On Budget. Behind on Sales. Running Out of Cash.

And luck is not a business plan.

Every development has two critical curves:

• the construction and expenditure curve;
• the sales, closings and collections curve.

When the sales curve moves to the right, cash moves with it. Buyers hesitate. Financing becomes less affordable. Incentives increase. Closings take longer. Interest continues accruing while contractors, employees and lenders still expect to be paid.

The project may remain within its original construction budget and still face a serious liquidity problem.

This is why a project review cannot stop at hard costs and schedule. It must connect sales velocity, cancellations, closings, collections, commissions, marketing expenses, incentives, carrying costs and cost-to-complete.

I prefer to project a realistic—and sometimes deliberately conservative—marketing budget. If the market weakens, the team has resources to respond. If it performs better, the unused budget becomes a positive surprise.

Launching a project without adequate marketing resources, or with unrealistically tight commission assumptions, is asking luck to protect the cash flow. In difficult markets, teams often work twice as hard to produce the same result.

Treat the sales team well. Give it information, tools, realistic incentives and the respect it deserves. Sales are not the final step of a development. Sales are how the money returns.

If your construction and sales curves are no longer aligned, how long can your liquidity support the gap?