Business Builders Blog

Category: Get Confident in Your Numbers

Financial Clarity = Greater Profits

In the world of construction, a common pattern I’ve seen is a reluctance to look at financial data. This avoidance is often due to a lack of confidence in how to read your financial reports, AND/OR fear of confronting disappointing results.

The problem? This makes it nearly impossible to truly know if the markup and margin you plan for in bidding are coming to fruition on your company’s bottom line!

Not looking can significantly impede your ability to produce consistent profitability. Today’s post is about helping you have more clarity and confidence in your numbers so you can produce greater profits.

Understanding Your Financials: A Key to Success

In my experience with contractors, avoiding financial numbers is like ignoring the compass that guides your business. Your financial data—be it profit and loss statements or job cost analysis—is not just numbers; it’s a story of where you are versus where you aim to be.

The Transformational Story of Joe

Consider the case of Joe, a contractor who initially shied away from his financials. When we finally examined his data, we focused on crucial aspects like profit margins, overhead costs, and revenue trends. This process was eye-opening for Joe. By understanding the narrative behind his numbers, he gained clarity and was able to make strategic decisions to enhance his bottom line.

Embrace the Data, Even When It Is Daunting

The lesson here is clear: avoiding your financial data breeds stress and uncertainty. When you start to lean into your numbers, understanding them even when they’re not as favorable, you unlock the ability to make impactful changes. It’s about shifting from anxiety to a state of informed confidence.

Resources to Guide You

If interpreting financial statements seems daunting, don’t worry. I offer a range of resources, including instructional videos on my blog and YouTube channel, tailored to help you gain fluency in your financials. These tools are your first step towards greater clarity and the ability to positively influence your construction profitability. You can check them out here.

Your Path to Greater Profitability

Remember, understanding and acting on your financial data is your pathway to freedom, peace of mind, and control over your construction business’s profits. I encourage you to watch today’s video and check out the video on how to read and use your financial reports as a powerful management tool.

Embrace your numbers, put ‘profit first’, and start steering your construction business towards greater profitability.

uncover your true labor costs

In the construction industry, understanding your true labor cost is crucial. This was a hard-learned lesson for Mike, a seasoned contractor who thought he knew the full extent of his labor costs, but a detailed analysis revealed significant gaps in his calculations.

The Bidding Blind Spot

Mike’s first challenge was in his project bidding process. He based his labor cost estimates on easily visible factors, neglecting the deeper, hidden costs of his employees. This oversight led to bids that underrepresented the actual expenses, affecting the overall profitability of his projects.

Misleading Profit and Loss Statements

The second issue was in Mike’s financial reporting. His profit and loss statements gave an inflated view of his gross profit margin. The culprit? Rising employee benefits and a few other line items were not being allocated correctly. These should have been included in the cost of goods sold but were instead shown as overhead expenses.

Correcting the Course

To tackle these issues, we recalculated the labor costs in Mike’s bids to reflect the true cost of his employees. We then restructured his profit and loss statements to align these costs accurately under the cost of goods sold. This not only gave Mike a true picture of his gross profit margin but also guided him toward more accurate and profitable bidding.

Empowering Solutions

The below Video Tutorial and FREE Template I’ve provided here will guide you through the process of accurately calculating your fully burdened labor cost. Additionally, take advantage of the FREE Labor Cost Calculator template I’m offering. These tools are essential for ensuring your project bids encompass all relevant costs and your financial statements reflect the true health of your business.

Conclusion: Take Action for Financial Clarity

Now is the time to enhance your financial acumen. Watch the video, use the template, and start transforming your approach to project pricing and financial analysis. Share your insights with the construction community and let’s pave the way for a future of accurate costing and increased profitability!

Get your FREE Labor Cost Calculator Template and Watch the Tutorial Video now!

Embrace accuracy in your financial practices. Watch the video, apply the template, and join a community of savvy construction professionals dedicated to financial clarity and success. Your journey towards a more profitable business starts here!

Controlling Job Costs – Exclusive Insider Interview!

Today’s video is the grand finale of our “Plugging the Profit Leaks” series, and we’ve saved the best for last!

Get ready for an enlightening interview with Aaron Gordon, a seasoned general contractor with over 20 years of experience in the construction industry. In this episode, we’re diving deep into the crucial topic of how to control project costs and meet those bid-day profitability goals. You won’t want to miss this powerful finale!

In the fast-paced construction world, project costs can spiral out of control, causing headaches and lost profits. With Cost to Complete (CTC), you gain real-time insights to spot and address potential cost issues early on, allowing you to make smarter decisions and maximize profitability.

When you implement CTC, you’ll have found the secret to plugging the profit leaks on jobs and discovered how to build a stronger team, and a more profitable business.

Picture yourself confidently communicating with clients, backed by accurate budgets and a clear understanding of your project’s progress.

In this interview, Aaron shares his own journey with CTC, and trust me, his experience will hit home for you.

If you’re looking to take your operations to the next level, boost profitability, and build a thriving contracting business, this is the interview you don’t want to miss!

At the end of this video I’m sharing a special offer to get my book, The Profit Bleed – How managing margin can save your contracting business” for FREE – you just pay shipping & handling.  Why am I offering the book for free? Because I REALLY want you to have all the tools you need to generate HUGE success in your contracting business!

The book is not just another generic guide; it’s packed with real stories of contractors who faced and conquered the challenges of building profitable businesses. Inside, you’ll discover valuable insights, tips, and strategies to achieve bid-day profitability goals and build a thriving contracting business. AND, there are lots of proven tools and resources you can get at no cost to help you implement your learning!  Download links are in the book.

Watch the video and grab your copy of “The Profit Bleed now and see how you can take control of your bottom line.

Claim your FREE book now and start building a brighter future for your business! Just cover the shipping and handling, and let the journey to success begin: Go here to claim your copy: https:/theprofitbleed.com/free

How to Read a Profit & Loss

Welcome back to our series, “Plugging the Profit Leaks in Your Contracting Business.” Today, we’re tackling the mystery of financial statements. They might look like a puzzle of numbers, but they hold the keys to a successful contracting business.

In today’s video, we delve into two crucial financial tools: the Profit and Loss Statement (P&L) and the Balance Sheet – how to read them and use them as a powerful management tool!

The Profit & Loss is like a report card. It shows your income, expenses, and profit or loss over a year. Knowing how to read and use this report lets you have more control over the ROI of your operations.

The Balance Sheet, on the other hand, is a snapshot of your business’s value or worth from the time you opened your doors. Knowing how to read and use this report lets you have more peace of mind and ease around cash flow and when and how to have the financial resources available when you need them.

I understand financial statements can be daunting. But without them, you’re running your business in the dark. Understanding your P&L and Balance Sheet sheds light on your path to profitability, especially when you know how your numbers stack up to industry standards!

In this video, I break down these statements, pointing out potential red flags and providing you with a roadmap for how to read, interpret and IMPACT these numbers and the ultimate profitability of your contracting business!

And, in this video, I share with you industry standards for what kind of profit margins you want to be targeting in your contracting business!

At the end of the video, I share this powerful resource to help you evaluate your financial reports and see how your data stacks up against industry benchmarks – How to Read Financial Statements (with industry benchmarks)

Better Feedback for Soaring Contractor Profits

Welcome back – I’m thrilled to have you join me for our next video in the series on “Plugging the Profit Leaks in Your Contracting Business.” Today, we’re delving into the realm of accounting and job costing, unveiling the key to more efficient and timely project feedback—the ultimate tool for boosting project profitability.

Job costing can feel like a daunting task, making you want to avoid it altogether to save time. But picture this: an efficient and straightforward way to do job costing that not only saves you time but can also increase your profits by an impressive 5-10%!

Sound too good to be true? Let me assure you, it isn’t.

Over the years, I’ve had the honor of working with hundreds of contractors who’ve successfully tapped into this goldmine!

So, what’s the secret, you ask?

The answer lies with my distinguished guest, Diane Gilson from Info Plus Accounting. In this week’s video, you’ll get an insider look into how job costing can let you have more control over project costs, and how to kick-start the implementation of her tried and true job costing system.

The good news doesn’t stop there! Diane generously shares direct links to some priceless resources to help you get started on this journey. So, I urge you to take a moment, click and watch the video now.

Curious about the treasures Diane brings to this discussion? Here’s a sneak peek:

Watch the video, discover the secret to amplified profits, and start plugging the profit leaks in your contracting business today!

Stay tuned for the next video in our “Plugging the Profit Leaks in Your Contracting Business” series. We’ll be focusing on how to read and use your financial reports to improve the profitability and financial health of your contracting business. You won’t want to miss it!

Improving Field Production

Hey there! Welcome to the 4th video in my series called “Plugging the Profit Leaks in Your Contracting Business”! This time, we’re focusing on the most important part of your operations: production.

I’m excited to have industry expert Tom Houghton from Round Peg Solutions join me for this interview. Together, we’ll explore the top three areas where profits tend to leak in field production and, most importantly, learn what you can do to plug them!

But before we dive into the solutions, let’s take a closer look at the leak points we’ll be addressing:

  1. Clear Handoff from Pre-Production to Production: One major area where profits can leak is the handoff process. If critical project details get lost due to unclear communication, it can lead to costly errors and delays.  In this video, we’ll show you how to establish a transparent handoff process. By using a centralized platform where everyone can easily access project details, you can prevent information gaps and ensure a smooth transition.

  2. Reviewing Job Hours Burned to Budget and Labor Overruns: Controlling labor costs and accurately tracking job hours are essential for maintaining profitability. Many contractors struggle with this, which can result in unexpected overruns. That’s why it’s important to regularly review job hours and labor costs compared to your budget. And here’s a handy tip: automated time-tracking systems are your best friend! In the video, Tom will share proven ways to get your employees on board with using these systems and introduce some great tools to make time tracking a breeze.

  3. Plan Ahead and Avoid Emergency Mode: Effective planning is the key to avoiding last-minute emergencies that can eat into your profits. But we know that getting everyone to plan effectively is a challenge. That’s why we’ll show you how to simplify the process by capturing all project details in one central location. When everyone can access and contribute to the planning process transparently, executing a two-week look-ahead schedule becomes a piece of cake. Tune in to the video to discover some valuable tips from Tom on keeping all the critical elements in one place.

While technology can be a game-changer in streamlining processes, we both know it’s not a magic bullet. Tom will not only highlight the importance of leveraging technology but also address the biggest challenge: getting employee buy-in and making the most out of these tools!

Ready to tackle those profit leaks in field production? Watch the video now and learn some fantastic tips to optimize your operations!

Make sure to stay tuned for our next video in the “Plug the Profit Leaks in Your Contracting Business” series. We’ll be diving into the world of accounting and how you can leverage it to gain better feedback.