How to rein in your budget and ditch the financial anxiety
No matter what their size, all builders face one common challenge: Managing cash flow. Even so-called small builders have several hundred thousand dollars flowing in and out of their bank accounts on a monthly basis. It’s easy to get caught up in managing or micromanaging your finances, to the point of debilitating anxiety.
Shawn McCadden for the Journal of Light Construction recently published a list of suggestions for taking back control of your financial life—we’ll add to it.
Number one on the list is predicting costs. A lot of builders scratch their heads at this task, because so many costs are unpredictable and so much can change during a project. Plus, some variables no one can control— like the weather, for instance.
But don’t write off what you can control.
Good budgeting starts with better tracking, and availing yourself of the workflow management software systems out there that have been developed specifically for builders. Grouping expenses by category, tracking revenue, gross profit margins, and accounts (receivable and payable as well as gross profits) will eliminate a lot of the clutter from your financial life and free you up to focus on the work of construction.
Workers comp is another hard-to-control variable in your budget. A jobsite accident is just that: an accident. Impossible to predict. And of course it is. But you can limit your exposure to accidents by changing the way you build your homes—and letting your component manufacturer do the heavy lifting for you in your framing. Learn more about how to take labor off the jobsite here.
Better record-keeping, and cutting down on labor on the jobsite, should make it a little easier to sleep at night. But as McCadden says, you can’t do it on your own. “Get the help you need to improve your business financial system,” whether that takes the form of a new hire, or simply a home design software upgrade.
However you tackle your budget, remember that the relief you’ll feel when your financial life is in order is well worth the price of admission, not only in dollars and cents but also in less psychological weight on your back and more energy to invest in your projects.