Weathering Financial Storms in Your Construction Business

Preparing for financial storms in your construction business

Financial storms in varying sizes

Financial storms can be minor or they can be devastating. Think of  the way dust devils and tornados create different levels of damage. However, even a dust devil can grab and keep your attention when you’re in the heart of it.

Financial storms are real

Joe, Tonya, and I were having a chat. Consequently, this post was born. I mentioned  I had come across another wayward piece of information. In short, the owner of an accounting service declared he could make his clients audit proof. 

It would have been laughable, except . . .we weren’t laughing. We wondered how many people might think becoming audit proof is a possibility. To clarify, it is not.

In other words, it ain’t gonna happen, Baby.

When a tornado hits your town or business, there is likely to be damage.  That is why the wise folks who live in Tornado Alley have built storm shelters.

Consequently, they are tornado prepared.

Likewise, when the IRS comes your way, the best safeguard is to be audit prepared.

Financial storms to prepare for

However, the IRS isn’t the only possible storm on the horizon. Commercial construction subcontractors need to be prepared for other inevitable financial storms. Because, there is every likelihood one or more storms are just around the corner from your construction business it is wise to be prepared. Be on the lookout for these possible financial storms.

  • A downturn in the economy
  • Job shutdown due to weather (yeah, the real weather)
  • Natural disasters
  • Owner or general contractor bankruptcy
  • Pre-bid reviews by general contractors
  • Loaning institution reviews
  • Bonding and insurance requirements
  • Equipment failure

Some of the above items are more akin to dust devils which cause you to duck and protect your eyes.  However, others are more like tornados, and being in a safe place is called for.

3 financial storm preparedness measures

Controlled operational systems

You can set yourself apart as a savvy contractor by getting all your operational systems documented and in place.  You become a savvy contractor ready to make the best of the good times. Furthermore, you’re known as the wise contractor ready to hunker down in the stormy times.

Remember all those little signs posted on the wall which direct you to the nearest exit or safe place where you can take shelter? That is to say, documented systems tell you which path to take.

Construction contractors with a well-designed organizational structure are better prepared and more likely to complete work on schedule. Don’t think the GCs in your area won’t notice.

Financial documentation

My cliché bell is ringing. Yet, having “all your ducks in a row” concerning financial documents is imperative in both good weather and bad. They’re in place to serve you. Having your financial reports and documents ready and up to date means you can be better prepared for the future.

For instance, it is likely the general contractor considering your bid will want to assess:

  • income statement
  • balance sheet
  • statement of cash flow
  • backlog levels in relation to working capital
  • available bank funds or financing options
  • lien history
  • past credit problems

Having all your financial documentation ready and accessible gives you peace of mind for day to day operations. More importantly, those documents act as a buffer when a financial storm hits.

Dedicated save/spend accounts

A good start is to have a savings account for your commercial construction contracting business. However, there is more to it than having a savings slush fund.

Dedicated save/spend accounts put you ahead of the game. This method is similar to Dave Ramsey’s personal financial recommendations concerning envelopes. Using this system helps keep you from making spending mistakes. You know how much is available in each account.

More importantly, you know what it is for. As a result, you don’t buy equipment or perform tenant improvements with your personal tax liability funds.

Some categories which you should consider are:

  • Profit*
  • Owner’s Personal Tax Liability
  • Equipment (and/or Vehicle) Repair, Maintenance, Replacement
  • Customer Satisfaction Program
  • Real Estate or Tenant Improvements

For example, take a look at the equipment account.  You know that big shiny piece of equipment will need to be repaired, replaced, or removed at some point in the future. Setting aside a percentage of real income (real income = revenue – cost of doing business) puts the equipment-storm at bay.

* Your Profit account should be built up and not touched until it contains at least 6 months of operating expenses just in case. A fund of 12 months of those expenses is even better.

Closing thoughts

In conclusion, being audit prepared makes sense. What makes no sense at all is thinking you’re audit proof.

Being prepared to weather financial storms allows you to walk in confidence as well as gain peace of mind.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

We are dedicated to serving you rather than merely performing obligatory functions.

So you can Run With the Big Dogs. Call us! 866-629-7735

Indirect Costs in Construction Contracting

Indirect Costs are important to the health of your construction company

Indirect Costs can cause hair loss

You know what I mean; trying to figure out what amount goes into which column can be a hair pulling adventure. And, making matters worse, indirect costs can mount in a hurry.

At first glance, it would seem differentiating a direct cost from an indirect cost would be somewhat intuitive. And, in one respect it is. Because, you can name the labor cost and the materials cost per job and you’ve got the foundation for your direct cost column.

Therefore, the rest should be easy, right? Anything on which money is spent and which isn’t a direct cost is quite obviously an indirect cost. Well . . . not so fast.

Indirect Costs accounting methods

There is more than one school of thought concerning how to handle job costing for indirect costs. They vary from “don’t do it” to “create several accounts depending on X factor,” and a few between. Of course, if you’re a commercial subcontractor and your bonding agent wants to see indirect costs on your job reports, and you say, “Oh we don’t mess with indirect costs,” you’re in for a rude awakening.

[In case you’re wondering which method we at Schulte and Schulte use, the answer is, “Which ever is the most appropriate for each individual client.” Yeah, we don’t believe in the one-size-fits-all method of dealing with our clients’ accounting needs.]

How it comes together

Dealing with indirect costs means determining things like fringe, general and administrative, and overhead then putting the numbers to use. It means you use appropriate tools strategically. And, it frequently means making your best estimate.

Indirect Costs can be a guessing game

So, if it is a guessing game – why bother? Right?

It is tempting to think the two words “accurate and estimates” could be counted as an oxymoron. Yet this article, Why Guessing Is Undervalued, suggests guessing is a huge part of our daily lives. And thoughtful guessing (estimating) is a skill worth developing.

Plus, think about this; guesstimates are the golden thread running through much of the construction contracting tapestry. From the beginning of the process, construction contractors take a unique set of variables, consider scope and feasibility, develop an “accurate estimate,” and call it a bid.

Taking into account we understand that close, just about, a little more (or less) than, and between are important and valuable words, it is also important to be able to determine a number which will satisfy several entities with whom you interact.

I’ve already mentioned that bonding agents want to see the numbers. So does your income tax preparer, the lending agency, the insurance provider, and the general contractors in your sphere.

Even more importantly, proper accounting for indirect costs allows you to receive appropriate tax deductions as well as make better business decisions.

How we can help

I’m just going to have to say it – the Schulte and Schulte team goal of helping our clients Run With the Big Dogs has a subheading titled “help them have peace of mind.”

Are you a construction contractor who needs help getting your indirect costs dilemma straightened out? Give us a call!

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. Call us! 866-629-7735 

Uber Report for Construction Contractors

Uber – what it means

From Dictionary dot com, we learn that “uber” can be used as either an adverb or an adjective. When used as an adverb it means, “having the specified property to an extreme or excessive degree,” and as an adjective, “designating a person or thing that exceeds the norms or limits of its kind or class.”

There is no mention at all of how the word is now being used as (I think) a verb. Here’s an example of how it is used in a sentence, “We thought about walking, but decided to Uber over instead.”

Uber on my mind

Typically, we use this space to provide information which will be useful for our clients or others who own commercial construction businesses. Occasionally, we throw in a piece which allows a peek behind the curtain concerning what goes on around here at Schulte and Schulte. As a matter of fact, that is exactly what we did last week when we shared what we were experiencing at the Scaling New Heights convention.

This week . . . well, let’s just say it is a bit different.

Yet, I believe I can give you a further peek into Schulte and Schulte culture as well as information which can certainly prove to be useful to you as a construction contracting business owner.

Next time you head out to a convention in a city “far, far away” you’ll be better prepared for your Uber experience. (Go ahead and groan if you like. It isn’t my fault Garrett Camp and Travis Kalanick named their company Uber.)

An uber number nerd

This story starts with Tonya making the (number-right and peace of mind-right) business decision to choose Uber as a transportation solution while attending the Scaling New Heights convention. The options were:

  • Driving to the destination – way too costly when “time” is thrown into the equation (and a consideration if parking may be difficult or if you’re unfamiliar with the city where you’ll be located)
  • Renting a car at the destination (parking and familiarity still possible problems)
  • Using Uber or Lyft

Notice “taxi” is not even a part of this number journey for both financial and ease-of-use considerations.

5 Uber tips

Number 1 – Know how you intend to make use of the Uber service. We knew we needed to be transported for three different reasons:

  1. To and from the airport
  2. Back and forth daily to the convention site from our Airbnb rental
  3. Excursions to other places we wanted to see while in our host city

Place your Uber “call for service” with time considerations in mind. Some of these destinations were time sensitive while others were not. (While we had only one time in which we were waiting longer than expected for the pick-up, it is worth noting it can happen.)

 

Number 2 – Greet your driver by name with a smile on your face. There are two reasons for doing this:

  • You’ll know the driver pulling near you is actually your driver (not one of the many who are also picking up riders near your location.)
  • It is always good to smile with the person who is providing you a service. Right?

Pay special attention to tip 3 – fun!

Number 3 – Have a good question in mind as a conversation starter. This takes away some of the awkwardness when you first enter the driver’s space. And, it is a fun way to pass the time on the way to your destination.

The question we asked each of our drivers was, “What is the longest distance you’ve taken an Uber passenger?”

In case you’re wondering, two of our drivers had taken passengers from Salt Lake City, Utah to Las Vegas, Nevada. Two more had driven from SLC to unnamed towns in Wyoming, and the one who won our unofficial contest had gone all the way to North Dakota and received a hefty tip in the bargain.

All the drivers, (even those with less than spectacular “long distance” travels) told us about their adventures.

Number 4 – Remember to tip your driver well. It is the nice thing to do. And,  Mom always said, “Be Nice!”

Number 5 – Talk to your accounting specialist about automating the recording process of the costs of your Uber rides.

Experience is valuable

It helps if you can think of your Uber ride as part of your experience. It also helps if you are willing to let the experience be less than pristine and spectacular, yet (perhaps) worthy of laughter and tale-telling when you arrive home. Our rides included:

One car with the rear passenger door caved in from an obvious auto accident. 😵

A new, shiny, and beautiful Mercedes Benz. 😎

An older and modest sedan which hadn’t been washed in quite some time. 😏

One ride in which we were pretty sure the diet of the driver emanated from his every pore in great wafts of (I’ve gotta say it) an unpleasant odor. 😣

A pickup truck. 😐

One minivan which we watched go to great lengths making U-turns and traffic maneuvers to get to the spot where we stood waiting. 😮

Mostly non-descript, yet clean and comfortable get-er-done vehicles. 😃

One more Uber experience

What follows is not our experience. This is the experience of one of our colleagues who shared this story with us one night as we dined with a group of (not so boring) accounting advisors.

As he told us:

“Last night, some of us went to dinner together, then I followed the others to an after-hours bar where I drank way too much. Knowing I was in no shape to try to get back to my hotel, I used my Uber app for a ride. When I got in the car, the driver asked me if I had put the correct address in when I ordered. I checked my phone and told him that was the correct address. He asked if I was ready to go. I let him know I was. He put the car in gear and pulled up about 10 feet, then said, ‘This is it, sir, you are at your hotel.’”

Our colleague told us after he and the driver had a good laugh, he gave the driver a substantial tip then exited to his hotel.

Perhaps, when we once again find ourselves using the services of an Uber driver, our question will be, “What is the Shortest distance you’ve taken an Uber passenger?” 😂

Wrapping up the Uber report – 5 tips

  1. Have a system in place to record your Uber expenses.
  2. Give yourself a time buffer when you need to be at your destination at a set time.
  3. Use a “question” which will break the ice with your drivers.
  4. Bring your good sense of humor to your ride experience.
  5. Remember it will be much more cost effective to fly rather than Uber to a destination a few states away. 😜

I hope you’ve enjoyed this light-hearted look at our Ubering experience. If my recollection is correct, we were in and out of a total of 16 different vehicles. Because #SNH19 was located at The Salt Palace we were able to walk to several different restaurants and even a delightful, two-story grocery store. Yet, it is our Uber experiences which tended to be uber fun and worthy of retelling.

 

Schulte and Schulte provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

 

So you can Run With the Big Dogs. Call us! 866-629-7735

 

Attending Scaling New Heights

Scaling New Heights in accounting to better serve clients in construction

We’re here in Salt Lake City, Utah at the Scaling New Heights convention produced by Woodard. We thought we would let you in on what we’ve been up to while we’re here. Keep in mind, everything we do (including convention attendance) hinges on our mission of helping our clients (small to medium commercial construction contractors) Run With the Big Dogs. And, we must tell you, we believe our experiences here have added to our ability to do so.

Scaling New Heights through attendance

From the Woodard website: “Each year, over one thousand of the world’s leading small business advisors and over 100 of the world’s leading software developers gather to gain knowledge, cross-refer services, develop practice skills…and more!”

From Tonya and Yvonne: Yes! Let’s roll!

We arrived eager to expand our knowledge and expertise, one keynote, one breakout, and one handshake at a time.

We were not disappointed!

In addition to that, we came with a set of objectives. Following our own advice  we had these goals in mind before we got here.

  • Expand our industry knowledge in general ✅
  • Find solutions for two client related problems
  • Look for new or updated app and SaaS vendors ✅
  • Network with peers ✅
  • Position Tonya as an expert* ✅

Learning from our peers, swapping big (and little) ideas, checking out the fun tech, and finding solutions for real life, real time problems our construction contractor clients encounter is exhilarating!

*Tonya was among the 4 people who served on a panel discussing best ways to serve construction contracting clients.

Scaling New Heights for the fun of it!

From joining the Knowify gang at Eva for tapas, to Jennifer Dymond showing us how the study of Improv  can make us better at serving our clients, we’ve been having fun! For Tonya, connecting with returning friends and for both of us making new friends has been the mortar to the building blocks we encounter in the breakout sessions.

Sharing tips, insights, and information one trowel blade at a time, is allowing us to share and compare with top notch accounting and business advisors from all across Canada and the US.

Scaling New Heights for the plums

It is possible we will still find more plums as this day and the next roll out. As of now, we’ve discovered 2 plums which have caught our attention and have already been acted upon in one way or another.

Plum 1. “We need to build out a very good website intake form to be available for potential clients to prior to initial consultation.”

Initial action step: Speak with website designer concerning placement. ✅

Secondary action step: Send info to calendar to begin design process. ✅

Plum 2. Need to take definitive action on the move towards AI in the accounting sector.

Initial action step: Begin brainstorm discussion with notes concerning possibilities. ✅

Secondary action step: Set up firm wide meeting to discuss iterations in business model. ✅

We’re excited to move on to the next sessions, meetings, and encounters as we finish up the week here at Scaling New Heights. And we’re excited about the upcoming possibilities.

 

Hope you’ve enjoyed this small peek into the happenings at the Schulte and Schulte firm.

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. Call us! 866-629-7735 

Brand Personality in Construction

Brand Personality including logos and such

Brand Personality is made up of many different (and some moving) parts.

How many times have you heard a product or service being noted as the “Rolls Royce” of their industry? Good thing the folks at Rolls have worked so hard to provide both an excellent product and an exemplary Brand Personality. Otherwise, those claims wouldn’t mean as much.

Yet, there is much more to a Brand Personality than hood ornaments or company logos.  Let’s face it, it isn’t as if you can choose a logo and decide you’ve done all you can to brand your construction company. Throw in some company labeled shirts and hardhats and you’re making inroads in the brand personality game. Yet, there is so much more to it.

Here is a short list of some brand personality building tactics:

  • Putting great wraps on your vehicles
  • Setting up your audacious website
  • Delving into the latest (and greatest) social media channels
  • Being a guest on some well-chosen podcasts
  • Volunteering within your trade association’s network
  • Donating to support children’s sports or other activities
  • Attending general contractors’ meet and greet or appreciation events
  • Participating in needs-based construction events such as Habitat for Humanity

Some more subtle brand personality building tactics:

As you can see, developing a brand personality in your commercial construction subcontracting business takes time, is ongoing, and is likely to evolve as you grow. There are no magic formulas, no silver bullets, and no easy ways out when it comes to building brand personality.

Yet, looking at the whole picture gives you more ideas to try and inspiration to keep working on.

Time out for transparency

While doing research concerning how to be better at delivering the Schulte and Schulte message, I came across this fun little article at Career Addict. It is titled, 12 Examples of Brand Personality to Inspire You.  It really is inspiring.

And, while reading, I kept thinking of various companies I know of which fit specific personalities.

Further transparency – What follows are 3 examples of Brand Personality as seen on Instagram. None of these examples are clients of ours. As a matter of fact, none of them fits the bull’s eye of our target clients. Because after all, we specialize in helping small to medium commercial construction subcontractors Run With the Big Dogs.

And, one of the firms highlighted (we believe) is primarily a service company rather than a construction contractor – 3 Mountains Plumbing. The other two – AFT Construction and Spain Commercial Inc. – are general contractors who do business with the folks we DO consider our target market (you know – those subcontractors I mentioned.)

Brand Personality on Instagram

First example

3 Mountains Plumbing found on Instagram at 3mountains.plumbing

From the Career Addict article, we see them as an Entertainer Brand:

“Entertainer brands champion values such as spontaneity, charm and humour. These brands seem to enjoy helping their customers discover the fun side of life. Examples of entertainer brands include Dr Pepper and M&M’s.”

The folks at 3 Mountain Plumbing take a difficult subject (who wants to think about all that goes on in those pipes and fixtures?) and turn it into something to laugh about. Also, their rhythm and consistency make remembering them easy. I must add, they make excellent use of color in branding.

Second example

AFT construction  found on Instagram at aft_construction

From the Career Addict article, we see them as an Emperor Brand:

“Leadership, determination, respect, dominance, influence and wealth are values that are associated with emperor brands. Good examples of emperor brands are American Express, Porsche and Rolex.”

Brad Levitt and his team hire professional photographers to take glamorous photos of their high end, custom projects. And, they leave no doubt concerning who their target market is and what they can offer the folks within that target. There is no room in their marketing calendar for rants or “tool bribery” posts. They aren’t trying to teach fellow contractors how to accomplish building tasks, nor are they passing along building “tips.” I hasten to add; Brad is quite generous with helping other contractors learn the ropes concerning being in the construction business in other online formats.

Third example

Spain Commercial Inc.  found on Instagram at spaincommercialinc 

From the Career Addict article, we see them as a Wizard Brand:

“Wizard brands specialise in taking the ordinary and transforming it into the extraordinary. Wizard brands champion values such as imagination, surprise and curiosity. Good examples of wizard brands are Apple and Pixar.”

Kayleigh is the “marketing department” for Spain Commercial. Unlike AFT where their emphasis is on the finished product, Kayleigh’s emphasis is on the people and the process. She is exemplary at getting folks to see that “ordinary” acts at each stage of the construction process ends in the “extraordinary” at completion. Plus, Kayleigh’s passion for telling the story of Spain Commercial simply rolls off the screen and into your mind. The story unfolds one image at a time making it possible to imagine how this company will service their clients well.

How does your company stack up?

Take another look at the Career Addict article and see if you can find which brand personality type your construction contracting firm fits.

Our perusal of the article made us think Schulte and Schulte fits as a Source Brand.

From the Career Addict article:

“Source brands embrace knowledge and enlightenment. They champion values such as truth, objectivity, education, discipline, clarity and commitment. They are the brands that we look to for information, advice and insights. Examples of source brands include Bloomberg, eMarketer, Forrester and Mckinsey.”

What is your brand personality?

How well are you doing at getting the message across to your present and potential clients? We hope this article has given you food for thought as well as a commitment to presenting an excellent brand personality.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

 

So you can Run With the Big Dogs. 866-629-7735 

Investing in Convention Attendance

Investing in Convention Attendance can bring you a great ROI

Investing is different than paying to attend

No matter which industry you’re in, seems there’s a convention or trade show for it. Perhaps more than one. And, unless your money tree is sprouting new leaves there is likely to be a cash consideration concerning attendance.

So, you must make your attendance evaluation based on the ROI. Yep, Return on Investment. If you get more in value than what you pay, a conference can certainly be worth it.

Look for the 3 “Es.” The best conventions will Educate, Enlighten, and Entertain you. As a matter of fact, conferences can be information avalanches. That is why it is important to have a goal in mind when you attend. (Hint: You can have more than one goal. Just make sure you have at least one. And don’t count free food and drinks in your goals.) 😉

  • Expand your industry knowledge in general (bring value to your clients)
  • Find solutions to specific business or client related problems (bring added value to your clients)
  • Encounter new vendors and suppliers (who may have options you’ve never thought of)
  • Network with peers (for the sheer joy of it)
  • Position yourself as an expert* (you’ll see an example below as you continue reading)

And, if more than one person from your commercial construction subcontracting business will be attending, it is wise to divide and conquer. Choose different break-out groups, classes, or training sessions. You can meet up for lunch or at the end of the day to share what you’ve learned or found.

Make your way to the exhibit hall; you’ll have opportunity to check out the vendor and partner exhibits so you can view all the new products, equipment, and technology available.

Important Investment returns

Plus, there are two less-measurable (yet highly important) investment returns you’ll want to consider.

  1. Conferences are a bargain when you think about how much education costs.
  2. When you’re immersed for a few days with other go-getters you can’t help but want to get out there and hustle too. Yes! Conferences are a motivation boost for you and your team.

Investing in convention attendance when you get home

Besides the fact you’re likely to meet allies and make friends during your conference days, there is another way to make the most of your investment. Set aside time to pass on what you learned to those who held down the fort while you were gone. In your morning huddle or at a special meeting, allow all who attended time to talk about something they learned, share a way they were inspired, or teach a new skill.

Speaking of conventions

Both Tonya and I will be attending Scaling New Heights this year. This is a conference put on annually by Woodard.

“Scaling New Heights is an internationally-renowned, in-depth training conference for accountants, bookkeepers and other small business advisors.”

And yes, we’ve chosen a few goals. Surprise, surprise! Between us, these are our goals:

  • Expand our industry knowledge in general
  • Find solutions for two client related problems
  • Look for new or updated app and SaaS vendors
  • Network with peers
  • Position Tonya as an expert*

*Tonya has been asked by the Woodard team to be part of a break-out session. It will be comprised of a four-member panel which will discuss the junction of QuickBooks and Construction Contracting. So yeah, we’re tooting our own horn here!

So, look out Salt Lake City and Salt Palace Convention Center! Some (not so) boring accounting, bookkeeping, and small business advisors will be rocking out the place June 16 – 19, 2019!

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses.

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. Call us! 866-629-7735 

Contingency Budget to Performance Budget

Contingency Budget to Performance Budget

Turn your contingency budget into your performance budget

You can get your commercial construction team on board for saving time,  reducing rework, diminishing safety issues, and integrating increased productivity on each project. One way to do it is by giving your team the opportunity to reap the reward through moving the money from the contingency fund to the performance fund.

Contingency budgets are real

Before you get too excited about the possibilities. Or, before you get mad at me for suggesting the prospect of fund shifting, let me explain. I know a contingency budget is called a contingency budget for a reason. A very good reason. Contingencies lurk around the corner.

Therefore, knowing there are contingencies over which neither you nor your crew have control, a contingency fund is still an excellent practice.  Some of the uncontrollable aspects include:

  • premature equipment failure
  • owner bankruptcies
  • regulatory changes
  • strikes
  • unanticipated price or interest rate increases
  • unusual or calamitous weather

Then understand, there are other things which come up which are more in your control, yet sometimes missed. They can include:

  • incomplete designs
  • scope errors
  • equipment breakdowns due to faulty maintenance schedule
  • estimating inaccuracies
  • technological upgrades you haven’t incorporated (yet)

Too many dastardly contingencies can, at times, eat up the  entire contingency budget. Yet, that isn’t always the case.

Reprioritize your contingency budget 

You have the opportunity to reprioritize the “insurance” of your contingency fund when you find it has not been needed in the usual way. Well of course, you could stick those funds in your pocket or in the bank. Yet, think of the opportunity you have. You can garner much more than the five to fifteen percent of a given project’s budget. (You know, the contingency fund.) When you get team buy-in as well as fewer problems, you’re on a golden path.

It begins with communication. Giving your team the “rules” before the game starts, gives them the opportunity to mitigate the risk associated with each portion of the contingency.

Consider what you want from your team: 

  • Fewer safety problems
  • Reduced rework issues
  • Increased productivity

Ways you can work with them to reach those goals: 

  • Improve safety training and provide more of it
  • Create better processes removing inefficiencies (These two articles, found here and here are gold when it comes to helping you and your team increase productivity.)
  • Provide specialized training for supervisors
  • And, (this is important) let them know how they will benefit by helping you turn the job contingency budget into their performance budget.

Risk management tool

Think of the time and effort you put into working with your team on moving your contingency fund to the performance fund as a risk management tool.

Here are a few more tips to help you in this effort.

  • Get the crew involved in doing regular inventories. That way, they and you know what you need and what you already have.
  • Set aside a certain amount of time at the end of each day to cleanup. As a result, your team understands it is part of their job. You aren’t asking them to do “extra stuff” after the day is complete.
  • Avoid inefficient layout of the shop, work vehicles, and work site. Let the team know they’re part of the effort to be organized. Here is an article you can check to get more information concerning organizing your vehicles.
  • Communicate often. Remember, communication is a two-way street.

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. 866-629-7735  

Advisory Board for Construction Contractors

Advisory Boards help with key decisions

Advisory Board for Construction Contractors

Advisory Board explained

Before we go further, there is a distinction to be made. Don’t confuse an advisory board with a Board of Directors.

A board of directors is made up of people who manage the CEO and formally approve all key decisions of the company.

An advisory board, on the other hand, is an informal group of mentors, guides, or service providers who each have useful knowledge or expertise to bring to the table. So informal, they may never be in the same room at the same time. Generally speaking, these are the folks you meet with individually.

Advisory Board early stages

It isn’t as if you can put out an add which reads, “Board Level Advisors Needed.”

The development of your advisory board is a process – and it takes time. Perhaps in the early stages of your business you were developing an advisory board without knowing it. You looked close to home. A spouse, a parent, a friend, even a friend of a friend may have been where you turned.

Then your commercial construction business grew, and you realized there was even more you didn’t know you didn’t know. You had to widen your circle of trusted advisors.

And, when you get down to it, that is the best way to understand the concept of advisory board. These are the folks who you can count on to help you and your business grow and succeed. They are your trusted advisors – they become your informal advisory board.

Advisory Board brick-wall method    

Often, the way your board is developed is through the brick-wall method. You’re humming along just fine – then you come up against a brick-wall and are unsure of the next method or the next action to take. You go looking for someone who can give you the answer, solve the problem, or simply provide you a next-step alternative. The following is in no particular order, nor necessarily complete, yet provides you with a “possibilities” list of the types of individuals you may wish to add to your advisory board.

  • Attorney
  • Tax Preparer
  • Coach or Business Development Advisor
  • Outsource providers such as:
    • Human Resource Expert
    • Accountant (that’s us!)
    • Virtual Assistant
  • Operating Systems Advisor
  • Marketing Professional

Set your expectations

Your advisors help you in a number of different ways. They can guide you in a strategic direction and help with key decisions. Not only are they a sounding board, they can also be an excellent source of ideas. And, one hidden quality many overlook is your advisory board members’ ability to provide network connections.

Some qualities to look for

  • They’re available to you for continuing guidance or one-off questions.
  • They bring specific skills or knowledge you are missing.
  • They have know-how which increases your odds of success.

 

Wondering if you should include a construction-centric accounting firm as part of your advisory board? Check out this article to see if the time is right.

We provide Accounting and Advisory Board Level counsel for small to medium commercial construction subcontractors. So you can Run With the Big Dogs. 866-629-7735

Promoting Your Commercial Construction Business

Promoting Your Commercial Construction Business

Promoting Your Commercial Construction Business

Promoting your construction business

While promoting your commercial construction business falls under the umbrella of marketing, don’t get it confused with your other marketing strategies and tactics.

Briefly, a few things your marketing can include are paid ads, social media, blogging, sponsoring, and promoting.

Plus, while we’re removing some confusion, I hasten to add that promoting is NOT the same as having a promotion.

Think of it like this – promoting is long-term and relational, while a promotion is short-term and impersonal. Going to participate in a promotion? Get out the coupons. Going to promote your business? Get out your best behavior.

There are 3 phases when you can promote your subcontracting business and they all involve dealing directly with your potential and present clients. But before we dive into them let’s look at why you need an excellent website.

Promoting your construction business on your website

Remember, good GCs are going to do their due diligence before considering your bid. Therefore, a basic starting point is to maintain your website with your target audience in mind. What do they want to know about you? What will help them see you as a responsible addition to their team? How will they quickly gain insight into what you do and how well you do it?

  • A portfolio of your past jobs
  • Testimonials from former clients
  • Photos of your team in action
  • Pictures of your company vehicles
  • Easy to find contact information – with phone numbers and email address taking front stage
  • Links to your social media channels (which should also be well maintained)

Include on the first page, in an easy to spot space, this type of sentence, “If you would like to find out more about our company or to request that we bid on your projects, please contact us.” (Be sure to make the contact easy by providing the proper link.)

Promoting your construction business before getting the job

In the before phase take time to do your own bit of due diligence. Determine if the GC is someone you want to work with. Do they have values which align with your own? Is it apparent they pay on time? Is it their practice to deliver excellent work?

We all know there are some GCs who are simply not worth the trouble. Skip them. In construction as in life, there are plenty of fish in the sea.

Because promoting your construction business is about relationship there isn’t likely to be a list you can check off and call each step done. Yet, there are a few things to keep in mind as you enhance your promoting skills.

  • Attend GC sponsored meet and greets
  • Peruse all building plans
  • Visit the job site
  • Ask questions
  • Get bids in on time and present them in a professional manner
  • Provide all necessary documents with bid
  • Maintain your integrity

Also, be quick with compliments, congratulations, and thanks. Keep complaints and criticism to a minimum.

Promoting your construction business after getting the job

The most important ingredient to include in your mix of promoting your construction company to the GC is to treat everyone as you want to be treated. That simple. Here are a few things to keep in mind.

  • Do what you said you would do
  • Realize that helping your GC make a profit is the bottom line – for both of you
  • Be sure to answer or return their phone calls quickly
  • Keep all your appointments – on time
  • Be certain your employees understand what is expected of them – written standards must be in place
  • Maintain written standards for your subs – great contracts support great relationships
  • Communicate with your suppliers, vendors, employees, and subs, just as you expect your GC to communicate with you
  • Pay your suppliers, vendors, employees, and subs on time and as agreed
  • Be of good character

Dwight Moody said, “Character is what you are in the dark.”

Promoting your construction business when the job is complete

Stay in touch with the GCs you want to work with. Here are a few ways you can do it:

  • Send a thank-you note
  • Give referrals
  • Ask what you can do to improve
  • Give leads
  • Attend mutually beneficial conventions or events
  • Suggest suppliers or vendors

You promote your business by performing to the best of your ability and getting the word out to those who matter. You must be conscious concerning your efforts. And, don’t think others will do it for you.

They won’t.

You and your team are the voices which are heard and seen.

Promoting your commercial construction business is pretty easy if you keep the golden rule in mind during all your business interactions.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Because we are a virtual “corporate accounting office” for commercial construction businesses we can assist you no matter in which of the 50 United States your business is located. We invite you to get in touch here

Counting the Cost in Construction Accounting

Counting the cost in construction accounting.

Counting the Cost in Construction Accounting

Counting the Cost in Flood Waters

There is an interesting law here in Arizona which is known by the name, “Stupid Motorist Law.” It says something to the effect of “any motorist who becomes stranded after driving around barricades to enter a flooded stretch of roadway may be charged for the cost of their rescue.” Apparently, the law can be found in Arizona Revised Statutes section 28-910. Also, just as apparently, the law isn’t regularly enforced.

So, for those of us who don’t drive around barricades when the summer rains create raging rivers where before there were only dry creek beds (or simply dips in the road) it doesn’t mean much one way or the other. For those who do, it only means they won’t be charged by the state for their stupidity. Yet, they will still likely be “taxed” because of their poor decision.

  • Towing
  • Repair
  • Beyond repair
  • Missed time at work
  • Lost opportunities

And, don’t forget all that schplainen’ they’ll have to do with rescue workers. Not to mention spouses, parents, children, friends, insurance companies, and so on.

Counting the Cost in Words

Yet, being wise to the way of words, I would replace “stupid” with the word, “ignorant.” Here’s why – being stupid means you don’t have the brain cells to get the job done. Being ignorant means you haven’t as yet learned.

See the difference?

This article will help you understand it better if you’re ignorant of how the two are different.

Counting the Cost of Ignorance

And, just like the wayward, water plunging drivers there are some who are guilty of breaking the “Accounting Ignorance Law.”

And, what that looks like is, they don’t yet understand how they can be aided in growing their construction contracting business through correct use of their financials – and it is going to cost them.

Here is the deal. Average Joe Contractor isn’t the competition they need to be concerned about. It is the up and moving commercial construction contractor who has gotten savvier and more sophisticated. It also means the General Contractors (who are also more savvy) expect their subs to bring a better level of efficiency and expertise not only in the field, but also in the office.

This has led to higher expectations which makes the cost of not knowing what you’re doing with the financials much higher these days.

And its not just the competition or the GCs.

Counting the Cost in Construction Accounting

It’s the complexity of software, SaaS, apps, construction bookkeeping nuances, and so on.

One of the huge benefits of QuickBooks and integrated apps is how much information you can obtain from having all the correct input in all the correct places. Its job costing, bidding, accounts receivable management (with or without AIA style billings,) estimating, invoicing, timesheet data, reconciliation of balance sheets, WIP reports and supporting documentation, making appropriate bill payments, certificate of insurance management, project close-out documents management, and on and on.

What that leaves us with is that understanding (and using) all the great benefits you can get from QuickBooks and the supporting apps is more complex these days, and even more so now that you’re ready to Run With the Big Dogs.

So, my advice?

Don’t drive around the barricades!

And don’t leave your construction business accounting needs to wishful thinking or chance. It will cost you.

You can get in touch with us here or give us a call Toll Free: 866-629-7735.