Materials and labor costs. Unusual changes in materials costs can signal that something’s out of whack. I track materials costs, labor costs, and revenue (actual work installed). This tells me whether or not I’m making enough gross profit. Know all of your costs so you can develop the right selling price based on your company’s costs, not the other guy’s price.

Monthly financial statements. It’s a must to have monthly financial statements in your hands as quickly as possible. Develop your skills to understand what the income and balance sheets are and what they tell you about your business … monthly. Having a sharp accountant or bookkeeper is paramount to getting your numbers quickly and keeping you on a profitable path.

Pay yourself. A lot of contractors simply hope there’s some money left over in the bank when their materials, payroll, and overhead expenses have been paid for. Pay yourself a salary and include that as overhead.

Proof is in the Profit Focus on the financial side of the business, and have a business plan, regularly updated, to chart your course. Most remodeling or replacement companies do not. Yet, if you wanted to borrow money, say for an expansion or some trucks, what do you think the banker would want to see first? Your business plan and your income statement and balance sheet. —Bill Frazier, owner of Austin Gutterman in Austin, Texas, also runs a boot camp for owners of gutter and gutter protection companies. For more information see: www.austingutterman.com.