Posted on 05/11/2020 at 09:00 AM by Brian Weckman
Benefits Beyond Efficiency & Productivity
You probably know that investing in electrical estimating software can have efficiency and productivity benefits that help save time and money. But it also offers another hidden benefit that you probably haven’t realized yet.
When you approach your bank for various financing options, a loan or a line of credit, they’re going to ask you several things:
How much money do you need – and why?
How is your business unique and what makes you different from other electrical contractors?
What’s the long-term business plan for your company?
How will you ensure you can repay the loan?
What assets, savings, collateral, etc. do you have to make sure you can survive ups and downs?
Do you have proof of solid cash flow?
Are you profitable, and can you ensure you stay that way?
Are you committed to the financial success of your business?
When it comes to answering these questions – especially in today’s economy when small businesses are competing for things like lines of credit and Paycheck Protection Program loans from the Small Business Administration – what will separate you from other contractors asking for funds?
The Importance of Financial Stability
One single factor can go a long way toward making your case: The ability to demonstrate that your company has the financial stability to make loan payments on time – even when something unexpected happens.
The profitability of your electrical contracting business has a direct impact on financing eligibility. Why? Because profitability acts as proof that you have enough liquid capital to pay back the loan you’re asking the bank for. It takes skill to bring in money – but it takes a solid approach to business to maintain profitability.
So, beyond bringing in multiple financial statements with profitability ratios, material pricing, an income statement or two, demonstrating your overall net income, and more, how can you prove that you not only generate revenue, but you also make more than what you owe?
Visual, Real-World Proof
Imagine this: What if you could walk into your bank (or jump on a conference or video call, which is the more likely scenario right now) and show the lender exactly how you bid and win jobs? What if you could demonstrate how you’re going to keep getting work – and maybe even take work from other places because you’re tracking project production, pace, and profit?
When you can help your banker understand how you run your business, walk them through the steps you take to ensure profitability on every project, and show them the real-world tools you use to make it all happen, it goes a long way toward helping the banker understand and buy into what you do.
Having this information at your fingertips is even more important if you’re dealing with a new bank that doesn’t know much about you or your business.
Electrical estimating software that details exact expenses, overruns, and profitability on specific job acts can demonstrate a commitment to your business plan and prove that you have processes in place to track the performance of each job.
You could use software to explain your profitability in a few ways. Some electrical contractors actually take their phones or laptops to show bankers the software and tools they use to track and verify profitability from start to finish on every project. Or you could use the software to generate custom reports to take with you as well.
At the end of the day, the bank cares most about your numbers. Are your jobs profitable – and will they continue to be? If you can demonstrate that you have a grasp on business expenses, know how to identify profitable vs. non-profitable jobs, and take steps to address profitability issues, then the likelihood of getting the funding you need increases.
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