How would it feel to know the future of your construction business?
Pretty awesome, right?
You’d be able to know which jobs to take, how much revenue you need to breakeven and hit your profit profit goals, how much cash you’re going to end up with, and more. It would be pretty powerful, to say the least.
That’s exactly what I set out to do almost 20 years ago
in the construction business I was working in.
Before I had gone to work at that construction business, I was part of a manufacturing business. And in that business, I had to forecast how much money the business was going to make, compare how the business actually did, and then explain why it was different.
Now, in a manufacturing business, this is pretty straight-forward: The products are fairly standardized, the costs are usually pretty standardized and predictable, and you are generally able to reliably predict the future of the company.
When I went into the construction industry, things were quite different…
Jobs in construction are custom-made almost every single time.
Nothing is ever static.
And on top of that, the construction industry is super fast paced.
So, when the construction company I was part of (in which I was a CFO) would go to bid jobs, it was normally without knowing exactly what the impact of the job would be.
And if we got in a really tight spot and had to bid 10 jobs at the same time to get work, we didn’t really know if that was enough jobs or too many.
This led to a lot of unpredictability, and coming from a manufacturing background where we were able to reliably predict the future of the company, I wanted to see if there was a way to do the same in construction.
I asked peers, mentors, and consultants if there was software available where I could plug in financial data we already produced (WIP job schedules, income statements, balance sheets) and calculate the financial future of the business.
I was met with a resounding: “No.”
“Fine, then. I’ll create it!” I told them.
They all thought I was crazy.
I’ll show them, I thought.
And so, I went to work!
After enough fancy calculations, testing, and back-breaking labor, I was able to create a complex series of spreadsheets, databases, and formulas where you plug in values (found in financial statements like the WIP job schedule, income statement, and balance sheet) and, with some mathematical wizardry, it tells you the future of your construction company.
This was a TOTAL game changer!
It meant that we could now figure out things like…
- How much work we needed to get in order to breakeven (or profit).
- When is a good time to add employees and purchase equipment.
- What our revenue would be for the year.
- What our overhead expenses would be.
- What our profit would be for the year.
- And more!
And, because of the bonus program in our company, it led to a TON of teamwork and cohesion in our construction company because I was able to explain to everyone where we were headed and what we needed to hit our goal—thus getting everyone a bonus.
For instance, I was able to tell people working on one job that we needed 20% margins on that job in order to be on track to hit our profit goals.
This led to a ton of teamwork because, if we were behind on that job, everyone would join forces to brainstorm ways to make sure it would get to the 20% margins we needed!
Plus, I was able to calculate if that “dream job” everyone “had to have”
would be miraculous… or disastrous for our company!
Our proposed dream job at the time was a $10 million job—and we all thought it would fix our problems.
Hold on, I thought, let me run scenarios on this to see what will happen if we take it.
So, I plugged in the “what if” scenario into my “big spreadsheet” to see what would happen if we took that job.
Would it solve all our problems?
In fact, it would create more problems!
At the time, we didn’t have enough capital to fund a job that big—we would need 20-30% up front in cash in order to fund the job.
That’s $2-3 million up front!
We didn’t have that kind of cash!
It would either bankrupt our company or it would lead to us slogging along for months or years—barely scraping by—while we worked on that job.
So, I showed it to the rest of the company, and we all agreed: Let’s not take that job!
We let the job go and one of our competitors bid on it instead—and they got it!
That meant that all the smaller, more profitable jobs were left to us…
While our competitor was left
slogging along on the huge, $10 million job!
Had we not had that formula, we could’ve gone bankrupt!
Fast forward a few years and Melissa and I decided to leave and create Atlas CFO so we could help other construction companies with the system I created.
Now, while I certainly was able to help other companies with that system, the system was built around multiple spreadsheets.
Now, if you’ve ever used spreadsheets, you’ll know that they’re prone to breaking.
Imagine a big, beautiful, complex analog clock (maybe like Big Ben): All the gears set up in the correct order, each moving precisely to move the clock hands to tell the correct time. It’s a true work of art.
Now imagine that clock didn’t have any walls.
And rocks would periodically get kicked from the road nearby into the gears, grinding the whole thing to a screeching halt.
That’s basically what I had to deal
with when using spreadsheets.
Thankfully, the technology eventually became widely available enough to get a software built around my formula—and get a software built I did.
The result was the Atlas Growth Model.
And unlike the clock example of the spreadsheets, the Atlas Growth Model was like a clock with walls and no rocks or road in sight!
It’s super easy to plug data into, plus it backs up all your data so you never have to worry about anything breaking.
And, because the formula was now in a dedicated software, I was able to add more features.
- The ability to “game” scenarios to see the different possible futures of your construction business. You’re able to see the real effects of “what if…” scenarios like adding jobs or changing schedules or costs on jobs!
- How much cash you’ll have at the end of the year.
- Your cash flow—that way, you can see where your cash is coming from and where it’s going, helping you to make decisions involving cash (like whether you should get rid of any expenses).
- Key ratios to determine the performance of your construction company.
- How much revenue you’ll earn.
- How much profit you’ll make.
- Your projected overhead expenses.
- Easy-to-understand graphs and tables of your financial data—you won’t have to worry about it being so terribly complex that it makes your head spin!
- The ability to make it as simple or as complex as you want.
You’re able to keep it super simple, or you can make it as complex as you want!
You could get “down and dirty” with the data and really zoom in on all the granular little details, or you could keep it simple and look at the fancy, quick-to-understand graphs and tables of your financial data.
And that’s not all you can do….
- You can look at different departments and divisions in your company to see how they’re doing and track performance.
- See the projected periods of profit, breakeven, and losses so you can make clear decisions on things like when you need to get jobs to make more revenue or when you need to control expenses.
- See whether you’re going to be collecting cash or whether you’ll need help on your line of credit. That way, you can plan accordingly with your cash.
- See what your working capital is to determine if you have enough money to take jobs.
- See approximately what you’ll need in terms of cash to fund a job—that way, it won’t catch you by surprise and leave you scrambling for cash to fund it.
- See approximately what margin trends are on a job so you know how much profit you’ll make off it.
- The ability to see how much margin you need to make on a job in order to breakeven or profit.
- The ability to easily export and import spreadsheets of your job schedule so you don’t have to manually grind away inputting the data.
- See if you’re building equity and the value of your company. That way, if your plan is to eventually sell it, you’ll know if you’re heading in the right direction by building the value you need to meet your long-term goals.
- Find the best time to add employees or equipment—that way, you won’t be breaking the bank and causing issues while expanding your business.
- See if you’re able to fund a bonus program. Plus, with the data the Atlas Growth Model provides, you’ll be able to show the rest of the team if you’re on track to reach your financial goals so everyone gets a bonus—leading to greatly increased teamwork and cohesion!
- Easily export the data into Excel spreadsheets so you can share it with others.
- See if you’re able to fund a succession/retirement plan.
- Test different jobs and see what will happen if you take them on—including your big, “dream” job!
Being able to see the effect of taking on jobs in our construction company was a huge game changer.
Because of that ability, we were able to avoid the huge, $10 million, not-so-dreamy-after-all job that could have bankrupted our company!
Being able to game different scenarios and see the effect of adding jobs allows you to see if it’s a good idea to add a job—and under which conditions.
- See the growth of your company. You’ll be able to see the growth curve of your company.
- Break out jobs into different sections/parts, so you can keep better track of a really complex job and see what’s going on with it.
- The AGM also helps with calculating bank covenants to see if you’ll hit them!
- Plus, you’ll be able to see how much working capital you have so you can get or grow a surety program.
- Productivity hacks to help you accomplish even more in the Atlas Growth Model in less time!
- Find good times to add jobs so you can make breakeven or make a profit.
- How to easily export your job schedule revenue and cost runout into a spreadsheet, and quickly set it up in a summarized, easy-to-understand way so you can share it—sureties love this!
Now, the Atlas Growth Model isn’t a magic crystal ball: It’s not 100% accurate (nothing attempting to predict the future ever is!), but it’s a pretty dang powerful tool you can use in your construction business. As I like to say, it’s used for decision, not precision.
Our clients, for instance, have been able to use the power of the Atlas Growth Model to better guide their decisions to increase profit and get more peace of mind.
They’ve said things like…
"The Atlas Growth Model has changed the way we do business. I can now see projections rather than just historical information. This helps me make the best decisions. We create budgets and overhead cost models using this tool. It gives us much more sophisticated information, so our banking and surety partners know where we stand. It's changed our philosophy in the way we handle our financial information. The Atlas Growth Model gives me exactly what I need to run my business successfully."
-Jeff, President, General Contractor
“Atlas has created forecasting and budgeting tools to help us be more operationally efficient on our projects. We are able to schedule and communicate to our project owners and general contractors, which allows our team to be better prepared and deliver top notch service. Atlas has created financial transparency, so we can make better decisions about our business.”
-Joe, President, Mechanical Contractor
The Atlas Growth Model is best used when you have someone with a financial background who’s able to input and translate all the nerdy data. It’s certainly still do-able if you don’t have a financial background, but our clients find that when someone reads it back to them, they have faster results.
If you have someone on staff or your own CPA, then you can get to harnessing the power of the Atlas Growth Model to improve your company. We have clients that have that financially-trained person on-staff to run the Atlas Growth Model.
But, if you don’t have someone with a financial background on your team, that’s just fine! We can do it with you. We’ve got different packages that can fit your needs.
Basically, the Atlas Growth Model is a super powerful tool that can help you make better decisions in your construction business that can guide you towards things like more revenue, increased profitability, better teamwork, and a whole slew of other benefits.
You’ll get access to…
- The Atlas Growth Model and its trainings,
- All Access (a resource library of our combined 40+ years of construction experience!),
- The WIP Creation Course (our class to help you properly build a WIP),
- Financial Metric Mastery (our class to help you track your most important metrics), and
- Cash Flow Control (our class on taking control of your cash flow).
That’s all of our classes in just one offer!
If you’d like to get access to all of that, just click the “Sign Me Up!” button below and enter your information.
If you’d like to see a demo of the Atlas Growth Model to see if it’s a good fit for your company, then just click the “Request Demo” button below.
We’ll get on a call and you can see how the Atlas Growth Model works.
I hope to see you using the Atlas Growth Model (and all our other classes!) to improve your construction business.
P.S. Here are some Frequently Asked Questions and pictures of the Atlas Growth Model:
What if I want to stop services?
Am I a good fit for the Atlas Growth Model?
What do I need for the Atlas Growth Model?
Here is a sneak peak of the Atlas Growth Model: