For any business executive—and particularly for building service contractors—true success is contingent on a detailed, disciplined approach of focusing on the overall mission of the company. Long-term sustainable growth is the objective, along with optimum valuation. Concentration on the results that the financial management generates is a key factor.
Key components of this success plan have to be increasing and/ or improving:
• Sales growth—revenue
• Customer retention
• Team development
• Refinement of the culture of the organization
• And, most importantly, is the financial criteria and procedures.
Financial goals need to be established and defined by your vision for the company. The focus must be on profitability, as well as sales, and then the progress must be measured and managed accurately and transparently.
Recommended Tools for Financial Management
1. A critical tool is a rolling 12-month cash flow management program is essential. This becomes a guide in the truest sense of the word. It is a forward-looking (windshield-type) tool rather than looking in a rearview mirror. By developing the process, you are keenly aware of the steps that are necessary to sustain and improve your growth and identify any cash difficulties and make preparation for dealing with each issue.
2. The next tool is a financial meeting process and includes regular financial meetings, (usually by the tenth of the month), with your team. The agenda should be a detailed and disciplined financial agenda that includes a properly landscaped financial report. This tool measures actual results to budget on a monthly and annual basis. A dashboard analysis distills the information that is measured in the financials for the management process.
3. The challenge is to then develop a gap-closure procedure that highlights the gaps and designates the team member who is responsible to develop and implement the closure process.
4. Follow through consist of weekly and, if necessary, daily meetings in order to close the loops by monitoring the results and effectiveness of the action items on a religious basis (habit). Jim Ryun said, “Motivation is what gets you started. Habit is what keeps you going.”
This process of results-oriented management is an ongoing process that improves the accountability and habits of the team. The process may not ever be perfected, as it is always in need of improvement and attention. This will continue to be refined as you execute against it. General George Patton said, “A good plan violently executed now is better than a perfect plan executed next week.”
Another tool in the toolbox is to schedule and prepare for quarterly strategic planning meetings followed by an annual complete strategic analysis. Develop the vision, three- to five-year goals, and enjoy seeing your growth and your achieved goals.
The financial management is merely one step, but a very essential one, in the process of improving value (EBITDA). Subsequent approaches are to focus on the important and not just on the urgent on the journey to success. Onward to long-term sustainable growth.
After the successful sale of The ABS Companies,
Barnett Gershen created his consultingpractice,
Gershen Consulting, LLC, tohelp CEO’s experience
similar growth with successful exit strategies.
He has recently partnered withMike Schumacherto
create GS Capital and Advisory, LLC, which offers,
not only consulting, but also capital options for building
service contractors. His offices are in Bellaire,
Texas and he can be reached at (713) 303-2874.