Most owners are trying to sit in two seats at once. One is driving the truck. The other is looking at where the truck is going. Both seats are always occupied, and almost nobody notices which one they have quietly stopped sitting in.

Bobby spent forty years in homebuilding, including running a region at John Wieland Homes. This episode names the two seats, shows you how to tell which one you are in, and gives you three things to do this week.

The present shouts. The future whispers. And guess which one gets your Tuesday.

This is part one of a pair. Part two is Everyone Knows Their Job and the Company Is Going Nowhere.

Chapters:

0:00 The present shouts, the future whispers

2:03 It is a seating problem

4:27 Both seats are always occupied

6:52 Stop counting revenue, count decisions

8:56 The present shouts, the future whispers, in full

9:32 The February problem

14:42 Three Thursdays, and one decision

17:02 The calendar test: your O's and your V's

21:41 Half a good plan is what you are bad at

25:35 The two seats want opposite things from you

29:32 Answer it once, in writing, with a dollar limit

33:23 Give yourself grace: nine years of being the answer

34:53 Forty calls, and good question go ask her

41:04 You cannot work your way into the vision seat

41:35 This week: run the calendar test

46:28 Why I am telling you this

48:46 Close

More at ChoiceConsultingMan.com/Podcast

Bobby sits down with Mark Whitmire, a CFO with more than 35 years in finance and accounting, to close out the Know Your Numbers series. Part one was the mindset. Part two was the math. This is the practitioner.

Mark's father was a CPA and president of the Georgia Society of CPAs, and Mark grew up watching him drop tax returns at the post office at midnight. He has the accounting gene and deliberately did not become an accountant. What he has instead is 35 years of being the person who finds the financial problem in somebody else's business.

His verdict, after decades of counselling owners: there has never been an instance where somebody was doing better than they thought. Not once.

The conversation covers why a builder reading a tax return may be looking at a business eighteen months old, the spec house that did not sell and why nothing in an income statement will ever reveal what it cost, the warranty money that leaves after the closing, and why you should raise three times what you think you need and raise it while you still do not need it.

Then it turns, as these conversations do, from money to people. Hiring to your weakness, the way Charles Schwab and Richard Branson both did. Why effective partners tend not to be friends. Why most business plans are simply "more," and what a finish line should look like instead.

"Engineers will build something nobody wants. Salespeople will sell something they can't produce."

"My to-do list tends to be one item."

Chapters:

0:00 The house you didn't sell

1:13 Why owners struggle with the numbers

3:29 Mark's father, and the adding machine

7:19 Advice for a new owner: triple it

9:57 Raise money before you need it

11:28 Your tax return is 18 months old

13:13 Regular reporting, and the discipline it takes

16:45 Warranty, and the cash that leaves after closing

17:47 Nobody was ever doing better than they thought

19:02 Hire to your weakness

21:00 Most business plans are simply more

23:34 Don't hire your best buddy

29:09 Go think

31:39 Your to-do list is one item

38:16 Homes where families create memories

41:02 Write your eulogy

42:01 Close

Learn more: ChoiceConsultingMan.com/Podcast

Bobby's books, Choices and Clarity: ChoiceConsultingMan.com/books

A video version of this episode is on YouTube. Search Choices Create Change.

Last week was why to measure. This week is how to read what you are measuring.

Bobby opens with two houses: same plan, same community, sold for the same price. On paper, at the moment they sold, they were the same job. One closed at 31% gross margin and the other at 17%. On a $500,000 house that is $70,000, and it was not created at the closing table. It was created in a hundred small decisions across six months, and not one of them felt like a $70,000 decision at the time.

From there it is a profit and loss statement in plain English, section by section, with the one test that tells you where a cost belongs: would this cost exist if you had not built that job?

Then the part that is quietly costing people money right now. Markup and margin are not the same number. Add 25% to a $100,000 cost and you sell at $125,000, which is a 20% margin, not 25%. To actually earn 30% you have to mark up almost 43%. A leader who confuses the two is not making an occasional error, they are underpricing every job by the same amount forever, and there is no bad month that makes them go look.

Also in this episode: the six places margin leaks and why not one of them is a market condition, why growing companies are the ones that run out of cash, and break-even, which is your annual overhead divided by your gross margin percentage. Drop five points of margin and a company with $1,200,000 of overhead has to build an extra $800,000 of work to end up exactly where it was.

"A number without a target is trivia. A number with a target is a decision waiting to be made."

This is part two of three. Next week a longtime CFO joins the show.

Chapters:

0:00 Two houses, identical on paper

0:33 Welcome

1:32 You were never taught this

2:26 Reading a profit and loss statement

5:45 The targets: 30, 18 and 12

6:54 Gross margin, where the money is won and lost

8:16 Two houses that look identical

9:25 The six places margin leaks

11:50 Not one of them is the market

12:15 Markup versus margin

13:52 Now do it the right way

15:07 To get 30 you have to mark up 43

16:03 Budget versus actual

17:25 How forecasting actually works

18:15 The monthly review: three columns

18:41 Variance analysis: get to why

20:09 Cash flow, the one that ends companies

20:40 Why growing companies are the ones at risk

21:38 Draws, inventory, receivables, payables

23:28 Break-even, and what a slow month costs

24:40 What five points of margin does to break-even

26:03 Leading versus lagging indicators

28:07 Building your weekly dashboard

29:39 The four questions

32:50 This week's challenge

34:33 Call your CPA and ask

35:49 Close

Learn more: ChoiceConsultingMan.com/Podcast

Bobby's books, Choices and Clarity: ChoiceConsultingMan.com/books

A video version of this episode is on YouTube. Search Choices Create Change.