Business owners must have a firm grasp of company finances to make decisions in the future. This is especially the case for those in the restoration industry. Understanding revenue streams, profit margins and where expenses are going allows the owner of a restoration company to devote more time and effort into the areas of business that need the help. Once finances are in order, the business can determine its best growth strategy moving forward.
One area where understanding finances can be tricky is attempting to differentiate between parts of a business. Certain teams or groups within a company may spend more than others, but that part of the business could also be responsible for bringing in more profits than any other part of the company. For an owner, understanding what is responsible for both the spending and acquisition of money is highly valuable.
Cloud-supported software makes understanding finances easier for business owners, as technology can analyze information quickly and give helpful insights. For those in the restoration industry, the best cloud system is DASH, by Next Gear. The software has an in-depth reporting process so that at the end of the year or completion of a job, a restoration company’s owner can understand where money is being spent and how money is coming in.
Given the complexities involved with managing money, a business owner who makes a financial plan will be at an advantage when making important decisions down the road for his or her company.
Measuring cash flow
The National Federation of Independent Businesses broke down some keys for business owners who are looking to improve their understanding of finances. The NFIB stated one top priority was measuring cash flow and projecting how much money will be coming in down the road. This type of data is necessary within an in-depth financial plan.
“An intelligent cash flow projection helps a company plan for the future.”
Cash flow is revenue subtracted by expenses, the total coming out to how much profit a company brings in overall. An intelligent cash flow projection helps a company plan for the future and determine if more staff or resources are needed. If a company believes it will be needing more employees for a job, an accurate cash flow projection will let executives know how much extra room in the budget is left for hiring staff. Conversely, if the projection show a likely decline in revenue, a business owner can work to determine how to cut costs.
DASH helps a restoration business make these decisions with information. The software tracks finances continuously, so owners can see when cash flow is strong versus the times it dips. And because DASH is in the cloud, executives can review the data any time they want, from anywhere. Because cash flow can change suddenly, having a system that stays up to date allows a restoration business to always be ready for the next move.
Review specific times
Sometimes it is useful for a business owner to see the expenses and profits a company has made over the course of an entire year. However, that’s not always the case. There are occasions when narrowing in and focusing on a specific time frame or project is more useful, especially for planning purposes. If a company can determine when business was at its best, or when it required the largest staff, it can be better prepared for the next time that situation arises.
Many restoration companies are busy in the spring, after a long winter has taken its toll on buildings. Instead of studying what expenses a company needed to make over the course of 12 months, or what equipment was needed during projects in the fall, a smart restoration business will only analyze its finances from the specific period it is investigating.
“A monthly or quarterly budget can help the owners of a restoration company plan accordingly.”
A monthly or quarterly budget can help the owners of a restoration company plan accordingly for the future. If a business knows it will be busy come spring time, it can look back at previous financial reports from that season and project how much money it will bring in. If the season starts out slow, maybe the company will adjust its marketing or advertising to attract clients sooner.
Entrepreneur magazine explained that a monthly budget has other values besides looking back at a company’s history. By charting finances by month, an owner can see how their forecasts compare to actual results, which will help future projections.
DASH comes equipped with date-range searches, so that restoration business owners can find the necessary information they need. The software also tracks invoices and bills, so jobs that are in-progress can be accounted for when analyzing what the company is doing during a specific time period.