3 Construction Business Lessons from a 3-year-old

Business Lessons concerning 3-year-olds and french fries

Business lessons from unexpected sources

The business lessons a 3-year-old passes on are pretty cool, partly because they’re so memorable.

I recently teased my cousin’s son about an incident which happened when he was only 3 years old. (He is now the daddy of a 6-year-old.) You see, his mom and I had agreed to meet at a restaurant for a couple hours of let’s-get-caught-up-time on a day I was passing through their town on a business trip.

While his mom and I slowly sipped our soft drinks, he (it seemed to us) took his straw in mouth and sucked down his entire drink in one fell swoop. Then . . .

The 3-year-old:

  • knew we were in a restaurant
  • made it abundantly clear he was likely to die of starvation if food was not ordered soon
  • wiggled and waggled his way to food-ordering-compliance from his mom

Because we hadn’t planned to have a meal, yet the 3-year-old was near death from starvation, his mom placed a French fry order for him.

We were all a bit surprised when his order came. A dinner plate piled high with French fries was placed in front of said wiggle-wort.

Business lesson #1 – Let it cool down

Our busy boy reached immediately for the fries in front of him, stuck one in his mouth and began crying.

Sometimes you must let things cool to the appropriate temperature before you can touch them. Fresh from their hot oil bath those fries were much too hot for tiny, tender fingers and mouth.

Make sure the temperature is correct – be certain you have a signed contract before beginning.

Those with whom you need to have a written contract include:

  • General Contractors
  • Your own subcontractors
  • Business partners
  • Service providers

Starting work on a verbal agreement or letter of intent means the appropriate temperature has not yet been reached. Fries which are too hot will bring tears.

Business lesson #2 – Don’t fixate on one French fry

During the course of our chat, my cousin reached over to the large plate of fries, scooped up one, and stuck it in her mouth.

Then, all hell broke loose from the 3-year-old.

His mom tried to sooth him and reminded him he had a large plate of fries still available for his meal. “Besides,” she said, “I only ate one.”

His immediate retort, “That is THE one I wanted!”

While it is easy to laugh at the exploits of a disgruntled 3-year-old, it is often the case, we as full-grown functioning adults, are much too worried about someone taking one of our fries, or one of many jobs available.

Save yourself the headache of worrying about the loss of one fry or one job. Taking the time to throw a fit about THE job you wanted (and someone else took) only means that the large plate of fries in front of you is cooling to the point it may soon not be palatable at all.

Business Lesson #3 – Don’t forget the ketchup

My cousin knew her little wiggle-wort was going to be crying out for the topper, the real reason for eating fries, the ketchup. So, she dutifully applied the condiment in order to forgo the impending upset.

BTW, just for fun – did you know you can learn what kind of person you are according to how you put ketchup on fries. Check it out. You’ll have fun.

A French fry is just a French fry – until you add the ketchup. Then it becomes real food worth conveying to your mouth. (Or at least that’s the way I see it. 😉)

So, what is the ketchup you can bring to the table? Let’s consider it is likely there are other specialty trades providers in your area who offer the same expertise you do. So, if they’re all bringing the same fries you are . . . time to add the ketchup.

Most of your competitors will likely be able to provide about the same skill set, manpower, equipment, and so on. You can set yourself apart by the simple act of being proactive before, during, and after the job is complete.

Be on top of your contracts

Take responsibility for knowing all aspects of upcoming projects by:

  • visiting job sites early
  • staying in touch with project superintendents
  • being certain your materials are approved and available
  • asking the GC what it will take to make the job run perfectly for them

 

During the contract time, stay on top of the job by doing the expected work and:

  • keeping the site clean and organized
  • providing for your crews’ needs including temporary facilities if called for
  • repairing damage or mistakes without “being caught”
  • being sure safety is a true priority

 

After the job is complete enhance further opportunities by:

  • staying in touch with the GC
  • sharing leads
  • asking how you can improve

Recap

Let fresh fries cool down, don’t fixate on one French fry, and by all means don’t forget the ketchup.

 

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

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 

Be the Best Bidder

Best Bidder practices for construction subcontractors

Best Bidder not lowest bidder

You know there are those who only choose the lowest bidder. No matter how detrimental that practice often is. It happens. This story from ENR tells the tale well.

And, here is another low bid fire station disaster.

If you wish to remove “lowest” from the criteria general contractors might use when considering your bid here are a few things for you to consider.  Because price shouldn’t be the only determining factor in a winning bid.

The Best Bidder will bring

 

  • Outstanding trade expertise.

 

  • Proof of required licenses and insurance.

 

  • Confirmation of past performance with comparable projects.

 

  • Excellent safety records.

 

  • Good equipment.

 

  • Demonstration of well-tended financials (including cash flow capabilities and good qualifications for meeting your vendors’ payment terms.)

 

Soft qualities of Best Bidders

While the following qualities are harder to quantify, they often fit in the make-it or break-it category for GCs. General contractors looking for the best bidder rather than the lowest bidder will watch for:

  • Responsiveness – responding to all forms of communication in a timely manner.

 

  • An excellent attitude – includes understanding how to respond to problems with creativity and a can-do attitude.

 

  • A dedication to teamwork – within your own company, with other trades, and with the GCs representatives, demonstrating your desire to create a mutually beneficial partnership.

 

  • Cleanliness – keeping the site as clean as possible at all times.

 

  • A reputation for integrity – honesty and sincerity, including owning up to your own or your team’s mistakes.

 

And, it is in these soft qualities where you have the most opportunity to promote your value as opposed to focusing on price.

Think about it — when your bid is close to other bids, often your reputation is all it takes to assure you get more than a passing glance.

Who you gonna call?

It is just as important to choose a general contractor worth submitting a bid to as it is to be a subcontractor worthy of consideration.

Here are questions vital to your pre-bid decision.

  • How long has the general contractor been in business?

 

  • How many subcontractors have they worked with? (Contacting past subs may give you an idea of how easy or difficult it is to work with this GC.)

 

  • Do they have procedures for handling conflicts?

 

  • How many levels of management do they have in place?

 

  • Who will be your point of contact?

 

  • What paperwork will be required? And how frequently?

 

  • When will the job begin?

 

  • What is the estimated time of completion?

 

  • What is the scope of the work required?

 

Best Bidder practices

Putting your best foot forward before the bid is called is only the first step. Take every opportunity to let GCs know why your services are better.

And finally, be sure to manage your bid processes well. Determine to focus on bidding projects that will result in profitable returns and repeat business.

 

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 and Advisory Board Level counsel for small to medium commercial construction subcontractors.

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

Be a Visionary Construction Subcontractor

Be a Visionary Construction Subcontractor

Be a Visionary Construction Subcontractor

Think like a Visionary Construction Contractor

You might think that because we’re construction accounting specialists that we would want you to frame your vision with numbers. And frankly, we often do. Yet, on this occasion we’re suggesting you take a step back from the numbers and look at what being visionary means in a different light.

Setting goals, planning out the numbers, determining profit or loss are all part of what it takes to run a successful commercial subcontracting business. And we don’t take that lightly. Yet, we’ve noticed that among construction business owners, those who are visionary beyond the numbers are those who tend to end up with the best numbers.

Yep, setting your vision, acting with your vision in mind, and spreading your vision is a potent way to strengthen and grow your business.

Put simply, it is a step you can take to set your construction business up for long-term success.

Envision the contribution your construction company makes

It doesn’t matter if your people are pulling wire, laying in pipe, installing the glass, or participating in any other piece of the commercial construction industry because they’re all contributing to the end product. And yes, construction is one industry which anyone can see is greater than the sum of its parts.

It is so easy to see, it is absurd to think about. Can you imagine a GC saying to the client, “Well you know, plumbers are expensive, what do you think about not including plumbing in the plans? That would save you thousands of dollars we could apply to having better electrical solutions.”

The faucets, the drains, the pipes are all items which provide value to the package well beyond the cost of parts and labor. Health, safety, nourishment, and cleanliness all come to mind.

Yet, it is even more than what happens on the jobsite. Leaving the absurd aside, let’s look at the contribution your contracting business makes.

Down and dirty, deep and basic, it provides for you and your family. Yet there is more.

  • The well-being of your employees and their families
  • Provision for your subcontractors
  • Support of your suppliers
  • Contribution to the business landlord or mortgage company
  • Success of your service providers (like us)
  • Adding backing of personal and business associations you’re a part of
  • An allowance for charities or organizations where you and/or your employees volunteer or support financially
  • The cash infused into your community through vehicle purchases, insurance, banking needs, utility providers, and on and on

And! Well, there is always the end of the job. And, there is always the completed project. Plus, there is always the way your construction business contributes to the outcome of the building venture. There is satisfaction in being able to say, “I helped build that.”

Act like a Visionary Construction Subcontractor

Before we go on, take a minute to check out the 8 most iconic Marine Corps recruiting slogans.  You can link over to see the story behind each slogan, and it’s worth the look. Yet, I’ll list them here so you can see what their message is to the world and to themselves.

“The Marines are looking for a few good men.”

“The Few. The Proud. The Marines.”

“Teufelhunden.”

“First to fight.”

“Tell that to the Marines!”

“We don’t promise you a rose garden.”

“If everybody could get in the Marines, it wouldn’t be the Marines.”

“The Marine Corps builds men.”

Now we’re getting to the heart of the matter. These are recruiting slogans which are internalized by the men and women who walk through the doors, sign on the dotted line, and put on that amazing uniform.

There is vision in those recruiting slogans that is a part of the cycle that brings about the loyalty instilled in the Marines.

And, that is the kind of vision which will get potential new hires in the door and potential clients on the phone. It is also the type of vision which will help create loyalty from those new hires and new clients.

Internalizing your vision as well as passing on your vision is a powerful tool.

Tell Your Visionary Construction Story

Your vision must align with your core values and company culture. It should describe what your intentions are. Yet, when you first begin to structure your visionary construction story don’t fret about making it perfect. It could change.

Look at the visions these well-known and successful businesses had in their start-up phases.

Airbnb: “Connecting people who have space to share with those who are looking for a place to stay”

Facebook: “Creating an online directory for colleges that is kind of interactive”

Uber: “An app to request premium black cars in a few metropolitan areas”

Ooze Vision

Yes, there is some amount of future-thinking involved in creating the vision for your commercial subcontracting business. Yet, grounding your vision in the present, in the day-to-day operations makes it tangible and useful.

Here’s a personal example. My cousin, who lives in Oklahoma once wrote a visionary statement on the back window of her pickup camper shell. It turned heads. Then made people smile. And caused conversations. You see, she and her family were headed back to New Mexico to spend time with her parents, siblings, aunts, uncles, and cousins for the holidays. Her simple, poignant, and to the point vision read, “We’ll be home for Christmas!”

The beauty of this next example can be found in the punctuation. “Working for a safer tomorrow . . . ” Verona, Wisconsin fire department. Think about the options and promise in those three little periods suggesting there is more to the picture.

And, here is an example of Boring! “We are a family owned company, committed to becoming the contractor of choice, pursuing excellence through dedication, experience and disciplined employees with an ongoing passion to deliver quality, timely and profitable projects.”

Not only is it boring, you’d have a hard time getting your employees or your clients to find the heart of what that company does. Remember it? Not a chance!

Check out these visions to get an idea of what works.

“A world where everyone has a decent place to live.” Habitat for Humanity

“That people everywhere will share the power of a wish.” Make-A-Wish

“A world without Alzheimer’s.” Alzheimer’s Association

“To make people happy.” Disney

“To revolutionize the way people do financial work.” Intuit

Visionary ideas for reaching General Contractors

Want to be noticed by the GCs in your area? Here are a few succinct visions I thought of. Feel free to copy, reshape, or adjust any of these for use in your vision building exercises.

“Helping General Contractors look like heroes to their clients.”

“Making our clients plumb happy.”

“Partnering with General Contractors to be sure the lights are bright for their clients.”

“We dig deep to provide solid foundations for our clients.”

“Joining forces with General Contractors to exceed THEIR client’s expectations.”

These are designed with these things in mind:

  • Likely to get the attention of your target audience
  • Makes it easy for your employees to see the essence and capture the heart of your vision
  • Is bold enough to stand out from the crowd

Your vision should be big and bold. It should be engaging yet simple enough for your employees and your clients to remember – and live by. (Remember those Marines?)

If it is honest, turns heads, and gets people asking questions, then you’ve found a winner.

What do fiercely successful businesses have in common? They have a culture built on a succinct and memorable vision.

Visionary Construction service provider

So, what does the vision for an accounting firm whose clients are small to medium commercial construction subcontractors look like?

Helping our clients Run With the Big Dogs. [bold]

Want to know how we do it? Get in touch here or give us a call Toll Free: 866-629-7735.

Subcontractors in Construction – A view from both sides

Subcontractors can satisfy general contractors by going the extra mile.

Subcontractors in Construction – A view from both sides

Subcontractors are not alone

Listen Subcontractors, more than once I’ve heard construction business owners mention one of the reasons they decided to go into business was because they wanted to be the boss rather than take instruction from the boss. Some have even jested that their elementary report cards often had a notation stating, “does not play well with others.”

Truth is, “playing well with others” is a major part of owning a business in the commercial trades. A business in which one must take care of his portion of the work while striving to make it easier for the general contractor and other trades on the jobsite to take care of their portions.

Subcontractors and General Contractors

The symbiosis which takes place between GCs and subs is rather a sight to behold. Negotiations, contracts, and agreements all come with understandings on both sides of the table. You do this, and I’ll give you that, is what it all boils down to.

Yet, we all know there are times when things go awry. There are times when things go off-kilter and must be put aright before the journey to completion resumes. Following are some areas which can become sticking points.

Subcontractors take another look

Here are some complaints GCs have mentioned when it comes to dealing with subs.

Not getting paperwork signed

“My sub hasn’t given me signed paperwork which is my route to paying for their completed work.”

Make it easy for people to do what you want them to do. Want to get paid in a timely manner? Be sure you’re following all the rules laid out by the GC – including giving them the signed paperwork (also in a timely manner.)

Submittals are incomplete

“It can be any number of items, lien-waivers; payment package; drawings; schedules; diagrams – we need it all in order to complete the project, to satisfy our owners, and to meet legal obligations.”

Subcontractors who submit the appropriate documents show that they’ve read and paid attention to the contract.

Subcontractors avoid these additional mistakes

Bonding bait and switch

“When subs assure us they are in compliance and they are not, we have a major problem.”

Just do the right thing. If you’re only bonded to a certain amount say so. Period.

Going behind our back

“We don’t appreciate it when we find we have subs stepping on our toes with the owner or someone else.”

Having a complaint in which you skip the general contractor and go to the owner is bad business all the way around. Do your best to have all your meetings with the GC in order to make everyone happy. This article explains some of the problems associated with skipping the GC to go to the owner.

Too many scope gaps

“When subs complain there is more work than they thought, we know they missed too many things on the bid. We’re hesitant to work with them again.”

Do your due diligence. Read it all. Look over the plans, carefully and thoughtfully. Train yourself to look for the details if you don’t already have that skill.

What general contractors want       

It is really rather simple. This is what GCs want from their subs.

“We want subcontractors who can deliver on their promises.”

“The subs we want to work with are those who make us look good to our clients as well as our potential clients.”

“They make our job easier rather than adding headaches to the mix.”

“They are clean and pick up after themselves as well as others without thinking in terms of ‘it’s not my department.’”

“We can trust them to do the job without calling them all the time to see that the work gets done.”

“Bottom line, we want subs whose own company goals and values align with ours in providing excellent service and products to our clients.”

How subcontractors can deliver

Finding ways to be “the” sub GCs want on their team isn’t always about being the lowest bidder on any given project. Much of the work is accomplished by having your team show up and be up to the challenges they will face on the jobsite. Going the extra mile and being the team player, listening to what the general contractor wants, and acting in ways which are beneficial to all wins the day.

 

Schulte and Schulte is a virtual firm with clients from all across the United States. We provide the “Corporate Accounting Office” for small to medium commercial construction trades.

It is our aim that this article (among our growing library of construction-centric informational articles) is helpful for those in the construction trades. Want to know more about us? Call Toll Free: 866-629-7735 Or, get in touch here.

Will QuickBooks Online work for my Construction Business?

I was originally asked to write this article for QBOChat where it was published back on March 8th. I wanted to share it here for our readership as well (with a few minor changes.)

Have you heard it won’t?

If you are a construction company owner who has been told that QuickBooks Online won’t work for your construction business, you may want to take a second look. There are still quite a few accounting professionals who tend to think of QuickBooks Online in the same way as they view the QuickBooks Desktop software package. Don’t get me wrong, QuickBooks Desktop is still a powerful piece of software and it is still being improved upon by the great folks at Intuit. However, to truly understand QuickBooks Online you must understand the idea of SaaS, cloud computing, and app integrations.

So, what is SaaS? No, it’s not the lip that you used to give your mom and for which you were sent to bed without your supper. SaaS stands for Software as a Service. QuickBooks Online is designed to be run from the cloud and one of the major benefits of this cloud computing model is the ability for QuickBooks Online to integrate fairly seamlessly with other cloud based apps. Cloud computing and SaaS programs – “apps” – are really the future of small business management.

OK, so what?

Why, you may be asking, does this matter to me in terms of my construction business. Back to our original proposition – if anyone has ever told you that QuickBooks Online just doesn’t have enough features for you to properly manage your construction business then you should know that they’re right.

Gulp. They’re right. As a Construction Accounting Specialist, I would say that the majority of construction companies (of any size) should not attempt to manage their construction business accounting solely through QuickBooks Online. Yet, the beauty of app integrations with other cloud based software is that now you can take your accounting software – QuickBooks Online – and link it directly to your project management software – for instance, Knowify – and have all the integrated project management and accounting data be magically imported into QuickBooks Online without having to do any manual data entry from one program to the other.

Just think

Think about the ramifications of that for a second. Just a few short years ago, the various aspects of running a construction company were broken up into various parts – estimating had their software tools, project managers had their software tools and accounting had their software tools. These various software systems operated independently of one another. So, estimating would work on an estimate (say they put that together in a spreadsheet program.) Then, they had to communicate that information to the project manager and to accounting – both of whom enter the same data all over again into their respective project management and accounting platforms. As the project progresses, the project manager had to communicate with accounting information about project costs, time and materials, what portion of the job is complete, and so on and so forth.

Let’s take a walk in the cloud

Now, step into the world of cloud computing, Knowify and QuickBooks Online. With these two powerful tools integrated nearly every step of a project (no matter how complicated) can now be managed in one simple tool. Accounting still has the ‘back end’ system of QuickBooks Online for maintaining non-project related items such as payroll and bank reconciliations, but everything pertaining to the projects is now flowing through the one, easy to use system of Knowify and the accountant never needs to do double data entry work to make sense of the numbers because Knowify pushes that information into QuickBooks Online without even having to click a button. Estimating enters their estimate directly into Knowify using as much or as little detail as necessary. The project manager can manage every piece of the project from scheduling to materials invoices to billing right within Knowify. All along the way, every detail that needs to post to QuickBooks is posting to QuickBooks. The accounting department (or your knowledgeable QuickBooks ProAdvisor or Construction Company Network Advisor) can see every piece of the accounting puzzle as it pushes into QuickBooks. Financials, job costing, and other reporting tools can be accessed much more quickly because there is much less time spent between when something happens out on the jobsite and when it is accounted for in the books.

Not only that, but if you need to prepare AIA type billings on a regular basis and they give you headaches trying to figure out what the exact percentage of completion will be for that month, then you will really fall in love with Knowify’s AIA billing capabilities. Not only does Knowify track your costs and progress on the job so that you can have a very accurate picture of percentage of job completion, it even has built in AIA style forms that most general contractors will accept. (Does your QuickBooks Desktop do that?)

Now you know – and,

The next time someone tells you to stay away from QuickBooks Online because it isn’t the right tool for the job, remind them that a drill with no bits is never the right tool forthe job either!