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EP 14: Best Financial Strategies To Run A Profitable Contracting Business – Igor Trninic

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30-SECOND SUMMARY
Step-by-step strategy to building a strong financial plan.
Why failure is inevitable, and key takeaways so you don’t make the same mistakes.
The true definition of a healthy net profit, and how to get you there.
Structuring your P&L, and what your accountant can’t tell you.
The difference between revenue, variable and fixed costs.
The dangers of being a financial freewheeler in the contracting realm.

Watch Episode 14 of the Contractor Evolution ShoW

Listen to Episode 14

Read a Summary of Episode 14

Financials: the very word conjures images of bean counters hunched over their desks, mired in numbers and bottom lines.

It’s hardly what you dreamed of doing when you started your business, but the brutal truth is that running your business without budgeting skills is like driving a Ferrari with blinders on: sooner or later, you’ll hit that curve and fly off the road.

Good budgeting skills not only make your decisions as a leader more informed, they enhance your leadership abilities: your strategies and promises will be firmly supported by the numbers.

So, how can you become a whizz at creating a great chart of accounts, balancing the books, and mapping out annual growth?

It’s easier than you think, as long as you don’t mind screwing up the first/second/third time. We’ve all been there; but in the end it becomes second nature. Last year, BTA hit 101% of a very large budget (and that budget was created months before the pandemic hit): that only comes from experience and repetition.

In this episode of Contractor Evolution, Benji and I explain how you can add financial know-how to your tool belt of skills – even if you were lousy at grade 8 math.

Dial in your own chart of accounts

Take the time and effort to do it yourself rather than copy pasting a template from your accountant. Consider the following: How are you categorizing your variable costs? “How are you categorizing your fixed expenses? How are you looking at the software that drives your business? How are you looking at payroll and salaries? All these elements and more need to be thoroughly determined.

Developing your own chart of accounts – and tweaking it occasionally to fit your language – will fit your business and management style, not someone else’s.

Take the time and effort to do it yourself rather than copy pasting a template from your accountant. Consider the following: How are you categorizing your variable costs? “How are you categorizing your fixed expenses? How are you looking at the software that drives your business? How are you looking at payroll and salaries? All these elements and more need to be thoroughly determined.

Study the numbers…….

To get to where you want to be financially, you have to analyze where you’ve already gone. Business owners at the very least should be doing a quarterly financial review with their accountant, financial controller, bookkeeper – examining what they budgeted for a year ago versus the actuals.

 

..And learn from the past

I write comments throughout my budget to explain the rationale behind my numbers, because you can be sure that a few months down the line you will question how on earth you arrived at those numbers. That way if certain elements turn out to be way off during a fiscal year, I can review my comments and know how I arrived at that conclusion.

 

Make your budget poke-proof.

This is especially important when planning growth. My strategy is to imagine that I have to  justify every figure to a group of fictional investors. You can be sure that investors would poke holes in my budgeting, and so should you. I have to have very rational logic if, for example, I say we’re going to do $3.2 million in revenue this year, how did I get there?

 

Be like Michael Jordan

How do you acquire budgeting skills? Basically, it’s all about the reps. It’s a lot like basketball: when Michael Jordan shot his first 100 free throws, he missed…a lot. Yes, you fail at first but you will develop all these skills through repetition and learning from your mistakes.

 

Failure is inevitable, but with each passing year your financial skills will keep growing, and I promise you by year four or five you’re going to be super dialed.

Plus, you’ll be surprised that number crunching isn’t as hard (or yawn-inducing) as you might think.

We hope you enjoy this episode of Contractor Evolution.

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Igor Trninic

Igor Trninic

Igor moved to Canada at a young age, where he learned the value of hard work as he watched his family rebuild a thriving life in a new world with extreme change. Most of Igor’s early learning came from competitive sports, where he learned how to hustle and lead. This learning transferred well to business, when he started running a College Pro Painters franchise at 18 and quickly grew it to one of the top franchises in Canada. After finishing an honours degree in Accounting and HR at the SFU Beedie School of Business, he decided to leave the dull world of numbers and followed his passion of developing people and businesses. He fell in love with leading great people and growing companies to their potential.

Working at College Pro as a General Manager for the franchisor, he tripled the revenue of his division in three years by hiring and leading great managers. Here, Igor saw the power of combining amazing people with strong systems to drive scalability. After College Pro, he chose to test these principles on a new venture with the launch of Shack Shine, and together with the guidance of a highly experienced trades entrepreneur, they grew the company to a full scale franchisor within a year and a half. Shack Shine was eventually acquired by 1-800-GOT-JUNK to be scaled across North America and Igor launched the Breakthrough Academy to guide trades and home service entrepreneurs grow their businesses through proven principles. Igor has a passion and true care for developing people and their businesses, which has formed the foundation of Breakthrough Academy. His work in developing BTA has recently been highlighted in Igor’s Top 30 Under 30 selection by BC Business Magazine.

Igor resides in Vancouver, British Columbia and loves to take on all the adventure that BC can offer. From hunting to skiing to downhill mountain biking, any outdoor adventure is up his alley.

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Welcome to Contractor Evolution, a show created for high-performing contractors that are focused on scaling up, working less and increasing profitability.

While a lot of other shows focus on early stage growth challenges, we focus on real life scenarios faced by contractors that are scaling at a rapid rate, and how they keep everything dialed in without losing sight of work/life balance.

If you’re ready to evolve from a contractor into a better business owner, you’re in the right place.

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