Cash, Measurements and Accountability

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Cash, Measurements and Accountability

• Business Mentors

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Measurements

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

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Database Programs

• ACT
• Chronicle
• JPP
• Access

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Accounting

• QuickBooks
• PSA
• Master Builder
• Timberline
• A-System
• MAS 90

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Estimating

• Xactimate
• Blue book
• Boeck

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Database program

• Purpose
• Measure job status and progress
• Track sales and estimates
• Track marketing and link to jobs

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Accounting

• Profit and Loss
• WIP
• Accrual
• Standard chart of accounts
• Depreciation

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Accounting Reports

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

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Key Measurements

• Job Costing
• By individual
• By job type
• In progress
• Completed
• Sales
• By job type
• By individual
• Compare to goals

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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?

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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

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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

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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

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Banks

• Where is there money?
• Understand your financials - esp Balance Sheet
  -the bankers do
• Accurate and timely financials
• Wont lend when you need it
• Track record and consistency
• Relationship built on trust

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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

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What do you want?

• Use your loan - dedicated funds
• Not for capital purchase
• Operational cash
• 30 days revenue
• 80 of current receivables

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Capital Expenses and Cash

• Stick to your budget
• Understand the ROI
• Rent
• Lease
• Bank Financing - not operating line

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Accountability

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

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What to Measure

• Sales
• Invoicing
• Cash
• Customer service - every job
• Gross Profit
• Breakeven

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Figuring Breakeven

• BE overhead/GP
• Example
• 100,000 overhead
• 50 GP
• 200,000 sales

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Sales

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

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Invoicing

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

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Cash

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

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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

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Gross Profit

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

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Improving Margins

• Travel
• Materials
• Shop time
• Poor project management
• Completion
• Not always the estimate

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Accountability

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

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Employee Profiling

• Where are you putting your effort?
• Stars
• Shooting stars
• Falling stars

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Accountability Tools

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

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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

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Tips for Success

• Make adjustments
• Get out of the trenches - use the talents of your
  team
• Plan and communicate
• Requires objective measurements