Using Reports to Drive Profits

By Jeffery K. Prager

report3Reports get a bad rap.  Nobody likes poring over stale reports from the last quarter that have no bearing on where your company is today.

But the right reports – and particularly the right reports at the right time – can help you drive profit and grow your home building or construction business.  And what many construction business owners don’t realize is that by taking just 5 minutes a day to review specific  reports you can add thousands of dollars in profit to your bottom line!

We call these reports “profit maps”.

There’s an old adage that says, “You can’t manage what you don’t measure, and that which you measure tends to improve.”  So, if you think of a report as a measurement, then measuring the right data at the right time can be invaluable.

The biggest problem is that most reports tell you what happened. However, what if you had reports that told you what’s happening – or better, what was about to happen?  Then, you’d have time to act to improve the results and outcome, i.e. your profits!

That’s the kind of reporting I love, so much so that I built an entire software to give me just that kind of information – vital measurements in real time that I can act on to make sure every job stays profitable.

Builders and contractors need to be able to react to problems, project your costs and your income, and identify your best and worst employees, subcontractors, and partners.

Our philosophy is that good reports don’t just show you numbers, but they help you answer important questions. Which report you look at depends on what question you are asking:

  • Are my jobs on budget?  If the answer is No, then why not?
  • Am I getting more cash in than I’m paying out?
  • Which job or jobs are falling behind?  If you have project managers – which one is performing well, who is not?
  • Which of my vendors are going over budget?  Which are behind schedule?
  • What lead sources are bringing me the most business?  Which is making me the most money?

Use these questions to generate key reports to use as your profit map. Successful, profitable home builders and construction companies using our software get all this information automatically.  You need to be able to look at all your jobs or specific jobs.  Here are just two of the many reports that are available at a glance from our CASHFLO job costing system:

Job Budget & Costs
This report shows Job Costs and compares costs to your budgets for every job you selected.  It also tells you the balance of costs you need to complete the project. You can change the dates by editing the “Current Period From and To” fields below the “Job Costing” tab.  You also can export to Excel, Save or Print the .pdf.

So… the results are that you know exactly where you are on your profit map on every job every week!

reports

Job Profitability
For business owners, this is the single most important report you can have for a job. You can generate it at any point in the job to see how much you’re making and how much you’re spending. With this, you can project your profitability and manage your cash flow proactively.

  • Projected figures versus actual figures.
  • Compare how much you’re billing against how much you hoped to bill.
  • Project your profit at any stage of the job—so you spot problems that impact your bottom line.

Reports like this are the whole reason you use an integrated system: so you can see where you’re going. See exhibit below and how to interpret it.

transactions

Other Job Cost reports that give you real-time control of your jobs and profits are:

  • Job Cost Detail Report – a detailed listing of all transactions used to create draws;
  • Job Profitability Cash Basis Report – knowing your current and pending billing opportunities and cost obligations is critical to managing your cash flow.
  • Job Cost Exceptions – shows you if you went over budget, why… and what to do about it.

Again, good reports give you answers to key questions that measure your success.  Knowing which questions to ask is sometimes harder than finding the answers.  That’s why we’ve designed our CASHFLO system to make the questions obvious and the answers instantaneous.

Find more information on revenue-generating reporting using CASHFLO here.