Mastering Your Business by the Numbers with Jakob Kirschner

📅 February 13, 2025 ⏱️ 34:23 🎤 Jakob Kirschner

Chapters

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0:00

Introduction to Financials

The hosts introduce the topic of financial management for contractors, highlighting its importance yet common neglect.
0:40

Meet Jakob Kirschner

Jakob Kirschner of Peak Advisory is introduced as a financial expert in the trade space, sharing his diverse background and passion for helping contractors.
7:10

Transition to Data-Driven Decisions

Jakob discusses the transition from running a business by gut feeling to making decisions based on financial data for scaling success.
9:20

Cash Flow Forecasting

The importance of cash flow forecasting is explained, with practical tips on using past P&Ls and tracking cash inflows and outflows to predict future financial health.
16:50

Cash Management Best Practices

Strategies for efficient cash management are discussed, including tracking average days to collect payments and strategic bill payment.
26:40

Common Financial Mistakes

Jakob outlines common mistakes contractors make, such as confusing profit with cash and lacking attention to cash flow.
35:50

Cash vs. Accrual Accounting

The critical differences between cash and accrual accounting are clarified, emphasizing accrual for accurate business insights.
40:20

Job Costing Importance

The necessity of job costing and cost accounting for project profitability, especially when scaling to commercial projects, is detailed.
51:20

Borrowing Money Wisely

The hosts and Jakob discuss the strategic timing of borrowing money, emphasizing borrowing when not desperate to get better terms and avoid financial distress.
53:20

Implementing Financial Management

Jakob offers advice on integrating financial management into daily operations and how fractional CFO services can benefit smaller businesses.

Speakers

Jakob Kirschner

Peak advisory

Key Takeaways

✦

Implement a cash flow forecast using your last 3-12 months of P&L data to predict future cash positions and make informed decisions.

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Track your 'average days to collect' invoices to understand your cash conversion cycle and identify opportunities to shorten it.

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Pay bills strategically by aligning payments to their due dates, avoiding early payments to retain cash longer, and exploring extended terms with major suppliers.

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Understand the difference between cash and accrual accounting; use accrual for accurate business analysis, especially for profitability and project costs.

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Adopt detailed job costing for every project to accurately estimate, track expenses in real-time, and identify profitable projects versus those incurring losses, particularly for commercial work.

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Cultivate financial discipline by setting aside a cash reserve. Avoid immediate spending of windfalls to prepare for market dips and unforeseen expenses.

✦

When scaling, especially into larger commercial projects, assess your financial readiness beyond just revenue. Ensure you have the cash reserves or credit lines to float increased material costs and longer payment cycles.

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