This Podcast Is Episode Number 502, And It's About How To Prevent Your Construction Company's Yearly Cycle Of Chaos The year is almost over. Fourth-quarter and year-end deadlines are approaching. Most construction business owners who reach out to us describe this as their "Year End Madness" to prepare their documents for the tax accountant.  The end of the year tends to be chaotic for construction company owners, but it's an excellent time to get some extra housekeeping done for your business. If you're on QuickBooks, you can click the Help Menu; depending on the year and version you're using, you can access the Year-End Guide, which will show you how to wrap up your business year. It's not an easy process, but it's all worth it.  Why? Because tax preparers will take what you give them - they don't have the time, and it's much work that you've paid for, but a good tax preparer will know how much you can save if you can track your money. Bottomline - pay your taxes right, but it doesn't have to be more than what you owe. Since you have a few weeks left for December's statements, ensure everything from November back to January 1st is reconciled. Here are also a few things to catch up on: 1. Review your goals and Key Performance Indicators A lot has likely happened for your construction business over the previous 11 months. The end of the year is the perfect time to look back and see how your performance is stacked against your goals. Consider your KPIs and review how you did. Be honest with yourself. If you didn't make your goals, that's okay. Now you can look at what went wrong–or right–and adjust accordingly. Were there surprises that affected your business? Could you prepare more for slower times? Did you take on too much all at once? If you met or exceeded your goals, take some time to celebrate the achievements. 2. Review your business plan Seeing how reality compares to your original business plan is always surprising. Allow yourself to evaluate how you're doing and see if your construction business is becoming what you hoped it would. If it isn't, ask yourself if your goals and vision have changed or if you haven't been focused enough on them. It's okay to adapt your dream as your business evolves and you understand the market better, but make sure the change is one you intend to make, not one that's happened unconsciously. 3. Reconcile accounts receivable Unpaid invoices are often one of the biggest disruptors to cash flow. Check if you have any outstanding accounts and remind those clients to settle before the year ends. It also doesn't hurt to double-check if you have any amounts owing to your suppliers and pay those. 4. Catch up on expenses This is especially important if the end of the calendar year also marks the end of the tax year in your location (as I would like to remind our readers from outside North America), but it's a good practice for anyone. Ensure you've accounted for any eligible business expenses by year's end to stay up to date for tax season. 5. Verify vendor or client information You already know that your business has changed for the year. The same is true for all the other companies that you work with. Take some time to ensure you have their correct information and are aware of any changes to their business terms. 6. Review subscriptions It's easy to let subscriptions fly under the radar, but they quickly add up. Review your active subscriptions and cancel any that aren't relevant anymore. It's easy to get more money in your pocket, and it's fun to choose some new ones for the new year that better meet your needs. 7. Send out year-end letters Put together a year-end letter for customers or clients and another for employees. Let your clients know what you've been up to over the year, share some of your milestones, and let them know how much you appreciate their business. Highlight any community events that your business was a part of. It's an excellent way to stay in touch and...

This Podcast Is Episode Number 501, And It's About Key Drivers To Improve Construction Profitability And Cash Flow Enlightened contractors like you understand the value of developing your own unique Construction Contracting System, a collection of documented repeatable processes and operation manuals. The key is continuously refining your construction company's practices and procedures. Your office ensures your contracting company has a steady flow of projects. Proper accounting and bookkeeping develop timely financial reports to show which jobs are profitable so you can pursue more. Thus, you can focus more on the following: Acquiring the right clients Doing the project as close to on time and budget as possible Get job deposits and timely progress payments Follow-up with clients to monitor satisfaction and line up new projects Boost profitability by recognizing your key drivers Identifying the key drivers of your business is critical to boosting profitability. A key 'driver' significantly impacts your specific construction business's performance. A whole range of factors can affect the performance of every business. The secret is to focus on a handful of drivers that: Affect the performance of your business significantly Are measurable Can be compared to a benchmark, such as last year's figures or an industry average Can be acted upon Make use of benchmarking Use past figures as a benchmark for current performance. Figures for last year or last quarter provide hard facts and established patterns that expose potential problems and opportunities. Also, compare your construction business with other similar companies, especially competitors. Your accountant, bank manager, or industry association may be able to supply industry benchmarks. What are some of the key drivers in business? Critical drivers vary from business to business, and in construction businesses, they include: Sales lead in capital goods or service Market share where only the biggest will survive 'First-time fix' in a maintenance business Even direct competitors may have different drivers. A prime location is not a key driver for a floor installation business, but it is for a brick-and-mortar competitor that relies on a well-located retail store if they sell hardwood flooring and carpet and provide installation services. Some of the following drivers might be relevant to your business: 1. Converting leads into sales The number of leads (information requests or quotes given) provides early warning of any peaks or downturns in your sales. If you have an established leads-to-sales conversion ratio and know the size of an average sale, you can use the pace of leads to forecast sales. Monitoring sales figures can show:  - Which categories of products are selling well - What each salesperson has achieved - If lead conversion rates are improving - Keep your costs under control Maintaining a healthy gross profit margin is critical. If your gross margin percentage is falling, take swift corrective action. The causes could include higher input prices, a changing product mix, production inefficiencies, or excessive discounting. If you run a service business that bills out time, it can be helpful to treat consultants' salaries as a variable rather than overhead costs because this makes it easier to work out who is making you money. 2. Collecting receivables efficiently Your accounts receivable collection period (the number of days on average to collect customer payments) is an important driver to monitor. Try to improve your past performance and at least match the industry standard. If the standard is 35 days, and you take 45 days on average to receive customer payments, then improve your collection activities immediately. Bill promptly and highlight overdue payments for prompt action. The key is consistency – late payers should know that you'll unfailingly contact them. 3. Optimal inventory levels Your inventory turnover rate is the ratio of cost-of-sales...

This Podcast Is Episode Number 500, And It's About Cost-Reduction Strategies For Construction Company Owners Cutting costs can be a quick and easy way to improve the profitability of your construction business. Introducing cost-control measures can bring immediate savings and ensure you remain profitable in the long term. But cost-control measures must be carefully managed. Eliminating errant expenses is beneficial, but indiscriminate cost-cutting could lead to a drop in quality or poor morale if staff fear being made redundant or are not given the tools they need to do their job efficiently. This risk is heavily reduced by identifying where you can safely trim costs, setting clear cost-reduction targets, and researching any cost-saving initiatives before making changes to your contracting business. Planning for effective cost-control The first step towards reducing costs is identifying your major cost areas. These are likely to include: Production Purchasing Sales and marketing Financing Administration Facilities maintenance 1. Profit and Loss Start by assessing your profit and loss statement for the last six months and rank all your expenses from highest to lowest, working your way down the list and identifying areas where you can reduce costs. It's a good idea to first focus on identifying cost-saving measures in places where you'll see the most significant return. For example, it's wise to work toward saving 5% on a $200,000 expense rather than a slightly higher percentage on a lower-cost expense. 2. Try new ideas You might find it challenging to anticipate savings without implementing new systems and processes. Remember that any changes you make don't need to be permanent. If you aren't sure if a cost-saving measure is suitable for your business, consider trying it for a few months and then assessing the results. This way, you'll know the actual cost savings without committing long-term to new processes or changes. Any new processes or systems should be benchmarked and frequently revisited to ensure they are still suitable for your business. Consider asking staff for feedback around any changes to confirm that no hidden problems could cost you more than the cost-saving value. If you are in doubt about any potential changes, consider seeking professional advice from an accountant, industry association, or business mentor. 3. Quick savings You might be surprised that significant savings can be made without worrying about your quality and affecting performance. Here are the most popular ways to trim costs without making radical changes. Eliminate unnecessary costs – start with waste reduction, heating costs, and utility charges. Reduce inefficiency by identifying manual tasks that could be computerized or completed less frequently. Avoid frequent, small orders that cost more than larger orders and take additional time to complete. Reduce travel expenses by booking air travel earlier and using cheaper accommodations on business trips. Find alternatives to high-priced suppliers or negotiate better payment terms or discounts on purchased goods. Revise your credit policies to encourage prompt payment. Brainstorm immediate cost savings with your staff – they might have some valuable suggestions you may have overlooked. 4. Significant savings Once you have identified your major cost areas, you may want to investigate potential ways to save money by changing existing processes. Some of the most common opportunities are listed below, but before adopting any changes, you should be aware of any potential damage to your core business activities. Cut payroll costs by outsourcing non-essential activities. Redesign your existing processes to eliminate duplication and cut time wastage. Make use of current technology or the latest industry innovation. Agree to long-term supply contracts, or guarantee a minimum purchase amount to secure better terms. Trim back or revise your current product offering and remove...

This Podcast Is Episode Number 499, And It's About Construction Company Employee Vs. Contractor - What You Need To Know Depending on the nature of your construction business, you may have workers who are employees or contractors, or you may have both. Each has its merits, but it's important to review which are to meet your tax obligations. With so much discussion about employees, payroll, and payroll taxes, you may feel like missing out by not hiring many employees. The reality is that as a small business owner, you do not have to hire employees. To hire or not to hire employees is one of the few optional things where the business owner can choose, change their mind, and change direction as needed. When you have an employee, you must withhold income tax and report on additional benefits. Contractors generally look after their tax obligations. Is there another way? Yes - to outsource most of the mundane low-value tasks that take time away from what you are skilled in. As the owner, you can use that time to meet with clients, create estimates, collect money, pay bills, and have a little left over. It's against the law to treat an employee as a contractor. Significant penalties apply if you do, so it's essential to get it right. The simplest way to remember is: An employee works in your business and is part of your business. A contractor is running their own business. But how can you be sure that you've got an employee or a contractor on your hands, especially with remote work blurring the lines between employees and contractors? Does it come to the point that you should be hiring a worker as an employee when you thought they were a contractor? There are six factors to consider: 1. Ability to subcontract or delegate An employee is not able to subcontract or delegate the work. They must perform the outlined tasks themselves. If they can't do the work themselves for any reason, say a prolonged illness, and someone else does it, this is a substitution. Your business would then pay the other person to carry out those activities. A contractor can delegate the work as long as they're not obligated to do it themselves per the contract. If your contractor didn't work, they would arrange for another qualified person to do it. You would pay your contractor, who would then pay their subcontractor. 2. Basis of payment An employee is paid a set amount per period. The most obvious example would be an annual salary or hourly wage. Some employees are paid piece-work rates. They receive an amount per successful sale or per the number of pieces produced. A commission basis would be a price-per-item structure. A contractor, however, is paid an agreed-upon price in exchange for a predetermined result. Some contracts may specify the amount to be paid in increments as stages of the project are completed. But the key takeaway is that a contractor is paid when the agreed-upon result is achieved. 3. Equipment, tools, and other assets If your business is responsible for providing the equipment, tools, and other assets required to perform the job, that's characteristic of an employee. If the worker is providing these items, they are likely a contractor. 4. Commercial risks Employees do not bear the commercial risk and are not liable for correcting any defects in the work at their own expense. Instead, your business takes this responsibility. The worker will be paid for the time required to complete the task. A contractor assumes commercial risk. They are responsible for fixing any mistakes on their own time. Your business does not have to pay for any extra time taken or materials used unless otherwise specified in the contract. This additional work would fall under the umbrella of the terms set at the beginning of the project. 5. Control over the work Employees have to complete the work the way the employer specifies. What work is done, where it's done, how it's done, and when it's done are all up to the employer. The employee...

This Podcast Is Episode Number 498, And It's About The Solution To Your Construction Company Equipment Dilemma Is it time for your construction business to invest in some new equipment? And if so, is it a more brilliant business decision and cost-effective to rent or buy? Black Friday, followed by Cyber Monday, is coming. The real question is what equipment is on your business shopping list. It is all a question of your budget, income, cash flow, profit & loss, and taxes. Why you might need new equipment: The right equipment can enhance your processes, productivity, innovation capacity, and bottom line, but should you buy now or wait till a later date? A few reasons you might need to purchase new equipment now are because: - You have some big contracts coming up and need to increase production. - Your construction business is expanding at a fast rate. - You need to replace some aging equipment to maintain your business’s high standards and keep up with the competition. Evaluate your existing financial state It can be easy to get caught up in the growth of your business without putting the necessary time into assessing whether you’re financially ready to buy some more equipment. Try to look beyond your current situation to project your costs over the coming months or years (depending on whether you plan to hire or buy).  You can reduce the financial impact on your business by: Using financing to buy the equipment – you may even get lower rates than hiring the asset, and after you complete your payments, you’ll own it. Purchasing quality used equipment could be more cost-effective than renting over the long term. Examine your business as a whole Short-term purchases without long-term plans can be costly Consider these questions when drawing up plans to invest in more equipment: What effect will the new equipment have on your human resources? Will you need additional staff or relocate staff elsewhere throughout your business? Can the equipment you’re replacing be used elsewhere in your business? The length of the job or project A crucial deciding factor as to whether the right time to purchase more equipment is now is the length of an upcoming project (or the frequency of extra jobs coming up). Additional short-term work suggests hiring would be a better option. Likewise, if you need a highly specialized (and expensive) piece of equipment, it might be preferable to hire it. It makes more sense to buy for longer-term projects. Hire costs can add up quickly as a job gets delayed and pushes past its expected finish date. Usage and availability Knowing that the right equipment is available to your business whenever needed is a significant advantage. If anything unexpected happens with a job, you’ll have the necessary equipment to react and reschedule. Potential clients will also notice that you own the equipment necessary to complete their requests, helping develop trust with your business. When you decide whether to hire or buy, consider the risk of your preferred hire company not having the equipment you want when you need it. Deciding to hire or buy You can get the new equipment you need by renting (hiring) or buying. Each has advantages and disadvantages, so it’s worthwhile assessing your business’s current financial situation, its current capabilities, and its plans (for growth). Weigh up the pros If you choose to purchase new equipment, the advantages over hiring will include the following: Availability – you can be sure the equipment will be available when needed. Ownership – you own the equipment and can potentially get a return on it when you sell it. Additional financing – if using a loan to pay for your equipment, you might be able to get extra funding to cover transport, training, or installation. If you decide to rent the equipment, the pros include the following: Cost – smaller initial investment Maintenance – the lender, should handle insurance and maintenance. Technology...

This Podcast Is Episode Number 497, And It's About A Guide To Construction Client Retention Long-standing customers form the backbone of a robust and well-established business. Make it your mission to ensure that most of your current customers stay with your company for many years. Understanding the High-Profit Client Most of them have personality traits commonly known as drivers. Folks accustomed to getting things done quickly and efficiently do not mind paying professionals for servicing, repairing, remodeling, or building new construction projects related to their houses and commercial buildings. Why it's vital to keep existing customers Your current customers already have personal experiences dealing with your business and using its services. You won't need to spend much time, money, and energy convincing them to continue hiring you. You and your staff know your current clients well. They're likely to increase the amount (or the frequency) of their purchases and recommend your business to others if you: Solve their problems. Meet their needs. Exceed their expectations. According to the US Chartered Institute of Marketing, it costs between four and ten times more to win a new customer than to keep a current customer. Therefore, it's vital to implement outstanding client service to convert occasional customers into loyal, long-standing regulars. 1. Communicate consistently and manage expectations Let your clients know what they can expect from your business, including timescales. Ensure emails are clear Your loyal clients deserve communications that are more personal and less formal. Using impersonal emails for your more extensive email list is fine, but use more personal touches with your best customers. 2. Show your customers you appreciate them You can show your customers you appreciate them in many different ways, including: Thank them personally for hiring you. The more special your clients feel, the more likely they will hire you again. They'll appreciate your thoughtfulness and value your service. Offer your long-term customers bonuses for their loyalty. Giving them a voucher, so they save money the next time. Or a voucher for someone they know who needs your service. It's great to offer new customers rewards and incentives, but that leaves existing customers feeling ignored. 3. Develop customer service standards Develop customer service standards for your business. You could use some of the following guidelines for your business's customer service standards. Try to: Be polite, helpful, and friendly to your clients at all times. Respond to emails as quickly as possible, preferably within three hours but within a maximum of 24 hours. Listen carefully to questions and requests so that you can offer the most appropriate help or advice. Inform customers immediately if there's an unexpected delay in processing their requests or implementing change orders. Train your crew in customer service - everyone in your business who will contact customers should be trained in customer service. Use your business's customer service standards as a basis for your training. Ensure staff knows precisely what's expected of them when interacting with clients. 4. Deal with customer complaints effectively Regard each customer complaint as an opportunity rather than an annoyance. This allows you to handle the complaint satisfactorily. If a customer complains, it shows they still care. Steps to take when a customer complains Train your staff members to take several steps whenever a customer complains. They should: Listen carefully to what the customer is saying. Understand exactly what they're complaining about and why. Admit any mistakes that your business has made and apologize to the customer. Make amends quickly. If necessary, ask the customer what they would like you to do to remedy the situation. Promise to do better next time. Test and improve your business's customer service There are several ways to find out how well...

This Podcast Is Episode Number 496, And It's About Managing Payment Terms For Your Construction Business Clients Getting paid correctly and on time by customers can be a constant frustration for business owners. Communicating your terms is the best way to ensure you aren't out of pocket – or are left chasing debtors. Investors, developers, and shrewd business people designed the most popular method - those who understand the concept of divide and conquer - it is when contractors get little or no down payment for a construction project, do all the work, including change orders, and then try to collect their money. What often happens is that contractors hate paperwork preferring to keep everything in their heads. Then when it comes time to collect their money, they have to re-sell the job and talk their customer into parting with their money. Contractors who finance working capital with their own money and whatever they can borrow will earn less profit and put themselves at a higher risk of failure than contractors who use Other People's Money (O.P.M.). The importance of setting your terms of payment Your payment terms let clients know when and how you expect to be paid. Setting your terms and letting your customers know your expectations gives you better control over your business and a valuable platform for resolving potential payment issues. Remove barriers to sale Setting payment terms shouldn't discourage regular or new customers from doing business with you – there are advantages to giving clients several options. Encourage clients to hire your services and remove barriers to the sale by making the purchase as easy as possible through a variety of ways to pay, including: Mobile payment options. Cash or check. Bank deposit. Online money transfers to your bank account Debit or credit card payment. Take the time to become familiar with all these options and their relative pros and cons. You might, for example, decide to accept only major credit cards, offer a discount for cash, or give your staff leeway to negotiate cash discounts if customers request this. Know your industry's norms It's worth researching your industry's generally accepted payment terms and terms competitors use. This doesn't mean you have to follow suit. You may be able to spot a gap or opportunity to be more flexible. The following examples could build a competitive edge: Feature more payment options than most competitors. Provide quicker and easier ways to pay. Offer a discount for cash deals that give you immediate cash flow and protect you from credit payment defaults. Offer longer payment terms in return for a slightly higher price. Investigate faster and more convenient ways to pay using the latest smartphone technology. Offer variations for payment There are numerous terms you can set out for your customers to pay. Sometimes it's best to use a method that works for you both. Payment in advance Some businesses, such as those operating over eBay or other auction sites, require payment in advance to protect against possible online fraud. Customers first pay the purchase price (including shipping costs). You then wait for the payment to clear before supplying your services. Although this might not work for your type of business, still be wary of relying on a bank deposit or email confirmation not sent directly from the depositing bank as proof of payment. Progress payments These can be useful when working on a lengthy project, such as building a house or a massive remodeling project. Progress payments serve two critical purposes: 1. They provide a regular cash flow to pay running costs. 2. They protect you against total loss if your client goes bust. Standard practice is to build progress payments into contracts based on measurable milestones. Early payment discounts Early payment discounts can encourage people to pay on time. They're more useful on higher-margin services as the deal will have less impact on your profits...

This Podcast Is Episode Number 495, And It's About The Common Construction Payroll Implementation Errors You Can Easily Avoid   Small business owners spend an average of eight hours monthly performing payroll functions. That's 12 business days a year that could be spent generating sales, prospecting new business opportunities, improving products or services, or servicing customers. Upgrading or changing your payroll system comes with a ton of attractive benefits. Saving time and money, making everyone's account more manageable, and better integration are all excellent reasons to consider a change. But if the switch is mishandled, the results can be catastrophic and lead to long-lasting problems. Read on for tips on avoiding a disastrous payroll system migration. 1. Give the project the time it needs People may indeed enjoy coming to work. But for most people, earning money is the main reason they seek employment. Our jobs make the world go round and support our families and us so that we can afford everything else. Not getting paid, or getting paid incorrectly, is a massive problem for your employees. As a business owner, you want to ensure your employees are paid right and on time. This protects your business, but it also protects their happiness. Changing payroll systems is a huge undertaking. There are many moving parts and people who will be affected. Make sure to give this project the time and attention it deserves. Determine what will be necessary to make the transition, understand whom it affects, and communicate with everyone involved. The planning process is critical. Treat it as the foundation for making the switch, and the rest will fall into place. 2. Map out integrations All payroll software will do the basics, but that's just the beginning of your new system. Learn about what other software will integrate with your new platform. Do your research for what add-ons you will need, and build accordingly. Your new system will be able to connect with HR software, advanced accounting functions, time-tracking tools, and so much more. Envision what your complete system looks like and understand how to get it to all work together. When you have the complete picture from the planning stage, it will make the transition a lot smoother. 3. Adjust the platform to your needs The primary motivation for implementing a new payroll system is to make things easier. Yet, many businesses overlook the ways that their new technology can help. It's easy to lean on old methods for getting things done because they're familiar, but that would be a mistake when switching to a new payroll system. Make sure you know about and understand the features of your new platform. This is where the real-time, money, and energy savings will come in. Automate anything you can. When these tools prove their worth, your team will understand the reason for switching. 4. Don't bring over insufficient data When implementing or switching to a new system, take the opportunity to go over your incoming data. Yes, all of it. Get rid of what you don't need while keeping in mind what you have to keep on hand according to any relevant tax agencies. While payroll software is beneficial, it can only do so much. If you put insufficient data in, it will spit bad data out. Go over the information you're inputting with a fine-toothed comb to get the best result. 5. Test, test, test Before you officially implement anything, make sure to test it out. This phase is critical and is often overlooked. There's no quicker way to turn your staff off of something new than for it to work poorly or not right out of the gate. Take the time to test now and reap the benefits when you go live. A Better Approach If you think hiring a full-time in-house payroll staff is not practical, you can always come to us and let us take care of your payroll. Whether you need weekly, fortnightly, or monthly processing, our team is flexible enough to do it for you.  When contractors ask...

This Podcast Is Episode Number 494, And It's About The Five Signs You Need To Start Outsourcing Your Administrative Tasks When you start a small business, it's usually only you behind the whole operation. You wear many hats, from CEO to clean-up crew. As you pour your heart and soul into your business and it begins to grow, the amount of work involved grows. Because a small business focuses on survival, you pay much attention to the bottom line. This makes much sense, but it also leads to being seriously overworked. These days, contractors are under increased pressure to cut their prices to get enough work. And that means they need to reduce costs. New technologies and approaches in cloud computing for construction accounting give forward-thinking contractors a fantastic ability to get more for less -but in most cases, contractors' heads are still stuck in 1990, thinking they have to do everything themselves. There will inevitably come a time when you must consider letting go of some control and paying others to take some things off your plate. Here are five signs that it's time for you to start outsourcing tasks: 1. You're overwhelmed and stressed This one's a dead giveaway. If you find that there isn't enough time in the day, you're losing sleep, free time is a thing of the past, and you're not your usual self — you've reached burnout. This is not a sustainable place, and it would be wise to start offloading some activities ASAP. 2. You're spending time doing things you hate Nobody goes into business hoping to spend their days completing tasks they despise. It starts with a dream or an idea for how to make things better. Or even an idea for how to make more money. Whatever the reasons you had for starting your construction business, they likely did not include doing tedious chores that you don't enjoy. When you decide to outsource, start with functions that are eating up your time in an unenjoyable way. Once you let these go, you'll find your purpose renewed because you can focus on what you love about your business to begin with. 3. Quality of work has gone down When you're working hard and trying to manage all aspects of your business, it can be easy to miss this sign that you're not juggling it as well as you thought. The first signs often come from a client complaint, like delivering a lower-quality product or missing something in your services.  When the quality of your work declines, it's time to hire some help. If you do not satisfy your customers, your business will begin to suffer – and then you won't need the extra support because there won't be a business to run. 4. No time to grow If you want your construction company to grow, you need time to plan for it. If you're getting by and unable to plan your next steps, you need to outsource some tasks. When you find that you're barely holding it together to get everything done and there's no time for anything else, get help. No business gets to the next level by completing the bare minimum. 5. No personal time When your work life is taking over your personal life, it's time to enlist some help. It isn't sustainable to work so hard that you have no time for family, friends, or enjoyable pursuits. Did you get into business so you could work 16 hours a day, seven days a week? Probably not, but you may find yourself doing that for weeks and even months at a time. You might save a bit of money, but you will also exacerbate your stress and miss out on the enjoyable parts of life.  If that's the case, you're going to burn out. It's time to get some help.  Outsource Your Construction Bookkeeping Anything not related to your core construction business is an outsourcing candidate. When I say, "outsource your contractor's bookkeeping," I do not mean turn it all over to us or any other contractor's bookkeeping service because this never seems to work out well. No, I'm talking about outsourcing specific bookkeeping services related to data entry, bills,...

This Podcast Is Episode Number 493, And It's About Management Priorities For New And Experienced Construction Company In the past, Construction Project Managers were laborers or served an apprenticeship in one of the skilled construction trades and were promoted to foreman. This meant many people were more comfortable in manual labor without management skills. And when "things" were put in charge of "people," the results were not usually favorable. Because of this, many construction companies failed and went out of business due to the Cost of Chaos in their businesses. And it is still happening today. In the late 20th century, construction and construction management were separated into individual disciplines, each with its methodologies, terms, and definitions. Project Management Institute developed a set of standards and guidelines, including a glossary of terms to make it possible for construction project managers worldwide to have a common language to communicate. In today's construction business world, there is a need for excellent project management. Highly skilled and qualified Construction Project Managers on your payroll can provide your company with another competitive advantage over your competition which could be like having a money tree in your backyard. As a result, you can put more money in the bank to operate and grow your construction business. Whether you just started your construction business and are a one-person company (just looking to hire a subcontractor for other parts of your project) or a weathered construction company owner looking to regain skills to operate your business confidently, it is essential to prioritize these management guidelines: 1. Put together a solid advisory team Starting a business and owning a construction business can be a lonely process, and thinking you can do it all yourself is the road to extra stress and pressure. Study successful business owners, and you'll find they have surrounded themselves with a strong group of advisers. A typical core team would include an accountant, a lawyer, a banker, and a mentor, such as an experienced business person you admire. You can then add experts who can give you quality advice on specialist areas where you may lack skills, such as finance, production, marketing, or technology. 2. Choose the proper business structure – with advice Should you start as a sole proprietor, a limited liability company, a partnership, or something else? Get advice, as each structure involves legal, regulatory, and tax issues. Think beyond this year. Which structure will carry the most credibility with customers? What's the best system for expanding the business or taking in partners? What form would best suit future investors? Think also of succession – one day, you will want to sell or pass on the business to family, staff, or an outside buyer. 3. Sort out all compliance requirements You don't want to be distracted by compliance issues once you're in business. List everything you need to sort out now, from health and safety issues to permits and consents required from Federal, State, or local authorities. If you're starting a business from home, do you need permission? Will your business involve hazardous activities, noise, or toxic chemicals? If so, what licenses do you need, and what health and safety measures do you need to take? What taxes do you have to pay, and when? What is a sound system for getting this done, so you don't miss any payments or incur penalties? Make a checklist and work systematically through it with help from your advisers. 4. Set up well-built systems Good business is all about substantial systems. To run your business well, you need efficient processes. Time spent setting up simple but effective systems will pay off handsomely. Think about everything from production and work processes to service and billing. With good strategies, you can: Run the business more efficiently and delegate more confidently. Deliver...