# Managing Your Business



## Sarah9910 (Sep 27, 2004)

I just had a contractor come into my home to give me an estimate on re-doing my bathroom in my 50 year old home. I just moved back into my home after renting it for 4 years and a couple years ago, I had a contractor re-do a tub surround and a floor. I got the contractor from a referral (a friend) and the contractor did a terrible job so now I'm paying for it. That's not the issue here, I realize I made a bad decision by choosing that contractor based just on a friends referral and I didn't research them on my own.

Here's the issue: The guy I had come in was highly referred and I'm hoping is a quality contractor as others have said he is (I will go look at his references work). He says "where did you get this guy, he just patched the problem, why would you do that". I admitted my faults and he gave me a quote. Now, as the guy was leaving I gave him my card which says what I do (business consulting, software training). He says "I'm getting married in a month, would you teach my fiance' how to do my books so I don't have to pay my CPA so much money?". I asked what his finace's background is, he said, she has a degree in nutrition and has worked in a factory as a crew leader. I asked if he had QuickBooks or a software for his business, he said "yes, I think I have one I bought a while back". 

Can anyone tell me what's wrong with this picture? Why do contractors think the customer is supposed to know how to pick a contractor but they themselves don't know how to pick a bookkeeper? It's either a CPA (overkill) or their family member with no experience in the field. Or...they don't really put a value on software to manage their business. They don't realize that it could "save" them money rather than "cost" them money. How do you convince a small contractor to make the investment?


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## Ed the Roofer (Dec 12, 2006)

WOW!!!

I am amazed that this topic sat so long so far without a response.

I continually see people asking how to move out of the tool belt and into the desk and what transitional learning would be required and what needs to be done in an office to have one run efficiently.

I went through my Major transition starting in 1991 and didn't get it worked out until 1993.

It all was dependent upon me finally hiring the right person for the job, because I didn't even know what the job description and tasks should have been.

The girl that Took Charge not only improved my business acumen, but my personal life was given a boost.

Everyone considering doing things themselves should look at over the internet part time help agencies such as this.

A wife should be a wife and it is too risky to have both incomes dependant upon the ups and downs of our business types, plus, don't you want to get away from each other in a nice way for part of each day?

Sarah,
What should a working guy look for when they are contemplating making a transition out of the tool belt or at least, minimally. allowing themselves to wear more of the tool belt without the office paperwork headaches that are associated with things we do not naturally understand?

Ed


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## Sarah9910 (Sep 27, 2004)

Hi Ed,

If the business owners strength is to get the job done, manage the project and find the work then they are probably billing their time at the highest rate of anyone else in their business. They should not be doing the books themselves when they could be doing networking, estimating or managing the jobs. More often than that, I find the small contractors just don't record their income and expenses on a regular basis, then they end up paying their CPA to do it at a price equal to their rate or higher. That just doesn't make good business sense. Data entry is not something a CPA should be doing.

I would outsouce the bookkeeping if they are small and request the company that they outsource to, to meet with them monthly at a minimum to review job reports, financial reports and teach them how to read the reports. Once that works for awhile, and they are ready to hire someone, I would have an experienced trainer, train the staff and turn over a set up books that has history and is set up already and who can be available for support. If I were a contractor going to hire a bookkeeper, I would ask someone experienced doing the job help me interview and hire someone. There are questions you can ask that would weed out people who don't understand accounting. Basic accounting tests you can give and organizational questions that will make it clear if you want them on your team. Then of course call their references. I realize that many companies won't give you much information, but you might be surprised, some do talk.

The whole idea here is that the services should be making you money, not costing you money. 
-If you see your job reports and know how you are doing on the job before you are substantially complete you can make changes to compensate for the numbers. 
-If you have equipment and it's not getting costed to your job, you aren't making as much money on the job as you thought you were.
-If you can apply labor to different workers comp rates based on the type of work the laborers are doing (in some states you can do this), and if you substantiate each hour worked with a workers comp code and rate, your audit will come in smoothly and you won't have any surprises.
-If someone else does the books, you can estimate more jobs and get more jobs based on the win/loss ratio you are getting the jobs now.
-There are so many little things that can save money which offset the the expense of having help. Just the ability to sleep at night because you know your bank balance is good and your jobs are profitable. Or if they aren't profitable, the knowledge that you should be doing something else and not be wearing blinders. 

Many of the QuickBooks Pro-Advisors on the Intuit website do bookkeeping, you can find local or remote assistance. You can get referrals, in fact, Intuit now has customer feedback about the pro-advisors on the site. You can find recommendations from your local building associations, ask for references (like I didn't do the first time on my bathroom).

Remember to schedule time each month to have this person show you your books, you will learn how to read financial statments and what reports you like best. Each month, you will come up with ideas of ways to better manage your business, you will be surprised, the numbers will tell the story.

Hope that's not TMI for what you were asking Ed.


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## Mike Finley (Apr 28, 2004)

Personally I don't see any difference between a consumer not knowing how to choose the correct contractor for a job and a contractor not knowing how to pick the right person for a job.

I suspect the under lying issue is money. I suspect like the contractor being seduced by the cheapest path, consumers create almost 100% of their own problems by doing the same thing.


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## Ed the Roofer (Dec 12, 2006)

My secretary has those tasks.

Once the sytem is in place and rocedures are written down in My Logical sense of how things need to be done, i just have to learn the Logical order that my accountant needs things to get to him and by when.

Life is so much simpler without having to try to keep up with all of those mundane tasks.

Also, I do my own payroll and withholdings, which save an enormous amount in accounting bills and the results are accurate and just "Might" need an adjusting entry, either from the 941 people or by my accountant, but it is rarely off a total of even $ 40.00 in an entire years time.

I use MYOB 12 and that is the software I started with back in 1993, so the export to quickbooks from that doesn't cooperate, otherwise I would have made the switch, because the QuickBooks version has a few more bells and whisteles, but MYOB does everthing I Need, just not everything I Want it to do.

Ed


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## genecarp (Mar 16, 2008)

:whistling:shutup:


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## Ed the Roofer (Dec 12, 2006)

genecarp said:


> :whistling:shutup:


Does this topic intimidate you per chance?

Ed


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## rbsremodeling (Nov 12, 2007)

I guess I should feel blessed my girlfriend has done my books for over 6 years with no formal training. Just some basic tips from me. Explanation of what I need done. A quick books seminar and bam she was off

After we crossed the 1 mil mark she got scared and made me hire and accountant.


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## genecarp (Mar 16, 2008)

Ed the Roofer said:


> Does this topic intimidate you per chance?
> 
> Ed


:laughing:, not really Ed, i guess i just found the question a bit odd, i have personally known the value of good accounting for the past 25 years. as to why everyone does not, STUPIDITY would pretty much sum it up. G


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## rbsremodeling (Nov 12, 2007)

genecarp said:


> :laughing:, not really Ed, i guess i just found the question a bit odd, i have personally known the value of good accounting for the past 25 years. as to why everyone does not, STUPIDITY would pretty much sum it up. G



Very few older contractors Gene are business savy Unless they run multi million dollar corporation and even those are questionable.

The younger ones because of the net and technology will stand a better chance. I hope??


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## Ed the Roofer (Dec 12, 2006)

rbsremodeling said:


> Very few older contractors Gene are business savy Unless they run multi million dollar corporation and even those are questionable.
> 
> *The younger ones because of the net and technology will stand a better chance. I hope??*


Not unless they make a video game version of accounting.

Ed


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## rbsremodeling (Nov 12, 2007)

Ed the Roofer said:


> Not unless they make a video game version of accounting.
> 
> Ed



Quickbooks and MYOB for XBOX OR NINTENDO HMMM!!!!!??????


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## Ed the Roofer (Dec 12, 2006)

From Randy Pauch, (RIP), the now famous author biography of, "My Last Lecture".

http://download.srv.cs.cmu.edu/~pausch/



And, contained on his site, what this computer professor has developed:

http://www.alice.org/

edit:
This link is more detailed and provides an accurate description and video to the software:
http://www.alice.org/index.php?page=what_is_alice/what_is_alice




A youn brainiac grammar school in my area just had an article written about this virtual software, (DaVinci Acedemy in Elgin, IL) written in the Daily Herald if you want to see what the school is having the students do with it. WOW!!! What a future virtual Reality Learning System.....

Maybe it does't have to be Grand Theft Auto to get their attention.

Ed


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## Double-A (Jul 3, 2006)

Frank Blau used to ask those folks at his talks who had family members doing the books. Several would raise their hands. Of those, how many payed their family members a regular salary to do those books. Of 100 people that raised their hands, only one or two payed their family members. 

Franks next question would be directed to one of those that didn't pay their family members to do their books. It was, "what would you do to the guy sitting behind you if your family member worked for him and he didn't pay them?

The answer was usually bodily harm of some sort. Frank's point was that using a family member to do the books and not paying them was a form of slavery or usery that wasn't tolerated in any relationship except family. This wasn't done to help out business, with a promise of a salary later, or for added retirement benfits, it was always to save money and make sacrifice so the business could prosper. Trouble is and was, most small businesses don't prosper. They just bump along, paying their bills, week to week, not really getting ahead.

Sort of like working for someone else for a salary and not upgrading your job or getting a promotion. You're stuck. 

We in this business dont' have the education or experince to understand the value of capable and talented people unless they are in the trades. We ask for advice and ignore it because we can't see how we can adjust our budget in the long term to accomodate it. We're too project oriented. We feel as if we can pull anything off as long as we don't have to commit money to it over the long haul. We can survive any short challenge, but the long haul just causes our eyes to glaze over.

Sarah, when marketing to these types, you have to consider that they know what they know, and know that what they don't know hasn't killed them yet. The trick is to find a way of telling them that what they don't know is costing them money they don't need to spend and is hurting them in the long run. 

Drawing paralels to the world they know helps as well. You don't send a master cabinet maker to frame a closet and you don't send a laborer to install custom millwork. In the case of this guy, his fiancee is the laborer and the CPA is the master cabinet maker. Both have their place, but using them incorrectly is wasted money everytime.


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## rbsremodeling (Nov 12, 2007)

Double-A said:


> Frank Blau used to ask those folks at his talks who had family members doing the books. Several would raise their hands. Of those, how many payed their family members a regular salary to do those books. Of 100 people that raised their hands, only one or two payed their family members.
> 
> Franks next question would be directed to one of those that didn't pay their family members to do their books. It was, "what would you do to the guy sitting behind you if your family member worked for him and he didn't pay them?
> 
> ...


Very good point. My girlfriend is paid a draw. She is co owner and recieves compensation of at least 60k a year. A good full time book keeper/office manager in my opinion is worth about 40-50k a year


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## Ed the Roofer (Dec 12, 2006)

*edit:*
*I wrote this before I saw Rory's recent post, so I was directing it towards, firstly Snoopy and then Sarah.*



Very well put with an accent on my compliments to the analogy given.

Sarah,

Do you have the opportunity to put forth a Free Luncheon for small construction businesses who want to learn to do less work and make more money with theit time being spent more judiciously.

Maybe not even free, but a co-op with another individual with a parallel integrated talent that would be desired, or some sales advisory coach providing a few mastery tricks and then tie it all in together.

Maybe a small fee just to cover expenses.....

No, start running this on the circuit and turn it into a full time gig.

Whoops, I got carried away again.

Sorry.

There are methods to break into the circle, but how to make them understand how vital a service or even their own implementation of software and an advisory consultant would be for their business should provide enough justification to pique their interest.

Personally, I have my regular accountant and I also use a MYOB Cerified Accountant, (Who happens to be QuickBooks Certified Too), and I find a use for both of them, all the while, utilizing my secretery to the best of her office talents to decrease my dependancy on either one of them.

Ed


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## Snow Man (Aug 18, 2008)

Sarah9910 said:


> I just had a contractor come into my home to give me an estimate on re-doing my bathroom in my 50 year old home. I just moved back into my home after renting it for 4 years and a couple years ago, I had a contractor re-do a tub surround and a floor. I got the contractor from a referral (a friend) and the contractor did a terrible job so now I'm paying for it. That's not the issue here, I realize I made a bad decision by choosing that contractor based just on a friends referral and I didn't research them on my own.
> 
> Here's the issue: The guy I had come in was highly referred and I'm hoping is a quality contractor as others have said he is (I will go look at his references work). He says "where did you get this guy, he just patched the problem, why would you do that". I admitted my faults and he gave me a quote. Now, as the guy was leaving I gave him my card which says what I do (business consulting, software training). He says "I'm getting married in a month, would you teach my fiance' how to do my books so I don't have to pay my CPA so much money?". I asked what his finace's background is, he said, she has a degree in nutrition and has worked in a factory as a crew leader. I asked if he had QuickBooks or a software for his business, he said "yes, I think I have one I bought a while back".
> 
> Can anyone tell me what's wrong with this picture? Why do contractors think the customer is supposed to know how to pick a contractor but they themselves don't know how to pick a bookkeeper? It's either a CPA (overkill) or their family member with no experience in the field. Or...they don't really put a value on software to manage their business. They don't realize that it could "save" them money rather than "cost" them money. How do you convince a small contractor to make the investment?


 Run .


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## Mike Finley (Apr 28, 2004)

Double-A said:


> Frank Blau used to ask those folks at his talks who had family members doing the books. Several would raise their hands. Of those, how many payed their family members a regular salary to do those books. Of 100 people that raised their hands, only one or two payed their family members.
> 
> Franks next question would be directed to one of those that didn't pay their family members to do their books. It was, "what would you do to the guy sitting behind you if your family member worked for him and he didn't pay them?
> 
> ...


Exactly my point. It comes down to *money*. No different really, just a few steps away from the contractor who employes subs and treats them like employees. (ethically much different - not saying Sarah is ethically challenged) but from the view point of a legitimate business, running a legitimate business means your business is able to run *legitimately*. - That means you are able to *pay for standard expenses* such as an accountant, insurance, Workers Comp, industry standard tools, new materials (not materials pulled out of another job and passed off as new to the next customer).

The contracting field has the same underlying problem that has never gone away - the difficulty of making a decent living in this field. 

The problem will never go away as long as we are all as _*resourceful*_ as we are. We're so resourceful we are able to figure out how to work 80 hour weeks, never take a vacation, drive junk vehicles, use family for free labor....

I'm betting some of us know people in this business who regard this resourcefulness as a badge of honor, don't we!

As long as we all keep being so _resourceful_ we avoid the underlying problem and solution to the whole thing which is bringing in enough income to afford to operate like a normal business instead of a too typical contracting business. That solution is easy, we as businesses don't pay for the work we do, our customers do. The solution is simple, it's simply having your customers pay more so you can stop being so _resourceful_, and start having the income to pay legitimate expenses.

But I don't think that's ever going to happen because contractors are mostly workers, they are nail drivers who happen to be in businesses for themselves, most of us never embrace the business side as much as the nail driving side and most of us are just plain too resourceful for our own good. :laughing:


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## Ed the Roofer (Dec 12, 2006)

The best line, albeint a very point blank statement, that I have ever learned at any seminar or in any learning book or tape is this:

*How does a contractor make more profit?*

(They go on to use employee labor cost comparisons and material cost comparisons, at least at that time, being no more than a 10% variance from one to another, etc.....)

*Well, the answer is to Charge more for what you are providing.*




*The simplicity in that statment misses nearly every contractor I have ever discussed this with who is struggling. They still "Won" the last "Bid" by matching someone elses price and cutting thousands of dollars off of their "Bid".*

*Rather than that, all contractors need to learn how to not just create the illusion to pricing higher so that they can pay for the necessities of truly running a business, but realistically plan for and follow the plan on how to reach those goals.*

*It is there for the taking, but it is not easy to change the typical mindset.*

*Ed*


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## Mike Finley (Apr 28, 2004)

Ed the Roofer said:


> The best line, albeint a very point blank statement, that I have ever learned at any seminar or in any learning book or tape is this:
> 
> *How does a contractor make more profit?*
> 
> ...


Nope, you're right, it never will be, not as long as being resourceful as I defined it is not only looked at as 

-- the way to do things.
-- a badge of honor.

Our customers should pay for our professinal accountants, they should pay for our insurances, our ability to pay living wages to employees... etc...

But they won't, as long as there are resourceful boneheads. We seem them from time to time post here about how :



> -- I'm looking to go out on my own, I know I can do good cause I can do the work for 1/2 the price my boss is ripping people off at.


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