Nation's Building News Online

Early Warning Signs Point to Possible Business Failure

With business hurting these days, commercial builders are making an especially concerted effort to avoid mistakes in running their companies.

Equally applicable to small residential builders, who need to watch their businesses in both good and hard times, Davidson & Golden, P.C., a Tennessee-based accounting firm, has identified 10 early warning signs that a company may be headed for failure:

Sponsored by: Countrywide Home Loans

See how Countrywide’s Prime Rate OTC construction loan can offer more flexibility to qualified buyers.
Learn how our Home Equity Loan offers flexible payment options and the ability to reuse the funds.

1. Growing too fast
2. Obtaining work in a new geographic region
3. Dramatically increasing in single job size
4. Obtaining new types of work
5. High employee turnover
6. Inadequate capitalization
7. Poor estimating and job costing
8. Poor accounting system
9. Poor cash flow
10. Buying “dumb” stuff

The accountants say businesses don’t necessarily need to panic if they match up with two or three of the above. Their experience with failed firms shows that these are among the most common mistakes they made.

Just be cautious about falling into too many of these traps, Davidson & Golden advises.

To read the entire article on which the above was based — “Ten Most Common Causes of Construction Contractor Failures,” by Robert A. Davidson, CPA, and Martin G. McGuire,CPA — click here, and go to page 6.
[ Go to Top ]

Sponsored by: 2-10 Home Buyer's Warranty

Need to Buy General Liability Insurance?
Are You Controlling Your Exposure to Moisture, Mold and Fungus?
Structural Defects, Can They Happen to You?
Insurance Coverage a Challenge?