Monthly Archives: April 2020

COVID-19 Delays Your Contracting Business Should Expect

It feels like parts of the world keep spinning, while others are set off their axis. You may have projects to complete, while your suppliers are considered non-essential. This can cause backlogs in your work, as you try to find ways to keep meeting client expectations as you can. Here are a few delays you can expect related to COVID-19, now and for several months into the future.

Inspections
Many construction projects require inspections at various points in the process. Since it will be more difficult to locate qualified people able to do the inspections, you should plan for significant delays in the inspection process. Right now, you are more likely to notice a slowdown because fewer people are working and more people are trying to minimize their contact with others. Overtime, as more industries open up for business again, the construction industry may face a glut of projects that need to move ahead as quickly as possible. This means that it may take you longer to get permits as well.

Labor

Finding labor has been tricky for several years, due to construction’s labor shortage. But finding qualified workers is going to be even more difficult right now. This is particularly true in fields where you were already having to pay more and search longer to find a qualified person ready to take on the project. Moving forward, you may need to prepare to offer higher rates as you can and start your search for work on specific projects further in advance. This can help you to avoid significant delays while you try to secure a subcontractor.

Materials
Since much of the world is currently dealing with COVID-19 or its aftermath, you can expect a number of delays tied to materials. If you typically outsource a lot of goods for construction from places like China, you may have already noticed a significant slowdown in the rate that you can receive them. It’s also worth keeping in mind that shipping is also taking longer on almost all deliveries that are less than a truckload. To mitigate this issue, you may want to source materials that are closer to your location, so that shipping times are less of an issue for you. Investigating your options to pick something up can also save time.

Tool and Equipment Rentals
Finding the tools and the equipment you need may be more difficult whether you are trying to buy or rent. Most retailers, even those deemed essential, are limiting their hours and restricting how customers can make purchases to reduce contact. Be prepared to order online and wait for shipping if needed. Once construction moves back to regular speed, you might have a harder time getting equipment rentals as everyone tries to catch up on delayed projects. If you can’t buy the equipment that you need, you should see if there is a way that you can book reservations earlier than you usually would.

Tips to Smooth the Process
Although running over time on your project is pretty common in construction, COVID-19 is making those typical delays much longer. The last thing that you want to do is lose money or reliable clients because you failed to estimate how long you need. You can minimize your chance of problems if you:

  • Revise estimates on time and pricing based on the most current data
  • Add extra time for each step of the project
  • Reconsider projects with equipment or materials that are difficult to source
  • Look for other ways to trim time off projects without cutting quality

Regular communication with your clients will help assure them that you are continually working in their best interest.

COVID-19 is changing the world as we know it, with significant effects for your construction workflow. Finding ways to predict problems so you can solve them in advance is how your contracting business survives. For more information about preparing for your contractor licensing exam, contact CSLS today!

How Long Is Stay-at-Home Going to Last for Construction?

States set orders to stay at home or shelter in place for a few weeks at a time. By this point, you’ve probably noticed that the dates have been extended more than once. This makes it harder to know when things might get back to normal. If you’ve been reading the news and reports from the rest of the world, you know that it may take some time before COVID-19 is no longer such a big threat and the healthcare system is equipped to manage it. These tips based on current assumptions can help you figure out what’s coming.

Track State Numbers
Although a state as large as California may have rates of COVID-19 that radically differ from one county to the next, keeping track of numbers at the state level is useful. At the moment, it seems that California may have hit the peak in cases reported each day. This could change, but it indicates that the existing stay-at-home orders are proving effective at slowing the spread. If you see a significant jump in numbers, you may need to prepare for a scaling back of the services that are currently considered essential. This could include construction, although it is unlikely that such a variable industry would be shut down at a statewide level.

Monitor National and International Concerns
If you were watching countries like China in January, you might have had a sense of what was on the horizon. Since the threat posed by COVID-19 is unlikely to be mitigated entirely without a vaccine, this means that you should pay attention to what is going on in the country as a whole and also elsewhere in the world. It’s reasonable to expect that if the western states lift restrictions and see a sudden rise in cases, they may choose to shut down again or restrict their services even further. The only way that you will know that this may be coming is if you are also watching what is happening outside of the state.

Anticipate Several Extensions
If your business is already teetering on the brink of insolvency because of the current situation, it’s tempting to think that you could start planning for the state to reopen. But it’s worth noting that the initial closures anticipated that they may be able to reopen at the end of March. Of course, now we know that would have been far too early. At present, experts say that re-opening much earlier than June or July is unrealistic. Still, you can expect government officials to extend stay-at-home orders by a few weeks at a time. This allows them the space to consider how the current limitations are working.

Expect a Slow, Regional Reintroduction
Just like other parts the world are beginning to re-introduce normal operations of society, you can expect that there will eventually be similar actions taken here. How it rolls out and when depends as much on the county that you live in as the state. Some counties with a higher population, or other reasons to believe they may be at higher risk for a resurgence, may choose to continue stay-at-home orders for longer. It’s important to balance the limitations set by the county as well as the state. For example, if the state lifts restrictions on how you can complete projects but the county doesn’t, you should plan to continue to practice social distancing on the jobsite.

Plan for a Resurgence
To protect yourself and your employees, it may make sense to keep up with many of the safety guidelines implemented as a result of COVID-19. Experts believe the COVID-19 is less likely to spread in hot weather. And while this means that summer might give a brief reprieve, it could also mean that the virus will come back in the fall. Do what you can to minimize the spread even if you think the threat is generally over. This will help to keep you in practice in the event that the state needs to place restrictions again later.

Stay-at-home orders will eventually be lifted, and you’ll need to be ready. To prepare your contracting business for whatever lies ahead, visit CSLS today!

Is Construction a Good Career to Start During a Recession?

The beginning of a recession, or even a minor economic downturn, is never the best time to be looking for any job. Although the construction industry can be one that gets hit harder when finances everywhere are tight, that doesn’t mean it’s a bad career choice overall. When you see professionals who have been doing this for 30 or 40 years, you know that they’ve stuck with it through all kinds of economic conditions. It’s reasonable to think that you can too. If you’re worried that a recession means you need to pick a different career, there are reasons to be positive about this one. Here are a few things to consider as you make a choice.

Construction’s Labor Shortage Isn’t Going Away Anytime Soon
The construction industry has a labor shortage that extends back several years. Specifically, this labor shortage began after millions of skilled workers left the industry during the housing crisis. The length of time that the industry has spent trying to fill this gap shows you that it’s not going to go away overnight. Although a recession often leads to a decrease in new construction starts, there are still a lot of projects in the pipeline. That means that the industry still needs a lot more people than it has now.

Recessions Don’t Hit All Fields in the Same Way
When pondering a recession, financial experts tend to talk about industries in very broad terms. But if you make career decisions based on those terms, you might end up cheating yourself out of a good career. In truth, certain parts of an industry may be affected very differently than other parts. For example, if you know that homeowners and businesses will still need maintenance on various aspects of the buildings they own, you can imagine that related fields will not disappear overnight. This is particularly true for fields where there already weren’t enough qualified workers, like electricians.

Economic Improvements Reward the Ambitious
Have you ever missed a big opportunity because you were a little late to decide? This happens all the time throughout your life. Recessions don’t last forever, which means that there will be a turning point where economic conditions start to get better. This is where you’ll see new business owners and homeowners with better financial backing looking for qualified contracting businesses available to meet their increasing needs. If you are already established and ready to help, you will be more likely to be able to take those opportunities than someone who waited a few years to see what happens.

Investing in Education Opens Doors
Some people know what they want to do with their lives by the end of elementary school and are able to build careers to meet those expectations flawlessly. But for most people, settling on the career they want to keep for a lifetime takes at least a little trial and error. The best way to set yourself up for where you want to go is to invest in your education. If you were already close to getting your contractor’s license, there really isn’t anything stopping you from seeing how that works. As with anything, the attempts that you make to find a career that don’t pan out give you practical tips for the future. That means that anything you do right now to learn more and invest in your skills has the potential for a big payoff later.

Economic Downturns Don’t Last Forever
When you’re in the middle of a recession, it feels like one month of struggle lasts a year. But in reality, the worst of a recession or economic downturn often runs for a year or two, after which it gets better. And when that happens, you’ll see that backlog of new construction starts burst through. If you are ready to take advantage of it, you’ll be in a much better position to establish your business and set yourself up for a great long-term career in construction.

Recessions can be difficult, but they don’t have to ruin your career plans. If you’re ready to find out how construction can get through all kinds of economic situations, visit CSLS today!

5 Tips to Help Your Contracting Business Answer Questions

Learning to answer questions may feel like a skill you picked up in preschool, but it’s more complicated than you think. Within a question, even a short one, may be assumptions and details that you miss if you’re not paying attention. Knowing how to break down a question can help you figure out how to answer it in ways that your clients, employees, and other people will understand. Here are five tips you can use to clarify your communication.

Listen Carefully
You’ve probably had many experiences where you needed clarification on something, and the person was so quick to answer that they didn’t actually listen to the question. When you know much more about the status of a project and its unique needs than the client, it’s tempting to assume you know whatever they are going to ask and can save time by answering quickly. But sometimes this means that you miss a crucial component to the question. This can lead you to giving an incomplete answer. Instead, listen carefully to the entire question and give yourself time to think about how you want to answer. Make sure to minimize distractions so you can pay close attention.

Get Clarification Before Crafting an Answer
In some cases, clients may be in such a rush or so worried about wasting your time that they don’t give you all the information you need to answer the question. For example, they might ask you about your expectations on the delivery of a particular project, but you’re not sure which aspect they need to focus on. In this case, it is perfectly acceptable to respond to a question with more questions. This allows you to make sure that you are getting all the details before you craft a reply.

Avoid Answering a Different Question
Many politicians and others prominent in public affairs are very good at listening to a question and turning it into something completely different. But if clients are to understand the details of the project, as well as your needs and expectations, you must answer their questions as they have asked them. Sometimes clients ask questions that indicate a concern about something else. For example, someone might ask you about when you expect to be done with the project because they are worried about when they will have to pay for it. But as a general rule, you should assume that you need to answer the question as the client indicates.

Tailor Answers to the Listener
The way that you answer a question depends heavily on the person who asks. You may be able to anticipate a much higher degree of understanding from one of your employees or a subcontractor than you would a homeowner with limited experience in the services you offer. Most people appreciate avoiding the use of jargon or making answers to questions unnecessarily complicated. Sometimes, people already think they know the answer and they just want to confirm it. If you can do so, you may be able to save a lot of time and hassle.

Follow Up to Confirm Understanding
It’s customary, after you have answered a few questions, to ask a client if they understand or if they have any other questions. But you should also know that it is customary for people to say that they understand or that they don’t have any other questions, even if they didn’t know how to interpret your answer. This is where you can ask them questions about their expectations and concerns. It may provide an excellent opportunity to confirm that they were asking the right question, and help to assure them that you are ready to clarify any aspect of the project as needed.

Working in construction means meeting with people from all walks of life, and learning to interact with them in ways that get both parties what they need. When you know how to answer questions efficiently, you can clear up confusion and make projects run more smoothly. To learn how to build a successful contracting business, contact CSLS today!

 

How Does the New Federal Paid Leave Law Affect Your Contracting Business?

One big concern coming out of the COVID-19 pandemic is the sheer number of people in the United States who have no sick leave. If they contract the virus, many of them worry they would have to choose between staying home sick and paying the bills. The federal government recently passed legislation to provide some assistance to people working for certain kinds of businesses. But since paid leave by the federal government is a new concept, there are a lot of details you need to know. Here’s how the new law could affect your contracting business.

What Are the Basics of the New Paid Leave Law?
The fact that the federal government has never mandated paid leave before creates a lot of questions. Prior to this point, the closest available has been unpaid leave based on the Family and Medical Leave Act of 1993. There may be adaptations or updates to the new paid leave law over the course of the COVID-19 crisis, but here are the basics:

  • Employees of qualified businesses with fewer than 500 workers may be eligible.
  • Workers who must stay home due to a coronavirus-related sickness or mandated shutdown may be able to get up to 80 hours of paid leave.
  • The amount is based on their regular income and the reason for leave, e.g. sickness or need to care for another family member.
  • Employers are expected to pay for the leave and then request tax credits.
  • The law applies to leave taken after April 1st, 2020 and by December 31st, 2020.

There are some exceptions, so it’s important to check on your eligibility and consult with an accountant, as needed.

How Does This Law Relate to FMLA?
FMLA has been around for 27 years, and the new paid leave laws are being administered as a part of it. For decades, FMLA has provided up to 12 weeks of unpaid leave for qualified employees without worry that they will lose their jobs. Traditionally, they’ve needed to work in the job for about a year to qualify. The new leave law makes a few changes tied specifically to the COVID-19 pandemic:

  • The law expands eligibility to employees who have worked with a company for 30 days.
  • It requires qualified employers to paid for up to two weeks paid leave for virus-related healthcare needs and closures.
  • Employers may also be required to pay up to 10 weeks paid leave for parents who can’t work due to school and childcare center closures.

Many of the ways that employers can administer these policies are tied to FMLA. Companies that already have leave policies under this guideline, such as requiring employees to use all their accrued sick pay or vacation time first, may be able to apply them to this law.

How Does This Law Relate to Contractors?
This rule, and the tax credits, apply to most companies with fewer than 500 employees. This means that even if you have only a few employees, you probably are not exempt from these requirements. Many contractors may be surprised to learn that there are provisions for self-employed workers. This means that if you are out of work due to COVID-19, you might be able to claim the credits on your 2020 taxes or adjust your contributions to your quarterly estimated tax payments.

Where Can Contractors Get More Information?
Given that the requirements come right now and tax credits usually come later, it’s not surprising that people are confused and have a lot of questions. The IRS maintains a section on its website with frequently asked questions about the policy. Contractors can also check the U.S. Department of Labor’s website for updates to the policy and clarifications.

Keeping a business going during COVID-19 is a struggle. The paid leave laws may help, but contractors need to pay close attention to the details. For more information about starting your own contracting business, visit CSLS today!

How Your Contracting Business Can Maintain Relationships With Partners

The longer you develop your business, the more opportunities you have to build relationships with business partners. Your contractors, subcontractors, supply chain and other companies help to keep you running smoothly. When you do it right, it’s a win-win for everyone involved. The trick is that you have to maintain the relationship so that it’s always there when you need it. Here’s a few ways to make it a priority.

Get on a First-Name Basis
You hear a lot about business success not being so much what you know, as who you know. In a competitive industry with a lot of small contracting businesses, this is certainly true. The better someone knows you and your work, the more likely they are to call you first when they need something. This is where all those networking skills come in handy. Whether you’re a B2B or a B2C, selling your services is paramount. You need to make sure that people with the right connection in the industry not just know your name, but can remember it. You can do this by communicating with them on a regular basis and remembering who they are, as well.

Keep Tabs on Your Contractors and Subcontractors
Businesses change names or switch owners all the time. Your job is to know who you need to talk to and how best to reach them. Once you get this information, write it down in a place where your employees can get easy access to it. At least once every six months, follow up with your most important business partners and confirm that your contact information is correct. The last thing you want to do is end up with a dead phone number or an email address that now goes into a black hole, right when you need it most.

Give as Much as You Take
Everyone has a friend who only comes around when they want something. Not surprisingly, there are plenty of businesses that run on the same premise. If you’re always asking for favors and not offering something in exchange, you may find that businesses are less interested in maintaining the relationship. Instead, make sure that you reciprocate on a regular basis. If you’re at the point where you might consider someone a colleague or a friend, get together for lunch or coffee on occasion. This little effort can remind someone that you’re a valuable part of their own business success.

Keep Your Promises
A lot of making sure you have a smooth workflow involves keeping up with your business partners, but there’s another step. You need to be a person they want to continue working with. When you first get started, it is really tempting to overpromise as a way to secure a bid or contract. The trouble is that if you underdeliver, you’ve given a cast-iron reason not to work with you again. Sure, completing a project late and over budget is practically part of the job description, but that doesn’t mean people will be happy about it. Set realistic goals you know you can achieve, and let your reliability secure your reputation.

Build Redundancy Into the System
In a field like construction, turnover is as predictable as the Santa Ana winds. The difficulty with cultivating long-term relationships with your subcontractors or supply chain is that you’ll develop relationships that break from time to time. This is where you want to build some redundancy into the system. If you have an employee who always talks to a particular company, make it a point to call them yourself on occasion. This helps them remain familiar with you, as you are with them. It makes for a more seamless transition, when one of your employees needs to move on.

Running a successful contracting business requires help from other businesses. To get their regular assistance, you need to develop a relationship that you can maintain for years to come. To learn how you can become your own boss in construction, contact CSLS today!

How Your Contracting Business Can Handle Sudden Price Increases in Construction Materials

As a contractor, you know that prices for materials fluctuate regularly. Most of the time, you can anticipate what’s likely to happen and plan ahead. At other times, you get hit with a surprise new tariff that dramatically increases costs. When you’re bidding on projects that won’t be completed for a year or two (or longer), it’s hard to predict now what you’ll pay for the things you need. Here are a few ways you can manage it without losing your profit margins.

Keep an Eye on Rising Prices
Prices don’t always go up with inflation. Sometimes they go down. On occasion, they’ll fluctuate, especially if there is some event like a disaster that forces everyone in the supply chain to accommodate. Sometimes, price increases mean that certain businesses will struggle to keep up. If you want to avoid being one of them, you should keep tabs on the news and regional prices for all materials you use regularly. Update your estimates as prices change so you don’t accidentally use last year’s numbers.

Round Up, Not Down
A good rule of thumb for many construction materials is to estimate how much you’ll need and add an extra 10 percent. You might want to do something similar for material prices, as well. You can’t predict when the federal government will institute a tariff that increases the cost of materials you bring overseas by a margin as large as 25 percent. But you can guess that prices will go up year after year. Look at price averages in your region and how they’ve changed over the past five years. Use that data to inform your estimates, and always round up. Underbidding on materials may make your bid more appealing to clients looking for a bargain. But you’ll pay for it with less money to keep your business going.

Consider an Escalation Clause
Once you sign a contract, generally you’re committed to doing the work at the price you specified. An escalation clause gives you a way to renegotiate the contract based on price increases. The terms are usually very specific, which means that you’ll have limits on the time you can raise prices, how much you can increase them, and how soon you can get payment for the difference. If you can’t reasonably predict what materials will cost you for the project, the clause may make the difference between safeguarding your profits and shaving them off entirely.

Evaluate the Best Terms
In an industry with fluctuating material prices, using escalation clauses can be a way for contractors to avoid cutting into their profits when prices go up. It’s important to choose the right one based on the project. For example, you might opt to share the risk up to a certain point. If the project is relatively short and you don’t anticipate rapid changes, you can offer to shoulder the increase unless it passes a certain percentage.

During longer projects, it may make more sense to activate an escalation clause past a certain amount of time. That helps to accommodate price changes that happen months or years later. Some escalation clauses allow you to raise the price the day it changes. If you want or need this level of flexibility, expect to show your work in your original price estimate.

Keeping a contracting business above water involves careful attention to the prices of materials you use. By tracking material costs and adding escalation clauses to certain contracts, you can protect your income and profits. To discover more benefits of running your own business, contact CSLS today!

5 Things to Do If Your Contracting Business Gets Shut Down Temporarily

Several states, California included, have shut down what they call “non-essential services” until they can get better control over the rising cases of COVID-19. Although construction is currently proceeding mostly as usual, this may not be the case next week. Dealing with a state-level or city-level shutdown presents a number of possible complications for your business. Here are five things you can do to help keep your business going, if you’re forced to cut hours or shut down for a short period of time.

Assess Status of Current Projects
It is common for contracting businesses to have several jobs going. You might be almost done with one and barely starting with another. The first thing you should do is assess where you are at with every current project. In some cases, you may be able to suspend work for a short period of time or change the nature of the project while you wait for a shutdown to end. In other cases, you might simply need to finish some paperwork, which could be easy to do remotely. There’s a high likelihood that you would have to suspend most work during a shutdown. But there may be other ways to run your business in the meantime.

Check on Your Cash Flow
One of the first rules of running a contracting business is to ensure that your cash flow is sufficient to handle temporary delays in revenue. While a shutdown due to COVID-19 might be longer than temporary, it’s possible that your cash flow may still be able to buy you some time. Invest the time to examine all of your expenses, including:

  • Payroll
  • Workspace rentals
  • Equipment
  • Supplies

If you made active orders for projects that are now on hold, you may be able to pause or cancel them until you are ready to make those orders again. Finding ways to limit what you have to pay can help ensure that you save most of your money for important things like keeping your employees on-staff.

Consider Financial Support
While the last thing that you may want to do right now is take out a loan when you’re not bringing money in, there are a variety of ways you can look at getting extra financial support while you wait for the opportunity to open business again. This might come in the form of

  • Low-interest business loans
  • Lines of credit
  • Grant programs

Take a look at federal legislation related to economic stimulus and see how the benefits for businesses may relate to yours in particular. It’s an imperfect solution, but it may help you keep the lights on.

Communicate with Clients and Lenders
In any kind of crisis, most business owners try to plan for the worst but hope for the best. This involves making sure that everybody who relates to your cash flow, from clients to lenders, is aware of what you are dealing with and how you were working to minimize problems. It might mean trying to negotiate a new timeline with a client rather than having to abandon a project altogether. It might also include talking to lenders and creditors and requesting some kind of forbearance that allows you extra time to catch up on payments while your income is lower. In most cases, you are much more likely to reach a satisfactory agreement if you talk to them before you fall into violation of the contract.

Get Updates on Limitations
While some experts are estimating that the threat posed by COVID-19 may last for months or even years, it is unlikely to lead to a long-term shutdown of the construction industry. That said, it is hard to tell when barriers to normal business function will lift. You should plan to spend some time every day looking for news as it relates to your field. This will give you the best opportunity to find out when you’ll be able to start working again.

Running a business in the middle of chaos can lead to a shutdown. With these tips, you’ll know what to do to keep your company as safe as possible. For more information about preparing for your contractor licensing exam from home, contact CSLS today!

Is Your Contracting Business Mobilizing to Assist in the COVID-19 Pandemic?

If COVID-19 has shown anything, it’s that the U.S. is quite unprepared to deal with a large number of sick people. Other countries have dealt with it by addressing faults in their infrastructure, like an insufficient number of hospital beds. And while the healthcare industry is in more need than ever now, these kinds of problems mean that construction contractors have a role to play, as well. Across the state, construction workers are getting ready to help. Here’s what is going on and how you can be a part of the solution.

Stay Updated on Current Guidelines
It may feel impossible to stay updated on the current status of rules concerning businesses in California right now. That said, you should still do everything you can to keep informed. At present, the state still classifies construction as an essential industry. This means that contracting businesses can continue to work on construction projects as long as they maintain proper attention to social distancing and sanitation practices. This may change at any time, so you will want to keep the latest information at your fingertips.

See What’s Happening in Your Area
Right now, the focus is on both containing the spread of COVID-19 and providing additional resources to the healthcare industry to treat people with the virus. Just like China was able to build a new hospital within a very short period of time, the state of California is mobilizing construction workers to expand and retrofit hospitals. This will make it easier for healthcare professionals to identify, diagnose and treat people who may have the virus. If you want more information about what you may be able to do, read local newspapers and social media posts from government officials. This may be the fastest way to get updates.

Get Ready for Action
Watching people come together from a large variety of industries to help produce personal protective equipment and ventilators is an inspiring sight. It is amazing what the population can do if they are only given a chance to use their skills and the resources that they already have. If you are already working on existing projects, it is probably best for you to continue meeting your obligations. But if your well of work seems to be running dry, looking for ways you can help may be able to make a big difference. This is a great time to network with other professionals in your area and see if you can team up to assist, even in small ways.

Take Advantage of Business Support Programs
While the focus is on businesses that are able to donate labor or supplies to battling COVID-19, many industries are also seeing significant cutbacks to their revenue streams. If you were worried about what the virus spread might do to your ability to keep your business running, one of the best things that you can do is start investigating the many local, state and federal programs recently implemented to help keep small businesses afloat. An interest-free loan or a grant may give you the ability to keep paying your bills while you protect your workers and help your community.

If All Else Fails, Minimize Harm
At the end of the day, every person has a responsibility to try to help contain the spread of COVID-19. A novel virus may cause significant damage, and it won’t be apparent how much until the vast majority of the threat has already passed. If you are unable to participate in assistance efforts related to COVID-19, your best bet may be simply to avoid increasing the risk for yourself and your employees. Focusing on what you can do to flatten the curve of rising cases and fatalities is a good effort all by itself.

The spread of COVID-19 has brought out the best in millions of people. If you want to be one of them, your contracting business may be able to help. To learn more about what the construction industry means to your local community, visit CSLS today!