Published: May 5, 2020
Every profitable construction business in the struggling Perth building sector at the moment is likely to have one thing in common – a good CFO.
That CFO is often an outsourced specialist who provides these builders with regular business advice based on their specific circumstances.
How can you tell if you need the services of a CFO?
It’s time to look for a part-time CFO if you:
- Have ambitious goals for your business
- Own a business with between $2 million to $50 million annual turnover
- Lack the necessary strategic and financial skills to fulfil the demands of your business
- Don’t want to or can’t afford to employ a full-time CFO
- Want to scale your business up fast
It’s a reality that many builders are too caught up in the day-to-day operations of their business to focus on strategic analysis and decision-making.
That’s where a good CFO can help.
They can analyse all aspects of the business’s operations and help builders to identify strategies to secure their long-term profitability.
A good CFO can find opportunities for you to grow your construction business (and to reduce your stress).
They can do this by helping you to:
They’ll look at how you can increase your revenue and lower your costs. They understand the reasons why you can lose money on construction projects, including underquoting, poor contract negotiation and bad project management. And more importantly, they can show you how to avoid those problems.
Cash flow is absolutely crucial in business. You need to ensure you’re paid on time by your clients so that you can pay your all subcontractors and suppliers on time. This can be a massive issue in the building sector, but it doesn’t have to be with accurate cash flow forecasting, proper budgeting and sound financial management! CFO’s have that skill set.
Tax minimisation is legal (and smart). A good CFO will make sure you’re only paying the tax that you’re entitled to pay. They’ll make sure you structure your business affairs as tax-effectively as possible and that you maximise all your deductions.
Bad systems cost businesses time and money. No construction business can afford inefficient systems in the highly competitive environment we’re now in. The right technology and systems can save you time and money to give you a competitive advantage.
Regularly measuring your business via efficient KPIs can help you to quickly work out where you’re making money and where you’re losing it. For example, waste can be another big issue in the building industry, but again, it doesn’t have to be!
Having a CFO around will help reduce the chances of something going wrong in your construction projects. They fill a critical role in your business by proactively managing risks and making things run smoothly.
There may come a time when you are looking for financial aid from the bank, in the case of a financial crisis or a new business opportunity. Your CFO will bring their good banking relationships with them, which can come in handy when you need a little funding,
Want to see what a CFO could do for your construction business?