Budgets

Concerned About Maximizing Your Business Value

Is This Your Situation: Are You Concerned About Budgeting for Your Construction Business?

Nicole Sithithavorn Blog Budgets, Construction

It is important to identify the factors that drive your construction company budget. The significant number of moving pieces can change the dynamics of your business quickly and without warning. And even a small alteration can completely the change the course of your company’s financial well-being. Let’s take a closer look at those essential factors.

Basic overhead costs. These include your utility payments, payroll costs, raw materials, rent, and more. The types of overhead costs will largely depend on a variety of factors surrounding your business model.
Soft business requirements. Have you also considered the soft costs of running a construction business? In today’s business climate you’ll need to invest in a website along with signs, advertisements, business cards, and social media.
Permits and licensing requirements. Additional costs of running your construction business will be required based on your location, state, or other governmental guidelines. You’ll need to consider these costs to remain compliant.
Employee costs. Regardless of whether your staff is permanent, temporary, or contract you will have a variety of costs related to their employment. It may include payroll or the use of a staffing agency that specializes in your industry.
Tools, supplies and inventory. There will also be the cost of the tools and supplies needed to conduct your day-to-day business. These costs may also include repair or replacement of these items as they are worn from use.
Loan and credit card payments. Your business, like many small businesses, may have made use of loans. Or, you may use a corporate credit card to pay certain expenses. This means you have to figure in the cost of these payments to your overall business plan.
Services like as accounting, maintenance and marketing. As a construction business owner, you may not be qualified to do certain tasks. This is perfectly understandable. Instead, consider paying an expert so that you can concentrate on the tasks required to run your business.
Payments for equipment or vehicles. Construction is the kind of business that often requires local or regional travel. A variety of costs are involved with having one or a fleet of vehicles. Consider payments or maintenance for these items as well as certain big ticket items you use daily.

This is just an overview of what it takes to create a budget for your construction business. Do you have a plan for your budget? You don’t have to answer these questions alone. Contact us to help you manage your money better.

Pro Tip: When to Start Planning for 2026

admin Blog, Pro Tip Budgets, planning, pro tip

When is the right time to start planning for 2026? Now! While 2025 is only halfway through, sometimes the legwork to make way for big returns next year takes longer than you might expect. This is particularly true if it involves an evolution in staffing and/or changes in how your data is recorded, either financial or operational, or both. Often, for metrics to be valuable, they need to be developed for at least a short historical period. So, whatever date you intended to start your 2026 planning, move that forward by at least 30-60 days. You can’t be too early, but you can be too late.

Trying to Get a Handle on Budgeting Success in Manufacturing

admin Blog Budgets, Manufacturing

When a manufacturing company doesn’t have a clear idea of its annual budget, it runs the risk of spending more money than it earns in a year. Even if production has been running smoothly for years, one small change can alter the entire financial picture. Money may be coming in, and all may seem fine, but without a handle on expenses versus income, you can quickly find yourself in the red.

Perhaps you want to apply for a business loan. A bank will need to see a formal budget as part of your business plan to consider the application. No matter where you are in the evolution of your manufacturing company, you can benefit from creating a basic budget.

Creating a Basic Budget

Budgeting can be accomplished in different ways with different processes, depending on the particular business and the people involved. Talking to a financial expert with experience in manufacturing always will be beneficial. Several universal parameters within a typical budget plan, however, can provide a foundation. For instance, most businesses make a rent or mortgage payment on their premises.

Next, basic overhead costs, such as utility bills, payroll expenses, and raw materials, need to be considered. You’ll also need to factor in interest, insurance, and tax payments. As a manufacturing operations owner or manager, you likely know these things, but have you considered some of the softer expenses, such as website development, signage, business cards, and advertisements?

You can use these initial elements when developing a budget plan and can add any expenses that are specific to manufacturing along the way. For example, your production facility may need to consider the following:

Salaries, wages, and benefits for you and your employees
Supplies and inventory
Loan and credit card payments
Services such as accounting, maintenance, and marketing
Machinery and vehicle or equipment payments, fuel, and insurance
Safety equipment

If you are just establishing your manufacturing facility, you may need to research your estimated monthly expenses. If your business is already established, you can base your assumptions of future costs or revenues on your past 12 months of figures.

Reaching Your Goals

By charting a comprehensive budget plan, you can enhance your chances of your business succeeding by anticipating future needs, spending, profits, and cash flow. A good budget provides a detailed road map so that you are not driving your production company blindly. When done correctly, it will provide clear insight into how your business is performing to help you achieve growth and success.

If you are interested in more details about establishing a budget for your manufacturing business, give us a call today.

Is This Your Situation: You’re Trying To Organize Job Costing

admin Blog Budgets, Construction, Job Costing

Job costing is within every company’s purview. Successful job costing can mean the difference between profitability and struggling to stay afloat. You may be overwhelmed with work, but perhaps are wondering why you’re not any more profitable. The basic principle behind job costing helps you know as accurately as possible the cost of each individual job so you can make better estimates and business choices.

Job costing doesn’t have to be a major distraction or expense. Here’s how you can get started:

Work with an estimator to implement a production reporting system to tell you how accurate your estimating has been.
Analyze job costing reports for completed jobs and jobs in progress.
Put in a billing system tied to actual and committed costs to keep cash flow stable.
Account for jobs properly to discover whether they turned out to be as profitable as your job cost schedules led you to believe they would be.
Get a more realistic breakdown of a project’s costs — even costs that may not have been expected or included in the original bid.

By collecting more accurate data, you’ll be able to better estimate how much a project will cost on the front end and get a competitive advantage when submitting bids. The following overhead costs often are improperly allocated:

Equipment and the costs of upkeep
Computers and software
Interest charges
Such unforeseen events as plan changes, increased material costs or additional time requirements
Salaries of those overseeing projects

When you establish a job-cost budget for each project based on figures provided by the estimator, your budget becomes a series of small estimates. For instance, you can predict how much concrete will be poured for a foundation and how many hours of labor will be required to complete that pour. Managers can compile actual costs and compare them with budgeted costs as the project is under way, not after it’s been completed. Job costing helps get a handle on which costs have fallen out of line.

Job costing enables businesses to compare jobs through time. You can track actual versus planned work hours for each cost to gain valuable insights into a project’s various aspects — for example, total square feet of pavement sealed, or pounds of crack filler used. Job costing can help you achieve the following:

Maintain credibility with your partners and bonding agents — successful forecasting of projects’ outcomes is key to obtaining loans or additional lines of credit.
Manage progress and motivate staff to reduce costs and increase output on projects.

Job costing reveals:

What your bread-and-butter jobs are.
What margins you are sacrificing because you don’t know what your estimates should be.
How to categorize costs according to tasks on the job. Thoughtful planning of goals early in the process will narrow your task list and help make clear exactly how your system should be structured.
What you’ve accomplished — by comparing results with goals.
What your current per-job profitability is and by what amount you would like to improve it.

Without job costing, you have to rely on assumptions when evaluating your firm’s strengths and weaknesses. Instead, you need to track job profitability. By identifying where or why you’ve failed, you can codify success.

For more on job cost accounting, give us a call, and we’ll help you understand what’s right for your business.

Pro Tip: Mid-year alignment

admin Blog, Pro Tip Budgets, Business Tips, planning

Somehow it is already May, which means we are nearly halfway through the year. It also means that it is time to do a mid-year alignment. We need to evaluate whether or not our budget for 2025 is meeting the reality of our performance. If so, great! If not, why not? Are strategic initiatives taking longer than they should? Have some operational roadblocks arisen? Have economic factors changed our trajectory? What do we need to do now to make the second half of 2025 a success? Getting granular and honest on these topics is the point – confronting reality is the first hurdle.

Is This Your Situation- Your Internal Controls Are Weak

Is This Your Situation: You’re Worried About Undercapitalization

admin Blog Budgets, Capitalization, Cash Flow

Undercapitalization is never good for business. This situation occurs when a business holds insufficient funding, or capital, to support its operations. It is a serious concern and can lead to a major financial crisis for any business. For businesses based on contracting, it is considered the leading cause of business failure.

The obvious solution is to ensure that your company has the right amount of money to achieve your financial and business goals. It is common, however, to underestimate how much capital is necessary to pursue the most profitable projects. Contractors who fail to realize how much money is required to get their business up and running, and then sustain it, likely will be affected by undercapitalization.

Being aware of your cash flow and funding projects in terms of employee wages, equipment, supplier materials and other obligations before you receive your first project payment will help you stay solvent.

Don’t assume you have excess cash. Receiving payment is not the same as having excess money. Once money is spent, it’s gone for good.
Create monthly budgets and cash flow projections. Compare current and projected expenses regularly.
Stay committed to your draw dates. Get to know your clients and how they handle their accounts payable so that you can stay on top of receipts.
Create a project plan. Account for the cost of each employee and any equipment or materials that you may need.

When you properly estimate cash flow, you will avoid undercapitalization.

Undercapitalization can restrict your construction company’s daily operations, growth and long-term success. With sufficient capitalization, you can manage slow periods as well as times of increased production. And having access to sufficient funds is a critical characteristic of a successful small business, such as your construction company.

The process isn’t easy, but you don’t have figure it out on your own. If you want to ensure your construction business has sufficient capital to pursue the most profitable of projects, contact a financial expert who can walk you through the business plan process. Contact us today to learn more about how to maintain the proper capital in your construction business and be successful.

Is This Your Situation: You’re Trying to Create a Flawless Budget

admin Blog Budgets, Construction, Forecasting, planning

A good annual budget should be able to keep a construction firm from running the risk of spending more money than it earns throughout the year. If you don’t have a clear budget, even if you’ve been running smoothly for years, future expenses could be more challenging than you anticipated. For example, you may have to expand or replace old machinery. If enough money is coming in, that won’t be a problem. But if you don’t have a grasp on expenses versus income, you could find yourself in the red.

There are several important reasons to create an accurate annual budget. For example, you may need to apply for a bank loan. In that case, your bank will need to see a formal budget as a part of your business plan.

Budgeting Techniques

You can use a variety of techniques to establish your annual budget. Depending on your work and the people involved, you can devise your own budgeting strategy. Several universal parameters within a budget plan, however, serve as a foundation. For instance, a fixed expense might be your mortgage or rental payments on your office property.

You also should consider basic overhead expenses, such as utilities, payroll and raw materials. Less-tangible items include interest, insurance and taxes. All of these are fairly clear expenses, but you also have to consider such expenses as website development, signs, business cards and advertising.

Standard Expenses

Anticipated expenses are good places to start when developing your construction firm’s annual budget. Even more specific expenses may be unique to your company. Consider some of these other standard expenses:

Business permits and licensing requirements
Salaries, wages, and benefits for you and your employees
Tools, supplies and inventory
Loan and credit card payments
Services such as accounting, maintenance and marketing
Heavy machinery and vehicle or equipment payments, fuel and insurance

Your budget planning will change dramatically depending on where you are in your business process. If you’re an established firm with a need to formalize existing plans, your experience will be quite different from that of a brand-new firm looking to establish its name in the industry.

Budgeting can be a time-consuming process. Before you get too deep into the accounting function, contact us so that we can help set up a budget that’s right for your company.

4 Restaurant Finance Golden Rules All Owners Should Remember

glevi Blog Budgets, Cash Flow, KPIs, Metrics, Reporting, Restaurants

As with any business, staying on top of your restaurant’s finances is essential to success. It is crucial to know what you are earning and what you are spending — and the difference between the two. Keeping track of your financials can be tricky, but staying on top of things is paramount to managing a profitable restaurant. While managing your financials is a complex task, there are few key points to follow to ensure success. Check our list below of the 4 golden rules of restaurant finance to make sure your restaurant is on track monetarily and moving in the right direction.

1. Make a budget and stick to it.

Creating a budget is Business 101. For a restaurant, this means budgeting food costs, labor, repair and maintenance, and overhead (just to name a few). Do your research and set a reasonable and attainable budget. Once you have set that budget, stick to it. It is easy to create a budget and forget about it. However, it is essential to regularly review your budget and make changes where necessary. Always keep an eye on your budgets, making sure you are sticking to them and adjusting them as needed.

2. Know your credit score and keep it high.

Just like in your personal life, you have to have good credit to get financing. Restaurant expenses can add up, so it is important to have financing options available. Vendors will check your credit score and history and may be reluctant to allow payment plans without a good report. Be sure to pay your bills on time and try not to carry large balances.

3. Avoid only paying the minimum payment.

When money is tight, it is tempting to pay only the minimum payment required. While it may lower your monthly expenses initially, this is a very bad practice to get in the habit of doing. It is totally reasonable to use credit cards to make purchases; however, you should strive to pay them off in full each month. Carrying a balance will cause you to accrue interest charges, which can add up very quickly. Don’t get in over your head using credit. Try to only charge as much as you can pay off at the end of the month.

4. Check your reports daily.

Thanks to modern restaurant technology, restaurant managers can check numbers on everything from labor and sales to food costs and loss on a daily basis. Checking these reports daily will help you stay on track with all your budgets. Additionally, these reports can help you ensure proper scheduling and ordering for the next week. Put technology to work for you and monitor your numbers daily. Make changes as needed and stay on top of the trends.

For more information about restaurant financing or help with managing your restaurant’s financial needs, reach out to us.

Pro Tip

glevi Blog Budgets, Business Tips, Goals, Growth, planning, pro tip

Happy New Year! Everyone wants to start the year off right, how can we approach that? For us, it is all about planning:

1. Consider where you want to go.

2. Plan out a realistic path to achieve your goal(s) using historical data and assumptions.

3. Consider what resources (in particular people) are required for your path.

4. Understand the impact on cash of your growth trajectory. Do you need to adjust your path or find additional funding to make it possible?

5. Think about the next goal after this one, at least broadly.

6. Set incremental goals to track progress.

Set yourself up for success in 2025!

Budgeting Success for the Construction Industry

glevi Blog Budgets, planning

When a business doesn’t have a clear idea of its annual budget, it runs the risk of spending more money than it earns that year. You may have been running smoothly for years, and then decide to expand or replace old machinery. There’s money coming in, so it seems you’re fine. But if you don’t have a good handle on expenses versus income, you can quickly find yourself in the red.

Maybe you want to apply for a loan. If so, the bank is certainly going to want to see a formal budget as part of your business plan.

Basic budgeting techniques

Budgeting can be done in different ways with different processes, depending on the particular business and the people involved. However, there are several universal parameters within a typical budget plan that provide a foundation. For instance, most businesses make a rent or mortgage payment on their premises.

Next, there are basic overhead costs such as utility bills, payroll expenses and raw material costs, as well as interest, insurance and tax payments. As a construction expert, you may know that, but have you considered some of the “softer” expenses, such as website development, signage for your business, business cards and advertisements?

These are safe initial elements when developing a budget plan, and then you can add any expenses that are specific to your business. As a construction business, there are several key expenses you need to account for, including:

Business permits and licensing requirements.
Salaries, wages and benefits for you and your employees.
Tools, supplies and inventory.
Loan and credit card payments.
Services such as accounting, maintenance and marketing.
Heavy machinery and vehicle or equipment payments, fuel and insurance.

If you are just launching your business, you may need to do some research to come up with estimates of monthly expenses. If your business is already established, you can base your assumptions of future costs or revenues on your past 12 months of figures.

A typical 12-month budget can be updated with actual expenditures and revenues each month so you know whether you are on target for your goals. Many plans feature one column of estimated expenses, with one blank column next to it where businesses fill in their actual expenses each month to track and compare.

If you are missing your planned targets, you can then apply the plan to troubleshoot by figuring out how you can reduce expenses like labor or new machinery, increase your sales with more aggressive marketing, or lower your profit expectations.

By charting on paper a comprehensive budget plan, you can enhance your chances of your business succeeding by anticipating future needs, spending, profits and cash flow. A good budget provides a detailed road map so that you are not driving your business blindly. When done correctly, it will provide clear insight into how your business is performing to help you achieve growth and success.

If you want more details on getting your budget going, give us a call.