Masonry Magazine June 2000 Page. 24
Financing for masonry businesses often starts with the owner's own resources, then family and friends, then business associates, customers or suppliers may get involved. As masonry businesses establish records of growth and profitability, owners gain access to banks, professional investors and other sources of capital.
Most successful masonry contractors usually end up with a patchwork quilt made up of different financing pieces. Coordinating those capital relationships isn't simple, given all the other demands on the owner's time, but it is essential. That's because only those masonry contractors that figure out how to keep their investors satisfied, well informed and committed to a teamwork approach will be able to rely on them for support when unexpected crises and opportunities arise - as they always do.
The addition of a banking relationship adds a new wrinkle to the masonry operation's communications challenge. Banks have very specific things that they care about, such as on-time payments, remaining within the financial covenants they have established and sending them the specific financial reports that they want. In contrast, communications with family and private investors are often more flexible and often focus on whatever information the masonry operation's owner feels is significant.
MEASURING GROWTH TO MANAGE GROWTH
The financial information of every masonry contractor and business is - or should be summarized in three key accounting statements: the balance sheet, the income statement and the statement of changes in financial positions.
The balance sheet can be thought of as a photograph showing the assets, liabilities and owners' equity of a masonry business at one point in time. The income statement is a motion picture designed to show the profitability of a masonry business over a period of time such as a quarter or a year. By subtracting expenses from income, the income statement reveals the amount of profit (or loss) for that accounting period.
The statement of changes in financial position explains the financial changes that occur from one accounting period to the next. It focuses on the sources and use of funds in the masonry operation.
THE GROWTH RATE OF THE MASONRY BUSINESS
The rate of growth for your masonry business is simply the amount of change in some financial characteristics of your operation. That growth can occur in total sales, net profits, total assets or merely in-ventory turnovers. Managing that growth of course will ensure that growth in total sales is accompanied by growth in bottom-line profits. Abraham Lincoln once said: "I claim not to have controlled events, but confess plainly that events have controlled me."
Managing the growth of your masonry business means taking control of that growth and managing it. Growth for growth's sake may appear impressive. However, unless that growth is built on a solid base and accomplished economically, the end result may be disaster.
Thus, the need for a formal plan of growth, a business plan if you will, that shows the masonry operation's present position, the goals you think feasible and, most importantly, a chart showing the path to those goals that will enable you to manage that growth for maximum profits for many years to come.
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