The construction industry is dynamic and challenging, and a business's success or failure can hinge on various factors. As we approach the end of another year, it's essential to take a step back and assess your company's successes and challenges.
Contracting is notorious for its complexities and ever-changing landscape. It is crucial to evaluate what worked well, what didn't, and what lessons we can carry into the following year. These are my key takeaways from phone chats and emails with our clients, industry friends, and followers. Use this as a template - remove, add, and reflect on this list to hold yourself accountable for what you can improve.
What Went Right
1. Embracing Technology
Your commitment to technology was one of the most significant positive shifts this year. Implementing various project management software has streamlined your processes and improved team communication. This investment increased efficiency and enhanced collaboration, allowing you to meet deadlines consistently.
2. Strong Client Relationships
Focusing on building strong relationships with your clients pays off tremendously. Most of you have secured several repeat contracts by maintaining open lines of communication and prioritizing customer service. Satisfied clients shared positive reviews, which helped you to attract new business through referrals. This year, we learned that transparency and trust are invaluable in fostering long-term partnerships.
3. Financial Management Improvements
We made a conscious effort to improve your financial planning and management. Developing a more robust budgeting system and closely monitoring cash flow allowed you to navigate unpredictable economic fluctuations more effectively. This proactive approach has prepared you to make better-informed decisions moving forward.
4. Commitment to Sustainability
As clients increasingly value sustainability, you have embraced eco-friendly construction practices. By incorporating green building methods and materials into your projects, you have met client demands and differentiated yourself from competitors.
5. Continuous Learning and Training
We are proud of our Construction Accounting Academy students and the contractors who took their certifications and licenses. Encouraging ongoing employee education and training ensures that you and your team remain adaptable and knowledgeable about industry trends and practices. A skilled workforce is pivotal to delivering high-quality work.
What (Mostly) Went Wrong
1. Labor Shortages
Despite the successes, there are significant setbacks due to the ongoing skilled labor shortage in the construction industry. Attracting and retaining talented tradespeople proved challenging, leading to project delays and impacting quality. This highlighted the need for better recruitment strategies and a stronger focus on employee retention.
2. Inadequate Project Planning
Project planning sometimes fell short, leading to cost overruns and missed deadlines. Although you made strides in overall project management, you learned the hard way that comprehensive planning, including risk assessments and resource allocation, is vital for successful project execution.
3. Neglecting Marketing Efforts
While most excelled in many areas, some of your marketing strategies took a backseat this year. You missed potential project opportunities without an effective online presence and outreach efforts. This experience underscored the importance of prioritizing marketing and business development in a competitive landscape.
4. Safety Compliance Issues
Although you have generally maintained a safe work environment, you've encountered a few instances of oversight regarding safety regulations. These moments served as crucial reminders of the importance of strict compliance. It is necessary to review safety training protocols to prevent any future incidents.
5. Bookkeeping
Neglecting bookkeeping in your construction business can lead to significant challenges that may hinder your overall success. Accurate financial management is crucial in this industry, and overlooking bookkeeping tasks can have far-reaching consequences. Particularly with your cash flow -inconsistent tracking of income and expenses can result in shortages and tax issues - paying penalties or fines that could even attract attention from tax authorities due to discrepancies.
Poor practices can also lead to disputes over unpaid invoices or discrepancies with subcontractors and suppliers, damaging relationships crucial to your business.
As construction bookkeepers and accounting specialists, our contributions extend beyond simply recording transactions. By implementing efficient bookkeeping practices, we play a crucial role in shaping your construction business's financial stability and growth. Regular reviews and updates of financial practices can help your company adapt to challenges, seize opportunities, and ultimately thrive in the competitive construction landscape.
Moving Forward
Reflecting on the year provides valuable insights into your strengths and weaknesses. You can enhance your operations by building on your successes—embracing technology and fostering strong client relationships. Simultaneously, addressing the areas where you fell short, such as improving labor recruitment and ensuring relentless project planning and bookkeeping, will be critical in your growth strategy for the coming year.
As we look forward to the new year, let's harness the lessons learned and strive for continuous improvement. The construction industry poses challenges, but with a proactive mindset and determination, we can navigate its complexities and position our business for more tremendous success in 2025. Here's to building a brighter future together!
IMPORTANT NOTICE:
Recent changes to the Beneficial Ownership Information reporting requirements may affect your organization. Please thoroughly review these updates to comply with the latest regulations. Also, please pay attention to any deadlines and necessary documentation to maintain compliance.
Starting January 1, 2024, many U.S. businesses must report information about their beneficial owners, i.e., those who own or control the company. Businesses must report Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a U.S. Department of the Treasury bureau. The reporting, a requirement of the Corporate Transparency Act (CTA), aims to combat financial crime and corruption and must be completed by January 1, 2025.
Key points about the update:
Who needs to report:
Any company formed or registered in the United States, including:
- Corporations
- Limited Liability Companies (LLCs)
- Limited Partnerships
- Certain trusts
What information needs to be reported:
This includes the legal name, date of birth, and address of each beneficial owner, as well as identifying information like a passport or driver's license number.
Filing deadline for existing businesses:
Companies formed before January 1, 2024, must file their beneficial ownership information by January 1, 2025.
Filing deadline for new businesses:
Companies formed in 2024 must file within 90 days of formation.
Where to file:
Beneficial ownership information must be submitted electronically through FinCEN's BOI E-Filing website.
Potential consequences of non-compliance: Businesses that fail to comply with the beneficial ownership reporting requirements may face significant civil penalties and possible criminal charges.
Please go directly to the FinCEN website for more information and answers to Frequently Asked Questions.
Keeping your records current is crucial for adhering to these new requirements. If you have any questions or need further clarification, please contact a legal expert specializing in compliance. We do not offer this service, but please feel free to contact me anytime when you need help with your construction bookkeeping, accounting, and business in general.
Disclaimer: This notice is for informational purposes only and does not constitute legal advice. For specific guidance, please consult with an attorney familiar with the CTA and its regulations.
About The Author:
Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com
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