Cash, Measurements and Accountability Business Mentors

Measurements  Role of objective measurements in management  Growth without measurement  Foundation  Measurement Tools  JPP  Accounting program  Xactimate

Database Programs  ACT  Chronicle  JPP  Access

Accounting  QuickBooks  PSA  Master Builder  Timberline  A-System  MAS 90

Estimating  Xactimate  Blue book  Boeck

Database program  Purpose  Measure job status and progress  Track sales and estimates  Track marketing and link to jobs

Accounting  Profit and Loss  WIP  Accrual  Standard chart of accounts  Depreciation

Accounting Reports  Balance Sheet  What you owe, what you own and capital investments  Key ratios  Current  Debt to Equity

Key Measurements  Job Costing  By individual  By job type  In progress  Completed  Sales  By job type  By individual  Compare to goals

The King!  Cash  Weekly cash projections  A/R Reports weekly at least  Measure turns and compare to goals  Collect from a position of strength  Manage and budget capital purchases  Where do profits go?

Managing the Cash Crunch  Start with a budget  Short cuts and Let cash drive your plan  Buy or sell to business weakness  Equity partner  Banking relationship  Cash dance

Strategies for Speeding Cash  Ask and Collecting from strength  Types of jobs  Have a cash plan for jobs and implement  All have some downside  Close jobs  Manage the schedule - Deposits and deductible  Billing and invoicing  Profitability  Subcontractors and materials

Banking Relationship  Reality of cash in restoration  A/P and payroll - 30 days or less  A/R 40 days and over depending on the company

Banks  Where is there money?  Understand your financials - esp Balance Sheet - the bankers do  Accurate and timely financials  Won’t lend $ when you need it  Track record and consistency  Relationship built on trust

Your Banker - Your Partner  Educate on Business  Growth plan and strategy  Vision  Risks  Margins and potential  What you will do with the funds  Difference from the construction industry

What do you want?  Use your loan - dedicated funds  Not for capital purchase  Operational cash  30 days revenue  80% of current receivables

Capital Expenses and Cash  Stick to your budget  Understand the ROI  Rent  Lease  Bank Financing - not operating line

Accountability  Subjective vs Objective  Clear Expectations  Be accountable for your communications  When, where and how do measurements take place

What to Measure  Sales  Invoicing  Cash  Customer service - every job  Gross Profit  Breakeven

Figuring Breakeven  BE = overhead/GP  Example $100,000 overhead 50% GP $200,000 sales

Sales  Start with a goal - definition  Individual  Division and work type  Include change orders and supplements  Review every week  Sales meeting

Invoicing  Focus on Revenue generation  Complete jobs timely  Measure weekly  Leads to cash generation and profits  Quantifies production

Cash  Weekly barometer  Payroll, A/P  Needs and targets  Budgets and expectations

Customer Service  Most important measurement in company  Start with training and strategy - Strategies for Success class  Post job survey  Progress calls  Visit jobs - Trust but verify  Quantify measurements and celebrate success

Gross Profit  Budget  Measure in progress  Accounting function  Weekly in progress  Monthly completed jobs  Sort by estimator and job type

Improving Margins  Travel  Materials  Shop time  Poor project management  Completion  Not always the estimate

Accountability  Clear expectations  Frequent feedback  Formal  Informal  Fair and consistent  Based on Objective measurements

Employee Profiling Where are you putting your effort?  Stars  Shooting stars  Falling stars

Accountability Tools  Put resources toward opportunity rather than problems  Coaching for performance  Be fair, timely and consistent  Should not be a surprise

Putting it all Together  Timely and accurate measurements  Clear communications  Accurate timely information  Cannot growth without good reporting  Build your company around a good office manager  Know your baseline numbers  Know the industry expectations

Tips for Success  Make adjustments  Get out of the trenches - use the talents of your team  Plan and communicate  Requires objective measurements