What is that old saying? “It Is Always Greener On The Other Side Of The Road”(author unknown)
It is always easier to look in hindsight and think “I should have done this” or “I could have done that”
All the advice from others about what you should of, could of, did do didn’t do is easy for the person who did not actually make any of the decisions. Some people excel at “Advising Not Actually Doing.”
You can’t change yesterday; only do a review and think about What Can I Do Today? And How Can I have a better tomorrow? Tiny changes can make a big difference. You can FIX SOMETHING and do nothing is a decision. (Sometimes taking a pause is the right decision to make)
The answer is Think, Plan, Do Something (Make a Plan, Work the Plan) or (Be, Do, Have)
The answer is Think, Plan, Do Something (Make a Plan, Work the Plan) or (Be, Do, Have). Sound familiar from listening to any of the sales messages and webinars from the famous sales organizations of 70’s, 80’s or 90’s. Anyone who has had a sales position and paid on commission knows it is never as easy as the sales manager said it would be. Very few people become successful with little or no effort. For the rest of us, it takes work.
However, some things are very basic and never change. Want to lose weight? Doctors answer is three very simple things to do and they don’t cost a lot of money. The Doctor’s answer never changes.
Step 1: Eat Less
Step 2: Exercise More
Step 3: Repeat.
Why did you decide to become a Construction Contractor?
- Fast Money
- Easy Work
- Few Hours
Yes, Contractors can make a Lot of Money as a Construction Contractor. Fast is a relative term.
Definition of Fast Money
Collecting a job deposit is designed to Lock down the job, buy material. It is always a good idea to use your client's money to start the job. That doesn’t mean you have money to Party Hearty, buy a bunch of tools or that brand new truck you want. In other words, spend the money as fast as it comes in.
With normal business expenses, the money will fly out of the checkbooks without any extra help.
If you spend your job deposits in this manner, you get into a cycle of “Borrow from Peter to pay Paul.” (author unknown) A favorite phrase of the 60’s and 70’s. Older country music fans will remember Merle Haggard’s If We Make It Through December. https://www.youtube.com/watch?v=U9TByT3QlWc
What do I mean? When you use the next job deposit to pay for the expenses of from the last job that is a slippery slope to financial disaster. Another common phrase is “Leverage Is Great Until The Stick Breaks.” Or the child’s game of musical chairs.
When the music stops, someone is without a chair. The same thing happens when the economy turns as it did in 2008. Contractors were thinking (and hoping) the recession would be a small dip and everything would be back to normal by summer of 2009. That is not what happened for most construction contractors.
Some construction contractors had lots of work in the pipeline that was not affected by the recession.
Many of them were cocky and thought other contractors are having a hard time “Just didn’t know how to run a business” Unfortunately, those same contractors were hurt badly when their pipeline of jobs ran out.
Definition of Easy Work
Easy work is any job that you know how to do easily. To a chef, Thanksgiving Dinner for twenty or more is a simple task. To a college student living in a dorm, shared apartment it might be an impossible task.
Easy work for a highly skilled craftsman picking up a piece of wood and working with it. We went to the fair and saw the wood carvers. The skills the Woodcarvers used to make a recognizable object using a chainsaw is amazing. Truly a case where people can watch them work for hours seeing the magic.
Definition of a Few Hours
Yes, Construction Contractors can work a few hours every day. Usually, it is working any twelve hours or more any day of the week.
- It is only a Few Hours to:
- Talk The Call
- Schedule The Appointment,
- Meet The Customer,
- Create The Bid,
- Present The Bid,
- Collect The Deposit,
- Schedule The Work,
- Make A Material List,
- Pick Up The Material,
- Coordinate Any Employees
- Go To The Homeowners House, Rental, Job Site.
Now You Can Begin The Job
- Think, Plan, Do The Work.
- Watch out for children and pets.
- Answer Homeowners Questions.
- Be Polite and do Small Talk as Needed
Keep working at a pace that makes up for any time spent watching out for children, pets, and chatting with the Homeowner. The Homeowner expects work to be completed on time or ahead of schedule no matter how many interruptions you or your employees have.
End of the day – Clean up the job site, so it is ready for use this evening or clean and ready for work tomorrow. Pick up all your tools and material (mobilize and demobilize)
Meet with the homeowner to discuss rest of the project.
Assure them all is going well. Make notes of possible change orders or add-ons. Do not forget to price out change orders. Homeowner’s memory is much better at remembering when you say you will reduce the price. Without something agreed to in writing – the extra money they owe you is easily forgotten.
The increase in scope is never forgotten. You Promised To Do [fill in the blank]. If you think any of the changes are forgotten, wait, you will hear the sounds of a grownup who is impersonating a preschooler wanting a cookie. Water on the stone is an understatement.
We have not even got started on all the rest of the little things that become automatic for Contractors.
- Get Fuel for the Vehicle
- Check The Weather
- Clean The Truck or Van
- Make a Dump Run
- Do More Planning
Next is the paperwork side of all jobs.
- Where are the receipts?
- How do you know if you made any money?
Like most Construction Contractors; you feel like you are waving the money as it goes by. Rest Assured It is true in Washington State – where Contractors are collecting and paying sales tax. The tax money is just moving through the checking account. Borrowing State and Federal tax money are very bad.
The same applies to Payroll Taxes except the company must do a company match for Social Security and Medicare (combined is 7.65% of gross wages) Plus State Unemployment Insurance, State Worker’s Compensation, Contractors License, Contractors Liability Insurance, Bond, Other Specialty Licenses.
The business of being in business as a Construction Contractors is a lot of paperwork to keep track of, government forms to fill out and file, pay taxes. Do I need to get a permit for this job? Is only one piece!
Financials are important to file Annual Federal Taxes. It matters if you are a Sole Prop. LLC or S-Corp. The Individual Reports are for the benefit of the Construction Contractor.
- Are you making money?
- Which job? – Did you like that particular type job?
- Do you go into any job knowing it was just barely going to break even?
- Are you passing out business cards or flyers to the neighbors of your current or past jobs?
- Are driving long distances between jobs?
It is okay to do a job at cost as a favor for your best friend, family, the little old lady down the street as long as you plan for it, willing and able to cover any overages. The catch is knowing in advance. It is too easy for Construction Contractors to be not Profitable.
Contractors can easily forget the cost of overhead. Costs of running a Construction Company is more than Labor, Material, Subcontractor, Permits, and Dump Runs.
Money makes the world go round.
- It is hard to buy gas or groceries with a Hope and a Promise.
- Hint: Even Barter Organizations want “real money” for their fees.
- It is NOT unreasonable to expect to be paid for your work.
Contractors bring value to everyone’s life they touch.
Wishing you and yours the best in everything that comes your way!
Sharie
In Conclusion:
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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 how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or sharie@fasteasyaccounting.com
When You Become A Client - Then we can tap into our resources of knowledge and strategy banks. We use the reports hidden in your QuickBooks in order to diagnose and understand your construction business and develop plans and help you implement a path to success for you and you alone because every contractor has unique Strengths, Weaknesses, Opportunities and Threats (S.W.O.T. Analysis) that when understood can lead to a Strategic Roadmap which cannot help but make a lot of money.
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This Is One More Example of how Fast Easy Accounting is helping construction company owners all across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that, and a lot more valuable to people like you so stop missing out! Call Sharie 206-361-3950 or sharie@fasteasyaccounting.com and schedule your no charge one-hour consultation.
Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time, and now you know about it too!
Thank You For Reading This Far, And I Hope You Understand we really do care about you and all contractors regardless of whether or not you ever hire our services.
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Most Contractors Setup QuickBooks Desktop Version In One Of Three Ways:
#1 EZ Step Interview inside QuickBooks Setup
#2 Asked Their Tax Accountant To Setup QuickBooks
#3 They Attended A How To Setup QuickBooks Class Or Seminar
And QuickBooks Does Not Work The Way They Want It Too!
The Answer: