Are your employees' work based on "Time Served" rather than "Results Achieved"?

A time to start and a time to stop. Now, do your expectations for those same employees to work faster (Indy 500)? Do you expect the job to be done efficiently, thoroughly, and beautifully (better quality than the homeowner can do themselves)? 

How many jobs are completed where the final punch list takes longer than the actual job?

The common practice with employees - get the job done Fast (beating their last time). There is done and not done. I can think of several examples. Is there trash left all over the job? Is the living space dirty and needs to be professionally cleaned for the client? Is there a zillion things the homeowner needs to do before they can reclaim their space?

The job is not done until the final punch list is completed, the customer has paid, the check has cleared the bank.

There are a zillion steps from the initial call to meeting the potential customer, creating an estimate, doing the work, collecting the money, and paying the bills. I repeat and cannot say it too often, for Construction Contractors like you, the paperwork, processes, and decision-making are never-ending.

Contractors' most common question: I saved all my paperwork, now what do I do with it?

Who will call my suppliers, create tax forms, pay all my bills and taxes? Will you do everything? I just want to do the work. You say you want all of your employees to enter into QuickBooks their receipts, invoice customers; it is a wasted step for me, as the owner, to handle all of the paperwork all over again.

You are the Contractor (THE OWNER). I want to point out that your employees are just that employees.

It makes sense for them to track their jobs (talking about the Project Managers, Construction Supervisors, Lead Staff) using Project Management Software, not QuickBooks. Keep It Simple: Start with an Electronic Timecard. 

We recommend T-sheets. T-sheets are affordable and work on all Smart Phone brands, with support for old-fashioned flip phones. Fantastic about helping you and your staff use the product. 

Reports can be pulled by date range, by staff, by the project. It works for both field and office staff. Of course, the GPS features - not practical for office staff but very practical for your field workers. Are your employees where you expect them to be?

Who is in your QuickBooks?

Experience has found that "Too Many Cooks In The Kitchen Ruin The Meal" and too many people in QuickBooks leads to a financial disaster and, more often than not, meltdown and bankruptcy business and personal. Does everyone need to be in the Accounting System? 

Having all your staff know more about your numbers can cause many "White Noise" in their heads. Common Employee thoughts are "Employees are doing all the work, and the Construction Owner is making all the money and doing nothing!" Sound familiar? It will if you have been in business for more than a few years! Employees never think about that stack of invoices for supplier slips, insurance, taxes (that's all just stuff that doesn't count).

About The Accounting. We recommend all Construction Contractors use the Desktop Version of QuickBooks. It's very robust and customizable. No, not every 3rd Party App. will work with QuickBooks.

Yes, in addition to QuickBooks Desktop Software, we use 3rd Party Software to help you. Both in the amount of paperwork you need to send us and keeping your costs affordable. 

Many Construction Contractors find us through blogs, podcasts, and their existing office staff who have read our blogs about Bad Bookkeeper. My suggestion to you is if your team is enraged about what has been written – maybe it is time to review their work closely.

We help with QuickBooks Setup, Cleanup, Ongoing Bookkeeping.

We provide Cloud Access Consulting and Training. We always recommend QuickBooks Desktop as the starting point for all Construction Contractors, large, small, new in business, returning contractors. We are here to help you.

The 80-20 Rule combined with Business Process Management can improve your life in ways you never dreamed possible.

• 20% Of The Construction Companies - Share the Top 80% of the profits which the owners and shareholders use to support lavish lifestyles because they know what to do, when to do it, and how to do it!
• 80% Of The Construction Companies - Share the Bottom 20% of the profits which the owners and shareholders use to support just above or just below average lifestyles because they don't know what to do, when to do it or how to do it!

Final thoughts

The answer lies in your thinking patterns and habits. 

Randalism:

Success is a few simple disciplines practiced every day. 

Failure is a few errors in judgment repeated every day.

For Contractors who are happy doing the bookkeeping, we offer custom-built QuickBooks Setups, Chart of Accounts and Cost Codes, and other related products on our store—making site improvements daily. Products are sectioned into (3) areas: United States, Canada, International.

Construction Contractors want their Accounting to be on a Merry-Go-Round instead of some of the more exciting rides at the county fair. Life is in constant change. Everyone has a Wish List – I want to be on yours when you are ready.  

I love to chat with everyone. Call today, tomorrow, next week. 

About The Author:

2. Ask open-ended questions

Final thoughts

Asking questions is vital to get valuable information from prospective clients by helping you understand their needs, priorities, and problems. By showing customers, you can listen to them and understand their needs; you build an important connection with them to provide them solutions. That connection may also be what keeps them coming back to your contracting business. That's how you build valuable relationships with clients.

Got a question? Let's talk.

About The Author:

Examine various aspects of your construction business, such as your marketing and sales, to see if they're all working together or if they need revising. Is your social media account information still accurate? Do you have unanswered emails to respond to? When was the last time you posted on your blog? Should your website be updated?

This is a great time to take care of those tasks that have been put off for far too long.

2. Get bold with your marketing

When business is booming, entrepreneurs often prioritize tasks directly related to profits, and other activities—such as marketing—take a back seat. Rather than using downtimes to catch up, use them for experimenting with new tactics. Have you tried creating marketing videos or used Instagram Live? Have you sent out direct mail?

Write a blog and social media posts ahead of time. Strategize your next marketing campaign and commit to posting on social media every day. If you have time, build up a backlog of posts to have pre-written content when things get busy again.

You can also use this time to learn tactics and tricks you may not fully understand. For example, if you like writing your marketing materials but don't understand search engine optimization (SEO) or Google Analytics, this is an opportune time to learn about them. Again, professional development now can help you in the future.

3. Implement new policies and procedures

If you want to make changes in your business, slower times are often a great opportunity to try them. That way, you have the chance to review the modifications and whether they work well for you before they cause a massive headache.

Are you considering a new web hosting service? Are you looking to automate some client-facing activities? Make these changes during a slow period to get a good feel for how well they work. At least then you can address challenges that arise before things get busy and you're left dealing with many upset customers.

4. Harness the power of learning

Knowledge leads to profits and cash flow. What makes knowledge powerful? Use of knowledge. In this cutthroat construction industry, you may not be able to outgrow your competition forever, but you can always outlearn them. 

Gain insight from a free consultation with me or enroll in one of our Construction Accounting Academy courses. Master the skills needed to generate useful reports, repeat quality performances, and make informed decisions to operate and grow your construction company. Click here for the list of classes. 

5. Connect with your community

Quieter periods are a perfect time to get more involved with your community and do some good. Find a local organization that you care about—or related to your business's work—and partner with them. For example, you could sponsor an event or a seminar or even run a fundraising drive.

Not only will you have something to talk about on your social media, but you'll also engage customers that care about purchasing from companies that do good. These days, that's important to many consumers. According to Forbes, 88% of consumers will be more loyal to a company that supports social or environmental issues, and 87% will have a more positive image of a company that supports social or environmental issues.

Final thoughts

Remember that business won't always be slow, so don't panic when things get quiet. Instead, take the opportunity to reflect on your business, make necessary changes, try new marketing tactics, advance through learning, and connect with your community. Doing so can help you make the most of your downtime so your construction business can rebound more effectively.

About The Author:

Banks stay in business by loaning money and earning interest. They work hard to find people, companies, and contractors with reasonable credit risks they can lend money to and get paid back promptly, with all of the interest due to them. Do your best to avoid raising any of these red flags.

#1 Your Profit & Loss and Balance Sheet Reports do not conform to financial industry standards

#2 The financials tell the banker your bookkeeper doesn't understand Construction Accounting

#3 The preparer's signature on the annual tax returns is not from a qualified tax specialist

#4 You have no access to a Construction Accountant, not even for quarterly check-ups

#5 You don't have a formal documented Business Plan with a budget and projections

If you have already raised some or all of these red flags, no worries; we can help you fix most of them.

Bankers love chatting with accountants because we speak the same language as homebuilders, who love talking with sub-contractors and building material suppliers. After all, you all speak the same vocabulary.

The Risk Management Association (RMA)

1914-  the Robert Morris Club (RMA) was formed to help businesses and bankers exchange credit information. It was named after Robert Morris, a signer of the Declaration of Independence, and was believed to be the primary financier of the Revolutionary War.

The RMA developed several tools; among them was a system of Ratios that we use today to study the financial statements of all companies in all industries.

The banking and lending industry has enormous databases and artificial intelligence software from places like The Risk Management Association, allowing them to separate reasonable contractor risks from bad ones. It generates recommendations based on algorithms much more complex than any gambling casino and with a much higher payoff.

One of the keys to getting a banker, lender, or bonding company to consider your construction company for financing is how your financial statements are presented. In particular, your construction company's Profit & Loss and Balance Sheet.

A banker, lender, or bonding agent logs into their RMA account, fills out electronic forms, answers questions about your construction company, and inputs specific numbers in specific blanks taken directly from your construction company's Profit and Loss and Balance Sheet. Any construction accountant knows precisely how to set up QuickBooks correctly for this process. 

If a contractor gives their banker, lender, or bonding agent a set of financial reports that do not conform to the RMA requirements, they may or may not try to extrapolate the numbers needed using Excel or some other program.

In most cases, they are polite and thank you for "applying" before giving you the "We will let you know as soon as we know anything" speech. I know this because I have heard it from many bankers, lenders, and bonding agents who are frustrated. After all, they know you are an excellent client and know you are a person of integrity who can be trusted to pay the loan back on time, with all the interest.

The RMA and other reports show where your contracting company stands concerning other contracting companies serving similar geographic and demographic markets.

Each major category, Sales, Cost of Goods Sold, Overhead, Other Expenses, and Other Income, is rated on a scale of top 25%, middle 50%, and bottom 25%.

Ideally, all the numbers on your Profit and Loss and Balance Sheet fall somewhere in the middle 50%. Whenever a contractor "forgets" to declare all their income or "overstate their expenses," it will appear as a red flag.

Finally, a Z-Score is compiled, a formula for predicting bankruptcy. Edward I. Altman published it in 1968. The procedure may be used to predict the probability that a firm will go into bankruptcy within two years. Although not 100% accurate, it is a valuable tool, similar to a tape measure, which is not 100% accurate yet still practical.

This is why sometimes a contractor with excellent credit cannot get a loan or line of credit, and yet another contractor with only good credit can get financing.

Prioritize these three things for a smoother loan application:

Your business risk profile

One of the most essential parts of any business loan application is demonstrating to a lender that your company can make regular payments and repay the loan in full. If your business is profitable, you can show you're at low risk by presenting cash flow statements, a detailed business plan, and your good credit history. Some of the most common reasons a bank won't grant a loan to a small business are a lack of security (e.g., no business assets), a poor or non-existent credit history, business inexperience, and a weak business plan.

Know your credit score

It's highly recommended that you review your credit score before you apply for financing. That way, you'll know whether it might be better to wait until you're in a better position to qualify. Check that your report is complete or free of any errors that can affect your score. Your credit report includes your payment history for credit cards, equipment leases, mortgage or office rentals, electricity, phone fees, and other business expenses. A simple omission – say your internet provider, whom you always pay on time, isn't included in your payment history – can result in your credit score being lower than it should be, so be sure to correct any errors immediately.

Before you apply for financing

If you suspect a lender will decide your business is too high risk for a loan, or you've been denied financing, apply for business credit instead. Your spending limit may be low, but a credit card will allow you to build a good credit history. Pay off your balance – or, at the very least, make your minimum payment each month. Keep up with your other financial obligations, such as personal loan payments, rent, leased equipment, and any income taxes owed. Apply for a loan in six months to a year, and you'll have a much better chance of approval.

Before you apply, be sure you have all the documentation needed to support your loan application. Include in your portfolio copies of business banking statements, financial reports, a detailed business plan including projections, and a well-researched marketing plan.

It would be best if you also were prepared to discuss with a lender why you need to borrow the amount you're asking for, the term length, and how your business can afford to repay it. Make a strong case for funding by demonstrating profitability, a good credit history, and a solid business plan, and you'll be in an excellent position to qualify for the funds you need to grow your business.

Final thoughts

Hopefully, you have gained insights into the banking, lending, and bonding industries. Profitable contractors and construction company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time, and now you know about it too. Reach out to me and let's chat about your construction business; whether you need a little help or a lot, I'm just a message away.