American Painting Contractor Magazine

November/December 2012

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Sound Business Management Profit & Loss 2012 Sales $50,000 100% Labor $25,000 50% (increase 100%) Profit & Loss 2011 Sales $100,000 100% Labor $25,000 25% All of that might seem confusing, and you might not want to bother. Here is the problem with that: You can look at the bottom line or an account and everything looks OK, but you might be looking at the wrong thing or in an improper format. Then down the road, you'll be in for a huge surprise. Monthly Review: Finances are in a constant flux and can rapidly change for most contractors. We encourage you to review financial information each and every month. That should include: • A monthly and yearly profit-and-loss statement for this and last year • A balance sheet for this and last year • An aging report of accounts receivable • An aging report of accounts payable (make sure invoices are recorded into your records and if you do have the money to pay the bill) • A backlog of work compared to last year • Your labor and install expense percentages compared to last year • Your gross profit compared to last year • Your overhead compared to last year • Your net profit and salary compared to last year Looking at financial data is pretty easy if you follow the basics and it is recorded in a useful format. I am not going to tell you that good financial records will ensure that you do not go broke, but I can assure you that you will at least have the option of being out of town when it APC happens. Monroe Porter is president of PROOF Management Consultants, a company specializing in seminars and business consulting for contractors. He is also founder of PROSULT Networking Groups, developed to help noncompeting contractors. He can be reached at (800) 864-0284 or monroe@proofman.com. For more information, visit his website at www.proofman.com. A Tool for Every Purpose Hyde Tools offers a complete surface prep program with new tools to satisfy every level of use. The program includes putty knives and scrapers from the high-value, competitively priced Value Series up to our premium Pro Stainless™ tools. Together with the HYDE® Black & Silver® Tools, the new product lines provide a "good, better, best" offering. Every tool in the program has been optimized to deliver the features users want at the price you expect to pay. ® For a better finish, start with HYDE. www.hydetools.com ©2012 Hyde Tools, Inc. All rights reserved. But wait a minute, last year you did $100,000 with $25,000 in labor and now you are doing $50,000 with that same $25,000 of labor. Your installation labor percentage used to be 25 percent of sales or for every $1in sales; now for $1 in sales it cost you 50 cents to install. Your actual cost of labor has doubled. You either have not billed something, lost a lot of money on some jobs or need to lay some people off. A statement comparing costs to a percentage of sales would look like this: 800-872-4933 See Advertiser Index on Page 62 AMERICAN PAINTING CONTRACTOR • November/December 2012 13

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