If you’re a small remodeler, your fixed expenses might look like this. These are expenses that occur whether or not you’re doing a project — such as office overhead, marketing costs, and nonconstruction salaries (including yours). The total of these costs is the “nut” you have to overcome simply to keep your doors open.
If you’re a small remodeler, your fixed expenses might look like this. These are expenses that occur whether or not you’re doing a project — such as office overhead, marketing costs, and nonconstruction salaries (including yours). The total of these costs is the “nut” you have to overcome simply to keep your doors open.

Last month, I introduced the concept of working “by the numbers” — meaning that you plan your annual income requirements in advance, then attempt to translate your goal into project sales, starts, and completions. You always work toward the plan, making adjustments along the way as necessary. I also made some distinctions between the kind of accounting your CPA does and “management” accounting and reporting — using the numbers your business generates to make successful operating decisions.

This process is the beginning of “strategic budgeting.” By establishing your goals for the year early on, you are building a road map for success — not just for the coming year, but for as long as you operate your business. Consistent strategic budgeting can make the difference between being able to retire with money in the bank and limping into...

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