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Five Tips to Grow your Profits in 2011

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 Five Things You Can Do TODAY That Will Guarantee Improved Profits for 2011


Here is a quote to contemplate for a minute before you read our tips. "If I only had two hours to chop down a tree, I would spend the first hour sharpening my ax."  Abe Lincoln

Now, how sharp is your ax?

Did you know there are three simple rules to making a profit in the construction industry?

1.       Provide the owner with a price he will accept

2.       Complete the job for less than you quoted in Rule #1

3.       Get the owner to pay the amount you quoted

Wow, that sounds pretty simple, but I have over 30 years in this industry and it is not that easy.  As you know, we worry about government regulations, personnel decisions, material deliveries and a lot more.

Where do you start?  Remember, this is 2011.  Are you still doing things like you did in 1990 or even 2005?  Technology is the first place you can start and it may not require a large investment.  Communication is the second place you can find hidden profits.  What can you do today to improve the profit on your current backlog and future bids?

Tip # 1

"Being on the go" is the way we all do business today.  Jobs are farther away than they were in the past and we are trying to do more with less.  Communication and technology both come into play here.  Link your jobsites to your office and stop doing things two or three times like we saw the other day at an unnamed contractor.

There are several ways to get this accomplished.  I would suggest you sign up for a free webinar to learn more about Terminal Services or our Hosted Solutions (send us an email if you are interested).  If you are still using a VPN, you are still using 2005 technology.

Tip #2

Communicate, communicate, and communicate!  How many of these questions can you answer yes?

1.       Your project managers, estimators and senior management meet weekly to review cost reports?

2.       You get an email alert when a job or cost code goes over budget at the end of the day?

3.       You send out auto alerts to subs, architects or owners when a document is not received on the due date?

4.       You send out invoices for approval by electronic signatures eliminating the making of copies and mailing or courier cost?

5.       You send out newsletters to prospects and clients on at least a quarterly basis?

6.       You maintain a website for your prospects to find you?

7.       You ask your clients for referrals?

8.       You ask your subcontractors or general contractor for referrals?

9.       You provide your employees with information about new jobs you have been awarded, not just the office employees?

10.   You have 3 to 5 Key Performance Indicators (KPI) that you monitor?

11.   You have a real CRM system (Salesforce, SageCRM) in place to manage your business development or a web-based CRM system?

If you answered yes to 5 or less, then you can improve your profits quickly.

Tip #3

KPI's - the smart companies are looking at these on a daily or weekly time frame to manage their profits and ability to acquire more profitable work.  There are several KPI's that will make sense for your company.  These are a few examples; there are many others.

1.       New projects awarded in volume and number

2.       Ratio of winning bids to those submitted

3.       Revenue per man-hour - this is great for subcontractors

4.       Our proprietary "survivor-ability ratio"  (send an email to us and we will send you the formula)

5.       Days of cash in the bank is another of our favorites

6.       Margin on Change Orders as a percent of the margin bid on the original job

7.       Days required for Change Order approvals

8.       Dollars of revenue from referrals

9.       For labor intensive organizations, our own "Earned Hours Factor" method. Sign up for a copy of this whitepaper when it is released.


There are an unlimited number of things to measure; the key is to measure the items that will give the biggest impact to your bottom line.

Tip #4

Educate yourself and your employees on how to use your current software solution.  We don't really care what you are using, but you need to know how to use what you have.  We recently did a survey of some of our 1,500 construction clients.  Our survey showed that the majority of those surveyed used less than 25% of their software's features and capabilities.  Every time you get a new release a new feature that can benefit your company goes unnoticed.  The way new features are determined is from customer surveys and customer enhancement requests.  You could take classes, attend a webinar or have a certified consultant sit down with you and put together a plan to maximize the use of what you already own.

Tip #5

Educate yourself on what solutions are available in the current market.  If you are a contractor or specialty subcontractor, you need your software to be fully integrated and to produce the following at a minimum with no additional keying or duplication of efforts:

1.       Work in Process Report or Bonding Report

2.       Committed Cost Report in real-time

3.       Workers Comp Reports

4.       Certified Payroll Reports if you require them

5.       Progress billings

6.       Cost to complete analysis

a.       Dollars

b.      Unit Cost

c.       Hours

These are some features offered in the "Best of Breed" category:

7.       Automatic alerts emailed out daily/weekly

a.       Job over budget

b.      Cost code over budget or approaching budget

c.       Change order x days past due or any other document

8.       Electronic routing of documents

9.       Security at the menu level or user level

10.   Dashboards to see important and key information

11.   Reports or inquires where you can drill down to the details

12.   Interfaces with Excel or Word

13.   Process subcontract bids on bid day easily, with multiple estimators and produce documents to submit with your bid

I hope this article was helpful and made you aware of some items you can implement in your company. Chief Financial officer on the go has over 20 certified consultants who work with over 1,500 clients helping them maximize their investment in one of Sage's construction solutions or improving their operations and processes.  Visit our website at to access our latest newsletter or information about our solutions. If you want to learn more, please email with your question or to schedule a free 15 minute call.  The first call is always on us.

Dennis E. Feidner

Chief Financial Officer on the go        800-659-5851



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