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Insurance/Legal Matters in RestorationManaging Your Restoration Business

Keep Tabs on the Taxman in 2011

By Les Cunningham
March 25, 2011


A lot of people are busy getting their taxes ready in order to get them filed on time. The problem is that a lot of owners are deciding how to handle their business tax situation way past the point where they could have really had a meaningful impact on what they will have to pay.

In my continuing quest to help you turn your company into the most profitable machine possible, here are 10 suggestions that I believe will drastically affect the taxes that you will pay next year. The order can be adjusted based on your perception of what is most important to you, so consider:

1. Get Out and Get Business

You, as the owner, need to spend up to 80% of your time going out and securing business for your company. The owner is the best salesperson a company has. No one has as much skin in the game, and no one has worked as hard to get the company where it is today. No one has as much to lose: no one in the company mortgages their home, their lifestyle, their assets and the future education of their kids. If you succeed, it’s going to be good; if you fail, you will spend the rest of your life repaying the debts incurred.

2. Recognize the Need to Hire

The owner starts the company and in the beginning does all of the sales (and often, the spouse does the bulk of the administration, in between running the home life with growing kids). The owner does all of the work needed to produce the job. As the company grows – if it grows – the owner needs to hire people to help with some of the work.

Because the owner has done most of the jobs in the company, he or she is able to mentor new company members in the goings on with regard to procedures, attitudes and culture.

3. Get a Second Opinion

Estimates need to be reviewed by a second set of eyes. Before an estimate is presented to the potential buyer, a second person should check for such items as math errors, missing items and be able to answer ‘yes’ when asked, “Does the estimate also indicate what you will not do? Does the estimate make sense to all concerned in the job process?”

4. Keep Track of Your People

All employees of the company need to turn in a timecard daily. The individual’s card needs to identify the task(s) performed and the time it took to do them. This data needs to be used to determine if the employee is doing what needs doing, and doing it as efficiently and as effectively as possible.

5. Let Technology Help You Get Organized

All purchases need to be done using a purchase order system that works with your accounting software. A purchase order system will allow the company to compare estimate amounts to what is actually being spent.

6. Establish Accountability

You need to have a weekly production meeting that compares all job costs that have been estimated to what the actual costs are coming in at. At that meeting, if a job came in on budget, praise your people. If the job was under time and under budget, or over time and over budget, determine why and make sure that it does not happen again.

7. Keep Your Growth Headed in the Right Direction

You need to have a weekly business development meeting to compare what was planned for the week and what actually happened. Business development people are the most difficult individuals to hold accountable. Usually, the reason is that there is not a written estimate of what has been agreed to by all individuals involved in business development. This key point is critical to all parties knowing what is expected of them, thereby allowing them to be evaluated on how well they are doing their job.

8. Put Everyone on the Same Page

The owner and the company team needs to agree what the goal(s) are for 2011, delegate who is responsible for getting the goal(s) done, and make sure that all team members are in the game.

9. Get Regular Accounts From Accounting

The accounting person needs to determine a monthly Work In Progress (WIP) report. This report also goes by the name of the “Over and Under” billing report. In a nutshell, it will tell you how much work has been done and how much work has been paid for. This report is critical to evaluating what the monthly Income Statement and Balance Sheet means and what it does not mean.

10. Grade Yourself

The owner is responsible for the company’s performance. The owner’s report card is the monthly Income Statement and Balance Sheet for the company. If it shows that the company is on budget, the owner did a good job. If it is not on budget, then it indicates that the owner has work to do.
KEYWORDS: restoration business profitability restoration services

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Les Cunningham, CGC,CR,CCR,CGRa, is president and CEO of Business Networks, Inc. He is a restoration industry expert and can be reached at 1-800-525-1009, ext. 14 or e-mail him at Les@BusinessNetworks.com

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