Answer: You don’t have to be an accountant to understand the financial health of your business, but you do need a good understanding. It’s important to remember numbers are more meaningful when compared to something:
• Compare current month to the same time last year. Identify variances year-over-year. Do they make sense? Is the company growing? Are costs in line with revenue?
• Compare current month to the budget. Is the company meeting budget? If not, develop a plan immediately to correct deficiencies. If the answer is yes, thank your team for a great job!
• Compare current year-to-date to the same time last year. Reviewing year-to-date information ensures the company continues to work to make up any lost ground in previous months, if necessary.
• Repeat the same analysis for each trade you manage. Are all departments hitting their revenue and income plans or does one cover for another? Analysis by department ensures all departments carry their own weight.
• Compare financial data to other contractors.
Jodi Peter guides Nexstar members to their vision of success through setting and exceeding goals. Prior to Nexstar, Jodi successfully led a large plumbing, heating and air conditioning business. To learn more about Jodi and the Nexstar Coaches, visit nexstarnetwork.com and click on Member Services to find our coach link. To submit questions, email firstname.lastname@example.org.
Publication date: 2/11/2013