I am sure by now you have heard time and time again that it takes hard work and consistency to grow your business. So what do you do when you finally get that client or contract or project that will catapult your business into a new stratosphere? A project that is so big that you have to hurry to hire people, increase your insurance coverage, find a lawyer to make sure your contracts are trump tight, and get a good accountant to manage all the paperwork and money details.
Well let me tell you, it’s better to get all that ready now so when it happens you will be ready.
Managing the money received from a major project can be tricky if not done correctly. Here are a few key points you need to be aware of.
Managing your cash flow properly is the most important tip I can give because this is the life blood of your business succeeding. In order to properly manage you cash flow, you must first have a budget in place to ensure that you leverage these funds to the best benefit for your business. This budget should detail out how it will be spent month by month. It’s important to spread it out like this because you want to be certain that you have the funds needed to carry you forward – this is forecasting.
Forecasting helps you see how monies will be received and spent in subsequent months. It’s important to perform this task so you can know when you need to move some things around to ensure your bank balance stays in the black. It also helps you determine at what point you need to start looking for the next contract.
Managing a large project can be an overwhelming and daunting task if you are new to working with something that small. And if the money is not managed properly you could be in for some huge losses.
Having your budget and forecast, which I mentioned above, inside of your financial reporting system will allow you to compare your actual expenditures against your projections. This will help you see if your budget was on point or if you are on the brink of failing fast. Monitoring and analyzing these figures monthly will help you foresee if you are trending towards a loss or profit. Looking at the numbers monthly gives you a better chance to make any course corrections.
One of the areas that a lot business owners fail in is being compliant. Corners are cut and information is omitted all just to “make the grade” and get the job done. Then it’s on to the next. Months later you realize you never submitted the paperwork for that final payment. You only needed one more small thing to be in compliance with the requirements of the contract. You must spend the time making sure you know everything that needs to be done before you start a job so that you can plan as you go to complete each task.
Staying on task ensures all your I’s are dotted and T’s are crossed. Having a good reporting system and support team can help make sure you stay on top of things and that you’re not leaving money on the table.
What are your best practices for managing contracts?