Although most construction company owners recognize the importance of careful financial management, few want to spend their time dealing with numbers. Unfortunately, not keeping a close eye on your income and expenses can be very costly for a business.

 

Here are five of the most common bookkeeping pitfalls, and some simple tips for getting back on track.

1. Mixing business and personal

All too often, contractors adapt a "buy now, sort later" approach to expenses, using the same credit card for personal and professional purchases. At the end of the month, they're left poring over statements, trying to sort things out. Mixing business and personal expenses cost extra hours of bookkeeping each month and muddles your overall financial picture.

Avoid this pitfall by using a separate credit card and bank account for business, and being disciplined about separating expenditures.

 

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Topics: Outsourced bookkeeping, outsourced construction accounting and bookkeeping, Accounting, Contractor, Contractor Tips, Contractor Operating Tips, Construction Systems And Processes

As another year winds down, it's a good time to reflect on your recent construction business successes – and consider what you'd like to achieve in the coming twelve to fifteen months. One tiny change in your process can help you grow your Construction Company.

 

Entrepreneurs are typically highly creative and optimistic; as a result, they often have difficulty narrowing down their ideas from among all the exciting possibilities, whether it's an opportunity to expand to a new market or choosing a better time management strategy. 

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Topics: Contractor, Contractor Tips, Contractor Operating Tips, Construction Systems And Processes

The nature of some types of businesses makes it challenging to come up with a standard price list. For tradespeople and construction company owners like you, what's required in terms of time, skill, labor, and materials frequently vary from job to job.

Offering an estimate or quote provides potential clients with a customized figure for what they can expect to pay based on what will be required to complete a specific project.

Quotes

A quote is a legally binding fixed price a company prepares for a client; as such, they should always be in writing. A quote should summarize the work to be performed and include a detailed breakdown of all the costs and the final total, including taxes. 

Once a business offers a quote and a client signs off on it, the price cannot change even if the job ends up costing more than initially anticipated. For this reason, it's crucial to always quote as accurately as possible, allowing ample time to complete the job and carefully pricing out costs for materials and labor (e.g., subcontractors). 

To protect your business from "scope creep," a quote should also stipulate that additional charges for extra work beyond what the original quote covers will apply.

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Topics: Contractor, Contractor Tips, quotes, estimates

Too many construction businesses fall over because the owner has not established efficient business systems. This typically happens because the construction company owner is so caught up in the day-to-day operations that the fundamentals of proper business management get forgotten. Often too, 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 disastrous:

• Poor or non-existent record-keeping. 
• Tax obligations are not met. 
• Invoices go out late, and debts remain uncollected. 
• There is one cashflow crisis after another. 
• Goods and services are incorrectly costed and priced.

Any of these factors can lead the business down the slippery path to failure, but all are avoidable. The whole point about putting in sound systems is that they free you to spend more time working ON your business, not in it.

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Topics: Contractor, Contractor Tips, Contractor Operating Tips, Construction Systems And Processes

Hiring an accountant is widely considered best practice for small business owners. But delegating financial analysis and reporting doesn't mean thoroughly checking out of the process each month or quarter. On the contrary, it's recommended that business owners work closely with their accountants throughout the year to better understand their financial position and make smart plans for future growth.

We have discussed time and again the importance of knowing the difference between Construction Accounting and Regular Accounting. For the sake of our new readers, blog subscribers, and podcast listeners, I'll be providing you with some basic accounting knowledge so you can have more informed, insightful discussions with your financial advisors before the year ends.

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Topics: Contractor Challenges, Contractor, Contractor Tips, Contractor Operating Tips, Construction Productivity

Many complex moving parts are involved in operating a profitable construction company, but at its core, business success hinges on just one thing: customer relationships. 

 

This is why Customer Relationship Management software is vital for contractors who want to grow their business.

 

A CRM solution helps your construction company nurture and improve client relationships by maintaining centralized data on all your leads and existing clients. With access to a history of customer transactions and communications, your team can make their next move with confidence while offering highly personalized customer service.

 

Construction business owners know that to find a loyal client base, they have to stand out from their competitors. One of the best and easiest ways to do that is to have outstanding customer service. How you treat your customers reflects your entire business. People think positively about companies that treat their customers and clients well. 

 

 

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Topics: Contractor Challenges, Contractor, Contractor Tips, Contractor Operating Tips, Construction Productivity

Be honest: is email helping or harming your construction business?

 

Remember when email was new and novel, and everyone thought it would vastly improve communication while freeing up time? It did improve communication - especially in the construction industry, where you have a team working on the field and in the office - on some levels, and freed up employee time at first. Now, however, email has become a productivity killer.

 

Construction business owners and workers have to wade through hundreds of emails in their inbox each day. Many contractors working on-site, choose to deal with email as it comes in rather than all at once. This takes the focus off their work and makes it difficult to concentrate on their tasks.

 

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Topics: Contractor Challenges, Contractor, Contractor Tips, Contractor Operating Tips, Construction Productivity

A new contractor meets an experienced customer, and money changes hands and not the way you expect it.

 

Typically, this is what happens when you first get started: You bid on a project, and you are the low bidder. You are given the client's standard contract, which contains the client's favorite set of commercial terms and conditions, to sign as a condition of getting the project. You close and sign the contract because you don't want to ask for changes in the terms or consult your construction attorney. You put the signed contract in your bottom desk drawer and pray hard nothing will happen during the project that will cause you ever to have to reread the contract.

 

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Topics: Construction Bookkeeping, Processes, Contractor Challenges, Contractor, contractor bookeeping services, Contractor Tips

Owning a construction business means you understand that bookkeeping is just one of those mundane, nasty, dirty, aggravating, grubby little chores you get stuck with along with its rotten scoundrel cousin the Monthly/Quarterly Tax Reports. 

If you have employees - look out! On top of everything else you have payroll to process, in some cases, you may decide to provide cash advances to your employees to keep them focused on the job and not on personal issues, and finally there are all the Payroll Taxes you need to keep track of and file the reports for on a regular basis.

Smart Contractors know their time is more valuable spent meeting prospective clients, putting together bids, managing job sites, and a whole lot of other things other than bookkeeping. So they find someone else to do it. 

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Topics: Construction Bookkeeping, Processes, Contractor Challenges, Contractor, contractor bookeeping services, Contractor Tips

Owners of small construction companies like you are the men and women who keep everything moving in the right direction. When the economy changes, you quickly adapt because you are a survivor, not a large giant behemoth dinosaur unable to respond promptly and dies in its tracks.

 

Most articles about Job Costing are for large contractors with dozens of employees, doing millions of dollars in sales every year. This article is not about them; it is about you!

 

Job Costing links the money you spent on a job against the money you received to do a particular job.

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Topics: Construction Bookkeeping, Processes, Contractor Challenges, Contractor, contractor bookeeping services, Contractor Tips