Wondering whether you have the right financial people in place on your team? If you have a CPA, tax accountant, bookkeeper, or controller handling your business financials, you have some of it covered—but definitely not all.
Most contractors earning $5 to $50 million in annual revenue don’t have the right financial expertise on staff—or the right adviser in an outsourced firm like a CPA—to help them plan for growth. Why? Simply put, a bookkeeper is focused on whether the firm has a historical record of all money spent to ensure reconciliation. The accountant is interested in how to legally mitigate taxes, by making business purchases and taking on debt. They have spreadsheets and software and functional expertise, but most of these advisers have never owned or grown a business.
If you truly want to make more money and grow your business, you need an adviser who has walked in your boots—who knows your industry, understands the pressures of ownership, and can help you navigate growth. In this article, we share the 10 reasons why our strategic, high-level financial expertise gives your contracting business the edge—and will help you grow your company and attain financial freedom.
#1. Industry expertise
Your advisers may know accounting and tax strategy inside and out, but do they specialize in construction? Construction is a unique and demanding industry, with its own very specific pressures. If your adviser doesn’t have a finger on the pulse of the industry, and on its trendlines, it’s likely you’re overlooking some very important indicators.
Construction is our sole focus, which means we know the industry—and your specific challenges—inside and out. Our team brings nearly 25 years’ experience in the skilled trades industry, along with a broad industry perspective on the latest data and trends, to our financial strategy recommendations.
#2. Industry-specific tools
How would Fortune 500-level tools and processes transform your business? In short, they’ll change what you measure and how you think.
Take our CFO Scorecard, for example. This is a unique tool we have created, based on the rigor expected to inform decision-making in the boardrooms of market-leading firms. The CFO Scorecard measures trailing numbers, so that you can start to see patterns and measure trends that help you tackle areas of opportunity in your business. You can monitor indicators like Days Sales Outstanding (DSO) and whether the value of your business is rising, with a monthly review and access to real-time data. Looking at indicators every 30 days is a huge leap from the traditional framework of year-over-year measurement.
#3. Operational improvement
Does your CPA firm have the industry know-how to advise on operational improvement? Most don’t—or won’t. Having extensive industry expertise gives us the perspective to immediately understand operational structure and processes and identify the leaks.
One immediate area for improvement for most contractors is financial upskilling for project managers. In our experience, common overruns or oversights make for a leaky process. Tightening up PM can yield as much as an additional 10% in savings, which can add up to hundreds of thousands of dollars. It’s one of the ways that industry expertise gives us the perspective to uncover ways to improve your business from the inside out.
#4. Team building
Helping your current people understand how to do their jobs better and handle firm finances with more confidence yields big benefits. But there is going to come a day—and it might be soon—when you need on-staff expertise to help you grow your business. Will your CPA firm help you define the role—and write the job description?
We will, even when it means replacing some of what we do for you. We’ll do so because we always put our clients’ best interests first. Because we’ve seen over and over what construction firms cresting the $5M, $15M, and $30M marks need, we’re able to identify where you should close the skills gap to take your business to the next level—and we’ll put it into a job description and recruitment process that brings in the right talent.
#5. Budgeting and forecasting
Of course, you have a budget—but how accurate is it, really? And are you using accurate, up-to-date estimates? Many contractors rely on outdated estimates to project overhead costs and estimate pricing. Construction is a business in which costs fluctuate daily, and the long arm of inflation has radically driven up material and labor costs. If your CPA isn’t an industry insider, you’re driving up your business risk, and you can’t be sure you’re truly profitable across every job and division.
We use a 12-month rolling average to ensure accurate, up-to-date estimates for overhead, and to inform all budgeting. We also implement a system to monitor the ebb and flow of costs, and to track responsive changes and variances with precision. It will transform how your business does budgeting and forecasting. And it’s construction-industry specific.
A quick meeting, a contract, and a few annual touchpoints aren’t sufficient to truly get to know your business. You need a financial partner willing to understand where you are today and where you want to go. That entails coming on site, spending multiple days at your job site, poring over your financial statements, and getting to know your employees. Fortunately, it’s exactly what we do during your onboarding process. No two companies are ever the same, and we want to learn about your business and its culture to help you make the best decisions.
#7. Due diligence
Maybe you’re bidding on a big new contract. Or you’re thinking about launching a new division or evaluating a merger or acquisition opportunity. Who’s going to help you figure out which direction to go?
Conducting due diligence really well takes experience, but it pays off when you can build value or strike the best deal for your company. As trusted advisors, we bring specific experience in acquisition, geographic expansion, and business exits to help our clients prepare for the next step.
We’ll keep this one short and sweet. Financial clarity means you know your numbers, across every job and division—so you always know exactly where your business is and how it’s performing. When this happens, you’re able to make smart decisions with confidence.
#9. Proven success
CPA firms can ensure that your accounting is handled and your taxes are filed, but few can boast that they’ve boosted your profits. This is exactly what a fractional CFO like DAAXIT can do for your business—and we have for many other contractors. In fact, in 2022, 100% of our clients notched record profits, with an average net profit increase of $836,000. In general, our clients achieve double the industry average net profit. What would that mean for your bottom line?
#10. Understanding the responsibility of ownership
Only another business owner knows what it means to be responsible for your P&L and your people. Our team understands this mindset, that you don’t just turn the lights off at the end of the day and clock out, but that you’re always thinking about your business—and what’s next.
We get the pressure of cashflow, and how it affects next week’s payroll and your accounts payable. We know the reality and the exhilaration of entrepreneurship, how much you put on the line when you’re building your business. We’ve lived the high highs and the low lows, and as a result, we understand your position in a way that a lot of vendors and partners can’t if they’re on the payroll but not the CEO.
There is absolutely a place for the CPA firms and in-house controllers of the world. When you want to grow, though, you need more. This is when you must be choosy and seek out the kind of adviser that’s going to give you an edge.
We’re here to help contractors like you build better businesses. By providing fractional CFO services, we create financial clarity and enhance your profitability, so you can take your company to the next level and attain financial freedom. As your partner, we’ll take you from best-guess decision-making and the daily grind to profitable growth with clarity and peace of mind. Our team brings 20+ years’ experience and MBA-level executive financial leadership to being your strategic partner. As business owners ourselves, we know what it means to put your livelihood on the line, which is why we always have your best interests at heart. Like Dax, the German Shepherd that inspired our logo, we strive to be loyal, confident, and a partner you can always count on to guide you.