Questions from the Listeners (Q&A): Discussing Everything from Cash Flow Problems to Dealing With Hostile Clients

In this Listener Q&A episode of Contractor Cuts, we tackle real questions submitted by contractors.

From paying outstanding invoices with new job deposits… to firing a sub who threatens a lien… to handling hostile homeowners mid-project — this episode dives into the messy, uncomfortable situations contractors face every day.

We break down:

• What to do when cash flow is tight and you’re juggling deposits
• How to properly fire a sub (and protect yourself from lien threats)
• Why doing “free” work to be nice often backfires
• How to respond when clients demand to see invoices and receipts
• When to stand firm on pricing — and when to walk away
• The real line between finishing the job and firing the client

If you’ve ever dealt with payment standoffs, nitpicky homeowners, or midnight bank account panic… this one’s for you.

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! 🚀

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Transcript

Listener Q&A Kickoff

SPEAKER_01 0:01

Welcome to Contractor Cuts, where we cover the good, the bad, and the ugly of growing a successful contracting company.

SPEAKER_00 0:13

Welcome to Contractor Cuts. My name is Clark Turner, and today we have Emory, our Director of Operations, back on the podcast with me. Emory, thanks for joining us this week. Of course. So today we are going through Emory's going to be reading off some um, what would you call them? Questions from the listeners. Questions from the listeners. So these are just uh from contractors like yourself listening uh that have written in with some questions or reached out uh wondering how we uh you know how they should handle things. And once we gather some of these, we we often we like to kind of dump the the best of the best on the show. Uh, because if you know if one person is struggling with them, then many people are. So today we're covering that. And uh if you have questions, go to our website, uh contractorcuts.com, go to contact us and submit the question to us. We love getting those and we'll we'll I'll personally respond to you if you if you submit it. So we'd love to talk to you about that. All right, Emory, take it away. Give me some questions and we'll uh we'll debate them. Cool.

The Rob Peter To Pay Paul Trap

SPEAKER_01 1:12

All right. Uh so the first one is I've got three jobs going and cash is tight. I use the deposit from a new client to finish paying subs on a project that's behind. Technically, everything will get done, but if one payment gets delayed, I'm screwed. Is just is this just how construction works or am I digging a hole?

Weekly Invoicing One Job At A Time

SPEAKER_00 1:31

Yeah, that's a that's a big one. Um, that's one that most contractors coming into coaching, I'd say not most, maybe half of the contractors coming into coaching are in that Rob Peter to PayPal stage, right? It's the uh it's uh I've got a I got a big deposit, I got a$10,000 deposit on this$40,000 job. I'm starting it in three weeks, but I also got bills to pay, I got my mortgage to pay, right? And so you start paying all your bills, taking the money, all of a sudden it's time to start the job, and you got$1,500 left in the account for that job. Right. And so a lot of guys are I got to get the next deposit. How do I get the next invoice? Okay, I'm at the end of this job, there's not a lot of money left. Let's start the next job and take that deposit. And it's not on purpose, but it's how guys end up getting when they're not managing their money and setting money aside. And really, the key to what we teach on this is A, you can't just rip the band-aid and do everything the right way, right? It's it's a slow progression of changing how you're invoicing uh one job at a time. So the way I coach out of this is um it's very dangerous because as your company is growing and your revenue grows, it works really well. And as soon as revenue dips for two months, you're screwed. You're out of money. So the way we coach is okay, keep doing what you're doing on the jobs you've got. Let's pick the first job that comes in and we're gonna change your processes on how you do invoicing. Now, we coach on weekly invoicing, and a lot of guys are like, that's too much paperwork. No, it's the way to be safe. It's where we check in with our clients, it's where we lay out exactly what is being done the past week and what we're doing the next week. Uh and during the weekly invoices are the conversation that I'm supposed to have with the client so they know what so we're on the same page as of what we both think we're done, done with to this week, right? On top of that, not only it being a check-in and making sure that we're we're calibrated with our brains the same direction, also it is allowing me to invoice for next week. So I'm invoicing this week for whatever I'm gonna do next week. The next week I'm I'm we're looking at what I already invoiced, and I'm now invoicing for the next week. So I'm getting paid one week in advance for the money I'm about to spend on their job. So I invoice it on a Tuesday. I need payment by Friday. They pay me on Friday. Next week the crew starts. I'm I've got all the materials ordered, we're good to go, and I spend all that money next week. So by the end of that week, before I take the next payment, anything left in my account is my money, right? And so I'm not overspending out of my money. So that is the ideal way to do it. Um, some guys on larger jobs, you know, uh, we've had projects that are um bank draws to where, you know, it's it's required, they'll give you 20% down. Uh, and then as you hit milestones with that, I like to have a separate bank account where we take that money and put it in, and then we do the weekly invoicing, pulling money out of that account, paying ourselves from our clients' account. That way I don't just have all of their money in my bank, hoping that at the end of the month that there's still something left. I'm just spending out out of out of it. But it's not a transition you can do right away, right? It's a it's a one job at a time, then we're gonna do two jobs, then three jobs, and it's trying to cherry pick the best ones that I can I can do it on and really get in and run those jobs in a different process, different setup of how invoicing happens, um, and then kind of trickle out the other way of doing it. Um, but it's difficult. It's it's tough because you're already behind and you're you're not on a credit card, you're take stealing money from your client to finish the job before them. And that's that's dangerous. It's fraudulent. Um, and it is the way that contractors get such a bad name, and it's usually not because we're stealing money, it's because contractors are mismanaging the money that way, and then all of a sudden I've got four clients that I can't finish their job because I haven't sold another one. And so it screws yours yourself. So slowly moving away from that one job at a time. I'm gonna take this next job and I'm gonna let it cash flow itself and invoice for it. And I can only do that if I've got a second job that I'm running the old way to fund the ending of that last job. So it's a slow move away from it, but three to five months down the road, you can be fully invoicing the new way to where no one you're not stealing anyone's money. And if things slow down, you're good. You're good. I can slow down, I can, I can uh weather that storm, sell the next job, get that one going. Um, but it's a really good way to make sure that cash flow that I'm taking your money as my client and putting it on your job that I'm doing. It's also a way that we on our client engagement agreement, we really sell ourselves to our customers because they love knowing this, right? They're like, hey, I'm not, you know, I'm not just cutting you a$30,000 check hoping you show up on Monday. Um and we we tell them, like, this is how we do it. Now, on your end, as my customer, because we're doing it this way, I need payment by Friday. And if you don't pay me by Friday, we're not showing up on Monday. I'm not doing, I'm not a bank for you. I'm not lending you money and doing all this work hoping you pay me. And vice versa, you're not just giving me cash hoping that I show up on Monday. So clients end up loving it if you if you pitch it to them the right way. Um, the only pushback I've had on that style of invoicing is I've had a couple investors like, I don't want to cut a check once a week. Cool. Give me four weeks of checks right now. This is what we're gonna do in the next month, and then next month I'll give you another invoice. And like, no, no, no, I don't want to do that either. Okay, so these are two options. This is pick one of these directions and we'll we'll go that way. So that's what I'd suggest on that one. If you're robbing Peter to PayPal, slowly move out of that as quickly as possible, but also in a realistic way to where you're not um screwing over the jobs that are currently running that way.

SPEAKER_01 7:06

Cool. Uh one question I have is how how do contractors end up like this? You know, like most people, I'm assuming when they start their business, aren't like, I'm going to intentionally take money from other jobs to pay for jobs and do how does that sort of materialize?

SPEAKER_00 7:21

I think it's it is um rose-colored glasses about your company. I've got five bids out there, I'm good. It's it's expecting like I know work's coming, so I'm fine. And it's also doing this is not a mental decision that guys do. It's not like, oh crap, I guess I gotta go sell the job so I can steal money from that job, right? It's not an actual decision that guys make. It's because they do the pot system. I just put all the money in my bank account, I spend on the jobs I need, I pull the money out I need, and I hope that there's money left in the pot at the end of the month. Right. And so that pot system of just pooling my money, not managing the finances, not tying dollars, not job costing, not using the Pro Truck software and seeing where the materials are and how much I'm spending and what am I doing here, and all of that that takes 20 minutes a week to really look at your dollars and manage it is going to save you from getting into this, right? So get not having a pot system where I just deposit the checks in my account and then spend what I need to spend, but actually running it like a business, not like a high schooler cutting grass, but it's actually a real true company that you're building to where I know the dollars coming in, I've got 10 grand coming in from this job, I've got four grand of materials. Uh, next week I'm gonna have uh three grand of labor, and I got about three grand on top of that for profit. So by the end of next week, I can pull three grand out of uh as a profit that goes to my pocket, right? And the hard part is the guys that that have bigger spends than what they're making, right? Like, well, I've got a wife and some kids, and my wife has a certain expectation of luxury, and like we do these trips, and we got like that type of mentality is like, no, we don't spend the money and figure out how to make it. We make the money and we spend within a budget, within what we actually have. So it's it's really being focused and and on top of planning and looking at the dollars, not just using the pot system.

SPEAKER_01 9:17

Gotcha. So it's more of the accounting side where if you don't have any idea how much profit you're making and keeping account of spending outside of your own spending with your pot, you're just gonna kind of end up in a situation where you're you're in this situation, I guess.

Ditch The Pot System And Track Profit

SPEAKER_00 9:35

Well, and uh like like you just said, like when I talk to contractors um, you know, not in coaching, but we're just you know, they're they're considering it or just having some questions and we're talking. I say, how you know, what's your profit? Well, I I make 35%. What what do you mean? Well, I take my I take how much I think it's gonna cost me and I mark it up 35% and then I go do the job. Well, at the end of the job, what's the percentage? I don't know. Yeah. Like the well, you might be ending at negative 3% if you don't know. Like it's it's the middle step of I've priced it the right way, I believe. I gotta track it. And uh the counting side, the tracking side, guys like, I'm just not good with numbers. Well, then don't run a freaking company. Like it's not difficult to look at I spent this and I expected to spend this, so I'm upside down a thousand bucks on this one thing. Like it's not a lot of work or effort. It just takes, I'm gonna set aside 30 minutes a week, an hour a week to sit down and look and plan out what I'm gonna spend and what I'm gonna invoice ahead of time and start looking at your dollars and knowing where every penny's coming from and every penny's going. And be able to have that conversation with your wife and saying, Hey, FYI, it looks like this month we're only gonna make about four grand. So no, we we can't book spring break. I'm sorry. I know you really want that, but we can't, right? As opposed to, yeah, just book it. We got money, I got 28,000 in the bank account. Well, yeah, those are just deposits for the next job. Yeah, you got 25 grand in in accounts payable that needs to go out in the next couple weeks. And so understanding those numbers allows you to make decisions. And uh, I think a lot of guys, because the numbers are so ugly, they don't want to look at them. And it's like it's just I'm I'm a bad businessman. I'm not, you know, like it's it's the self, you know, pity and the and the the mindset that guys have of like, I just if I don't know, then I don't know, I'm gonna bury my head in the sand and we'll figure this out. It's like that's that's how you crash a company. That's how you end up with the with debt and screwing seven, eight, ten uh homeowners because you started their jobs, you took deposits, and you can't complete them. Yeah, it sounds like a very slippery slope. Trevor Burrus, Jr. It is. It is. And no, I mean no one intends to do that. No one I mean most contractors. Yeah. And I think that's contractors are known for like, you know, they took my deposit and ran, and these guys are slimy. And it's like, no, they're most guys aren't slimy, they're just bad businessmen. And it's like it's not difficult to be a good business like you don't have to be Warren Buffett. Like, you can literally, I'm gonna spend an hour and know my numbers once a week. That's it. I can get up an hour before my kids get up, and I'm gonna know my numbers, and then I'm gonna execute this week. And it you it also doing that is helping you adjust your numbers, right? Like, oh, maybe I need to price this higher. Maybe I need to get, you know, I'm looking at this, and every time I price sheetrock, I lose. So I need to up my pricing when I'm around that because I think I can knock that out in a couple days, and it takes me seven days every single time I do this. So I need to change how I do it, uh, find a new vendor, um, maybe outsource it to someone else instead of doing it myself. Like looking at the numbers helps you guide the decisions you make on the project itself.

unknown 13:39

Cool.

SPEAKER_01 13:40

Yeah. Um, I guess the last question on this are there any red flags that people can notice that they're starting to sort of go down this path? Things that are kind of, you know, come out of nowhere where they're like, oh, I'm actually about to be in this situation.

SPEAKER_00 13:53

Yeah, yes. Um I I think the the two red flags I would say, number one, when you have those oh crap moments at midnight and your your head starts getting really hot because you're looking at your bank account on your phone and it's at$28 and you're like, where did that money go? As soon as you start having those moments, the oh no, moments of I didn't realize where I if you are going to run out of money, you should know that weeks, months in advance. Like that should be uh like, well, if I don't sell one more job next month I'm gonna have X, Y, and Z. If I don't get this, I need to invoice at least 30 grand next month. I need to at least hit$100,000 next month to make payroll. Well, whatever, like knowing those numbers, my profitability, what I take home, what my expenses are, what's it gonna cost me. And so I have to hit$38,000 a month of invoicing at 35% to be able to afford all of my bills and and break even. Whatever that number is, if you're not looking at that and knowing, okay, next month if I don't sell a couple more jobs, I I don't know what we're gonna do. Hey, babe, I just want to give you some warning. Like, if that's not your your if you're not having those check-ins with yourself and all of a sudden it is a shock to look at your bank account and be like, oh crap, I'm out of money. Who can I invoice? I don't have any invoices I can send. That's the biggest red flag. And it's too late at that point, right? Like, like your money's gone. Like you're you're rate racking up credit cards at that point. Um, I think that's the biggest red flag. Um, the other one is if I ask you at the end of a job how much profit you made on it, you don't know, that's a problem. Yeah. You're not tracking your dollars, you're not looking at it. So if you can't tell me, you know, in our bank account, we've got, you know,$86,000. Of that, we should be spending about$72,000 on expenses in the next two weeks. Uh, and so we have this much uh extra profit in there. Like knowing those type of larger, broader numbers, we don't you don't need to be a the an accountant on this. You don't have to be perfect on all your numbers. I need to know roundabout to the thousand, right? Like we got this much going out, this much coming in. I know this is my profit, I know I got to spend this. On this job, we invoice 10,000, but I got nine grand of expenses next week. So don't touch that money. Or I invoice 10,000 and I already spent all the money on the materials. I've already paid the crew on this, so all 10,000 of that is profit in my pocket. Like knowing those numbers and spending an hour a week to look at them and plan it and know next week and the next week and the next month, that is that is what brings it from a red flag to a green flag. The further out I can see my numbers, the further, the more defin definition I have in the profitability of a job and what dollars are going where. And the final at the end of the job, uh, you know, I started this job at 38% profit, I ended at 24. Where did I lose 14%? Like, let me look into those numbers. That's how we become businessmen that are running a company that's actually growing its revenue and growing to the next level. Cool. Well, awesome. Yeah.

SPEAKER_01 16:58

All right, you ready to move on to the next one? Next question, hit me. All right. Uh a sub that I hired has been doing terrible quality work and isn't showing up half the time. I told him if he doesn't show up on Monday, then I'm going to fire him and fire another and hire another crew. He told me we have a contract, and if I do that, he will put a lien on the house. Am I stuck using this guy?

Red Flags You’re Heading For A Cash Crunch

SPEAKER_00 17:19

Ah, yes. The old, how do I fire a sub, right? Um I think uh uh a couple things. Number one, this starts with the subcontractor agreement. Every sub has to sign it, every sub has to understand it, and every sub has to uh like it's not just getting a signature on it, it's walking them through. So it's just like our client engagement agreement. I need you to understand how the operations go and what you're signing, what you're agreeing to. Um we've got a very defined sub-agreement that we take we give to everyone, whether you're in the foundations, base level of of coaching, all the way up through our executive level. Our subcontractor agreement that we give out has a well-defined as to how you get fired, how you lose money, what the work orders mean, how they operate. Um it has full agreements around if there is a conflict, we're doing arbitration, not suing the pants off each other. If if there's a conflict over a thousand bucks, we're not gonna each spend eight grand in lawyer fees. Like let's go to arbitration, figure out, and the the the loser uh, according to the arbiter, has to pay. Um and they look waived the the right to a lien in that. There's we're not gonna put liens, we're just gonna go to arbitration. Um can they still put a lien on the house? Yes. Um but I'm talking to them about this is how we settle these disputes. Uh that's number one. Number two, on that is when I'm going to replace a crew, we've got a very defined process to really set the bar to build your case for that court for the arbitration. To where number one, I'm gonna show up and take pictures of everything, and then I'm gonna send them a documented email from the software with all the pictures uploaded saying, here's what's subpar, here's what didn't meet industry standard, here's how you committed a timing and you've already blown past the expected um budgeted time. Um this is what we agreed to, this is what you're breaking in the agreement. And then after I've listed out everything that they need to do or all of the issues that they have, I then say, if this isn't repaired, I want to meet you out there tomorrow morning at 8:30 to to uh repair the situation. If you don't meet me or these are still subpar after repair, then I'm going to uh uh terminate our contract, fire you off the job, and I'm gonna bring someone else in. Um documentation showing them what they can do to to still get their money and what happens if they don't do that, um, and then documenting when they don't do it, because they're not showing up tomorrow morning usually, right? They're not coming back. And if they are, I'm saying, okay, you've got today to fix X, Y, and Z. This is our plan. Everything's documented through email so I can timestamp it, bring it to arbitration or court with me. Um and so I've told them what I'm doing, and then I I say if if they don't show up or if they don't uh increase the quality of what they're doing, I then send them a final email saying, Hey, you are not allowed on our job sites, please um don't come back. Your work order for$2,000. Um, I'm going to use that money to hire the next crew per our contract. Whatever's left over, if I can get the rest of the work done for$1,500, I'll pay you that$500 difference. Um if it takes me$500 to get done, I'll pay you$1,500. I've got$2,000 for the work that we had agreed to, and I'm somebody's gonna get it. Um and so I say that to them. At that point, usually you get a mad phone call or text message saying, no problem, I'm just gonna put a lien on the house until you pay me. There's two things I'd say I respond to when a sub threatens that lien. Number one, I say, hey, listen, just so you know, if you put a lien on our house, you're going against our contract, I'm gonna bond out of that lien. Bonding out of a lien, you go to a bond company, a lot of insurance companies will do it, and the lien's for$2,000. I go to the bond company or the insurance company, say, hey, here's$2,000. I want to bond out of this lien. They give me paperwork saying, hey, we're gonna hold the$2,000 until we get a judgment as to who deserves this money. I take that and I go and get the lien released off your house. So I tell the crew that. I say, listen, I will bond out of this lien and you will not see a penny, and I'm actually gonna come after you for money because of the damages you've done on this house and for breaking our contract. So you can either put a lien on the house and go and get sued and not see a penny, or you can come by my office this afternoon, sign a lien release, we'll walk away from each other and I'll give you 500 bucks to just walk. Right. So I'm gonna, I'm willing to just, I don't care about justice. I just want to move on and make the job complete and and stop dealing with extra stuff that I don't have time for. So I'm, you know, if I owe the, if they, you know, there's$2,000 work order, they think we're halfway through it, I say, listen, I'll either give you$500 today or you'll see zero dollars. I will bond out of it. Like your lean doesn't scare me, right? I'm cutting the legs out from underneath them in that argument. And I say, I'll cut you a$500 check today if you come by the office just to walk away from this. I have never had a crew not accept that because they know, they know I got them dead to rights. They know that they're that their work looks like crap. They know they didn't show up. They know that I'm gonna win with a lawyer. They know I'm that our company is has the funds to hire a lawyer. Um, and so they just fine, give me the money, I'll sign it. They sign the paperwork. We've got a lien release form that we give to our coaching clients um that states everything that needs to say, talking about the job, as well as any past work you've done for us as of this date, no work previously. Uh, you know, you've released liens, blah, blah, blah, blah. We do that, we cut them a check, we we get the signature, we hand them the check, we walk out of there, we're done with them. So we've replaced them on that job site. The worst thing you can do is let them keep working because they're it's only going to get worse from here. It's gonna cost you money and it's gonna cost you a reputation. So We we end it quickly, as quickly as possible. Um, I'm not walking on day two of them working on my job site and firing them. I we've got kind of a day one, day two, day three, like the first day they're working, I'm gonna be on there every day. Uh one, two, and three, I'm gonna be checking in. If I don't like what they're doing, I'm saying, hey, uh, you know, like if it was you and I I show up and it's day two and you've done about a half a day's worth of work, I'm like, Emory, I got come let let's talk uh outside. I'm like, Emory, I feel like this is going to end in disaster. Like I I there's not enough money for you to take two days to do half day of work, and I have a feeling you're gonna run out of money before this is done. And even the half day of work you did, I I'm not impressed with. Like, what's going on, man? Right? It's the curiosity, not conflict. Um, and so it's a what's going on? Like, what's happening here? Why is it what and and that's when the confessional starts, right? Like, well, my main guy that was coming with me got a flat tire yesterday, so I was just worked here by myself and I had to cut out at two because I had to go help him get his car going. Um, and then today something happened with my wife's vehicle, and so I didn't get here till noon. So I you're right, I've only done a half day and I'm gonna make it up. So today we're gonna stay here till nine tonight. Tomorrow we're getting here at 6 a.m. I'm gonna make it up, right? And so at that point, I'm saying, cool. So by tomorrow at four o'clock, where will we be? And then I show up tomorrow at four, right? So I'm not just coming in guns ablazing when that crew's screwing things up, but when it gets too far down the road where I'm like, this is not recoverable, and I don't trust this guy, I'm going to go straight to that documentation, uh, what they have to do to uh fix it, and then my lean defense and get them off the job site. Also, day one that I start seeing getting concerned, I'm calling my other crews trying to find a replacement, saying, hey, you know, calling my best guy, you know, hey Pete, um, I might have a crew I need you to come and help me out with. Um, what are you doing Thursday, Friday this week? All right, I'll call you tomorrow, let you know if I need you, right? So I'm starting to try and replace them if needed to prep for that.

SPEAKER_01 25:01

Cool. Um so one question with uh do you ever involve the client in this situation? Or are you kind of just managing this in the background and not allowing them to know any of the drama that's going on? Great question.

Firing A Subcontractor The Right Way

SPEAKER_00 25:15

Um That is a very difficult question to answer because it it's so uh situationally dependent. Um with clients, I try to view myself as their representative, not me and the crews versus them, and I gotta fix it without them seeing because people aren't idiots. People people sniff that stuff out. And when they're also walking through the house saying this is pretty low quality and it's not going fast. So as soon as like if I'm firing a crew and I'm trying to replace, all they see is now the crew hasn't been here in three days, and Clark has been here and he's walked through with some people, like, what the heck's going on? So most of the time I want to have the conversation with the client. Now, there's times that I don't. If it's an investor client and I know we can get the crew out there and get it done in time, I'm probably not gonna like make him nervous. Um, but for the majority of the time, I'm bringing the client in and I'm saying, hey, listen, I want to let kind of fill you in on what's going on. Um, we're on day three with this with these guys. They've worked for me before. They're they've really good. Um, they're, you know, I didn't just pick them up off the Home Depot parking lot. Like these guys are are good. I don't know what's going on with this job, but I'm not happy with it. Right. Like letting them know that I'm upset about it and that this isn't my standard and lets them be like, okay, he's got this. Right. Like I want them to let me stay in the driver's seat and not be like, I need to take the wheel because Clark, I don't think, has this. Right. So it's a, you know, if you're the if you were the homeowner, I'd be like, hey, Emery, so I'm not happy with what's going on here. Uh, you know, it the work is subpar in my opinion. Um, I don't like how they started doing the demo in the kitchen when we're doing the bathrooms first. And then like there's a lot of stuff that I I'm I don't like, the uh order of operation, even though me and me and the crew talked about it. I don't like the quality, and they've they're going slower than I want. So uh let me tell you my plan of action. I've already done the plan of action. I'm I'm filling them in on it, right? Like, so they're gonna be gone tomorrow. I've got another crew coming in. We're gonna have to wait till Monday before that next crew comes in. So we're gonna lose a couple days on the timeline. But I need your buy-in that you're cool with me bringing a better crew in and losing a couple days instead of just trying to make it work with these guys. This is your house, and this is a project that I want to take a lot of pride in. And I don't think I'm getting it with these guys. And I don't know what's changed from our last project to this project, but I don't like it. Right. And normally clients are like, I'm so glad you said something. I totally agree. Thank you so much. Like there will be some like, well, you know, we can't let this timeline slip. I've got this great. I understand that. I'm gonna try to double up some crews next week. I'm I'm gonna expedite this as much as possible. That being said, I care more about the final product and the quality being high than losing a couple days on the timeline. Right. And so there's sometimes that conflict with the crew with the client, but they they're not idiots. They see the the lack of work being done and the low quality that's happening, right? So they're they're like, I'm concerned about Clark and his company. As soon as I say, hey, I'm concerned about the crew, we're gonna replace them. They're like, oh, cool, it's not Clark's company, it's these guys, and he's fixing that problem, right? So being honest about it, talking about it with the client really allows that trust to stay there because that's a spot where they they see that the crew's doing this and Clark's okay with it. And so Clark must think that this is the level of excellence for uh his jobs, and I don't want to use Clark and his company anymore. Right. So all the trust is now gone, and now I'm battling them day in and day out on on them micromanaging quality and over the shoulders of guys. So it really it's an important thing to do is bringing that client in into that conversation.

SPEAKER_01 28:55

Aaron Powell So what about in reference to the lien release? If uh if a client gets a piece of mail saying that they have a lien on their house.

SPEAKER_00 29:02

I think in 20 years of doing this, we've we've had two people put liens on houses, and both were because we didn't know what one was we didn't know that they were gonna do it. They just kind of bailed and we said we're gonna replace them and they did it. Another one was we hired someone who hired somebody else. And so we paid person A and then person B put a lien on the house who we'd never heard of before. Um those are the only two times I I can remember that we've had a lien put on one of our properties by subs. Um and both times it was a surprise to us and the client. Um if a crew I'm not gonna bring a client in unless I the crew's like, screw you, I'm putting a lien on the house anyways. If it's a crew that is low in quality, not showing up, don't have a lot of work ethic, they're probably not getting in their car, going down to City Hall, filing paperwork. Like they're like they're not that smart. And I usually cut it off by cutting a deal and just paying them to go away. Um and$500 is usually my max on that. I'll give you$200 if I owe you five. I'll give you$500 if I owe two grand. Um but I I'm I don't think I've ever told a client that someone's putting a lien on their house. If I knew someone was doing it, I would give them that heads up.

SPEAKER_01 30:13

Yeah.

SPEAKER_00 30:14

I'd say, hey, they're doing it, but I'd also give them that heads up after I call my insurance company and get the bond to bond out of the lien. I'd then take it to you and be like, hey, homeowner, I just want you to know this is what's going on. They threatened a lien, so I'm gonna go ahead and bond out of that lien. So there will be a lien on your house for about two days and I'm gonna take care of it. This crew, I don't know what's going on with them. They've gone crazy. I don't want the homeowner to think Clark's just picking people up off the street to do my job. So it's always a, hey, they were fine. I don't know what happened and went south. Even if it's their first job, I've already met with them. I've done a subcontract agreement meeting with them. So I've gotten to know them before the job. And so it's like, hey, this isn't what I expect out of these guys from my experience with them. So, you know, I'm not okay with it, but I'm gonna handle this. Uh, you're not gonna be on the hook for anything, I'm gonna take care of it. Well, you know, that sort of conversation. I've never had to do that, but if I knew someone was putting a lien on the house, I will definitely have that conversation with the client.

SPEAKER_01 31:08

Yeah, you want to be proactive rather than reactive because I'm assuming if if I had a contractor working on my house and then all of a sudden out of nowhere, I got a piece of mail saying I had a lien on my house.

SPEAKER_00 31:18

Yeah.

SPEAKER_01 31:18

That's a complete, utter destroyer. Yeah. It's like, what's going on? I don't trust you anymore. Yep. Okay. Zip. Cool. We can go on to the next one. Cool. All right. Um throughout a large home renovation I'm doing, my client asked me to do tons of small changes. None of them have been that big of a deal, and I just did them to keep the client happy and keep moving without charging extra. Now at the end of the project, the client doesn't like the paint color in a few of the rooms, and we disagree as to who is at fault. They want me to repaint it for free, and I would have if I didn't some do so many other things for free. But I think that they should pay for the change order. What should I do? I love this question.

Handling Lien Threats And Bonding Out

SPEAKER_00 32:04

This is I feel like this is like half the guys I talk to are struggling with this over almost monthly. Um, because it's like I want to I want them to be happy and I've got a little bit of extra in this, so I'm just gonna take care of this. I'm just gonna take care of that. I'm just gonna take care of that. Yeah, they want that done. We're just gonna hit go ahead and paint that other room. Let's let's take care of them. I've we've got it, I'll pay you a little extra money. And so I'm doing all this work to for free trying to impress the client. And so it's like I'm building this ledger in my brain of all this stuff that I'm doing that they should be patting me on the back for and that they're getting for free. And like I I'm the hero here. And then all of a sudden at the end of the job, it's like, hey, I don't like how you're doing this, I need you to repaint this. And it's like, well, you pick the color. No, this isn't the color we picked. Yeah, look at it, look at this watch. No, that just you guys must not prime the wall. You might like it's kind of splotchy. And so they're at like there's this disagreement as to who's at fault. It's kind of this gray area for for repair. And I've got this whole ledger of stuff I did for free. What you as a contractor don't realize is flip yourself to the other side. When when I, as the customer, say, Hey, can you get that done? The customer thinks that's part of your scope. So the dollars they're paying you on their invoice is what they think. All the work you're doing is included in that. So anytime that you say, Yeah, I'll take that, I'll I'll handle that for you, they're like, Great, thanks. That's what I'm paying you for. So there is a zero ledger in their head. There is zero money owed to you. I don't owe you a thank you. Like, you did what we agreed to, right? There is a miscommunication on expectation of what is getting done for the price paid. And so when you think this wasn't on my scope, I'm just gonna handle it. I'm I'm such a good contractor and I'm doing free stuff. They're in their brain, they're the exact opposite is uh in the exact same situation is good, I'm glad he's doing what we agreed for him to do. So I'm, you know, like he's doing it. And so at the end of the job, you've got this big debt in your head that they owe you. And they're like, you, you know what? You're welcome. I did all this stuff for free. I'm not I didn't I could have charged you five, six grand if we add all this stuff up. And the client's like, I paid you for everything that got done. You need to fix this because it didn't look, it doesn't look good. Right. And so there's this two totally different viewpoints of the same thing. Um and so what we do to coach out of this, it doesn't, you can't solve this at the end of the job. This has to be solved at the beginning of the job and throughout the job. So, number one, our client engagement agreement, we talk about scope. We talk about if it's written on the scope, it gets done. If it's not on the scope, it's not getting done. And I talk to them about how our work orders uh take, you know, we take the actual verbiage from the scopes, and that's what goes on the work orders, and our crews are only allowed to touch that stuff. So during the CEA, I say to the client, it's your responsibility to look at the total scope that you're signing. And if it's not on here, it's not getting done. So, and I always use the example. If I'm walking through your house and we're talking about your new kitchen and you're like, hey, Clark, also, can we get a new roof on the house? I say, Yeah, we we can definitely do a roof for you. If I write an estimate and forget to put a roof on there, do I owe you a free roof? No. And everyone, that's that makes sense to everybody. And I say, and the same thing works on any other thing. If I'm walking through and I forget to put a faucet on there when we're doing a bathroom renovation, that doesn't mean you're getting a free faucet. That means I forgot to put it on there and I'm a human. That means you're gonna get a change order for that faucet. And I say this during the client engagement agreement, and it makes so much sense to clients. So, like, yeah, absolutely. If if I'm not paying for it, then you don't owe it to me. And I said, So your responsibility in this relationship is I want you to be a Karen. I want, and they all laugh and like, I want you to nitpick my estimate. And if it's not on there, if you want me to add verbiage, if you want me to define something, let's do that before we start. So look at my estimate. Your responsibility is to make sure everything that you want done is written on there. I've tried my hardest to put everything down there that we've discussed, but if I missed something, if I didn't hear you, if I didn't understand what you were going for, this is the time for that clarity, right? And so I'm having that conversation before we start. Then when we do get started and they're like, hey, can you also like replace that trim down there? I don't like the way that that trim list that needs to be, you guys can replace that. If I'm okay with doing that, I'm already doing trim in the other room. I can pick, I can replace that one spot where the dog chewed it up. I say to the client, and this is the key throughout the project. I say, hey, listen, I just want you to know we can do that for you. Uh I'm gonna eat that. It's gonna cost me about 250 bucks. I don't want to hit you with the change order. I just want to do it. I'm not looking for a thank you. I just want to let you know I'm I'm gonna lose on this one. Um, and I put it on the quote and I put replace baseboard and living room,$250, in the description, and I put a$0 line item on the estimate itself. So the estimate, it says$0. And then the, but there's a line item keeping track of how much money I've spent. That way, there's no argument as to them thinking you were supposed to do that because they're like, cool, he is doing it. Uh, I thought he was gonna do it, but yeah, that's fine as long as you're not charging me. But I've now got a a snapshot throughout the job of$250 here,$500 here,$80 here,$26 there for I bought that extra door handle you needed. Right? Whatever it is, I'm I'm logging it on my quote and I'm sending it to them on my estimate and our scope of work. It's logged on there at zero dollars. I'm not charging for this. So at the end of the job, we get to it and they say, Hey, I want this repaint. I say, This is what we chose, and I did the two coats per. Remember, I talked to you about doing three to four coats because of the dark color that was we're covering, and you said, No, I want to do two coats. That's what we gave you. We did two coats. I don't think you did two coats at all, right? We we have the disagreement with the client, and I can say, listen, if you look back, I build a little bit of buffer into my quotes to where I can cover stuff like this when there's a disagreement. I spent all of that money. If you look here, 250 for the baseboards, I spent 80 on this one, I spent 500 on this one. I've got about$1,500 in work that you asked me to do that's not on the scope. And remember, we talked about it. If it's not on the scope, it's not getting done. I spent that extra buffer money on those items. So I spent about$1,500 out of my pocket trying to make you happy on the stuff that wasn't on your quote. So here's what here's what we can do: either you do a change order for the paint, you keep the paint how it is, or you pay me for the the stuff you asked me to do and I did for free, and I'll cover the paint for you. Those are your those are the three options we have. Which option would you like to do? Right. And so they've got a whole record and conversation and emails about every single thing I did for free for them without me looking like I'm nitpicking or asking for a thank you. Like, hey, just want to document what we're doing. I got to put it on a work order for a crew. So I got to put it on the scope so they can they can do it. It's not on the scope, I'm doing it right. And so that's the conversation I'm having throughout the job, referencing back to the CEA. And then at the end of the job, that's my ammunition. And I've got it written down there. Because if I don't write it down and document it, at the end of the job, I'm like, yeah, well, I did this for free, I did that for free. Like, no, you didn't. That was part of what we talked about. It wasn't on the scope. Why didn't you tell me that before you did it? I wouldn't have had you do that if, you know, like that's you can't argue after doing something, but I can throughout the job document it. So does that make sense? Like, like the the CEA, documentation throughout, options at the end. Here's the three options. We call it, we walk away, you give me my final check. If you're happy with it and can live with this, awesome. You pay me for fixing this because I did what I was supposed to do and you just don't like it. Or you pay me for all the change orders throughout the job, which is fifteen hundred dollars, and you we'll put that on the quote and I'll I'll cover this part for free. What do you want for free um out of my pocket? And or do you want to just you're good to go? Right?

SPEAKER_01 39:48

Yeah. Uh it definitely I think it ties back to the first question that we talked about with uh you know having to where you're robbing Peter to pay Paul. Yeah. To where it's like if you are giving away a lot of free things and you're not tracking how much it's eating against your profit, you're trying to be a good person, you know, you're trying to make the client happy, but at the end of the day, you could find yourself in a situation where you're screwing your company. Yes, yeah.

What To Tell Clients When Crews Fail

SPEAKER_00 40:12

Well, and uh uh again, like you just said, like it takes an hour to look at your dollars when you're instead of robbing Peter or PayPal to know where your money is each week. It takes time to pull up your software on your iPad, type in that line, hit send to a client. It takes five minutes, but you don't take but it's like I'll be fine. I don't have time for that. And you do have you like you have to have time for that because it's gonna cost me money, right? And it makes you look good. Even if they don't have that issue at the end of the job, they're like, I really like this company. They I mean, he did two grand worth of work for free for me just because he's he's trying to help out. Like that's that's the deposits into the trust bank if you do it right. Now, if I'm like, I'll do this for free for you, it's$250, but I'll do it. You know, like if I'm trying to guilt them and try to get the attaboy out of them, it's not it does the opposite effect. But if it's like, hey, you know what? It's not on our scope, it's about a$250 change order. I'm just gonna do it. Like, I got a little buffer in here for this. I'm gonna eat this for you. Don't worry about it. That sort of thing, I'm not looking for praise. I'm not looking for a thank you or an attaboy. I'm just letting them know, hey, I'm gonna cover this because I uh I instead of dealing with change orders and extra money, I'm just gonna handle this. I already got the guys out there. Um Clash like, awesome, thank you, cool, on to the next, right? And so planting those seeds throughout the job, at best case scenario, things end well. And they're like, that guy's awesome. Like he did all the stuff, thank you so much. Worst case scenario, we have a conflict at the end, and I've got ammunition to back my back my argument at the end of the job.

SPEAKER_01 41:48

Cool. You know, I think it's interesting that uh, you know, going back to what I just said, where you know, when you're doing the Robert Peney to pay Paul type invoicing where, you know, you're taking from other jobs to pay your current job, you know, that's seen as like a sort of slimy, stereotypical contractor mindset. But a lot of guys get to that point because they're trying to be the nice guy. Yeah. Because they're trying to give away free work and make the client satisfied where they end up in that hole. Yep. So it's I just find it kind of ironic.

SPEAKER_00 42:19

That's that's so true. Like whether it's trying to be the nice guy and doing the things just to get out of here, and then all of a sudden I have seven go backs at the end of the job, and I don't have a way to close it, like the efficiencies that we have in our paperwork and processes, start it well, execute quickly, and end well and leave the job site. And I think the uh the problem with a bat with a with a green contractor that doesn't know better, they're not starting it well. They're not running it well, they're just doing the work, and they're not w exiting well. And so a three-week job turns into a seven-week job, turns into a bunch of I did five grand worth of free work and I uh I should have I invoiced them. And uh throughout doing this, it wasn't a big deal, but now I'm out of money, right? Like all of that stuff combined is like, let's clean this up. A little bit of paperwork, a little bit of planning and processes put in, all of that goes away. Now you're making money and making people happy. Like it's not rocket science, it's just we got to have these processes in place to do all the stuff. Cool.

SPEAKER_01 43:18

Yep.

SPEAKER_00 43:18

Next one.

SPEAKER_01 43:19

Let's do it. All right. Um, a client asked to see all of our subcontractor invoices and material receipts. I normally mark up materials and don't show raw numbers. If I say no, I look like I'm ripping him off. If I say yes, it's going to take hours to pull together and the client is going to argue numbers. What would you do?

Change Orders, Freebies, And Scope Control

SPEAKER_00 43:39

Great question. This is one that has hit us plenty of times before. So if a client, and this usually happens with an unhappy client at the end of the job, right? Um, or it happens with like an investor at the first invoice. Uh either way, there's a that's a loaded question because there's like three different things in it that are separate. So, number one, I have the conversation of marking up materials up front, and I'm very transparent about it. And I don't mark up materials, I budget time and effort for repairs, for go back, for um delivery. So, what that means is I, you know, if I was doing a bathroom for you and I say, okay, here's our light budget. It's it's$500 for the light fixture that you want. And I say, listen, we mark our materials up 20%. And we do that be not because it's a gotcha fee. Um, I'm we're doing that for material management fee. That that 20% is not just reselling you a light fixture. I've got to go to the store. Uh I've got to pick out, walk, work with you to find the light fixture you want. I then got to order it. I've got to go pick it up. I've got to go drop it off at the job site. I got to line, make sure that my electrician's there. If it's sitting on the job site and the flooring guy step on it, who's paying for it? I got to go now get a second one. I've got to negotiate with my flooring guys for breaking it. Uh uh and and Probably split it with them and lose money on that. I then bring that second one back. So I'm on my third trip because I went to the store once, went to the house, went to the store, went really the fourth trip. I'm delivering the second one now to my electrician. He I I head out, I go to the next job site, he opens the box up. Well, it came from Home Depot broken. How many times does that happen to you guys, right? Like it came with a missing um uh piece of glass on it. It can't like that happens so often. So now I've got to drive back to the job site, pick it up, take it back to Home Depot while my electrician's sitting there twiddling his thumbs. I've got to do a return and take it back to the job site. I have spent 12 hours on this one light fixture, and you're paying me a 20% markup on 500 bucks, which is$100. You pay me$100 for 12 hours. And so what you're paying me for is the warranty that if there's an issue, I'm coming, I'm fixing it, I'm taking it back and forth. And so if you want to buy your own materials, that means you're not paying me for material management, which means you need to get it to the job site for me. It needs to be there before my guys start. If we open it and my electrician opens it up, you've got to come leave your job, come get it, and take it back to Home Depot. And if there's nothing else for him to do, we're charging you by the hour while he's just standing there doing nothing. That's what I'm paying for. That's the insurance that you're paying for for me with our materials. So I'm, I have that conversation up front with the clients and let them know if you want to buy your own stuff, cool, you're doing the material management and we're charging you if I have to do the material management because that's ours. That's time, that's it's it's effort and takes brain power and someone to plan this stuff. So that that quote unquote markup is not markup. It is a management fee and it scales with how much materials I'm managing. And if I'm managing a$1,000 light fixture versus a hundred dollar light fixture, I'm ensuring that if it's broken or we break it, I'm gonna replace it at my cost. So that's why it's a percentage scale because a thousand dollars is gonna cost me a lot more than a hundred dollars, right? And so I explain that uh during the estimating process. And so someone's like, well, I want to buy my own materials. Okay, well, let's talk about what that means. Are you buying all the two by fours? Are you like, who's counting how much you need and who's putting together the order? And like, there's still work on the admin side that I need to do. On the delivery, when they drop it in the driveway, who's carrying it all inside? Are you doing that? Or do you want us to do that? Okay, why it's gonna take a couple hours and a couple guys to do that. Who's paying for those hours? Right. And so helping them understand where their dollars are going allows me to do that that sort of a fee, um, the markup of it. So, number one, they know my markup on materials. Um, they don't know my markup on crews because it's all over the place, right? My my roofer, I got a 10% markup, my HVAC, I've got a 10% markup, my handyman, I've got a 40% markup because it's way more time consuming. So our markups on per trade, per item on what we're doing is is our our information. So if I haven't had any of those conversations with them, and the and at the end of the job, you're like, hey, can I just get a breakdown of all the materials and market like uh like see all those, I say honestly, I don't, I did not budget any time to do that administrative work to pull all that stuff together. Number one, is gonna take me four to five hours. I've got to go hunt down all those receipts. I've got to put them all in a document and get it to you. I did not budget four hours of my time to do that for you. So if you want to do a change order, no problem. You know, I'm$185 an hour and I'll charge you for four hours and do paperwork for you. No, I can handle that for you. Here's the deal, though. I win some and I lose some on my materials. I budget them out and I go spend it. So if I do that and we get to the end of it and you owe me more money, which I think you might end up doing, there's gonna be a change order for those materials. And so the client's like, you know what? Don't worry about it. Like every single time, don't worry about it. If they ask about my subs and my vendors, I say, that's proprietary. Like that's I've negotiated pricing with them. So what you would buy from them is gonna be what about you're buying it from me, but I've got a negotiated price drop because I'm doing a lot of the front-end work and you're buying it from me. So I don't really have a breakdown of numbers for my crews or my vendors. I do own materials, and like I said, if you wanted that, I didn't know that up front that you wanted me to spend time doing that. And I could do a change order, no problem. We we can we can I have never had someone pay me for a change order to pull all their numbers together. Every single time I say that, I don't worry about it, don't worry about it. And it's fine, like because I've I've laid that out. If you do the the client engagement agreement the right way, though, where you're talking about markups, like we show the markup. You'll you'll see a line item that says um light fixture uh allowance,$1,000, and uh in the description, and then the line item is actually$1,200. And so they could see they've got a$1,000 budgeted and the line items$1,200. And so we're very transparent on that. And we don't have pushback. Like people will ask about it, but once you explain to them the management, the material management cost and what what it could cost them if they're doing it, they're like, yeah, no, no, no, no, you handled it. That's fine. So that's usually how we handle it. It's kind of the front end again versus back end. If if we need to argue, I'm gonna do a change order for it. But um, yeah, I'm uh I will show them the numbers on the materials if they want. Um, and I will make it very fat and make sure every single charge from Home Depot is on there for them so they can see everything we bought. Um but at the same and a part of that too, like, well, it looks like your materials are five grand and you charge me seven, seven thousand. Yeah, absolutely. How much gas that I spend collecting all this stuff? How much hours that I spend doing? And I'll I have no problem having that conversation with the client and arguing the value of my time and the value that we're bringing to their job. Cool.

SPEAKER_01 50:40

Uh what if you have like a DIY client or somebody that's kind of in the industry but not necessarily a contractor that's just arguing with you about numbers, you know. In their mind, they're like, oh, I could do this for this amount of money, or I could do this for that, and they're kind of pushing you back on a lot of the numbers that you have, those stuff, what they have in their heads.

SPEAKER_00 51:00

Those are two separate conversations. One is during the estimate phase if they're saying that, versus number two, during the project when they start trying to renegotiate, right? So pre-job during the estimate phase of like, well, I mean, 8,000 to paint the house, I could probably rent a paint sprayer and get a buddy over here and do it on a weekend. I say, cool. You're gonna knock that off your estimate? Well, no, I mean, I just want a better price than that. Ah, that's that's our price. I mean, it takes a lot of work, a lot of effort, and I'm guessing our like my painters are really, really high quality. Uh, and so it's gonna be done really well. Um, if you don't want that on there, just let me know and I'll take that off the quote. Right. And so I'm not negotiating my pricing based around what you think it should be priced. I'll take it off the quote. Uh, you know, you don't have to pay me for it if you want to do that part. Um, if they want to be a DIY, DIY great. And I tell them, you're not gonna, I don't want you working in the property while working, we're working. So if you want to do the painting, no problem. We're gonna pull off post-sheetrock. After that, let me know when you're done with the painting and we'll we'll come back out to the house. But I don't want you working over my crews and them working over you. It just opens a can of worms for liability of who's in charge of when a hole gets poked in the wall. Um, so pre-construction, that's my conversation with them. Like, yeah, I'll take that off my quote if you don't want if that's not valuable for you. Um, once we start work, I've had clients try to renegotiate. Like, I mean, the guys are out here for a day to do that, and you're charging me$2,800 for a day's worth of work. And at that point, I'm like, yeah, that's uh we had talked about this, and this is why we had a signed agreement because I'm paying the guys for quality, not time. Um, if you want to pay guys by the hour, I'll bring some guys here that I can pick up at the Home Depot parking lot, and I'm gonna really charge you a lot of money. Like, would you rather have high quality or uh and and done quickly or lower quality and done over a long period of time? Like, we didn't price this job by the hour, we priced it by by the product that you're getting. Um, and so saying it that way is like, uh, I'm not I'm not even entertaining justifying my pricing. I'm not entertaining that conversation with that client. If you don't like the pricing, you shouldn't have signed the contract. And if you have concerns that you're not getting what we agreed on, that's a different conversation. And that's, I mean, I would say that sentence to the client. Like, you shouldn't have signed the contract if you don't want to pay that price. Do you have a concern with the quality that we're doing, or are you just are regretting how much we're charging and signing that contract? Like, which, what, what is it? Are we not giving you what we agreed on, or do you have like you know, regrets on going with us because you don't like the pricing? Right. And so, like, let's have that conversation. I'm not gonna engage in, well, this is why I charge that and this and these this, and maybe we can knock off a couple hundred bucks because that's like I'm not doing that. I'm not having that conversation. I'm staying kind of out of the deep end and just saying, listen, we're not getting into the numbers, into the weeds. Let's stay up here. Are you regretting what you signed or do you not like the quality we did? Cool. Yep. All right, you want to do one more? Yeah, let's do one more. One more.

SPEAKER_01 54:07

Uh, let's see. We're halfway through a$250,000 renovation, and the homeowner has turned hostile. They question every invoice, hover over the crew, and threaten bad reviews. Part of me wants to fire them, but that means walking away from serious money. Do you finish the job or cut my losses?

Showing Markups And Material Management

SPEAKER_00 54:26

Great. That that is that's a tough one because it's so situational. Um number one, did you do a client engagement agreement? If you did, we've got a set of rules of how this game will be played. And so as soon as they start stepping outside of those rules, I'm having a sit-down outside of this outside of uh emotion with them to discuss the rules that they're breaking. Um I want to not, when they're angry at me, say, well, you we didn't blah blah blah blah. Like I'm not engaging at heightened emotion when they um are on the job site and are overstepping and trying to direct my crew to start doing things. I'm like, hey Susan, can we can I swing by uh tomorrow morning? Can we have a chat before the guys get there? I'd love to love to chat with you about some stuff. Great, yeah. I show up at eight and I say, look, hey, I I'm really kind of getting concerned because we've we've had three different conversations about what was happening or not happening, and like you keep doing X, Y, and Z. And I feel like like the crews are getting pretty, pretty uh uh bothered by it because they can't get their work done when you're hovering over them. Um, you know, it's your house, it's your right to be here, but also per our agreement, you agree not to engage them, uh not to have conversations with our subs, but you direct all questions and conversations to me as your project manager. Um and so whatever they're the everything in the CEA, anything that they could be doing that can bother you on your job is covered in our CEA, uh, the client engagement agreement. Um and if you want a copy of it, hit me up, contractorguest.com, we'll talk through the paperwork. Anyways, the the it I cover it there, and then I have create corrective conversations of confusion, not conflict. Tell like I help me understand. Like, why do you feel like like I feel like you don't trust the process of what's going on? Do you feel like so I'm I'm having a bigger picture conversation throughout the project? If it's just a Karen that doesn't isn't reasonable and isn't gonna see eye to eye with me, at that point I say, hey, I feel like you like there's two ways that this relationship can go from here. Either we can rebuild trust or we can separate. Um right now it would be way more uh cost prohibitive for us to separate because you owe me way more money than what it's gonna, it's gonna cost you a lot more money to have another crew come in here and finish, and it's gonna get ugly because I I am owed a lot of money because we've started a bunch of stuff in here and I need payment for what we've done. But whoever comes in again is gonna also charge you for doing that. So to separate right now is gonna cost you a lot of money, and I don't want to do that. At the same time, if I've broken your trust, I don't I I and that can't be regained, then this is gonna end badly, and I don't want that to happen. So here's here's the two paths we can go. Either I can put together a an invoice for everything we've done and we won't show back up on Monday, or we can get to the end of this project and rebuild the trust, but we got to put some more stiff rules in place for that, right? I I don't think I've ever had a client go crazy without a list of reasons as to why they're not happy, right? It's not I've never had an insane client that just is unhappy for no reason. Um, it's an unmet expectation, which my job is to set expectations during the client engagement agreement. So to rebuild that trust, I'm like, so Susan, um what like what would make it where you feel better about this? Well, honestly, Clark, I'd like to if you can give me an email like every Monday, Wednesday, and Friday and tell me who's gonna be here when like whatever the request is, I'm gonna listen to it. Maybe I'll say yes, you know what? I'll do that. I can do that. Why don't we have a walk on Mondays and I'll email you on Wednesdays and Fridays? Uh, and every Monday we will. And so we're gonna set some new rules around that's tighter. Hey, you know, uh, well, Clark, the guy's parked in my driveway, and there's a there's an oil sand, and that really pissed me off. Oh, I didn't even realize that. I'm so like that is against our policies for us to park in driveways. Let me talk to the crew. Do you know which which vehicle it was? Um I'm gonna have a chemical clean come out and make sure that that that is cleaned off your driveway. I'll take care of that for you. What what else are some issues that that you've had? Well, Clark, you you haven't called me back like for four days straight. Like every time I call you, I can't get a hold of you. Okay. I I as we talked about during the CEA, I don't do nights and weekends. And every time you call me, it's a Friday night, and you and I'm not gonna get back to you till Monday. And you know what? There's probably been a couple times that I've been annoyed that you're calling me Friday at 10 p.m. and I just ignore it and I don't call you back on Monday, and that's on me. But we need we've had an agreement as to when the work hours. And so we start having those conversations, and I'm gonna own up to the stuff I've done. Like, I'm not gonna just be like, you're the problem, but like, hey, I get it. Those guys, the paint crew sucked, and I had to bring another paint crew in. I paid the new guys three grand out of my pocket to make it right. And that's not on you. I'm not looking for a thank you. I but I want you to know like it slowed down and cost me money. It cost you a couple days in the house. Um, but that's on me. I had uh the paint crew wasn't good, and that's on me. Also, those guys didn't show up for two days. I didn't realize they had another job. Again, that is on me, and I'm sorry about that. What uh what other issues do we have? And so I'm going to have a define the relationship conversation with her of there's two paths forward. Can we rebuild a trust bridge? Or should we end this and it's gonna cost a lot of money and it's gonna get into a fight, and I don't want to do that. It's up to you, right? And depending on where we're at the project, I'm I'm before this conversation, I'm printing out a Gantt chart. This is how we end. We will be done by October 15th, is when our last day is. We're a couple weeks away. Like, let us get the blah, blah, blah. Right. And so I'm trying to salvage it, but also like I need her buy-in that things are gonna change. Uh, and whatever the issue is that my crews are having, that she she's having, like, why are you nitpicking me about this? Let's have that conversation. That's not that, and so I'm gonna do the tug of war still for the rest of the job with her with some new rules in place to make it a little more fair and the and more understanding. Um, but I'm giving her the choice. There's two paths we can go down. Which one do you want to go?

SPEAKER_01 1:00:38

Cool. Um, so so what are some firable offenses in terms of firing your client or leaving a job site? What's what's the line that people should have to where they just say, I can't work with this client anymore?

DIY Clients And Price Pushback

SPEAKER_00 1:00:50

Um extreme disrespect. If you use a racial slur to my crews, we'll not show them back up. Um if they are unreasonably disrespectful to my crews um or or to me or my employees, we're done. We're not gonna, we're not gonna even even if like we had one that wanted to apologize to the crew, I'm like, I'm not giving you their number, A. B, the crew don't want to hear from you. Um, it's we're not, we're not gonna work here anymore. And we lost money. We walked away and didn't get paid on that one. Um I would say that, I would say lying and I provable lying that I catch them in. Um, provable um, you know, saying that something happened when I when it turns out they were the ones that did something wrong. Um it's it's not a lot of fireable offenses outside of lying, being disrespectful, um, or not paying a bill. Um if you're not paying me, we're pulling off that again. Going back to earlier in this podcast, we do uh weekly invoicing. So I don't get over my skis where my client owes me 40 grand. What should I do? They might owe me eight grand and I'm gonna pull my guys off on Friday and per our contract. We're not showing up Monday until you give me that money. And if we don't show up on Monday, there's gonna be a fee because my guys have no other work to do and you're causing that delay. So I will get into that conversation easily with them. Um, but really it's that it's lack of payment, it's disrespect where it's you know, egregious disrespect. Um, I've had clients that are disrespectful because they're pissed off, and then they come around and apologize and everything gets okay. Cool. We're all human, we all have bad days, we all have high stress and lose it on a crew and shouldn't like I've yelled at a crew before and come back and and apologize for being disrespectful. Um so it like egregious disrespect, not paying a bill, and then just lying about stuff or trying, you know, the the I I had an investor client that literally I mean, if if there was a Yelp review on the guy, it would have been helpful because it's like purposefully I knew he was trying to not pay bills and get us to do stuff and threaten us with lawsuits, and just like I know that I was number 28 of contractors, that he just does one job with screws and goes on to the next contractor. Right? That sort of we're not on the same page. We're like I you've broken trust, you're lying to me, you're not paying your bills. All of that stuff is kind of the firable stuff. Um, someone being a Karen, being annoying, being nitpicky, that's because I haven't built their trust. That's because they were screwed by another contractor and they're they've got their defenses up. I'm gonna I'm gonna call it out. I'm like, hey, I feel like something's going on. Like, what's going on, what's happening? Part of also, like I just said, they've been screwed before by another contractor. That's a CEA conversation. We talk about that. Like, have you ever experienced uh renovation with another contractor? What's it like? Like, what was your experience on it? Honestly, like he screwed us, or it was great, he just retired. Okay, cool. I know your mindset coming into this as to who I am to you. So if I can't sit down and have a reasonable conversation and us work out our differences, I'm not bringing my guys back out here. Um that I also I would say that happens at the end of the job as well. Um when someone this is a good one. Uh kind of going off what what you just said. There have been times that I've had a client or two um that are holding that last check ransom to get us to keep coming back out. Um and so what I what we do is like every time we come, there's a whole new 50-point checklist of stuff that they want done. You walk in and there's 200 pieces of blue tape in one room. And it's like this guy's just trying not to pay his bill. So at that point, I don't send guys back out there. We don't, we don't do anything. I pause and I go up to the client and say, Listen, you owe us eight grand. You have a punch list, I want a finalized punch list, and we're gonna finalize what we agree on needs to get done because some of this stuff is industry standard and we are we are not fixing it. Other stuff we are. And I want to get ex I want to exit this smoothly with you, right? And so at that point, it is a if we can't come to an agreement, I'm gonna not come back out here until we can, but I'm also gonna put a lien on the property and come after the money that you owe me. Um, I don't want to do that. Don't make me do that. Let's come to a reasonable agreement. So I'm gonna get a punch list together so that if we do all of this stuff, you're gonna sign off and let us go. Yes. All right, so all of this stuff, do we agree, is about two days worth of work. Yep, that's about two days of work. That then okay, so I can come out here next Monday and Tuesday and get this done. Yep, that works. I say, great, before we do that, I'm not gonna be held a ransom over$8,000 for two days of work. Two days of work at most, I'm gonna give you$500 a day. So I need a$7,000 payment from you. I'm gonna let you hold a thousand bucks for those two days of work. And so we'll come back out, but I need that$7,000 to get paid up to what's not done. Uh, and then we'll come out and do that. And if the client won't do that, they're not gonna pay me. They're just trying so at that point, I'm going to come to an agreement, get some sort of a payment of goodwill to know that we're on the same page of what is if for sure owed. Even if it's like, give me four grand, hold four grand for those last two days. I need to know that I'm gonna get something out of him. Um and then if they won't agree to that, if we can't come up with the punch list, if that punch, if the goalposts are moving and that punch list changes by um by the next time we're gonna, you know, we should come out and do the work, and then all of a sudden he has a whole new list. Then I say, Hey, we agree. This was our final list. Yeah, but this, I found this, uh that's warranty work. I'm this is go back work. You got to pay me for go back, and until the bill's paid, you get no warranty. Uh and so I will push back on that and kind of fire a client at that point and not go back and finish the work until I get paid, put a lien on the property, end up settling with them, whatever it takes. But there's sometimes like I I I care more about my reputation than dollars. But when a client's trying to wreck rake me over the coals and I've done all of the right steps, he gives me a one star review. I don't Mind going on there and responding, I did this, I did this, I tried to do this, you wouldn't pay me, so we couldn't come back out. I would love to come finish that, but you have to pay me for that eight grand worth of work that we've already done there before I can come back out and finish. I would love to put that on a one-star review because any other client that that reads that review and sees my response and says, that makes sense, right? And so if a client who a potential client reads that and is like, I don't like that answer, cool. I don't want to work with you. Like I want I want to work with reasonable clients. Uh, and so I'm not too scared of that one star if I've done everything I could do to make it right. Cool. Yeah. That's all I got. Cool. All right, guys. Thanks for listening. Thanks for joining us. If you want to have any more conversations, want our paperwork, want to talk about coaching, uh consulting with me or James or anyone else here. Uh, we'd love, we'd love to have that conversation. Go to contractorcuts.com, go to proshuck360.com if you want to look at our software, get a free demo on the software, take it for a spin. We give two free weeks to test it out to see if you like it. It's a month-to-month software. It's not a you got to sign an 18-month term to get into the software. Uh, and you get free onboarding. Um, most companies charge between$500 and$1,500 to onboard you. We do it for free. We want to, we, we, we see it as a long-term relationship with our software users. So if you want to test it out, go to ProShow360.com uh and we'll hopefully talk to you soon. All right, see you on the next podcast. See ya.