Commercial Integrator October 2021 - 20

AV AS A BUSINESS
statement than cash received, then this
may indicate a problem with accounts
receivable. More cash disbursements on
the bank statement than expenses on the
income statement may indicate a leverage
problem, such as monthly requirements to
pay down bank debt.
A quick monthly analysis of your expenses
is always required. Your direct costs (materials,
labor, and equipment costs) should
normally be a fairly consistent percentage
of revenue from month to month. Your
fi xed operating expenses (sales, offi ce, and
administrative expenses) should normally
of vendor invoices coming due during the
same time period.
You may need your materials vendor to
extend more credit before you can fi nish
your current project. It's much better to
make additional credit requests of a vendor
while you're still paying them rather than
waiting until you're tapped out. The same
holds true with your banker. You shouldn't
ask the banker for a credit line (or line
extension) aſt er the cash well runs dry. This
approach tells the banker that you're managing
by the " knee-jerk " method and you
never planned for any shortfalls.
It's not oſt en that someone starting a business has all
the skills they need to make it succeed. You may know
installation and customer service, but you may not
possess a great deal of fi nancial knowledge.
be a fairly even dollar amount from month
to month. If expenses don't follow these
" normal patterns, " then more investigation
is absolutely required by the owner. It's the
owner's neck on the chopping block.
Driving with only your fog lights on is
preferable to driving with no lights at all.
If you don't use an automated accounting
system, then prepare a bare-bones income
statement. Add up all your billing invoices
for the month: This is your revenue. Add up
all the checks cut and credit card charges
for the month: These are your expenses.
While this excludes all the accounting nuances
(such as depreciation, accruals, and
deferrals), it still provides valuable information
regarding profi tability each month.
Remember, unsophisticated information is
still better than no information.
Habit No. 4: Never Surprise Your
Vendor or Banker
Many start-up integrators oſt en run out of
money before they run out of month. While
your new operation always seems cash
starved, it's better to know how deep the
water is before you step into the pond.
Bankers and vendors become skittish if
you surprise them. Advanced warning of future
cash needs is critical. Even if you don't
prepare a sophisticated cash forecast, at
least jot down what the next eight weeks of
payroll will run, along with a rough estimate
20
Commercial Integrator OCTOBER 2021
NSCA's 24th Annual Business & Leadership Conference: Discuss these
challenges with the integration community live in Dallas, February 23-25.
Register at NSCA.org/blc2022.
commercialintegrator.com
Habit No. 5: Phone a Friend
Everyone starts their careers without all the
required knowledge and experience necessary
to be successful right away.
Fortunately, we can learn from those who
have been where we plan to go. There's
an old adage that says, " We can't possibly
live long enough to make all the mistakes
ourselves, so we must learn from others. "
We get better by doing and learning
from our mistakes, but we can also learn
from others. The start-up integrator needs
to regularly check in with individuals who
can act as a sounding board. This includes
other trade contractors, your banker, your
vendor, and your CPA fi rm. You may not
have all these individuals at your disposal,
but you at least have someone you can call
to help you see your blind spots.
Seek Out Guidance When You Need It
Here's a fi nal piece of advice for the start-up
integrator: Don't kill the messenger. You
can only be successful if you continue to
learn and correct your oversights. Take
advice constructively. If you have an
unplanned outcome (this sounds better
than saying a " mistake, " right?), then ask
yourself these two questions:
1. What needs to be done to correct the
immediate situation?
2. What will I do diff erently to prevent
this occurrence from happening
again?
You'll be pleasantly surprised at how
helpful advisors can be when you ask them
to help you prepare workable responses to
these two questions.
If you need some guidance, don't forget
that NSCA is here as your resource and
trusted advisor. If you're not sure how to
approach something, question what your
numbers should look like, or just need
some advice, then send them a note.
Being young, fearless and bold is
admirable. Being young, fearless, bold
and clueless is not. Use these fi ve habits of
successful start-up integrators to propel you
on your journey to becoming an industry
leader - and someone to be admired.
Eric Morris is CFO at Wayne Automatic
Fire Sprinklers, Inc. He's a member of
NSCA's Financial Leadership Council.
LOOKER_STUDIO/STOCK.ADOBE.COM
http://www.NSCA.org/blc2022 http://www.commercialintegrator.com
Commercial Integrator October 2021

Table of Contents for the Digital Edition of Commercial Integrator October 2021
