Latest / Contractor Business Builder Podcast / I Hated My Construction Business, Until I Learnt These Systems

Transcript

I Hated My Construction Business, Until I Learnt These Systems · Contractor Business Builder Podcast

0:00
I used to hate my construction business.
0:02
I was stressed out all the time, not giving enough time to my
0:05
family and it made me feel empty inside.
0:09
Everything was great. Even though I had tripled my
0:11
revenue that year, I was still running out of money.
0:15
Then I discovered what really caused me to fail.
0:18
It was not having good business systems in place.
0:22
So when all in on learning construction systems and I
0:25
started helping other contractors with what I learned
0:28
and that went so well that I've now helped black actors generate
0:31
over $30 million in revenue and $5,000,000 in profit.
0:35
In this video I'm gonna be walking you through all the
0:37
systems you must build in order to keep growing comfortably even
0:41
in rough times. And the first system you must
0:45
get in place is your client acquisition system.
0:48
This is how you acquire clients, generate leads, bring business
0:52
into your business. And the first thing is
0:55
marketing. You have to have a marketing
0:57
engine, a marketing machine that's constantly driving new
1:01
leads into your business, the right types of leads that are
1:03
going to give you good projects and be the types that you want
1:07
to work with. So the system to get into place
1:09
here is you need to have the right setup first.
1:12
So your visual presence, good quality website that is designed
1:16
to keep people engaged on the website, but also lead them to a
1:20
call to action of reaching out for a free consultation or maybe
1:23
getting your free lead magnet, whatever you want them to do,
1:26
give you a call, whatever it might be.
1:28
Then you need to be found online.
1:30
So your Google business profile being Yelp, all of these
1:33
different directories, whatever directories and different
1:36
websites you can get listed on list on 10/20/30.
1:39
We've got a directory of I think about 40 to 50 different
1:42
business listing sites. You want to get on them all so
1:45
that you can be found everywhere and anywhere.
1:47
And then finally, social media. You should be on at least the
1:51
top 4 platforms, Facebook, Instagram, LinkedIn, ideally
1:55
YouTube, possibly more, the more the better.
1:58
Not that you need to be pumping out content and all these
2:01
different channels all the time, but you should at least have a
2:04
profile and be set up so that if someone's on that Channel,
2:07
whatever social media platform it might be, you have a business
2:10
profile that they can find you. They can follow like subscribe,
2:13
whatever it may be, and you've got a couple of content pieces
2:16
there so that they can get you. The reason for this is because
2:19
first, it helps for search everywhere optimization.
2:22
So people will search even on the web.
2:24
They can find your content on social media also because you
2:27
never know which channel is going to take off.
2:29
And the demographics for these social media channels keeps
2:32
getting older. So you might say TikTok isn't
2:35
that for young people. Well, the demographic keeps
2:37
getting older, just as Instagram used to be for young people, now
2:40
it's for, you know, middle age or older people.
2:42
So you never know where these platforms are gonna go.
2:44
You wanna be on the wall. Now, the next piece of the
2:46
puzzle here for systems is your content machine.
2:49
You should have a content system that's constantly pumping out
2:53
new content, interesting content, stuff that aligns with
2:56
your ideal client. Now, you start with a knowledge
2:58
base. The knowledge base is
3:00
essentially between your two ears, what's inside your head.
3:03
That is all the knowledge for the content that you need to get
3:05
out there. Your projects, how you run your
3:08
business, what questions clients are asking.
3:10
Those are great. If you get the same question all
3:12
the time, you need to make content about it.
3:14
And the way you build this is you can just voice record
3:17
yourself talking about a subject you probably have recording
3:20
somewhere or maybe other articles or even just
3:24
conversations that you've had with clients.
3:26
Use AI, something like that. Pull out the transcripts from
3:29
videos and give it that raw material specifically from your
3:32
business and create a long form blog article.
3:35
That blog article can then be chopped into 5-6, maybe 10
3:40
different social media posts. You can create videos around it,
3:43
can do videos of the site. So there's all these ways to
3:46
create larger, bigger content pieces and then chop them up and
3:50
get them out there so that you can easily spend maybe one to
3:53
two hours a month actually creating the raw content and
3:57
then have two to three posts going out every single week.
4:00
That is the system you need. Low on time commitment from
4:04
yourself it could be your team members as well, but lots of
4:07
good quality content going out to your list.
4:09
Once that's in place now you need e-mail marketing.
4:11
So the next step in the system for client acquisition is having
4:15
an e-mail marketing system. There's two types.
4:17
There's the nurture sequence. So anybody who signs up, any new
4:20
client, any new lead automatically goes on your
4:22
e-mail list and they get anywhere from three, five, maybe
4:26
10 different emails that'll go out usually right away in the
4:30
first Week, 2 to 3 emails, then one week every week after that.
4:33
So that you've got about two to three months, you know, any new
4:36
lead is getting emails from you and they're being nurtured.
4:39
A lot of leads that come through, they may not be in that
4:42
buying window, they may not be ready to commit.
4:44
Maybe they're shopping around, maybe they were referral from
4:47
somewhere, but they just aren't ready yet.
4:49
Whatever it could be, that nurture sequence is going to
4:52
give you top of mind. It also portrays you as the go
4:54
to in your industry. Those first 510 emails that
4:58
they're going to get through that nurture sequence need to be
5:00
crazy high value. So frequently asked questions
5:04
specifically, you know, how much is going to cost, how long is it
5:06
gonna take, what is our process? How do you build a house?
5:09
Like all of these different things that they're asking that
5:11
they need to know about before they decide to commit to
5:15
construction. You need to answer, you need to
5:17
be that authority in the marketplace.
5:19
The other kind of e-mail is your newsletter.
5:21
So every month you should have a newsletter that goes out on your
5:24
company, maybe some hot topic, usually seasonal.
5:28
So whatever kind of seasonal holidays there are around that
5:31
time, that kind of thing. So now you got your e-mail
5:33
locked in. Next is paid ads.
5:35
And the reason paid ads is last is because you don't want to be
5:38
spending a ton of money on paid advertising without all of the
5:41
other assets that I mentioned, all the other systems in place
5:44
because you want to capitalize. If you're going to be spending
5:46
1020 hundred $100 a lead, you need to make sure that the rest
5:50
of your system is is capitalizing on that that money
5:53
spent. Now with paid advertising, it
5:55
helps to have a lead magnet for home builders.
5:58
This is usually like a new home building guide or it could be
6:02
the top 20 questions or what you need to know before starting to
6:05
build your home. Something that's very high value
6:08
that people want, something typically that they can kind of
6:10
work through and something they're not going to generally
6:12
find online somewhere, be able to ask ChatGPT.
6:15
So make it very location oriented, very specific to what
6:19
they need. With that lead magnet, you can
6:21
now use that in Meta ads, so Facebook, Instagram ads.
6:24
And this is a very good way to have a low cost per lead because
6:29
it's a high value thing. They're not committing to
6:31
talking to you. They're not committing to doing
6:34
construction or anything else. And you're getting them early in
6:37
the buyer journey. These kind of leads from Meta
6:40
are typically going to be lower quality or ones that are not
6:43
ready. Maybe they're thinking in a year
6:45
from now or two years from now, they want to build a home, but
6:47
they see a free guide and they're like, oh, sure, I'll get
6:49
that. Two years later, they may be
6:51
ready to start the conversation. But they've been on your nurture
6:54
campaigns. They know your business, they've
6:56
seen your socials, and now they're in your system.
6:58
So that is the idea behind that. Google Ads is more high intent.
7:02
So you want to have the system set up to for the people that
7:05
are actively searching. I need a builder in my area.
7:08
How much does building this home cost?
7:10
So specific people and questions that are ready to buy, ready to
7:14
build homes, ones that are going to Click to your website to go
7:17
find more information. And that's where you have all
7:19
your blog articles or your content, your social profiles,
7:21
all this stuff so that they can get into your web of your
7:24
business and they get all these touch points.
7:26
The beauty of having both of these in place is Google Ads is
7:30
typically getting to cost a little bit more because it's
7:32
high intent, higher quality leads.
7:34
But everybody who visits your website is going to have a
7:37
tracking link to them. They're then going to be in your
7:40
meta pixel for tracking. So now you can, they target them
7:43
so you're paying more for the people that are high intent to
7:46
come through Google, but you're able to do cheaper advertising
7:49
to them through Meta while they're scrolling through
7:51
Instagram or Facebook and you're getting more touch points with
7:54
them. Now that is your marketing
7:56
system dialed in, creating very high demand loading, front
8:00
loading your business with leads.
8:01
You want to front load with lots of leads and then be choosy
8:04
about the clients that you're taking on.
8:05
Although just generating leads is not enough.
8:07
We're building a client acquisition system, so we need
8:10
the preconstruction and sales portion of that system.
8:13
Now, this is the sales process that I like to implement with my
8:16
contractors that I work with, and that is the first call or
8:20
first e-mail wherever they come through.
8:22
You're gonna get them on the phone and you're gonna ask them
8:24
qualifying questions. Where are you located?
8:27
Do you have a budget? Are you working with an
8:29
architect? Have you had other estimates?
8:31
All of these qualifying questions to see is this someone
8:34
who actually I want to help and actually I can provide services
8:38
for considering that they are a good fit.
8:40
You're then going to give them a ballpark estimate and going to
8:42
ask them specifically. Is that about what you expected?
8:45
Ideally, you get their budget first.
8:47
Most people are hesitant to give budgets over the phone or the
8:50
first time they meet you, whatever.
8:52
But I'm sure you've been burnt by this before where you spend a
8:54
bunch of time with someone only to realize later that they're
8:57
just tire kicking or have a way out of line budget.
9:00
So get that out in the open. You don't want to lead with it.
9:03
But after the qualifying questions, you've got to know
9:05
them. You built some report, maybe I
9:06
don't know, 5-10 minutes into the conversation.
9:09
You're going to then give them a ballpark budget and if you need
9:12
a few minutes to work through it, let them know, hey, do you
9:14
mind just giving me a minute or two to work through a couple
9:17
numbers? I can give you a rough estimate
9:19
of like what your host is gonna cost.
9:20
Typically, if they're like, I want a 1200 square foot home or
9:23
2000 square foot home, you probably know the math generally
9:26
and the, and the price range you might be like, well, that's
9:28
gonna cost you anywhere from 5 to 700,000.
9:31
If they're like, well, I'm looking for a home for like
9:33
$200,000. You're like, well, I'm sorry,
9:35
but we just can't do that. We're happy to work with you if
9:39
you're willing to compromise on the size or location or
9:42
whatever, right, If it makes sense.
9:44
If not that, that is the qualifying process.
9:46
From there, considering they met the criteria of the qualifying
9:50
questions and the budgeting is within range for them, then
9:52
you'll set up a free consultation.
9:55
The free consultation is going to be a little bit of a longer
9:57
meeting. You're going to have plans in
9:59
front of you if it makes sense. You'll meet the client at their
10:01
home, which is best if possible, especially if you're remodeling
10:04
or something. You need to meet them there
10:06
because you need to see what's going on.
10:07
But in like a new home build situation, it could be a Zoom
10:10
call if they've got plans already.
10:11
If they don't, it's just more of a, you know, chat about what
10:14
they need, what they want, all those kind of things from that
10:17
free console. Then you move into the rough
10:20
budgeting and this is the free budget.
10:22
And I put quotations there because everyone's looking for a
10:25
free budget and they expect free budgets nowadays.
10:28
You can try to go against the grain there, and I know some
10:31
contractors who do, especially if you got lots of leads coming
10:34
in, but typically you're going to provide at least a rough
10:36
budget for free that gets your foot in the door.
10:38
It provides some goodwill. It kind of puts some money in
10:41
the relationship bank so that it's easier to them move them
10:43
into a reconstruction process. The rough budget is quick and
10:46
dirty. Not too dirty, but very quick,
10:48
high level. Put in your numbers, use your
10:51
multipliers. You're not getting pricing from
10:53
suppliers or subcontractors. 1/2 hours Max is all the time you're
10:58
putting into it. Very templated, but a nice
11:00
looking proposal with, you know, the line items of scope of work,
11:03
that kind of thing. With AI, it's even easier than
11:05
ever. From there, when you present the
11:07
proposal, you have to be speaking with the person in
11:10
person unless you're doing projects maybe under 100,000 or
11:13
under 50,000. And you just need to get the
11:16
estimate at the door and see what, you know, sticks to the
11:18
wall when you throw it. Meet with the person or at least
11:21
on Zoom or something like that to go through the proposal.
11:24
You know, this is this stage, this is this stage, this is what
11:26
this is gonna cost. This is you know what you had
11:29
wanted all these kind of things because you're going to have a
11:31
lot easier time moving to the next stage on a phone call with
11:34
them or a Zoom call. Then you are just sending them
11:37
an e-mail and and telling them, hey, you know, get back to me or
11:40
let me know what you think because it's very easy.
11:42
People then ghost you and ignore you.
11:44
The whole purpose of that rough budget is to then work come into
11:47
a pre construction agreement. So from there you say the next
11:50
step is here's the preconstruction agreement and we
11:53
need a retainer or deposit, whatever it may be, we'll charge
11:56
for services. That is the first sale that you
11:59
need to make. The first sale is just getting
12:00
into the preconstruction process with the client.
12:02
They're not committing to construction, they're not
12:04
committing to hundreds of thousands of dollars.
12:06
They're committing to maybe 5, ten, $15,000 to properly plan
12:10
their project. And that's what you need to
12:12
learn to sell. So that's the system I put into
12:13
place. Once the pre construction is in
12:16
process, then you have iterative design, generative budgeting,
12:19
you're charging for your time, so you're just working through
12:21
it. And then comes the sales
12:23
conversation of hey, now we actually have to sign the
12:26
construction contract in order to start building your project.
12:30
And that is a bigger hurdle or can be.
12:32
But if you've done a great job so far leading the client all
12:35
the way through the preconstruction, got the
12:37
designs, they know the budget, they know how the budgets been
12:40
affected, that you've gone up or down and tried to fine tune it
12:42
specifically to meet their criteria.
12:45
Moving into the construction contract is just the logical
12:47
next step and should not be big hurdle.
12:50
There should not be a lot of objections at that point.
12:52
So that is the first client acquisition system I would have
12:55
to have in order not to be hating on my business.
12:59
Now that is an extremely important system.
13:01
Although you can't rely on just one system, there are four in
13:04
total that you would have to have in order to have a good
13:08
quality construction business They can be happy with.
13:10
That gives you some time. So the second system that we'll
13:13
be talking about is project management systems.
13:15
This gets over complicated. It's actually, I wouldn't say
13:18
easy, but there's only a few components, really good project
13:21
management. The first one is a schedule.
13:23
I don't know how many clients I have a talk with at first who
13:27
are just doing really basic scheduling or really no
13:30
scheduling at all. And then it's like, no wonder
13:32
things are a mess. No wonder your projects take way
13:35
longer than expected. The schedule gets made in the
13:38
preconstruction process. So this has to be a prerequisite
13:41
before even starting the project.
13:43
It cannot be done during project.
13:44
It should not be done during project.
13:46
And the schedule essentially is going to lay out all the
13:49
different pieces. It should be templated like
13:51
everything else, just like your estimate.
13:53
Have a template in place so it's easy to pull up a schedule.
13:55
You modify the dates, you modify the durations, and that's about
13:59
it. In your schedule, you should
14:00
have ordering. So any critical ordering
14:02
cabinets, windows, whatever it may be, things that take, you
14:06
know, a couple of weeks for lead time, you should have in your
14:09
schedule so you know when to order them so that they're
14:11
ready, ideally at least one to three weeks ahead of time and
14:14
take out any of that guesswork. And then some buffers, the best
14:17
laid plans go to waste. You know, those that fail to
14:20
plan, plan to fail, have some buffer in between critical
14:23
phases. So usually between concrete and
14:25
framing, between framing and ruffins, have a day or two
14:28
buffer because you know, there's going to be some weather delays,
14:31
there's gonna be subcontractor delays, whatever it may be.
14:33
And if you end up head of schedule, great, just bump
14:36
people up, make use of it. But typically speaking, that
14:39
rarely ever happens. And then inspections, have
14:41
inspections in there and then have a few days after
14:43
inspections to fix stuff just in case the inspection doesn't
14:46
pass. Don't expect everything to go,
14:48
you know, blue skies and cherries with rainbows on tops
14:51
and all that kind of stuff. Never pay because it's not gonna
14:53
happen. So schedules.
14:54
Second one is quality control. Again, not a difficult system to
14:58
implement. Maybe to practice to some degree
15:00
because you have to have some experience, but quality control
15:03
checklists and just having hard stops between phases.
15:07
So jobs start checklist, is a preconstruction done or the
15:10
selections done? Do we have the schedule in
15:12
place? Do we have materials ordered?
15:14
Do we have Subs scheduled? Do we have the guys lined up?
15:17
Do they have a tool list and material list of what they need
15:19
to bring to site? So just make sure all your ducks
15:21
are in a row. Makes it super quality of a job
15:24
start and then quality control for concrete framing, rough
15:28
trades, finishing, whatever may be.
15:29
There should be checklists there so that you're not dragging all
15:33
of this gunk to the end of the project, which happens way too
15:35
often. I've been there.
15:37
I know how all this goes. So don't think I'm like making
15:40
it hard on on contractors. I've been there.
15:42
I've made all these mistakes to get to the end of the project.
15:45
And it's always like, oh, that piece wasn't here, that
15:47
material. All we'll get to that later.
15:49
We have to fix this anyway. So we'll fix that.
15:51
And then it's like you have multiple weeks of punch list
15:54
items when it needs to be corrected and taken care of,
15:58
have a little bit of buffer time to fix stuff in between if you
16:00
need to. So when you get to the end of
16:01
the project, you're not going back to fix a whole bunch of
16:04
different things that have just been left to the end because you
16:07
want to maintain speed and you want to meet your deadline.
16:10
So that is a quality controls checklist and hard stops between
16:14
certain phases. Third thing about project
16:15
management systems is communication.
16:17
Good project managers are fantastic at communication.
16:21
That's what differentiates mediocre project manager from a
16:25
great project manager, as seen with the systems.
16:28
So having daily logs from your guys, having regular
16:31
communication between subcontractors, having
16:34
handbooks, employee handbooks and subcontractor handbooks so
16:37
that they know all the information they need to about
16:40
employment, about working on sites, what's acceptable about
16:43
client communication. So what they communicate to the
16:45
client, how to introduce themselves when they show up to
16:48
sites, where to park their vehicles, how to enter homes,
16:51
what they need to know, safety, all of that stuff, right?
16:54
Communication that can happen without you explicitly having to
16:57
tell people what decisions can be made on site, who can make
17:01
decisions, what specific criteria there are for purchases
17:05
of like anything under $1000, just go ahead with it.
17:07
Anything that's going to take more than, you know, two hours
17:10
of change order, we need to talk about whatever it may be.
17:14
But having that, that whole communication system set up is,
17:17
is pivotal to a great project management system.
17:20
So I understand this may seem overwhelming.
17:22
I'm listing off a lot of stuff and there's there's obviously a
17:24
lot of depth to these systems. Now I understand that these
17:27
systems may seem overwhelming. There's a lot of detail and
17:30
depth that go into getting and implementing all of these.
17:33
So if you want us to build out all these systems inside your
17:36
business done for you, then click the link in the
17:39
description to apply to work with us.
17:40
Third system that we need to get in place to not hate your
17:44
business is a financial security system.
17:48
Just as if you go to Fort Knox or the White House, you're not
17:51
just going to simply walk on the property and start messing
17:54
around. There's going to be a lot of
17:55
security all over you and you're not going to get anywhere.
17:58
That is the type of security system you need for your
18:02
financials. When you're putting it together,
18:04
no one's gonna mess with your profits.
18:05
There's no way that you're not gonna make money on projects and
18:08
your cash flow is solid and strong.
18:11
That is the mentality and the mindset you need going into
18:14
building financial security system.
18:16
First thing is estimating. You make your money in your
18:19
project, in your business. When you estimate, if you've
18:22
estimated poorly, if things are missing, if it's inaccurate, you
18:25
are going to be in for a rough time.
18:27
It doesn't matter how great of project management you have, you
18:30
can only make up so much efficiency.
18:32
So estimating is key. And I'm not going to get into
18:34
all the nitty gritty specifics of setting up the whole
18:37
estimating system. There's a lot of stuff like
18:39
templates and cost codes and cost databases, all that kind of
18:42
stuff. These are the big ones that for
18:44
me made my life hard when I was running my contracting business,
18:48
and that is project management and not accounting for properly.
18:51
I was the main project manager at my company for quite some
18:55
time and I never charge properly for my time managing my projects
19:00
and it made my life really difficult.
19:02
As I mentioned, we tripled revenue which was great, but I
19:04
was not making money at the end of the day and I didn't know
19:07
where the money went. So charging properly, typically
19:10
any project 5 to 10% of the project is going to be project
19:14
management time. So if you're doing a $500,000
19:16
home, 25 to $50,000 should be in your estimate for the project
19:21
management time. Because you, even if you're
19:23
doing the project management yourself, you need to be able to
19:25
hire someone very easily when you scale up or when you don't
19:28
want to be doing the project management anymore.
19:30
So have that in there having contingency as well.
19:33
And not just saying like, oh, this cost me 1000, I'm gonna
19:36
bump it up 1200. And that's, that's good.
19:38
You know, just kind of like padding all your numbers have an
19:41
actual contingency amount in your markup and margin.
19:45
So the second thing with estimating systems is knowing
19:47
the difference between markup and margin.
19:48
Markup is on top. Margin is part of the whole.
19:51
And I've got other videos on that.
19:53
You can go check it out if you need a better explanation.
19:55
But essentially I'm going to be talking about margin, which is
19:58
different than markup like a. Think of 40% markup might be a
20:02
30% margin somewhere in there I'm going to be off, but
20:05
something like that. So let's say you've got you're
20:06
marking up about 40%, that's let's say a 30% margin.
20:09
Just for arguments sake, your overhead is probably about 10 to
20:12
15% in your company, so 10 to 15% out the window, that's your
20:17
overhead. Then you got about 5%
20:18
contingency. So that already puts you up to
20:20
20%. Now considering everything goes
20:23
well and you've estimated properly, that gives you about
20:26
10% margin for profit, which is not bad.
20:29
That's like about average for what a decent construction
20:32
company can do. Although if you don't have
20:34
specific line item pricing for project management, project
20:37
management is going to cost you another 5 to 10%.
20:40
Now you're not making any money. So it's very easy to not
20:43
understand your numbers and not have a good system in place for
20:45
estimating and losing small amounts of margin and all these
20:49
different areas that are in accounted for.
20:50
So that's what I would change and that's what made my business
20:53
very difficult and put me in a bad place.
20:55
Maybe a question why I was in the business in the 1st place.
20:58
So the second thing with financial security is your
21:01
bookkeeping. You should hire a bookkeeper if
21:03
you haven't. Essentially you bookkeeping
21:05
should be done regularly. If your bookkeeper is only
21:07
updating your books every month, that is not enough.
21:10
I would like to see weekly updating.
21:12
And if you got to pay them a little bit more, pay them a
21:14
little bit more, whatever it needs to take because it is so
21:17
important to not be losing money and also have clear financial
21:20
control and cash flow forecasting that things are
21:23
updated. Plus when we move into our next
21:25
system, which we're going to talk about, which is job costing
21:27
for financial security. If your job costing needs to be
21:30
up to date and if you're not doing that weekly, you're not
21:33
going to be effective and it's not really that useful.
21:35
It's it's better than nothing, but it needs to be done weekly.
21:38
Second thing is chart of accounts.
21:39
So setting up your chart of accounts to be very specific in
21:44
your cost of goods sold and your overhead expenses and having
21:47
those very differentiated and having them allocated properly.
21:50
I would say probably about 80 to 90% of the books that I see for
21:55
clients and contractors are not set up correctly from the start.
21:58
There's things that are in the wrong categories or are
22:01
misconstrued and inaccurate. So cleaning that up, make sure I
22:04
have a good system in place so I know this is what I'm spending
22:07
on. Direct costs for projects.
22:09
This is what my overhead is that I need to account for in those
22:12
margins of the estimate that I mentioned.
22:14
All of these tie into each other and they all provide that
22:16
security that you're looking for.
22:17
Now the next thing after my chart of accounts is invoicing.
22:20
You need to get paid. You need to get paid on time and
22:22
you need to get paid ahead of time actually.
22:25
So having a good invoicing system and terms on your
22:27
contract. So you're getting a deposit and
22:29
you're always invoicing before that deposit is used.
22:32
You always have money in the bank.
22:34
If for some reason this project goes sideways, some catastrophe
22:37
happens, you can walk away and give the client their money
22:40
back. And what I mean by that is you
22:42
always have some deposit, some money from the client in the
22:45
bank so that no matter what stage the project is, that you
22:48
can essentially part ways and you do a reconciliation of the
22:52
accounts. And you might say, OK, you gave
22:54
us a deposit for $50,000. According to, you know, our
22:57
calculations here and our job costing, you owe us about
23:00
$30,000 for services and products rendered.
23:03
So that's going to pay this last invoice.
23:06
Here's your $20,000 back. That's the kind of situation you
23:09
need to be in. That is how you're always secure
23:11
and you never have a client holding that money over your
23:14
head saying, well, if you don't do this extra thing or if you
23:17
don't make this right or come fix this little paint chip like
23:21
10 different times that we've asked for it and send your
23:23
painter over here a million times, then we're not paying you
23:26
that last invoice. You don't want to be in that
23:28
situation. Now I know there's certain laws
23:30
and rules against certain deposits in some States and
23:33
things like that will always abide by local law, but there's
23:36
always ways to front load your payments and make sure that
23:39
you're in the right and invoice often.
23:41
So that all needs to be in your system and that needs to be
23:44
happening automatically by a bookkeeper, by an admin person,
23:47
whoever it needs to be so that you have invoices going out
23:50
ideally like every week, every two weeks.
23:52
Waiting a month or two to invoice for like large $100,000
23:56
invoices is not the way to go. I would have a system in place
23:59
where we're invoicing maybe ten $20,000 at a time so that we're
24:03
never owed a lot of money from the client side.
24:06
They're never thinking like, oh, I just got $100,000 bill or
24:09
$200,000 bill to go get the money from the bank.
24:11
And it's like, now we have to do this and that, right?
24:13
They get a $20,000 bill. It's like, yeah, whatever, you
24:16
know, like not a big deal. So a lot easier to, to run it
24:18
that way. And the final thing is
24:20
reporting, having a regular reporting profit and loss
24:23
balance sheet, cash flow statements, those 3 reports
24:26
delivered to me and explained to me every single month by my
24:30
bookkeeper admin exactly where we are at, if anything looks
24:34
critical, if anything's changed substantially so that I'm always
24:37
in the know and we always know like we're always in a good
24:40
place and secured financially. Now the third kind of system to
24:44
put in this financial security system is job costing.
24:47
This gets over complicated A lot because it is a complicated,
24:50
although essentially you need a way to make sure every
24:53
transaction gets into the system.
24:56
So receipt capture, linked up a accounts with bookkeeping
25:00
software, credit cards, bank statements, all that information
25:03
needs to come into the system. Then we need to categorize what
25:06
is cost of goods sold, so materials, subcontractors,
25:10
direct labour. From there, I would then
25:13
essentially have someone who's responsible for making sure
25:16
everything is tied to a project, everything is tied to an expense
25:19
category, ideally something that is in the estimate.
25:21
Now there is a lot of different components there, but the flow
25:26
is actually fairly straightforward.
25:28
After building all of those systems, we're in a great place,
25:30
but we're still missing the critical link, the most
25:33
important system of them all, and it helps with profitability,
25:37
operations, your workload, how happy you are at the end of the
25:41
day, all of that. And that is team building
25:44
systems. The whole construction business
25:46
cannot be automated. We need people in our business.
25:48
We need great people. We need 8 players, and we need a
25:51
system to make sure that they're operating and working at their
25:54
best. So the first thing with team
25:56
building is hiring. You have to get the right people
25:58
and you gotta make sure you're bringing people in.
26:00
They're going to stay long term, they're going to be confident,
26:02
they're going to be experienced. They know what job they're
26:04
doing. That starts with an ideal
26:06
employee. So I take my time.
26:08
That's the first system to put into place of who exactly is the
26:11
right person, who's the best project manager we could hire
26:14
for this system? Who's the the best Carpenter
26:16
that we could hire for this position.
26:18
From there, creating a job ad that stands out, that gets
26:21
noticed. And just as in marketing where
26:23
we blasted out of marketing to every single place we could,
26:27
when you're hiring everybody, their uncle, their aunt, their
26:30
dog, their cousin needs to know that you are hiring and you're
26:34
looking for somebody you want to get that exposure.
26:36
From there it becomes the qualification process.
26:39
So qualifying questions and sifting through resumes, doing
26:43
that very quickly with AI now just to weed out a lot of the
26:45
the ones that are just not going to be a good fit.
26:47
Then setting up interviews with the ones that are quick phone
26:50
call, see what they're about, see how they answer the phone.
26:52
How do they communicate, ensure that they're actually being
26:54
truthful on their resume. Then setting up an interview.
26:58
So having the whole interview process there with specific
27:01
questions, pulling out situational stories from them.
27:04
Not how would you build a wall on site.
27:07
Tell me a time that you built wall and how you did it.
27:10
So you want to know specifically from their past what they did in
27:13
certain situations. Tell me a time when you had a
27:15
disagreement with an employee. Where was it, what happened,
27:18
what did you do right. It's a lot harder to lie about a
27:21
story that actually happened than it is just to make up
27:23
something that sounds good when someone asks you a hypothetical
27:26
question. Then after that is due
27:28
diligence. Maybe they acted the part, maybe
27:30
they seem good. Maybe their resume was top
27:32
notch. Due diligence, references,
27:35
background check. Check out their social media
27:37
profiles, do criminal records, check if you if you have to,
27:41
maybe even a drug test depending on you know your location and
27:44
what kind of people you you seem to get into your business making
27:46
sure they meet all the criteria and also be willing to realize
27:49
that you may not be the best person to hire people.
27:52
I'm like this. I know other clients, a lot of
27:54
entrepreneurs. We are good people people.
27:56
We our salespeople, we get along with people.
27:59
Generally speaking, we are have a good way of selling ourselves
28:04
of why someone is a good way because we have no good report
28:07
with them. They impressed us.
28:08
We like them as a person, whereas someone who's a little
28:11
bit more detached, like maybe an admin and HR manager or somebody
28:15
else will give a more critical line.
28:17
Maybe it's a project manager. So even if you're doing the main
28:19
interview, have a second interviewer.
28:21
So that would be hiring system to make sure I'm getting a
28:23
players and we've done everything we possibly can to
28:26
ensure that this person is going to be successful when we go to
28:28
onboarding, which is the second system in team building systems,
28:32
having a whole path laid out for the new employee is critical.
28:37
So setting them up in the the softwares, setting them up in
28:41
the system for payroll, whatever is there should be the whole
28:44
onboarding process that happens on the admin back end side,
28:46
sending out the first e-mail saying where they're working,
28:49
who they're working with, all that kind of stuff.
28:51
Next up is the employee handbook.
28:53
So give them the handbook that outlines everything from how to
28:56
dress to how to talk to company culture to safety, when they get
29:01
paid, how they get paid, which holidays we have.
29:03
All this stuff should be in the handbook so you don't have to
29:06
tell them and later they can't say, well, I didn't know about
29:09
that, but it's in the handbook. You said you read it, we gave it
29:12
to you, we told you it was important, so on and so forth.
29:15
Then setting up a training schedule so they know, hey,
29:18
we're not just hiring you to do your job, we're hiring you to
29:21
improve yourself, to get better at your skills to be a long term
29:24
employee. So laying out the schedule of
29:27
what competencies we want them to be at as well as doing an
29:29
initial test on them. That is like a self-assessment
29:32
is the word I'm looking for. So they will be assessing
29:34
themselves of how strong they are in these different
29:37
categories. And from there you can tell
29:38
them, hey, this is part of the job.
29:40
We need you to get to like a higher competency in this.
29:43
And this is the plan over the next three months or one year
29:45
for you to go from here to here. And that leads into retention.
29:48
That's the third system in team building systems is you need to
29:51
retain the great people that you have.
29:54
And one way to do that is through training.
29:56
Pay rates are another one. So you need to pay your people
29:58
well. I found in my experience, it's
30:00
much better to pay people like 1015% more than sort of going
30:04
rates in order to get A players because A players will easily
30:07
produce an extra 203050, sometimes 100% more than B
30:11
players. You can't have all eight players
30:13
all the time. So even beat players, oversee
30:14
players, whatever it is. But paying a little bit extra
30:17
definitely helps you retain better people for longer amounts
30:20
of time. And you just forward this to the
30:22
client. So extra 1015% on labour rates,
30:25
you just put that into your estimates.
30:27
If you've got that lead Gen. machine that we talked about and
30:29
that sales process, you can charge a little bit more easily,
30:32
extra 510% to account for labour.
30:35
Culture is the next thing. And this is something that can't
30:38
be fully systemized. Culture is defined by the
30:41
people, a lot of it, but you do set the pace and it can be
30:44
outlined in your employee handbook and just the different
30:47
materials that you have. So sure, you got a great culture
30:49
and leadership as well. So leadership training for site
30:52
managers, for project managers, senior managers for yourself,
30:55
that needs to be a system you need to be training and building
30:58
people with inside your organization and have a
31:00
leadership structure and reporting review process
31:03
encourages that throughout the organization.
31:05
Good perks always help as well. You know, nice branded clothes,
31:09
pizza days, maybe like once or twice a year, going out for a
31:14
special team building type thing, Christmas bonuses, all
31:17
that kind of stuff definitely help.
31:19
And then safety, and I know what you're thinking, like whatever,
31:23
safety is not that important. The guys don't care about safety
31:26
on site. They don't want to wear
31:28
harnesses or hard hats or you know, fill out OSHA safety daily
31:32
logs and all that kind of stuff. But you don't have to go all out
31:35
on this. But at least meeting the basic
31:37
criteria for safety and making it important keeps guys around
31:40
longer because they don't get injured.
31:42
It also keeps the old timers Boeing longer and it creates
31:46
atmosphere and a culture of we actually do care about you.
31:49
We care if you get hurt, we care if there's things that are
31:52
unsafe on site. You don't have to police it and
31:54
be super overbearing, but having a good safety program does help
31:57
keep people longer and retain them.
31:59
So these are the exact systems you need to grow comfortably
32:03
without losing time with your family and not enjoying your
32:06
life. If you want us to build all
32:07
these systems in your company without you having to do all the
32:10
heavy lifting, click the link in the description to apply to work
32:14
with us. If you want to learn how to
32:15
systemize a construction company in depth, watch this free course
32:19
where I break it all down for you.