Separate new money from old money. New York law requires that contractors place deposits in an escrow account, but Nash says that it's a good idea for any remodeler. He places deposits for jobs in a separate account: “Any deposit we get can only go toward the expenses for that job,” he says. “Don't put that into your working capital.”
Use percent-completion reporting. “If a job is half complete, you need to show half the income, so you can see what you're really making,” Nash says.
Study key reports on a regular basis. Set a weekly schedule to review profit-and-loss and percentage of completion statements.
Be proactive with debts. “If you do get behind, sit down and have personal conversations with your suppliers. Don't let them come bang on your door.
“I still do work with the companies I owed. They got a chance to stick their neck out for us, and I delivered on my promises,” he says.
Set aside additional money as a cushion. Nash began putting 3% of every check that came into the office into a company savings account. After a few months, he used the accumulated money to pay a bill. “If you're supposed to make a 10% net profit, then it should be no problem to set this aside.”