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This Podcast Is Episode 593, And It's About Creating A Strong Personal Brand For Your Construction Business In today's competitive business landscape, establishing a personal brand is essential for standing out in the construction industry. Whether you're a contractor, architect, or engineer, cultivating a professional image differentiates you from competitors and fosters trust and credibility among clients and partners. The words "personal brand" are still somewhat controversial and carry an unfortunate cast of self-promotion and vanity. However, personal branding is more important than ever in the job market, and those without a clear personal brand or mission to create one are lagging behind the competition.
What is a personal brand?
How you present yourself has always been important in the workplace. In the corporate heyday, it was established that to get a good job and be considered for promotion, you had to dress, speak, and act appropriately for the company with which you were employed. Consider this the forerunner of the personal brand; now, you create an impression of yourself and your company that clients and homeowners want to hire.
Personality versus personal brand
Do not mistake your personality for what constitutes an attractive personal brand. In the age of social media, everyone is Googling prospective companies and employees, and personal information is available at their fingertips. If there are unattractive photographs of you on Facebook, personal details about your family, or complaints about your work, delete them or make them private. Now would be an excellent time to set up work-only accounts and separate your social and corporate friends lists.
Promote yourself professionally on the Internet. When creating a profile or website, what photographs are you using? What typefaces and colors do you use? What are you saying? The handwriting font may appeal to you, your favorite color may be baby pink, or that picture of you wearing a Halloween costume may show your best side, but ask yourself: would you hire you based on your tastes?
Remember, this is not about changing who you are but highlighting your best assets.
Though companies are growing ever larger, there is more competition for fewer jobs. Always look professional and remain visible within your community. You must update your brand and create an image of yourself showcasing your proficiency in your services and transferable skills and achievements.
Here are some critical strategies for creating a compelling personal brand for your construction business:
1. Define Your Unique Value Proposition
Identify what sets you apart from others in the construction industry. Consider your expertise, experience, and the specific value you bring to clients. This could be your commitment to quality, innovative design approach, or exceptional customer service. Articulating your unique value proposition forms the foundation of your brand.
2. Develop a Consistent Brand Identity
Consistency is key to building a solid personal brand. This includes everything from your visual identity (logo, color scheme, and imagery) to your communication style and how you present yourself professionally. Consistent branding helps create a strong and memorable impression on your target audience and builds trust in your expertise.
3. Showcase Your Work
One of the most powerful ways to establish your brand in the construction industry is by showcasing your work. This could be through a professional portfolio featuring completed projects, case studies, testimonials from satisfied clients, and before-and-after transformations. Highlighting your successful projects demonstrates your capabilities and the quality of your work.
4. Leverage Social Media and Online Presence
In today's digital age, an online presence is crucial for building a personal brand. Utilize social media platforms like LinkedIn, Instagram, and Facebook to share valuable content related to your expertise, such as industry insights, project updates, and client tips. Engage with your audience, participate in relevant discussions, and demonstrate your thought leadership in construction.
5. Network and Build Relationships
Networking is a powerful tool for personal branding. Attend industry events, join professional associations, and engage with other professionals in the construction sector. Building strong relationships with peers, clients, and industry influencers can significantly enhance your brand and open up new opportunities for your business.
6. Provide Exceptional Customer Service
A positive client experience is fundamental to personal branding in the construction business. Consistently delivering exceptional customer service and prioritizing client satisfaction builds a strong reputation and fosters positive word-of-mouth referrals, which are invaluable for reinforcing your brand image.
7. Emphasize Your Expertise through Thought Leadership
Share your knowledge and insights to establish yourself as a thought leader in the construction industry. This could involve writing articles for industry publications, speaking at conferences, or hosting webinars. Positioning yourself as an expert reinforces your brand and enhances your credibility.
Remember that branding is just another marketing word. You are selling yourself in the construction industry daily by making yourself available and preferable for different responsibilities and projects. Do not be afraid to ask for others' input. Ask previous project managers why they chose you for specific tasks, or ask your clients what word jumps into their minds when they hear your name. Reliability? Professionalism? Authority? Or is it something negative? Ask for honesty, and receive criticism with grace.
Final thoughts
Personal branding is a powerful tool you can use to your advantage or detriment. Use it wisely; it might be the most important thing you ever do for your career.
By implementing these strategies, construction professionals like you can effectively create a personal brand that resonates with your target audience differentiates you from competitors and ultimately contributes to the success of your business. Remember that personal branding is an ongoing process that requires consistent effort and a genuine commitment to delivering value to clients and the industry.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 592, And It's About Tips For Working With Banks And Lenders In the Construction Industry
If your company is experiencing rapid growth, you might find yourself navigating a good news/bad news situation: while your sales figures climb, managing cash flow becomes increasingly complex, pushing you to seek additional financing to meet the rising demand.
Consider this scenario: A couple wanting to sell their house expresses interest in your remodeling service, presenting an exciting opportunity that could significantly elevate your construction business.
However, they have a requirement: they want the job done in three weeks.
Now, you're caught in a challenging position. Declining could mean missing out on a lucrative partnership, yet agreeing could strain your cash reserves.
You're not alone in this struggle; many businesses face similar hurdles when scaling operations or entering new partnerships, especially when balancing cash flow and the cost of fulfilling the project on time.
To build a stronger case when approaching your financial institution for support, it's essential to understand how bankers think and what they look for in terms of business viability. A solid business plan is just the beginning; you must clearly outline your financial needs and establish a robust strategy highlighting your project's viability.
Here are some practical tips to help you prepare for that crucial conversation—and improve your chances of a successful outcome.
Understanding your financial institution
Understanding how financial institutions—such as national banks, regional banks, credit unions, and other lenders—operate is essential for enhancing your borrowing potential.
Here are some fundamental operating principles to consider:
1. The difference between being bankable and lendable.
Every entity with financial records is bankable: you can open a business account, deposit revenues, and pay bills. However, to be deemed lendable, you generally need at least three years of financial statements and tangible assets, inventory, or accounts receivable to serve as collateral.
A minimum risk rating is also required. Understanding your company's financial performance is crucial before approaching your banker for additional funding.
2. How financial institutions evaluate creditworthiness.
The approach that financial institutions take to assess creditworthiness is constantly changing. Evaluating a business often involves several decision-makers, so bankers may use a behavioral-based model to determine your credit score. This score typically merges performance metrics from businesses within your industry and assesses your business's history with the current financial institution, which includes factors such as borrowing and repayment patterns, cash cycles, and customer payment terms.
3. Banks often don't value foreign assets.
Many banks need help assigning value to overseas assets, including foreign accounts receivable. The reason for this caution is straightforward: if repayment issues arise, banks face challenges in recovering losses when collateral assets are internationally situated. This situation can lead to reduced financing possibilities and limit the size and number of contracts your business can manage simultaneously.
4. Competition for loan dollars
When you seek financing from your bank, remember that you are competing with other businesses for the same loan funds. Therefore, it's vital that you present your case clearly and persuasively. The following section outlines the essential elements you need to include.
5. Time constraints of account managers
Your financial institution's account manager likely balances a diverse portfolio of clients, each with distinct needs and business backgrounds. To ensure a successful meeting, providing a concise business plan and well-presented financial statements will significantly enhance your chances of a favorable outcome.
Essential documents to take to your lender
With an understanding of how banks operate, it's time to prepare your documentation and refine your pitch.
1. Define your request
Clarifying your financial request is crucial. Take the time to outline precisely what you need from your financial institution. Whether it's bridging the gap between supplier payments and customer receipts or funds to secure materials for a significant contract, presenting your pain points will aid your account manager in determining the appropriate financing solution—a loan or line of credit.
Keep in mind that loans provide a limited credit amount that must be repaid in full, while lines of credit offer revolving access, allowing for continuous borrowing within a predetermined limit.
2. Compile financial statements
Financial institutions generally favor established companies with a history of economic stability. Aim to have at least three years of financial statements ready to demonstrate your business's viability. If your business is newer or has unusual financial trends, be prepared to share future projections that reflect your anticipated growth. For younger businesses, pursuing financing for specific transactions can enhance your credibility.
3. Evaluate your collateral
For small business lines of credit, banks typically require $2 in collateral for every $1 financed. Understand what collateral you can offer, including capital assets, inventory, or accounts receivable.
Capital assets consist of real estate and equipment, which banks may be reluctant to accept due to liquidation challenges.
Inventory - this can be used at a discounted valuation, depending on its quality and turnover rate.
Accounts Receivable: Domestic receivables with short payment terms may be accepted, while international receivables are often unsupported.
4. Perfect your pitch
With your understanding of the bank's considerations, ensure your pitch stands out. Develop a well-prepared presentation that balances enthusiasm for your construction business with sound financial planning. Your banker will appreciate your passion, but they'll also seek reassurance that you have a strategic plan. Be ready to discuss the reasons behind your working capital need and the unique aspects of your business that set you apart.
Additionally, if you aim to enter a new market, prepare to articulate the associated risks and benefits and your long-term vision for growth.
5. Mitigate your bank's risk
To improve your chances of securing working capital, demonstrate to your bank that you understand and can mitigate their risks. They will need confidence in their ability to recover funds if repayment becomes an issue.
Following these guidelines will enhance your approach to securing financing from your financial institution, ultimately positioning your business for sustainable growth and success.
In Summary
What can you expect from us?
Banks typically require several documents from a construction business to approve a loan. These may include:
1. Profit and Loss Statement - overviews the business's profitability.
2. Balance Sheet - shows the company's assets, liabilities, and equity at a specific point in time.
3. Business Plan - details the construction company's operations, market analysis, and financial projections.
4. Tax Returns - typically, banks ask for the business's tax returns for the past few years.
5. Projected Cash Flow - provides insight into the company's ability to repay the loan.
6. Business Licenses and Permits - banks may also request documentation showing that the business operates legally.
We can help you with these standard requirements when you become a client, but remember that specific documentation needed can vary based on the bank and the loan type. It's always best to check with the lending institution to ensure all required documents are provided.
As always, I'm just a phone call away for a no-charge business consultation.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 591, And It's About Construction Business Continuity - From Labor To Legacy We often overlook the immense value that construction contractors bring to our communities. From building our homes and schools to developing infrastructure and commercial spaces, construction contractors like you play a vital role in shaping our world. Your contributions are undeniably essential, yet they often go unrecognized. This Labor Day weekend, it's time to shed light on your significant impact on our everyday lives. Construction contractors are responsible for bringing our dreams and ideas into reality. Whether it's a new residential housing development, a highway expansion project, or the construction of a commercial building, you are the driving force behind these monumental undertakings. You possess the expertise, skills, and dedication necessary to transform architectural plans into tangible structures serving our communities.
Furthermore, construction contractors are instrumental in maintaining and improving existing infrastructure. From repairing roads and bridges to renovating aging buildings, your work ensures the safety and functionality of the spaces we rely on daily. Without your commitment to upkeep and innovation, our infrastructure would deteriorate, posing risks to public safety and hindering economic growth.
Your projects generate employment opportunities for skilled laborers, engineers, architects, and other professionals. Furthermore, the construction industry stimulates economic activity by purchasing materials, equipment, and services, fostering local and national economic development.
We recognize and appreciate your dedication and hard work. Your unwavering commitment to quality, safety, and efficiency directly impacts our daily experiences. Whether building a new neighborhood park or renovating a historic landmark, your work enhances the quality of life for individuals and communities.
Successful contractors improve processes all year long.
Your construction company can benefit from an excellent system that other successful contractors use now, so there is no need to "Reinvent The Wheel." As your construction company grows and evolves, your processes can support the controlled and planned expansion.
Along with trying to keep up with your construction business, the unfortunate reality is that most business owners need to take proper holidays. This is usually because their business relies on them, and they need the support to keep the business running without them.
As a construction business owner, have you ever considered what would happen to the business if you had to take a six-month break because of a severe illness or injury?
Would the business survive? How would the bills get paid? And while it might not be nice to think about if you were to die, are you sure your business partners would give your loved ones a fair deal? For these reasons, all business owners must have a detailed succession plan. A succession plan is like a will but for a business. However, there is often a more comprehensive range of scenarios and options.
Succession planning, even when you're a sole proprietor, is critical to ensuring the continuity and legacy of your construction business. It involves identifying and developing new leaders who can take over critical roles within the company when current leaders retire, resign, or are otherwise unable to continue.
Like many others, the construction industry comprises family-owned businesses and long-standing companies with deep roots in their local communities. In such cases, succession planning is about ensuring the smooth transition of leadership and preserving the values, traditions, and reputation built over time.
Consider the potential impact of sudden leadership changes on ongoing projects and client relationships. Clients, subcontractors, and other stakeholders often develop trust and familiarity with a construction company's leaders. A sudden change in leadership without a clear succession plan can lead to uncertainty and negatively impact these vital relationships.
Here are some key steps to consider when planning for the succession of your construction business:
1. Identify Potential Successors:
Consider who could take over the business in the event of your retirement, disability, or unexpected absence. This could be a family member, a key employee, or an external party with the skills and understanding of the business operations.
2. Prepare Your Business for Transition:
Document and organize all aspects of your business, including financial records, client contracts, and operational procedures. This will help the successor understand and manage the business effectively.
3. Establish a Clear Transition Plan:
Outline a detailed plan for the transition of ownership and management. This should include timelines, responsibilities, and potential training requirements for the successor. Communicate this plan openly with all relevant parties involved.
4. Seek Professional Advice:
Consult with legal and financial advisors to ensure your succession plan complies with applicable laws and regulations. They can also help you structure the ownership transfer and minimize tax implications.
5. Consider Financial Implications:
Determine the financial value of your business and explore options for transferring ownership, such as selling the company, gifting shares to family members, or structuring a buyout agreement with the successor.
6. Communicate with Stakeholders:
Openly communicate your succession plan with family members, key employees, and other stakeholders who may be affected. Address any concerns and ensure everyone knows the business's future direction.
7. Develop a Contingency Plan:
Prepare for unforeseen events by devising a contingency plan that outlines what would happen if you could not continue running the business. This could involve appointing a temporary manager or identifying an interim solution.
8. Review and Update Regularly:
Review and update your succession plan regularly to account for changes in your business, personal circumstances, or relevant laws. Flexibility is essential in ensuring that the plan remains viable over time.
Succession planning for your construction business as a sole proprietor may seem complex, but taking proactive steps to address it can provide peace of mind and stability for your business's future.
In conclusion
Construction contractors like you play an indispensable role in our lives by shaping our physical environment, bolstering our economy, and enhancing our well-being. Your contributions are woven into the fabric of our everyday experiences, and it's essential to acknowledge and celebrate your valuable impact.
For the tireless efforts in constructing our world, we would like to help you extend, safeguard, and continue this legacy. By carefully considering the options and seeking professional advice, you can ensure a smooth transition when the time comes.
Thank you for building a better world one project at a time. Contractors like you deserve to be wealthy because you bring value to our lives.
Happy Labor Day Weekend!
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 590, And It's About Silent Success - How Active Listening Can Speak Volumes In Construction Communication is crucial in the construction industry, and active listening plays a significant role in fostering successful communication. In the bustling environment of a contracting business, the ability to actively listen can make a substantial difference in understanding client needs, ensuring project requirements are met, and ultimately delivering top-quality results. Active listening involves more than just hearing the words; it encompasses fully concentrating, understanding, responding, and remembering what is being said. For construction professionals, this skill can improve client relationships, make fewer errors, enhance teamwork, and ultimately increase project success.
Why active listening matters
Active listening is crucial for construction business owners for several reasons:
Internal Communication
When you actively listen to their ideas and concerns, you foster an environment of trust and mutual respect. This enhances employee satisfaction and reduces turnover rates, making your team more engaged and productive.
Conflict resolution: You can address and resolve conflicts more effectively by genuinely listening. Building trust: Employees who feel heard are likelier to trust their leaders and stay committed to the business. Improved morale: A culture of active listening can significantly boost team morale and engagement. Better decision-making: Understanding diverse perspectives enables more informed and balanced decisions. Increased collaboration: When everyone feels their voice matters, cooperation and teamwork improve.Listening to your team can unlock a wealth of innovative ideas. Those on the front lines often have unique insights into processes and customer needs that can drive your business forward. Encouraging an open dialogue can lead to creative solutions and new opportunities.
External Communication
Understanding Client Needs
By listening attentively to clients' ideas, concerns, and expectations, contractors can gain valuable insights to deliver results that align precisely with the client's desires, instilling confidence in client interactions.
Effective Requirements Gathering
Active listening also plays a critical role in gathering project requirements. Whether it's a renovation, new construction, or infrastructure project, carefully listening to the client's specifications, preferences, and constraints is vital for ensuring the project is executed per the client's vision.
Reducing Errors and Rework
Miscommunication and misunderstanding can lead to costly errors and rework in construction projects. By actively listening to project requirements and clarifying any uncertainties, construction professionals can significantly reduce the likelihood of mistakes, ensuring the project progresses smoothly and according to plan.
Imagine a client is frustrated because a product or service didn't meet their expectations. By actively listening to their concerns, you can resolve the issue and gain valuable insights into improving your services. This feedback loop is essential for continuous improvement and customer satisfaction.
Improved Client Relations
Actively listening to clients not only ensures project success but also strengthens client relationships. When clients feel heard and understood, it fosters trust and confidence in the construction team. This, in turn, can lead to repeat business, referrals, and positive word-of-mouth recommendations.
How to master active listening
Here are six practical steps to help you master the art of active listening in your construction business:
1. Note the unsaid
Pay attention to non-verbal cues such as body language and tone of voice. These often reveal underlying emotions and concerns that words alone may not convey. For example, if an employee seems hesitant or anxious during a discussion, it might indicate they're uncomfortable or unsure about the topic. Similarly, if a client's body language suggests frustration or disappointment, it's a sign that they may not be delighted with the project's progress.
2. Seek to understand
Approach conversations with an open mind. Ask clarifying questions and paraphrase what you've heard to ensure you understand correctly. For instance, if a team member expresses frustration with a project, ask them to elaborate on their challenges.
3. Decode
Take the time to process and interpret the information. This is what we call 'decoding '. Avoid jumping to conclusions or making snap judgments. Slow down your thinking to avoid costly mistakes or misunderstandings. This might involve discussing the issue with other team members to gain different perspectives.
4. Act
Show that you've heard and understood by taking appropriate action. This could be implementing a suggestion, addressing a concern, or simply acknowledging the person's feelings. For example, if an employee suggests a new workflow, try it and provide feedback on its effectiveness.
5. Close the loop
Follow up to ensure the issue has been resolved or the suggestion has been implemented. This reinforces that you value their input and are committed to continuous improvement. For instance, if an employee has suggested a new project management tool, follow up after a week to see how it's working for them. Regular check-ins help maintain this ongoing dialogue.
6. Create a listening culture
Foster an environment where everyone is encouraged to listen actively. Lead by example and practice listening actively to each other within your team. Reward those who demonstrate strong listening skills.
In conclusion
Active listening is a powerful tool that can positively impact every aspect of a construction business. By honing this skill, construction professionals like you can enhance client satisfaction, minimize errors, foster teamwork, and ultimately drive the success of your projects. Integrating active listening as a core practice can set your construction business apart in a competitive industry, leading to long-term success and growth.
Excellent communication skills with strong attention to detail are not just soft skills but strategic advantages that can set your small business apart. Ready to transform your construction business with the power of active listening? Start today by incorporating these steps into your daily routines, and watch as your construction business thrives.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 589, And It's About The Cash Flow Survival Guide For Your Construction Business
Avoiding cash flow crises is crucial for the success and sustainability of your construction business. Managing cash flow is vital for small business owners. Poor cash flow management can create significant challenges even if your business is profitable.
Cash is a fact; Profit is an opinion
A cash crisis can be emotionally devastating and even kill your business. If you've ever had to beg, borrow, and steal to cover tomorrow's payroll, you know what I mean.
Understanding cash flow
Cash flow refers to the money moving in and out of your business. Cash inflows come from sales, interest earned, and investments. Cash outflows cover rent, payroll, bills, and supplier payments. Positive cash flow means your inflows exceed outflows, while negative cash flow indicates more money going out than coming in.
Why cash flow matters
You might ask, "Why is cash flow so important if my business is profitable?" The answer is simple: you need sufficient cash to pay your bills, invest in growth, or keep the lights on. Understanding and managing your cash flow is essential to maintaining the health and stability of your business.
This guide will share practical tips to help you avoid a cash flow crisis and ensure your business remains financially healthy.
1. Manage your expenses
Review your expenses regularly and look for ways to cut costs. Can you negotiate better terms with suppliers? Are there subscriptions or services you no longer need? You can identify savings opportunities and reduce outflows by closely monitoring your expenses.
2. Encourage repeat business
Retaining existing customers is often cheaper and more effective than acquiring new ones. Offer loyalty programs, discounts, or incentives to encourage repeat business or word-of-mouth referrals. Happy customers are more likely to return and recommend your company to others.
3. Invoice quickly and set shorter payment terms
The sooner you invoice, the sooner you'll get paid. Implement a system to send invoices immediately after delivering goods or services. Consider setting shorter payment terms (e.g., Net ten instead of the 20th month following, or Net 30 instead of Net 60) to improve cash flow.
4. Don't accept late payments
Late payments can severely impact your cash flow. Consider offering discounts for early payments or imposing penalties for late payments. Clear communication about payment terms and consistent follow-ups can help ensure timely payments.
5. Manage your inventory
Too much inventory ties up cash unnecessarily. Implement just-in-time inventory practices to order items only when needed. Review your inventory levels and turnover rates to ensure you're not overstocking slow-moving items.
6. Cash flow forecasting
A cash flow forecast is a projection of your cash inflows and outflows over a specific period, usually 12 months. It helps you anticipate potential shortfalls and take corrective actions in advance. Regularly update your forecast to reflect changes in your business environment.
7. Build cash reserves
Having a cash reserve can help you weather unexpected expenses or downturns. Aim to save enough to cover at least three months of operating expenses. This financial cushion can provide peace of mind and stability during uncertain times.
8. Improve operational efficiencies
Look for ways to streamline your operations and reduce waste. Can you automate specific tasks? Are there more efficient methods or technologies you can adopt? Improved efficiencies can lead to cost savings and better cash flow management.
9. Explore multiple revenue streams
Diversifying your revenue streams can help level out your cash flow. If one source of income dries up, having others can keep your business afloat. Consider adding complementary products or services or exploring new markets.
10. Negotiate with suppliers
Can your suppliers offer better payment terms or discounts for bulk purchases? Building solid relationships with your suppliers can lead to better terms that improve your cash flow. Feel free to negotiate and ask for what you need.
How can we help?
1. Accurate Financial Forecasting: We can create detailed financial projections and forecasts to anticipate future cash flow needs and identify potential gaps. This will allow you to address any impending cash flow issues proactively before they arise.
2. Efficient Invoicing and Payment Collection: We can implement a systematic invoicing process to promptly bill your clients for completed work. We can also assist you with offering incentives for early payments and diligently following up on overdue invoices to maintain a steady cash flow.
3. Vendor Management: We can help you negotiate favorable payment terms with your suppliers and subcontractors to align outgoing payments with incoming receivables. By managing your payables effectively, you can optimize your cash flow and minimize strain on your finances.
4. Strict Budgeting and Cost Control: We can monitor your expenses closely and maintain a disciplined budgeting approach. We can identify areas where costs can be reduced without compromising quality or safety standards to improve your cash position.
5. Line of Credit or Emergency Fund: We can establish or maintain an emergency fund to cushion during lean periods or unexpected expenses. Access to additional funds can help bridge temporary cash flow gaps and prevent disruptions to your operations. Please note: We do not touch your money. We can only assist you in managing your finances.
6. Streamline Operations: We can identify inefficiencies in your business processes and streamline operations to optimize productivity and reduce operational costs. This can free up working capital and improve your overall cash flow position.
By proactively managing your cash flow and implementing these strategies, you can protect your construction business from potential financial crises and maintain a healthy financial position for long-term success.
Final thoughts
Effective cash flow management is critical for the success of your small business. These practical tips can avoid a cash flow crisis and ensure your construction business remains financially healthy. Remember, proactive planning can go a long way in securing your business's future.
If you need advice or further assistance, please get in touch with our team.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 588, And It's About Financial Statements Demystified: A Practical Guide For Contractors Understanding financial statements might sound daunting, but small business owners like you must stay on top of your game. Each financial report offers unique insights into your company's economic status. As a construction contractor, your financial statements provide valuable insights into your company's financial health and are essential for making informed decisions. Let's look at the critical components of financial statements and why they matter to construction contractors.
1. Balance sheet
The balance sheet is a snapshot of your company's financial position at a specific time. It includes your assets, liabilities, and equity. For construction contractors, the balance sheet reflects the value of equipment, property, other assets, any outstanding debts, and your company's net worth. Monitoring your balance sheet helps you track your company's financial stability and wealth.
Assessing net worth: By understanding your assets and liabilities, you can easily calculate your company's net worth.
Financial stability: The balance sheet helps you gauge whether your business is financially stable or if it's relying too much on borrowed funds.
Practical tip:
Regularly review your balance sheet to make informed decisions about investing and financing to foster growth. If you notice a high level of liabilities compared to assets, consider strategies to reduce debt.
2. Income statement
The income statement, also known as the profit and loss statement, provides an overview of your company's revenues, expenses, and profits over a specific period. As a contractor, your income statement reflects your revenue from completed projects and your operational costs, such as materials, labor, and overhead (LMOS). Analyzing your income statement helps you assess the profitability of your projects and identify areas where you can improve efficiency.
Operational efficiency: By reviewing your income statement, you can identify how efficiently your business operates.
Profitability: It shows your ability to generate profit by increasing revenue or reducing costs.
Practical tip:
Keep an eye on revenue and expense trends. If operating expenses are consistently rising, it may be time to reevaluate your cost management strategies.
3. Cash flow statement
The cash flow statement details how cash enters and leaves your business. It is divided into three sections—operating, investing, and financing activities—showing how well your company manages its money.
Due to the industry's cyclical nature, managing cash flow is especially critical for construction contractors. Your cash flow statement helps you monitor the timing of your receivables and payables, ensuring sufficient liquidity to cover ongoing expenses and take on new projects.
Liquidity: It helps you understand your company's ability to meet short-term obligations.
Expense management: By tracking cash flows, you can make more informed decisions about spending and saving.
Practical tip:
Pay close attention to operations cash flow. If you consistently see negative cash flow, it's a sign that you need to improve your operational efficiency or adjust pricing strategies.
4. Statement of changes in equity
This lesser-known but important report details the changes in the equity section of your balance sheet over a specific period. It includes contributions from shareholders and retained earnings.
Why it matters
Investment decisions: Helps investors understand how their investments are performing.
Retention strategy: Shows how profits are being reinvested into the business.
Practical tip:
Use this statement to communicate with potential investors. Highlight how you reinvest profits to fuel growth, showcasing your commitment to long-term success.
5. Financial ratios
Financial ratios are derived from your financial statements and provide deeper insights into your company's performance. Key ratios include profitability, liquidity, efficiency, and solvency ratios.
Quick insights: Ratios offer a quick snapshot of your business health.
Benchmarking: Compare your ratios with industry standards to see how your business stacks up.
Practical tip:
Calculate the current ratio (current assets divided by current liabilities) to assess your short-term financial health. A ratio above 1 indicates good liquidity.
6. Notes to the financial statements
These notes provide additional context, explaining the methods used in preparing the financial statements and offering detailed breakdowns of certain items.
Transparency: Enhances the transparency of your financial reporting.
Clarity: Helps stakeholders understand the numbers better, leading to more informed decisions.
Practical tip:
Ensure the notes are detailed and precise. Transparency builds trust with investors and other stakeholders, making them more likely to support your business.
Why Financial Statements Matter
Understanding how to read financial statements as a construction contractor can provide several key advantages:
Firstly, it allows you to assess the economic health of your construction business. Understanding your company's financial position enables you to make informed decisions about investments, expansion, and resource allocation.
Secondly, financial statements provide valuable insights for stakeholders, such as investors, lenders, and sureties. Maintaining accurate and transparent financial statements can enhance credibility and facilitate access to capital for future projects and growth opportunities.
Lastly, understanding your financial statements can help you identify areas for improvement and implement strategies to enhance profitability and operational efficiency. Whether reducing costs, optimizing cash flow, or diversifying your service offerings, your financial statements guide strategic planning and performance evaluation.
Remember that it can also aid in compliance and tax planning. Being aware of your financial position can help ensure that you are meeting regulatory requirements and assist you in making tax-efficient decisions.
In Conclusion
Reading and understanding financial statements is a valuable skill for construction contractors. It provides a clear picture of your business's economic standing and enables informed decision-making.
Each report offers valuable information, whether evaluating your net worth through the balance sheet, assessing profitability via the income statement, or managing liquidity with the cash flow statement.
Ready to take control of your financial health? If you need advice or assistance, contact our team. We're here to help.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 587, And It's About Fortifying Financials And The Importance Of Solid Security Measures Handling multiple projects simultaneously is a common challenge for small construction companies. While it can signify growth and success, it comes with its fair share of struggles. From resource allocation to maintaining quality and meeting deadlines, juggling several projects can be overwhelming. However, with the right strategies, it's possible to navigate these challenges successfully. Staying organized is crucial. With numerous tasks, deadlines, and client expectations, implementing efficient organizational strategies is critical to success. Create a centralized system for storing project-related information such as contracts, plans, permits, and client communication. Utilize project management software or cloud-based storage solutions to ensure easy access and seamless collaboration with your team.
Here are more detailed tips for staying organized when managing multiple projects:
1. Prioritize and Plan
It is crucial to prioritize projects based on their deadlines, importance, and resource requirements. Creating a detailed project plan for each undertaking, including task schedules, resource allocation, and deadlines, can help maintain clarity and focus.
Before starting any project, develop detailed plans outlining the scope of work, timelines, and budget. Clearly define project milestones, tasks, and responsibilities to keep everyone aligned and on track.
2. Efficient Resource Management
Resource allocation, including labor, materials, and equipment, is essential. Understanding each project's specific needs and ensuring that resources are distributed effectively can prevent bottlenecks and delays.
Implement a project management tool to track tasks, deadlines, and progress across multiple projects. Tools like Trello or as simple as a whiteboard can help you stay organized and ensure that nothing falls through the cracks.
Avoid overcommitting and assess resource availability before taking on new projects to ensure you can deliver on time and within budget.
3. Streamline Processes
Prioritize tasks based on project deadlines, client demands, and resource availability. Develop a comprehensive schedule that allocates time for each project, considering factors such as material procurement, subcontractor availability, and potential delays.
Standardizing processes and using technology to streamline project management tasks can increase efficiency. Again, project management software and tools can help track progress, manage documents, and coordinate teams across different sites.
4. Communicate Effectively
Maintain open communication with clients, subcontractors, and your internal team. Regular updates and progress reports can help everyone stay informed and aligned, reducing the risk of misunderstandings or miscommunication.
Effective communication is paramount when managing multiple projects. Regular updates, team meetings, and clear communication channels ensure everyone is aligned and aware of their responsibilities across different projects.
5. Review and Adapt
Review your organizational processes regularly and adapt based on project feedback and lessons learned. Continuous improvement is essential for refining your approach and maximizing efficiency.
Being agile and adaptable to changes is essential when managing several projects concurrently. Anticipating potential issues and having contingency plans can help you navigate unforeseen obstacles without significant disruptions.
Maintaining consistent quality across all projects is non-negotiable. Implementing robust quality control processes and regular site inspections can help uphold the company's reputation and ensure client satisfaction.
By implementing these organizational strategies, you can effectively manage and deliver multiple construction projects while maintaining high quality and client satisfaction standards.
But remember yourself and your crew. Managing multiple projects can strain the workforce. Prioritizing employee well-being, managing workloads, and providing adequate support can prevent burnout and maintain productivity.
What about the paperwork?
Contractors call us to ask about managing bookkeeping and accounting for multiple projects. Though it may seem overwhelming, it can be straightforward with the right approach:
Here are some valuable tips to help contractors effectively handle the financial aspects of their projects.
1. Utilize Project-Based Accounting Software
Investing in project-based accounting software can significantly simplify managing multiple projects. These tools allow contractors to track expenses, income, and project-specific details in one centralized system, providing a comprehensive overview of each project's financial status.
2. Establish Clear Project Budgets
By outlining each project's expected costs and revenue, contractors can better control their finances and make informed decisions throughout the project lifecycle.
3. Track Expenses Accurately
It's essential to meticulously track all project-related expenses, including material costs, labor expenses, equipment rentals, and subcontractor fees. By maintaining accurate records of expenditures, contractors can monitor project profitability and identify areas for cost optimization.
4. Separate Business and Project Finances
Contractors should maintain separate bank accounts and financial records for each project to avoid commingling funds. This separation simplifies financial reporting, ensures transparency, and minimizes the risk of errors or discrepancies in accounting records.
5. Implement Time Tracking Systems
Tracking billable hours and labor costs for each project is crucial for accurate invoicing and financial analysis. Implementing time-tracking systems allows contractors to monitor labor expenses, allocate costs to specific projects, and assess the profitability of each endeavor.
6. Regularly Reconcile Accounts
Regularly reconciling bank and credit card accounts is essential for identifying discrepancies, detecting errors, and maintaining financial accuracy. Timely reconciliation provides contractors with a clear understanding of their cash flow and helps prevent financial mismanagement.
7. Seek Professional Guidance
Contractors should consider consulting with a professional accountant or financial advisor for complex accounting tasks and tax implications associated with multiple projects. Expert guidance can ensure compliance with tax regulations, optimize financial processes, and provide valuable insights for business growth.
Unfortunately, many small construction business owners seek to keep costs low by doing everything themselves, unwittingly sabotaging their company's financial stability. If numbers aren't your strength and you would instead focus on building your business, it's time to hire a bookkeeper.
Ensure you choose a bookkeeper with experience in your industry. The nuances of bookkeeping vary from one corner of the market to another. When assessing candidates, it's essential to consider the total number of years of experience and the relevance of that experience.
We can provide you with expertise, guidance, and savings.We are experts at managing, sorting, and recording your construction business's financial transactions, whether you're working on a single project at a time or multiple job sites. We've spent time developing our skills and experience. During this time, we've also seen and resolved bookkeeping-related issues that you may encounter. Our expertise makes us efficient at managing those issues.
We can assist you with budgeting and sticking to your budget, help you develop a realistic financial plan that enables your business to grow while achieving short-term and long-term goals and save you from costly mistakes that could affect your finances.
In summary
While managing multiple construction projects presents challenges, adopting a strategic and organized approach can turn these challenges into opportunities for growth and success. Small construction companies can overcome the struggles of handling multiple projects concurrently by prioritizing planning, effective communication, efficient resource management, and a strong focus on quality.
A well-organized financial approach facilitates project success and lays the groundwork for sustainable business growth. Bookkeeping is essential to running a successful business, whether you do it yourself or hire someone. Contact us today to learn more about how we can help you.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 586, And It's About Fortifying Financials And The Importance Of Solid Security Measures The recent cyber outage is a stark reminder of digital systems' vulnerability and potential impact on businesses, including those in the construction industry. This incident offers several critical lessons for construction bookkeeping. As a contractor, your accounting and bookkeeping systems are vulnerable not only to cyber threats but also to software outages, which can compromise sensitive financial data and disrupt business operations. In this blog post, we'll explore the implications of the recent cyber outage for construction accounting and bookkeeping and provide actionable tips to strengthen your defenses.
Implications for Construction Accounting and Bookkeeping:
Data Breach Risks: Cyber attacks can lead to unauthorized access to financial data, including client information and project records. System Downtime: Cyber outages can cause accounting and bookkeeping systems to go offline, halting critical financial operations. Financial Losses: Cyber attacks can result in direct financial losses, damage to your reputation, and legal liabilities.Lessons Learned and Better Practices:
1. Data security is paramount
The cyber outage underscores the critical importance of robust data security measures. Construction companies must prioritize the security of their financial data, including sensitive client information, to prevent unauthorized access and mitigate the risk of data breaches.
2. Backup and recovery plans
Construction firms should review and enhance their data backup and recovery plans. Regular, automated backups of financial records and bookkeeping data can help ensure that critical information is not lost during a cyber incident.
3. Vigilance in Vendor Management
Construction companies rely on external vendors and software providers for bookkeeping tools and platforms. To minimize the risk of potential disruptions due to cyber incidents, construction firms must assess their vendors' security protocols and resilience.
4. Employee training and awareness
Educating employees about cybersecurity best practices and potential threats is imperative. Construction businesses should invest in training programs to enhance employee awareness and establish protocols for identifying and responding to potential cyber threats.
5. Contingency planning
Comprehensive contingency plans for potential cyber outages are essential. Construction companies should establish clear protocols for maintaining critical financial operations during a disruption, ensuring minimal impact on day-to-day business activities.
A quick recap of actionable steps:
Implement robust cybersecurity measures, including firewalls, antivirus software, and intrusion detection systems. Conduct regular software updates and backups to ensure business continuity. Train staff on cybersecurity awareness and best practices. Use secure communication channels for sensitive financial data. Consider outsourcing accounting and bookkeeping to reputable, cyber-secure providers.FEA Cybersecurity
As an accounting firm, our client's privacy and security remain our top priorities. We continually look at ways to develop and evaluate our system to prevent breaches and network holes. We utilize Secure Socket Layer encryption, which ensures that all data passed between the web server and browsers remains private and integral. There are two levels of restrictions, and a password must be entered before you can access your data file.
At Fast Easy Accounting, Cloud Security is not an option—it is a fundamental requirement. We only use Intuit-approved commercial Hosting Services. We have taken steps to select the best to ensure that your data is as secure as that found for online banking and financial institutions. Their Cloud Security rests on U.S.-based servers, backups, data centers, and technical support. Not one aspect of our Cloud security relies on outsourced services or offshore locations.
Don't assume your construction business is safe from hackers because you run a small business or don't collect payment information. There is a lot of private information available that hackers and thieves can use to make money, and companies large and small are targets. Be aware of vulnerabilities in your system and take steps to address them before it's too late.
Online data protection is critical in providing contractors with reliable and professional-grade bookkeeping services. The cost of proper bookkeeping combined with secured cyber information is priceless. Clean, up-to-date bookkeeping records, accurate financial reports, and protected data make up for a good night's sleep. After all, security comes from setting up Structures and Systems in place so your construction company will run smoothly.
Conclusion:
The recent cyber outage serves as a wake-up call for construction contractors to prioritize cybersecurity in their accounting and bookkeeping practices. By implementing robust defenses and best practices, you can protect your business from cyber threats and ensure the integrity of your financial operations.
Stay vigilant and build a more solid security for your construction business. By addressing these key lessons, construction companies can better safeguard their financial data and minimize the impact of potential cyber incidents on their operations.
As a reminder:
Speaking of technology, have you made the switch yet?
QuickBooks plans to stop selling several versions to new U.S. subscribers. The deadline to purchase new subscriptions to the listed products has been extended from July 31, 2024, to Sept. 30, 2024.
QuickBooks Desktop Pro Plus QuickBooks Desktop Premier Plus QuickBooks Desktop Mac Plus QuickBooks Desktop Enhanced PayrollWe do our best to inform you of your options based on your construction company's needs and ensure you are alerted to fundamental software changes that may affect your construction business now or in the future. Although extended, we recommend checking and upgrading immediately to avoid service disruptions and workflow interruptions. Please plan accordingly or reach out if you need help.
We are here to help you achieve your definition of success, whether you would like to outsource your bookkeeping to us, buy and use our templates, or learn to do it independently.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 584, And It's About Discovering The Importance Of A Solid Business Plan For Your Contracting Company Starting a construction business without a plan is like setting sail without a compass. While you might eventually reach your destination, the journey will likely be longer and more challenging. A well-constructed business plan is essential for guiding your business toward success. Here's why It Clarifies Your Vision A business plan helps you articulate the vision for your enterprise. It forces you to think through every aspect of your business, including what you want to achieve and how you plan to get there. This clarity is crucial for communicating your vision to potential investors, partners, and employees. It Defines Your Goals And Objectives One of the primary purposes of a business plan is to set clear, measurable goals. Whether you aim to acquire a certain number of clients, reach a specific revenue target, or open new locations, having defined goals ensures you know exactly what success looks like for your business. It Helps You Understand The Market A solid business plan includes thorough market research. Understanding your target market, competitors, and industry trends is vital for positioning your construction business effectively. This research helps you identify opportunities and threats, allowing you to make informed decisions. It Guides Your Strategy With your goals in place, a business plan outlines the strategies you will use to achieve them. This includes marketing plans, sales tactics, operational procedures, and financial strategy. Having these strategies documented ensures that everyone involved knows the steps needed to move forward. It Allocates Resources Effectively A well-thought-out business plan helps you determine how to allocate your resources—time, money, and personnel—most efficiently. By identifying priorities, you can ensure that your resources are focused on activities that drive your business toward its goals. It Monitors Progress And Facilitates Adjustments A business plan is not a static document; it should evolve as your business grows. Regularly reviewing your plan allows you to track progress against your goals and make necessary adjustments. This ongoing analysis helps you stay adaptable and responsive to market or business environment changes. It Attracts Investors And Secures Funding If you need external funding, a business plan is indispensable. Investors and lenders want to see that you have a clear vision, defined goals, and a feasible strategy for achieving them. A comprehensive business plan demonstrates your commitment and capability, making securing the financial resources you need easier. It Reduces Risks A business plan helps mitigate risks by forcing you to think through potential challenges and develop contingency plans. This proactive approach lets you anticipate obstacles and devise solutions before they become critical. Creating a small business plan as a construction contractor, whether you have employees or a one-person company, is crucial for charting a path to success. A well-thought-out plan helps you set goals, identify your target market, and establish the direction for your business. Here's a guide on creating one: 1. Let's Get Started with an Executive Summary: Kick off your plan with a quick peek into your company, its mission, and the services you offer. Share a brief overview of your target market and a summary of your financial projections. 2. Company Description - Tell Your Story: In this section, share a detailed and friendly description of your small construction business. Share your company's story, the nature of your construction services, and what makes your business unique. Also, describe your target market and discuss the specific construction needs you aim to fulfill. 3. Market Analysis - Understanding Your Playground: Determine the construction industry in your target area. Here, you can identify market trends, assess the demand for construction services, and analyze your competitors. Understanding the market dynamics will help you position your business effectively and identify growth opportunities. 4. Organization and Management - Who's Who in Your Team: In this section, outline the friendly organizational structure of your small construction business. Define key team members' roles and responsibilities and discuss your expertise and experience in the construction industry. On your own? Highlight any strategic partnerships or key contractors you plan to collaborate with or professionals you outsourced to help with administrative work and financials. 5. Services and Products - Showcasing Your Specialties: Let's detail the range of construction services and products your business offers in a friendly tone. Give importance to any unique or specialized services that set your business apart. It's essential to show your services' value to clients and how they address specific construction needs. 6. Marketing and Sales Strategy - Spreading the Word: Develop a friendly marketing and sales strategy to reach potential clients and promote your construction services. Identify your target audience, outline promotional tactics, and define your pricing strategy. Additionally, describe the sales channels and distribution methods you will use to reach your clients. 7. Financial Projections - Let's Predict the Future: Include detailed financial projections for your small construction business. This should encompass your income statement, cash flow projections, and balance sheet. Outline your funding requirements and how you plan to finance your business. 8. Risk Analysis - Preparing for the Unexpected: Evaluate potential risks and challenges your small construction business may face. Identify strategies to overcome these risks and show your readiness to tackle the obstacles in the construction industry. 9. Implementation Plan - Let's Get It Done: Set measurable milestones and key performance indicators to track your progress. Additionally, detail your operational plan, including necessary resources, equipment, and technology. 10. Appendices - Supporting Cast: Include any additional information, such as resumes of key team members, legal documents, or supporting research that strengthens your business plan. In summary A business plan is a crucial tool for any entrepreneur. It provides a clear vision, sets measurable goals, guides strategy, allocates resources, monitors progress, attracts funding, and reduces risks. By carefully considering each aspect of your business and creating a clear roadmap for success, you can position your construction company for long-term growth and success. Remember that a well-crafted business plan not only serves as a guide for your business but it communicates your vision and professionalism to potential clients and stakeholders. We are here to assist you in creating a plan that sets your business up for profit and growth. Contact us today to learn how we can support your contracting journey.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 583, And It's About Building On Solid Ground: Your Construction Bookkeeping Foundation As a construction business owner, you must stay informed about your finances and financial situation. You do this through bookkeeping, the process of recording transactions in your business. This includes transactions, credit card charges, and any other economic activity within your company. Financial management can easily be overlooked when managing projects, dealing with subcontractors, and ensuring customer satisfaction. However, neglecting proper bookkeeping can significantly impact the growth and success of your construction business.
When your construction bookkeeping is set up right
It gives you insights into your income and expenses, such as:
How much money you've made How much money needs to be paid for bills or salaries How much money should be put away for taxes or other unexpected costsBookkeeping also helps keep track of all your business transactions. A good system will serve as an audit trail showing every transaction that has taken place within your company. This includes purchases from suppliers, sales made to customers, and bills paid out by suppliers or employees (like salaries).
This information will quickly become apparent if there are any irregularities, such as missing items on purchase orders. You get transparency into your business, a way to ensure you remain compliant with laws, and valuable insights to help you make smarter decisions.
While factors such as market trends, technological advancements, and customer demands undoubtedly play a significant role in shaping your business, financial insights are an often underestimated aspect that can substantially impact growth. Understanding the intricacies of your company's financial data and leveraging this insight effectively can be a powerful tool for driving growth in your construction business.
When to hire a construction bookkeeper
There are many scenarios where hiring a bookkeeper makes sense. These depend on your construction business setup and your abilities.
You should consider hiring a bookkeeper if you have
More than one employee Multiple business locations A complex business structure - yes, like a contracting business Concerns about making errors in your books that could lead to fines or penalties Too much work to do, and bookkeeping constantly gets pushed to the side A lack of experience with bookkeeping and still determining how to go about it, so you avoid it.What a Construction Bookkeeper can provide for you
1. Expertise
Construction bookkeepers are experts at managing, sorting, and recording your business's financial transactions. They've spent time developing their skills and experience. During that time, they've also seen and resolved bookkeeping-related issues that you may come up against. Their expertise makes them more efficient at managing those issues.
Beyond that, they understand business trends and challenges others in your industry face and can help you move through those. They also know what questions to ask to help you make important decisions and can share best practices with you.
2. Guidance
Your bookkeeper not only helps you maintain accurate records but also understands your financial circumstances. They help you assess how to make critical business decisions, such as whether now is an excellent time to grow or when you should hold back. They can also identify trends in your industry and help you take advantage of those opportunities.
Finally, they can assist you with budgeting and sticking to your budget. They'll help you develop a realistic financial plan that enables your business to grow while achieving short- and long-term goals.
3. Time savings
As a business owner, you likely have many activities to focus on. In bookkeeping alone, there are numerous tasks to be responsible for, such as:
Collecting and recording transaction data Sorting receipts Classifying expenses Invoicing customers Paying vendors Managing payrollBookkeepers take on those tasks, so you don't have to. It's not just about the energy you put into them; it's about the fact that unless you're a construction bookkeeping expert, it'll likely take you longer to complete these activities than a bookkeeper. That can add up to a lot of extra hours.
Hiring a Construction Bookkeeper frees up valuable time for other activities such as marketing, perfecting your products and services, or spending time with family.
4. Money savings
There's a time cost to doing your books, but there's also a potential money cost in the form of missed opportunities. The time you spend doing your books is time you could be out creating or taking advantage of new opportunities for your business. Your bookkeeper frees you up, giving you the time and energy to identify potential opportunities. They can also advise whether you're in an excellent financial position to jump on those possibilities.
Additionally, the expertise bookkeepers bring to their activities means they're likely to prevent costly mistakes that could affect your finances.
Final thoughts
Prioritizing better bookkeeping practices is fundamental to driving growth and sustainability in your construction business. By proactively managing your company's finances, you can gain a competitive edge, mitigate risks, and position your business for long-term success in the dynamic construction industry.
Remember, the success of your construction business depends not only on the quality of your work but also on the strength of your financial foundation. Embracing better bookkeeping practices can pave the way for sustained growth and profitability in your construction enterprise.
As a reminder:
QuickBooks plans to stop selling several versions to new U.S. subscribers. The deadline to purchase new subscriptions to the listed products has been extended from July 31, 2024, to Sept. 30, 2024.
QuickBooks Desktop Pro Plus QuickBooks Desktop Premier Plus QuickBooks Desktop Mac Plus QuickBooks Desktop Enhanced PayrollWe do our best to inform you of your options based on your construction company's needs and ensure you are alerted to fundamental software changes that may affect your construction business now or in the future. Although extended, we recommend checking and upgrading immediately to avoid service disruptions and workflow interruptions. Please plan accordingly or reach out if you need help.
We are here to help you achieve your definition of success, whether you would like to outsource your bookkeeping to us, buy and use our templates, or learn to do it independently.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 582, And It's About Dealing With Toxic Construction Employees In The Job Site Running a small construction business comes with unique challenges, and dealing with toxic employees is undoubtedly one of the trickiest. A single troublesome team member can disrupt productivity, affect team morale, and ultimately harm your business's success. These individuals can create a hostile work environment, lower morale, and reduce productivity. For the construction industry, where teamwork and safety are paramount, addressing and managing toxic employees is crucial. Knowing how to handle such situations effectively can turn things around. Let's look at the types of toxic actions, how to address them, and provide practical steps to manage these challenging situations. Read on to transform your workplace or job site into a harmonious and productive environment. To effectively deal with toxic employees, it's essential first to identify poisonous behavior. This can include constant negativity, gossiping, bullying, or undermining colleagues. In the construction industry, toxic behavior can manifest as disregarding safety protocols, cutting corners, or fostering a culture of non-compliance. Understanding troublesome conduct Intentional vs. unintentional Before you can tackle the issue, it's essential to understand whether the problematic actions are intentional or a result of the other problems. Intentional bad conduct often stems from personal grievances or a desire to undermine authority. On the other hand, unintentional actions might be due to personal struggles, misunderstandings, or lack of awareness. Understanding the root cause is crucial because it determines your response strategy. For example, intentional troublemaking might require firmer actions than unintentional issues, which might be resolved with support and guidance. Early recognition Early recognition of problematic conduct can prevent it from escalating. Look for signs such as frequent conflicts with colleagues, consistent underperformance, or a noticeable dip in team morale. Address these issues promptly to avoid long-term repercussions. Impact on team dynamics Toxic conduct doesn't just affect the individual involved; it can spread like wildfire, impacting the broader team. It can lead to increased stress, reduced collaboration, and higher turnover rates. Understanding the wider impact highlights the importance of addressing the issue head-on. Tackling the problem head-on Direct approach Avoiding the problem is never a good strategy. Instead, address the issue directly with the troublesome team member. Start by scheduling a private meeting to discuss specific concerns. Be clear about the actions that need to change and provide concrete examples. Clear communication Addressing toxic behavior often starts with open communication. Construction managers and supervisors must create a work culture where employees feel safe to voice their concerns. Encouraging open communication can help identify toxic behavior early on and prevent it from escalating. Open dialogue Engage in an open dialogue where the employee can share their perspective. Understanding their viewpoint can offer insights into potential solutions. Ensure the conversation remains respectful and focused on finding a resolution. Consistent follow-through Consistency is key when managing toxic workplace conduct. After the initial discussion, follow up regularly to monitor progress. This shows the employee that you're serious about making positive changes and are there to support them through the process. Detailing specific actions Communicate the issues clearly by detailing specific actions that are problematic. Vague feedback can lead to misunderstandings and may result in something other than the desired changes. Be precise about what needs to improve and why. Impact on the team and business as a whole Explain the impact of their conduct on the team and the business as a whole. Sometimes, employees are unaware of how their actions affect others. Highlighting the broader consequences can motivate them to change. Setting expectations Set clear expectations for conduct moving forward. This includes outlining the company's values, code of conduct, and expectations for teamwork and collaboration. By clearly defining unacceptable behavior, employees are less likely to engage in toxic conduct. Outline the standards you expect and the timeline for improvement. This gives the employee a clear roadmap to follow. Providing support Sometimes, toxic behavior can stem from underlying issues such as stress, burnout, or lack of training. Providing support for employees who may be struggling and offering training programs to develop their interpersonal and communication skills can help in addressing toxic behavior. Resources and training Ensure that the employee has the necessary resources and support to improve. This could include training sessions, mentoring programs, or adjustments to their workload. Providing these tools shows your commitment to their development. Mentoring and coaching Pair the employee with a mentor or coach who can offer guidance and support. This relationship can provide valuable insights and help employees develop new skills and attitudes. Adjusting workload Sometimes, problematic conduct stems from being overwhelmed. Assess the employee's workload and make necessary adjustments to ensure they can perform at their best without undue stress. Documenting everything Keeping detailed records Maintain detailed records of all interactions and steps taken to address the issue. Documentation is crucial if further action is needed and provides a clear history of your efforts to resolve the situation. Importance of transparency Be transparent with the employee about the documentation process. This will help build trust and ensure they understand the seriousness of the situation. Preparing for future actions Detailed records can be invaluable if the conduct doesn't improve and more serious actions are required. They provide a clear trail of your efforts and the employee's responses. Being prepared for tough decisions when enough is enough! Despite your best efforts, some employees may not improve. Acknowledging when enough is enough to protect your team's well-being and your business's success is essential. Making difficult choices When toxic behavior persists despite efforts to address it, decisive action may be necessary. This can include implementing disciplinary measures, reassigning responsibilities, or, in severe cases, terminating employment. Handling these situations with professionalism, empathy, and adherence to company policies and labor laws is essential. Be prepared to make difficult decisions; while potential termination is never an easy choice, sometimes it's necessary for the greater good of the business. Protecting team well-being Your primary responsibility is to ensure a healthy and productive work environment for all employees. Protecting the team's well-being should always be a top priority. In summary Dealing with toxic employees is a challenging but essential aspect of managing a small business. You can transform your workplace into a harmonious and productive environment by understanding the types of troublesome conduct, tackling issues head-on, communicating clearly, providing support, documenting everything, and being prepared for tough decisions. Remember, the key to success lies in consistent follow-through and a commitment to fostering a positive workplace culture. Recognizing and rewarding positive contributions, fostering a sense of teamwork and camaraderie, and leading by example can all contribute to creating a healthy work environment where toxic behavior is less likely to thrive. If you need more advice or support, reach out—we're here to advocate for you. Whether you need help with construction bookkeeping or want a listening ear, I am just a phone call or email away.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 581, And It's About The Importance Of Having A Contingency Plan For Construction Contractors In the construction industry, unexpected challenges can arise at any moment. Numerous factors, from material delays to unforeseen weather conditions, can disrupt project timelines and budgets. From terrorism to fire, from extreme weather or earthquakes to cyber-attacks – how would your business cope if it was affected? Would your staff know what to do? Would you be able to keep working? That's why a contingency plan is crucial for construction contractors. It is not just a precaution but a necessity. Small construction businesses need to be prepared for a range of scenarios. Your company could avoid significant setbacks or closure with a solid contingency plan.
Why contingency planning is crucial
Contingency planning involves foreseeing potential risks and developing a strategic approach to mitigate their impact. For small business owners, this means safeguarding their assets, ensuring business continuity, and protecting their staff and customers.
A well-thought-out plan can differentiate between a temporary disruption and a permanent shutdown. It helps contractors mitigate risks and minimize the impact of unexpected events on their projects.
Here are a few reasons why having a contingency plan is essential for construction contractors:
1. Risk Management: A contingency plan enables contractors to identify potential risks and develop strategies to address them. By proactively planning for various scenarios, contractors can better protect their projects from cost overruns and delays.
2. Budget Protection: Unforeseen events can quickly eat into a project's budget. A contingency plan allows contractors to set aside funds specifically for addressing unexpected expenses, ensuring that the project stays on track financially.
3. Schedule Flexibility: Delays are not uncommon in the construction industry. A contingency plan allows contractors to adapt to unexpected schedule changes without derailing the project timeline.
4. Client Confidence: Clients appreciate contractors prepared for the unexpected. Demonstrating that you have a contingency plan can instill confidence in your clients and reassure them that you can manage unforeseen challenges.
5. Competitive Advantage: Navigating unexpected obstacles efficiently sets contractors apart in a competitive industry. A well-executed contingency plan can demonstrate a contractor's professionalism and commitment to delivering results, giving them a competitive edge in the market.
Emerging issues and regulation changes
Ever-evolving regulations demand greater transparency and accountability from small businesses. This is particularly relevant in preventing and addressing financial fraud, which remains a substantial risk. The increased scrutiny from regulatory bodies means companies must have robust monitoring systems and response strategies. Failure to comply not only puts your financial standing in jeopardy but also your business's reputation.
Practical steps to develop your contingency plan
Risk assessment: Identify all potential risks that could impact your business. This includes everything from natural disasters and cyber-attacks to key personnel suddenly becoming unavailable. Rank these risks based on their likelihood and potential impact.
Document everything: Put together an operational guide for your business, outlining everything you would need to know to keep it running, such as who your suppliers are, how and when they are paid, and everything else that happens on a daily/weekly/monthly basis. As part of the same process, outline the roles and responsibilities of every senior staff member and scope out the daily and weekly tasks so a replacement could easily assume those responsibilities.
Communication plan: Develop a communication plan to keep employees informed during and after a crisis. Consider using multiple channels such as email, phone calls, and social media to reach out to employees and customers.
Develop response strategies: For each identified risk, develop a response strategy. This could involve establishing a crisis management team, setting up temporary operational sites, or creating data backup protocols. Ensure these strategies are detailed and cover all critical aspects of your business operations.
Regular review and testing: A contingency plan is only effective if it's current and functional. Review and update your plan regularly, especially after significant changes in your business environment. Conduct drills and simulations to test your team's readiness and the effectiveness of your response strategies. Your contingency plan should be a living document that evolves with your business.
Construction Client's Story (edited for brevity):
On Sunday, July 27, 2008, around 6:30 p.m., my girlfriend and I had just returned from an overnight hiking trip.
When we arrived home, we discovered that we had been robbed. We immediately called 911.
As we walked through the house, we discovered that our computer and many other valuables were gone. The computer had all the company business on it.
QuickBooks, invoices, all the subcontractors' info, and everything to keep the company books. We were at a loss for what to do. But as luck would have it, we had Randal DeHart as our accountant. He had all our info on a backup system somewhere on a huge server.
So we called Randal to let him know that we would get a new computer as soon as the insurance company paid us.
Randal called us the next day, July 28, 2008, and told us to come to his office. To our surprise, he had gone to Office Depot, purchased a new computer, loaded it with QuickBooks, and restored all our business information.
We are so appreciative that Randal had our backs. We had told him that we would pay him for the computer as soon as possible, but you know what he said,
No thanks are necessary; if we just pay forward, that's all he asked."
How's that for a Good Accountant?
Also, as a reminder that could be helpful in your planning:
QuickBooks plans to stop selling several versions to new U.S. subscribers. The deadline to purchase new subscriptions to the listed products has been extended from July 31, 2024, to Sept. 30, 2024.
QuickBooks Desktop Pro Plus QuickBooks Desktop Premier Plus QuickBooks Desktop Mac Plus QuickBooks Desktop Enhanced PayrollWe do our best to inform you of your options based on your construction company's needs and ensure you are alerted to fundamental software changes that may affect your construction business now or in the future. Although extended, we recommend checking and upgrading immediately to avoid service disruptions and workflow interruptions. Please plan accordingly or reach out if you need help.
Final thoughts
As a business owner, a lot of critical information exists only in your head. As the founder, you always know what's happening and how to do things, but what would happen if you weren't there?
Developing a contingency plan is not just good practice; it's a critical component of your business strategy. By taking proactive steps today, you can secure the future of your small business.
Plus, having a plan gives you peace of mind that everything could continue in your absence or without crucial team members. It also makes for a better-run and more organized business. Forcing yourself to have everything documented centrally builds a greater awareness of roles and responsibilities across the organization while making holidays less challenging!
We could be a part of your contingency plan; let me know how I could help with yours.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 580, And It's About Improving Construction Communication And Workplace Productivity The success of any business, large or small, depends largely on nurturing an efficient, productive workplace. While improving employee productivity should always be a priority when the ultimate goal is a sustainable and profitable business, the process is more straightforward said than done. In today's fast-paced construction industry, staying in touch and being productive is crucial for project success. The good news is that technology has made it easier to streamline processes and enhance team collaboration. One of the most impactful ways technology has improved construction communication is through user-friendly mobile applications and project management software. These tools allow for real-time communication, easy document sharing, and smooth task management, reducing the delays and errors often associated with traditional communication methods.
Moreover, Building Information Modeling (BIM) technology has transformed how construction teams work together. BIM fosters better communication and collaboration by providing a centralized platform for sharing 3D models and project data, ultimately leading to more efficient decision-making and problem-solving.
Another astounding technological advancement that has significantly boosted workplace productivity is the integration of wearables and IoT (Internet of Things) devices. These innovations enable real-time tracking of equipment, materials, and the workforce, leading to optimized resource allocation and enhanced safety measures on-site.
Would you like to implement better practices while staying on budget? These are some of the most effective methods of managing a productive, happy workplace while increasing output:
Embrace Technology
While many construction workplaces still see new technology, as mentioned above, as unnecessary or even distracting, the simple truth is that it can significantly impact productivity. Updated hardware, software, and machinery ensure that work can be performed quickly and with minimal error. While it may not seem like a big deal, even minor issues, such as temporary connectivity problems or hardware breakdowns, can quickly add up throughout a fiscal year.
Start small, like incorporating better project management software and bookkeeping processes. If this overwhelms you, let me know how I can help.
Avoid Excessive Micromanagement
There is no denying that management is crucial, but too much of a good thing can adversely affect productivity. Instead of encouraging employees to put forth their best efforts, it results in an eventual dependence on micromanagement that can sink productivity levels.
Excessive micromanagement can be detrimental to productivity and morale in a construction workplace. To avoid this, it's essential to focus on
Hiring and training competent employees so you can have confidence in their ability to perform their tasks without constant oversight. Clearly defining the project objectives and individual responsibilities can help employees understand what is expected of them, reducing the need for micromanagement. Encouraging open dialogue and feedback can help employees feel empowered and trusted, reducing the need for constant supervision. Delegating decision-making authority and autonomy in their areas of expertise, reducing the need for constant oversight. Implementing project management tools and software can provide real-time visibility into task and project progress, reducing the need for constant check-ins. Providing constructive feedback and support, allowing employees to learn and grow.Recognize Success
Just as employees must be held accountable for their actions, they should also be recognized for their success. Even small efforts, such as verbal recognition or occasional awards, can encourage employees and make them feel like their hard work is being rewarded. For businesses that can afford it, more significant rewards, such as holiday parties, improve morale and create camaraderie in the office, leading to happier, more productive employees.
Break Out of Ruts
While assigning tasks based on an employee's particular competencies is generally advisable, remember that doing the same tasks repeatedly over an extended period can make even a skilled employee feel as if their work has become monotonous. Exposing employees to other tasks and even different departments may be helpful. This renews motivation, offers new skills to learn and apply, and gives employees a broader understanding of the company's operations.
Cut Down on Meetings
Often, meetings serve as nothing more than temporary breaks from productive work. A meeting needs a specific purpose, an organized agenda, and a plan of action to maintain productivity. Meetings can be a great way to share ideas and establish goals, but keep them from getting in the way of delivering actual results.
In conclusion
Technology has vastly improved construction communication and workplace productivity. By leveraging user-friendly mobile applications and software, construction teams can communicate seamlessly, collaborate effectively, and ultimately achieve higher levels of productivity and efficiency.
Balancing a construction business's needs is never easy, but focusing on increased productivity can positively impact nearly every other facet of the workplace. The above-mentioned techniques eliminate unnecessary pitfalls and ensure employees are personally invested in efficient, quality work output.
As a reminder:
Speaking of technology, have you made the switch yet?
QuickBooks plans to stop selling several versions to new U.S. subscribers. The deadline to purchase new subscriptions to the listed products has been extended from July 31, 2024, to Sept. 30, 2024.
QuickBooks Desktop Pro Plus QuickBooks Desktop Premier Plus QuickBooks Desktop Mac Plus QuickBooks Desktop Enhanced PayrollWe do our best to inform you of your options based on your construction company's needs and ensure you are alerted to fundamental software changes that may affect your construction business now or in the future. Although extended, we recommend checking and upgrading immediately to avoid service disruptions and workflow interruptions. Please plan accordingly or reach out if you need help.
We are here to help you achieve your definition of success, whether you would like to outsource your bookkeeping to us, buy and use our templates, or learn to do it independently.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 579, And It's About How To Build Construction Business Systems That Deliver Results In the competitive construction industry, implementing efficient business systems can make a significant impact on the overall success and profitability of a construction business, regardless of its size or specialization. From streamlining operations to improving project management, adopting efficient systems can yield tangible benefits that truly pay off in the long run. Too many businesses fail because the owner needs to establish efficient business systems. This typically happens because the business owner is so caught up in the company's day-to-day running that the fundamentals of good business management are forgotten. Often, it must be 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 still need to be met. Invoices go out late, and debts remain uncollected. There is one cash flow crisis after another. Goods and services should be correctly costed and priced.Any of these factors can lead the construction business down the slippery path to failure, but all are avoidable. The whole point of implementing sound systems is that they free you to spend more time working on your business, not in it.
Sound business systems will strengthen, improve, and simplify your business. They will also make your construction business far more attractive to future buyers. If you have developed clear operating and procedure manuals, your business will be seen as an independently viable unit and less dependent on you.
Here are five steps to a better construction business:
Good record-keeping and bookkeeping will help you keep on-side with the Internal Revenue Department. You'll sleep better at night if you can meet your tax obligations through sensible planning. You won't fear a tax audit, and you'll know how your business is doing. You won't be caught by a 'sudden tax demand out of the blue' because no such thing exists for a well-run business. You should always know which taxes are due and when. You'll suffer less stress.
Good business planning will help you set goals for your business and take specific steps to achieve them. Without goals, where do you think you're going? Running a business without goals is like arriving at an airport and saying, "I'd like to go somewhere." The person at the ticket desk would think you're clueless!
Good cashflow forecasting will enable you to anticipate a possible cashflow problem (something all growing businesses experience occasionally) and take steps before the situation becomes a crisis. Banks will respect you if you anticipate issues and make plans in advance. Banks will not respect you—and will indeed categorize you as incompetent—if you tell them you've been 'caught out' by a crisis. Banks don't like crises. They want you to go to them well before any possible crisis with a plan. This shows them you're in charge of your business.
Good creditor and debtor control will improve your cash flow. Invoicing promptly and collecting debts on time gives you the cash to pay suppliers on time and get more favorable credit terms from them. It is a virtuous circle. Sloppiness in this department is one of the most common (and unnecessary) causes of business owners experiencing stress and anxiety. So pay your creditors on time and don't let your debtors use you as a free banking service.
Realistic pricing and costing will ensure you run your business competitively but profitably. Poor skills could mean operating at unrealistic levels—even at a loss. For example, your profits will erode if you let costs (such as overhead costs) get out of hand. There is no point in increasing sales if you're not increasing your profits.One key area where efficient business systems can make a difference is project management. For instance, using project management software that allows for effective scheduling, budgeting, and resource allocation can improve project delivery, increase productivity, and enhance client satisfaction. By having a clear overview of project timelines, milestones, and resource availability, construction firms can better manage their projects and ensure that they are completed on time and within budget.
Moreover, integrating technology into construction business processes can save substantial time and cost. Leveraging advanced estimating and bidding software streamlines the bidding process and allows for more accurate cost projections, leading to more competitive bids and improved profit margins. Additionally, embracing cloud-based accounting and financial management systems can simplify invoicing, expense tracking, and financial reporting, providing better visibility into the economic health of the business.
Another area where efficient business systems can yield substantial payoffs is communication and collaboration. Implementing collaborative digital platforms and tools can enhance communication among project teams, subcontractors, and clients, leading to better coordination, reduced errors, and smoother project workflows. By fostering transparent and efficient communication, construction businesses can minimize costly misunderstandings and delays, ultimately improving project outcomes.
In conclusion
Implementing efficient construction business systems can generate significant payoffs for construction firms. In business, you don't have to be an expert at everything. 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! You should at least understand the processes and the overall accounting picture, even if you don't want to do the 'drudge work' yourself.
Poor systems lead to stress and burnout. On the other hand, good business systems 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 clearly documented systems and procedures.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 578, And It's About Utilizing The Power Of Financial Modeling In The Construction Industry n the ever-evolving world of construction, financial modeling is a game-changer. It drives intelligent decision-making, minimizes risks, and ensures the revenue health of projects. Crafting precise and insightful financial models is a valuable tool for construction companies. It offers a panoramic view of the asset landscape and enables proactive planning and strategic management. Financial models are invaluable tools designed to help you understand and protect your business's economic health. By simulating different scenarios and examining potential outcomes based on various inputs, such as sales growth, margins, and cash flow, these models provide a comprehensive picture that aids in informed decisions.
1. Precise Cost Forecasting and Budgeting
Financial modeling empowers construction companies to predict costs accurately, considering many factors such as material costs, labor expenses, equipment outlays, and overheads. Companies can develop precise project budgets by creating detailed financial models, spot potential cost overruns, and implement strategies to monitor expenses. This foresight allows for proactive cost management, preventing financial surprises that could impact project profitability.
Start by creating a base financial model incorporating your current financial data. Input variables such as projected sales, estimated expenses, and planned investments allow you to forecast your financial performance across different scenarios. By simulating best-case, worst-case, and most-likely scenarios, you'll be better prepared to navigate potential challenges and seize opportunities.
Action Tip: Develop your initial model using spreadsheet software or financial modeling tools. Regularly update it as new data becomes available.
2. Streamlined Cash Flow Management
Effective cash flow management is crucial in construction, where substantial capital outlays are often needed before revenues are realized. Financial modeling enables companies to map out cash flows over the project's lifecycle, identifying potential bottlenecks and ensuring adequate liquidity is maintained to support ongoing operations. By optimizing cash flow through meticulous financial modeling, construction companies can enhance their financial stability and seize growth opportunities.
Presenting a detailed financial model can significantly enhance your credibility with lenders and investors. It demonstrates your understanding of your business's financial position and showcases your preparation for future growth.
Action Tip: When seeking financing, ensure your model includes comprehensive projections showing how the funds will be used and the expected return on investment.
3. Informed Decision-Making through Scenario Analysis
Financial modeling allows construction companies to conduct scenario analysis, assessing the potential impact of various factors on project outcomes. Whether it's changes in material costs, fluctuations in interest rates, or delays in project timelines, scenario analysis helps companies evaluate the financial implications of different situations and develop contingency plans to mitigate risks. This proactive approach to risk management is invaluable in an industry where unforeseen challenges can have significant financial repercussions.
Financial models serve as robust decision-support tools. They help you evaluate the economic implications of various choices, whether setting pricing strategies, launching new projects, or considering investment opportunities.
Action Tip: Before making substantial business decisions, use your financial model to conduct a cost-benefit analysis. This will help you weigh the pros and cons and align decisions with your financial goals.
4. Assessing Project Feasibility and Profitability
By incorporating revenue projections, cost estimates, and financing structures into their financial models, companies can gauge the financial viability of potential projects and make informed decisions about resource allocation. This thorough assessment of project feasibility helps companies refrain from investing in financially unviable ventures and focus on opportunities with the most significant potential for success.
It's crucial to create detailed and comprehensive financial projections. This includes estimating costs for materials, labor, equipment, and permits and factoring in potential risks and market fluctuations. Additionally, conducting sensitivity analysis and scenario planning can help assess the project's financial resilience to various external factors. Utilizing industry-specific Key Performance Indicators (KPIs) and benchmarks can provide valuable insights into the project's economic viability.
Action Tip: Set up regular financial reviews—monthly or quarterly—to compare projected versus actual performance. Use these reviews to refine your model and strategies continually.
5. Setting and Achieving Goals and Monitoring Performances
Defining specific financial goals for the construction business, such as increasing revenue, improving profitability, or managing cash flow effectively, is essential. These goals should be realistic, measurable, and aligned with the business strategy.
It involves a detailed representation of the construction company's economic situation, including income, expenses, assets, and liabilities. This model is a valuable tool for analyzing different scenarios, identifying potential risks, and evaluating the impact of strategic decisions on the company's finances.
Establish clear, achievable financial goals based on your model's insights. By tracking your progress against these goals, you can focus strategically on growth and profitability while identifying improvement areas. Regularly comparing your actual financial performance with your model's projections is essential. This practice helps identify deviations, assess their causes, and make the necessary adjustments to keep your business on track.
Action Tip: Break down long-term goals into smaller, manageable milestones. Regularly review and adjust these goals based on your actual performance and market conditions.
Strategic Financial Planning and Risk Mitigation
Financial modeling is the cornerstone of strategic financial planning for construction companies, providing a roadmap for long-term financial management and risk mitigation. By creating comprehensive financial models, companies can pinpoint potential financial vulnerabilities, develop risk mitigation strategies, and make informed decisions that align with their long-term financial objectives. This proactive approach to financial planning is essential for navigating the industry's inherent complexities and uncertainties.
Construction businesses can make more accurate cost projections and optimize their financial resources by incorporating various factors such as material costs, labor expenses, and overheads (LMOS™) into the financial model.
Once the financial model is in place, it's essential to regularly review and update it to reflect changes in the business environment, market conditions, or project parameters. This ensures that the construction business stays on track toward achieving its financial goals and can adapt to evolving circumstances.
In conclusion
The potential of financial modeling in the construction industry is immense. By harnessing financial modeling tools and techniques, construction companies can gain invaluable insights into their financial landscape, make informed decisions, and proactively manage financial risks. Ultimately, the ability to develop accurate and insightful financial models is a crucial differentiator for construction companies looking to achieve financial resilience, profitability, and sustainable growth in a friendly, competitive, and dynamic industry.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 577, And It's About Mastering Construction Business Finances Through QuickBooks Desktop
The power of effective bookkeeping using QuickBooks Desktop - plus an Important Update from Intuit.
Keeping track of sales, earnings, expenses, and purchases is fundamental to your construction business's overall health and sustainability. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals.
Many business owners dread bookkeeping and accounting tasks despite their proven importance. In fact, 40% of surveyed entrepreneurs claim that bookkeeping is one of the worst parts of running a business!
Is it worth the aggravation?
Here are three reminders of how effective bookkeeping is the cornerstone of small business success:
Keeping track of reimbursable expenses
A reliable system for tracking reimbursable expenses ensures you reap all the benefits you're entitled to when filing your taxes. Expenditures sorted into categories, such as "food," "travel," and "office supplies," can be cataloged quite simply with online bookkeeping software.
Using a dedicated credit card for business expenses and updating your records every month will put money back in your pocket come tax time.
Measuring profitability and planning for the future
To grow your business, you must be able to track and compare its finances from one year to the next.
In addition to reconciling the books and bank statements every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:
Measure year-over-year profits; Identify opportunities to cut costs; Plan for major expenses (such as new office space, equipment, or staff) and develop data-based strategies for expansion.Preparing for tax season
Few things are more stressful for business owners than scrambling to prepare poorly maintained financial records for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation can lead to severe penalties, fines, and an audit.
In the United States alone, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings!
Sound bookkeeping can save you money and give you peace of mind. You'll be assured of compliance with regulations and receive a reliable estimate of amounts owing long before your tax bill is due.
If you've been following us over the years, you know that we are raving fans of Intuit, the makers of QuickBooks, and have used QuickBooks since the first version was released in 1992. In fact, in 2005, we moved our entire client base, including our own accounting firm's QuickBooks files, to an Intuit-approved commercial hosting environment so we could offer our clients all of the benefits of the full desktop version of QuickBooks accessible online 24/7, and it has been a huge success!
We've always encouraged our contractor clients to use QuickBooks Desktop as QuickBooks Online does not offer the full features of QuickBooks. We know that QB Desktop in the Cloud is one area where you can reduce your overhead and increase productivity quickly and easily.
It is a powerful tool that can streamline your accounting processes and provide valuable insights into your company's financial health. Here are some reasons why using QuickBooks Desktop is crucial for your construction business:
1. Industry-Specific Features: QB Desktop offers industry-specific features tailored to the needs of construction businesses. You can track job costs, create estimates, and manage progress invoicing, which is essential for staying on top of your projects' financial aspects.
2. Robust Reporting: QB Desktop provides robust reporting capabilities, allowing you to generate customized reports to analyze your business's performance. You can track profitability by project, compare actual costs to estimated costs, and monitor cash flow to make informed financial decisions.
3. Integration with Third-Party Applications: QBDesktop integrates with various third-party applications commonly used in the construction industry, such as project management software and time-tracking tools. This integration can help you streamline your workflows and eliminate the need for manual data entry.
4. Job Costing: Job costing is a critical aspect of construction accounting, and QB Desktop offers comprehensive job costing features. You can allocate expenses to specific projects, track labor costs, and monitor overhead expenses to ensure that each project remains profitable.
5. Compliance and Security: QB Desktop is designed to help you maintain compliance with industry regulations and ensure the security of your financial data. You can set user permissions to control access to sensitive information and generate audit trails to track changes made to your financial records.
Using QuickBooks Desktop for your construction business can significantly improve your financial management processes and give you the tools to make informed business decisions. However, change is inevitable, and as someone with responsibilities, I have little time to waste; I have learned that sometimes I have to deliver challenging news. (In case you missed our Tuesday email):
For those using QuickBooks Desktop 2021 software, it will be discontinued after May 31, 2024. (You may have received this notice from Intuit through your email). This includes all 2021 versions of QuickBooks Desktop Pro, QuickBooks Desktop Premier, QuickBooks Desktop for Mac, and QuickBooks Enterprise Solutions v21. Other Intuit products are affected by the software discontinuation.
If you don't upgrade your QuickBooks Desktop 2021 by May 31, 2024, you won't have access to live technical support if you run into problems or any other Intuit services that can be integrated with QB Desktop. This includes QB Desktop Payroll, QB Desktop Payments, and online bank feeds. Discontinued versions won't receive the latest critical security patches and updates. (More info from Intuit)
Final tip: This is the time to ask for help
There's a good reason why most small businesses outsource at least one accounting function to help manage tasks like payroll, closing the books each month, and managing accounts receivable. With all the changes coming to QuickBooks software, it would be best and all the more reason to ask for support.
Most entrepreneurs are passionate about developing new business ideas – not crunching numbers. Employing or outsourcing a professional construction bookkeeper, even part-time or as-needed, can help optimize your accounting and increase profitability. It's well worth it. Invest in effective bookkeeping and build a solid foundation for a resilient, forward-moving construction business.
Feel free to contact me if you need specific guidance on using QuickBooks Desktop for your construction bookkeeping and accounting needs. And, of course, subscribe to our newsletter so you won't miss out on important industry news, events, and updates.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 576, And It's About How To Build Up And Stand Out By Delighting Your Construction Clients
Most businesses understand that customer satisfaction is crucial to their success. Happy clients are likelier to remain loyal, refer others, and leave positive reviews. This trend has only been amplified by social media and online review sites, where negative feedback can spread quickly and damage a company's reputation.
In an increasingly competitive marketplace, more than an effective customer service system is needed: you must provide customers with a positive and memorable end-to-end experience at every touchpoint. Creating powerful experiences that exceed consumer expectations can have massive implications for any business — from increasing brand loyalty and trustworthiness among current clients to being highly attractive to potential customers.
It starts with understanding the difference between traditional customer service expectations and modern customer experience strategies. Keep reading as we explore the nuances of each approach and discuss how construction businesses like yours can strive towards offering excellent experiences in their markets.
Defining customer service and customer experience
When we talk about customer service and experience, it's not just about providing a product or a service. It's about the way you make your customers feel. Customer service is all about delivering the product or service in a way that exceeds expectations and meets the customer's needs.
But the customer experience is entirely different. It's a holistic approach that considers how your customers are impacted from the minute they interact with your brand to long after they purchase or hire you. It's about creating an emotional connection with your clients and leaving a lasting impression.
So, whether you're a small construction business owner, understanding the power of customer service and customer experience can take your brand to the next level.
The importance of customer service in the business
Have you ever walked into a store and received terrible customer service? Maybe the employee didn't acknowledge your presence or seemed annoyed when you asked a question. It's a frustrating experience and can leave a bad taste in your mouth about that business.
That's why having good customer service is essential in any industry. It's not just about making a sale; it's about creating a positive experience for the customer. When customers feel valued and heard, they are more likely to return to that business and even recommend it to others.
In a world with countless consumer options, standing out with exceptional customer service can make all the difference. Improving customer service is crucial for any business looking to stay competitive in today's market.
Strategies for improving customer service
Invest in employee training to equip staff with the necessary skills and knowledge to handle customer inquiries and complaints professionally and empathically.
Collect customer feedback to identify areas of improvement for products, services, and overall customer experience.
Implement technology solutions such as chatbots or knowledge bases to assist customers and streamline the resolution process immediately.
The importance of the customer experience
The significance of customer experience transcends the essential act of selling products or services; it's about crafting stories and memories that customers carry with them long after a transaction. A superior customer experience fosters an emotional attachment to the brand, transforming casual customers into passionate advocates and vocal supporters.
Where choices are plentiful and attention spans are short, construction businesses that focus on delivering memorable customer experiences will not only distinguish themselves from competitors but will enjoy enhanced customer loyalty, increased satisfaction, and, ultimately, improved business outcomes.
What should you look at within your customer experience?
How quickly do you respond to customer website inquiries? Do you have a target time, and how do you measure this? How quickly do you get the quote to the prospect or set an appointment date? How do you measure that you meet an acceptable time frame? When do you follow up? How do you do this? Who is responsible for this? How do you make clients feel special the first time they use your services? During the sale process, how do you make the customer feel like they are your most important client? What do you know about them? Has everyone in your business been appropriately briefed about a new client, and has anything in particular been discussed with the client? How do you appreciate the customer after the sale and ensure they have no post-purchase regrets? What system do you have to ensure that customers feel they are unique in the future, not just a forgotten number? How do you thank your customers when they refer to a family member or friend? Lastly, do all your business employees know your customer experience process and why it's essential to follow it every time?We have asked hundreds of homeowners, commercial property owners, landlords, commercial space tenants, and even a few car buyers, computer buyers, ship buyers, and consumers about their overall buying experiences, and one common thread appears over and over: They got what they wanted and were happy repeat customers and clients who referred their friends and family, or they didn't get what they wanted and made the contractors' lives hell.
Our Script Book has a list of continually honed, polished, updated, and replaced questions, from which we pick and choose the ones to use depending on the situation.
Develop Your Script Book—Record the questions and answers that you find. This will encourage people to open up because when they feel valued, your exceptional service and their appreciation will be far more rewarding than the money you earn.
Start by practicing at social gatherings - they are more casual, business meetings are more focused, network events are somewhere in the middle, and focus group events are intense and tightly focused.
The Two Most Powerful Questions:
What are your most important criteria in making a purchase decision? What is the one thing you remembered about your purchase?Final thoughts
Customer service and customer experience are crucial aspects of any business. Without them, companies will struggle to meet their customers' needs and fail to create a positive and enduring impression that ensures long-term loyalty.
All businesses should prioritize investing time and resources to provide quality customer service and improve the overall customer experience. Ready to elevate your customer service and create unforgettable experiences? Get started now and reach out if we can help you in any way.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 575, And It's About A No-fuss Record-keeping Guide For Your Construction Business
Managing a hectic schedule and complex projects can be challenging if you're a contractor. You must also ensure that your paperwork, documents, and contracts are in order. It's essential to keep a paper trail of your work and practice due diligence.
Keeping all your working documents in order shows that you treat your business, customers, and subcontractors responsibly. This is a mark of professionalism and can also help if you have an insurance or legal claim.
Contractor paperwork documentation and procedures
You should develop documentation and record-keeping procedures appropriate for your contracting operation or service if necessary. Once procedures are in place, it is equally important to ensure everyone understands and follows them.
It's good practice to hold a workshop on documentation procedures with your employees and have them sign off that they understand and have copies of the procedures.
For construction jobs, some of the documents that may be obtained and maintained as part of your documentation procedure include:
Project tenders/estimates Contracts or work orders Duty to perform documents Site inspection forms Tests on work completed Documentation for materials delivered to the site Documentation of your risk services assessment Certificates of insurance from your subcontractorsUsing Digital Tools and Software
Implementing project management and documentation software can significantly reduce the time spent on paperwork. These tools can help track project progress, manage invoices, and store important documents securely in the cloud for easy access from any location.
There are many options on the market, and it's unlikely that a single piece of software will meet all of your project management needs. Companies usually combine a few applications to create a custom solution.
Remember, the accounting software you need depends on the level of reports you require. This is why we recommend choosing project management tools that integrate nicely with the parts of your setup that don't need changing.
What to look for
Real-time reporting capability
Effective construction project management requires up-to-date information. With this, you can make important decisions if you rely on guesswork, which is a lousy way to do things.
The best project management tools for the construction industry offer instant reporting.
Accessibility
Your data must be as accessible as possible. The best construction project management tools are cloud/web-based, which makes them accessible from virtually anywhere in the world.
Good Support
Incorporating even the best construction project management tools will inevitably result in hiccups. That's why you should look for programs from companies with reliable customer support.
Security
Your data is precious and sensitive, and construction project management tools and techniques should reflect this. Before you incorporate any software into your workflow, research the company behind it, its terms of use, and the security measures it implements to keep your company's data private.
Construction project management tool checklist
Here are questions to ask yourself once you've narrowed your options using the above criteria:
Does the software come with enough licenses for my company? Can I use the tool on multiple devices? Does the software have several positive reviews? Will the company demo its software for my company? Can my current data be easily transferred to this new software? Do partner companies use the same software or a program that integrates well with this one?The proper construction project management tools can make a big difference to your company and its productivity.
I hope this helps identify the best picks and what you must consider when evaluating them.
Proper record-keeping helps you manage your finances, comply with tax laws, and make informed decisions about your business.
Now that you've narrowed down what your company needs for record-keeping, here are some tips to help you with bookkeeping or both:
1. Keep accurate records of all income and expenses, including invoices, receipts, and bank statements.
2. Use accounting software to manage your finances. This will make managing your cash flow, tracking your expenses, and generating financial reports easier.
3. Separate your personal and business finances. Use separate bank accounts and credit cards for your business expenses.
4. Track your payroll and tax obligations. Ensure you are withholding the correct taxes from your employees' paychecks and paying your taxes on time.
5. Store your records in a safe and secure place. Keep backups of your financial data in case of a disaster or data loss.
If you've reached this point - perhaps you're wondering: Do I still need to implement record-keeping practices when I have already outsourced you as our bookkeeper? That depends. Are you proactive or reactive?
Proactive Business Owners have systems and strategic planning to optimize profit and growth and understand the value of construction bookkeeping and accounting, while Reactive Business Owners wait until the taxes are filed to find out what happened and never plan, and worst, haven't sent any paperwork to us.
In All Cases, as the construction business owner, you should take a "hands-on" approach, including paying the bills, because we do not touch your money.
It is optional for our clients to have 24/7 access to their QuickBooks files and review their Key Performance Reports/financial reports daily. We continually improve processes to make other reporting methods available. With us handling the contractor's bookkeeping services tasks, your in-house staff is free to work on more productive tasks and do what they do best.
Final thoughts
By following these tips, you can ensure that your construction business stays organized, compliant with tax laws, and financially healthy.
We offer a free one-hour consultation; if it takes a little longer, that is OK! Your relationship with your bookkeeper is one of the most important business relationships ever because we will know what works and what doesn't for you and your construction business.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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This Podcast Is Episode 574, And It's About What Every Contractor Needs To Know About Successful Construction Companies
Small construction businesses have several characteristics that distinguish them from larger firms. These characteristics include having a limited workforce, smaller revenue streams, and a more localized focus.
They are often run by the owners themselves or a small team of employees. They tend to have a more personal approach to their work, as they are usually more involved in every aspect of the project. Due to their size, they are often more flexible and able to adapt to market or project scope changes. However, they may also face challenges such as limited resource access, difficulty securing financing, and increased competition from larger firms.
Over the years, we have had many successful construction clients. The seasoned ones have become lifelong friends and are now retired, living according to their terms. And several are still working according to their schedule with quality, high-paying clients.
Is it still possible to succeed in this industry, given the state of the economy? Regardless of government or environment, what I find common among them are these characteristics:
1. Owners leading by example
The construction company owner or project manager leads by example. They are usually the first to arrive and the last to leave. The owner knows everyone by name, and their presence is unmistakable. They show a strong commitment, setting the standard where they work. This commitment should be easy to understand. After all, if they don't work hard in their own company, how can they expect anyone else to take their business seriously?
2. Simple business structure
They operate a simple and open business structure, encouraging easy access to the owner for every employee. They value the contribution of each employee, many of whom are allowed to influence aspects of the construction business that would ordinarily be denied to them in a large hierarchical company
3. Communication among employees
Staff receive information as soon as the owner does. Goals, problems, and concerns are discussed openly. Feedback on issues is encouraged, and staff are asked to contribute their ideas for improving and overcoming difficulties. It is often this aspect of open communication that staff appreciate the most; it is unique to small construction businesses, whether you have only one or two staff.
4. The crew is carefully chosen
Staff is recruited very carefully because the contractor owner(s) recognize that they are the lifeblood of any small business. Staff are hired because their knowledge, skills, and abilities will benefit the organization rather than because of friendships or family relations. They are carefully chosen, nurtured, and trained to help the crew members and the organization from the relationship.
5. Staff commitment and loyalty
All staff are very committed and loyal. Good performance is rewarded with praise, extra responsibility, and money—poor performance is not. Poor workers are consistently removed as they upset the rest of the team. Organizations whose staff show optimum commitment and loyalty have a source of competitive advantage that is hard to copy or beat.
6. A unique service (or product delivery that goes with the service)
Most successful construction businesses have unique products or services, such as designs, products, systems, or some other aspect that sets them apart. This uniqueness is an essential source of competitive advantage and one that many companies work hard to sustain, adapting and innovating their products or services as their competition catches up with them.
7. A specific customer focus
Successful small businesses specifically focus on their customers and clients and are geared to supplying them with exactly what they want. This focus means adopting a market-led approach, with the owners and their managers consistently looking for ways to solve their client's problems and improve their products to match their client's requirements.
8. Prompt follow-up
On occasions when an inquiry or complaint is received, successful construction company owners actively follow up and solve them as quickly as possible. The results are promptly reported back to the client or customer, and in the case of complaints, measures are put in place to reduce the likelihood of similar issues reoccurring. Successful small businesses view complaints and problems as opportunities for growth and improvement.
They work with a construction accountant
They hire the best people to do their job in-house or outsourced. There are several valuable lessons that construction business owners can learn from accountants, and the successful ones know and appreciate the value they bring to their business.
Construction accountants are experts in financial management in their industry. They can help trade business owners understand their company's financial health, identify areas for improvement, and develop strategies to increase profitability.
Additionally, construction accountants are skilled at analyzing data and making informed decisions based on that data. They help construction business owners track their progress toward goals, identify trends and patterns in their financial data, and make data-driven decisions to benefit their businesses.
Since delegating their financials to us, our clients have told us that they have more time to focus on what they're good at and love to do. We help them stay compliant with tax laws and regulations, which is one of the common causes of a business's owner stress come tax time. By working with us, you can ensure you meet your tax obligations and avoid costly penalties. You can also gain valuable insights and support that will help you grow and succeed in the long run.
Final thoughts
Embodying these traits and improving your practice are essential to succeeding in your construction business. A solid plan that clearly understands your target market and competitive advantages and a detailed financial system are also necessary. Focus on building meaningful relationships with clients and suppliers, providing high-quality work, and staying up-to-date with industry trends and technology.
Additionally, it is crucial to have a skilled and reliable team in place and continuously invest in their professional development. You can build a successful and profitable construction contracting business with dedication, hard work, and a strategic approach. And, of course, a construction business accountant who will guide you along the way.
PS
We offer free resources to help you save time and money that you can download and print now.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 [email protected]
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