Note: We are tracking the latest construction industry news and online resources for contractors in the time of COVID-19.
Please note that the PPP loans are closed; and other SBA loans are hard to get.

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    Costly Bookkeeping Mistakes That Kill Profit And Growth

    Posted by Sharie DeHart on Fri, Sep 25, 2020

    Most construction business owners like you understand that effective financial management is key to your success. But lack of knowledge, frustration, and even avoidance can add up to your bookkeeping mistakes that derail future company growth.

    With everything contractors like you need to do every day, including weekends and holidays, it's too easy to let crisp, timely Financial Reports go unread, and in some cases, you may not fully understand what they are telling you when you do read them.
     

     

    Protect your construction business and reduce stress by avoiding these costly bookkeeping errors:

    Mixing personal and professional finances

    From day one, business owners should have a separate bank account to deposit their income and pay their business expenses.

    It's also crucial to designate a business-only credit card. Come tax time; separate statements will make submitting claimable expenses quick and easy while reducing painful audit risk.

    Letting accounts receivable slide

    It's frighteningly easy to lose track of which customers have paid you and which clients are late. Implement a strict policy and schedule for tracking accounts receivable and pursuing unpaid invoices. 

    • Ask customers to pay at the point of purchase or no more than 30 days later;
    • Contact clients to confirm they have received your invoice and to agree on a payment date;
    • Follow up immediately when payment dates are missed; and
    • Keep accurate, up-to-date records of each client's payment history.

    Investing in a cloud-based accounting solution can make AR a breeze by automating your monthly invoicing – and contacting late payers with a reminder email. 

    Not tracking direct construction job for each job or project

    If you want to know where you are making and losing money, you need to implement a system of Job Costing. 

    Not allocating overhead to jobs

    For your Job Costing and Job Profitability Reports to be useful, you need a way to allocate overhead among jobs. Overhead generally refers to costs that benefit all jobs.

    For Example:

    • Office And Shop Rent
    • Office Supplies
    • Admin Staff Salary
    • Officer Owner Salary
    • Marketing And Advertising
    • Consulting, Legal, And Accounting
    • Other Overhead Costs

    Not using tech to track your expenses

    Tired of chasing down missing receipts and struggling to justify claims come tax time? There's an app for that! Our outsourced bookkeeping clients have mobile apps specific to their company needs that integrate seamlessly with QuickBooks or Xero.

    Neglecting to strategize for long-term growth

    Practical accounting means managing day-to-day finances while making provisions for future growth. Software and cloud-based solutions offer easy ways to track your financials, but they also generate reports and provide analytic tools construction business owners can use for future forecasting.

    Familiarize yourself with the reports your software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about which reports and metrics are most important for your particular business and how to utilize them. 

    Final thoughts

    You don't have to go through it alone. 

    Construction business owners like you are rarely trained accountants. Don't try to manage your company's finances all by yourself. 

    Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends. 

    You'll feel empowered, which is step one to forging a more love-filled relationship with small business accounting. If you need help avoiding these mistakes, fill out the form on the right and I'll be in touch with you.

    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. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

     

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    Simply scan the QR code or search for ‘MyAccountants’ in the App Store and enter the Access code: FEAHEROS to utilize the powerful App features and capabilities, and benefit from having our Construction Accounting App at your fingertips, 24/7."

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    Topics: Construction Profits, Construction Accounting, Contractor, Contractor Tips, Contractor Operating Tips

    Contractor Clients' Four Critical Words That Leads To Change Orders

    Posted by Sharie DeHart on Fri, Sep 18, 2020

    Are you sick and tired of customers continually changing stuff on you and creating delays or extra work?

    Is your customer leaving you "love notes" regarding minor changes they would like to make on the counter or someplace you can easily find them when you first arrive in the morning? Or the never-ending chain of emails. Or greeting you with "I/we thought we would like to have...."

    Do these notes, emails, or greetings send you into a mental or alone verbal rant about why they can't leave you alone to get your work done?

    Are you concerned they expect you to do the additional work for FREE, NO CHARGE, NA-DA, ZIP, ZERO?

    You needed to be compensated for your time and your crew's time, and you need to do it right away.

    Read More

    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Change Order, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    A Guide To Construction Business Recovery In The Pandemic World

    Posted by Sharie DeHart on Fri, Sep 11, 2020

    As you well know, the COVID-19 pandemic is not just a public health issue; it's also caused lock-downs and resulting financial worries on a global scale.
     
    Almost all business sectors have experienced declining profits, liquidity that is drying out, and even bankruptcy. Although the short-term outlook varies depending on your industry sector, all business leaders need to set up a strategy to guide their way towards recovery. 
     
    Nevertheless, the rough and tumble world of construction company ownership is not for the weak or the timid. It is an arena where the admission price is a lot of blood, sweat, tears, and long nights and lost sleep, with peaks of enthusiasm and depths of despair.

    Read More

    Topics: Contractor Operating Tips, Contractor Guidance

    How To Grow Your Construction Network Without In-Person Events

    Posted by Sharie DeHart on Fri, Aug 28, 2020

    Networking can be a crucial way to keep your construction business growing.
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    Topics: Networking, Clients or Customers, Contractor, Contractor Tips, Contractor Operating Tips

    Contractors, Know What You're Good At And Generate More Leads

    Posted by Sharie DeHart on Fri, Aug 14, 2020

    The pressures of owning and operating a construction company can be, at times, almost unbearable. Unlike any other business, there's no "one size fits all" solution in your toolbox to fix your dilemma.

    Read More

    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Customers, Contractor, Contractor Tips, Contractor Operating Tips, SWOT Analysis

    Five Ways To Increase Your Construction Business Profit

    Posted by Sharie DeHart on Fri, Aug 07, 2020

    First, we always ask our clients to decide what they want from their construction company. Do you want to get rid of the boss? Do you want to work in a more structured environment? Are you sick and tired of working for the boss's son or daughter? Do you want to make much money? Do you wish to make enough money to pay the bills and enjoy a vacation now and then? There are no wrong answers, whatever is right for you is the correct answer; however, you need a reason to do it otherwise when the going gets tough, and it will, you will either win or lose depending on your purpose. With a big enough reason, you will find a way to win.
     
    For many small construction companies, the best way to improve profitability is to increase turnover, as there's no limit to sales, but there is a limit to how much you can reduce your costs.
     
    Let's look at how you can focus on each of the five ways in our profit increase calculator to achieve your goal of improving profits.
     
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    Topics: Construction Profits, Construction Accounting, Profitable Leads For Contractors, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    Troublesome Customers Every Contractor Should Learn To Recognize And Deal With

    Posted by Sharie DeHart on Fri, Jul 24, 2020

    Customers are disloyal price buyers who purchase commodities and services with cost as their primary consideration. Clients are loyal value buyers who purchase goods and services with suitability as their primary consideration.
     
    Every businessperson knows that customers and clients are not created equal. Clients are loyal, while customers will stray if they're offered a slightly lower price elsewhere. Some customers are demanding, while clients only call when they wish to hire you right away.
     
    Every business must deal with a variety of customers and clients. But there are certain types of customers who do more harm than good to your construction business - they drain your resources while adding little to your revenue. 
     
     
    Read More

    Topics: Construction Accounting, Clients or Customers, Customers, Contractor, Contractor Tips, Contractor Operating Tips

    What To Do If Your Construction Business Is Operating At A Loss

    Posted by Sharie DeHart on Fri, Jul 10, 2020

    Operating at a loss means you’re spending more money than you’re making. And while it’s not uncommon, especially for new businesses, it’s still not an ideal situation and shouldn’t continue in the long term. Otherwise, you will eventually run out of cash reserves and be out of business.

    So the first thing you need to identify is why you’re operating at a loss. If it’s because you’re still in the start-up phase, then you might not need to worry too much as long as you’ve got enough cash to meet your costs. But if the losses are due to a decline in sales, then it’s time to review your construction business and, if necessary, get professional help.

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    Topics: Profit And Loss Reports, Construction Marketing, Contractor, Contractor Tips, finance, Contractor Operating Tips

    Questions To Ask As Your Construction Business Reopens

    Posted by Sharie DeHart on Fri, Jul 03, 2020

    (Note: Celebrate Independence Day with a coupon code found at the end of this post)
     
    As small business owners look to operations after reopening, there are some critical business questions to ask. These questions will help you determine what adaptations you want to keep, whether your construction business model is working, if there are additional changes you want to make to keep your company operational through future economic downturns.
     
    It's not always fun to do this sort of examination, but the answers to these questions will help you make the best possible future decisions.
     
    Read More

    Topics: Construction Accounting, Contractor, Contractor Tips, Contractor Operating Tips, Reopening, Construction Business After COVID-19

    Sure-fire Construction Marketing Plan In Eight Easy Steps

    Posted by Sharie DeHart on Fri, Jun 19, 2020

    If you're serious about getting the best value you can for your marketing budget, you'll need to develop a marketing plan. Many contractors are having challenges adapting to this ever-changing economy. Trade contractors who rely on the same general contractors they did a few years ago to supply jobs to bid on are finding it more difficult to recover and find work.
     
    It appears that history is repeating itself. Instead of yellow pages, I see many well-intentioned people with their minds and hearts in the right place with a lot of really great ideas on what works and fails in social media. I certainly don't know what works for every contractor; however, what I do know is that every construction company is unique, and what works for your competitor may not work for you.
     
    Read More

    Topics: Marketing Tracking, Construction Marketing, Construction Accounting, Marketing, Contractor Marketing, Contractor, Contractor Tips, Contractor Operating Tips

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