Category: Consultants

How Do You Handle Your Company Finance?

Money. If you have too little or no money you are frowned upon by society as well as your peers. If you have plenty of money the tax man taketh. So what’s the answer to this riddle?

There are many schools of thought on the subject of money, finance and economics. Most of them so complex they are literally not even understandable. There are however, very simple methods of handling money, so you can have some.

Chapter Four in the book The Nuts and Bolts of Erecting a Contracting Empire is titled The Basics of Company Finance. It includes all the basic principles and practices to manage money and finance not only for your construction / contracting company, but for ANY business, personal or household budget.

The very simple actions that need to be taken to insure your bills are paid on time, how to have a cash stash to get you through periods involving income shortages, and, developing a financial strategy for your future.

It may not be so easy to change the ways you thought money and finances should be handled at first. BUT, I promise you, if you execute these very basic actions, you will succeed and eventually have money.

The stress will go away and you will be able to have some more time as well.

It has been said that money is the root of all evil. And my Mom used to say, “everyone needs roots.” Truthfully, the only evil concerning money is not having any.

Many people operate with the idea that they have a salary and the salary is not enough to sustain their life the way they want. I have worked with everyday people and owners of companies who believe this and every time I reviewed their finances, have been able to show them how to get out of the soup, turn their finances for the positive and plan for the future. Every time.

You see, the actual cause is not money, it is what is done with it once you have it. It doesn’t matter if you have little money or tons of money. It matters what you do with it.

So, if you are having a struggle with money, you may want to have a look at our online course just for Chapter Four.

The Most Common Problem…

We often get asked by our clients, “What are the most common problems that contractors face?” As you could imagine, the answers are almost invariably the same, only different in the sense of how one sees them in their own organization.

 

In the world of construction we have many other companies and levels of service to deal with in our operations for delivering our products and services to the client. Because each one of these operate on some other rules than you do, or even that each of the others does, it becomes a challenge to make sense of.

 

For instance – you get a contract from a GC (general contractor) which immediately puts you in the position of sub-contractor, placing you, legally, under the control and company policies of the GC. This includes payment terms, safety programs, screening of your company or its employees, schedules, insurance requirements and anti-drug policies.

 

Let’s say you sign your first $100,000 contract. You have 30 days to perform your scope of work. You start out well, get all your planning done, materials ordered, personnel assigned and equipment in place. The contract says that the payment terms are based on the amount of work you complete in a 30-day period, which in this case will be your entire scope, and the GC will pay 90% of that 15 days after, and the remaining 10% 45 days after that. So, this means that you finance the entire project, without collecting one red cent, for at least 45 days.

 

If you usually perform this size contract this is probably OK, and you can float the expense for that time period. BUT, the fine print on that contract has this little clause that says, “the GC will only pay, provided they receive payment from their client and will not pay anybody until that occurs”. This is called a paid when paid clause and is more and more becoming a part of the contract landscape.

 

Here is what this means: If the GC or another sub screws up and doesn’t perform correctly or at all as part of the GC’s contract with the client, you don’t get paid even though you delivered your scope of work on time and correct. Get a couple of these going on and you can be run right out of business.

 

Which brings us to the #1 problem – Cash Flow. How do you operate your company when you have someone else controlling your income?

 

Well, all is not lost on this. Make sure you read your contract well before you sign it. If you don’t agree with a term or clause take a nice big red marker and cross it out. DO NOT make any verbal promises or agreements as this will just end up in a he-said-she-said pissing match.

 

The most successful method I used to handle this is when I was put into a sub position, I would submit OUR company’s contract based on sane and ethical business practices that prevented us from falling prey to the other guy. If the GC, or direct client for that matter, wouldn’t agree, then they have their own unsolved problems and have no intention of paying you for your services anyway.

 

In closing, I give you this: if you cannot come to terms on a contract that will be a win-win agreement, do not sign it and walk away from the job. This will be a whole lot easier and less expensive in the long run. Avoid being forced into some sort of legal battle which will drag out for years and be way more costly than just saying, “no thank you”.

How Do You Hire Employees?

Human Resources can be a very volatile area of any company, large or small. The smaller the company the more volatile. Let me explain.

 

In a smaller company an owner or executive hires a person to do some part of their post so it is crucial to get the right person who is skilled in, and can handle that duty and obligation. This is all due to the simple fact that you can do any of it, but, since you do such good work, the demand keeps going up and you no longer can do all of it.

 

If you are a craftsman that is running your new business all by yourself all the other functions of the company require your attention and prevent you from providing the services to your clients. You may need a treasury manager or sales person to do those functions so your company can grow while still allowing you to be that craftsman and handle the demand for your work. You simply need someone to take duties off your plate. You are literally establishing an organization.

 

Therefore it is EXTREMELY important to get the right person for the task at hand. If you don’t get the right person then you’ll end up still doing most of the post, or worse, have to do it over correctly. You have to be sure that the person would do as you would do, the way that ends up in your desired results, with the same amount of diligence and care that you would take in getting that desired result.

 

In a smaller company, as you grow, you are actually establishing the organization with the people you hire. In a larger company the organization is already established for the most part and that is why and how it became a larger company.

 

In a larger organization a person is usually hired to share a portion of the work load or be assigned a new position which is part of an expansion effort. This could be an additional person to handle an increase in demand for services, such as a bookkeeper. The amount of effort required to keep the books has exceeded what one person is capable of doing.

 

As the owner of a smaller company wanting to grow and become a large company, it is paramount to get the right people who care about what goes on just like you do.

 

To help with this we have Nuts and Bolts Academy. It is, to our knowledge, the only course of its kind online, that helps you establish and controllably expand any company in the construction and service industry world.

 

Get the full story on how and why. CLICK HERE

 

Consulting or Contracting ?

I wanted to take the time to answer a question that I get very often – “ Why is the name of your company Nuts and Bolts Contracting and not Nuts and Bolts Consulting?

And by the way, that is a VERY good question. So I am going to share with you why it is that way, why we decided on Contracting instead of Consulting.

First let’s look at what the dictionary says about the two words.

Consulting means: To be employed or involved in giving professional advice to the public or to those practicing a profession whether an individual or company.

Contracting means: To enter into a contract to do work, for an individual or company, for the purpose of assessing and understanding the client’s needs and performing the work to an agreed upon and expected end result.

We are not in the business of just fact-finding and giving advice.

We are in the business of helping you discover the areas where you are experiencing stops or barriers with your company that prevent you from achieving your business goals, and then working with you to eliminate those stops and barriers as well as implement the correct systems to enable you to realize those goals for your business.

So you see, we do not just consult, we contract to deliver an exact end result that you need and want for the purpose of helping you organize and manage your enterprise with the end goals that you desire.

Whether in the areas of:

  • Finance
  • Operations
  • Human Resources
  • Project Management
  • New Business & Marketing
  • Organizational Development

Or if you are interested in:

Taking Your Business to the Next Level of Freedom

We can help with that.

We can also train your entire staff, be it managers or executives, to share and contribute to the successful management and operations of your company. You won’t be the only back that the future of the company rests on. This returns to you, time and money. Your company will operate flawlessly and it won’t matter if you are involved in the daily operations or not.