As a construction or trade contractor, you are highly skilled, intelligent, and adaptable. That is a given because you operate in a multi-faceted changing environment doing the impossible with limited time, money, and resources on every project. Moreover, soon as one is finished, another one is waiting for you.
Many contractors like you feel that hiring a Professional Contractor Bookkeeping Service is a waste of money when you should be able to do it yourself. You press a few keys on your keyboard thinking you are going to get the results you want, accurate bank balances, a report showing who owes you money and who you owe money to, a Profit and Loss Report and Balance Sheet Report you can understand and if all goes well perhaps even some Job Costing Reports. Instead, what you get is a hot steaming pile of fertilizer that cannot even be used in the garden.
Read More
Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
Many contractors are having trouble adapting to the new economy. I have made more mistakes – than ten of the average contractors put together. I've learned a great deal of hard, hard lessons, and worked my way through several "Character Building Moments." What I am about to ask you to do is something I have done for many years during my contracting days, and it still works.
Understanding Other Costs:
Marketing Cost
The cost your company spent to acquire and maintain the job. Depending on how you allocate marketing dollars as a percentage of sales or a fixed budget will have an impact on your marketing cost per job. Your cost-per-call, closing ratio, and other related information is all part of your operations, accounting, and bookkeeping reports.
Mobilization Cost
Are the costs you incurred to get a crew to the job site in terms of travel time and vehicle operating costs; and then the labor costs to unload tools, equipment, and material and put everything in place for easy access and not in the way of the work to be done. These costs are generally high and fixed.
Demobilization Cost
Are the reverse and generally lower because it takes less time to load the truck or van since you know where everything goes, and you know the quickest route back to the shop or office. These costs are also generally high and fixed.
Read More
Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
All construction contractors have experienced the financial pain of bad debt, which is defined as a customer who refuses to pay no matter what you do.
I've been there before, and it will probably happen again in the future. Owning and operating any business, including accounting, means sometimes you provide goods and services and not get paid.
Knowing The Answers Helps
"If you know the answers, the questions will not bother you" - Randalism.
In school, when you sat for an exam or a test, and you knew the material forwards, and backward, it was fast and easy. The exams and tests for the classes you struggled with were the opposite.
Read More
Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
In the mechanical trades of the construction industry, plumbing, electrical, HVAC and related fields of irrigation, low voltage and audio / visual equipment companies there are lively discussions happening regarding "Repair Versus Replace."
Most of the time, the participants are more fixed in their positions and intense with passion than any political or religious discussion I have ever seen.
The primary question involves a deep-seated paradigm regarding the definition of honor and integrity. Is it more honorable and better for the client to treat every mechanical part as something that must have every last bit of use squeezed out of it before replacing it? Or is it better to replace it at the first sign of breakage? Or lastly is there a middle ground?
Read More
Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
Construction company cash flow is the movement of money in and out of your contracting business; these movements are known in accounting circles as inflow and outflow.
Inflows for your construction company primarily come from the sale of goods or services to your customers, but keep in mind that inflow only occurs when you make a cash sale or collect on receivables. Cash is king! Other examples of cash inflows are borrowed funds, income derived from sales of assets, and investment income from interest.
Outflows for your construction company are generally the result of paying labor, material, other direct and indirect costs of goods sold and overhead expenses.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
Estimating and submitting bids are one of the most stressful and nerve-wracking sides of your construction business. It is essential to keep in mind that "break-even" in the construction business is challenging to calculate because most projects are one-of-a-kind custom jobs. Proactive contractors have systems and cost libraries with pre-priced assemblies for bidding, which works in conjunction with Strategic Construction Accounting to provide management with progress invoicing, job costing, and job profitability.
With poor bookkeeping, misguided judgment, and clerical errors come bad decisions on what projects to bid and not to bid on until eventually, you'll run out of time and money. This is why some construction projects fail or worse, construction companies get bankrupt.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
Perhaps more.
An alarming number of construction company owners are being ripped-off and driven into bankruptcy.
That sounds harsh, but it's true. Whenever we see a contractor heading towards a problem, an issue, or a big disaster, we immediately raise the alarm. We are cautious about doing it so when we say there is a potential problem, our clients know we are serious.
Contractors by nature are tenacious, resilient and have a tremendous amount of "Grit And Determination To Succeed" which means they are not easily disturbed or prone to react hastily or rashly at the first sign of trouble. This is just one of the many qualities I sincerely admire about these wonderful men and women.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
If you are the typical construction contractor trying to keep track of your construction projects, meetings, tasks, and conversations without the tools and technologies you could be living in a nightmare. You can either keep on "Powering Through"- spend your life endlessly chasing details, missing appointments, suffer untold losses in cash flow and profits; or you can start developing a plan and work on your business.
You may be getting your construction projects done with sheer will-power, but the lack of processes, business plan, and strategy will eventually wear you down.
Successful contractors improve processes all year long. Your construction company can benefit from this system that other successful contractors are using now, which means there is no need to "Reinvent The Wheel." As your construction company grows and evolves, your processes can support the controlled and planned expansion.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
When my partner, Sharie DeHart and I, were running construction and plumbing service and repair businesses beginning in the early 1970s until 2000 we felt we did not need to pay anybody to tell us what to do because we knew exactly what to do.
After several very painful and extremely costly mistakes, we found the adage "Experience Is The Best Teacher...And The Most Expensive" to be oh so true!
We found ourselves, our family, employees, and suppliers were all riding on our Roller Coaster of Surprises, some good, some bad. On occasion, we would wake up screaming bloody murder only to discover it was the middle of the afternoon, and we were not asleep!
After a while, we decided perhaps there was truth to "If you think education is expensive, try ignorance." I will admit I was a bit arrogant thinking since I was raised in a family of contractors that I knew a lot about construction. In fact, I knew quite a bit about what Michael Gerber calls "Working In The Business But Not On The Business."
At that point in the late 1970s, we decided to move to The Merry-Go-Round of a business with a Strategic Plan that could grow-up and provide us with a more predictable result.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
The one burning question contractors want to know: When is it income?
When money comes into the business, at some point it turns into income. " Money goes in and out of my business and I don't understand when it is income and when it is not ". Without proper tracking and matching of income and expenses, most construction companies never know if they made a profit until the job is over.
Read More
Topics:
Payment Collect,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
