How to Measure Gross Profit for Construction Businesses
“Our construction company has commercial and residential clients. Commercial projects last longer and use up more resources. Forecasting profits can be a real challenge. Can you help?” Forecasting gross profit can be challenging, but there’s an easy way to do it. If the owner separates revenue and cost of goods sold expenses into two categories […]
Protecting your business from risky clients
We just got clobbered by a risky client who went under, taking our receivables with them. We’ve gone from having tons of money in the bank to being very thin. Since this was a sizable account, it’s going to be hard to replace. We want to learn from this experience. What should we have done […]
Employee Compensation Strategy
We have an employee compensation issue that keeps stretching our strategy limits. Asks for reimbursement of expenses that we don’t usually reimburse. Frequently requests salary increases. Asks for special favors regularly. Tends to take it personally, as if we’re not meeting his needs. I need to realize it’s just who he is and draw the […]
Credit line is up for renewal
“Our credit line is up for renewal and our bank is dragging its feet. I’m concerned we may not get our line renewed and without it, we’re sunk. Any suggestions?” A plan to manage debt is a key component of your small-business growth strategy. When we track small-business growth, we see that reducing debt […]
Weighing in on mid-year bonuses
“Things are looking up. Right after we get through June, I want to give my employees a mid-year bonus. We didn’t give raises or bonuses last year. We are now doing much better and I want to show them their hard work is bearing fruit. We have around 30 employees, from entry level and […]
Mark up or gross margin? Which is better?
“What’s the difference between markup and gross margin? Which is better to use? I was told our gross margin percentage is much smaller than our mark up percentage. That disturbed me as I thought they were pretty much the same! Now I wonder if we’re in control of our costs and profit as much […]
Cash-flow crunches in construction
“We’re in construction and cash flow is really stretched, making it so much harder to run the business and stay positive about what we’re trying to accomplish. I’m tired of playing this game over and over, year after year.” Especially in a seasonal and cyclical business like construction, you’re going to encounter cash-flow crunches. […]
Billing for accounts receivable
“Clients are going past due. Our standard billing terms are 30 days. We have a clause in our contracts that we can bill interest at 30 days, but we’ve never done that. What do you suggest we do to get paid?” In tough economic times clients stretch out what they owe to many of […]
Planning to thrive
“I want to be extra careful with the company’s money this year. What are some mistakes I could make and how do I avoid them?” This year there will be less room for error, and fewer outside ways to bail out problems. Don’t expect things to work out according to plan. Watch what’s going on […]
‘Tis the season to be frugal
“What’s the story this year with client gifts, employee bonuses, etc.? What are you seeing other companies doing? We’re in good shape financially, but careful about what we’re spending at the moment. I would be interested in having another perspective. Thanks.” Discretionary spending is something just about every business owner is taking a good hard […]