Finances
Reading your numbers, the clock the money runs on, and margin — knowing what the work costs, running on a clock the money can survive, and finding the parts of the business that are quietly paying for the rest. The first read is below in full and it is free.
The organising idea — volume hides sin
“Volume hides sin.” It is a saying in my industry and it is the truest thing I know about money in a business. When work is pouring in, everyone is happy, sales climb — sometimes straight at the expense of profit — and nobody looks, because nobody has a reason to.
You would think the looking starts when volume drops. It doesn’t. Attention goes to the missing work, not to the thing that would actually help — getting better at service and productivity so you can carry the work at a lower cost. Busy hides the margin problem; slow hides it behind a demand problem.
No amount of work, high or low, makes people look at the money on their own. That is why it has to be a built-in habit — the right month never comes.
What it cost me before I built the habit
My peak ran November to February, and you don’t turn down peak volume — that is how you lose the contract. Payroll went from $35,000 every two weeks to $110,000; everything else rose about forty per cent. Four months, roughly $900,000 in wages out of my own pocket, for work that wouldn’t be paid until March — sometimes July if a charge was disputed. I tried to grow my way out; more volume just added more running around, and the rates were too cheap to grow out of. Taking the leases and rentals off the books and handing every route to owner-operators stopped the surprises. I still couldn’t get at the money.
The year I finally priced it, route by route
Thirteen routes on a regional highway contract. The forecast I built in February: $1,654,000 in revenue, less a 1% penalty for thirty-day terms, less the owner-operator and backup-driver payouts — a forecast profit of $71,600, about 4.3% of revenue. After the other shareholder’s 4.5% of gross, what was left for me was minus $2,076. Thirteen routes, $1.6 million in, trucks moving every day, invoices going out — and the man who owned it finishing the year two thousand dollars in the hole.
The part that should worry you: every one of those numbers could have been known in advance. I built that forecast in February, before the year ran. Nothing in it was a surprise or bad luck — it was arithmetic I hadn’t been doing for years, while the business was busy. And the routes weren’t all bad: some returned 17% over what the contractor cost me, others 84%. Parts of it worked beautifully — I just couldn’t see which parts, because the total swallowed them.
I could not see which parts of my business worked. That is what the rest of this chapter is for.
The cost-of-one-unit sheet, the morning sheet, the days-out-days-in read and the profit-and-productivity grid — with the three reads that explain why each one exists — are inside Base Camp, along with your own four gear results and a second reading ninety days out.
Three reads, and the sheet that ends the guessing.
Knowing that volume hides sin changes nothing on its own. These are the three that make it visible: what the work costs, how often you look, and which parts are carrying the rest.
Where the money is made. Twenty minutes, alone.
List your work, biggest first, and beside each line what it costs to do and what is left. Then mark each one: does it pay, or only keep us busy? You are looking for the line that is all volume and no margin. The sheet is free.
Open the free sheet, Finances: where to start →Inside Base Camp this sheet is Block 1 of The Finances Page, and station two, what one unit really costs, comes next.
Two errors, running in opposite directions.
Why the cost you feel is the one you over-weight, why nearly everything you omit is time, and the two costs of people that never reach a spreadsheet in any business.
The one big visible cost — fuel in a fleet, materials in a shop, payroll in a clinic — is talked about constantly, and owners exaggerate its weight in the calculation. Administrative time chasing expenses, people paid while they wait for the next job, rework, breakdown time — none of it appears anywhere.
INSIDE BASE CAMPLooking once a week is not a rhythm. It is a delay.
The daily read, the reason you get paid slower than you pay — which means you are financing your customers, and the morning sheet he built after a bookkeeper who could never tell him how the company was doing.
A weekly view in a very cash-intensive environment is managing in the rearview mirror. By the time the week closes, the decisions that made it are five days old and the ones you would have changed are already paid for.
INSIDE BASE CAMPUnprofitable is usually unproductive.
The gap between plan and actual that catches one part of the business drifting, and the two acceptable outcomes of a price increase — one of which most owners refuse to let themselves want.
The unprofitable part of a business is usually the unproductive part too: the route too far out to fit another stop, the client whose every job takes three visits, the product that needs twice the handling for the same price. A price increase alone often fixes the profit and leaves the waste exactly where it was.
INSIDE BASE CAMPFour gears, and one of them is always the one in the way.
Team, Direction, Operations, Finances. They have to turn together, and at any moment one of them is the constraint — rarely the one you are working on. That is the whole framework, and the reason it starts with a measurement rather than with advice.
Fix the one in the way and another becomes the thing holding you back, usually within a quarter and usually because you fixed the last one. That is not a flaw in the method. It is what a business does, and it is the reason this is a practice rather than a book you finish.
Every story in this chapter comes from the operating history of the people who built Summit, and the figures in read one are from a route-by-route forecast he built in February 2021. Companies are unnamed on purpose and individuals stay unnamed permanently. Nothing here is adapted from anybody else’s material.