Cash, Measurements & Accountability Business Mentors Phillip Rosebrook JR, CR

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

Database Programs Details: File management CRM Management performance Marketing reports and accountability Database programs that allow you analyze and parse data

Accounting Accounting programs used for job costing, key financial reports and cash reporting Look to integrate software applications but financial information from Accounting Many small business owners do not understand and not use financial statements

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

Balance Sheet Statement of what you owe and what you own Banker’s yardstick Expresses your finacial health Proper balance shows business acumen

Accountability Reports Monthly Balance Sheet Key ratios  Current (range)  Debt to Equity - 1:1 P&L A/R and A/P Cash flow reports Closed Job costing reports

Financial Reports Weekly reporting WIP Summary Job costing report New sales and invoicing Break by PM Goals YTD and MTD compared to goals Cash Status A/R

Key Measurements Job Costing By individual By job type In progress Completed Budget variance 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?

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 and 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 A new dynamic and future risks

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 “What gets measured gets done” Tom Peters Sales Invoicing Cash Customer service - every job Gross Profit Breakeven

Figuring Breakeven BE = overhead/GP Example $100,000 overhead 50% GP $200,000 sales Does not include Balance sheet cash entries

Sales Sales backlog helps see the future 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 Should mirror but lag sales

Cash Weekly planning Banks provide flexibility Do not create bad habits Money in vs money out Budgets and expectations Mortgage companies, third parties and delays Draw schedule, progress payments

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 Guidelines - cost based pricing and price based costing

Improving Margins Travel Materials Shop time Poor project management BUDGET! Completion Subcontractor pricing Not always the estimate

Benchmarks & Measurements Financial Overhead % of revenue Marketing % of revenue Sales and production - 10% and 25% Other measurements Turns on A/R days Rev/A/r = number of turns 365/# of turns = Av Days

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

Employee Profiling Where are you putting your effort?

Locating and Rewarding Strong Candidates Strong company culture draws good people Internet searches Utilize your network Staffing group

Rewarding Performance Competitive market compensation Bonus based on performance, service and quality Discretionary bonus Carrot vs Stick 1/2 Quarterly compensation with 1/2 paid at end of year Non - financial incentives

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

Putting it all Together Timely and accurate measurements Clear communications Accurate timely information Should not grow 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 and create synergy Plan and communicate Requires objective measurements Put in writing - it is the difference between said and done

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