The Virtual CFO

Why Budget Construction Projects? Normal Budget Process

Last year, I wrote a blog series entitled "Budgeting for Small Business". In this series, I described the steps that most businesses take when producing a company-wide budget. These steps are:

1. Sales Revenue Budget. This is the revenue you expect to make during the period from selling your products or services.
2. Production Budget. These are the expenses that are directly associated with producing your products or services.
3. General and Administrative Budget (sometimes called an Overhead Budget). These are the expenses that cannot be directly tied to producing a product or service, such as non-production related payroll, depreciation, sales and marketing, rent, insurance, and bad debt.
4. Capital Expenditure Budget. This is where you estimate the expense for the major purchases, such as machinery or automobiles, you plan to make during the period.
5. Interest and Tax Budget. These are all the revenues and expenses that are not directly related to the operations of the company, but do have an effect on the income or loss used for tax purposes.
6. Cash Flow Budget. This is where you estimate the actual cash you will receive and the actual cash expenditures that will be made during a certain period.

This budgeting process works for most companies because most industries are sales driven. By this I mean that most firms can create a budget from the top-down by forecasting sales because sales to customers are regular and routine.

The construction industry is unique in that it is project driven instead of sales driven.

New Client HastyHost.com: Why I Love This Job

CPA for Small Business recently gained a new client, HastyHost. HastyHost is a company that provides high-quality, affordable web hosting. Yesterday, Robert, the CEO of HastyHost wrote a very flattering (and humbling) post about me on the HastyHost blog entitled, "Whats New At HastyHost?".

Robert is an entrepreneur who is building his dream and I feel very privileged to have gained his company’s business. I look forward to helping HastyHost with their future accounting, financial, and tax needs.

The thing I love the most about my job is that I get to spend most of my time assisting people who are building a dream. As a group, entrepreneurs are very inspirational and positive to be around. This is the reason I wrote "Make Friends and Network with Non-Competing Entrepreneurs and Small Business Owners" earlier in the year. Being around entrepreneurs such as Robert help me stay motivated as I build CPA for Small Business.

Budgeting for Profit Maximization of Construction Projects

Next month, I will be leading a session at the Tennessee Society of CPAs Construction Conference entitled, "Budgeting & Profit Maximization for Projects". I’ve been working on the PowerPoint presentation for this session and I decided that construction project budgeting would be a good blog series topic.

In this series, I’ll cover the following subjects:

• Why budget projects?
• The goals of budgeting for projects
• The requirements for successfully budgeting projects
• The reasons that budgeting for projects fails
• Overcoming resistance to project budgeting
• Budgeting project expenses
• Budget variance reporting, and
• Using the data you’ve gathered to improve future estimating and budgeting

I hope you find this series on construction project budgeting informative and interesting.

Blog Series Topic Index

Several readers to the Virtual CFO Blog have requested that I publish a directory of the blog series I’ve written.

I considered placing a blog series topic index on the blog’s main page, but doing this would make the main page look awfully crowded. I’ve written eighteen topical series in the year The Virtual CFO Blog has been in existence and an index of these topics would take up a considerable amount of space.

This is why I’ve decided to use The Virtual CFO Squidoo site to host the Virtual CFO Blog Topic Index. A link to this index is located on the right hand sidebar of The Virtual CFO Blog’s main page.

You can also find a list of my favorite post on the Squidoo site as well as descriptions of the services CPA for Small Business provides. There is also a little poll at the bottom you might want to participate in.

I hope you find the index useful.

Virtual CFO’s are Scalable

A fourth advantage to using a Virtual CFO at your company is that the services received are scalable, giving you the ability to expand the financial management services your company receive as it grows.

This is particularly important when your firm is growing and in need of financial management guidance that is not available in-house.

For many small businesses, the first financial related hire is a bookkeeper. As the company grows, owners begin to desire assistance with financial management activities such as cash flow, budgets, and forecasting. Unfortunately, many bookkeepers don’t have the experience necessary to adequately assist owners with these activities.

This is where a Virtual CFO can help. When you first start using a Virtual CFO, you may only have a few hours of cash flow management work a month. As your company grows, you may want to implement budgets and budget variance reporting. In this situation, a Virtual CFO can increase the hours and scope of the work performed to meet your company’s needs.

Virtual CFO’s are Economical for Small, Entrepreneurial Businesses

The third advantage of hiring a Virtual CFO is that it is an economical means of utilizing someone with a high level of financial management experience and expertise.

In my post, "Why Focus on Virtual CFO Services?", I explain why I offer Virtual CFO Services at CPA for Small Business, LLC. The reason these two business owners asked if I would be interested in working for them on a part-time basis is that they didn’t want to pay for a full-time CFO but they knew their company would benefit from an experienced CFO.

All small business owners desire to have the best help available. By retaining a Virtual CFO, you are essentially hiring a high quality CFO at your company while at the same time only paying for the time you need.

One Note on MBA Classes During Summer School

The previous two summers, I attended MBA classes during summer school. In 2005, I took Strategic Marketing and last year it was Data Resources Management.

Both of these summers were extremely hectic because of the work load from class. I had to spend all my free time studying and working on class projects. This is part of the reason why I decided to take this summer off.

However, I’m ready for fall classes to begin. Today, UPS delivered the textbook for the class I’m taking this fall, Accounting Information for Management Decisions, so I can get ahead on my reading.