If You’re Not Measuring, You’re Not Managing.
Imagine building a house without a tape measure. You kinda guess at 92 5/8″. You eyeball the door and window framing to confirm it’s square and true. You drill the waste hole for the toilet “that far” off the wall. You just make the truss set “work out”.
You wouldn’t do that.
But that is exactly what you are doing with the finances of your business if you haven’t selected a set of financial reports about the performance of your business to follow rigorously and compare periodic results to know where your business stands.
This course will help you select and understand the foundational numbers that will disclose how your business is doing.
First, I introduce the Nine Numbers and demonstrate how to read them to answer three important questions about your business.
Second, we take a look at how to use building cost benchmarks to improve the financial performance of your business.
Then we look at how even rudimentary financial analysis can provide insights into business performance.
Just as the measuring tools you use on the jobsite assist in your building processes working better together, measuring and bench-marking the financial performance of your business can lead to a much more successful outcome.
Sections in this course include:
The Nine Numbers
- Introduction to the Nine Numbers
- Three Statements That Provide the Nine Numbers
- The Inter-Relationship of the Nine Numbers
- Three Questions That the Nine Numbers Answer
- Reading the Cash Flow Statement
- Is My Construction Business Going to Survive?
Building Cost Benchmarks
- Introduction to Building Cost Benchmarks
- Introduction to the Break-Even Financial Model
- Calculating Break-Even
- How Much Can I Afford to Pay Myself?
- What If I …? Scenario 2
- What If I …? Scenario 3
- Perform “What-If” On Your Own Construction Company
- Additional Resources
Free 3-month Access
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The Nine Numbers
Introduction to the Nine Numbers
These nine numbers can help you manage your construction business better and more profitably. See where they come from and how you can use them.
Three Statements That Provide the Nine Numbers
A discussion of the three components of wealth-building and the language of business.
The Inter-Relationship of the Nine Numbers
It would be nice to understand how the Nine Numbers work together to provide the financial picture of your business. Here’s how/
Three Questions That the Nine Numbers Answer
Your business is not going to survive without cash. Your business is not healthy without profit. You are not getting wealthy unless your net worth is increasing.
Reading the Cash Flow Statement
Reading the financial statements should be just like reading a book. What does your cash flow story tell you?
Is My Construction Business Going to Survive?
Is my business going to survive?
Do I have more cash coming in than going out?
The Cash Flow Statement provides those answers.
Building Cost Benchmarks
Introduction to Building Cost Benchmarks
Demonstrate to the prospective client that you have a handle on this overwhelming task of building their new home, that you can manage both the financial and time constraints to deliver the product. This template and worksheet will help.
Introduction to the Break-Even Financial Model
Of all the financial decision models I have studied, Break-Even Analysis is the most useful. Used correctly, it can tell you what you need to know about the financial decisions you must make as a business owner.
Just grit your teeth and get through this lesson. It provides the basis for the good stuff that follows.
How Much Can I Afford to Pay Myself?
The Second Commandment for running your Construction business says “You shall only play in a game worth winning”. How can you be sure your game is worth winning?
What If I …? Scenario 2
What if I spend $40,000 for a site manager who will help me reduce direct costs by 5%, at the same sales level as last year? How will that affect my profit?
What If I …? Scenario 3
What if I hire that site manager, get the 5% improvement in direct costs, can concentrate more time on sales, and sell one more house at $250,000 .
Perform “What-If” On Your Own Construction Company
Get out your own numbers and ask them a question.