Contractor Cuts
Join the ProStruct360 team on the Contractor Cuts podcast as we delve into the ins and outs of building and sustaining a thriving contracting business. Gain valuable insights and actionable tips from our experts who have successfully grown their own contracting company from the ground up.
Our show is dedicated to helping contractors like you unlock the secrets to increased profitability, efficient organization, and seamless processes within your company. Whether you're a seasoned professional or just starting out, our episodes cover key topics essential for your business growth and long-term success.
Make the most of your time between job sites by tuning in to our podcast and learn firsthand how to navigate the challenges of the contracting industry. Get ready to transform your business with valuable information that can potentially change the trajectory of your success.
Don't miss out on this opportunity to gain the knowledge and strategies you need to take your contracting business to new heights. Subscribe to Contractor Cuts today and empower yourself with the tools and insights to thrive in the industry.
Contractor Cuts
Before You Can Grow: Building a Solid Foundation for Business Success
Unlock the secrets to transforming your contracting business as we unravel the complexities many companies face today. Ever wondered how untangling your business's "ball of yarn" can lead to unprecedented growth? Join us on Contractor Cuts for a comprehensive exploration of foundational coaching techniques, designed to help you establish a strong base and steer clear of legal pitfalls. Whether you're just starting out or grappling with entrenched habits, this episode promises a clear path to success, beginning with understanding your current business state as accurately as a GPS setting.
Financial mismanagement often derails business expansion, but it doesn't have to be that way. Discover the critical steps of executive-level coaching, where organizing finances becomes an art that paves the way for informed decision-making. We'll guide you through categorizing expenses, understanding pricing, and identifying profit margins to ensure your contracting business thrives financially. From common pitfalls like the 'pot system' to the critical use of software like ProStrux 360, we emphasize the need for clarity and order in financial operations to sustain healthy business growth.
Transitioning from small teams to larger crews can be daunting, but with structured communication and processes, success is within reach. We tackle the challenges of aligning job schedules, managing cash flow, and introducing reliable software solutions to enhance efficiency. Plus, learn how to manage change even when faced with resistant team members. Get ready to strategize for 2025 with us, whether through our upcoming retreat or online platforms, as we explore coaching and technology opportunities that can drive your business towards a prosperous future.
Struggling to grow your contracting business? The Foundations Program is designed to help contractors break free from the chaos and build a business that runs smoothly. You’ll get a customized training program, 1-on-1 coaching, and access to a full paperwork database—including contracts and the Client Engagement Agreement. Join the Foundations Program today! 🚀
Go to ProStruct360.com or schedule a meeting with Clark at Have a question or an idea to improve the podcast?
Email us at team@prostruct360.com or text us at +1 (678) 940-5747
Want to learn more about our software or coaching?
Visit our website at ProStruct360.com
Welcome to Contractor Cuts, where we cover the good, the bad and the ugly of growing a successful contracting company.
Speaker 2:Welcome back to Contractor Cuts. My name is Clark Turner, I'm Jared Flo. Thank you for joining us again this week. So today we are rewinding the clock on how we do coaching. We are taking it back to where we start with people. We've talked a lot about kind of where we start, how we grow, how we build the game plan, but what we do first we realize we don't even dive into that or we haven't yet in a podcast. So today we are going through the four things that we do first out of any anything else is unwinding the ball of yarn that's happening in these companies. That's right. We've seen a lot of companies come through that we've done coaching and every single one has multiple, if not all of these things that we have to start by sorting and organizing and getting to zero, yeah, before we can move forward.
Speaker 1:Well, and the reality about that is, and clarity on that thing, is that the easiest people for us to coach and help them develop and make forward movement and grow are people that are just starting. Yeah, right.
Speaker 2:They're starting at zero. Yeah, yeah.
Speaker 1:They don't have a one back history of just bad behaviors that have to be re-changed, Reprogrammed, Reprogrammed, but also the ball of yarn that those bad behaviors have created.
Speaker 2:Yeah, with our coaching we usually start. We say, okay, we're going to unwind, like we need to know all the data, and normally that's where it all starts getting foggy, because there's not any data to look at, because it's just a bunch of really a lack of information that we start with by digging into the company to understand where they're at today. So we had to unwind that ball of yarn, as we call it, and sort all of that out. Then we go into building a game plan of how we're going to execute, how we're going to help the client grow and what's going to happen, and then we go into executing that growth.
Speaker 1:Yeah Well, and the reason why we have to do that, versus just cutting a line, you know, drawing a line and saying, okay, from here forward we're just going to start doing things you know differently. We have to know where we are right. The metaphor analogy around that is I want to grow to X. Right, I want my company to be this thing by the end of the year. I want to do this thing.
Speaker 1:And so it's like plugging in the destination in a GPS, like where I want to go, but not putting in the place of origin, like where I am right now. I want to get from here to here at the end of the year. Well, if I don't have the here's where I am, I can look at where I want to go all day, but it's impossible to create a roadmap of here are the turns and directions that I need to make to get from where I am today to the next. So the before you can grow, you have to unwind that ball of wax, which is essential, or ball of yarn, which is essentially getting to that ground zero. Getting to that like where am I?
Speaker 2:Yeah, and a lot of our assessment, when we're starting with the coaching client, is trying to figure out kind of around the origin city that they're coming from. So the metaphor in my head is like hey, someone comes to us as a coaching client and says, hey, I want to drive to Mexico City. I say, great, where are you at today? And we'll get you directions. We know, turn by turn, how to get there. We're going to tell you where to take a left, where normally people take a right, but we'll explain how to get there. And they say, well, I'm in the United States right now. I say, ok, great. And say, okay, great, where in the United States? I can't get you directions to Mexico City unless I know where. And they say, well, I think on the East Coast somewhere. Yeah, okay, that's helpful. I know we're going Southwest-ish from the East Coast to get there. So we're starting directions of understanding. But are we talking the Carolinas?
Speaker 1:or are we talking New York? Yeah?
Speaker 2:And so figuring that data out and understanding where we're starting is what we need first, and a lot of times where that leads to is we now start game planning. How are we going to fix today's problems before we can start growth? And we'll talk about that in the next podcast. Where how do we deal with current clients, current jobs, things that are broken currently? Because if we don't get that right, there's lawsuits to follow usually. And so we look at the destination, the origin city. Where are we starting? How are we getting to that destination? What needs to be fixed before we load the car up and leave, and then we game plan that trip to success and we start driving down it and that's where the week over week coaching and the calls start is while we're on that drive.
Speaker 2:So today we're covering how to find where you're at, how to get to zero before starting. So, whether you're coming into coaching or not, this is something that you can do on your own. If you're just getting started, if you've been around for six months and you're just starting a company or about to launch a company, this is a great thing to avoid, right? This is what you have to have in place and avoid before starting a company, or you're going to be a year and a half from now and have a ball of yarn?
Speaker 1:Yes, for sure.
Speaker 2:And also, if you want to walk through this stuff with us, shoot us an email, hit us up on the website. We will do an assessment with you and kind of walk through some of this stuff for free with you. We'd love to kind of help organize this side of it to help people understand where they're at today. So there are really four main areas that we see that we call the ball of yarn that where it gets tangled. And so there's the four areas that are kind of two in the finance area and two in structure, right. And so we're going to dive into those four areas today and kind of break them down and also talk through what we see guys doing wrong and how to start riding that ship to get back to zero so we can really grow and grow the company from there. That's right.
Speaker 2:So the first one I'll run through all four, then we'll break them down individually. So it's unorganized finances, it's cashflow mismanagement, it's structure of product delivery and its structure of info and communication management. Those are the four areas that we're saying wait, why do you do this way? How does that happen? Wait, where is that dollar coming from? What's happening over here? And so we start unrolling and, honestly, this is where it feels like we're in a Catholic church with a priest and the person that we're coaching is just confessional right.
Speaker 2:And it's like I did this and I don't know about that. I took this loan. That's great. The more data we have, the more we can unpack and then we can start planning out the journey.
Speaker 1:Well, and on the executive level of our coaching, it actually starts out with essentially this we have a one-on-one in-person, the both of us and the contractor, and it's hey, this is a fact-finding mission. We want to know everything the good, the bad, the ugly. What are you great at? What do you suck at? What bad decisions have you made? How much debt do you have? Where are the finances? Where are your jobs? Where are your clients? Everything. We want to know all the information because we are walking down this road to find out okay, we before we can because the next step for us is okay, great, now that we know where you are, here's where we're going to go and here's the steps that we need to get there. But we can't make that plan until we figure out where they're at.
Speaker 2:Yeah, and with a one and two man show smaller companies. We'll do that over Zoom, we'll talk through it and then we try and do some sort of a meeting in Atlanta where you come to us and we start really diving into the game, planning and unfolding this stuff For our larger clients. What we end up doing is a lot of times we'll go out to their location Because what the owner that is hiring us says when we're just consultants is a lot different than what their employees feel and think. So we'll go out there, we'll meet with your employees. We found a lot of clarity.
Speaker 2:Yes and so we unpack all the bags first and we spend time doing that, and then we make a game plan, repack it and we start down the road of going. So let's dive into all four of these. So number one unorganized finances, jared. Where do we start? And what does that mean? Because, again, this is unpacking, this isn't moving forward. How to organize them, this is just trying to figure out how to get to zero. So what does that mean?
Speaker 1:Well, you know your finances. Having them organized is what allows you to be able to make decisions. It is what allows you to know if you can buy something or not. Buy something, make a move in your company, hire somebody, whatever it is, and if they are unorganized and you've not been categorizing so you know what you're spending money on you, you're. You're literally just in the space of I've got the invoices and money coming in and I hope, at the end of the day, that I've spent less than what I've got coming in.
Speaker 2:Right, yeah, well, and it's also as well as that of, like, we look at the QuickBooks, or do you have QuickBooks or do you? Where are you categorizing things? Do you know what expenses are? What's your minimum you've got to make this month to be able to hit pay all your bills? And we also go into pricing. How do you do your pricing? How do you decide when you're giving discounts? What do you do? Cause, a lot of times it's like, well, I price it in my head and if they, if they want a discount and it's the only way I'm going to get a signature, I say yes and I'll do it. And there is no data there to know if that's a good or bad decision.
Speaker 1:Well, we've had we've had people in the past that that will come to us and, um, you know we'll ask them so what, what kind of profit are you making on your jobs? Some of them don't know Right, but there there have been some that are like, oh, I do 25%, so you do 25% on on all your jobs. So, yep, okay, tell me why. Why did, why do you do that number? And they're like well, I mean, somebody told me that one day and it felt like a good, you know a good number. Well, is your company making profit on that? I know you can probably make profit on your job. You're making 25%, but is your company making profit on that? Well, I don't know. I mean I'm making. I'm pretty good at hitting the 25%. Yeah, well, you've got, you know, 23% of that is your overhead cost and your employees and your trucks and your gas and your all this stuff. You're making one to 2% as a profit in the company. That's. You got to change that, right, and so it's.
Speaker 1:Unorganized essentially means like you don't have any reason, rhyme or reason around the way that you deal with the money. Yeah, right, like you were saying, categorizing it, if you can categorize, when you pay for labor for something a painter for getting paint done, if you can categorize that to. That was for 123 Main Street and $1,000 purchase of paint. That was also for that job. Yeah, I've now got $5,000 worth of cost and I charged my client 7,800 bucks. Okay, I made $2,800 on that thing.
Speaker 1:Okay, but if I don't, if I don't know that and don't have the ability to have that organized, then it's. It's just, you're shooting, you're flying by the seat of your pants working on the hope that I don't overspend. Yeah, what happens when that guy comes back to you? The painter comes back and says hey, I know you said 5,000, but it's taking longer. The ceilings are higher than I thought. Well, I need another 2,000 bucks, Okay, yeah, fine, I'll pay it to you. Yeah, right, so that the unorganized finances leads to a place where you're walking through the dark and you're kind of aimless because you don't have anything that's giving you concrete. Making this decision is the right decision and I can afford to do that.
Speaker 2:And the reason that we do this also is because this is if we get this organized of how your finances flow and how and the visibility of it, then, starting today and moving forward every day, we're getting more and more data that we can read Right, and that's going to allow us to make decisions as to what we should and shouldn't do. Should I hire someone? Should I do that? Should I buy a truck? Should I? All of those are based on. Well, it depends on what the data says, right, right, and so people don't understand. Like I'm not keeping it organized because I like organization, I'm keeping it organized, so I have a book to read about what the controls need to happen on my company.
Speaker 2:So for us undoing the ball of yarn for us is saying okay, I don't know how to give you advice until I know what I'm giving advice about.
Speaker 1:I've had people come in that they have a QuickBooks and they'll open it up and show it to me and their QuickBooks checking account balance shows that they have negative $500,000. And I'm like I hope that's not true, because then we're in a big, big problem Like no it's. And I'm like I hope that's not true, because then we're in a big, big problem Like no it's. And so what? What we do in this space is say, ok, we've got to get this caught up. Right, that's the untangling of the ball of yarn. We've got to get this caught up. So let's look where we at. Can we get these numbers? Is there enough information in your head? Because, at the end of the day, it's tangled because you didn't put the data in when it needed to be there, you didn't categorize stuff when the things happened. So do you have enough in your head to be able to say, okay, this cost was for this, this was for this, and back it all the way back? And normally what we do is one of two things Get your QuickBooks up to date and as close to accurate as possible through the beginning of whatever, whatever year that you're in, whatever physical year you're in, um back it all the way back up to January 1st. That way I've got an entire year that I know my accounting is accurate, right.
Speaker 1:Sometimes it is in such a cluster that it's like, oh dude, I mean I was just cutting checks and occasionally I would pull cash out of the ATM machine. I knew in my head how much money I had on the job, so I knew I wasn't overspending and that I would make something on the job. But I don't know who I spent money on and how much I paid a guy Like I. Just I knew I made money at the end of the job. That scenario it's impossible to go back and categorize those things and clean up your QuickBooks. So sometimes we've had guys say there's no way I'm going to be able to do that and so we'll draw a line in the sand and say, okay, that's your old QuickBooks, we're going to keep it for accounting and taxes and hopefully you can get a CPA that'll help you with that. But from here forward you're going to start with a new QuickBooks blank slate and let's integrate that into the ProStrux 360 software where it's going to automate some of that calculations and management for you.
Speaker 2:That's right, and our goal is A. I mean, there's really a bunch of different goals, but the main two goals for me are A I don't want the IRS coming after you and I want to make sure we're clean on that side. But B I want to make sure that we have the data to make the decisions, and so I need you to be able to tell me what's your profit margin month over month, what's your average revenue month over month, what's your average expenses month over month, what's your average revenue month over month, what's your average expenses month over month those type of general how much debt do you have? And what's your debt service month over month? All of those type of questions. If you can't, within 30 seconds, find the answer or know the answer, we need to unravel that a little bit more until you get to that spot. So once we get there, then we game plan on how to grow it and how to go from that spot.
Speaker 1:I've got to know how much money do you have available to spend, and the only way to get to that place is not. Well, I just opened up my Bank of America, my Wells Fargo, whatever and it says I've got $100,000 cash in the bank. Well, I can't trust that you can't spend that money. Are there checks out there that you've written? And so that's why you've got to dial that in so that I can look at it. Okay, Of the $100,000, 20 grand is spent already in checks floating around out there. We have $80,000. Then we can start looking at current jobs, what's needed, and then can I take on more work and float that with this money. It allows you to be able to make those types of decisions, but you have to get to ground zero. Where am I at with my money? That's right.
Speaker 2:All right, so that's number one unorganized finances. Number two is cash flow mismanagement right, and so that's different than cash flow management. For us, cash flow management is a game plan on how to manage the cashflow moving forward. Where we need to get to zero before we can plan. That is, looking at your mismanagement of your current cashflow, and so what that often looks like is we're diving into all of your open jobs.
Speaker 2:If you're a general contractor, we're looking at your 10, 12, seven two jobs that are open and we're trying to understand on a micro level, job per job, right, and we're trying to understand on a micro level, job per job what have you collected, what do you owe out, how much more do you need to invoice and how much more do you need to pay? Right, I need to know those four stats on every single open job. If you're a HVAC company, I still need that stats. Now you might have 40 jobs open because there are service calls and installs and a bunch of stuff. I need some generalization on some of those stats sometimes, but we need to understand.
Speaker 2:If I stop taking work today on these current open jobs, how much do I have left to invoice? How much do I have left to pay. How much have they paid me so far and how much have I paid out so far? Those four stats get me the cash flow understanding, because most guys we've talked about this a hundred times use the pot system, where they put all their money into a pot and then they spend out of it. Right, it's a hey, a homeowner. I need a deposit for $50,000 to get this job started.
Speaker 1:Great that goes into my bank.
Speaker 2:There's now $51,000 in my bank Cause I was running a thousand bucks, Yep. And then I walked to the job site and say hey, on another job site that I'm done invoicing. I say, oh, HVAC guy, you need a check right here. It's $5,000 for you. Oh, that's right, we need to finish paying out the roofer. So here's your money. And it's a robbing Peter to pay Paul. And we talk about that a lot but most guys don't know they're doing it.
Speaker 1:It's just, that's how I did it in the beginning and now that I've grown I'm still just saying bad habits, and it's it really. It's really hard to detect because if you took a $50,000 deposit and you've only got let's call it $10,000 worth of closeout on a job behind you, it kind of rolls smooth. You know what. I've got the cash, I was able to close this job out. There's no more invoicing I can do, but I got my guys paid out or we're good to go. And then you roll into the job Well, maybe that's a six month, eight month, 12 month job and you might not realize that you're out of balance and don't have enough cashflow in that that job to keep it rolling, because I spent 10 grand somewhere else that needed, needed in that job. Yeah Right, and a lot of times. That's why we have two different invoicing styles in the ProStrux 360 software. One is line by line, right, if the paint's done and I can pay my guys for the work that they did, I invoice the client for it.
Speaker 2:If it's halfway done, I invoice half and I pay half. That's right, yeah.
Speaker 1:And what that does is that I am never collecting money on work that hasn't been completed. Right, so it helps keep the money associated with that job on it. I understand, and I talked to a lot of contractors that are like I just don't work that way. I've always done draw systems, that's the way I want to do it, I'm going to continue doing it, that's fine. You just need to understand that you're taking money in for work that needs to be completed and if you spend that money, a dollar of that, somewhere else, you've mismanaged your cashflow. Yeah, right, and well, I'll make it up here and I'll make it up here. Everybody listening to this podcast knows I'll make it up so long as there's not a mistake, or?
Speaker 2:so long as jobs continue to come in Correct.
Speaker 1:Yeah, yeah. So it's a, and that's why you know we, we the in the bootcamp that we just went through I did. I did one entire day that we spent a lot of time talking about an organized, like physical banking, system of how to organize. If you're going to do draw schedules, here's how you should organize your bank accounts to ensure you don't overspend money. It's very easy and with an example that I use all the time, if you said a second ago I took a $50,000 deposit from a client, right, take a $50,000 deposit from a client.
Speaker 1:And then tomorrow, all of a sudden I get from my insurance agent hey, urgent, it looks like you forgot to pay your insurance. If you don't get this paid today, it may lapse. Well, let me look in the account. I got 50 grand. How much is this thing? It's $6,000. Okay, cool, 6,000 done. And then you move on and you don't think about it again, but you literally just spent the kitchen cabinets or countertops for Sally Sue's job right, well, well, and that 50 000 deposit was for the wood to build the house and so I have to have a 45 000 check.
Speaker 2:I got to pay to my wood supplier and so I spent six to the insurance, so I'm negative one right now and I haven't taken a paycheck. That's right, right and yeah, that's. That's the pot system, yeah, working and it's just there's nothing wrong with it.
Speaker 1:You just need to know what you're getting into. But when we come in and take on a new client, this is a place where there are there are hidden places where your company may show on a balance sheet or a P and L, even if you're keeping your company in a good, good standings on QuickBooks. It may show in a balance sheet or quick a P and L that you're in good standings. But if you go in and do the research and figure out, okay, how much money have I taken in? How much of that money do is the work already completed, how much is needed to complete right, and then all we've done this before with the company that everything on paper looked like, hey, this is, you know, they've got a little bit of debt, whatever, but it's not a big deal. And then we do the deep dive on this and we discombobulated this, this ball of yarn, and it was like I think it was like $280,000 upside down or something.
Speaker 2:It's the number one. Our software does this for you. So if you're, if you're invoicing out of there and paying your crews and and purchasing out of there, it all handles it and all your stats are right there. So you don't have to do any brain work. It just happens in the background. But what you're talking about is we had a company that we started coaching and they're like we're making between 60, $80,000 a month, month over month. I'm like heck, yeah, that's awesome, let's, let's grow it to the next level we get in. It's because they were growing and growing and growing more and more clients. So they were you know it was they're a year in the business and they were went from one client at a time to four clients at a time, to 10 jobs at a time, to 15 jobs at a time, and so.
Speaker 2:On paper, this month I spent a hundred thousand and I invoiced 200,000. So I made a hundred grand this month. But in reality the the,000 that you spent was invoiced last month for only $105,000. Right, and the $200,000 that you invoiced, we got to spend $180,000 of that going forward on fixes and fixing that. So you really made $20,000, maybe $25,000. But in paper, in QuickBooks, it looks like you made $100,000.
Speaker 2:So the data is wrong because of the construction industry invoices ahead, so it gets money not tied to the. It's not a point of sale system, right? Like if I'm selling you, uh, if I show up for a one day service and I do the work today and I charge you today, quickbooks is clean. I've I spent the money today and I made the money today and it's all clean. But the problem is we do an invoice this month, we don't spend it for the next two months, or I did work this month and I don't invoice till next month. Either way, those two things aren't lining up in QuickBooks. Quickbooks is taking a snapshot day one to day 31. And that's that's all.
Speaker 1:That's all you can see there.
Speaker 1:So we found where that ball of yarn is virtually impossible to undo is when you're doing a draw schedule if you don't have clarity on what that draw covers.
Speaker 1:Well, you know, this $50,000 covers us getting to this point of the the, the project, right. If you don't have clarity on that in and be very, very specific, it's really difficult when you go to kind of run the balance sheet of how much have I taken in, based on what I've taken in, how much of the work needed to get completed by that money, how much of that work has actually been done and how much of that work have I paid my guys for. Yeah, Right, and, and then, okay, so the work that has actually been done is about 20% short of what the invoicing was for, but I've spent all the money because I spent 20 grand over here getting this other job. I don't have any more money, but my guys got 20% more that they need to do to catch up to what I've invoiced and so you've got a 20% gap that you've got to figure out how to pay for. And then you go hey, Mr Client, I need the next draw, Right. And then you're just, you're behind the curve.
Speaker 2:The draw schedule is great Cause.
Speaker 2:What I always coach if someone does draw schedules or they're working you know most home builders are working on a draw schedule because that's what the banks and financing requires what I like to say is let's set our sections and our line items on the job according to the draw schedule.
Speaker 2:So if my draw schedule is, I get my next draw after foundation is poured, everything that happens before that I want, above that line item on my quote, chronologically down my quote, so I can draw a line in the sand of this is where the foundation ends, right, and this is where the framing starts in the next portion.
Speaker 2:And so I can, in the software, click on all of those line items and at the bottom it says you have selected $80,000 worth of work. Of that you've paid out $20,000. Right, and of that you can invoice $120,000 worth of work. Of that you've paid out $20,000. And of that you can invoice $120,000, right. And so it will show you by just looking at your job you can say, hey, I know I still need to pay another $60,000 out of this draw that I already have before I get the next one, and so I can put that aside If I'm a really good company. I have a separate bank account for expenditures on that job site and you can manage all that. But it's all visible if you're using the software right, and so that's the goal, where you know what money is coming in and what money is going out, what I have left to invoice, what I have left to pay.
Speaker 1:So that's two places that we start with the finances when we're trying to find ground. Zero is that we've got to figure out what cash do you actually have and where are you cash flow wise on your jobs, what money is owed? What money is owed to you? What money is owed out? Right, because now I know you've got $80,000 left in your bank account because we've squared away your your QuickBooks and I've looked at the jobs and it shows that you're $60,000 that you need to catch up to where your invoicing is Great. So you've got about 20 grand worth of profit in your bank account. That's great.
Speaker 2:And we're not the principals either. We'll sit there and say okay, so you are upside down $80,000. All right, so we're going to rob Peter to pay Paul for the next four jobs, but if you get that going and we manage this, you're going to be out of that hole. Yeah Right, so it's a game plan with you from where you're at, not a game plan of well, you better fix that and then come back to us.
Speaker 1:Also, just for clarity ninety, nine point, nine percent of every, every client that comes to us. That's all messed up. Yes, Always.
Speaker 2:Yeah, absolutely. Number three. So those are the first two that are kind of in the financing side the unorganized finances and the cashflow mismanagement. Number three goes into the structure side, structure of product delivery.
Speaker 2:So this is a big one, because this is probably the hardest to change yeah, the hardest ball to unwind, because it affects your coworkers and the people you've hired and your brother-in-law that works for you. The structure of how you're delivering the product is the next thing we got to unwind, and so what we're looking at is a lot of companies get started, especially in contracting or any sort of service-based. I'm just doing it on my own. I'm an electrician and I do work for my buddies, and I have another friend who's an investor, so I do his houses and my mom's friends all call me when they have an electrical issue and it's just me.
Speaker 2:And then all of a sudden, I've got a lot of work and all of a sudden, hey, jared, listen man, I know that you're in between jobs right now. Do you want to come help me? I need an extra set of hands on this stuff. So you come in and you know, in contracting we see it a ton too. Hey, come, I need you to do a demo with me. You don't have skills, but let me teach you, let me show you we get going. I'll pay you 350 bucks a day if you come with me, whatever it is in your area, and I start building my company by just bringing the next guy on and everybody is my helper, everyone's my minion. Maybe Jared gets a little more skilled and so I can say, jared, those walls over there need to be framed on it. You handle that today and I don't have to babysit him on that. But that's because we have this relationship and he's working hard, because I know his work ethic Fast forward these companies.
Speaker 2:I've now got four, five, six guys that I've all pulled together and I'm splitting two to three job sites, running around with my tool belt, helping everybody, making sure everyone's in the right spot.
Speaker 2:But it's not babysitting, it's managing, because I know all of these guys. I get beers with them every Friday night, we're on the softball team together, right, and so I don't need to babysit you and pull the most work out of you, because you've got good work ethic and we're working together. What we see is the next step is when you are growing your company, you are stepping out of that relationship with every laborer and you're bringing on more subcontractors and vendors and crews that you don't know and have that relationship with, and their mindset, nine times out of 10, is what's the least amount of work for the most amount of pay I'm going to get out of this guy. And so as soon as I step out and I have now have four or five, six jobs running, all of a sudden the way I'm delivering my product is structured incorrectly. But I've I've built this bed that I'm laying in.
Speaker 1:It's built on a level of I can trust these guys.
Speaker 2:Yes, yeah, and it works this way. It's worked this way for 10 years.
Speaker 1:Why would?
Speaker 2:it not continue working this way Because people don't, you don't have that relationship as you grow. It's impossible to have that same level of a relationship with 30 crew members.
Speaker 1:Well, and what I what I see over and over and over is the way that this plays out is you are selling yourself at the beginning and clients love it and you do a great job. You get a great reputation. You start getting on more and more work. You really suck at saying no right. Any job that comes at you, you say yes and because of that reputation you end up getting more and more and more work and eventually you get to the place where you've said yes to more than you can possibly handle because you've got this reputation.
Speaker 1:You don't want to lose the reputation. So you've got a sense of urgency. You know what me and my cousin John and my brother Scott, we've been running this thing, but that we're all maxed out. I got to get somebody else to just cover so that I don't lose my reputation, and so I hire somebody whether it's a 1099 or W2, it doesn't matter Like I bring somebody else in to help me manage a project, and you end up hiring or bringing somebody in out of urgency of not losing the reputation because you've grown so fast and you all you very quickly realize that you have you have no systems in place to manage and organize the way that people work. Yep, and you didn't need them because scott and john they kind of think like they're the same work ethic.
Speaker 2:Right, they got the same work you're selling you as a product and scott and john are delivering the same product. So you're delivering what you promise, yeah. And then, as you get bigger, that next guy that you bring in, I'm promising my work ethic and how I do things, but he's delivering on how good he is. And sometimes those hires work out because they just they're a good worker, they're good at what they do. But most of the time the second hire, if that first person didn't work out, you're going to get someone who doesn't deliver that product. Well, and even if they are, it's not delivering what you're promising because you haven't trained them, there's no methods, there's no systems and processes. So that's the growth part of setting up those systems and processes.
Speaker 2:But what we do first to unwind the ball is going in and saying, hey, why do you have four plumbers on staff when you're a general contracting company? Well, we need them. And this guy and this guy help with electrical, sometimes on the side, right, we've seen this in companies, right, and it's like this isn't going to work because you're a full-time babysitter right now, making sure that people don't take too long of lunches, making sure that people show up on time, checking job sites at 4.40, because you know that they're leaving about 3.30 normally, all of that sort of babysitting that's taking 10, 15, 20 hours of your day, of your week, and then also the expense that goes along with that side of it and the loss, lost money. That product delivery system doesn't work in a growing company as it does when you're a small, a smaller startup company.
Speaker 1:Well, and what we do is in that spot we ask whoever the new coaching person is, walk me. From first contact Somebody calls you and says, hey, I want you to execute a new kitchen for me. Walk me from that all the way through the end of job. Tell me how it goes, what are the steps, what are the processes, how does that thing happen? And by nature of doing that, it's very easy to see bottlenecks and inefficiencies that are happening. And allow us to ask questions. Wait, so you have, you have how many W2 laborers and you have an excavator, and you know, there there's, there's one company that we've dealt with that has like four or five office people, and so one project goes from four or five different hands of different things that need to happen before it even gets out in the field. Right, and so it's just. That's a place, and for for anybody listening to this that is wanting to walk through this on their own, it's going to be hard for you to do that because for the most part, your process makes sense in your head.
Speaker 2:Yeah, well, and it works and it works, it works, but it doesn't grow Right. It's. You can't because it's me and my buddy who's doing that estimates, and Susan, who's our office manager, works. Now I can't hire three more people and think they're going to act just like the three of us.
Speaker 2:It doesn't duplicate like that, one of the things we also see when we come into larger companies or even midsize companies. When they're when we're looking and assessing a company companies or even midsize companies, when we're looking and assessing a company, I say, why is that guy here? He's got a poor attitude. He shows up late and leaves early. Why is this guy here? It's because he's the cog in a lot of the system and if that guy leaves, we're screwed, because most of our information is in that guy's brain and so everyone asks him questions.
Speaker 2:And he's our, he's our main guy and so he, oh, he's the king of the company. He, you can't fire him. He's unfireable. You can't afford to piss him off. Yeah, so what we want is I want to set up systems that that we are running in this company, and those systems are what we're selling. So I can have this guy or that guy or the next guy come run the system and whoever I can find best at learning and implementing is going to have that job. So I can fire this guy if he thinks we can't do it without him.
Speaker 1:Yeah Well, and technically, you know, as you go through and investigate that you will see areas of that mismanaged structure of the product delivery that's going to touch the first two, the financial pieces of it. Like oh, that's why I can't ever figure out my finances, because I don't record that, because I don't have a step for this, I don't it just whatever, whenever we'll figure that out, right? So it gives you a lot of clarity in the process of itself, but also in some of the previous categories it's just going to highlight stuff and go oh, that makes a lot of sense, and the ball of yarn for us on this one too is like hey, what if we move that guy to this position and fired that other guy?
Speaker 2:Well, I can't do that. That's my daughter's boyfriend, and if I fired him, I'm a right and so that's kind of the unwinding of we're going to make a game plan for growth. What, what keys do?
Speaker 2:we have and what keys are you taking back? That we are not allowed to do, Right. And so we've had one, one guy that won't be named that was the main cog in the company who was the one of the owners of the company who should not be working at the company anymore. He's older and he's stuck in his ways and it was like can we let him go? And they're like no, he's a part owner, it's his name on the backs of the shirts and we just can't let. Okay, great, we need to know that. So where can we put him in this? And so that's the unwinding of the ball for us is okay, we're going to change this stuff. I need your buy into changing. I need you to hand me the keys and trust me with them, because I'm going to move some stuff around that you have to be okay with, but I need to know how far I can bend before the company breaks. All right, Number four last thing of the four coming with structure, is structure of info and communication management. So this is one. Again, this is a little probably the simplest of the three. Yeah, and this is a little easier to solve in game plan going forward than unwinding, but again, the importance of this, one that we have to unwind is, as we're looking at the broken jobs, as we're trying to assess today, to fix, and then we can grow.
Speaker 2:Where's all the information and communication happening? Who's got what? Why is that happening? A good example of this is a customer calls and says hey, you guys were out here and I need you to come back out and fix this. It's a warranty issue. Well, maybe your company has a one-year warranty.
Speaker 2:When did you do that job? I think it was in February, because it was end of no. When did you do that job? I think it was in February, because it was end of no. No, it was March. And so what's one year? What does that look like? Where's the signed agreement to the warranty agreement, All of that information?
Speaker 2:Where is it stored? How do we find it and why is it being stored that way? Insurance, subcontractor agreements, all of that sort of stuff, as well as all the email communications with customers. Where are those? I know you can go through your cell phone and find every single text from people. We don't have time for you to spend three hours diving into finding the right text from three months ago to find an answer. So we need that information. How is that working? What's your systems? We've got a perfect software that handles all of that for you. We're going to transition to that. But we need to unwind the ball of exactly how that's happening right now and where you're missing the mark as a company, where you're doing good as a company, because we don't want to fix the good stuff, we just want to patch the bad stuff up.
Speaker 1:The thing about that is that that's a you know a place of a leaky bucket, right? Because if, if it's hard for me to find the data or I can't find the data, I am going to default to to customer service or digging my heels in, depending on who you are as a contractor, right, yep, either one of those, if I don't have the ability to go back and say hey, actually I have pictures of when we left that house and all the appliances were in the house when we left. I also have pictures of the lockbox closed yeah, right, when. And that's a real life example.
Speaker 2:I had a client.
Speaker 1:I had a client call me and say hey, you guys left the doors unlocked and all the appliances got stolen.
Speaker 2:You owe me eight grand.
Speaker 1:And that would have been eight thousand dollars. That if I didn't have a quick and easy way to go back and say nope, here are the pictures, here's the timestamps. That was not us. I don't know how it happened, but that was not us, we'd have been on the hook for $8,000 because that was a massive client of ours that provided a multimillion dollars worth of work a year and we would have lost them. We would have said we would have eaten $8,000. We would have eaten $8,000. We would not have felt that it would be possible to push back on them, right. So that's where not having that into play, not having a system of organization around that. It's a leaky bucket, yeah.
Speaker 2:Right. So those are the four main things. After we get an understanding of where we are starting, we then fix customer issues. So we take all of that stuff. It's okay, we understand getting back to zero. We understand what we need to do, what you need to do. We give you some homework, get this stuff done, get this information. The next spot we go is saying, okay, what are our problem trials right now? Because the system you're running isn't great and it's causing communication issues. It's causing pissed off client issues. So let's look at that next, and that's where we go.
Speaker 2:Second, after we try to get you to zero, to understand all the data, next is going to customers and a lot of issues that probably are happening or you might not know are happening, that are happening. And so part two is figuring out what clients need help. What do we need to reach out? How do we fix this? Before we make the game plan, we're going to cover that next week. Next week is talking about how to break bad news, how to talk to customers when things have gone sideways. We've had some of this before in terms of like, when things go sideways and do this, do this, but we're going to talk through the different kind of the minor, the major and the catastrophic issues that happen on job sites and how we talk to the customer. Because a lot of times when we're pausing with our clients in this position, they're going to have to have some of those conversations because we're going to get organized and we're going to stop robbing the company and doing things for free, and so we need to start having those conversations with clients.
Speaker 1:And so there's a specific way to do it. Once you've found your company ground zero, you've got to find ground zero with clients. What's their temperature? Where are they at? Are they frustrated, are they ready to quit? And then you've got to find that ground zero.
Speaker 2:There's going to be an expectation and process shift in that client, especially if you're a builder doing large scale renovations that are over three weeks long. They're going to feel that, and so let's have that conversation. How is this going to change? How are we going to do better for you? Let me get some feedback so we'll talk about that next week. Yeah, let's not do the whole podcast right now, let's do it right now.
Speaker 2:We'll do it next week. But if you want help on diving into these four things for your company, please reach out to us. We, like I said in the beginning, we love sitting down with companies, even if it's a 30 minute zoom where we kind of help out. You're not ready for coaching, you don't want any consulting, you don't even want the software yet. You just want to talk. Hit us up, we're down for that. We'd love to talk with you.
Speaker 2:We've got a retreat coming up in a few months, the, the annual retreat. This stuff is great to do now. So at the retreat, we're game planning for 2025. If we can start now with catching you up, identifying the issues, game planning, then we go on this retreat in January and have this big game plan as to how you're going to execute in 2025. That's starting the drive on the trip right. If we can find your destination, we can find your city of origin, we know exactly what's happening. We hit January with a game plan and you just start cruising towards success. That's right. So that's the goal. Come with us on the retreat, hit us up online. We'd love to talk to you about coaching, software, anything else. Thanks for listening. See you, bye, see you.
