If a business’ finances need help, it is symptomatic of a business owner who is looking at their business from the wrong end. Similar to riding a horse facing backward, you may know where you have been but have no idea where you are going—until it is too late. Here are my top three steps to turning your business around.
Change your focus. When we changed our focus from P.A.M. To M.A.P, everything changed, it was like turning on a money faucet. It is not enough to work night and day, rely on the kindness of others to market your construction company, and ignore your financial statements. The key is to focus on M.A.P. = Marketing First, Accounting Second, Production Third.
Get QuickBooks desktop in the cloud or Xero. Both of them are automatically backed up, and you can access it from any web-enabled device including Apple. Set it up for your particular business model and include the 5 KPI Icons. There are roughly 60 types of construction businesses like General Contractor, Handyman, Remodeler, Trade Contractors; each one has different accounting requirements.
The biggest mistake a contractor can make in their financials is having no accounting system, or trying to make do with QuickBooks Online, Freshbooks, or some other cheap accounting software. Good accounting software, correctly set up and maintained is one-third of their business. Without it, there is no way to get useful financials. For more information, check out the pros and cons of top accounting programs.
Put together a formal Business Plan and refer to it early and often. Everything changes, so set aside a day at the beginning of every calendar quarter to review and update your business plan as needed. A good business plan is a roadmap every highly profitable contractor, and other business owners, uses to get where they are going.
I cover this, my 5 KPIs for mastering accounting, and much more in Master Accounting Basics: Contractor Edition premium online course starting on April 23rd.