- Cash is king! - There isn't much to explain here. As a contractor, you have to know your cash position every day. No cash, no business. Take on more business and cash will decrease. Will your reserves sustain the growth?
- Every $1 of new sales requires some amount of capital - This relates to the cash comments. It is very difficult to stay ahead of working capital requirements without additional capital to support growth. Take on work beyond your plan limits and you are asking for trouble.
- Inspect, inspect and inspect - You have to run the business, which means knowing what is going on each and every day. How you do that is up to you. You can inspect on your own or have your foreman supply a report for your review. If you don't keep a watch on the important stuff, it will sooner or later become a problem.
- Time is money - This statement has never been truer than in the construction business. They even have TV programs based on this exact topic. Construction work needs to get completed on budget, which means on time. The more time it takes, the less you make.
- Plan out your work for the period and stick to it - This sounds simple enough, but it isn't. There are too many distractions contractors face that make this goal difficult to achieve. Discipline is the key to making this happen. If you don't have the make-up to follow this course, find a partner who does. Without discipline, the desired results will not happen.
You have a tough business to run. But you can avoid a lot of the pain that goes along with it - and make money - if you focus on what you do best, work within your financial framework and keep your eye on the ball every day.
Garry Bartecki is director of dealer/distributor services at BDO Seidman, LLP of Chicago, as well as a consultant to the AED. He has also worked as an independent CPA and consultant to equipment dealers. He can be reached at (312) 616-4677 or firstname.lastname@example.org.