Oct 10, 2014
The BCG Matrix Is One Of The Tools Fast Easy Accounting Uses To Help Construction Contractors Increase Profits
Developed By Bruce Henderson - For the Boston Consulting Group in 1968 to help corporations analyze business units or product lines. It helps companies allocate resources and is used as an analytical tool in brand marketing, product management, strategic management.
No Two Construction - Companies are alike. Every construction company has a unique blend of ownership and management philosophies, tools, equipment, staff, field employees, geographic location, and relationships with suppliers, vendors and professional service providers.
This Means - That if construction company "A" earns a better than average profit percentage on residential remodel it does not follow that company "B" will be able to do the same.
Get Rich In A Niche - By finding your company's sweet spot, that particular thing you are good at, that people want and will pay good money for and that you are best suits you. Then you spend the majority of your time and effort developing your Business Process Management (BPM) to be the best and only company to service those clients and preferably dominate that market in your target geographic area.
The BCG Matrix - Is one of the many tools in our BPM tool chest. We Job Profitability and Job Costing reports from a properly maintained QuickBooks file to map out a specific construction company's target markets.
- Cash Cows - Are construction projects that generate the highest gross margin. These projects typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as stable and boring and every contractor would be thrilled to own as many as possible. They are to be "milked" continuously and add more of them whenever possible.
- Dogs - Are construction projects that generate the least gross margin. These projects typically "break even" or lose money. Though owning a break-even unit provides the social benefit of providing jobs for your employees and possible synergies to assist other construction projects from an accounting point of view they are worthless because they reduce profits and the construction company's return on assets ratio which many investors, bankers and bonding companies use to decide how well a company is being managed.
- Question Marks - Are construction projects in new markets or a different type of work than the company has been doing which shows potential because they are growing rapidly. Beware of the fact they could consume a lot of cash while you are putting the processes in place to manage these projects. A question mark could prove itself and become a star, and eventually a cash cow. If the question mark does not prove profitable within 90 - 180 days, it may be wise to re-evaluate those projects.
- Stars - Are construction projects with high gross margins in a fast-growing area like aging in place for seniors. The hope is that stars become the next cash cows. Sustaining your construction company market leadership and increasing the profit picture. When growth slows, stars become cash cows if they have been able to maintain their category leadership, or they move from being a star to a dog.
I hope this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now and if you have listened this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
We Remove Contractor's Unique Paperwork Frustrations
For Construction Company Owners who do not need the full power of QuickBooks for contractors and want 24/7 online access we offer Xero Accounting Online and we have custom setup for construction companies.
I hope this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now and if you have listened this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
You Deserve To Be Wealthy, Because You Bring Value To Other People's Lives!
I trust this will be of value to you and your feedback is always welcome at www.FastEasyAccounting.com/podcast
This is one more example of how Fast Easy Accounting is helping construction company owners across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to construction contractors like you so stop missing out and call Sharie 206-361-3950 or email sharie@fasteasyaccounting.com
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
Need Help Now?
Call Sharie 206-361-3950
In closing, I want to caution you that we may or may not be a good fit for your contracting company. This guide will help you learn what to look for in outsourced construction accounting.
Thank you very much and I hope you understand we really do care
about you and all contractors regardless of whether or not you ever
hire our services.
Bye for now until our next episode here on the Contractors Success
MAP Podcast.
Warm Regards,
Randal DeHart | Contractors Accountant