14 Florida Pool Prosm • December 2023 THE SCOOP ON SERVICE your company has a substantial commitment in the form of notes or loans accompanying its generated income. When work dissipates, financial commitments remain, causing companies to go belly up. Financing options are an incredibly valuable tool that can help your organization grow, but if misunderstood, they can accomplish the opposite. Furthermore, profit margins are another basic, yet essential, metric which must be monitored in your company. It is easy to stray from profit margin goals, especially with the volatile costs we have seen over the last two years. This is why a designated price book that is constantly maintained is one of the most significant tools you can have in your toolbelt. Meeting your margin on every project, job, or sale will allow you to continue operating your business. This is something that sounds elementary, yet it is often overlooked when bidding against other vendors. As unfortunate as it may sound, there is some work your company cannot afford to win if it requires you to perform it at a razor thin margin or at a high risk for loss. Lastly, solvency ratios provide a great picture of your ability to meet or exceed your financial commitments. Rather than simply comparing your financial commitments to your projected revenues, these ratios also consider the interest owed on your loans. The additional cost to borrow the money can become overwhelming, furthering the notion that you are better suited favoring a lesser-leveraged state. By reviewing your organization’s solvency, you will have a better grasp on your ability to contend with your fixed costs if the industry takes a turn for the worse. Each of the metrics and ideas discussed above are aimed to help prepare for the inevitable “rainy day.” They are at your disposal to ensure your company is equipped to handle the uncertainty of the future. The benefit of reviewing your company’s financial health while business is healthy, is that you have time to correct any issues you discover. If you elect to wait, you may not be afforded the same opportunity. As pool professionals, our collective goal is to help this industry expand and keep as many people swimming as possible, and that all starts with the ones running the show. If you operate your company responsibly, it will pay dividends for generations to come.
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