Good contractors keep accurate records and manage cash flow. Great contractors review data with experience and insight in order to better understand their firms' performance and identify areas for improvement.



Computers are great at tabulating numbers. They've made it possible for contractors to keep track of far more information than earlier generations would ever have thought possible. Today job costing, estimating, and accounting can be done with an amazing degree of accuracy and detail.

But managing your company's finances goes beyond simply keeping track of income and expenses and making sure that more money comes in than goes out. We need to be applying intelligent conclusions to our findings and making appropriate choices daily. That requires an understanding of financial statements and the ability to use that information to make better decisions, both short and long-term.

For example, compare day-to-day productivity with long-term productivity. When you include call-backs and reworks in performance, you might find it better to budget additional hours upfront to get the job done right the first time.

Also, along this line, how many times have you started into a job and realized that you had bid the job much lower than you should have bid to make a profit, but after realizing your error, jumped into the job on "all fours", took the "bull by the horns" and managed to squeak out a meager profit? After getting by with the skin on your teeth, you vowed never to get yourself into that situation again only to find yourself there sometime in the future.

We have a tendency to finish the problem job and go right on to the next job without considering the consequences of failing to properly identify the problems and mistakes that we made with the last bid and correct them BEFORE we have to deal with them on the next bid.

We have all heard the saying, "Insanity is doing something the same way over and over again and expecting different results.Unfortunately, it would appear that many of us are pointing fingers at what someone else may or may not be doing, but are not closing our own barn door concerning the history of our own estimating bids versus our actual results on the job!

Forecasting is another key activity. It might be considered planning for future financial management. While no one can predict the company's future with certainty, it's important to make some thoughtful estimates from time to time. Those 'best guesses,' such as whether to buy or lease equipment or improve your internal computer software tools, can be factored into decisions made each day.

A truly great manager realizes and studies the factors that create successful construction projects, versus the shortcomings that lead to failures, and quickly find that "squeezing a dollar" too much today can be "penny wise and pound foolish" tomorrow when they have to spend far more to correct what they could have averted with better money management at the beginning of the project. By actively managing the company's financial affairs rather than just keeping good books, contractors can build and maintain a strong foundation for future prosperity for both the company and its employees.