“Overhead schmoverhead! Who cares?” Your profits  care.  Your cash flow  cares. And if you want to stay in business long-term, you   should too . Most contractors understand what profit is and why cash flow matters. However, the critical junction of the two often gets overlooked: your overhead and how you allocate it when pricing jobs. Overhead isn’t just a number your accounting professional tracks. It’s a real cash eater  if it’s not adequately accounted for—and it directly

The Bridge You can walk onto several construction job sites and find a few tools that serve multiple purposes. For instance, a power drill   can be used for drilling holes, and by changing the bit, it can also be used to tighten or loosen screws. Similarly, a pipe wrench can be adjusted to various sizes, and a circular saw performs different tasks with a blade change. In each case, the tool is the bridge. Same tool, different uses. In construction accounting, the tool known a

In a few recent posts (listed below), information was presented to help construction contractors understand how implementing the right systems in their financial dealings allows them to take control and steer toward building a debt and risk-resilient construction business.   The Hidden Cost of Debt in Subcontracting (Understanding actual job costs up front reduces the need to borrow just to stay afloat.)   Budgeting as a Financial Risk Management Tool (A proactive budget le

We’re exploring the difference between being profitable on paper and having cash available. It’s About Those Apples Do you remember those long-ago lessons concerning addition and subtraction where you were told you had ten apples and asked if you gave four apples to your friend, how many would still be in your possession? Recall it was about the plus (+) or the minus (-) and the equals (=).  In today’s lesson, boys and girls, the question is, “If you have ten apples and promi

Weak cash management habits can push subcontractors into risky financing. Yet, healthy reserves allow construction contractors to regain control of their cash flow management.  So, the big question is – how do construction contractors get to the point of having a healthy reserve when, by gosh and by golly, they have to borrow money to meet payroll, or pay the taxes, or purchase the equipment, or – you name it – spend money? They use a cash management tool, of course!  And I w

The use of WIP reports for construction contractors is much like that of a lighthouse for guiding ships. The National Oceanic and Atmospheric Administration (NOAA) has this to say about lighthouses: “The messages of these long-trusted aids to navigation are simple: either STAY AWAY, DANGER, BEWARE! or COME THIS WAY!”  For construction contractors, percentage of completion WIP reports act like a lighthouse and reveal much concerning what’s ahead. By paying attention to the si

Just as you take time to address risks on the jobsite, you must take time to address risk from a financial perspective. Learn why the...

Debt Feels Like an Easy Solution – But It’s Not! Got a cut on your hand? Clean it up, put on a bandage, and go about your day. But...

Talking About Construction Industry Robots You know about these “robots”: they’re all about technology. From drones to robotic PPE,...

Before we proceed, let’s define risk mitigation. Note that it  is NOT the same as risk elimination. Risk mitigation : the process of...

Site Preparation for Construction Project Estimates Project estimate  – a detailed prediction of the total cost to complete a...

Let’s break it down. Using your noodle  means using your intelligence, brainpower, and thinking ability. Using your books  means using...

Labor Burden Belongs Factual labor burden should be included in creating estimates because it affects how your construction business...

You, your construction company, and how you do business are all different from your fellow contractors. That’s because you (and your...

Figuring out what an employee costs means paying attention to all the price tags accompanying his or her base wage or salary. Those tags...

The Hidden Costs of Labor: Building a Better Labor Burden Most construction contractors underestimate labor burden because they don’t...

Understanding What Choosing a CPA Means Yes, you WANT someone who can prepare tax reports for your construction business (and many people...

When subcontractors find that pieces of the money puzzle are missing, it could be because they are pricing the same way their GC prices,...

In our last post concerning Margin vs. Markup , we told you that we would “show you how to convert markup to margin so you can price your...

This vs. That Because you’re in construction, you know the difference between certain things that many others often get confused about....