Standards for project profitability and cash flow progressively improve over time, just like any other standard.
With each stage of contractor growth, the emphasis on profitability and cash flow moves earlier and earlier in the Project Value Stream (PVS), eventually moving into opportunity selection, business development, and strategic decisions about markets.
Goal: When a contractor is Starting Up and building a Basic Foundation, profitability and cash flow on projects are goals. Basics like estimating systems, production units, project management, billings, contract compliance, and cash flow management are just being figured out. Profitability and cash flow are required for survival of the business but getting there often feels like a never-ending cycle of doing things.
Plan: As a contractor moves into the Refinement stage, they are starting to plan for profitability and cash flow on their projects as well as planning at the business level.
Process: During the next stage of growth, the contractor builds a Scalable Foundation by adding capacity and depth of functional leadership levels, including estimating, project management, and accounting. During this stage of growth, standard procedures, reporting, and meetings are put into place that help ensure profitability and cash flow. Those procedures start within individual functions and become integrated with each other over time.
Prerequisite: By the time the contractor reaches the next growth stage and is Ready to Scale, they have fully integrated these processes starting with strategic market choices and their sales funnel. The processes have become habit throughout the organization, allowing leadership to focus on the next stage of growth - Sustainable Scaling and Succession.
The earlier you can start shifting your project profitability and cash flow from fuzzy goals to concrete plans and deliberate processes, the better. This is good for you, your team, and your customers.
A quick conversation can help identify where you are at along with some tangible opportunities to improve.
Contact us to schedule some time to confidentially talk about your specific situation.
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Every contractor grows through six general stages with each requiring different strategies, systems, structure, and leadership focus. This 90-minute discussion covers the basic challenges with examples for all levels, along with dozens of additional resources to help you grow.
