420: Keeping Score: The Key to Roofing Business Success with Diane Gilson

⏱️ 58:55 🎤 Dave Sullivan, Diane Gilson, John DeLaurier

AUDIO EPISODE

420: Keeping Score: The Key to Roofing Business Success with Diane Gilson

0:00

Chapters

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0:00

The Three-Legged Stool

Dave introduces the concept of selling work, doing work, and keeping score as the three essential legs of a successful business, highlighting scorekeeping as the often-neglected weak link.
0:13

Why Scorekeeping Matters

Diane and Dave discuss how neglecting proper financial scorekeeping can lead to businesses losing money faster, despite increasing sales, due to incorrect pricing and lack of understanding of numbers.
0:22

Gross Profit Roller Coaster

They delve into the common problem of erratic gross profit margins month-to-month and introduce the core issue: traditional cash or accrual accounting methods in construction.
0:29

Cash vs. Accrual Issues

Diane explains the pitfalls of cash basis accounting for misleading management reports and how even accrual accounting often fails to provide an accurate match between income and costs in construction.
0:42

Making Monthly Adjustments

The discussion focuses on making monthly adjustments to financial statements to accurately match income and costs, using the 'percentage of completion' method to stabilize gross profit reporting.
0:51

Estimate vs. Actual Monitoring

Dave stresses the importance of continuously monitoring job progress against estimates (estimate vs. actual) and taking immediate action when projects deviate from budget.
0:58

Business vs. Roofing

They conclude by reinforcing that roofing contractors are running a business, not just doing roofing, and understanding financial concepts is crucial for long-term sustainability and growth.

Speakers

Dave Sullivan

Host

Diane Gilson

financial guru, InfoPlus Accounting

John DeLaurier

Host

Key Takeaways

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Prioritize financial scorekeeping as one of the three critical pillars of your business, alongside selling and doing work, to ensure stability and growth.

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Avoid using cash-basis accounting for managerial decisions; it provides a misleading view of your business's true financial health.

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Implement strategic monthly adjustments, such as the percentage of completion method, to accurately match income with costs and stabilize your gross profit reporting.

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Establish detailed job estimates and continuously monitor 'estimate versus actual' costs and progress for each project to identify and address financial deviations early.

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Conduct pre-job conferences with sales, foreman, and superintendents to align on job budgets and expected timelines, ensuring everyone understands and works towards the same financial targets.

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Educate yourself and your financial team on construction-specific accounting practices, as they differ significantly from general business accounting.

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Recognize that you are running a business, not just a roofing company, and understanding the business's financial health is paramount for sustainable success and scaling.

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