Financial Management

It's great to hear about your entrepreneurial spirit in starting a construction company. I would just caution you to really make sure that you have the work experience and the team in place to successfully move forward with this venture. Sometimes entrepreneurs jump into a venture, and after getting their hands dirty, realize they don't have all the tools in place to be successful.

As you point out, finance and accounting are crucial elements in all businesses. As basic as it may seem, a lot of entrepreneurs jump into a venture without thinking about how they will make money (i.e. be profitable) and to account for that money.

Once you have completed the majority of your business plan, then start to work on building a financial model. As I stated before, you will want to highlight all of the specific drivers of revenue growth in your model so that you will be able to measure your progress in reaching your milestones for each growth initiative.

Let's move to the expense side of running a business. As a side note, this happens to be an area that entrepreneurs usually underestimate and is the common cause for a cash crunch later on down the line.

Your first step is to list as many expenses that you can think of on a plain sheet of paper. Think long and hard on this and do some research because there may be expenses that are not coming to your mind at first. Also, speak with other entrepreneurs in the construction industry as they will likely fill in any gaps you might be missing on your list.

Once your expense list is complete, incorporate it in the financial model. Keep in mind that as you grow, your expenses will also likely increase so you will want to model operating expenses such as employee headcount, office space, administrative fees and anything else that goes into your business.

In addition, it is often helpful to incorporate some scenario analysis in your model (i.e. worst-case, base-case, expected scenario). For instance, if you were estimating the fuel costs for the company's construction vehicles on a yearly basis, a scenario analysis would entail modeling gas prices at current levels, higher levels and lower levels. It doesn't have to be exact as no one can predict the future but you should be thinking about different scenarios to better prepare yourself for the future.