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    Process Dependent Vs. People Dependent Increases Contractor's Profits

    Posted by Randal DeHart on Fri, Feb 28, 2014

    Money Is The Main Reason You Own And Operate

    Your Construction Contracting Company

    There are several more reasons you do what you do including the satisfaction you get from getting the job done, the thanks and appreciation from your customers and clients and the freedom and satisfaction of being in control of your financial destiny.

    Is your Construction Company Process Dependent Or People Dependent? There is no one right answer; it depends on what you want from your construction company. Having owned and operated a few of them I found the thrill of living on the edge not knowing what new and exciting things would occur each day got real old real fast!

    If your construction company depends on people to remember what to do, how to do it, when to do it you are in for an emotional and financial Dog-And-Pony-Show-Roller-Coaster-Ride without any safety net and it's not fun!

    If your construction company depends on repeatable processes you are in for a long, boring, predictable ride on the Cash-Cow-Merry-Go-Round and that is a lot of fun!

    When you were young and had a support system providing your food, clothing and shelter that was the time to own and operate your contracting company fast and loose without any checklists, processes, systems or any of that perceived non-sense. You just went out and acquired some customers and found out what they were willing to pay you for:

    Lemonade Stand

    • Setup a fresh cold lemonade stand next to the sidewalk

    • Washing and waxing their car or truck

    • Trimming their trees and bushes

    • Mowing their lawn

    • Walking the dog

    • Running errands

    • Etc.

    Things Changed Rapidly When You Moved Into The Real World And Needed

    To Generate Enough Cash To Pay For All Those Nice Things

    Like Food, Clothing And Shelter

    Some of you have a household full of relatives who moved in and expected you to provide all of their food, clothing and shelter and entertainment while they ate, slept and played all day for a few years. Then suddenly you decided they needed to get an education in return you were still expected to continue to provide their food, clothing and shelter for another twelve years or so. They are your children; so it's O.K.

    You started your construction company to have more money, more freedom and to be in control of your destiny. If you are like most construction contractors your dream has turned into a bit of a nightmare which you cannot seem to wake up from.

    To make matters worse there are a never ending parade of consults and hucksters ready to solve all your problems and make everything right as if by magic; and you know that's not going to happen!

    Perhaps it could be time for a shift is thinking and a radical change in the way you view the world. Perhaps it is time for you to experience:

    The Contractor Paradigm Shift!

    There Are Three Steps To The Contractor Paradigm Shift:

    #1 Unfreeze - Open the portals of your mind and be open to new ideas and test them to determine if they are in agreement with your core values.

    #2 Change State - Arrive at a new understanding about something. Education is the foundation for shifting paradigm. In ancient Greece, Socrates argued that education was about drawing out what was already within the student. "I cannot teach anybody anything; I can only make them think." - Socrates.

    #3 Refreeze - Close the portals of your mind for now.

    fast easy accounting 206 361 3950 contractors bookkeeping services paradigm shift image

    The only real difference between the success and failure is the answers. "If you know the answers the questions will not bother you" - Randalism

    After reading through this we invite you to contact Sharie and set an appointment to chat with her. You will not have to spend any money; you do not have to be a client. However you do have to own or be in the process of getting ready to start a contracting company.

    She will spend some time at NO CHARGE and perhaps you will get a mere scrap of information that could help turn your construction company around. We sincerely care about all contractors and want to do our part to help and support you. She can be reached at 206-361-3950 or sharie@fasteasyaccounting.com.

    We offer the following list of root causes for the extremely high rate of construction company failure.

    Please read objectively and assess your strengths and weaknesses in each area. You will be a better contractor for it. We do not ask you to change who you are but rather encourage you to do what you do best and outsource the rest.

    Some of you will experience a paradigm shift which is something deep inside yourself recognizing there may be another way to do something you are already doing. Others will experience nothing. Whatever is in your best interest will occur.

    The list below comes from working with hundreds of construction companies for over thirty years. This is not academic, it is real world experience and I trust you find some value in it. I apologize in advance if anyone is offended by the direct nature of the statements below. Please accept them in the Spirit of friendship, respect and honor as I intend them.

    Construction Company Failure Root Causes:


    1. Working for customers instead of clients and not charging enough (The 80-20 Rule)

    1. Not using Additional Work Orders or Change Orders (Click For FREE Change Order Template)

    2. Cash flow issues kill contractors even though they have profit

    3. Changes in their operations due to contingencies beyond their control

    4. Contractors are subject matter experts in a few areas then believe they know everything

    5. Sales tax liens against contractors twenty two times higher than any other business

    6. Poor document management results in overpaying taxes

    7. Poor scheduling affects production and cash flow

    8. Management skills are learned in the school of hard knocks

    9. Lack of understanding of Construction Psychology

    10. Using outdated time cards instead of a time card calculator

    11. Creatures of habit performing the same mental scripts getting the same bad results

    12. Contractors assimilate pictures faster and easier than numbers and words

    13. General distrust of their Board of Advisors until it is too late

    14. Generally not able to construct BPM Strategy Tools to help them in decision-making

    15. Generally do not plan from back (end goals) to front (current operations)

    16. Look at financial data as time allows and in a historical context only, no forecasting

    17. Operate in the manner that is their organic, natural instinct (it feels right)

    18. Predominantly not financial managers and do not understand the value of outsourcing

    19. Work primarily IN the business but not ON the business

    20. Spend a good deal of time “putting out the same fires” over and over

    21. Value production over planning

    22. Want to work less and earn more money but not willing to learn how

    23. Burn out is high after the tenth year of owning and operating a construction company

    24. They would like problems solved for them without spending time or money

    25. They want instant understanding, instant answers and instant results

    26. Time and money are the commodities that are in the shortest supply

    27. Work-In-Progress (WIP) report the ultimate gauge for cash flow and least understood

    28. Working on stuff you are not skilled in by trying to save money

    29. Ignoring Profit Centers and Key Performance Indicators (KPI)

    30. Attending the business round table at the local bar which leads to Intellectual Incest

    31. Contractors don’t plan, they recover

    32. Do you have lots of “Squeaky Wheels” and do you carry a bucket of grease at all times?

    33. Every contractor with cash flow problems works too hard, has too many clients and sells to much

    34. Every contractor’s income is the average of their customers and client’s income

    35. Good job pays $40K a year whereas a contractor with good financial reports earns $100K+ a year

    36. Having ten dollar conversations instead of million dollar conversations

    37. Lack of good accounting records causes 9 out of 10 contractor’s business failures

    38. Not one contractor’s business failure had meaningful records in the Quarter preceding the failure

    39. Poor contractors do their own accounting, payroll, and tax reports to save money; and yet they don’t

    40. The more you know about bookkeeping the less successful you will be in your contracting business

    41. Wealthy contractors work on building relationships and innovating (faster/better/cheaper)

    42. Wealthy contractors outsource their Accounting and get timely financial and business coaching

    43. Thinking you can only create wealth if you are doing the work

    44. Thinking you can get rich with your head in a ditch

    45. Working ten hours a day instead of focusing on marketing and innovation

    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" or spend your life endlessly chasing details, missing appointments, suffer untold losses in cash flow and profits or you can seek help from someone who understands the construction industry who can help your develop a plan and work with you side-by-side to get it done.

    If Your Construction Company Is Process Dependent, Stop Reading

    If Your Construction Company Is People Dependent, Please Continue Reading

    You may be getting your construction projects done with sheer will-power but the lack processes, business plan and strategy will eventually wear you down.

    Your construction company can benefit from systems and processes 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.

    Here Are Some Important Questions To Consider:

    • What if there was a way to have useful Financial and Job Costing Reports on demand 24/7 from a secure web portal that provides the information you and your construction company actually need rather than adapting the way you work to a tool that only partially addresses your construction company's needs?

    • What if these tools and processes not only worked well within your construction company but allowed you to invite your Board of Advisors to participate and collaborate with you?

    • What if these tools and processes could be customized for your particular construction company without having to go to multiple sources to get it done?

    • What if these tools and processes required little or no technology investment?

    At This Point A Typical Project Follows This Sequence:

    1. Contact Sharie 206-361-3950 or sharie@fasteasyaccounting.com and help her to understand and identify your construction company process needs and priorities.

    2. We analyze and review your existing QuickBooks data file for how QuickBooks Setup was done and determine what if any repairs to recommend.

    3. You will have another conversation with Sharie to verify our understanding of your construction company needs and areas for improvement.

    4. We will work with you to examine your processes and start by finding the "Low Hanging Fruit" that offers the most "Bang For The Buck". We want to find fast easy ways to generate new cash flows and profits with a reasonable expectation of Return On Investment (R.O.I).

    5. Once we have proven our worth then we will examine slightly larger projects and develop simple case studies with cost-benefit-analysis to determine which ones, if any make sense to proceed with doing.

    6. We will continually propose methods to simplify and streamline your construction company's operations where it makes sense and has a reasonable expectation of Return On Investment (R.O.I).

    7. Training and orientation will begin in just a few days after we start working together and will move at whatever pace you are comfortable with and makes sound financial sense.

    With the appropriate tools and processes you can have the insights you need to manage your construction company effectively and efficiently. You can monitor your work-in-process and you can manage your work-in-process.

    The Last Thing I Leave You With Is Knowledge Is Power

    There are simple answers to all complex problems and they are usually wrong. Invest the time, money and effort to do it right the first time. You have what it takes to be successful and you deserve to be wealthy because contractors add value to other people's lives'. We stand ready to serve when you are ready to contact us.

    Profitable Construction - Companies have known about the value of outsourced bookkeeping services for a long time and now you know about it too!

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    We Scan Your Receipts And Invoices link them to Xero transactions where it is appropriate and give you back a CPA-ready packet for your tax return and we provide ongoing Cloud Based Contractors Bookkeeping Services by accountants who understand construction.

    Thinking About Outsourcing Your Contractors Bookkeeping Services?

    Click On The Button Below To Download A Free Guide

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    Business Process Management (BPM) For Contractors

    Need Help Now?

    Call Sharie 206-361-3950206-361-3950

    sharie@fasteasyaccounting.com

     

     

    We Are Xero Accounting Experts Specializing In Construction Bookkeeping Services

    About The Author:

    Randal DeHart, PMP, QPA The Construction Accountant Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

    Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Follow Randal on Google+

    Topics: Process Dependent Vs. People Dependent, The Contractor Paradigm Shift, People Dependent Vs. Process Dependent

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