The business cycle operates like ocean waves that cause a lot of construction business to go out in a year or two. Some grew too fast without reliable financial reporting tools and proper guidance.
As you may know, there is an expansion and contraction Isoquant that occurs in all businesses. For construction companies, it is accelerated because of the enormous risks in project work. The changes in demand for Labor, Material, Other Costs, Subcontractors can occur almost overnight which often causes a financial death spiral, and the contractor does not know they are in trouble before it is too late.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
A wise business owner once said, "Happiness is positive cash flow." As a business owner, I'm sure you agree. Everything is better when your cash-in exceeds your cash-out.
A cash crisis can be emotionally devastating, and it can even kill your business. If you've ever had to beg, borrow, and steal to cover tomorrows payroll you know what I mean.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
When it comes to paying employees, laws and the IRS, have made the payroll function a time-consuming nightmare for the small business owner.
Small business owners spend an average of eight hours a month performing payroll functions. That's 12 full days a year that could be spent generating sales, prospecting new business opportunities, improving products or services, or servicing customers.
Getting time cards input into QuickBooks and processing payroll can be a big hassle for your construction company.
- Employee advances and loans that you forget to deduct can drain away your entire profit.
- Timecards come in late causing payroll to be under enormous pressure to meet direct deposit deadlines.
- Tracking employee bonuses, reimbursements and garnishments take time and money and can cost your company some serious fines, penalties, and lost productivity if not handled correctly.
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Topics:
Payroll Processing,
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips,
Payroll For Construction Contractors
Profitable contractors attend networking events not because they have nothing better to do; they do it because it pays off. You can either spend hours doing office tasks like bookkeeping or getting face to face with someone who may need your services. Meeting people gives you the chance to build and develop relationships, hire you, or refer you to someone who might.
Most of our contractor clients work alone or with a small team, making connections vital and refreshing to meet other professionals doing similar work.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
During my lifetime, I have seen too many contractors work hard, never have enough money to retire. Some of them die from exhaustion, and others just wore themselves out and lived their final years in poverty and only a few, less than 5% ever made enough money from owning and operating their construction company and outside investments to retire early enough and enjoy a comfortable lifestyle.
This article is a bit strong, and it could offend some folks. If it offends you, please accept my sincere apologies. I tend to tell it straight and not sugar coat anything because I have been involved in the construction industry most of my life beginning with working in my Step Father's construction company after school in the mid-1960s.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
If a Contractors Bookkeeping Services System doesn't work and they want it fixed but will not allow any changes, they need a magician, not a construction bookkeeper. Our workflow removes paperwork frustrations only if the contractor is also willing to do their part.
It hurts when we have to let a contractor client go elsewhere because we are not able to help them. We sincerely believe we can help all contractors have more freedom, by earning more money, working fewer hours and sleeping better at night by taking the pressure off their bookkeeping so they can focus on financial reports and job costing reports, instead of data entry.
In a few rare cases, contractor clients have wanted specific financial and job costing reports, but they flatly refused to allow us to make changes in their contractors bookkeeping services system which would have made it possible.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
Journal entries are a quick and dirty way to get transactions in without putting forth the time and effort to enter each transaction. In the short run, you save time; in the long term, you can forget about the accurate
Job Cost Reports.
QuickBooks set up right and choosing the correct QuickBooks Version (QuickBooks Mac here) is the most critical part of being able to generate accurate reports including Job Cost Reports all because it is the foundation upon which your entire financial system is built. Put the wrong foundation under your business, and it will not matter who is doing the bookkeeping because it will always be a mess and you will never get the reports you need to operate and grow your business profitably. Your
Board of Advisors and especially your banker
will be unhappy; however, they may not say it outright, just that your loans, lines of credit, and referral opportunities may be limited.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
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.
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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.
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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.
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Topics:
Contractor Challenges,
Contractor,
Contractor Tips,
finance,
Contractor Operating Tips
