Why You Need To STOP Avoiding the Numbers

Inaccurate bookkeeping causes restoration firms to avoid their financials; learn how to get meaningful P&Ls that reflect your true profitability.

I’m excited about a trend that I’ve been noticing over the past year and a half in both the restoration industry and with general contractors. More and more restoration businesses and general contractors are starting to pay attention to their numbers in a much different way than they have before—and that’s a good thing.

At the same time, I still talk to a lot of people who aren’t paying attention to their numbers. Sometimes it’s small businesses that are just getting started, and other times, it’s large seven or eight-figure businesses that have been around for a long time.

So, why aren’t they looking at their numbers?

After talking to hundreds of restoration businesses over the past several years, I think it comes down to this: they avoid the numbers because when they look at them, they’re not real.

What do I mean by that?

Let’s take a full-service restoration business, for example. In the case of larger projects, you’re probably taking deposits and the way you account for those deposits has a huge impact on the way those numbers are reported. If you take a bunch of deposits in, say, November but don’t do any of the work that month, your P&L (Profit & Loss) statement might show that you did really well. But is that real? No. You took all this deposit money, but none of the work is reflected yet—no labor costs, no materials. Of course, your profitability is going to look unrealistically good.

Here’s another scenario: You get to the end of the month, run your P&L, and see a negative net profit. You think, “Wow, that was not a good month. We did really poorly.” But then you remember: you’ve got jobs that you finished that aren’t in there yet because they haven’t been invoiced. Why? Maybe someone didn’t get around yet???

What about long-running jobs that span multiple months? If you’re not progress invoicing, your team is doing work, but you won’t see it reflected in black and white on your P&L.

So, what I see as the number one issue is that people are avoiding their numbers. The discipline of reviewing cash and accrual P&Ls every month, the discipline of reviewing individual job P&Ls at the close of every job—people avoid it because their bookkeeping doesn’t paint an accurate picture of what’s really going on.

Now, what can you do about it?

There are a few things you can try:

1. Talk to your accountant. They may or may not be skilled in solving this problem for you.
2. Search YouTube for people talking about this issue—typically bookkeepers or accountants.

. . . Or you can book a call with me.

I’ll share a financial assessment with you that will show you the exact steps you need to take to get numbers that truly make sense. Once you have accurate numbers, my guess is that you’ll start paying attention to them and use them as a tool to get more profitable.

If you’d like to book a call, just click the link below. I’ll share that assessment with you, and we’ll talk about getting you on the right path.