Construction Accounting – Zooming In

Construction Accounting takes zooming in on the important areas.

One of the questions we’re often asked by commercial subcontractors is, “How do you do it?” The following is a dive into what it looks like working with an outsourced accounting and advisory firm. (Well, we don’t know if it is true for other firms – but this is what it looks like working with us. 😎)

Construction Accounting zoom in on understanding

While it is always our goal to provide each of our clients with a clear and up to date financial picture of his or her business, we remember to do so in English not Accountanteeze.

Some have shared there was a time, before they came to us, when they looked at all those reports and thought of them as a foreign language. We’ve become their “complexity filter.”

A few other things we implement in understandable language are:

  • Guidance for meeting long and short-term goals
  • Information concerning strategic thought and vision
  • Processes which make profit a verifiable reality

At its core, our services provide clients with confident, well-informed, professional advice.

Construction Accounting zoom in on client needs

Each client comes with his or her own set of needs. Things like:

  • Please clean up our old issues.
  • Can you just get us back on track?
  • We need help achieving high levels of profitability.
  • I need to know my books are taken care of and I can rest easy at the end of the year.
  • We’re trying to get bonded and we need to get this mess straightened out.
  • I hate dealing with contract management, can you take care of it?
  • My business coach said I need to build systems; can you help with that?
  • We took in a lot of money last year but can’t see where it went. Can you help?

Regardless of the complication, our goal is to meet individual needs, always striving to make it easier for each client to run with the big dogs.

Construction Accounting zoom in on systems

One of the things we strive to make clear is we are NOT simply financial historians.  While it is necessary that we give timely and accurate financial information, we also aid our clients in other areas. One of those areas is help in building systems.

We help clients:

  • Improve processes and procedures
  • Increase organizational structure
  • Better understand next steps

We help commercial subcontractors figure out which systems are working, and which are not. More importantly, we don’t try to “fix” their unbroken systems.

Zooming in through Zoom

Part of our job is helping our clients devise a tech-stack which helps them have better systems for dealing with their business and financial needs. So yeah, we do spend time with our heads in the cloud. Yet, we’re also down-to-earth when it comes to dealing with our clients.

And the corner where cloud and earth meets is when we have regular Zoom meetings with individual clients. It is during those times we meet with them “face-to-face” whether they’re in New Jersey or New Mexico, North Dakota or South Carolina, in a Phoenix suburb or Phoenix proper.

The types of things we discuss with them are:

  • Month end reports and what they mean
  • Unusual items we noticed in their reports
  • Our questions concerning their data
  • Their questions
  • Ways to improve (both from their end and ours)

While we believe our experience and well-thought-out tech solutions are important to how we help our clients, we believe nothing would be possible if we didn’t have good systems for communication in place. And one of those systems is a video conferencing SaaS called Zoom.

There you have it. We’ve zoomed in on a few things you can count on us to do to help you grow your commercial subcontracting business. And, we’ve told you how it is possible to meet with our clients no matter where they are located. Now you have a better idea of “how we do it.”

 

Want to learn more? Our office hours are 9 to 5 Arizona time where our main office is located. And our Toll-Free number is 866-629-7735. Give us a call!

Grow an Established Construction Business – Part 3

Business growth through managing cash flow and developing processes

Business is great

Business is great – until it isn’t. The construction contracting business is well known for its boom or bust nature. Using the boom to prepare for the bust is simply a matter of having good business sense. And, two ways you make the preparation are considering future financial needs and creating documented, sustaining processes.

This is the third in a three-part series dealing with growing an established construction business. Taking it up a level. Getting better at running with the big dogs. If you missed the first two parts, they can be found here and here.

Business is all about business

Getting better at doing business is how you position yourself as the owner of a growth-oriented business – a construction business that is in it for the long-haul. Now, we’ll take a look at the last two areas of importance in growing an established construction business.

Prepare for financial needs in advance

Save

Access to capital is what makes the difference between owning a winning business and owning a business that limps along, never quite making it. One of the easiest ways to make sure you have cash to see you through the famine is to save it during the feast. Oh yeah, it is also one of the hardest ways. Like my dad used to say, if it was really easy, everyone would do it.

You can scour the internet and find a multitude of tips and tricks concerning how to save money. I even wrote one post about it here.  Yet, reading about ways to save money without taking action will not get you to the end of the block, much less all the way to the other side of town.

Time to take action

Now it is time to buck-up. This is when, if you’re not a natural saver (and few are) you need to find someone to aid you in making the right decisions concerning spend or save.

So, I’ll go ahead and throw this out there. The folks here at Schulte and Schulte are good at providing financial reports and teaching you how to interpret them. Yet, we have even more than that to offer. We, ever so gently, guide our clients into the act of saving. OK, some would say we hold their feet to the fire. Whichever way you interpret what we do, we help our clients get into position to save for a raining day.

Saving is a strategic maneuver which takes guts, determination, and (sometimes) help from an outside source.

Borrow

There is another way to have cash when you need it and that is to borrow it. I know, I know. There are those who say the only way a lending agency will hand over the funds is if you can prove you don’t really need it.

Truth is, there are a number of things you need to prove, but lack of need isn’t one of them – usually. 🤔

Your financial records and reports are key to being able to borrow the cash you need at any given time.

What lenders want

Here is a sampling of the things a construction-wise lender is likely to want to know about you and your business:

  • How long have you been around?
  • Have you run your business well so far?
  • How much outstanding debt do you have?
  • How safe are your jobsites?
  • What is your credit score?
  • What is the credit score of each of your clients?
  • Is there collateral you can offer?
  • What is the dollar amount of your annual sales?
  • Have you experienced a bankruptcy or tax lien?
  • How much do you need?
  • What do you need it for?

Once again, having your financial reports at hand and knowing what they’re saying about how good you are at running a construction contracting business is essential.

Knowing where to go for the loan is also important. Check around with your fellow contractors for suggestions. Contact your mentor or other trusted advisor for his or her input. Look for a loan provider who is a member of your trade association – they often have insight into your trade’s specific needs.

If you’re interested in working with someone who provides Accounts Receivable Financing, we suggest Contractors Capital Solutions

Create documented, sustaining processes

There may be a number of factors concerning how the “big dogs” in your sector of the construction industry made it to their status, but you can be assured that one of the things they did is create documented processes. They use documented processes in both the field and the office to maintain consistency throughout their organization.

Yet, most small to medium construction subcontractors overlook or avoid this step in building their businesses. Here at Schulte and Schulte, we think this point is so important we go so far as to say put process improvement before technology adoption.

The GPS of processes

Think of it this way; when you begin documenting your processes you’re creating what equates to an internal GPS. Rather than Global Positioning System, you can see it as your Great Processes System. While regular GPS gives information that helps people determine their location on a global scope, internal GPS gives information that allows you and your people to determine their duties (and actions) on a companywide scope.

Beyond consistency, creating and documenting processes gives you:

  • Ability to analyze your processes
  • Knowledge to make improvements in the processes
  • Understanding for better managing your business
  • Capability to monitor service levels
  • Competence spread throughout your organization

Create a library of standardized processes

Creating internal processes (then implementing them) brings a real challenge. It is especially difficult for small companies with mostly operational staff who are very busy “doing what they do” to get this additional task done. That doesn’t even take into consideration that most people are unsure of what all should, could, or must go into the step by step writing of the processes.

That’s why we’re quite excited to let you know we’re working on building a system in which our clients will have access to the tools they need to build their own library of standardized processes unique to their subcontracting business. We hope to have the roll-out by January of 2019. How’s that for a cliff-hanger?

Want to know more? Get in touch with us here.

The Efficient Construction Office Part 2

Efficient construction offices take time and planning.

Efficient construction offices take time and planning.

This is the second in a 3-part series dealing with efficiency in a construction contracting office. The first installment, having to do with the basics, can be found here

Being efficient is all about systems and processes

Finding ways to make your construction office operate more efficiently begins with determining simple, thoughtful solutions for the various systems and processes necessary to get from point A to point Z. You already have systems and processes in place, whether or not you know it. I think you’ll see what I mean if you take a moment to consider diets.

You’re on a diet whether you know it or not

Assuming you eat, (and I’m going to make that bold assumption) you’re on a diet. Be it good, bad, or somewhere in between you are on a diet. The same thing goes for your construction office; you’re either functioning with poor systems and processes or you’re somewhere on the scale of good, better, best systems and processes.

The words “processes” and “systems” are often used synonymously

I know, because I’m guilty. Yet, they are distinct. A process helps you run systems most efficiently. A system has a process built around it – the process involves specific, documented responsibilities and next steps.

While your entire business could be considered a system, there are smaller systems within it. Each of these smaller systems –  advertising, bookkeeping, sales, permit management, supplier management, and so on – should have a process built around it. The process is the steps you take in order to help the system run as efficiently as possible. So how do you determine what each step of a process is or should be? One way is to create a process map.

Create a process map

There are a few ways to accomplish the task of process mapping. One is using an online tool such as smartdraw. Another online tool is Lucidchart where you can also find a brief explanation of a process map.

Or you can rely on the pen and paper method. What you will be creating is a “map” of the sequential steps involved in any given process.

If you’re a one-man-show (or a one-woman-show) then a piece of paper and a pencil or a pen may suffice. If you have a number of people working in your office you may wish to use sticky notes and a wall surface, or a dry erase board. The main point here is to get everyone who is involved in an individual process to be involved in the creating of the process map.

Especially if you’re creating the process map with several people involved, I suggest the analogue method simply because a “scruffy” visual will make it more inviting for people to participate. If you create the map online, things might look “done” to the participants and they’ll be less likely to want to “mess it up.”

Process mapping explained

One of the best places I’ve found for a great overview and tons of information concerning process mapping as well as process improvement is from a process consultant named Ian James. His videos are entertaining, his British accent is a pleasure to listen to, his information is geared toward an office setting, and he understands that people are the most important factor concerning process improvement.

Take a few minutes to watch some of his videos or read some of his articles. He gives an excellent overview of the hows as well as the whys of process improvement.

You may wish to start with this set of articles which deals with classifying different process types. Or this spunky video having to do with ways to overcome the pitfalls you may encounter when trying to do process mapping.

Documenting the processes – no silver bullet

One more article you’ll find most informational on Mr. James’ site is this one having to do with process documentation. It is lengthy and chock full of good info. He says, “The goal of process documentation is to provide a means to communicate what the process is.”

Consider why you may need to communicate what the process is.

  • The person who regularly completes a process is on vacation or has left your business.
  • A new employee needs to be brought up to speed quickly.
  • The process is only used occasionally and people (even you) may forget what the process is.
  • Everyone is on the same page when it gets down to “this is how it is done.”
  • Your construction business is able to maintain and grow better through consistency.
  • Having the written process makes updating and improving easier when the time comes.

“If you don’t write it down, you don’t own it.” Michael E. Gerber, author of The E-Myth

This looks time consuming

If you’re concerned about the time involved in the whole idea of creating processes for multiple systems here are a few things to keep in mind.

  • It is likely you already have some good processes in place (and at most, may only need to document them.)
  • You aren’t expected to have every process documented perfectly in the next week or even within a month.
  • There are plenty of processes already mapped out and ready for you to use in the form of SaaS. (I’ll talk more about that in the next installment of this series.)
  • There are a few SaaS applications which are designed to make documentation and the use of set processes available, so you won’t need to start from scratch – think templates.

Setting aside time to create documented processes will, in the end, save you time + headache. Take a look at this post to be reminded why it is worth the effort.

In the next article of this 3-part series the focus will be on ways to build, maintain, and use documented processes on your journey to cultivate an efficient construction office.  

Get in touch today, see how Schulte and Schulte can be of service to your construction contracting or service business by calling 480-442-4032.

Running an Efficient Construction Office – Part 1

Efficiency in your office basics.

Efficiency in your office basics.

Efficiency in the construction office

Efficiency for the sake of efficiency isn’t enough. As a project-based organization, you often face a struggle with factors such as time, cost, and quality on each individual job site. Therefore, being efficient and effective in the office becomes paramount to supporting all the needs associated with getting the jobs, performing the jobs, and getting paid for the jobs.

Let’s start with Return on Investment

Yes, there is an ROI factor connected to the level of efficiency in your construction office. And it will be best if you have a holistic view of the hard ROI and the indirect or so-called “soft ROI.”

Because you will be able to see the hard ROI in the numbers, I’ll focus here on the soft ROI. Examples of long-term soft success metrics to look for are:

  • Escalation of employee productivity
  • Enhancement of company morale
  • Decrease in work related stress levels
  • Increase in company culture awareness
  • Upsurge in employee wellbeing
  • Improved brand perception and reputation
  • Boost in word of mouth advertising

These soft metrics aren’t as easy to quantify or measure. Yet, set against your immediate and long-term financial goals, they are equally important to consider.

Pour the Foundation

Before we get to system and process improvement (covered later in this series) we’ll delve into some overall office basics which play into the goal of better office efficiency. It doesn’t matter if your office is in your home, shop, or another stand-alone location, these ideas will work. Some of the recommendations will involve more effort as well as a monetary comment. Others are so simple you’ll probably wonder why you hadn’t been using them already.

Color

Painting the office walls is neither simple nor quick, yet it is bound to have an effect on your and your employees attitude as well as efficiency. This brief article from Entrepreneur will give you a quick guide to which colors will serve your office best.

Lighting

From eye strain to headaches and a few other glitches in-between, it seems that improper lighting is the likely culprit in many offices. The folks at Inc. mention five ways lighting can improve mood, productivity, and health. Their second point about making lighting more flexible is likely to be the least capital outlay for the most intrinsic gain.

Temperature

The folks at PGi offer a bit of office temperature advice that might surprise you. Take a look. Even though they rely on scientific research to make their recommendation, you may wish to consider providing office scarves, sweaters, even blankets part of the year and a few of these gadgets during the summer months if you have two or more people sharing office space. BTW, the makers of the facial spray from Mario Badescu (mentioned in the link above) recommend keeping the spray in the refrigerator for “an extra refreshing and cooling boost.”  And yes, since I live in the wilds of the Arizona desert I see that as a majorly good idea.

View and décor

Gloomy is as gloomy does. If your offices are dark or otherwise constrained, being efficient isn’t likely to be your strong point. Considering both the color and lighting advice above is a good starting point. From there, other simple ways to add to your view and décor are by bringing in plants, adding beautiful decorative objects, placing intriguing wall art, or simply placing framed photos of your loved ones on your desk. Do you have a small collection worth showing off? Consider displaying it in your office for your own as well as the enjoyment of visitors. If you have the funds and the desire to go all out, then by all means find an interior decorator who will understand your corporate identity and work with you to make all your interior spaces rock.

Scents

Lisa Evans over at Entrepreneur says, “Aromatherapy probably isn’t the first tool you think of to help boost your productivity and grow your business, but maybe it should be.” She goes on to describe various reasons for introducing scent into your office as well as ways to do so that won’t be offensive to others.

Stress balls and fidget spinners

OK, I saved this for last, because I like it – and it seemed like fun to me. Yet, I know what you may be thinking. What do non-productive gadgets have to do with efficiency?  There is evidence that “stress toys” may actually help folks focus on their work. While the jury is still out, it may be worth the few dollars to pick up a stress toy (or 5 – depending on your office size *wink*) and give it a try. If “calm down” is the directive you’d like to give yourself or someone in your office, perhaps having a fidget widget nearby is an acceptable answer.

In the next part of this 3-part series we’ll delve into effective planning methods for becoming more efficient in your construction contracting office.

In the meantime, you can get in on the accounting service we provide (which comes with systems and processes as part of the package) by getting in touch here.

Scale Your Construction Contracting Business

Escalating your business to the next level

So, you’re ready to scale your construction contracting business. It is time to move to a new level. You have plans, thoughts, and ideas about moving into the big league. Read on, because there is a brief primer ahead to help you begin to work through that process. But, before we go any further, I’m going to tell you the same thing my dad had to remind me of on more than one occasion.

If it was easy, everybody would do it

Scaling isn’t as easy as finding the right app, purchasing the correct software, or hiring the right superintendent. It is a process, with many components, and it requires commitment.

I’m not trying to take the wind out of your sails. As a matter of fact, I hasten to add, while you can’t change the direction of the wind, you can adjust your sails in order to reach your destination.

What the heck does it even mean?

A little more than a decade ago I came across the term and the idea of scaling your business. In context, I sort of had an idea of what it meant, but wasn’t completely sure. How about you? Do you know what it means? If not, this definition and explanation of scalability found on divestopedia is short, concise, and is worth your time to check out.

Identify ways to upgrade processes on the path to scaling your business

The most basic take-away from divestopedia’s article is a scalable business is one that focuses on the implementation of processes that lead to an efficient operation.

You’ll need to identify those processes which can be reproduced at a rapid rate, without generating increased costs. Think in terms of automating certain processes that currently require time and hands-on interaction.

One example of this type of automation can be found at your local supermarket, where you’ll find four or more self-check counters manned by only one person.

Another example is how we, at Schulte and Schulte, LLC work with you through accounting software or SaaS and various apps implementing an automated process.

Speaking of apps, this List of 17 construction apps for 2017 is a good place to begin your research into some ways to simplify, update, or structure some of the functions necessary for running your present and future job sites.

Of course, there are other technologies which are no longer the stuff of science fiction, but are already being embraced and are quite literally changing the landscape of the construction contracting field as well as the landscape around us.

  • Robotics
  • Drones
  • 3D printing

Look into what each of these technologies are already being used by your colleagues as well as your competitors. Think in terms of investing in what will bring the most ROI not only now but in the upcoming years.

10 important scale driving measures to take

Scaling your business goes beyond buying the latest technological item or system. There is more to the whole notion of scaling your business. Just as you put in time and effort to start your business, you’ll need to put in additional time and effort to scale your business. Following is a list of actions you’ll need to consider.

  1. Update and reshape your business plan
  2. Line up any necessary funding
  3. Pay attention to your consistent brand messaging across divisions, locations, and mediums
  4. Embrace standardization (scalable companies have effective tools for measurement)
  5. Hire people smarter and more talented than you
  6. Outsource what makes sense
  7. Focus on ROI
  8. Document everything
  9. Plan for the little things
  10. Keep trying until you find what works

In order to scale you must indeed be proactive rather than reactive. Begin building into your business those standardized functions which will continue working whether or not you’re at the helm.

OK, now where is the blueprint?

Not here. I won’t be able to offer you a “Your business blueprint,” yet I have given you enough information to begin putting your own blueprint together. And, good news, (caution — big self-serving plug here) we at Schulte and Schulte, LLC are ready, willing, and able to aid you through accounting advice as you take the scaling up steps.

In case you are wondering. Yes, we have built into our plans and strategy the scaling of Schulte and Schulte, LLC. One of our favorite parts of the plan is that as your construction contracting business scales we’ll be on the scaling escalator right beside you.