Cash, Measurements and Accountability

1. Cash, Measurements and Accountability Business Mentors

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

3. Database Programs • ACT • Chronicle • JPP • Access

4. Accounting • QuickBooks • PSA • Master Builder • Timberline • A-System • MAS 90

5. Estimating • Xactimate • Blue book • Boeck

6. Database program • Purpose • Measure job status and progress • Track sales and estimates • Track marketing and link to jobs

7. Accounting • Profit and Loss • WIP • Accrual • Standard chart of accounts • Depreciation

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

9. Key Measurements • Job Costing • By individual • By job type • In progress • Completed • Sales • By job type • By individual • Compare to goals

10. 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?

11. 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

12. 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

13. 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

14. 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

15. 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

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

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

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

19. What to Measure • Sales • Invoicing • Cash • Customer service - every job • Gross Profit • Breakeven

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

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

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

23. Cash • Weekly barometer • Payroll, A/P • Needs and targets • Budgets and expectations

24. 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

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

26. Improving Margins • Travel • Materials • Shop time • Poor project management • Completion • Not always the estimate

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

28. Employee Profiling Where are you putting your effort? • Stars • Shooting stars • Falling stars

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

30. 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

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