Meli Figueres, CEO of Coastal Painting, shares her journey transitioning from corporate America to construction, highlighting the financial challenges of project funding, the importance of cash flow management, and the human impact of payroll delays on workers. She emphasizes strategic decision-making, including when to pull out of unprofitable jobs, and the critical role of mobilization funding in sustaining projects.
In the world of construction, managing projects goes beyond just the physical work; it involves navigating complex financial landscapes and human challenges. Meli Figueres, owner and CEO of Coastal Painting, shares her insightful journey from the corporate world into construction, revealing the realities of project funding, cash flow management, and the human side of the trade.
Meli entered the construction industry only two years ago, bringing with her a wealth of experience from the executive and corporate sectors. She quickly realized the stark differences, especially in terms of financial demands. The initial shock came from understanding how much capital is required upfront before seeing any revenue.
"It was a heart shock how much money you need to start a project before you even see the first dollar."
Typically, construction projects provide about 10% of the contract value upfront, but this amount depletes rapidly as expenses accumulate. Meli emphasizes that even with this initial payment, the company must fund the remaining costs until the first invoice is processed and paid, which can take a significant amount of time.
One of the biggest challenges Meli highlights is the cash flow gap between starting a project and receiving payment. From the moment the first paintbrush touches the wall until the payment clears, it can realistically take about 90 days.
"From the moment you put the first paintbrush until you actually get the dollars in the bank account, it's at least 90 days to be realistic."
This delay is influenced by various factors such as the type of project, the project owner, the general contractor, and the payment terms agreed upon. Additionally, construction schedules rarely go as planned, causing further delays and financial strain.
Construction projects involve multiple trades and contractors, and delays in one area can cascade into others. Meli shares examples of how unforeseen issues, like an electrician's mistake or drywall not being ready, can halt painting work and disrupt schedules.
"We're ready to send the crew to paint, but the electrician screwed up, or the drywall guy hasn't finished. The wall is not ready for you to paint."
Such disruptions require constant decision-making and adaptability, adding to the complexity of managing projects.
Meli credits mobilization funding as a crucial tool that helped her company manage the financial demands of projects. Mobilization funding provides the necessary capital to cover upfront costs until the first invoice is paid.
"We started with the whole process and everything, and I even thought the name is great. This is exactly what a construction company needs — money to get the project to a point where you can send the first invoice."
Without such funding, companies risk running out of cash before the project generates revenue, which can jeopardize the entire operation.
Beyond the financial numbers, Meli stresses the human impact of cash flow challenges. Workers in construction often live paycheck to paycheck, and any delay in payroll can have serious consequences for their families.
"If painters don't get paid that week, they don't have money to eat on the weekend. Their kids don't have a way to buy food."
This reality motivates Meli to prioritize having sufficient funds to meet payroll obligations on time, underscoring the responsibility business owners have toward their employees.
Not every project is a good fit, and sometimes the most profitable decision is to walk away. Meli shares a story about deciding to pull out of a job due to a poor match with the engineer and the condo association.
"The jobs you decide not to do sometimes are the most profitable jobs that you do all year because one bad job can really crush the profitability of an entire year."
This strategic decision-making is essential to maintaining overall business health and profitability.
Meli Figueres' experience highlights the multifaceted challenges of leading a construction company, from managing tight cash flows and unpredictable schedules to understanding the profound human impact of financial decisions. Her story underscores the importance of strategic funding solutions like mobilization funding and the courage to make tough decisions for the long-term success of the business.
Her journey serves as an inspiration for those looking to break barriers and lead effectively at every level within the construction industry.
