your receipts to ensure you get all the deductions you are entitled to.

 

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Topics: CPA Vs Construction Accountant, When Contractors Need A CPA, Construction Bookkeeping, Construction Bookkeeping And Accounting, Construction Accountant Who Listens, CPA, Contractor Tips

As the year ends and another page is turning, it is important to learn and listen from trusted people who have come to assist you and guide you in your personal and professional endeavors. Your construction business's financial board, mainly your accountant, is one of them.

 

Ideally, you and your accountant are more than just an "adviser" and a "client" to each other. With your combined skills, expertise, and a shared mission to support a thriving business, you're more like strategic partners. 

 

The key to achieving success in any partnership is, of course, healthy communication. Before the year ends or at your next meeting, be sure to ask your construction accountant these four important questions:

 

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Topics: Construction Business Consulting, Construction Accountant Who Listens, Business Consultants, Contractor Mentoring, Contractor, Contractor Tips

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Contractors Need Help Understanding Role of Accountants

Contractors should have two primary accountants. One is the Tax Accountant the other is your Construction Accountant. Tax Accountant who does the Annual tax return for your business and your personal tax return.

These are two of the Five Board Of Advisors Successful Highly Profitable Contractors Use To Operate And Grow Their Contracting Company Cash Flow And Profits.

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Topics: Construction Accountant Who Listens, Tax Accountants