The Design Builder's Blog

Guest Blogger: Diane Menke, VP/Operations Manager of Myers Constructs, Inc.  Diane Menke (left) and Tamara Myers (right) are the co-owners and principals of Myers Constructs, Inc., an award-winning design to build firm serving the greater Philadelphia region. A certified Women Business Enterprise, Myers Constructs is also a member of the U.S. Green Building Council, NARI, and NKBA.

Advice For Contractors When Working With Home Buyers Considering Renovations

The Construction Pro: A Key Player in the Home-Buying Process

Most people who are in the market for buying a home that is in need of renovation are not home-construction experts — and they don't know what the various necessary upgrades will cost them. That's why it makes sense for them to reach out to a reputable local construction expert for information before they make a property purchase. We get calls from people in this position often.

This is the advice we give them:

• Their real estate agent should provide them with comparable values for the property they are considering. The agent should also tell them where that prospective property may be lacking, in terms of value and sale-ability. For example, does it have enough bathrooms? Does it have updated systems, finishes, and appliances? What other features should it have to compete with the highest priced comps in the area?
• Once they find a property they want to put a serious offer on, they should reach out to a building professional for some assistance in developing their renovation budget. That budget should be weighed against what the comps and the offer will be. If they do not yet have a relationship with that construction pro, they should expect to compensate them for their time. A good carpenter might bill them $70/hour; a design-build pro might run $120/hour or more. Small structural repairs and a bathroom refit with no design might be perfect for the carpenter, while a complicated project like a kitchen or addition require a design/build professional who has experience in those types of projects.
• Most property buyers do not need to have full plans and exact budgets to formulate their offer. If they come away from the discussions with a ballpark range of expected costs — with a 10-15% cushion added for contingencies that might be found once walls are opened up — they should be in good shape to make an offer.
• Once they close on a property purchase, we encourage them to reach out to those same construction pros and offer them the work on their new home. In this way, they will develop mutual trust with a valuable ally on their wealth-building team.

Guest Blogger: Mark Brown is a student at BYU-Idaho where he studies Construction Management. He currently lives in Spokane, WA, working as a carpenter and studying online while his wife finishes her Bachelor’s degree in nursing. This article is a shortened version of an essay titled “Is Generation Y learning how to learn?” written by Mark for a research writing class. It has been revised to help contractors working with Gen Y employees.

Advice For Contractors On How To Work With Generation Y From One Of Them

“Things just aren’t the way they used to be” is a lament often heard from aging generations. However nostalgic and skeptical this observation may be, it is definitely true. Generation Y (those born between 1980 and 2000) is growing up in a world completely different than their parents. Today we are surrounded throughout our waking hours by new technologies and devices that feed us steady and seemingly infinite flows of information, providing us with instant connection to knowledge that used to be much more difficult to acquire. Obviously, things are not the way they used to be. One can’t help but wonder; how do these changes affect our daily lives?  The way we work?  Our relationships with others?  The way we see ourselves?  How we learn?  

Contractors today face an especially daunting task trying to teach the business to a generation that learns completely different than the average hard-knocks PhD. Understanding these differences is essential to utilizing the huge talent Gen Y possesses and snuffing your own doubts of any hope for the future. 

The way Gen Y learns is fundamentally different than their parents.

They process information about ten times faster, they expect free and instant access to all this information, and they wonder what everyone else thinks about it all. Most have grown up learning on a computer from the time they were in grade school. Google is their main professor and they’ve learned to research as fast and efficient as possible. Capitalize on this. Gen Y can sail through tasks you find yourself poring over for hours like learning new scheduling software, Google Sketchup, or computer networking. They love to share what they’ve learned and can help you learn faster.

They can learn fast and perform consistently

Like a Southern California piece-work carpenter, Gen Y loves to have their work lined out and ready to tackle. This may be frustrating to those who value someone who can see what needs to be done and figure out how to do it, but think of the value of someone who can learn fast and perform consistently. Gen Y is also extremely adaptable, so they can learn how to be the leader who takes charge. They just need a better reason than, “Because that’s how it’s done you idiot!”

Can, will you give them what they want?

Gen Y has often been accused of wanting everything right now that their parents spent 25 years earning. However fair the accusation may be, it definitely reveals something about Gen Y. You’ll be hard pressed to find a more ambitious bunch. If they know that you can give them something they really want, they will follow whatever path you draw for them to get it. You can build them in ways that you never could with a burnt out 50 year old carpenter who’s been swinging a hammer the same way since he was 18.

The construction industry has seen some dismal days as of lately and those who have spent nearly a lifetime in it may not wish others the same. But, I hope they can see the promise that exists in the younger generation and take some time to be coaches and mentors to those who are ready and more than capable of taking the industry to the next level.

Carpenters Should Read This Before They Interview For Their Next Job

If you’re a carpenter looking for a better job and career opportunity you might want to consider a lot more than just compensation before you decide which remodeling or construction business you will work for.  Sure, what you get paid is important.  However, considering how much money you will make over the course of your entire career might make far more sense than only considering how much you will get paid next week.

At the Providence RI JLC Live Show coming up in March I will be presenting a seminar titled “A Call to Action and an Opportunity for Carpenters and Business Owners” on Saturday morning March 23^rd from 7-8:30 AM.   At the seminar I will be sharing some strategies carpenters can use to help them if they would like to improve their careers and compensation.  This same information can be used by business owners if they want to attract and keep quality carpenters for their production teams.

Below is a list of some of the considerations an aspiring carpenter might want to use when searching and interviewing for a new job and career opportunity.  As part of my presentation I’ll be reviewing and discussing this list at the seminar.  My hope is that by discussing these considerations attendees can determine whether they are working at the right company already, whether they should consider looking for a new company to work for, and how to evaluate the businesses they interview with.

Topics to be discussed at the JLC LIVE Seminar

The Company You Keep: Financial Considerations

• Does the business have a financial budget for the year?
• Can and does the business run budget to actual reports to track progress?
• Does the business have a formal estimating system and method?
• Does the business share the estimate with field staff?
• Does the business do job costing on a consistent basis?
• Does the business share job costing info with field staff?

The Company You Keep: Company Structure Considerations

• Does the business have an organizational chart you can look at?
• Do they have a growth plan and organizational charts to show future staffing needs?
• Do they have and will they share written job descriptions?
• Do they use a production manager driven or lead carpenter driven production system?
• Does the business have a place of business?
• Does the business operate legally?

The Company You Keep: Opportunity for Advancement

• Does the business plan to advance employees as it grows or hire to fill future positions?
• Has the business defined career paths for employees, in writing?
• Do job descriptions include educational requirements and or expectations?
• Does the business have an adequate budget for employee education?
• Does the business have a formal and scheduled review process?
• Does the business have an objective method for establishing compensation rates?

The Company You Keep: Current Leadership

• What are the goals of the owner; Practice vs. growing business?
• Is the owner a craftsman or business person?
• Is middle management already in place?
• Is the owner or manager “present” at the job interview?
• Does the owner share financial information with employees?
• Does the owner conduct him/herself in a professional manner?

Thinking about attending this JLC LIVE seminar with Shawn?

Below is the summary slide from my presentation.   In case you’re considering joining me that morning, the slide should help give you an understanding of what I’ll be discussing at the seminar.

Other seminars Shawn will be presenting at JLC LIVE in Providence RI:

EPA RRP Certified Lead-Safe Renovator Training & Certification (Also covers MA and RI Certification)

Three Keys to Building a Profitable and Sustainable Business

Leadership Skills For The Lead Carpenter

Checklist of Consideration for Contractors Offering Snow Removal Services.

When winter snows and ice dams hit many contractors see offering snow and ice dam removal as an opportunity to make money.   If you’re considering snow removal as an opportunity for your business thinking ahead about how and where you offer it, as well as how you will perform the work, can help protect your business from inherent risks.  Thinking ahead about your approach can even help you drum up additional work after the snow has disappeared.

Offering snow removal services makes sense for many contractors 

After all, if work is slow during winter months, snow removal can bring in extra revenue.   Also, many projects come to a halt when the weather makes working outside impractical or makes going in and out of a building while working on interior renovations dangerous and messy.   If you price it correctly, offering snow removal and ice dam removal can help keep employees working and help contribute gross profit to cover business overhead.

How the snow removal checklist list came about

Several years ago I helped one of my remodeler coaching clients plan out how to offer and perform snow removal services.   He called me because he realized there were a lot of things he should consider before just sending his guys out with there with shovels and axes.  Below is a list of considerations from my coaching session notes created during my discussions with him.   By sharing my notes my hope is that you will find them helpful, you will price the work for profit, you and your employees will be safer while performing the work, you can use the opportunity to create new customers and you will generate future work from those that hire you.

Checklist of Snow Removal Services Considerations for Contractors:

• Suggested he consider the work is labor intensive, he will not be earning his typical gross profit on subs or materials, be sure to price hourly rates accordingly.
• Agreed on $300 first hour with two men, $80/hr per additional man hour.
• 4 men doing it currently.  Full employees with Workers Compensation (WC) coverage. 
• Discussed properly equipping his employees to avoid risk and health problems. Confirmed he has fall protection equipment needed to meet OSHA requirements and employees know how to use it.  Should try to do as much of the work as they can from the ground.
• Confirmed that he knows which WC classification workers will be in while doing the work and what rate he will be charged on all related payroll.
• Discussed a variety of ways to do the work to limit residual damages.
• Discussed setting realistic expectation with clients before doing the work. Agreed that only using a verbal agreement about services would not be acceptable.
• Help home owners understand nature of the work, let them know that damages will happen and that he cannot guarantee preventing leaks or any possible damages inside or outside.
• Suggested he have an agreement; created and or reviewed by legal counsel.
• Suggested he disclaim in the agreement any water damage prevention and or remediation responsibilities.
• Look at the work as a good way to meet new clients.  Because there might be more demand than he can service, be selective about who he will work for, make sure they fit within his target customer/location niche.
• Suggested he make follow up calls to verify home owners are all set and happy, ask if they should come back if it keeps snowing.
• Collect contact info including e-mail addresses so he can re-market for future work.
• If he uses any subs make sure they are properly insured and follow OSHA requirements.  Make sure subs know not to attempt to solicit or accept any work from his customers.
• Keep emergency contact info on site and or in each vehicle.
• Suggest he ask about future work, both snow related and remodeling.
• Could create a checklist of things to ask or tell customers related to the work and future work; what his company does.  Said he has already created a simple sheet listing other work they do.
• Suggested he should be prepared regarding how to differentiate his business from other businesses offering the work. Discussed one way is to offer all clients an insurance certificate that lists the home owner as an additional insured, sent direct to the client from his insurance agent before work starts.  Verify his agent is prepared and capable to do so.
• Suggested considering doing a YouTube video commercial about the service and put it on his website ASAP.
• Discourage use of Red Bull, maybe even coffee. Suggested hot chocolate and donuts.
• Suggested refrigerator magnets would be a good leave behind.  Also consider 5-5-10 door hanger package we had discussed on a previous call about jobsite marketing.
• Asked him what his top three takeaways from our discussion were:

1. Caution regarding liabilities, set expectations with clients in writing.
2. Realizes the marketing opportunity, concentrate on working for his target customer.
3. Keep an eye on the big picture to avoid liabilities and not miss an opportunity by being blinded by a just getting the work done mentality.

Guest Blogger: Jim Lex is the owner of Better Homes and Remodeling, a Design/Build firm serving the greater Atlanta area. His passion is to make homes better by designing and building spaces that serve better!  As a full service remodeler, he also offers home maintenance and handyman services. On the national level, Jim supports the construction industry by teaching classes on lead, mold and radon.  I ran into Jim on LinkedIn.  He participated in a discussion I had started about great business books for remodelers.  I liked some of the comments he added to discussion regarding his approach to reading and asked him to do a guest blog.

Reading ROI For Contractors: How To Maximize Results When Reading Business Books

Reading for a Positive Change

Reading can be a powerful tool to help grow your remodeling business. However, reading is of little benefit when it is done casually. Casual reading works fine for the news, novels, and entertainment.  But with business, casual reading isn’t enough because it brings only casual results. As contractors, we need great results with measurable change.  If you haven’t been getting that from your reading, then perhaps it’s time for a reading pathway.

Reading for a Positive Change is a reading pathway involving several key steps that culminate in both personal and business growth.

Read wisely and widely

A wise king once said, “You can get anything by either wisdom or money, but being wise has many advantages.” So be sure to read wisely and widely to get all the advantages.

• Read wisely – Identify industry movers and shakers, ask for their referrals and check online book reviews. Starting with the right book ensures you are getting the best answers and insights.  It will save you time and money.
• Read widely – Remodelers tend to be strong on technical skills and product knowledge.  But your positive change might be elsewhere like your presentation, office, or running your business. Read widely to improve your skills in other vital areas such as selling, design, marketing, managing, communicating, finances, technical/computer, building processes, and so on. Your width and depth in reading supports you like the width and depth of a foundation supports a home.

Great reads don’t always cost a lot.  With Amazon used books, I recently obtained several excellent business classics ($20 and up new) for as low as $1 each.

Read actively

To get the most from any read, begin with a posture that is open minded, disciplined and focused. Avoid early judgments of new ideas as you may miss the very thing you need most. Be sure to notate and contemplate:

• Notate – Use 1, 2 or 3 stars for anything you MUST remember or implement.  Highlight key concepts and paragraphs. Underline key industry words, phrases and clauses.
• Contemplate – Review your learning notations.  Think about how and when you should be using your underlines.  Review your highlights and stars.  I often use times away from a book, such as driving, to process how challenges can be solved.  Questions I might ask myself include, how could I have closed that missed sale? What more could I be doing to obtain customer loyalty? How can I better manage customers expectations? After asking yourself insightful questions, talk it over with someone. It’s extremely beneficial to hear yourself processing it.  

Implement for a positive change

At the end of the day, if you don’t learn something new, understand it in your own words, and then implement it for a positive change, nothing happened! So don’t wait. Do something now while it is fresh in your mind.

• Begin using the underlined words immediately.  It will increase your communication and professionalism.    
• Create a one-page summary of takeaways as bullet points. It will help “nail down” what you learned.  At the bottom, write page #’s with “future” points to revisit.
• Write implementation goals with start and finish dates. Work it and track your progress.  The success of your implementation is your return on investment.  And who doesn’t love a good ROI.

If your reading hasn’t been bringing great results with measurable change, then perhaps it’s time for a reading change.  A reading pathway can make a big difference and bring immediate results in your remodeling business!

** Quotes are proverbs from the wisdom literature.

Green Building and Green Products: Understanding and Selling the Many Shades of Green

Contractors and building materials dealers (LBM dealers) have found it challenging figuring out how to tap into the green building opportunity.  Some say the problem is caused by “green washing”.  Without a single and accepted definition of what green building is and what products are or are not green, it’s no wonder they are challenged.  Whether you’re an LBM Dealer, a product distributer, a professional designer or a contractor, it might not really make much difference what you consider to be green.  Before you get all upset at that statement and or with me, please hear me out.

Here’s my rationale

I’m not saying you can’t have your own definition.  What I am saying is if you want to sell green, you better make sure you know how your target customer defines and decides what is green if you want to sell green to them. 

Sounds easy right?  Not really. 

Unfortunately, if you ask 10 people what green is, you’ll get at least 10 different answers!  So, how should contractors and LBM dealers (and even their staff) respond to homeowners who ask for green products when these same customers might not even know what they’re looking for?  Solution; You need to know the questions to ask before you risk providing any answers! 

“What is green and what is not is up to the person with the money!”

On February 8, 2013 I’ll be presenting a seminar at the NRLA LBM EXPO in Boston titled “Understanding and Selling the Many Shades of Green”.  One of my goals at this seminar is to help LBM dealers take advantage of the green building and renovation market that is expected to grow significantly as the economy improves.  Another goal is to help them so they can help their contractor customers sell and use more green products. 

In addition to discussing how different consumers define green and why, I plan to help them decided which products to sell and how to sell them.  To do so I will be offering and discussing the list of criteria below.  Contractors trying to decide what to sell should also find the list very helpful.  The key to success will be matching some or all of the criteria below to the green motivations of the home owner with the money.

Seven Criteria for Choosing Green Products to Sell

#1: Is the material effective in your conditions/climate?

Heat, cold, moisture, insects…

#2: Is the material healthy and safe?

For workers, consumers and the planet

#3: Is the material durable and easily maintained?

Saves time, money, replacement, and disposal costs

#4: Is the material available in your area and can contractors work with it?

Saves time and money

#5: Is the material used efficiently?

Locally sourced, transportation considerations, processing considerations

Efficient use of resources, recycled and/or recyclable

#6: Is the material cost effective?

Now and in the future: maintenance, replacement, comfort, health effects/costs

#7: Is the material aesthetically satisfying to the consumer?

That’s important too!

How To Have A Rockin 2013!

A new economy and a new marketplace are both here now, and they are what they are; for now.   Old ways of doing business or just waiting for something good to happen for you in the New Year are strategies that are probably not going to help grow your business and or your profitability.  Here’s my list of three things remodeling business owners can do to make sure 2013 will be the year they set their businesses on a new path towards success in a constantly evolving marketplace.  Don’t miss the video treat at the end!

#1: Choose your niches: You can’t serve everyone or anyone

When you serve anyone and are willing to build anything your business misses an opportunity to really stand out.  Lots of businesses already follow that model.   If you follow it too you will be just another one in the crowd.  Instead, by choosing specifically who you will work for and what work type or types you will concentrate on, you can then create and build a brand that attracts your targeted niche.  Make sure the niche market you choose to serve can support the required margins your business needs to do so and make sure to consider the skills required to sell to that niche.  Remember, the economy will be soft for at least several more years, so choose niches and work types that will be in demand in your market.   As Mick Jagger of the Rolling Stones sings: ““You can't always get what you want. But if you try sometime, you just might find, you get what you need”

#2: Identify how you’re unique

Don’t be different in the same ways other remodelers are different.  Sounds stupid but why copy another business and call that being different.  Besides, when you’re just like all the other companies the only differentiator in the eyes of the consumer might be price.   Instead, be unique.  Find ways to really stand out from the crowd in the way you do things and or the things you do.   For example maybe you only hire female field staff to build your projects.  Maybe you and your employees always wear company uniforms and name badges with your picture on it whenever you and or they show up for a sales call, service call or the first day at a new project.  Or, maybe you will only install American made products (assume that is really possible these days!).   As Jerry Garcia of the Grateful Dead once said: “You do not merely want to be the best of the best, you want to be considered the only one who does what you do”

#3: Build the right team 

You can’t do it all on your own and still have a life.  As the legendary Canadian Rock Band Bachman-Turner Overdrive sang: “I've been taking care of business, it's all mine. Taking care of business and working overtime”.   If running your business requires too much time away from the things you actually work to have or enjoy, you need to change how you do business.

Building the right team requires some engineering.   First, identify the organizational chart of job positions and the number of employees needed; today and at other predetermined milestones as your business grows and evolves.  Then, find employees who complement your and current employees’ strengths and weaknesses.   When filling job positions consider whether the assigned employees should be global or linear thinkers.   If you want employees who think like owners, hire the right ones and then give them the same experiences an owner has so they can actually think like an owner thinks.  If you want to use a lead carpenter system then hire true lead carpenters, but first make sure your other business systems are already in place and designed to support a true lead carpenter system.

I hope you enjoyed the “rockin” theme of this blog post.  

What inspired this approach you might ask.  I recently went on the Rock Legends Cruise II and had a blast.  Here’s a video I shot on the cruise of the Lynyrd Skynyrd tune “Give Me Three Steps” performed by the Artimus Pyle Band.   Artimus is one of two drummers who played for Lynyrd Skynyrd.   What’s special about this recording is that Bob Burns, the other drummer for Lynyrd Skynyrd, is on stage and both Bob and Artimus are playing drums at the same time!  I’m not sure that has ever happened before.  I hope you enjoy this recording as much as I enjoyed it live!  Artimus really pulled together the “right team” for this tune!

Artimus Pyle Band with Bob Burns and Artimus playing drums at the same time!

Rebuilding Your Construction Business On Purpose in 2013

Most remodeling and construction business owners didn’t start with a plan for where their business would end up; they just ended up where their businesses took them.   As they did business the employees and subs who worked for them, the clients who bought from them and the project types they bought are often the factors that eventually defined the business and therefore defined who their target customer type and job types are today.  If you’re not happy with where your business ended up, and you had to downsize during the recession, your current position might just provide an opportunity to rethink how you move forward before the economy and your business picks up.  Here’s a path to consider if you want a different business going forward.  Reflect back on and take advantage of lessons learned in the past as you map out your plan.

First establish goals for your business.  

Make sure the goals support both your professional and personal ambitions.   If you want to work to live, rather than live to work, now is your opportunity to make the change happen.

Your goals must be measurable

Next, establish metrics by which you will measure whether your business is on the right track and is achieving those goals.   In your metrics include ways to measure things like financial health, quality of service, quality of work, company culture, when you will be ready for the next stage of growth and the related employee growth or advancement that needs to be achieved. 

Decide who you will need for employees

Now that you have a clear idea of your goals and have defined objective ways to measure whether you’re achieving them or not, you can develop organizational charts for each stage of growth as well as job descriptions and candidate profiles for the people you will need to hire and advance.   Rather than let who you hire define your business and the job descriptions for those people, you will this time be able to proactively define, seek out and better qualify the right employees for each job position you will need to fill as the business grows. 

Here are a few examples. 

If you want to use a lead carpenter system, hire field staff with both trade and management skills.  If you can’t find real lead carpenters with management skills (because in reality very few exist) find good carpenters with the cognitive abilities and desire to learn and use those skills.  Then, train them yourself or find someone else to properly train them.  Your lead carpenter job description will help define the training you will need to provide.   If you want managers who will lead employees rather than supervise them, make sure you include that consideration in the employee profiles you will use to complement your job descriptions and hiring decisions. 

Putting the pieces together

If you hire the wrong managers you will be compromising your ability to hire and keep the right employees to do the work.   If you have to compromise on who you hire to do the work they will not be able to live up to your metrics or you will have to lower the standards by which you measure their performance.   If you drop the bar on your metrics you will either have to accept that you will never achieve your business and personal goals, or you will have to drop the bar on those too.

One definition of insanity is to keep doing the same things but expect different results.  If you want 2013 to be the year you changed the direction and performance of your business, you would probably be insane not to consider the path described above.

Thinking about figuring all this out on your own? 

If you and your business have the ability, the time and the money to learn all this stuff on your own check out this list of Five Great Books for Remodeling Business Owners.

Rather work one-on-one with a coach to help you?

Contact Shawn to find out how he helps remodelers and other construction related businesses all over the country achieve the business and personal results they desire.  If you're not earning and keeping enough money for your retirement yet he can help you change things.

A Simple Strategy For Payment Schedules That Create And Protect Cash Flow

Contractors are forever complaining that they don’t have adequate cash flow when producing projects.  More times than not they blame this on their customers, citing that the customer is holding back or delaying progress payments.   If a contractor keeps working without getting paid he or she has no one to blame but themselves.

Consider these questions. 

Will Delta Airlines let you pay after you land?  Will Dell Computer let you pay for a custom computer after it’s built?   Of course they won’t!  So why do contractors find themselves financing projects for their customers and then end up waiting and even begging for their money?

Protect your cash flow before you sell the job!

On February 26^th, as part of a six workshop program, I’ll be leading a strategic estimating and proposal creation workshop for contractors titled: “Know What You’re Selling Before You Sell It!”   One of the topics I’ll be covering in that workshop is how to write a project payment schedule that creates and protects cash flow.  I’ll also be explaining how that same payment schedule, if explain correctly to a prospect, will help a contractor sell the job.

Below is a brief summary of how to do it and what I will be sharing more about with the attendees.   The attendees will then be encouraged to try the strategy when estimating and selling their next project.  They can then come to the free lunch and learn session scheduled before each next workshop for help with any questions or challenges they experience implementing the new strategy.

10 Steps to create and protect cash flow:

1. Estimate all tasks in critical path order (same order you would actually build the project)
2. Group tasks to establish easily definable (for the contractor and the property owner) project and payment milestones
3. Add up all direct costs the business will incur between milestones and include overhead and profit
4. Establish payment amounts based on the total cost of the milestone (Including overhead and profit) plus add some money to each to maintain frontloading for safety (you’ll make up for the frontloading when establishing the final payment)
5. Word payment schedules so each payment will be due prior to the start of each milestone
6. Collect the money needed to finance all of a milestone’s tasks before you start it (don’t be Wimpy on this!)
7. Get a significant amount of the outstanding balance at the second to last payment
8. Make sure the project cannot be used for its intended purpose until after the second to last payment is received.
9. Make the final payment due on “Substantial Completion”
10. Make sure the final payment is far less than your expected net profit but a comfortable amount for your prospect

Purpose of Accounting and Financial Management For Contractors

A fundamental goal of any growing business is to maximize and protect the profits.  By understanding the profit process - that is how to define it, create it, and measure it - a business owner or manager will come to better understand how fragile profits can be and the importance financial management plays in protecting it.   For many Remodelers first getting into the business, myself included, financial management skills were not necessarily part of our educational background.   However, our lack of knowledge on the subject would be a weak excuse to give our family for not being financially successful.

Try This Self Quiz To See If A Properly Setup Financial System Can Help You

Profitability is ultimately the responsibility of the business owner

There is way too much to learn about accounting and financing to cover or explain in this short blog article.  I suppose that is why it is actually a career for some people.  That’s why there are accountants, business consultants and financial advisors. For a business owner though, understanding and overseeing the process are the bare minimums.  The ultimate success and profitability of your company is typically not left to someone else; it’s the owner’s responsibility.  In order to identify what business owners need to do, I find have found it helpful to show my consulting and coaching clients a path for how it should happen. 

A simple path could be as follows

1. Make a plan for what you want to do and how you expect to do it.
2. Create a realistic budget for your plan so you will know what it will cost in total and how it breaks down into direct costs, indirect costs and profit.
3. Determine the markup percentage to add to your estimated costs, and what gross profit margin that represents so you will know if you’re on track as you complete projects.
4. Estimate your projects using qualified information for pricing assumptions, and then do job costing to track your actual results.
5. Use financial reports to monitor your actual gross margin, overhead costs and profitability.
6. Take advantage of the information you collect to make changes to your plan and or to create your next plan.

Is your accountant a historian?

With much to be learned, be sure you find the right accountant to partner with.  Do you want a historian who will collect your information and report to the government what happened while you were working?   Or, do you want a proactive partner helping you to create and protect your profits?  I tell my clients to seek referrals for someone who can answer their many questions and perhaps helps them create and understand the accounting reports needed to track business performance. 

Keep in mind this harsh truth...

If you still have a historian, it’s not his or her fault!