Owning then Scaling a Construction Contracting or Service Business

In the beginning you had to:

  • Figure out the legal, financial, and operational aspects of your business
  • Understand how to communicate and negotiate
  • Learn how to promote your business, yourself, and your products or services
  • Comprehend how to keep the accounts, stay organized, and run the office
  • Grasp the responsibilities of entrepreneurship

Now, you’re ready to scale

Not simply running with the big dogs – being a big dog. You’ve mastered so much already and the time has come to master even more. In fact, you’ll need to hone the above-mentioned aspects of starting a construction contracting or service business to a greater degree.

While it doesn’t hurt to know how to pick up the tools of your trade and apply them to good use what matters more is understanding the tools inherent to being a successful business owner.

Consider this

Which is more important?

  • Knowing how to cut a short board or knowing how to cut a meeting short
  • Knowing how to paint a room or knowing how to paint the picture which your potential customers need in order to purchase a painted room from you
  • Knowing how to twist the wrench or knowing how to twist out all the information necessary so you’ll be able to go above your clients’ expectations
  • Knowing how to celebrate your personal achievements or knowing how to celebrate the accomplishments of your crew
  • Knowing how to build then install a cabinet or knowing how to build then scale your construction contracting business

Mindset matters

It is perfectly acceptable to be proud of the skills you have and your ability to accomplish the various tasks associated with your particular trade. Those skills have likely played a great part in getting you where you are now.

And, if you’re going to scale your construction contracting business now is the time to build on the additional skills you’ve been learning all along. Not every carpenter, electrician, plumber, painter, or other tradesman has the where-with-all to become the owner of a business within their discipline. But, you do! Congratulations!

Because you’ve already accomplished much, it is only a small degree of difference to begin your journey of scaling your construction contracting or service business.

Let’s put it this way, we at Schulte and Schulte don’t believe in mumbo-jumbo about wishing or thinking your way to success. We do believe it takes hard work and the proper mindset. We further believe that, while “thinking you can” doesn’t always accomplish the task, “thinking you can’t” will always achieve its goal.

There is more to learn

In an earlier article, I talked about some things you should be doing when working ON rather than IN your business.

  • Planning
  • Hiring
  • Training
  • Leading the management team
  • Delegating
  • Presenting
  • Selling
  • Negotiating
  • Tracking results

If you’re not proficient at any of these skills, begin learning and practicing. Being the leader of an enterprise which is scaling is not an easy job, but it is certainly a rewarding one and one worth putting your best efforts into.

We at Schulte and Schulte are happy to stand beside you and work with you to aid you in scaling your construction contracting or service business.

17hats: All-in-One Business Management Software

In this monthly post, it’s my pleasure to introduce you to one of the many apps that we at Schulte and Schulte endorse and recommend to our customers.

As a firm of construction accounting specialists, we love to help companies in the construction industry with their books and finances, part of that help is finding different apps or software that can help our clients out.  During this monthly feature, we take a look at several apps that we love at Schulte and Schulte, LLC, and dig a little deeper into our favorites.

This month, we would like to introduce you to 17hats.

As a business owner, there are multiple “hats” that you will wear as you go about running your business.  By hats, we are talking about the different roles you will play on any given day, from accounting, marketing, client communication, lead development, etc.  17hats is a brilliant piece of software that is designed to integrate each of these different hats into an easy to use business management tool.  We could go into detail talking about each of the different tools that are built into 17hats, but for the sake of time we will highlight a couple of the features that we appreciate the most; specifically the Overview Page, Customer Relationship Management (CRM), and Workflow Management.

Overview Page
This dashboard is what you will see whenever you log into your 17hats account.  It has been designed to incorporate a 3-day calendar view of all events and to-do’s that you have set up.  Underneath the calendar is a list of all action items from every ongoing project that you have, as well as a list of client email correspondence that is needing your attention.  This dashboard is customizable to include this above information, as well as other options available for you.  It is a really handy tool to get a bird’s eye view of what needs your attention on any given day.

Customer Relationship Management (CRM)
A lot of effort has been put into developing this CRM tool to make it easy to use.  As the above video shows in its example of adding a new lead and the development of that lead into a client, 17hats utilizes its CRM to assist you in keeping your contact information and projects accessible. It also stores all email communication and documents sorted by client.  This means no more searching through your email account for that important message from a client’s project you are working on.

Workflow Management
The video above gives a snapshot of the process involved within 17hats’ Workflow Management.  You are able to create templates for almost everything you will end up passing onto a customer, from engagement/proposal questionnaires and feedback forms, quotes, invoices, and more.  It has e-signature technology built into the app to allow anything that needs a signature or feedback from a customer to be sent from the app, and also allows you to track what has been sent.  17hats has a one-way sync that will allow you to sync invoices into QuickBooks Online, which is music to our accounting ears.

We love 17hats, and would like the opportunity to share it with you.  If this sounds like an app that you would be interested in checking out, please let us know!

Financials: Cash Basis versus Accrual Basis for QuickBooks Online

If you want to get a handle on the numbers in your Construction Contracting business then it is imperative you understand your financial statements.

Understanding the difference between a cash basis financial statement and an accrual basis financial statement is a good start. Then, understanding what makes them different in QuickBooks online and how they’re deciphered there aids you in getting a firm grip on those numbers.

Cash Basis Perspective Gained – The Cash Flow within Your Construction Contracting Business

In its most simple format, Cash Basis is achieved by recording your income and expenses when payments are received and when expenses are paid. If money moves one way or the other it is recorded then and there. Your customer pays his invoice and the amount is entered as received. You buy some new tools and the cost is entered as paid out.

Example: Customer ABC agrees to a job which will cost him $1,000. He pays you when the job is complete. This is a cash basis transaction.  (Even if he pays you with a credit card, it is a cash basis transaction because the credit card company will place the fund in your account within a couple of days.) Therefore, payment was made. Yet, if the customer pays you the next month, you won’t recognize the sale until next month.

Accrual Basis Perspective Gained – The Financial Health of Your Construction Contracting Business

Now, on to Accrual Basis. In this format, you record your income and expenses as payments are earned and expenses are incurred. Put simply, you record the transactions whether the money moved or not. What you’re doing is recording when the promise of payment is made, whether by you or by your customer. What you will see is either an Accounts Receivable or Accounts Payable in your books.

Example: You perform a job for customer XYZ. Once you’re done, you leave the job site. When you return to your office you generate an invoice and send it to her for $1,000. This is an accrual basis transaction. The customer now owes you money for your services and you now have an accounts receivable balance on your books.

Now if your construction business delivers long-term contracts, transactions that will take longer than 12 months or cross fiscal years, then these rules get a little more sticky. I won’t try to get into the ramifications of those circumstances in this post.

What all this means for your transactions through QuickBooks Online

In QuickBooks online, it is very easy to switch between cash and accrual systems in the reports. At the top of the report, where the options are listed, you will see Accounting Method. When you switch from accrual to cash, QuickBooks reverses out receivable and payable transactions because cash did not change hands, no cash moved.

Once you make the switch the financial statements will look different. And, as you can see, this is because some transactions are handled differently under each accounting system.

Not all transactions are converted equally under each system. Understanding these differences and how they affect your financials will help you understand which financial picture you are looking at.

One step further

Let’s go back to our previous example under the accrual method above, where you created the invoice for $1,000. This invoice will appear on your accrual basis Profit and Loss under sales but it will not appear on your cash basis Profit and Loss. Because of this difference, when you look at the cash basis Profit and Loss, it will not show you how many sales you really transacted during that period and your statement will be understated. Only the accrual Profit and Loss will show you the true sales number.

If customer XYZ pays you $500 of the balance, when you look at your accrual basis Profit and Loss under sales you will still see the $1,000 sale, but now when you look at your cash basis Profit and Loss you will see the $500 under sales. You only see the $500 because you actually received the cash.

Yet, when you look at this financial statement, your sales are again understated. This time by the $500 balance that remains. This is an important distinction to understand when looking at how much sales your business generated for the period.

The effect of these two examples can also occur in your expenses or accounts payable transactions. If you record a bill for $100 in supplies, that bill will appear in your accrual system profit and loss but not your cash system profit and loss. This will result in understated cash basis financials. Once you make a $50 payment on that bill, the $50 payment will appear on your cash basis Profit and Loss but that statement will still be understated by the $50 balance still due.

Know what you’re looking at

When looking through your financial reports, be certain you understand the type of data each report provides based on the accounting method being used.

We, at Schulte and Schulte, LLC believe the accrual method is best because it tells you the financial health of your business. Yet, if you are inclined to run a cash basis statement, be certain you understand what you are looking at and the story that it tells.

Have questions? Give us a call, we can even help you make sense of those long-term contracts and accounting that occurs cross fiscal years. 480-442-4032 or Toll Free: 866-629-7735

Introducing Our Construction Knowledgeable Payroll Specialist!

 

Way back in January we introduced you to Alicia Lybarger as our Cleanup Specialist – a job she has proven herself to be exceptional at performing. Now we’re excited to announce Alicia is accepting more responsibility and moving into her new position as the Schulte and Schulte, LLC Payroll Specialist.

What she does

In this role, she ensures accurate processing and recording of our clients’ payroll, provides timely and accurate financial information, and participates in data entry payroll processing.

Why we are so glad to have her

What we love about Alicia is she is proactive, analytical, and eager to work in a fast-paced environment. She thinks on her feet, enjoys working with people and working on multiple projects back to back. Besides all that, she has an excellent knowledge of payroll best practices as well as a commitment to client confidentiality.

Other things she likes doing

When she is not busy working for Schulte and Schulte clients, Alicia spends time with two rambunctious sons. She sews on a sewing machine handed down from her grandmother. She bakes and decorate cakes. And, she admits she is still in love with New Kids on The Block!

Need payroll help? Give Schulte and Schulte a call – we’ll hook you up!  480-442-4032 or Toll Free: 866-629-7735

CoConstruct: Custom Build and Remodel Software

In this monthly post, it’s my pleasure to introduce you to one of the many apps that we at Schulte and Schulte endorse and recommend to our customers.

As a firm of construction accounting specialists, we love to help companies in the construction industry with their books and finances, part of that help is finding different apps or software that can help our clients out. During this monthly feature, we take a look at several apps that we love at Schulte and Schulte, and dig a little deeper into our favorites.

This month, we would like to introduce you to CoConstruct.

CoConstruct is geared specifically for custom home builders and remodelers. This software is designed to include everything that goes into home building from initial client leads, all the way through punchlist and warranty work. The video above gives a brief overview of the software in action, particularly the financial setup of a project start. CoConstruct has a lot more features baked into it than we have time to get into here, but we want to highlight a couple of the features that we believe set CoConstruct apart from other similar apps and software.

Keep Your Clients Informed – “If the clients ain’t happy, ain’t nobody happy”
Keeping your clients informed as the project progresses is an essential part of any custom build, and CoConstruct takes a lot of the time involved in doing this off of your hands. Included in the software is a client-only web portal that shows them the information they are looking for; 24-7 access to selections, costs, photos, conversations, job calendar, and more. This gives them the opportunity to know exactly where the project is at, and also allows them to share progress photos and your work with their friends through social media, which translates to referrals for your company!

Improved Client Communication – Kiss the “he said, she said” goodbye
CoConstruct has patent-pending communication technology that allows all communication between your team, client, and trade partners to be found in one place. This allows everyone involved in the project to be on the same page, and if changes happen then everyone involved will be in the communication loop without having to worry about forwarding emails, IMs, or text messages to all of the relevant parties.

Finish Strong – Leave a great last impression on your clients
CoConstruct makes it a priority to see your client’s projects through to completion, even while you are moving on to new jobs. You won’t get caught dropping the ball with your clients and subcontractors regarding warranty work with the reports and reminders that will come up, months and years down the line. It’s the “little things” like this that can make or break a great referral for your company, and CoConstruct has your back.

We love CoConstruct, and would like the opportunity to share it with you. If this sounds like an app that you would be interested in checking out, please let us know!