Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services

This Podcast Is Episode Number 542, And It's About What Is A Fractional CFO And How Can It Help Your Construction Business? A fractional CFO, or Chief Financial Officer, is a finance professional working part-time, retainer, or contract. They bring the experience and expertise of a high-level CFO to your business – without the cost of hiring a full-time, in-house employee.   Fractional CFOs service several clients simultaneously, typically on a part-time, retainer, or contract basis. Their specialty is providing outsourced CFO services to small and medium businesses.   Because their financial management skills are so well-developed, it's common to bring one on board to help navigate a challenge.   Every construction business can benefit from dedicated financial management expertise, but very few small companies have the means to hire someone full-time—particularly in the lean early years.   Unfortunately, it's those first few years when a company is just starting up that establishing good habits with managing financial resources is so important, and, over time, can even make or break a construction business.   Outsourcing a CFO is affordable for business owners like you who recognize the need for a financial expert with construction business experience. CFOs provide top-level advice when needed, offering incredible value and cost savings to companies focused on growth and long-term success. But what happens when you hire a CFO without a construction business experience? At the very least, you and your CFO would constantly struggle between having all the documents needed for data entry and providing the tools to the Bookkeeper to deliver the reports correctly. As a construction business owner, you want answers to the following questions: Am I making any money? Where am I making any money? Why isn't there a report that gives me all the answers at the push of the button? Furthermore, a financial challenge sometimes comes beyond your team's skill or experience level. This is where a fractional construction CFO can be of great benefit. Some of the issues they assist with include: Cash flow problems High expenses Existing systems that are no longer working Cost-cutting analysis Getting through an audit Hopefully, these situations don't come up often, but when they do, it's beneficial to have an expert on your side to guide you through. Your small construction business might want to consider the benefits of working with a fractional construction CFO. Achieving goals A fractional CFO can help you realize your dreams by deciphering the numbers. They will look at where you are now and help you plan where to go next. This includes: Ensuring the books are in order Performing financial forecasts Helping with strategic relationships Overseeing due diligence There are plenty of ways a fractional CFO improves your operations. The specific skills and experience they provide will clarify your situation and help you achieve what you want. Managing growth Taking your construction business to the next level can seem daunting. You want to grow but don't want to risk your success by taking on too much or making a damaging misstep. A CFO will help you navigate the steps ahead. If you're already growing at a rate that makes you feel like losing control, they will help you retake the reins. A fractional CFO will help by: Breaking down large amounts of financial information into helpful data Making a plan to develop existing employees and their skills Identifying the need to hire new employees to manage growth Implementing systems that will work in the future Exploring causes of revenue loss and cost overruns and developing solutions to address them Ultimately, a fractional CFO is helpful to guide you through the growth process so that you can feel confident as your business expands. High-level decision making A CFO can analyze your construction company finances and provide expert advice to help you make more informed, strategic decisions for ongoing profitability. That senior-level financial oversight can help you understand any risks or weak spots, identify opportunities, and create a realistic and actionable business plan that steers the company precisely where you want it to go. Managing risk Your business is an asset that needs protection from any potential risk that may threaten its ongoing success. A fire or flood, cyber attack, or employee theft can all cause long-term damage if you don't protect your business. A CFO can undertake a risk assessment and ensure that you invest wisely, have appropriate insurance, and secure sensitive data, equipment, and inventory. Field tools are a given. The truck has a rack for ladders and lumber. Vans have shelves and bins; they are tall enough to stand in, saving wear and tear on employees' knees. Less strain on knees can keep or postpone possible Worker's Compensation claims. Worker Comp claims lead to increased premiums. Once the Tools and Equipment are updated, it is much easier to see which employees are productive. In the Field – Who is bringing their jobs in on time, under budget is reasonable. Jobs without warranty work and signing billable change orders add to the bottom line. Simple Efficiency is a "Win-Win" for everyone: The Contractor Owner receives the reports needed to make good, proactive decisions. The CFO has a smooth-running operation and can focus on the "Money Management" duties necessary to run the business. The Office Manager or Bookkeeper can efficiently enter the day-to-day paperwork into the QuickBooks file, answer the phones, and complete other daily tasks without frustration. The Field Staff know they have turned in all their paperwork (paper and digital) in a timely fashion with limited stress and are greeted warmly by the Office Manager or Bookkeeper. Everyone is ending their day on a "Happy Friendly Note" and looking forward to tomorrow. Everyone Wins When: 1. The Contractor Owner knows the accounting records are accurate and can make decisions 2. The CFO can be confident that clients are billed, and no one is paid twice. 3. The Office Manager or Bookkeeper can easily track Job Costing and Timecards 4. The Field Staff stays on top of the job and gets signed Change Orders 5. The Customer is happy with an excellent job without any warranty work. Final thoughts When you hire a fractional CFO, you decide how often their services are required and only pay for the services you need. Hiring a financial expert on contract is a cost-effective solution for construction businesses that only need part-time support. Staying on top of your company's financial management is a struggle for many small business owners, who spend much time attending to clients and profit-generating activities. Working with a team of accountants, bookkeepers, and a CFO can help you better manage the most critical aspect of your business for ongoing growth: your bottom line. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 541, And It's About The Value Of Documenting Effective Construction Business Systems Many entrepreneurs operate with their business processes and systems in their heads. They know what they must do daily and how they want to get things done.   Unfortunately, when a construction business grows, and staff need to be hired – or the owner needs to take time away from the company – it's an absolute liability not having processes and systems documented in one place.   To be in business and to remain in business, become a business person! To run a construction business, you must be business-like. It's not sufficient just to be very good at what you do. Many people who are 'very good at what they do' have failed. The familiar cry: "I'm far too busy for that," is also no excuse. Are you 'too busy' to be a competent businessperson? If so, your construction business won't last long. You must continue to develop your business skills.   To be a businessperson, you must try to become an all-rounder, not just a specialist player. You can offer outstanding goods or services, but if you don't develop sound business systems, you are not a fully rounded businessperson, and your construction business will be in danger of failing. Remember that other stakeholders in your business - such as the building material suppliers who give you credit and the bankers who extend loans and financing terms, are constantly assessing your business skills. If you consistently pay people late or can't meet the duration of your debt agreements, they will draw obvious conclusions about your business skills. Here are the top five reasons to record your company processes and systems so your business can run more efficiently and effectively even when you're not there. 1. Improve efficiency When you sit down to record your processes and systems, you may discover gaps where improvements could be made. You might find better ways to perform routine tasks, reducing bottlenecks and eliminating extra steps. You may decide that some tasks are too time-consuming, and you'd save time and money switching to an automated solution. Reviewing how you do things as you record systems can help create better systems, improving productivity. 2. Support staff training When hiring new talent, a systems manual can dramatically reduce the time you spend training. Documenting your processes can also ensure that jobs are consistently performed to a high standard. Sharing your procedure guidelines can help new employees and casual staff quickly get up to speed on expectations and give them a reference to check before asking questions. 3. Sell your systems Develop a unique turnkey system that other construction businesses can implement to save time and cut costs, and you can increase profits by selling your operating manual. Those documented processes are part of your company's intellectual property and can be licensed like your brand name. 4. Getaway One of the perks of running your own business is setting your schedule. But without systems, it can be challenging to get away for a vacation, let alone retire. To build a company that can run without you, you need to be able to delegate the tasks and processes to someone else with confidence that they'll be performed correctly and consistently. Another excellent reason to make sure your systems are recorded and your manual is updated regularly. 5. Sell your business When it comes time to sell your construction business, you'll get top dollar if you can provide a buyer with an operating manual. A potential buyer wants to know that the company will continue to run smoothly without you throughout the transition period and that institutional memory will be retained when there's staff turnover. The greater ease with which someone can step in and operate the business, the greater the value and the higher your compensation when you're ready to sell. As we've seen, several excellent reasons exist to review your systems and record them, even if you're just starting. You might update it yearly, just like your business plan, to discover best practices and ensure it maintains its usefulness to you and your staff. Too many businesses fall over because the owner has not established efficient business systems. This typically happens because the business owner is so caught up in the day-to-day running of the business that the fundamentals of good business management get forgotten. It must be often said that the owner doesn't like bookkeeping or other administrative tasks, so these get put on the back burner. The symptoms are familiar, and their results are disastrous: Poor or non-existent record-keeping. Tax obligations are not met. Invoices go out late, and debts remain uncollected. There is one cash flow crisis after another. Goods and services are incorrectly costed and priced. Any of these factors can lead the business down the slippery path to failure, but all are avoidable. The whole point about using sound systems is that they free you to spend more time working ON your business, not in it. How good business systems will help you? Good systems will make your construction business more substantial, efficient, and manageable. They will also make your business far more attractive to future buyers because if you have developed clear operating and procedure manuals, the business will be seen as an independently viable unit and less dependent on you. Consider, for instance, what makes franchises so successful: they are designed so that people can buy a proven system and operate it after minimal training. They can do this because the business procedures are captured in simple, clear operating manuals. You don't have to be an expert at everything in your construction business. For example, you might hate bookkeeping. Okay—but do get someone else to do it for you; don't rely on a shoebox for your accounts! And you should at least understand the processes and the overall accounting picture, even if you don't want to do the 'drudge work' yourself. Final thoughts Large, profitable construction companies have known and used some form of Business Process Management (B.P.M.) for hundreds of years. We've always used M.A.P. to help our clients find the treasure hidden inside their construction business. (You can download our free toolkit here if you haven't done so). Having poor systems is the road to stress and burnout. On the other hand, good business systems will enable you to work smarter, not harder. They free you to work on your business rather than in it. That way, you're more likely to avoid burnout, and you'll be able to take time off work because you can train others to follow your documented systems and procedures. Build a better construction business and liberate yourself from it. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com    

This Podcast Is Episode Number 540, And It's About Key Financial Concepts For Construction Company Owners Not everyone knows construction accounting, and it is easy to assume all accounting is the same. Even if you have outsourced your financial functions, as a small construction business owner, having a solid understanding of critical financial concepts is crucial to work with your advisor and 'speak their language". This article outlines several essential concepts that every small business owner should know.   Construction is a tricky business, and people's failure is expected. Most of our clients have either failed or come very close. It doesn't matter how many times you are knocked down; it only matters that you learn your lessons, get up, and go again. We noted these lessons years ago, owning and operating our construction company. By building a system and gaining insight from us, you can pick up from our mistakes, which you don't have to go through and can start avoiding before it comes crashing down.    Get that one thing working, then move on to the next one. What is the most annoying thing you can quickly fix? We talk about accounting because that is our primary focus. Start with the basics: Open a business checking account. Use a dedicated credit card for the business (if using a personal card). Create invoices, present them to your customers, collect the money, and get it in the bank (Do you have an easy way for your clients to pay you?). Collect the money ASAP because, without cash flow, you are out of business. Basics of income and expenses As a construction business owner, you must understand how you generate and spend money. This way, you can maintain fiscal responsibility while also promoting business growth. Income statements (Profit & Loss) versus cash flow Business owners should always stay on top of the latest cash flow analyses and projections to make smart short-term financial decisions. Remember, a P&L doesn't tell you if you can pay your bills or how liquid your business is. Keep that in mind! Operating cash flow Understanding a company's operating cash flow is vital for assessing its performance and cash runway. Gross sales versus net profits As a small business owner, paying attention to sales and expenses is vital to ensure a healthy and well-managed business. Remember, gross sales don't equal net profits. Understanding every expense, knowing the industry averages, and having enough cash to thrive long-term are crucial. Reading a balance sheet It's important to understand the line items on a balance sheet. Taking a deep dive into these details can provide valuable insights into your financial well-being. Soon, you will instinctively know if something doesn't look right. Return on equity This concept helps us decide whether to keep investing in the business or look into other investment options. You see, there are always opportunity costs to consider for every investment. Materials A construction contractor may purchase material and resell it to their customer. Thereby thinking it is a reimbursable expense. (You lose money when doing this).  Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) are income. Every line item on a customer invoice is ALL INCOME. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Washington State, for instance, has a clear explanation.  Purchases for the material are Cost of Goods Sold or are expenses if you are short-cutting your accounting. I have seen financial statements backed out because they will reflect reimbursable income as a negative number, thereby showing it as a deduction. (The net effect is double dipping on the expense side.) The cause is that the accounting software is not correctly set up.  Cost of goods sold It's imperative to clearly understand the cost involved in producing your products or services. If you're unsure how much it costs to provide your services, it's hard to know how much you'll have left to cover your overhead expenses. For example, a material receipt arrives at the regular bookkeeper's desk from a lumber supplier, and they open the QuickBooks contractor file, look up the supplier to determine how the previous lumber purchase was coded, and proceed to code the new transaction the same way. The problem is that each transaction is unique and could go into any of a dozen accounts or item codes depending upon whether it is a direct cost, indirect cost, WIP, retention, warranty, overhead, administrative, or other costs, or simply an expense. The cumulative effect of these bookkeeping errors in one month can do enough damage to the financial and job cost reports to bankrupt a contractor eventually. Accounts payable and accounts receivable Managing cash flow through digital tools for accounts payable (AP) and accounts receivable (AR) is crucial. After all, cash is king for small businesses! No - the company with the most Accounts Receivable or Accounts Payable does not win a prize. Accounts Receivable means your customers owe you money. Accounts Payable means you owe money to your suppliers. Net Profit is the money left over. You want lots of Net Profit! You are not a banker! Stop borrowing money using your credit cards, Loans, and Lines of Credit, then finance customers' projects at 0% interest. Working capital Monitoring working capital is vital for ensuring the business has enough funds to operate smoothly. You can get loans if you can't get enough working money because of seasonality or other external factors. A working capital ratio between 1.2 and 2 signifies a healthy business to lending companies. The operating capital ratio shows the percentage of assets to liabilities, i.e., how often a company can pay off its current liabilities with its existing assets. The working capital ratio calculation is Working Capital Ratio = Current Assets / Current Liabilities. We are deeply passionate and committed to the construction industry and want to support you, our clients, and our readers to achieve your definition of success. Whether you're a contractor, owner, spouse, business professional, bookkeeper, or accountant, we understand your frustrations because we've been where you are now and are here to help. We have proudly produced 12 classes in our Construction Accounting Academy. Each course was designed for QuickBooks users from all levels - Beginner to Experienced. Our goal is to provide the student with suitable and valuable information to build a construction accounting system specific to their type of construction business and company role. As with every type of business, having the right tools can help you work efficiently and effectively. The key to your business profitability lies in understanding the critical concepts of construction accounting. Now that the tools are available online and accessible 24/7, it's up to you to leverage and implement the power of knowledge. To wrap things up A solid understanding of these key financial concepts enables you to make informed decisions, effectively manage your finances, and strategically drive your businesses' growth and long-term success. With financial acumen, you can identify expansion opportunities, mitigate risks, and build a sustainable foundation for your business ventures. Don't navigate your finances alone – we're here to help. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 539, And It's About Construction Company Contract Traps And The Advantages Of Legal Help Mistakes can be expensive in the construction business, and as an entrepreneur, although you'll know many of the regulations that apply to your business, there are so many that you can't possibly remember all of them. Depending on the type of contracting business you run, you could face laws regarding taxation, employment, product liability, premises liability, discrimination, health and safety, and various other regulations.   Keeping on top of all the laws that affect you and the changes to those laws while still being mindful of all the other aspects involved in running a business is almost impossible.   That's why you need legal help. A legal professional can identify the rules and regulations that apply to your business and advise you on operating within those laws. They can also help you draw up necessary contracts that could prevent legal action in the future, and they can prepare a case in the unfortunate event that you wind up facing or filing a lawsuit.   For instance, a new contractor meets an experienced customer, and money changes hands, not how you expect it. Typically, this happens when you first get started: You bid on a project and are the low bidder. You are given the client's standard contract, which contains the client's favorite set of commercial terms and conditions, to sign as a condition of getting the project. You close and sign the contract because you don't want to ask for changes in the terms or consult your construction attorney. You put the signed contract in your bottom desk drawer and pray that nothing will happen during the project that will cause you to reread the contract. Before it is too late, consider these contract traps to look out for: 1. Poorly defined scopes of work create claims and disputes. 2. The completion schedule is too short and exposes you to monetary damages for failure to finish on time. 3. Payment terms put you in never-ending negative cash flow by loaning the customer money at 0% and borrowing on your credit cards at 24%. 4. The customer keeps 5%-10% of the contract price as retention for up to a year or more after the entire project is finished, which could be all your profit. 5. Indemnity clauses could make you financially responsible for bodily injury and property damage claims caused by customer negligence. 6. Indemnity clauses could make you pay the customer's attorney fees and costs. 7. Your insurance company may be required to provide additional insured coverage for the project, giving the customer free insurance and full access to the policy coverage and limits. 8. Often, the terms and coverage of the warranty are beyond reasonable industry standards. 9. Dispute resolution clauses that require arbitration first and then litigation are probably the two worst ways ever invented to resolve disputes. 10. The client's pre-printed final waiver of the lien document (necessary for the contractor to receive final payment) waives all contractor's rights to recover unpaid extra work and to pursue any claims that arose during the project. Here are three reasons you need a professional to help. They help set up your construction business In the early stages of your business, they can help you make vital decisions and understand the consequences of those decisions. Is your business going to incorporate? Do you know what that means from a legal standpoint compared to other business entities? Do you understand the difference between hiring employees and working with contractors? Do you know the employment laws surrounding hiring and firing if you hire employees? Law experts understand each of those and can explain how they affect your business. They can help you make an informed decision that is in the best interests of your organization and protects you in the future. They help with contracts At some point, your business will enter into contracts. Whether those are employment contracts with employees, service contracts with clients, or business agreements with other partners, you will need legally-binding documents to protect yourself. Not all contracts are easy to read or understand, and some may have confusing clauses. They will help determine if the contract is in your best interest and if there are inclusions you need to know about—such as whether parts of the contract can be assigned to third parties or how to terminate the agreement. They can also revise the contract or change anything you deem problematic. If you're drawing up the contract, getting a qualified legal opinion can ensure the agreement represents your needs and goals. This will definitely prevent experiencing contract traps, as mentioned earlier. We recommend seeking the advice of a qualified construction attorney to put together a contract that fits your specific needs. Your arrangements need a well-defined scope of work, clear payment terms, a reasonable schedule, and a proper change order clause. No work should ever be performed based on verbal agreements. Get everything in writing, always, with no exceptions. They help prevent lawsuits When you own a small business, there's always a chance you'll wind up in litigation. You could have a dissatisfied customer or an angry former employee. You may file a lawsuit because someone else infringes on your trademark or copyright. Usually, there are steps you can take in those situations before filing or facing an expensive lawsuit, and a lawyer can help you navigate those steps, possibly avoiding the cost of going to court. If you wind up in court and already have legal representation, that person will be familiar with your business, making representing you much more manageable. Many small construction business owners and entrepreneurs wait until it's too late to seek help. They wait until a lawsuit has been filed or need to file it. A lawyer can advise you of ways to avoid those situations in the first place, saving you unnecessary legal expenses in the long run. Final thoughts Yes, attorneys cost money. The benefits of having one, however, far outweigh the expenses. They will not only advise you on business decisions and contracts that protect your business in the future; they will help defend your construction company, product, or yourself if a lawsuit arises, either with you as the plaintiff or the defendant. Smart construction business owners know there is a time and a place to spend money. Spending your money in intelligent ways saves you time and energy. It can save you money in the long run by reducing turnover and preventing costly mistakes. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 538, And It's About Pros And Cons Of Working With Family And Friends In Construction Ever dreamed of starting a family business? Investing in a franchise opportunity with friends?   Businesses owned and operated by families can have incredible staying power. All family-owned companies, Volkswagen, Samsung, and Nike, are among the world's most successful, leading brands.   Working with family and friends can be fun and rewarding, especially in the construction industry. I know because we've been in one. But before you hire the people you care about most, it's wise to consider the pros and cons.   Pro: Dynamics When you hire family and friends, working together can feel comfortable and pleasant. You can vouch for their work ethic and values upfront. You already know their natural talents, abilities, preferences, and skill sets – their strengths, weaknesses, and how you can best work together. Con: Dynamics Regarding family and friends, modifying negative behavior or communication patterns can be challenging. What's more, it can be complicated to confront a loved one when they aren't acting in the company's best interest. The temptation to avoid conflict or hurt feelings can make managing a friend or relative tricky at best – at worst, it can become a severe liability. Always practice clear communication. Share business policies, practices, and expectations just as you would with any employee. Pro: Streamlined hiring You'll save time and money when you have a crew of committed workers ready to go before you're set to launch. With family and friends willing to help you, you won't have to screen and interview candidates – or spend precious time following up on background checks and qualifications. You can hit the ground running, focusing on generating income and profit. Con: The company has to come first Building a profitable and sustainable business requires effective management without exception. That means sometimes it may be in the company's best interest to re-train an employee for a different role, ask a worker to take on additional responsibilities – or, in some cases, to let someone go. When it comes to complex personnel matters, it can help to seek guidance from an independent advisor. Pro: Tradition is seen as a strength Strong brands are quickly built on the values we associate with family, such as honesty, trust, and enduring relationships. A recent study showed customers prefer family-owned businesses for their perceived stability, trustworthiness, and consistent service. Con: Too much tradition can hold you back When a family business does things as they've always been, the company can suffer from a lack of diversity and innovation. It's essential to keep an eye on market trends and changes in your industry, so you can adapt quickly and avoid missing opportunities. Solution: Set up a board consisting of family members and an equal number of independent advisors. A note on the spouse doing the construction bookkeeping and divorce Here is what we see repeated many times over. Contractors cross the line and treat their spouses as indentured servants who should be grateful for a place to live, eat and sleep in exchange for maintaining a household and being an overworked, underpaid contractor's bookkeeper. They become incredibly frustrated and desperate. In some cases, you are not at fault; you are being hammered by customers who are doing everything they can to drive the price of everything and everyone into the ground in a twisted attempt to get something for nothing, and I have a suggestion for how to fix that. The answer is simple. We have helped save many marriages by working with contractors' spouses and showing them how to do what they are good at, like managing the money, paying the bills, customer service, and other management tasks, and letting us take care of the contractors' bookkeeping services. Having your spouse handle construction bookkeeping can be a recipe for disaster. Mixing business and personal relationships can lead to conflicts of interest and communication breakdowns. It's best to keep these two areas of your life separate to maintain a healthy work-life balance and avoid potential complications down the line. Ultimately, going through a divorce after being in the construction business together can be challenging. It's not just about separating personal and professional lives, dividing assets, and determining who gets what. It's important to approach the situation with a level head and seek legal counsel to ensure a fair and amicable outcome.  Remember to prioritize the well-being of any children involved and communicate openly with your former partner to minimize conflict. It may be a difficult process, but with patience and cooperation, you can move forward and begin a new chapter in your life. Having family and friends involved in a business can have advantages and disadvantages.  On the one hand, having family members or close friends as business partners or construction crew can provide a sense of trust and loyalty that may not be present with outside partners. It can also be easier to communicate and make decisions with people you know well and trust.  On the other hand, working with family and friends can also lead to conflicts and emotional tension that can spill over into personal relationships. It can be difficult to separate business and personal disagreements, which can quickly become heated and damaging. Additionally, working with family and friends may limit the pool of talent and ideas available to the business, as outside perspectives and expertise may be overlooked.  Whether involving family and friends in a business is beneficial depends on the specific situation and individuals involved. It is essential to consider the potential risks and benefits before making any decisions and to prioritize clear communication and boundaries to maintain healthy personal and professional relationships. Final Thoughts Because family members and friends are personally invested in your business – both emotionally and financially – they can make fantastic employees. They'll work hard, put in the extra hours when needed, and do everything they can to ensure your venture succeeds. The biggest challenge can be to draw the lines between work, family, friendship, and home. As an employer, it's crucial that you set boundaries, practice clear communication, and be willing to make difficult decisions so your business and personal relationships can thrive. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 537, And It's About How To Safeguard Your Construction Company From Employee Expense Fraud As a small business owner, you always look to keep your company running efficiently. Expense reimbursement fraud is the last thing you want to face. Not only can it hurt your bottom line, but it can also damage your construction company's reputation. Here we discuss employee expense fraud, the reasons behind it, and, most importantly, how to prevent it from happening to your construction business.   What is expense fraud?   Expense fraud is submitting falsified or inflated expense claims to receive reimbursement from the employer or avoid paying out of pocket. It is illegal, unethical, and detrimental to your business.   Employees can commit expense fraud in several ways, such as using personal expenses as business, submitting fake receipts, inflating costs, duplicating submissions, falsifying mileage, and using company funds for personal use. Why do employees commit expense fraud? There can be multiple reasons behind expense fraud. Financial gain is the most common motivation, but some employees may do it for personal reasons, misunderstanding of policies, pressure to achieve targets, or simply apathy. As a business owner, it is essential to understand the reasons behind expense fraud, as it can help you identify and address them proactively. Understand The Employee Theft 10-10-80 Rule - Discovered over many years of experience and first-hand observation by auditors, accountants, fraud examiners, and anyone involved in detecting employee theft. Ten Percent of all employees, including bookkeepers, will steal in various ways from office supplies, petty cash, graft, kickbacks, and payoffs from your suppliers, vendors, and sub-contractors, and even hundreds of thousands or even millions of dollars. They will do it regardless of how many security systems are in place because they lack integrity. They cannot be stopped, only caught! And only then, if you have systems in place and can convince the criminal justice system to take action, good luck with that! Ten Percent of all employees, including bookkeepers, will never steal because they have integrity and a "Producer's" paradigm. Ultimately, these people will add so much value to your company that you cannot help but reward them with more money, benefits, and recognition. Because if you do not, they will be recruited by your competitors.  Eighty Percent  of all employees, including bookkeepers, will steal if they feel confident they can get away with it and if circumstances allow for it due to weak integrity and a sense of "Redistributing The Wealth, But Not The Work Or The Responsibility." Signs to watch out for your employee: Asks for signature authority on your checking/savings/payroll accounts Has a lifestyle that seems above what they are earning Takes Records Home to work on, or they want to work in the office when no one is around (Fraudulent activities are more accessible when nobody is around) Gets defensive when you or your CPA asks questions. Has access to your credit/debit cards Your bookkeeping is a complete mess, and you cannot understand it. Tries to explain away delinquency tax notices. Is the primary contact for your company's banks, auditors, creditors, etc. Misplaces payroll receipts, deposit records, supplier letters, and estimates. Makes bank deposits, and they seem to be too small. Show signs of drinking, drug, gambling, or family financial problems. Suggested they could save money by eliminating the outside accounting firm. Gets angry when you ask for a QuickBooks report. Tries to blame the previous Bookkeeper or outside accounting firm for messy QuickBooks. Does not get along well with other employees and staff members. There are more warning signs, so be aware of and action steps you can take. How can you effectively prevent expense fraud? The first step in preventing expense fraud is to have a comprehensive and clear expense policy. It should be up-to-date, relevant, and easily accessible for all employees. Ensuring that the policy covers all necessary expenses, acceptable limits, documentation requirements, and reporting procedures is essential. It would be best to encourage employees to ask questions or seek clarification regarding the policy. Require detailed receipts and proper documentation to support the expense claims. Expense receipts should be original and include the date, amount, vendor name, and a clear description of the expense. For instance, credit card statements are not acceptable as receipts because they need to provide detailed information about the payment. Conduct regular audits of expense reports to identify any patterns or suspicious claims. Audits not only help you detect fraudulent activities but can also identify internal control gaps or process deficiencies. Providing policy training and raising awareness of employees regarding business ethics can also help prevent expense fraud. All employees should be trained on these measures and regularly communicate a zero-tolerance policy for fraud and misconduct.  Additionally, implement systems for reviewing and approving all expenses and ensure checks and balances are in place to prevent unauthorized spending. By taking these steps, we can maintain a culture of integrity and honesty in your business and protect your construction company's reputation. You can leverage expense management software that automates the expense reporting process, thereby reducing errors and improving efficiency. It can also help monitor suspicious activities, such as multiple submissions for the same expense or expenses exceeding the allowable limit. Final thoughts Preventing expense fraud requires a collective effort from construction business owners, project managers, and employees. Having a clear and comprehensive expense policy, encouraging ethical culture, conducting regular audits, and leveraging technology can help prevent expense fraud. By implementing suitable prevention measures and promoting ethical conduct among employees, you can reduce the risk of expense fraud and protect your business from potential financial and reputational losses. Don't let expense fraud be a hidden cost in your business. If you need help creating policies or want to review your existing expense processes, we're here to help. Reach out to us today! About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 536, And It's About How To Handle Construction Client Debt So You Get Paid On Time If your customers owe you money, the faster you can obtain it using effective collection tactics, the better. Ideally, you want to reduce the chance of bad debts and pressure on your construction company's cash flow. It can be easy to neglect to manage your debtors when you're busy growing your business, but intelligent credit control is important. So it's crucial to have the skills to handle the people who owe you money well, especially if you want to avoid taking them to court. When negotiating contracts with clients, try to set payment terms that help your cash flow, such as deposits or progress payments. Dealing regular payments for contracts that take months to complete has two purposes: it gives you cash flow to match your expenses and protects you from total loss on a project if the customer goes into liquidation. Please include a timetable for the customer to pay invoices as part of any agreement. Agree on clear milestones for the work to be completed to minimize the chance of the customer disputing any invoices. Successful debt collection is about good processes. As with most things, prevention's better than a cure. If you have good processes in place for collecting debt, the less likely it is that you'll have to chase debtors. And if you do, having the proper procedures to follow up on late payers makes it much more manageable. 1. Tighten your credit control Having stricter control over new debtors is the best way to limit your exposure to future bad debts. So make sure that you: - Ensure your business completes comprehensive reference checks before offering credit to new customers. - Set fair credit limits – and ask your staff members to notify you if a customer wants to exceed their agreed limit. - Approve any additional credit extensions in advance. Make sure you state clear payment conditions in your terms of trade agreement. Make use of credit checks – this can be especially important for new businesses that feel pressure to gain customers. Try to avoid being careless with credit checks. It might come back to haunt your business in the form of cash flow problems up the road. Terms of trade – implement a system whereby new customers must sign their acceptance of your terms of trade before you offer them credit. Follow up by emailing (and any changes) annually to refresh their memories. 2. Structure payment terms It's essential to put together your payment terms to encourage prompt Payment. You could, for example, offer a 2% discount for customers who pay within 21 days. Ensure that your terms of trade state exactly when you'll start charging interest on any overdue amounts and the rate you'll be charging. Don't yield to customers even if Payment is only a day late. Whether you decide to make any exceptions for those customers that usually pay promptly is up to you – but be clear that it's a once-only exception because you value that customer's business relationship. 3. Good organization is vital You'll come across as an astute businessperson who takes Payment collections seriously if you systematically show your clients that invoices are a top priority. By being organized and able to quickly reference a customer's account when they make contact, you'll be more likely to get paid faster. Some ways you can project a higher level of organization include: - Being professional – all written communication with your customers should be consistent, look professional, and clearly show contact details, the amount owed, expectations, and payment terms. - Having a consistent schedule – sending invoices at the same time of the month and following up after a set number of days. - Don't show a layered approach – a customer's first invoice will show the amount due and by when, but next month should state that they're late in paying. Don't have 'late Month 1, Month 2, Month 3'. They are all late and should accumulate. - Flexibility for significant clients – a degree of understanding may be necessary for your critical clients with larger bills to pay that help keep you in business. Phone calls or more personal letters to key staff may be warranted to entice earlier payments. 4. Address problems quickly Identify and deal with problem payers as soon as you can. The sooner you start chasing the debt, the sooner you'll get paid. If you've got good accounting software, it'll notify you of any unpaid credit sales as they become overdue. Many accounting programs will automatically flag due bills and generate reports of unpaid bills showing how long they've been late. You're looking to speed up the collection of late payers. You can do this by: - Calling them directly – to discuss how a resolution can be made quickly. - Visit in person – a face-to-face meeting is generally more effective. - Sending a legal letter – if all other options have been exhausted and you're close to writing off the debt. So when is a good time to ask for Payment? When the contract is signed, ask for a deposit. Progress Payments - Every week, perhaps on Monday, you could review the work completed the week before, issue a simple invoice or give your customer a comprehensive payment application and get paid. Change Orders - Every change order has a clear scope of work and pre-determined price, which needs to be documented before the work is done and paid in advance. Sounds strong? Well, change orders have a short shelf life; the value of the work and the motivation to pay for the work on all Change Orders rapidly diminish after the work has been performed.  Final Payment - when the work is done. When you prepare the final invoice, you will credit back the deposit and either issue a small refund check or collect a small check. Final thoughts Stop doing the work and yet feel embarrassed about asking for money. Construction business owners often find chasing money owed to them like pulling teeth. It's not pleasant, and it's not the reason you went into business. But when people owe you money, and it's the lifeblood of your business, then you cannot afford not to take action. Clients will respect you for being firm but fair. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 535, And It's About A Guide To Service Based Business Advertising That Works Marketing covers everything you do in your business that creates awareness, including advertising, brochures, competitions, trade shows, demonstrations, travel, direct mail, email campaigns, your website, and sponsorship. Let's narrow our focus to an integral part of Marketing - Advertising. Advertising is a massive industry with multiple mediums for your message to be heard or lost in translation. It might sound like a no-brainer, but before you start planning your advertising, you must consider what you are trying to achieve from your investment. Your ultimate objective likely is to build sales, but other things to consider are increasing market presence and building your brand. Advertising can be used to: Establish a reputation as the market leader or industry expert – allowing you to win long-term contracts or even increase prices. Build brand awareness for a product to make it easier to sell and raise the profile of your other products. Change customer perceptions of your products and services to boost sales. Detail a specific, one-off message to your market by informing potential customers of a special offer or product component. Address your existing customers to increase your brand awareness – meaning they think of your business first when considering a product or service. Identifying your target market Before any advertising is written, you need to take the time to define your target market (if you haven't already). Knowing who you are trying to target will help you customize your marketing efforts to suit those people. You should already know who is interested in your products or services, but the easiest way to clearly define your target market is to create an ideal customer profile. How to create a customer profile: Try and create an ideal demographic for your target market. Think about the age, gender, marital status, and income of the person most likely to buy your product or use your services. If you are unsure, think about your biggest customers – is there anything they have in common, such as age or gender? Think about the geographical reach of your business – service-based businesses like yours have a limited market area. Think about your regular customers or clients that live within the region. Once you know your market area, you could research existing data or conduct some market research to find out the average age, income, and family status of people in your area. Be careful not to make your target market too specific, as you may exclude many potential customers. For example, rather than targeting couples aged up to 30 years who own their first home, it might be better to target couples aged up to 40 years who are currently renting but are interested in purchasing a property. You can learn a lot about your target market by looking at your competition – pay attention to where they advertise, how they present their advertising, and the tone they use in their written material. Subscribing to competitor newsletters or regularly checking their websites is a good way of keeping up-to-date from a distance. Types of advertising Knowing what type of advertising will appeal the most to your target market is the key to producing effective advertising. Here are the most common types of advertising you can use to promote your construction business. Print advertising. Print advertising traditionally covers newspapers, magazines, brochures, flyers, and other printed media. Print advertising can be expensive, such as a feature page in a newspaper or a local magazine. More inexpensive options include community papers, classifieds, or delivered printed fliers. Internet advertising. Internet advertising includes online services such as YouTube, Facebook, Google, and Twitter but also includes banner ads and embedded video content. Internet advertising offers a range of options for different budgets, from pay-per-click services such as Google AdWords to home page coverage on a popular website. Outdoor or out-of-home advertising. Outdoor advertising covers a range of billboards, signs, or even event sponsorship. Other popular types of outdoor advertising include motor vehicles, such as advertisements on buses or cars. Some outdoor advertising, such as billboards, will require a permit, and most signs are subject to local laws and regulations that determine where they can be located. Broadcast advertising. Broadcast advertising traditionally includes television and radio but can also cover some Internet mediums such as YouTube, Vimeo, or even podcasts. Appealing to your market Now that you have identified your target market, the next step is to decide which forms of advertising will give you the best return on your investment. This decision will be based on the characteristics of your target market, such as: Personality Values Interests or hobbies Lifestyles. Think about how your service fits your target market's lifestyle – will they have enough time to wait for a renovation project to be done, or are they too busy? Also, consider what features of your product or service will be most appealing to them, such as quality, price, and after-sales support. You should now have a good idea of which features of your products or services you should pay the most attention to in your advertising material. Future-proofing your advertising To get the most out of your investment, make sure you: Listen to any customer feedback about your advertising. Are prepared to amend your advertising efforts if they aren't working. Observe your competitors' advertising efforts and pick up on any new trends or tools you can use. Ask another business owner or professional for advice if you doubt advertising material content, design, or tone. Are aware of laws or regulations about where you can advertise and the content of your messages. Feed your advertising results back into your marketing or business plan. No-idea vs. Objective and Task Method I see many construction businesses that are just too busy during certain times of the year to think of advertising, and if they did, it would be a waste as they would not be able to handle the work anyway. Suddenly, however, sales fall (perhaps due to seasonality), and then the business starts marketing. However, this could be a waste of money as you're often marketing at the wrong time or advertising to get instant sales, which is unlikely. So the problem is that the marketing money is spent during slow times (this hurts) and is allocated to fix a problem instead of creating new opportunities. What to do? At the start of the year, select the targets you'll aim at over the next 12 months. Work out what you want from each of these targets (such as 20 new clients, or each existing customer to spend another $100 in your plumbing business, or an increase in the average sale). Then expressly state what you want to do to achieve this, estimating how much it will cost (common sense will give you guidelines, for example, a small service-based business will not be spending $100,000 on TV advertising). Final thoughts "Early to bed, early to rise, know your numbers, and advertise." Always have a method of monitoring if your advertising is working or not—otherwise, you'll fall into the 'no idea' category that far too many small business owners belong to. You can't refine and improve your marketing spending without measuring the results. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 534, And It's About The Rundown To Running Your Own Construction Business Getting your construction business up and running and making a profit is usually much more complicated than it sounds. So let's focus on honing the skills you'll need to make it happen by acquiring these yourself or consulting professionals to help you. What it means to be your own boss Being your own boss might sound like it is the ultimate ticket to freedom and financial success – and it can be. But don't be fooled into thinking you'll be able to put in a few hours each morning and spend the afternoons networking over a round of golf. The reality is that most businesses require much hard work – more than your standard 9–5 job and over some years – before they start to make a reasonable profit, and many new construction businesses fold before they reach that point. Here are the top things you should be aware of: You need to be passionate about what you do: Setting up your contracting business is challenging. If you're not passionate about what you do, you'll find it hard to stay motivated when faced with several hurdles. Also, if your business is just another idea to make money and not something you're passionate about, you'll lack that key ingredient to make your new business more attractive than the established competition. Before you start a construction business, ask yourself if you're passionate about this industry. You'll need to make sacrifices, at least during the first couple of years: You'll need to put in a lot of hard work between coming up with your business idea and establishing your business. You'll probably have to work harder than most of your mates and make many sacrifices. It might mean less time with your friends, less time for sports or hobbies, or even less time with your family. You'll also probably be taking home less money – and might need to sacrifice family holidays or put major household purchases on hold until your business is established. Ask yourself if you're prepared to make the sacrifices necessary to make it a success – and check that your family is prepared to make these sacrifices too. You'll face risk and uncertainty: When you start your own business, you won't have the security of regular payments from an employer. Your business might be unable to pay you a wage for the first few weeks, months, or years. In addition, you might need to draw on your savings or even take out a loan to finance your business operations. There's an element of risk and uncertainty when you start your own business, so you need to be sure that your construction business idea is viable and that you have enough money to support yourself and your business until you reach your break-even point and start turning a profit. You'll need abundant patience and persistence: It's rare for a start-up that has everything run according to plan without any teething problems. You'll likely encounter your fair share of setbacks and challenges, from financial issues to demanding customers and problem staff. While there's a fine line between persisting against all odds (when the business is not viable) and giving up when the going gets tough, you'll need patience and persistence to make your business a success. Getting the skills you need Very few people who own businesses start with all the necessary skills. The secret is to quickly inventory your current skills and identify the gaps in your knowledge base. You can then either get the training you need or employ people with the right skills for those areas you don't have a natural affinity for. You'll need the following skills to run your business. Market research skills to understand the market you are entering and stay abreast of market developments, customer preferences, and the actions of your competitors. Money management skills to forecast when you expect your business to break even, understand your financial position at any point, and asses the financial implications of any business decision you make. Marketing and sales skills to effectively promote your products or services and reach your break-even target sales as soon as possible. People skills to help you manage and motivate your staff and deal with customers. Negotiating skills to ensure you can strike the best deal when dealing with suppliers or bidding contracts. In the longer term, it's a good idea to do courses in all these areas, even those you're uncomfortable with. If, for example, you don't like figures, or feel you are not good with people, try to develop these skills over time. A rudimentary understanding of financial statements and what the critical metrics for your business mean will help you run your business better and improve your people skills if that is your area of weakness. "Do you have what it takes" Self-test Here's a quick self-test you can take to see what it takes to start your construction business. 1. Do you have several years of experience in the trade industry you're considering entering? If not, it might be best to wait a few years until you increase your knowledge and contacts. 2. Starting your own business is challenging. Do you thrive on challenges? If not, starting your own business might not be your best option. 3. A wide range of skills to run a business successfully would be best. Are you prepared to undergo training to develop the skills you need or to heed input from specialist advisers in areas, not your specialty? 4. There's no fallback guy when you run your own business. Do you enjoy making and being responsible for your own decisions?  5. You'll need to invest much time into your business start-up. Are you prepared to work long hours without the security of a steady income? 6. You might not be able to pay yourself a wage for a while. Are you prepared to lower your standard of living until your business starts to make a profit, and do you have sufficient savings or an alternative income to live off during the start-up period? 7. Most small businesses fail due to inexperience, poor management, or lack of planning. Are you actively working on overcoming these common problems?  8. Starting your own business has implications for your family, including less income, reduced family time, and taking on additional responsibilities. Does your family understand this and unconditionally support your desire to start a business?  9. Regardless of how excited you might be about starting your own business, there is a chance you might fail. Are you prepared to risk losing the money you invest in your business? When a business starts, it's natural for you, the owner, to be a jack-of-all-trades. You may not have the capital to hire specialists or access the technology to help you. As your business grows–or as you look to take a minor role in your construction company–you may find the industry has become over-reliant on you, making it challenging to take a step back. Final thoughts Have you M.A.P.ped your business yet? Consider this before retreating and delegating: Marketing - never sells more than Production can provide; on-time and on-budget Accounting - manages the money to maintain operations and produce a reasonable profit Production - delivers the project intending to exceed customer expectations As you know, we are big on Construction Marketing, Accounting, and Production; having a basic operation manual in place for your office, remote, and field employees pays off in the long run. It won't be easy to run your construction business on your own. Are you prepared to hire staff and delegate responsibilities to them or use the services of a professional? If not, this could reduce the chances of your business being successful.  Call, email, or fill out the form on the right to schedule a free consultation with me - regardless of where you are in you're construction business journey. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 533, And It's About Finding The Right Construction Talent And Common Onboarding Mistakes As a business owner, you know the right people are crucial to your construction company's success. The best employees can help you achieve your business goals, improve productivity, and drive growth. But finding the people best suited to your team can be daunting, and sometimes it's easy to hire someone who seems okay rather than taking the time to find the best fit.  Here are some steps to find and hire staff that support your business growth, whether in the office or the field. Step 1: Define the job and necessary qualifications The first step in finding the right talent is accurately defining the job description and qualifications. Is this a new position you're hiring for? Are there gaps in employee skills that need to be met? Is this a position that requires specific knowledge and experience?    Remember that there's a difference between "must-have" qualifications and "nice to have" considerations. When setting out "must have" qualifications, include only those that are necessary to the person successfully performing the role.  Remember also that the job salary should match the role and the qualifications. You can't expect to hire someone with ten years of experience by only offering an entry-level wage.    Step 2: Use multiple recruiting channels These days, there are many places you can turn to when finding employees, and each attracts different people. Using a variety of channels when searching for employees gives you a higher chance of success.  Post the job description on your company website and multiple social media platforms. Use job boards and recruitment agencies to expand your reach. Contact your personal and professional networks to ask for referrals or recommendations. After all, the people you know also know people. They may be able to recommend someone who's an excellent fit for your construction business. Step 3: Screen candidates Once you have a list of candidates, you'll need to screen them. This includes going through resumes/CVs and conducting interviews. Check to make sure they have the qualifications and experience you need.  During the interview, ask open-ended questions to assess the candidate's problem-solving abilities, communication skills, and overall fit. Ask about the results they've obtained in previous jobs and lessons they've learned throughout their experience. It's also important to allow candidates to ask questions about your company and the position you're hiring for. Step 4: Check references Before making a job offer, it's essential to check references. Contact former supervisors and colleagues to ask about their work performance and attitude. Double-check that they obtained the results they said they did. This will help you ensure that the candidate has a proven track record of success and is a good fit for your construction company. Step 5: Make a job offer After checking references and confirming that the candidate has the skills and qualifications to match your needs, it's time to make the job offer. Be clear about the terms of employment, including salary, benefits, and start date. Give the candidate time to review the offer and ask any additional questions they may have.  Once they accept the offer, you can begin the onboarding process. Step 6: Provide training and support Once you've hired someone, it's crucial to provide training and support to help them succeed in their new role. This can include job-specific training and coaching on company culture and values. Regular check-ins and feedback can help new employees feel supported and valued and ensure issues are handled quickly and effectively. In this regard, while most small businesses spend much time and effort finding the right employees, they often fail to capitalize on their newly hired talent by ceding the onboarding process to HR or neglecting their responsibility entirely. From long waits for workspace, equipment, or training to an overly negative recitation of 'don't do these things or you will be fired,' employers consistently miss the opportunity to inspire new contributors and set aggressive performance standards. Before you bring on your next new hires and leave them to languish in the lunchroom filling out paperwork with an HR representative, consider the following seven common onboarding mistakes small businesses make. 1. Letting human resources lead While it's important for newly hired employees to fill out their tax forms and enroll in benefits, this process should not replace new-hire orientation. Rather than waste valuable time on paperwork, send new employees a package of documents, or give them a link to apply online before they start their first day of work. Nothing is more demotivating than spending four hours alone in a room filling out paperwork you could have quickly done at home. On their first day, an employee should be greeted by their direct supervisor, who spends at least a half-hour with them to begin building a relationship. 2. Focusing on negatives While it's vital to discuss expectations early in the onboarding process, focusing on a list of negatives that could result in termination detracts from why you hired the person in the first place. While it's crucial to address ethics and accountability, newly hired employees must be encouraged to engage in the work they were hired to do rather than focus on the top 10 ways they could get fired. 3. Failing to prepare workspace and equipment There is no excuse to leave newly hired employees without workspace or equipment. It would be far better to delay an employee's start date rather than leave them in a conference room without a workspace or equipment to do their job. 4. Failing to provide an agenda All newly hired employees should have a training agenda before their start date. The agenda should list the type of training they should expect to receive, the name of the trainer with a short bio, and an expectation of when they will be finished their training and start work on their own. If there is a competency test before the start of work, this should also be noted in the agenda. 5. Failing to introduce co-workers Co-workers are an excellent resource for newly hired employees. While companies often focus on introducing their most productive workers and managers, introducing new hires to other recently hired employees who can more easily empathize with their needs is often helpful. If possible, consider hiring new employees in waves rather than individually, as this can often build relationships and lead to a more cohesive team. 6. Failing to provide comprehensive training Training provides a critical foundation for ongoing success in a construction company. Not only does a well-trained employee perform better, but the employee will also have more confidence when interacting with customers and will be far more likely to succeed. If your organization has a high churn rate within the first six months, poor training is likely the culprit. Untrained new hires often become disillusioned with an organization that lacks structure, training, and follow-up. During the first 90 days of hire, an employee should have enough training to be self-sufficient for at least a week, regardless of their position. 7. Failing to provide knowledge resources Not all employees learn at the same rate using the same methods. Make sure new hires have access to training material in various formats. This includes training handbooks, training videos, and employee shadowing. Rather than force a particular format, concentrate on the results needed to excel at the position. Make sure to give feedback regularly throughout the process. New employees' first day on the job should be a day of promise and inspiration, not a window into dysfunction. Since first impressions matter, alert everyone in the organization that a new employee has been hired, and supply a biography. There's nothing more gratifying to new employees than to be enthusiastically greeted by co-workers who have taken the time to find out who they are and how they can contribute. Final thoughts Finding the right talent for your business can be challenging, but you can increase your chances of finding the right people to help your business grow. Remember to be clear about job expectations, use multiple recruiting channels, screen candidates thoroughly, conduct in-person interviews, check references, make a job offer, and provide proper onboarding, training, and support. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 532, And It's About Adapting Your Construction Business To A Slower Economy It's hard to go a day without reading something in the news about the state of the economy. Whether it's interest rates rising or the cost of living, there's no getting around the fact that in 2023 there are many doing it more demanding than a few years ago. But while there are some economic challenges for individuals and businesses, it's important not to go too far down the rabbit hole. Remember – economic conditions are forever changing, and history tells us things can change anytime. If you're concerned about the economy's impact on your business or have already experienced its effects, read on. In this article, we'll explore ways to adapt and improve your construction company during slowdowns, so your business can emerge more substantial when the market bounces back. Take the time to understand your market conditions   The news can often overwhelm us with negativity. While staying informed is crucial, consuming every opinion piece and social media commentary can lead to a negative mindset. Instead, focus on your own business and industry to identify the real challenges you're facing. Research might even uncover some opportunities too.   As a construction business owner, adapting to a slower economy can be challenging. However, there are several steps you can take to keep your business afloat during tough times. One of the most important things you can do is to focus on efficiency. Look for ways to streamline your operations and reduce your expenses without sacrificing the quality of your work. This might mean cutting back on specific services or finding ways to complete projects quickly. Consider the following: Have there been changes in your industry or the way customers behave? Can you identify any new, untapped opportunities? Are there any emerging trends that you can take advantage of? Understanding your business' position in the market and identifying opportunities to differentiate from competitors is crucial. It guides your marketing budget allocation and shapes your products/services. A chance to improve efficiency If your business is experiencing a slowdown and you have some extra time, it's an excellent opportunity to improve it. Many business owners find prioritizing improvement initiatives over customer or administrative tasks challenging, but now you can focus on executing those long-standing plans. These activities can make your operations more efficient and will be even more beneficial once things pick up again. Documenting processes Capturing your business processes is a valuable way to improve efficiency. Documenting procedures and creating visual aids can help onboard new team members faster and safeguard against knowledge loss. Protecting your business from the risk of key personnel leaving is essential. Automation Artificial Intelligence and automation are changing everything. Explore how these technologies are used in your trade to streamline tasks like data entry, reporting, and inventory management. Update old systems Migrating from one system to another can be complex and time-consuming. Businesses often stick with legacy systems for longer than necessary. But new tools can speed up daily tasks, benefitting long-term business growth. These new tools are good for business long term. Exploring different revenue streams Consider exploring additional offerings if there is a decline in demand for your core services or products. By diversifying, you'll better weather economic downturns and ensure a steady revenue stream. Service-related Consider your team's existing knowledge. Can you broaden your work to capture more clients? For example, if you're a builder who completes new builds, think about how you can communicate your skills for property maintenance, custom carpentry, outdoor living spaces, or project consulting. Your skills and industry knowledge can be used in various ways – take some time to think about it. Nurture customer relationships Focus on your existing loyal clients as a top priority, as their satisfaction is vital to maintaining a successful business. While acquiring new customers is essential, remember that the cost of acquiring them is often higher than retaining the ones you already have. In today's digital age, providing outstanding customer experiences is crucial, as online testimonials and recommendations greatly influence potential customers. Take advantage of quiet periods to add spontaneous value to your loyal customers, whether offering advice, checking in on their satisfaction, or surprising them with something free. Going the extra mile for your customers and thinking beyond transactions will earn you their trust and respect, resulting in positive word-of-mouth and referrals that can significantly impact your long-term success. Expanding B2B opportunities Consider if your business, focused on serving end users, could extend its offering to cater to other businesses (for example - Nursing home maintenance, etc). This can provide a consistent revenue stream with less time and management than direct consumer engagements. Assess whether pricing for businesses could be lower than for consumers. Estimate potential revenue against reduced margin. If the numbers align, explore this opportunity while maintaining your core business. Keep track of your finances and budget Regularly reviewing your finances is crucial to improving your business's health. During quieter periods, you can implement cost-saving practices that have a lasting impact. For example, consider reviewing your suppliers for cheaper options to save time and money. Conducting a comprehensive expense review can unlock savings without significant disruption. Understand natural business cycles Keep calm and avoid making hasty decisions based on short-term events. While ignoring the constant economic commentary can be difficult, it's in your business's best interest to rely on concrete facts and data when making decisions. A long-term business plan is a reference point for guiding your choices. Finally, staying current on the latest industry trends and technologies is important. This can help you stay ahead of the competition and offer your clients the best possible service. Consider investing in new equipment or software to help you work more efficiently and effectively. And don't be afraid to seek advice from other industry professionals or attend conferences and workshops to stay informed. Final thoughts Overall, adapting to a slower economy requires a combination of creativity, flexibility, and hard work. But with the right approach, you can keep your construction business thriving even in challenging times. Let me know if you need help balancing short-term actions with long-term goals. I'm always ready to listen. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 531, And It's About A Guide To Building A Solid Construction Company Marketing Plan When it comes to the construction industry, employee training and development is crucial for success. Providing employees with the necessary skills and knowledge can make their work more efficient and effective, leading to higher-quality results and increased productivity. From safety training to technical skills development, a variety of areas can be focused on in construction employee training and development programs. Investing in these programs not only benefits employees but also improves the overall success of the construction company. Don't have an employee? As a construction company owner, it's important to prioritize investing in yourself and your growth. By paying yourself first, you'll be better equipped to make intelligent investments in your construction business and provide valuable training and development opportunities for your soon-to-be employees in the industry. This can lead to a more skilled and efficient workforce, which can ultimately help your business thrive. Let's say that you have two people working for you, one is your apprentice, and the other is your office administrator; developing employee skills for them and yourself creates a situation where your construction company benefits from a more knowledgeable and capable staff while your whole team gains additional skills or qualifications. This can allow employees to further their careers and possibly increase their earning potential in the long term.  Training and skills development can assist underperforming employees and be used to encourage talented employees, allowing them to grow within the business. This helps both individual employees and your business achieve their full potential. Some business owners worry that training and development can cause an employee to seek additional responsibility elsewhere. But it's also worth bearing in mind that driven and successful employees will lose interest in their job and leave if it doesn't allow them to develop their skills. To develop skills as a construction professional, starting with a solid foundation of knowledge and experience in the industry is essential. Here are some steps you can take: 1. Set a training budget Consider setting aside money for staff training and development in your annual budget as you'd budget for other necessary business expenses. You could claim the training costs as a business expense or negotiate more expensive training as part of a salary package with employees. 2. Draw up a training policy A training policy doesn't need to be too in-depth, but it should set out any special requirements so your employees know what training you'll consider and what requirements they'll have to meet to benefit from company-sponsored training. You could require that: Training needs to be job-related for the company to pay for it. Employees pay 50% of the course fee if training is helpful to the company but not necessary for their job. Employees reimburse costs (if completely necessary) if they don't complete or pass the course. 3. Discuss career goals and opportunities. Discuss short- and long-term career goals during performance reviews or employee conversations. You can decide how to match their goals with any short and long-term opportunities available in your business. Training in areas that do not further your employee's short- or long-term career goals will not be embraced as enthusiastically, so it makes sense to plan future development to balance business needs and employee goals. 4. Identify employee strengths and weaknesses One of the best ways to get agreement on the appropriate training is to collaboratively identify the strengths and weaknesses of each employee for any current and future roles they might play. Start by identifying the skills they'd need for the job. Then ask them to identify the skills they have and list their strengths. Then ask your employee to identify the weaknesses in their skill set. Phrase this carefully and be clear that you're not looking to criticize but to find areas where additional training would help them perform current or future roles better. 5. Agree on training objectives Use the information you've obtained from exploring career goals and opportunities and examining strengths and weaknesses to identify suitable training options for each employee and collaboratively agree on training objectives. Write down the objectives, then plan how these will be achieved and the timeframes you expect them to be achieved. 6. Stay current Ideally, as a construction business owner, you must stay current with industry trends and advancements by attending conferences, workshops, and other professional development opportunities. Remember, developing your skills as a construction contractor is an ongoing process that requires dedication, hard work, and a commitment to continual learning and improvement. You can build a successful career in this exciting and challenging field with patience and persistence. 7. Monitor progress and request feedback Monitor progress by reviewing the agreed objectives at least once a year to evaluate progress. This allows you to revise the training objectives and plans where necessary. Consider scheduling regular meetings to ask staff for feedback. These can be as informal or formal as you like, ranging from a quick conversation to asking staff to complete a questionnaire or conducting a formal presentation on what they have learned. You'll want the following: A quick summary of what was learned (the take-home benefits). Feedback on whether the training met the employee's expectations. Feedback on whether the training met your business's objectives. Give your employee adequate notice that you'll be asking for feedback. This helps you to evaluate courses or training service providers to use or avoid in the future. Cultivating construction company productivity through staff training and development is crucial to ensuring success and growth in the industry. By investing in employee training, companies can improve their workforce's skills, knowledge, and efficiency, leading to higher quality work, faster project completion times, and increased profitability.  Training can take many forms, from on-the-job mentoring to classroom instruction, but the key is to provide employees with the tools and resources they need to excel in their roles. This can include technical training in specific construction techniques, safety and compliance training, or leadership and management training to help employees develop critical soft skills. Moreover, training programs should be tailored to the company's and its employees' unique needs. By identifying areas where employees need improvement, companies can design training programs that address those needs, resulting in a more effective and efficient workforce.  Final thoughts Investing in staff training is an intelligent strategy for construction companies looking to improve productivity and profitability. Companies can build a skilled, motivated, and productive workforce that can confidently take on even the most complex construction projects by providing employees with the resources they need to succeed. You can't outwork your competition forever, but you can outlearn them. We offer free construction bookkeeping and accounting consultation; fill out the form on the right, and I'll get back to you shortly. We understand your frustrations, so if you or your in-house bookkeeper is lost and tired of your paperwork system, we also offer Construction Accounting and Bookkeeping Classes. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 530, And It's About How To Manage Your Construction Company Payroll Effectively Payroll is one of those things that starts simply enough. You start your construction business and hire a few employees, and things tick along. It's straightforward enough to keep everything in line at first, but what happens to most companies is… they grow! This is a great thing, but it also means that payroll becomes more complicated. As such an essential aspect of your business, payroll must run smoothly. Getting paid is, after all, the primary reason that most people come to work.   One of the biggest challenges contractors face is keeping track of overtime hours. With so many employees working on different job sites and projects, it isn't easy to calculate their overtime pay accurately. Complying with all federal and state labor laws is another essential aspect of a construction payroll system. This includes appropriately classifying employees as exempt or non-exempt, withholding the correct amount of taxes from their paychecks, and providing accurate wage statements.   Here are some tips for managing payroll effectively: 1. Simplify Payroll is one of those things that can be overly complex, and the importance of simplifying it can't be overstated. Many small and medium-sized companies have quirks in managing their payroll. This can make it difficult for somebody else to step in or for someone new to be trained. Keep things as simple as possible wherever you can. One way to do this is by switching to direct deposit. This will drastically reduce the work put into issuing and tracking payments. 2. Schedule At least once per year, and preferably more, it's essential that your payroll professional take some time to create a payroll calendar. This will allow them to highlight any dates that may cause a lag in your employees' pay. It will also allow you to plan for any potential shortcomings or other issues arising from holiday closures or oddities in the calendar. Making a payroll mistake is a surefire way to lower employee morale, so it's important to be aware of these dates ahead of time. Once compiled, distribute the calendar to your managers so that they can communicate the information to their employees. This will keep everyone apprised of any potential delays in getting paid that may come up. 3. Automate The computer can be your best friend. Finding the right software to help with payroll can automatically take care of simplifying and scheduling, freeing up valuable time for your payroll specialist. It also eliminates the potential for human error in payroll processing and creates a crystal-clear picture of your finances. Many options are available these days that are easy to learn and straightforward to maintain. 4. Brush up Payroll rules and regulations can change frequently and for any number of reasons. It's important to stay informed on any changes in your region and proactively plan for them. A lot of time can go into correcting a payroll error, so know what's happening to avoid this. With more and more employees being hired remotely, it's also important to be aware of any regulations about those geographically located in a different area from your business. 5. Get help There comes the point for all growing trade businesses where they have to outsource their payroll processing; if this is you, congratulations! It is truly a milestone. There are many options out there regarding hiring a payroll specialist, and many of them are available online. Choose the one best suited for you and your business needs without leaving your desk. This takes the pressure off you to know all the nitty gritty details about payroll processing. By hiring an outside professional, preferably a construction payroll specialist, you can ensure your employees will be paid correctly and on time. Payroll Options While every contractor recognizes the flaws of using ineffective tools, they may still be losing money due to inefficient payroll tools and processes. When contractors ask us which payroll option we recommend the most, we often say Direct Deposit. As usual, the reasons are simple and related to our primary role as "Profit and Growth Specialists for Contractors." Option 1 - Paper check looks like the least expensive. Calculate payroll, handwrite or print a paycheck, hand it to your employee, and done. What is the first thing an employee does after getting a paper paycheck? They go to the bank or the check-cashing store and get cash! Nowadays, you can deposit a check using your bank's mobile app, but let's say your employee wants to cash it immediately: If they are paid for travel time to and from the job site, they will typically cash their paycheck to the job site or take a break as soon as the bank opens. Having this scenario in mind, there are three costs to consider:  #1 Travel Time - See how much ten minutes can cost your company and Multiply By Three! Because it will take ten minutes each way to detour to and from the bank or payday advance company, plus ten minutes inside the building. For example, you pay your employee $25.00 per hour, which means every ten minutes of doing personal business on company time costs you $5.94, multiplied by three equals $17.82. If Your Company Earns 10% Net Profit, you need to sell another $178.20 worth of work to compensate for your loss. If there is more than one worker in the company vehicle, multiply everything by that number. #2 Cost Per Mile - To operate the company vehicle, which varies depending on the type of vehicles your company uses. Generally, the numbers range from $1.25 to $1.75 per mile. This considers Fuel + Insurance + Repairs + Maintenance + Registration + License divided by the number of miles driven. In this example, we estimate a three-mile detour at the middle range of $1.50 per mile = $4.50. This is towards the lower-end cost and may not reflect the current prices.  #3 Delays On The Job - In construction, you are dealing with project-based systems, not operations or manufacturing-based operations. Every additional day you have to mobilize and de-mobilize costs you money. For example, if it takes (15) minutes for (4) workers to get set up in the morning and the same amount of time at night, your total costs could be $121.92 The total cost for paper checks is between $15.00 and $50.00 per employee. To get the actual results for your company, some analysis would need to be run, or you would look in your Business Process Management System (BPM) for the answers. Option 2 - Direct deposit could cost an additional $5.00 per payroll and $0.99 per deposit. Direct deposit drops into your employee's bank account one minute after midnight on the day payroll is due. Having a Professional Bookkeeper prepare the payroll is less with direct deposit because of the time saved in making and printing the paper checks, setting them aside for you to sign them, stuffing them in the envelopes, and taking time to pass them out. Option 3 - A debit Card is similar to a direct deposit. The difference is that the employee does not need a checking account. Final thoughts Everything runs smoothly during your regular pay schedule when timecards arrive on time. When employees do not turn in their timecards on schedule and expect you to have their checks ready, no worries; we have you covered. When Payroll Processing gets too complicated, it's time to outsource it.  Payroll is most effectively managed when it's simple, straightforward, and coordinated. By ensuring that our employees are paid fairly and on time, we can help to create a positive and productive work environment. When it starts getting tough to keep it that way, it's likely a sign that your company has grown and you're ready for more robust support.  About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 529, And It's About A Guide To Building A Solid Construction Company Marketing Plan As a contractor, having a solid business plan is essential for growing your company and attracting new clients. If you're serious about getting the best value you can for your marketing budget, you'll need to develop a marketing plan. One of the first steps is to identify your target audience. Who are your ideal clients? What are their needs and pain points? Once you understand your target audience, you can develop a marketing strategy that speaks directly to them. Building a solid construction company marketing plan is essential for any business owner looking to grow their company. With the right strategy, you can increase your brand awareness, generate leads, and ultimately boost your revenue. Some critical elements of a successful contractor marketing plan might include the following: 1. Knowing your customers Firstly, you need to identify your target market. You probably have an idea of who buys from you, but make sure you: Define your target market in detail. Write down who your target market is. To help you focus your promotions more effectively, spend time finding out about your client's preferences and habits. To get the best return on your investment, look at how your message is structured, worded, and designed – and where and when you advertise. 2. Studying your market Market research is an effective way to help find out about your target market. Ask customers for feedback directly or send them an email. Ask questions such as: Why did you hire us? What could we do better? What additional services would you like us to offer? Your clients' responses will highlight what works well and will help you attract more sales. This feedback can also help improve your service and encourage positive word-of-mouth referrals. Show that you're listening and improving where you can, and you'll gain greater customer loyalty. 3. Identifying your competitors Find out who your direct competitors are – and gather as much detailed information about them as possible. Try: Visiting their websites Reviewing their advertising and promotional leaflets. Observing their relative strengths and weaknesses. If you want consumers to differentiate between you and your competitors, develop a new marketing and advertising approach. Your competitors' weaknesses will present opportunities for you to market your points of difference. 4. Determining your competitive advantage When it comes to the construction industry, there's no shortage of competition. Many companies are vying for the same contracts and trying to build a reputation for quality work. But how can you set yourself apart from the rest? How can you create an advantage that will help you win more bids and secure more business? Sit down with your staff, advisers, and mentors to brainstorm the best competitive advantage for your business. Your competitive advantage can be anything that sets you apart from your competitors in your target market – such as price, service, or location. It should be something that: Makes you stand out from the crowd Exploits a gap in the market that your competitors haven't thought about Suits your business and the current market condition Is essential to your target customers   Use it in all your marketing after you've worked out your competitive advantage. Ensure that your competitive advantage is evident in any customer communication. One key factor is innovation. Look for ways to incorporate new materials or processes into your projects to give you an edge over your competitors. Maybe you can find a way to use eco-friendly materials that are more cost-effective in the long run. Or perhaps you can streamline your construction process to save time and money. Another factor is reputation. Word of mouth is compelling in the construction industry, so ensure you deliver quality work and treat your clients well. Be responsive to their needs and concerns, and go above and beyond to ensure their satisfaction. This will help you build a loyal customer base and attract new business through referrals. 5. Creating a promise A promise helps clarify the most crucial aspect of your business to your customers. You want the customer to value your promise or guarantee. For example, if you offer a product or money-back guarantee, you must stand by these assurances. Your customers will find out if you can't stand by your promise, and they'll quickly lose trust in you and your business. You'll also run the risk that they'll warn their friends not to hire your company. 6. Building a reliable brand You must develop an integrated marketing strategy to ensure that all your promotions, advertisements, and marketing communications convey the same unified message and consistent brand values. A solid online presence: In today's digital age, website and social media profiles are crucial. Ensure your website is easy to navigate and showcases your services and expertise. Use social media to share project updates, photos, and testimonials from satisfied clients. Networking: Building relationships with other professionals in your industry can help you generate referrals and connect with potential clients. Attend industry events, join local business organizations, and try to stay in touch with your contacts. Advertising: Depending on your budget and target audience, you may want to consider paid advertising channels such as Google Ads or Facebook Ads. Be sure to track your results and adjust your strategy as needed. Content marketing: Creating valuable content such as blog posts, videos, or infographics can help establish you as an expert in your field and attract potential clients to your website. Also, make sure you maximize the opportunity to cross-market your message. For example: Mention your website in your email signature. Market your social media presence on your website. Use your various social media platforms to cross-market content effectively. 7. Evaluating your marketing and updating your plans Measure the return on investment on all your marketing efforts and update your marketing plans based on what works and what doesn't – for your business, market conditions, and customers. Some returns are easy to quantify, like the number of sales or the sales value generated from an advert or promotion. Others are harder to put a value on like the number of followers gained on social media or the number of visitors to your website. Some are more difficult to measure, like customers' perceptions or increased brand awareness. Marketing experts will be able to advise you on the best ways to measure the hard-to-quantify parts of your marketing plan – and will help you improve your efforts for maximum results. Final thoughts Don't underestimate the power of marketing. Ensure your website and social media presence are top-notch, and invest in advertising to get your name out there. Consider partnering with local businesses or organizations to increase your visibility in the community. Remember, developing and implementing a successful marketing plan takes time and effort. Be patient and focus on your goals; you'll see results over time. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 528, And It's About Construction Accounting Concepts You Can Benefit From Today   As a small business owner, you know that managing your finances is crucial to the success of your business. But with so many accounting principles and practices, it can be challenging to know where to start. That's where we come in! This guide will break down the essential accounting principles that every small construction business owner should know. We'll discuss how these principles can help you keep track of financial transactions, create accurate financial statements, and make informed decisions for your business. So, let's dive in, shall we? Why Are Accounting Principles Important for Construction Businesses? Accounting principles are the foundation for any successful business. They provide a uniform framework for recording and reporting financial transactions, ensuring consistency and accuracy in your financial records. By adhering to these principles, you'll be able to: Make better financial decisions based on accurate and reliable data Monitor your business's performance and identify areas for improvement Meet legal and regulatory requirements for financial reporting Build trust with investors, lenders, and other stakeholders   All Accounting Uses The Same Accounting Equation Assets = Liabilities + Equity Regarding construction accounting, several concepts can be highly beneficial to understand. Here are a few you can start taking advantage of today: Construction Accounting Vs. Regular Accounting Not everyone knows what construction accounting is, and easy to assume all accounting is the same. Construction Accounting Is Used - When the entire place of business is packed up and taken to the customer. In essence, you are selling, assembling, delivering, and installing a customized product from a mobile shop on location. Think of it like shooting a movie on location without all the glamor, resources, and money to go with it. Why is there confusion? From a tax standpoint, most construction projects are all lumped together, and after the Cost of Good Sold, Expenses, and Depreciation, you either made money or didn't. The Tax Accountant rolls the numbers to compute the annual tax return. Therefore, if the information is not needed to be broken down for taxes, then the Tax Accountant is not concerned. As the Construction Contractor paying the bills, you are constantly concerned about which jobs are "Making Money or Losing Money." "Why does it seem like I am watching the money fly by and zooming out of my checking account? It never seems like there is any money left over!" Materials A construction contractor may purchase material and resell it to their customer. Thereby thinking it is a reimbursable expense. (You lose money when doing this).  Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) are income. Every line item on a customer invoice is ALL INCOME. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Washington State, for instance, has a clear explanation.  Purchases for the material are Cost of Goods Sold or are expenses if you are short-cutting your accounting. I have seen financial statements backed out because they will reflect reimbursable income as a negative number, thereby showing it as a deduction. (The net effect is double dipping on the expense side) The cause is that the accounting software is not correctly set up.  Cost Of Goods Sold (COGS) It appears regular bookkeepers over their heads with construction accounting are trying to figure out how to input new QuickBooks transactions by copying previous transactions. This is not an issue with regular accounting because there is only one or two costs of goods sold accounts (COGS), no direct COGS, no indirect COGS, no Work-In-Progress (WIP), no retention, no job costing allocation to consider, and only one customer "cash sale" in addition to several other variables involved in construction accounting.  For example, a material receipt arrives at the regular bookkeeper's desk from a lumber supplier, and they open the QuickBooks contractor file, look up the supplier to determine how the previous lumber purchase was coded, and proceed to code the new transaction the same way. The problem is that each transaction is unique and could go into any of a dozen accounts or item codes depending upon whether it is a direct cost, indirect cost, WIP, retention, warranty, overhead, administrative, or other costs, or simply an expense. The cumulative effect of these bookkeeping errors in one month can do enough damage to the financial and job cost reports to bankrupt a contractor eventually. Another example is if the bookkeeper generates job costing reports that are off by 10%, it could cause the contractor to make radically different decisions based on what they believe about the job costing reports. If the contractor believes the company is undercharging, they may raise bid prices, lose jobs, eventually run out of cash, and file bankruptcy. If the contractor believes the company is overcharging, they may lower bid prices, lose money on all jobs, eventually run out of cash, and file bankruptcy. Many bookkeepers have lost their jobs and are freelancing as Jack-of-All-Trades and Master-of-None bookkeepers, doing whatever work they can find, and I understand that everyone needs to eat. I would prefer they avoid contractors and stick to regular bookkeeping like retail stores. The net result is that more contractors are going out of business due to inadequate financial and job costing reports just when construction demand is about to grow. Fix the giant boulders one at a time. Get that one thing working, then move on to the next one. What is the most annoying thing you can quickly fix? We talk about accounting because that is our primary focus. Start with the basics: Open a business checking account. Use a dedicated credit card for the business (if using a personal card). Create invoices, present them to your customer, collect the money, and get it in the bank (Do you have an easy way for your clients to pay you?). Collect the money ASAP because, without cash flow, you are out of business. No - the company with the most Accounts Receivable or Accounts Payable does not win a prize. Accounts Receivable means your customers owe you money. Accounts Payable means you owe money to your suppliers. Net Profit is the money left over. You want lots of Net Profit! You are not a banker! Stop borrowing money using your credit cards, Loans, and Lines of Credit, then finance customers' projects at 0% interest. Final thoughts Becoming knowledgeable in accounting principles has the power to transform the way you run your construction business. Understanding and implementing these concepts in your construction accounting practices can improve your financial management and set your business up for long-term success. Fast Easy Accounting does the bookkeeping, accounting, and payroll and offers business coaching for small, brand-new Construction Contractors, General Contractors, Trade Contractors, and Handymen across the USA, including Alaska and Hawaii. Do the parts only you can do; leave the rest to us. You are never too small for us to help, and we can help to begin with your first day in business. Schedule your free consultation here. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 527, And It's About Leading Causes Of Stress For Contractors And How To Counter Them Construction business owners face various sources of stress that can negatively impact their well-being and overall business performance. Some leading causes of stress for construction business owners include financial pressures, tight deadlines, workforce management, safety concerns, and regulatory compliance. If not adequately addressed, these factors can lead to burnout, decreased productivity, and even business failure.  Many entrepreneurs believe hard work and determination are all it takes to build and sustain a successful business. But when you consider the pressures of running a company, it seems wise to add effective stress management to the list. Left unchecked, stress can erode your passion and undermine performance – not to mention a severe toll on your health. Are you wondering how to stop stress from derailing your productivity, profits, and overall well-being? Follow these practical tips for avoiding the main causes of "business burnout." Cause: So many tasks, so little time Solution: Without effective strategies for managing time and sharing the load, you'll be forced into a reactive versus proactive position – the perfect storm for chronic stress and impaired decision-making. Prioritize your tasks. Make a to-do list and prioritize your tasks based on urgency and importance. This will help you focus on what must be done first and avoid feeling overwhelmed. Use a project management tool to organize and assign tasks, track progress, and share results with clients. Don't try to do everything yourself. Delegate tasks to reliable and competent employees or outsource them to a trusted contractor. Hire an accountant to help you navigate taxes and implement time- and money-saving financial solutions year-round. Cause: Cash Flow Solution: All businesses, particularly start-ups, must have enough cash to keep running after covering monthly expenses. Cultivating a consistent cash flow is crucial for managing your finances and stress levels. Here are a few ways to stay cash flow positive. Follow up promptly on unpaid bills, and consider offering an incentive for early bill payment (such as a slight discount when payment is received within five days of invoicing) Be wary of slashing prices: if you must mark down a product or service, be sure you can recover your costs elsewhere. Think "less is more" when purchasing inventory to avoid sinking precious cash into excess stock. Have a trusted employee monitor your cash flow and inform you once it dips below a certain threshold. Again, this is where your construction bookkeeper comes in. I recommend reviewing your Five For Five At Five. Cause: Attracting New Clients Solution: Starting to panic because you keep missing your sales goals? Auditing your current approach and implementing better growth strategies is critical to alleviating that stress. Here are a few ideas to get started. Drill down into the behaviors and preferences of your customers, so you can better target your marketing. Analyze each step in your sales process to see where the holes are and tighten your approach. Use your audience research to develop a new product or service that fills a unique need for your customers and gives you a leg up on the competition. Practice self-care. Taking breaks throughout the day is important to clear your mind and recharge. Go for a walk, grab a snack, or do something you enjoy. Take care of yourself physically and mentally. Get enough sleep, exercise regularly, and eat a balanced diet. Consider meditation or other relaxation techniques to reduce stress. Final thoughts Starting and growing a business takes tremendous energy. But by leveraging skilled help and improving key management processes, you'll learn to pace yourself – and keep that passion burning for years to come.  Running a construction business is challenging, but taking care of yourself is essential to effectively manage your business without burning out. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 526, And It's About Becoming A Better Construction Company Owner By Developing Courage Fear is a natural, emotional response to distress. The evolution of humanity was dependent upon feeling and responding to fear. Unfortunately, for some of us, fear is a stumbling block to unlocking our full potential and becoming great leaders.  Fear can have a significant impact on business activities. If a business owner is afraid of taking risks or making decisions based on past negative experiences, it can hinder their success. It's important to remember that fear is often based on False Evidence Appearing Real or F.E.A.R. It's crucial to approach business decisions objectively and not let fear cloud judgment. By recognizing and addressing fear, business owners can make informed decisions that lead to success. The good news is that courage is like a muscle, and when you exercise courage, it often becomes more robust and more natural. Here are a handful of ways to overcome fear, find courage and become a better construction company owner. 1. Don't lose your sense of direction If you struggle to lead in your construction business or manage your employees, staying connected to your purpose for making your decisions is essential. If you lose your sense of direction, the people you are leading may begin to question your ability and authority. When giving instructions to someone you are charged with leading, be specific about what needs to be done and why. 2. Visualize all of the possible outcomes Visualizing a negative outcome may seem counter-intuitive to building courage; however, realizing that the worst that could happen is not fatal in most situations is incredibly beneficial. Conversely, visualizing a positive and prosperous outcome can give you the bravery to make risky choices and stand behind them occasionally. 3. Be willing to do what other leaders won't If you are surrounded by leaders who continually play it safe but are sensing a need to take the road less traveled and make a bold decision, be willing to do it! The fear of people around you disapproving of your choices can be crippling. But the sense of pride when you carefully calculate your options and make a bold choice that turns out well, will strengthen your sense of courage. 4. Carefully consider the opinions of people around you You don't need to allow yourself to be persuaded by the opinions of others in any way, but occasionally a new view from someone with less experience can bring new life into your construction business. Don't let your employee's inexperience cause you to overlook the great ideas they may occasionally have. Be willing to do things someone else's way occasionally bravely, and your courage will undoubtedly increase. 5. Be willing to commit to success Have the inner strength and courage to keep going even when things get tough because you know that everything will work out in the end; if something has not worked out yet, it is not the end. 6. Make the hard decision and say "no" As uncomfortable as it can be to shut down someone's idea, it is necessary sometimes. Next time someone has an opinion you are completely uncomfortable with, respond by telling them no. Often, no explanation is better than a long explanation when you disagree with a person's idea. As a leader, it is right to go with your gut instinct and override decisions you disagree with. Saying no to bad ideas will increase your courage and even the level of respect your employees have for you. As you can see, building courage is not a complicated process. Building courage is simply taking small steps in your daily life and being unapologetic about doing what you know is right. If you are willing to commit to taking the above steps as a leader, you will soon become more confident in your decisions! Many leaders struggle to feel courageous regardless of their time leading. Fear on all sides Contractors without financial reporting systems they can trust to generate accurate Key Performance Indicators and Reliable Job Cost Reports do not know if they are making or losing money from day to day, which leads to doubt which leads to stress, and they tend to work faster and harder. This frantic behavior raises everyone's stress level, affecting your team, project, and client. Contractors are superheroes! What is your Contractor Superpower? The power of choice.  Increase your pricing Which projects do you say YES to Collect job deposits Ask the client for money Your working hours The area of the country where you want to live You can choose what is best for you, your loved ones, and your construction company. It is easy to listen to the news and become depressed, agitated, or think the day's challenges are hopeless to overcome. Mother Teresa (of Calcutta) said it best: We, the willing, led by the unknowing, are doing the impossible for the ungrateful. We have done so much, with so little, for so long; we are now qualified to do anything with nothing. Final thoughts The rough and tumble world of construction company ownership is not for the weak or the timid. It is an arena where the price of admission is a lot of blood, sweat, tears, long nights, and lost sleep, with peaks of enthusiasm and depths of despair. It can feel like riding a roller coaster operated by a madman trying to convince you to get off, get out and do something more relaxing, like teaching a pig to sing! With careful planning and a solid strategy, you can overcome any obstacles that come your way. Don't be afraid to take risks and think outside the box. Remember, the greatest successes often come from taking bold actions. So be brave, stay focused, and keep pushing forward. Your construction business dreams are within reach! Life is a journey that happens one day at a time, one decision at a time, one choice at a time. Tomorrow is a new day with every potential of being happier if we allow it. We will continue empowering and advocating for contractors and construction business owners like you. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 525, And It's About Building A Competitive Advantage In The Construction Industry A competitive advantage is something that you offer or have that the competitor does not. There must be compelling reasons for people to do business with you rather than with other construction companies. The need to identify your point of difference is essential. The more similar your business is to many others, the greater your need to develop competitive advantages. The key to benefitting from the competition is knowing how to take on competitors so your company earns a profit effectively. Look into your industry and the successful contractors around you not to lose sight of your vision for your construction company but as an inspiration to guide your systems and processes. Identifying your advantage A competitive advantage is what you are better at doing than anyone else. The wiser you can be about developing and promoting your competitive advantage, the better placed your business will be to succeed. Think about how you can differentiate yourself: Low pricing – you're able to supply the most budget-friendly service. Specialization – you service a specific niche market better than anyone else. Differentiation – you have the same service as others, but you make it different. Specialization and differentiation are the most common small business strategies because more significant businesses can usually get bulk deals and compete on price. Being affordable is the most straightforward tactic to implement (reduce all your fees but know your worth), though this is the last thing to consider, as it is often a losing strategy. The chances that you can be the cheapest and survive are not good because you will usually compete against companies with far more financial muscle than you have. Having the most considerable margins is your ultimate goal. You can position yourself away from the cheap end of the market if you develop other competitive advantages, such as excellent, friendly service, good after-sales service, a more specialized range of products, more knowledgeable staff, and so on. Here are some ways to get ahead of your competition and grow your construction business: 1. Awesome staff Your staff will be one of your best (or worst) competitive advantages. The advantage of having friendly, knowledgeable, proactive staff must never be underestimated. The key is ensuring your staff is motivated, trained, and performing well. Do this by: Establishing clear performance standards. Starting incentive schemes. Sending them on training courses. Encouraging them to develop their product/service knowledge. Holding yearly selling courses. 2. Unique or exclusive products You have an advantage if you can source products or deliver services that the competition cannot. If you're competing against larger or similar businesses, can you establish a reputation for unique products people can't find anywhere else? 3. A great website A website that is more attractive or easier to navigate than competitors can be a distinct advantage. Can you create a better, more effortless online scheduling experience? More competitive payment options? 4. Become a star Your own image can be a competitive advantage. No one else has quite your mix of skills, and you can build a 'character owner' image by having your name on as much material as possible, including: A signed mission statement for online and in-person visitors. Signing your name at the end of all newsletters and correspondence. Offering personal guarantees. Becoming prominent in your community. Becoming an authority in your field and a spokesperson for the industry. 5. Brush up on your technical knowledge If you can't compete on price, offer superior knowledge to other businesses around you. Consequently, it would be best to ensure staff are well trained. You could ask your suppliers to provide training. 6. Get to know your suppliers Being on good terms with your suppliers and their sales representatives is an often-overlooked competitive advantage over other businesses that haven't bothered to develop this closeness. A good relationship will provide the following: Better service and support.  Better supply and faster delivery. Better return policy and customer support. Early notification of specials or discounts. You might get promotional material, displays, signs, and staff training. Being linked to a large, well-known supplier is a definite competitive advantage. They might do most of the market research, develop new products, conduct customer analysis, and provide nationwide branding and advertising that enhances your credibility. An independent will find it more challenging to compete with you. 7. Display your other services To gain an advantage, offer things that the competitors don't, especially if they cost very little. Sometimes this may involve displaying what you already do for customers, but most may have been unaware of it. Don't simply expect customers to be automatically aware of your competitive advantages. You must advertise and promote them. 8. Strategic alliances and joint ventures One of the best ways to compete against larger businesses is to form alliances and joint ventures with other companies. For example, by banding together with other businesses in your industry, you can often gain better group discounts from suppliers than you would if you ordered on your own. The ability to form intelligent alliances and joint ventures is an increasingly essential and distinguishing feature in the success of many businesses. Joint venture marketing is another way of sharing advertising costs. You can brainstorm many variations on this theme with your staff. 9. Speed People want quick service, so the faster you can deliver your product or service, the better. Hold regular staff meetings on how to streamline your business processes and fulfill or exceed client requirements without sacrificing the quality of delivery. Final thoughts There's room enough in most industries for competition. While knowing who you're up against is a good idea, ultimately, your clients are your priority. Focus on providing meaningful goods and services to them, addressing their pain points, and improving their lives. Market yourself to make those aspects clear. Show them why you're the ideal company to hire for their project.   Using these strategies can effectively take on the competition and help your construction business be successful. Take it one step further by hiring an expert to help you with the things you are not an expert on - for instance, hiring a Website/Social Media Manager to take care of your online presence, as this is your digital office.  Of course, a financial advisor or a construction accountant who has been where you want to go and can guide you will benefit your construction business. We want to be that person for you. Optimize your time and skills by doing what you love and do best. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 524, And It's About How To Increase Your Construction Business Profit In Three Months Sales and profit are two very different things – as a construction business owner, you can find yourself without the cash to pay bills despite making sales you knew were profitable. You may also be startled to discover that solid cash flows from sales deliver little profit.   A cash flow forecast tracks cash flowing in and out of your business. The timing of these flows enables you to identify cash-rich and cash-lean periods. This helps make the right decisions, such as buying assets or preparing for cash shortfalls.   Cash flow is essential to the survival of your business – arguably more so than profit in the short term. Profit may be necessary for the longer term, but cash is needed to pay bills and operating costs quickly.   For example, if you're a plumber with reasonable cash reserves, you can survive until your business becomes profitable. However, if your business runs out of cash, you'll need to find a solution quickly to avoid going bankrupt.   Profit is the money left in your business after all your expenses have been paid. An income statement (also referred to as a profit and loss report) reveals what profit your construction company made last month or last quarter. Your profit's detailed in two figures, namely: Gross profit is what's left from sales after deducting the costs of goods sold or services provided. Net profit is left from gross profit after operating expenses (your business overheads) are deducted. Note that net profit isn't the final 'bottom line' profit until all taxes have been paid. Gaining more significant profits depends on accomplishing all the little things better – rather than making one huge change. You'll need to focus on every detail to reduce expenses and increase your sales turnover over the next 90 days. Decreasing your costs For most small businesses, reducing costs is the easiest way to increase profitability. Reducing direct costs can dramatically increase your sales profit while eliminating unnecessary business overheads. Challenging your direct costs Identify the steps you can take to minimize your direct costs, such as: Negotiating lower prices with your suppliers. Reviewing processes and systems to minimize waste. Implementing additional security to reduce the chance of theft. For example, you may have had one material supplier over the last five years. It might be time to challenge your supplier on their wholesale prices while introducing yourself to others who might do a better deal. Some of your business costs, such as insurance, power, and the Internet, could be put out to tender. The value of effective systems Practical systems help you minimize errors – and save time and money. The time invested in creating designs is usually minimal compared to solving a problem from scratch. Where appropriate, turn decisions into policies to avoid making the same decision again – or sort out the same issues repetitively. Learn from mistakes and problem areas, and if systems go wrong, fix them. It's a wise idea to review your procedures periodically to see where improvements can be made. For example, if your software firm decides to place all its information on a central server to ensure staff can access it at any time, hours of productivity can be saved each week. Stay focused on profitability Focusing staff awareness on profitability can have a dramatic impact. Even if cash flow is your top priority, it shouldn't be at the expense of profitability. Monitor your actual costs against your budgets and your sales against your forecasts. Measure staff performance Monitor and measure staff performance and productivity. Be sure to reward productive staff members by linking pay rates to effectiveness. It's important to praise and thank the staff when it's been earned. Aim to provide a clear career path so your team can grow, and they don't see their prospects as limited. Aspire to get constant improvement A simple planning cycle dramatically enhances your ability to make continuous improvements. Thorough planning also helps you anticipate problems and adapt as your circumstances change. Aim to: Set measurable, time-limited targets – to monitor how effectively your plans are implemented. Review what you've achieved to learn from your experiences and continuously improve. Keep improving your underlying systems and planning process, but be ready to alter your strategy if necessary. Increasing your turnover To improve your turnover, look for new markets and distribution channels. Some ideas to help you increase turnover include: for instance, are you making the best use of the Internet? Can you form a strategic alliance with a complementary business or a joint venture to tackle work you don't have the resources for? Actively selling – simply taking orders won't ensure your survival as a business. Aim to gain more sales by being proactive. Retaining existing customers – through outstanding service and placing value on lifetime patronage. Maximizing the value of your sales – consider moving upmarket and providing a premium product or service. Add features to your offerings if the perceived value to customers is greater than the cost to you. Keep your products or services up-to-date – extend your product range or work to ensure it stays ahead of your competition. Focus your efforts on your most profitable customers – look after your customers who place large or frequent orders, pay their bills on time, and are low maintenance. Review your profit margins To improve overall profitability, review your sales and profit margins periodically. Divide your services or products into four categories, namely: High percentage of sales and high-profit margins – nurture these stars. High percentage of sales but low-profit margins – consider a price increase and examine how you can cut costs to increase your profit margins. Low percentage of sales but high-profit margins – consider a sales push. Low percentage of sales and low-profit margins – eliminate these where possible. Consider any possible effects before making decisions. For example, a low-profit product might be the one that brings other businesses from a significant, highly profitable customer. It's possible to run out of cash or go bankrupt by taking on too much business too quickly, even though each sale is profitable. This is called overtrading – companies that sell on credit rather than cash terms are more at risk. Remember, use O.P.M. - Other People's Money. Final thoughts Familiarize yourself with the reports your accounting software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about your construction business's most important reports and metrics and how to utilize them.  You don't have to go through this alone. Don't try to manage your company's finances all by yourself.  Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends. Whether you improve your profits in three months, implementing these processes will result in better construction business management. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 523, And It's About Ways To Keep Your Construction Company Sustainable Taking steps to create a good foundation in the early days of your business is essential for a sustainable and profitable future.  It's rare these days that your prospective leads happen to find your construction business and become a client with no work. Your company has to grab people's attention, turn curious visitors into leads and then convert those leads into sales. Keep in mind: Marketing-Accounting-Production The first thing I would like to point out is: 1. Don't neglect Marketing Entrepreneurs like you are incredibly busy, and finding the time to promote your business can be a real challenge. The other challenge for new trade companies is money—but every small business needs to invest in marketing activities to increase sales and keep the cash flow flowing. It's wise to be wary of costly large-scale marketing strategies when you're just starting. The best use of your time in the early days is getting to know your clients and how they tick so that you can design (or hire an expert to mastermind) highly appealing, cost-effective campaigns. And don't turn a blind eye to what your competitors are up to. Monitor how they attract new customers and think about how you can improve on what they're doing—or take a completely different approach to promote your business that will help your young brand stand apart. This means that the more solid leads you have, the greater your chances of making a sale. Solid leads are contacts engaged in your business, fit your client persona, and are at least somewhat motivated to hire your service. Here are four great ways to get more leads for your business: 1. Target your ideal clients You might want your business to be relevant to everybody, but the reality is that there is a specific target client who is ideal for your business. Those clients are the ones who are most likely to be attracted to your services and, therefore, the most likely to hire you. These are the people to aim your marketing at. Knowing who they are and what they like helps you develop the products and services they'll use. It also saves you money on marketing because you can target your ideal clients rather than marketing to everybody and hoping somebody shows interest. Even more critical, when you understand your ideal clients, you can build connections with them more effectively, generating leads that can turn into sales. 2. Know your unique value proposition Your unique value proposition is what makes you different from your competition. Every business has something that sets it apart and attracts a specific market. Your products or services might be of a higher quality. You might have better loyalty programs or more specialized staff. Even the size of your business can be a unique value proposition. Smaller companies can claim more personal, attentive, and efficient service for their clients.  Determine what differentiates your construction business from your competition and use that uniqueness in your marketing. 3. Attend networking events Yes, in-person marketing takes time and energy, and you can only talk to so many people simultaneously. But hearing an entrepreneur speak passionately about their business can be very persuasive. Networking events are a great way to get face-to-face time with potential leads. Meeting people at events lets you talk directly to potential clients and hear what issues must be solved. Just make sure the networking events you attend are relevant to your business and are functions that your ideal clients attend. Otherwise, you'll be wasting that valuable time and energy. 4. Create high-value content With so many people using the Internet to find companies and make purchasing decisions, you must ensure your business is easily found. That means developing attractive, high-value, informative website content that is compelling and encourages page visitors to submit their contact information. Make sure you use engaging calls to action. Write blog posts that drive traffic to your website. Develop tip sheets that quickly address some of your clients' issues and get people to sign-up to receive them. Create a newsletter that clients or customers can subscribe to. The people on your newsletter subscription list become leads. However, ensure your content is timely, engaging, and relevant to your clients and business. Now that you got Marketing handled let's move to Accounting. 2. Keep your eyes on the numbers If you're starting, you may be surprised by how quickly those day-to-day expenses add up. It's essential to make sure, right from day one, that you consistently track your spending, file your receipts, and monitor your income and expenses with an easy, reliable accounting system. Cloud-based accounting software (like Xero) can help you know exactly where your finances stand in real time—with secure access to accurate, up-to-date financial data anywhere, anytime. In addition to collaborating more efficiently with your bookkeeper and accountant so you can get advice whenever you need it, you'll avoid the stress and hassle come tax time—and be empowered every day to make better, more intelligent business decisions. Touching base with your business advisor is valuable. Every successful entrepreneur learns from experience—not to mention failure, which can be the greatest of all teachers. While it's true that "you don't know what you don't know," you can shrink your learning curve by reaching out to experienced mentors for guidance. Consider working with a small construction business accountant who can provide personalized advice to help you make it through the first year—and an ongoing objective perspective on your business, industry, and market in the future. And last, let's talk about Production: 3. Take care of your employees Your business is nothing without your employees; happy employees are more productive, motivated, and loyal. Smart construction business owners know it's worth spending a little extra money to ensure you have the best employees on your staff and reward them for their hard work.  When you can, spend money on your crew, offer bonuses or gifts for meeting their goals or exceptional service, provide better-than-average benefits plans, give them opportunities for training, or increase their salaries. Happy employees give more to your business. They reduce the turnover rate, saving you the cost and headache of finding and training new workers. Plus, your clients like seeing consistency in your staff, so they'll appreciate that you keep your workers happy. Alone? I hear you. The reality is that as a small business owner, you DO NOT HAVE to hire employees. Invest in yourself, and outsource the most mundane low-value tasks that take time away from what you are skilled in. Remember that you are your company's most important employee. It's been said many times that a business is like a baby—and it can be challenging for entrepreneurs to trust someone enough to hand over any aspect of it. Many construction business owners work to exhaustion because they can't let themselves take a weekend off. They neglect their most important relationships and never get to enjoy their successes because there's always more to do. Final thoughts Leads don't just magically appear out of thin air. Developing solid contacts that turn into paying clients takes time and work. By knowing who your ideal clients are, understanding your unique value proposition, putting in some face-to-face time, and developing relevant content, you can quickly increase your solid leads this year.  The most successful entrepreneurs know they can't do it all—nor should they—and build in time for rest so they can be more productive at work. Train someone early on to run the business in your absence so you can take a rejuvenating vacation and enjoy the freedom you likely dreamed of when you first imagined going into the construction business for yourself. Now, you have a road MAP to sustain your construction company for success, and all you have left is to assemble the tools, equipment, and staff to set up your trucks and vans and go to work! About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 522, And It's About Increasing Construction Company Profitability Through Better Practices If you feel overwhelmed by the sheer volume of technological gadgets, never mind apps and other digital "solutions,"; you're not alone. Technology sprawl and the rabbit hole of more and more information available all the time makes productivity—and healthy downtime—a real challenge for many of us. Although we may be quicker at completing redundant tasks, more time is wasted managing all our different apps and technologies—and more of us live in a near-constant state of distraction. An epidemic of distracted workers Maintaining focus on the job is increasingly difficult in the era of social media, chat apps, games, and the ability to search for anything at any time—whether related to the task at hand or not. Recent research shows that, on average, office workers switch between tasks roughly every three minutes. Half of those "task switches" were not because the phone rang or someone stopped by with a question—they were self-interruptions. The same study showed that when an interruption is related to the primary task, it isn't a problem for the worker to maintain focus when the interruption ends. But when people have to "shift their cognitive resources" to a new task, it takes longer to remember where they were, refocus, and regain momentum. If your team isn't working across the same devices, platforms, and apps, imagine the increased inefficiency as workers spend more time dealing with incompatibility issues. For anyone moving between several decentralized apps during the workday, the cost is mental exhaustion—which can lead to an increased lack of focus and even less productivity. Tools and tips for increasing efficiency No matter how much we'd like to improve our productivity, multitasking is a myth; most humans can only perform one task well at a time. It seems there are never enough hours in the day to complete every job on your list. Often you're faced with prioritizing what you need to do right now – deal with a customer, meet a deadline, attend an event – and the things you know you should do for the ongoing growth of your construction business. Scheduling time to attend to these business activities regularly is a great way to get on track for tremendous success. 1. If you must use a computer at work To help minimize the temptation to check Facebook or random search, focus on your to-do list and block all digital distractions, like placing your smartphone next to you, so you can focus on just what's in front of you. Another tip is to batch email rather than reading and responding to messages continually. Sending emails twice a day—once in the morning and again in the afternoon—will train people not to expect to hear from you instantly, creating more reasonable (and sane) expectations. No one can or should be available to work around the clock for our own personal and collective well-being. 2. Know your numbers It's not uncommon for business owners to lose touch with how well their business is performing daily. But an awareness of your real-time income and expenses is the key to making better decisions that will nurture growth. Implement these changes and see the difference they make in your business: Switch to an online accounting solution offering access to real-time data anywhere. Monitor your finances daily, weekly, monthly, and quarterly; review the data with your accountant often. Check-in on your other numbers – your website metrics and software analytics – to know whether your marketing, lead generation and sales tactics are working. 3. Update your business plan Construction companies should update their business plan at least once a year—sooner if an upcoming change requires planning, financing, or re-assigning resources (for instance, a service launch or a new side business). Many trade business owners neglect to revise their plans regularly. They end up operating on autopilot, losing sight of their bigger goals and the steps they planned to take their business to the next level. Set goals, mark milestones, and start implementing your plans. Look at your previous year's books to plan with your latest annual figures in mind. 4. Hire help It sounds simple, but many entrepreneurs' self-sufficient, independent nature can make it difficult to get comfortable delegating responsibility. Finding the right people to relieve the burden of doing everything all the time is the only way a business can scale and reach its potential. Think carefully about how you spend your days. Are you still at the point where you want to – or need to – do it all? The ultimate success of any company is to reach the point where it can run without you, so you can enjoy a holiday, pass the business on to a family member, or sell it. Finding the right people you can trust to perform their jobs well and continue to grow your business can take time. A recruitment agency can help you craft an attractive job description and recruit so you can focus on strategies that can bring you greater enjoyment and success. 5. Unplug Perhaps most importantly, unplug and rest your mind each day. A week or two of time off, away from work, email, and other stress-inducing distractions, will do more to increase your productivity than any app. And be good to yourself by taking a health break each year. Bottomline Remember, you can do anything, but not everything. Developing new business habits takes time and commitment – but the payoff is well worth it! Monitor how creating and implementing these practices in your construction business improves company performance.  About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 521, And It's About Unlocking The Secrets Of Small Construction Business Cash Flow Cash is king! Construction Company cash flow is the movement of money in and out of your Construction Company; these movements are known in accounting circles as inflow and outflow. Inflows for your Construction Company primarily come from selling goods or services to your customers, but keep in mind that inflow only occurs when you make a cash sale or collect on receivables. Other examples of cash inflows are borrowed funds, income derived from sales of assets, and investment income from interest. Outflows for your Construction Company are generally the result of paying labor, material, other direct and indirect costs of goods sold, and overhead expenses. Is Cash Flow Same As Profit? While they might seem similar, profit and cash flow are two entirely different concepts, each with completely different results. Profit helps calculate your taxes and report to the IRS. The idea of profit is somewhat broad and only looks at income and expenses over a certain period, say a fiscal quarter. Cash flow, on the other hand, is a more dynamic tool focusing on the day-to-day operations of a Construction Company owner. It is concerned with money movement in and out of a Construction Company. However, more important, it is concerned with the times when the direction of the money occurs. In theory, even profitable Construction Companies can go bankrupt. It would take a lot of negligence and total disregard for cash flow, but it is possible. Consider how profit and cash flow relate to your Construction Company. Example: If your retail Construction Company bought a $1,000 item and turned around to sell it for $2,000, then you have made a $1,000 profit. However, what if the item's buyer is slow to pay their bill, and six months pass before you collect on the account? Your Construction Company may show a profit, but what about the bills it has to pay during those six months? You may not have the cash to pay the bills despite the profits you earned on the sale. Furthermore, this cash flow gap may cause you to miss other profit opportunities, damage your credit rating, and force you to take out loans and create debt. If this mistake is repeated enough times, you may go bankrupt. Maintaining a healthy cash flow is essential for a small business's sustainability and growth. Your construction business can be incredibly profitable but fail because of improper cash flow management. To prevent that from happening, here are some best practices that can help you better manage your cash flow and maintain the financial health of your small business. Remember, being proactive and vigilant about your finances is the key to success.  Let's dive in! 1. Understand Your Cash Flow Cycle Before managing your cash flow, you must understand your cash flow cycle. This involves tracking when money comes into your business and when it goes out. You can identify patterns and potential issues by examining the timing and sources of your cash inflows and outflows. For example, you'll notice periods with higher expenses and lower profits or the reverse.  This information helps you make informed decisions on maintaining a positive cash flow. For example, you might offer more sales during your slow periods or find ways to cut costs.  2. Develop Accurate Financial Forecasts Financial forecasting is crucial to cash flow management, allowing you to anticipate your cash flow cycles. Regularly create and update cash flow projections, considering expected sales, expenses, and other relevant factors. Accurate economic forecasts will help you identify potential cash shortages or surpluses and effectively make informed resource allocation decisions. For example, you might hold off buying new equipment this month because the next two months are expected to be slower financially, then make the purchases when you have more cash coming in.  3. Monitor Your Cash Flow Regularly Just like a doctor checks a patient's vital signs, you should monitor your cash flow regularly to maintain your business's financial health. This means periodically reviewing your cash flow statements, balance sheets, and income statements. Doing this lets you spot issues early on, such as late payments or unexpected expenses, and take corrective action before they become significant problems. 4. Maintain an Emergency Fund Unexpected expenses are a fact of life for any business. To mitigate their impact on your cash flow, establish an emergency fund. This reserve can cover unexpected costs or tide you over during periods of slow cash inflow.  Ideally, your emergency fund should be able to cover at least three months' worth of operating expenses. Not only will this help your finances, but it will also give you peace of mind because you know you'll have breathing room in an emergency.  5. Invoice Promptly and Efficiently Although invoicing is vital to your cash flow, many small business owners put off invoicing and following up on unpaid invoices.  You must invoice your clients promptly and efficiently to maintain your cash flow. This means using accurate invoicing software, setting clear payment terms, and providing convenient payment options for your customers. If you have clients with accounts payable processes, ensure you understand the process and their payment cycles so you don't wind up waiting months for payment. Additionally, follow up on overdue invoices promptly. The sooner you invoice and follow up, the sooner you'll get paid. 6. Encourage Early Payments Offer incentives for customers to pay early, such as discounts or other perks. This can help increase cash coming in and provide a buffer for cash flow management. Additionally, consider implementing payment milestones for large projects, where customers pay a portion of the invoice at specific intervals throughout the project. 7. Keep Your Expenses in Check To maintain a positive cash flow, it's essential to keep your expenses under control. Regularly review your expenses, identify areas where you can cut costs, and negotiate better terms with suppliers. Remember also to check your ongoing subscriptions and automatic payments. You may be paying a lot for products you don't use.  8. Use Technology Embrace technology to streamline your cash flow management. By leveraging technology, you can save time and effort, allowing you to focus on growing your business. There are many tools available that can help you track expenses, create financial forecasts, and automate invoicing. Chat with us to get our recommendations for your business.  9. Seek Professional Guidance Financial professionals provide valuable guidance and insights on managing your cash flow. They will identify potential issues and develop strategies to maintain a healthy cash flow.  Working with a construction accounting specialist can help you avoid costly mistakes and make well-informed financial decisions, which is well worth it in the long run.  The bottom line Effectively managing your cash flow is crucial for the success and growth of your small construction business. By understanding your cash flow cycle, developing accurate financial forecasts, monitoring your cash flow regularly, and implementing the better practices discussed in this blog post, you can maintain a healthy financial position and pave the way for sustainable growth. Monitoring and managing your cash flow is essential for the vitality of your Construction Company. The first signs of financial woe appear in your cash flow statement, giving you time to recognize a forthcoming problem and plan a strategy to deal with it. Furthermore, with periodic cash flow analysis, you can head off those unpleasant financial glitches by recognizing which aspects of your Construction Company can potentially cause cash flow gaps. Need assistance? We can help you analyze and manage your cash flow more effectively and ensure your Construction Company has adequate funds to cover day-to-day expenses. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 520, And It's About The Problem With High-Profit Jobs In The Construction Industry Many problems can be traced back to the "Halo Effect," which happens when a contractor thinks, "We are so good at (fill in the blank) we should expand into (fill in the blank)." The most common situation is when a residential remodel contractor with a reputation and a substantial company generating 15% or more profits decides to start building custom homes. Or the opposite, a home builder who decides to branch out into residential remodeling. Residential Remodel Contractor Building A Home The processes, tools, equipment, materials, skills, and invoicing procedures required to build a house from the ground up differ entirely from modifying a home with people living there. The remodeling contractor uses a form of "Cost Plus" or "Not To Exceed" to provide the homeowner with the scope of work and a contract price the bank needs to finance the construction. That process can work for a residential remodel because the house is already in place, which helps define the size and scope of the project. The size and scope of the homeowner's dream house are limited only by what the building codes will allow. When the labor, material, other costs, and subcontractor bills pile up, the remodeling contractor asks for a construction draw and is told the bank needs a Pay Application filled out and submitted. Then it will take a while for the bank inspector to review the project and approve the draw. This is when the remodeling contractor figures out they are providing all the labor, material, other costs, and subcontractor expense up front and getting paid only when and if the building inspectors, architect, bank, and the client agree to the draw request. Home Builder Doing A Residential Remodel The processes, tools, equipment, materials, skills, and invoicing procedures required to modify a home with people living in it differ entirely from building a house from the ground up. New construction workers are more like cave dwellers with a brute-force mentality. If something doesn't fit or will not work the way they want, they use more brute force until it does. Every problem has one answer "Brute Force." The same goes for managing sub-contractors and suppliers. The home builder bids on a residential remodel project using the exact square foot costs they have continuously operated in building houses and quickly discovers the meaning of "Hidden Costs." These costs include dry rot, cracked foundations, broken plumbing, bad wiring, worn-out HVAC, and other unpleasant surprises. Homeowners living in the house while the remodel is happening do not ever want to be without water, lights, heat, and privacy, and they don't know how much debris, dust, and noise is involved in a remodel. Homeowners want to believe everything is included in the original contract price, including the little extras they think of along the way. When it comes to change orders, that is something most home builders do not understand. They don't have a process for tracking them, let alone pricing and getting paid for doing them. Most trade contractors and subcontractors working on residential remodel projects understand change orders and how to pressure the builder to get paid. Too often, this is the main reason home builders go bankrupt - cash flow issues. The Solution Most construction business owners who use accounting software quickly master the basics. They automate processes like invoicing and payroll, track expenses, and view real-time financial reports to manage cash flow and make better business decisions. The problem is that high-profit jobs have a way of turning into low or no-profit jobs, and in some cases, they can bankrupt your construction company because you bid on the project using whatever model you are accustomed to using, and in the end, you wind up with cash flow problems. But what many business owners don't take advantage of are key insights that can improve customer care and increase sales. With the help of your accounting software, you can continue to provide services that you're good at, work on improving them, and help boost your bottom line. Gain insights that increase sales If you're not tapping into your accounting software analytics to better understand your clients, you're missing a significant opportunity to close more sales. Most accounting software can highlight your biggest spenders and buying trends. Knowing who your best clients are, your most extensive selling products and services, and how much each customer spends impact your marketing decisions – not to mention - help you fine-tune your sales strategies. Improve customer care and boost profits Accounting software can offer peace of mind when you know your financials are accurate and up to date. But another significant advantage of an online accounting solution is how much time you'll save by automating processes like invoicing and payroll – giving you more time to follow up with clients and seek out new prospects. We all know how important the personal touch is in sales. So why not use your accounting software client data to help remember your customers' birthdays or thank them when they've hit a milestone – being on your subscription service for five years, for example? With enhanced customer data at your fingertips, your construction business will earn a reputation for personalized service. You'll be able to respond quickly when a client calls with a question about a service. And you'll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap. How will you use accounting software to grow your small contracting business? Savvy construction business owners take the first step toward better profitability when they stop thinking of accounting software as a financial management solution and consider it a comprehensive tool for business growth. You may be surprised at how accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential. Final Thoughts For your construction company to survive and thrive in any economy, you must pick a niche market and develop your Strategic Business Process Management System (BPM) with written goals of what you want to accomplish and how much money you want to earn. Once you have picked your construction specialty, stick with it no matter what, and in the end, you will have the best chance of making much money and retiring wealthy. All contractors who try to do the right thing deserve to be rich because they bring value to other people's lives. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 519, And It's About Using Financial Reconciliation To Keep Your Construction Business On Track   As a small business owner, you're likely already aware of the importance of keeping your finances in order. Financial management goes deeper than paying your bills on time and collecting invoices (although those are also important). It involves regularly checking your financial situation to ensure your accounts are in order, your records are up-to-date, and you're spending within your budget. Among those activities, financial reconciliation is vital in keeping your finances and business on track. Force reconciliations can cause your net income to be over or understated, which means you pay too much in taxes now or too little now and the rest later with penalties and interest because the IRS can ask for a copy of your bookkeeping record.    Here's what you should know about financial reconciliation and how it can help your construction business. What is financial reconciliation? Financial reconciliation is a process of ensuring your financial records are consistent and accurate. When you conduct a financial reconciliation, you review financial statements and compare them with your bank statements, credit card statements, vendor statements, and other relevant financial records, such as invoices.  As you do this, you'll look for errors or discrepancies–for example, if a payment appears on your bank statement but not your accounting records or the costs are for different amounts on different records. When you conduct a financial reconciliation, you want to ensure that the money in your bank account matches the money your financial documents show you should have. Discrepancies need to be addressed, or you'll wind up with financial information that isn't accurate, which affects your cash flow and your ability to make financial decisions. If the discrepancy involves an ongoing payment to you or a vendor, catching it early could save you much money.   Financial reconciliation ensures that all financial transactions are recorded accurately and thoroughly in your accounting system. That way, you know exactly how much money you have and how much is moving into and out of your business, and you can make informed financial decisions.  Types of financial reconciliation Every business has different reconciliation needs, depending on how big, how many, and what types of transactions it has. Bank reconciliation involves your business's bank statement to your accounting records to ensure that all transactions have been recorded correctly. You're looking to safeguard your bank statement's bottom line matches your bank account balance. If not, you'll want to determine why. Is there an automatic withdrawal not yet posted to your account? If so, you need to be aware of it to prevent yourself from overdrawing on your account.  Credit card reconciliation involves reconciling your business's credit card statements with your accounting records to ensure that all charges have been recorded accurately. This is similar to a bank reconciliation in that you need to know exactly how much you've spent on your credit card–including pending transactions–to understand how much you have available.  You can also conduct vendor statement reconciliation, examining your vendor statements against your accounting records to ensure all invoices have been paid and recorded accurately. This can prevent any errors in paying your vendors.  You'll need to conduct intercompany reconciliation if you have two units of business or more–such as divisions, subsidiaries, or franchises. This is where you compare financial records between two or more companies to ensure transactions are recorded accurately and consistently. Why you need financial reconciliation Financial reconciliation is a vital tool that helps you manage your business more effectively. It ensures your financial records are accurate, complete, and up-to-date. This prevents errors or discrepancies that could lead to financial losses or legal or compliance issues. It can also help identify any fraudulent activity or transactions you disapprove of, protecting you against fraud and lessening the risk of financial losses. If you have numerous transactions that are difficult to track, regular financial reconciliation prevents accidental overspending or missed payments that could ultimately affect your relationships with vendors. As mentioned above, many businesses must comply with financial regulations and reporting requirements. Financial reconciliation helps ensure that your business complies with these requirements. If you're not compliant, you can take measures to address the issue quickly before it gets out of control.  How to conduct financial reconciliation If you're looking to establish a solid, repeatable process, these are a few steps you can take:  Step 1: Identity what types of financial reconciliation you need to perform.  Step 2: Establish roles and responsibilities for each team member involved. Make sure everyone knows and understands what they are responsible for and when. Step 3: Create a schedule for conducting financial reconciliation regularly. This may vary depending on the size of your business, and you may perform different types of reconciliation on various programs depending on your unique business needs.  Step 4: Ensure all financial data is easily accessible to those who need it. Each time you conduct a financial reconciliation, ensure you have all the necessary documentation and data. Cloud accounting software can help you manage your reconciliation. Step 5: Conduct the reconciliation: Compare your financial statements to your accounting records to identify discrepancies or errors.  Step 6: Investigate and resolve discrepancies: If you find errors or inconsistencies, look into them and do what you can to fix them. You may have to hunt down additional paperwork, contact vendors to discuss payments, or contact your bank or credit card issuer.  Final thoughts As a construction business owner, you must make vital decisions to move your company forward. Accurate financial records enable you to make those decisions based on your cash flow and current financial standing.  Bank and credit card accounts are the hubs of all your construction accounting and bookkeeping, meaning all transactions must be coded and input properly to have meaningful, reliable reports. If you have questions about financial reconciliation or other important financial aspects of your business, don't hesitate to contact us. We're always happy to answer questions and show you how we can simplify business management. About The Author: Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com    

This Podcast Is Episode Number 518, And It's About How To Protect Your Construction Company From Bankruptcy   Starting a construction business is not for the faint of heart. A certain level of stress comes with ensuring your company's success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it. With good planning and strong business practices, you can avoid the pitfalls and drive your trade business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you. 1. Poor cash flow Not bringing enough money in is the main reason why businesses fail. You must have more money coming in than is going out, or you're on the express train to bankruptcy. This might mean increasing your prices, decreasing costs, or combining the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income.    Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there's a problem–or to prevent one before it happens. The earlier you catch a cash flow problem, the better. 2. Insufficient initial funding Don't rely solely on credit to fund your business. If you start in a deficit, climbing out of debt and becoming cash positive will be much harder. It can also be challenging to break the habit of throwing capital investments on credit in an attempt to start making money. Explore all of your options for initial funding. Ensure you have enough budget to start your business on the right foot.  3. Difficult market conditions Economic recessions or depressions can negatively affect businesses, especially those relying heavily on consumer spending. Unfortunately, there's not much anyone can do about a poor economic climate but try to budget for the ebbs and flows of the market so you have breathing room if times get tough. An emergency account with money set aside for unexpected situations will at least give you some cash to survive on if things take a downturn. 4. Poor financial management Finances can get complicated, so you must ensure you're on top. Failing to keep accurate financial records, not managing expenses effectively, and not correctly forecasting future revenues and costs are all issues that could hurt you financially. Work with an accountant, bookkeeper, or advisor if you have difficulty managing your finances. They can help you set a plan and show you how to ensure your money is best used.  5. Lack of market research If you can't compete with your rivals, your construction business may struggle to generate enough revenue to stay afloat. This problem typically comes back to a lack of market research.  Entrepreneur jumps into a market they're passionate about, only to discover that somebody else is already offering the same thing – and they've already got the market cornered. Or maybe there's no need for that particular product or service.  Market research before entering the business and offering a new product or service. The results will tell you whether there's a need for what you're offering.  6. Legal issues Lawsuits, fines, and penalties can be costly for businesses, draining their financial resources. The best way to avoid this is to ensure you're familiar with the rules and regulations you must follow or get help from a professional advisor when necessary. An ounce of prevention is worth a pound of cure. Construction Company Failure is Always Preceded by Bad Bookkeeping The construction company owner who buys QuickBooks and hires a regular bookkeeper to "put stuff into QuickBooks" and then ignores all of the financial and job costing reports generated from their QuickBooks file drives their construction company into economic doom. Too often, contractors have led down the primrose path into bankruptcy and business failure by relying on inaccurate, false, misleading financial and job costing reports from their QuickBooks file. Part of the blame rests on Intuit, the maker of QuickBooks because their marketing strategy implies that anyone, regardless of their understanding of accounting principles, can use QuickBooks, and if you are a contractor, all you need is QuickBooks for Contractors. It sets up contractors for failure by playing to their self-image of strong people who are rough and tumble and can do anything. In too many cases, these contractors end up feeling inadequate and experience huge disappointments feeling like they are the only people on earth who cannot figure out how to use QuickBooks. Most of these contractors give up trying to make QuickBooks do what they want and lower their expectations to just knowing how much money is in the checkbook, Key Performance Indicator #1, and ignoring the other four Key Performance Indicators. Ultimately, it is like driving a car in the pitch-black darkness, on the freeway, with a tiny flashlight at 60 MPH, and being shocked and dismayed when it crashes, rolls in the ditch, and burns. How to avoid bankruptcy While the reasons construction businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn't happen to you, such as: Maintain accurate financial records and regularly review your business's performance. Develop a solid business plan that includes realistic revenue and expense projections. Diversify your business's revenue streams to reduce reliance on a single source of income. Stay current on industry trends and market changes. Reduce unnecessary expenses and manage costs effectively. Seek professional advice from construction accountants, lawyers, and business consultants when necessary. Build up an emergency fund to help your business weather tough times. Avoid taking on too much debt and manage what you already have effectively. By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success. Final thoughts A business might end up in bankruptcy for many reasons, but a bit of planning goes a long way. Do your research, be honest when you need help, and work with a financial professional to help you stay profitable. Contact us to discuss further how you can protect your construction business and learn how we can help. No construction company goes bankrupt that had useful, accurate Financial Statements and Job Costing Reports that they understood and paid attention to because they would have seen bankruptcy coming well enough ahead of time to avoid it. About The Author: Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 517, And It's About How To Weigh ROI Vs Cost When Making A Business Purchase Deciding to purchase something to help your construction business is a big decision. It can be challenging to part with hard-earned money, especially in the early days. To understand the right time to invest by purchasing something for your business, you must calculate whether the Return on Investment (ROI) would be profitable. The cost is the money you spend making the purchase plus any indirect costs (such as training costs) related to the purchase. The ROI is a calculation of financial gains or benefits that you obtain due to that cost. To determine ROI profitability, there is a simple formula you can use. If the purchase yields a positive return, it can be considered profitable. However, if the purchase does not earn back the money it costs, it would be considered a negative return on investment.   Return on Investment Formula Using a formula to calculate the ROI only offers a rough initial estimate. Other factors might come into play, such as future work you will get because of the new asset or unforeseen expenses. The formula to determine ROI is: ROI = (Net Profit / Cost of Investment) x 100 Let's see an example: Suppose you run a spec home building company. Three employees spend their time in the field gathering data and taking stock of how a proposed development project would affect the landscape. Vegetation, waterways, animals – everything is taken into consideration. You have one client who would like you to survey very rugged terrain. They would pay $2500 if you could complete this work, but covering the landscape would be difficult and take time. The only way to do it effectively would be to purchase a drone for $1000. It would cost $200 to train each employee how to use the drone. The new equipment would make taking on this work possible and save many hours spent physically in the field. Additionally, having a drone would mean you could offer your new aerial surveying services to other clients who are undertaking more large-scale or complex projects. Calculating the ROI of obtaining new equipment for this project: First, you would tally your total expenses and expected revenue to decide whether this purchase would be profitable. Expected Revenue = $2500 Total Expenses = $1000 + ($200 x 3) = $1600 Then, you would subtract the expenses from your expected revenue to determine the net profit. Net Profit = $2500 – $1600 = $900 To calculate the expected return on investment, you would divide the net profit by the cost of the investment and multiply that number by 100. ROI = ($900 / $1600) x 100 = 56.25% Your return on investment would be 56.25%, a positive return. Not only that, but your new equipment may allow you to gain more work in the future, making your ROI even better. What happens when you don't put your investment to work What if you purchase the drone but find the learning curve overwhelming, and it collects dust in a corner? In this case, your client may not hire you, or the hours required to do the work on foot may make taking on the project cost prohibitive. Your ROI would be zero, plus you would be down $1600 from the initial expense and training. This would result in a negative return on investment, mainly if you have already performed the employee training. On the other hand, how many places can you find with a strong chance Of 100% Return on Investment? Let me say - If something seems too good to be true, it probably is, and you should stay far away from it. We Do Like Managed Risks This is anything we can control the input and have a more remarkable than the breakeven chance of making a profit. We pay close attention to the higher levels of math and how it is used to predict probable outcomes accurately. Decision Modeling Decision modeling uses reliable QuickBooks reports to generate predictions of profit and loss based upon re-allocating resources and aligning your Business Process Management system processes to present to you a variety of possible outcomes. It offers you a way to attach knowledge, expertise, and analytic insights. As possible results are analyzed, decisions become easy because the goals, processes, and data come together. As contractors like you move away from gut-level decisions and begin relying on your construction accounting systems to provide helpful financial and job costing reports, it will open a treasure chest busting at the seams with practical knowledge which can lead you to earn massive profits and, by extension, increase your wealth exponentially. Knowledge Leads To Profits And Cash Flow What Makes Knowledge Powerful? Use Of Knowledge! If you could harness and truly understand even half of the information in your existing QuickBooks company file and truly understand it, you could quickly become wealthy, debt free, and live the lifestyle you deserve in five years or less. Final thoughts While making a large purchase to benefit your business can be daunting, significant rewards often come with taking the plunge. Do your research, calculate if the investment is worth it, and then move ahead confidently. If you calculate correctly, you will find that your purchase takes your construction business to new heights. About The Author: Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com  

This Podcast Is Episode Number 516, And It's About Construction Business Growth Through Networking And Having A Mentor Most business owners receive plenty of well-intentioned advice and 'helpful opinion' from family and friends. However, good business advice spoken from commercial experience is another matter entirely. That's not to say it's hard to find, but finding a reputable source in the Internet age is sometimes less than straightforward – especially if you have a specific problem to solve and limited time. This is why, for good times or bad, developing a network of peers or seeking out a business mentor can be a great idea. Networking Business owners shouldn't feel they need to operate in isolation. There are several options to consider, and you're not limited to only one or a few. Developing a network of peers and colleagues is an excellent way to keep in touch with new developments, and you'll have a great resource to access when you need input and advice. Your local chamber of commerce Your local chamber of commerce is likely to be a helpful resource. They should be able to put you in touch with industry bodies and refer you to people who can give you professional advice. In addition, they might also have information and resources to help you deal with the issues you are facing. Attending meetings and events is also an excellent way to brush up on skills and meet and network with other business people operating in your area. Local chambers can be found online through the US Chamber of Commerce. Your industry body Most industry sectors have some organization representing the collective interests of businesses operating in the sector; some will have more than one. They can give you industry-specific advice and put you in touch with other people in your line of business for input. These sources should also be able to refer you to reputable outside professionals if you need the help of an accountant or a lawyer, for example. They will generally also hold regular meetings where you can meet and get to know other small business owners. Once you've met or contacted a business peer or professional, swap business cards and keep their details on file; while you can do this manually, it would be more effective to include their details in your contacts on your computer and mobile and to connect with them through other networks like the business-focused LinkedIn or even Twitter. If you keep people's contact details, you can give them a call whenever you need assistance. Even if they cannot help you, they might be able to suggest someone who can. LinkedIn is a great networking resource for business people. You can join several online groups to ask relevant questions and get good advice. You can create your own if you can't find a forum to suit your needs.  We are also highly recommended on Alignable, and we recommend it, too. It is a great way to connect with local business owners and work-from-home entrepreneurs who are also there to network and market their services and might need a plumber, handyperson, roofer, or remodeling soon. Credible online sources of advice It would probably be best to meet face-to-face with your banker, accountant, or lawyer for financial or legal advice, depending on the advice you need. But there are several additional resources you can turn to for assistance. The usa.gov site dedicates part of its site to small and medium businesses. The United States Patent and Trademark Office website lets you do many online functions. For the answers to several employment or health and safety issues, look at the United States Department of Labor website. Business mentors If you're not looking for business advice on a particular problem but are more interested in long-term direction to help you grow and develop your construction business, you should consider getting a business mentor. Mentors can act as an experienced sounding board for ideas and help you consider long-term strategies, assess your business from an independent but supportive point of view, and even connect you with others from their business networks. So how do you connect with a mentor and get the most out of your mentor-mentee relationship? Perhaps you already have an accountant but would like a Construction Accounting mentor. The first step to seeking a mentor is knowing the kind of guidance you and your business would most benefit from right now.  For construction business owners in the early start-up stage, someone who can provide advice for surviving the first few lean years—and someone you can get in touch with more often—may be the perfect fit. In this scenario, finding a mentor with a background in your industry is a plus. Mentors with relevant experience have been where you are now and understand all your issues and frustrations. Let's face it: all business owners are busy people. And although meeting with a mentor consistently is most beneficial, doing so in person regularly can be a challenge for both parties. For some mentors and mentees, what works best is video calls. Our Contractor Bookkeeping Review, for instance, offers consultation and mentoring from Sharie and works well through a phone call or in-person meeting. To get the most out of mentoring—and to demonstrate how valuable your mentor's help has been—be sure to follow up on your progress. A mentor will appreciate hearing how you've put their advice to work, your milestones and successes, and the goals you'd like to work on in the future. Acknowledging your progress will help you stay motivated by seeing how far you've come. Final thoughts Profitable contractors attend networking events not because they have nothing better to do; they do it because it pays off. You can either spend hours doing office tasks like bookkeeping or getting face-to-face with someone who may need your services. Meeting people gives you the chance to build and develop relationships, hire you, or refer you to someone who might. The opportunity to learn from not just an accountant but your Construction Accounting mentor can do more for your business than any course, educational program, or degree. Being a mentee means you get first-hand experience without dealing with all the mistakes yourself.  About The Author: Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 515, And It's About What Every Trade Business Owner Should Know About Raising Prices Raising prices can be a sore subject. Many construction business owners like you assume doing so will spell the end of your competitiveness. But by not raising prices, you're simply letting inflation and your suppliers' maintenance of your margins quietly eat away at profitability. The bottom line is that costs will always rise long-term - at least with inflation. That means you have to pass on the costs to your customers or consume those costs yourself to the point where one day, you'll have to either suddenly raise prices or accept the eventual failure of your business. The worst thing you can do is avoid measuring your costs by sticking your head in the sand. Cost rises will catch up with you eventually, so take action to maintain your margins. Analyze and reduce your costs Regularly check the accuracy of the prices you use in your forecasts and break-even calculations. If you're using outdated costs, your predictions could be dangerously off course from the actual performance of your business. Ideally, you should have your figures analyzed by a professional accountant with experience in the construction industry - and even then, you should remain directly involved to maintain an understanding of your books. But if that's impossible and you have to make your own costs and margin analysis, try using the following tips to help you resolve any profit issues. Analyze costs and profits on an individual product and service level first before looking at the business as a whole. You may miss critical financial details if you try and cut straight to the chase. Try making minor, subtle adjustments throughout your range rather than hiking prices on one service, even if the margin on that particular item is the one causing the biggest headache. Sharp, sudden price rises are more likely to attract a long-term adverse reaction from the target market than almost imperceptible ones they can easily accept. If you find a loss-making product in your books, don't immediately delete it. Consider first whether it's required to aid sales of profitable services. Schedule small price increases every six months or years rather than waiting every few years to raise prices more noticeably. Increase your prices If your costs are optimal, look at the other end of your margin - the price. You may be hesitant to raise prices because you think any price advantage you have over the competition is too significant to lose, but if you give customers more compelling reasons to hire you, you may be able to justify a higher price. Remember, it's all about positioning. Premium pricing reinforces the value of a premium service. If your market research tells you there's a gap in the market for a value alternative, fill it. But if there's also a gap for a superior choice, take that option if you can deliver a product or service to the required standards. Why? Put simply; there's always someone willing to go cheaper. Look at how large shopping outlets use their buying power to find ultra-cheap stock and take customers away from smaller businesses with tighter margins. Many small business owners take it as gospel that the last thing they should do is raise prices, but the opposite is true more often than not. Just make sure that if you do raise your prices, you do so: At a fair pace and intervals instead of raising prices in a way that will shock the market With consideration of the market's price tolerance Alter your product or service mix Any two margins are rarely the same in a range of products, so why focus equally on selling them all if concentrating on the higher-margin products will increase your income? If costs and pricing are optimal, altering your product mix is the only way to maintain or increase your margins. This means being ruthless and chopping products or services that may be close to your heart to focus instead on those that bring people in through the doors. Look at your margins, pick the top earners, and focus your marketing efforts on promoting these products and services above the others. Pricing Feasibility Your prices must be set to cover your costs and provide you with a healthy margin, but they also need to be developed considering your target market's tolerance for pricing. If you don't do this, you could price yourself out of the market or underestimate the value of your products or services. You'll be tempted to let your competitors dictate your pricing, but you need to build a comprehensive pricing strategy that reflects the value of your product and the price your market might be willing to pay for it. Carry out market research Finding out the price expectations of your target market may be as easy as simply asking them. The key is to get an accurate idea of your offering's value before you enter the market. The best way to do that is by directly talking to your target market. Conduct surveys or, if you already have a working product prototype or service concept, form a focus group to gain their instinctive responses and opinions on how much value they'd place on your offering. Ask them: The price they'd expect to pay for a product or service like yours. Where else do they buy, and why. What typically influences their purchasing decisions (you may find competitive pricing isn't as crucial as you expected). Remember that the prices you choose must reflect your position in the marketplace if you want your brand to thrive. At the end of the process, you need to know the following: Whether your service needs to compete directly on price or whether it's innovative enough to charge a premium for. The maximum price ceiling the target market will tolerate. Consider test marketing If you struggle to estimate your market's price tolerance, consider releasing your service on a small, limited scale as part of a test marketing exercise. You'll be able to get direct, valuable feedback from customers on what they think about your product or service and its pricing. Assess costs and margins Once you know your target market's price expectations, you can start looking at the feasibility of meeting them. Assess your cost and supplier options, and produce financial forecasts that could give you a long-term view of profitability. A cash flow forecast will give you a clear idea of the possible return on investment you could expect, while a break-even calculation will estimate the minimum performance (in units sold or hours) you'd need to meet before you start making a profit. These forecasts will be critical to your strategic decisions. Consult an accountant to make sure you've accounted for all your costs. Use your forecasts to answer these questions: Will the return on investment be worth your while? Can you trim your costs to improving your margins? Should you consider a more premium pricing strategy to improve your margins? Final thoughts While it may seem scary, remember that your job is to keep prices fair for you and your clients. That means you must charge fees that work for you and allow you to remain operational. It's just good business sense. Whatever the case, research and review your prices often to ensure you position your trade business correctly. About The Author: Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com    

This Podcast Is Episode Number 514, And It's About How To Attract Profitable Construction Clients