What’s Holding You Back from Getting Your Financial House in Order?

Facebook
Twitter
LinkedIn

Is the financial uncertainty of your restoration business keeping you up at night? If that’s the case, know that you’re not alone, and there’s a way out of the fog. I get it, numbers aren’t naturally exciting for everyone, but you know what is? The freedom and peace of mind they can bring you. Finding numbers intimidating is natural and more common than you’d imagine.

As restoration business owners, we’re no strangers to tackling tough challenges and change head-on. Yet, there’s an area that seems to elude many of us—the element of numbers and financial management.

When I sat down to write this, the idea of mindset was the first thing I thought of. So often, we talk ourselves into the idea that the challenge, whatever it is, will be too difficult for us or we tell ourselves that we’re not the kind of person that can do it. When it comes to financial understanding, you might be telling yourself, “I’m not a numbers person”, “I was never good at math” or “I’m just trying to get through the day, I don’t have time to get my numbers in order, that’s a job for my accountant.” Whatever you’re telling yourself, I want to urge you to stop it now and open your mind to the idea that you can absolutely do this and there’s a big enough reason to take on the challenge.

It’s not uncommon to avoid what we don’t understand or find enjoyable. When it comes to the numbers, maybe you’re avoiding them for both reasons. But let me assure you, diving into your financials won’t be as daunting as you might think. Ok, it might be daunting in the beginning but for most of my clients, that feeling goes away pretty quickly. It gets replaced with a feeling of calmness because now they can truly see what’s going on financially in the business, they are able to put a plan together to take action and improve the situation.  And even if I’m mistaken and your first reaction is more like “Oh, $#!%, this is more difficult than Scott said it would be”, I have a feeling you’ll forgive me once you get through it.

Take it from me, the payoff is worth it. It didn’t happen overnight but, over the course of the next year, I gained peace of mind, new insights into my business, my income increased, and the value of my business grew. Here’s another comforting thought for you . . . You won’t be alone while you’re on this path to financial understanding. It’s a journey already taken by many of your industry peers. Many have already gone through the process and many more will follow.

Let me get back to mindset for a minute. As a leader, my perspective has always been simple: when things are going well, I credit the team; when they’re not, I blame myself. As a business owner, I knew that I had the responsibility of casting the vision for our future, shaping the culture of our team, and owning the numbers by thoroughly comprehending them. Just like you, I didn’t have all the answers when I started my business. Let me correct myself . . . I didn’t have ANY of the answers. Tracking numbers the “right” way and using data to inform my decisions were unfamiliar concepts, and then, I tackled the challenge of learning and development in this area.

The motivation for my understanding of tracking labor to jobs came to me during my first two years in the business when my company was mitigation-only. In the early days, I was closely involved in every job. I knew the numbers like the back of my hand. Little did I realize, I was mentally running Profit & Loss statements! I couldn’t have picked a real, QuickBooks generated P&L out of a lineup at that point! As we expanded, hired more technicians, and took on more projects, I couldn’t be present on every job site anymore. I had to start relying on others—I had no choice. It was a good problem to have, and it was definitely a problem.

That’s when I promoted two technicians to production managers to handle field operations. In some ways, it was fantastic—I was no longer in the field. However, that’s when the trouble began. No longer in touch with the daily field operations, I was unable to monitor profitability, and the P&Ls in my head weren’t cutting it anymore. Can you guess what followed? Yes, profitability plummeted.

It wasn’t an overnight disaster, rather, a two-year journey of profitability decline. The further I distanced myself from job awareness, the more the bottom line suffered. Sleepless nights became routine as I struggled with worry and uncertainty. I found myself at a loss, with no reliable reports to analyze the situation or come up with solutions. I knew the potential profitability levels for my business, but I was clueless about the path to achieving it. Finally, my frustration grew to the point where I made a decision. I changed my mindset and became determined to figure it out—to break the cycle.

If this sounds like you, let me share a real-life example.

Case Study: A Second-Generation Owner Turns Things Around

Last year, I got a call from a guy who was a second-generation owner of a 30-year-old restoration business. He and his team had done a great job growing revenue but were hitting a wall with profitability. At the time, he couldn’t even open QuickBooks, let alone make sense of any reports. Sound familiar?

After our conversation, he decided to do something about it. We teamed up and pulled in his CPA. He even found a local expert to train his admin team on QuickBooks. Fast forward to today, he’s not just running P&Ls, he’s breaking them down by individual jobs. His profitability? Up by over 8 points on repair jobs. The other unexpected benefit has been better team member engagement.  When people understand the target, they tend to get more interested in hitting it.

Why did the turnaround happen? Because he started measuring, setting targets, and holding his project managers accountable. All those financial unknowns that were causing him sleepless nights? Gone. Replaced by hard data that he and his team act on.

Change is often challenging, but people rarely change unless the pain of staying in the current state outweighs the perceived (or real) pain of change. Let’s explore your current pain, and then consider the anticipated pain of change. What’s wrong with the status quo, and what’s the cost of maintaining it?

Let’s be honest, we often need a ‘why’ before we tackle a ‘how’. Here’s a quick rundown of what you’re risking by not getting a grip on your finances and what you’ll need to face when you decide to change.

The Pain of Staying the Same:

  • Lack of Improvement: Staying in the dark about how to improve your situation.
  • Worry: As a result of not understanding how to fix the problem, you end up worrying about your situation
  • Missed Profitability: Failing to maximize profitability potential.
  • Missed Income Opportunity: Inability to incentivize employees based on their job performance.
  • Undervalued Business: Shortchanging your business’s value when the time comes to sell.

The Pain of Change:

  • Learning Something New: Learning the basics of business finances/financial literacy.
  • Technical Work: Some involvement with your accounting software (likely QuickBooks), payroll company, and your production management/CRM platform.
  • Adjusting Payroll: Potentially changing payroll companies.
  • Implementing Clock-Ins: Setting up clock-in and clock-out procedures for jobs.
  • Budgeting and Tracking: Setting budgets for rebuild jobs and tracking labor and material costs for all jobs.
  • Discipline: Establishing a consistent system and ensuring your team follows it. There’s also discipline needed for the owner in terms of regular report review.
  • Ownership: Truly owning the financial management of your business – owning the numbers.

I guarantee this journey won’t be the toughest you’ve undertaken, personally or professionally, and the benefits will outweigh the pain of the initial learning curve. So, what’s next? You’ll need assistance, and there are various avenues to acquire it—books, videos, CPAs, experienced bookkeepers, and seasoned guides who have walked this path before.

So, how are you feeling about this?  Are you ready to put this challenge behind you?  Are you ready to start taking action to change your situation?

Before you move on, consider these three action steps:

  1. Master the Basics: If you don’t know where to start, there are plenty of resources (like those I just mentioned) that can help you understand the basics of financial management and how to use QuickBooks.
  2. Team up with Financial Pros: Don’t hesitate to pull in experts. Get your CPA involved and consider hiring an experienced bookkeeper to make sure you’re set up for success.
  3. Consult an Industry-Specific Coach: If you’re struggling to implement these changes, remember that you don’t have to go it alone. An industry-specific coach can provide invaluable insights to fast-track your financial understanding and profitability.

Make 2024 the year you commit to understanding your financials. You will be glad you did! 

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

Scott Miller

Scott Miller is a restoration business coach. For the past 14 years, he has been helping restoration business owners increase their profitability and reduce their importance to the day-to-day operations. He has owned, operated, and sold multiple businesses. Scott started his property damage restoration business in 2005 as a franchisee of a national system, became independent of the system several years later, and sold the business in 2017. Scott can be reached at scott@thegrowthleague.com, 610­263-2772 or https://thegrowthleague.com.

 

Latest Posts
Most Popular

Hey there! We're glad you're here!

This content is only available for subscribers. Please enter your email below to verify your subscription.

Don't worry! If you are not a subscriber, simply enter your email below and fill out the information on the next page to subscribe for FREE!

Back to homepage