Monthly Archives: February 2022

Does Your Contracting Business Need a Better Cash Flow Strategy?

When you run a contracting business, you’ll quickly learn that cash is king. Without the money to keep the lights on and the bills paid, you wouldn’t have much of a business. But it can be tricky to get your income and expenses into a balance you can manage every month. Here are a few ways you can tell that your cash flow strategy needs an overhaul.

Mismatched Income and Expenses
It’s not uncommon for contractors to pay for the majority of the expenses for a project before they receive payment from a client. At times, this may be the only way that you can keep projects going. On the other hand, if you are regularly waiting much longer for payment than you have to pay your bills, you may have a cash flow problem. For example, if your suppliers bill within 30 days and you have to wait 60 days for payment, you may have as much as a month waiting to refill your account. For contractors who work on shorter projects, this can create a significant backlog. Extra money in savings can help, but it is not always enough.

Using Credit for Cash Flow
Credit can be an excellent tool to use to help cover minor shortfalls on occasion. However, when contractors begin to rely on credit as a way to fund every project, they may start to run out of options. After all, you can only use credit so much until you run out of money. On top of that, the more debt you have, the more you have to pay in interest and regular payments. As a general rule, experts recommend the contractors try to minimize the amount that they spend on credit for projects, particularly if they are waiting for a payment at an undetermined point in the future.

Trouble Getting New Credit
When you’re using credit for cash flow, the cycle of debt can begin to create other problems for you. For example, you might use a line of credit as a way to get supplies for your projects. Once that line of credit runs out, you may think that you can request an extension or get more credit elsewhere. Of course, this depends on a variety of factors, and you may not have an attractive borrowing record yet. If you find that you’re constantly running up against your credit limits and looking for options to add more debt to buy you more time, you may need to rethink your cash flow.

Regularly Declined Purchases
If your cash flow situation becomes serious enough, you may find it difficult to get the supplies that you need or equipment rentals. It’s not uncommon to negotiate an arrangement with your supplier where you buy materials on credit and then pay them back once you have received payment on your invoices. But if your clients aren’t getting back to you on time, your suppliers may decide that it’s too big of a risk. If you have a flexible line of credit, but you’re finding that you can’t use it, you may need to think differently about the way that you are utilizing credit in general to assist with your cash flow.

Paying Yourself Later
When you have more bills than you have income to pay them, one of the first places that you may look to trim back is your own paycheck. If you have employees, you’re required to pay them. But it’s tempting, in the midst of a cash flow problem, to think that you’ll pay yourself at the end of the next project and catch up. The problem is that over time, you can build a backlog of income that you’re not taking. And eventually, you won’t be able to keep doing work if you’re not getting paid for it. It’s better to think about ways that you can re-order your expenses to work with your projects, or incentivize clients to pay more promptly.

Learning how to analyze and manage your cash flow is one of the most important things you will do as a contracting business owner. To learn more about becoming a licensed contractor, visit CSLS today!

5 Ways Your Contracting Business Can Impress Potential Clients

You never get a second chance to make a first impression. For many potential clients, the way they see you at first may determine whether you get their business. While you can’t guarantee how they will interpret your effort, there are a few things you can do to shape it. Follow these five tips to ensure that your first impression is a good one.

Respond Quickly and Fully
For many projects, your first opportunity to interact with the client may come in the form of a phone message or an email. People want to know what your availability may look like, and ask for more details about a possible proposal. One of the best things that you can do for them is to respond to their communication in a timely manner and make sure that you answer fully. No one wants to wait forever for an answer, and many clients will look for multiple possible contractors at the same time. The one who treats the lead as an opportunity to shine will be more likely to get the job.

Show Up on Time
In a busy world, everyone seems to be running on a tight schedule. You might be booked up for months, with consultations, meetings, and project work all in the same day. But it’s worth keeping in mind that your clients may have the same obligations and limitations. If you agree to meet with them at a particular time, you should do your best to arrive promptly. Clients watch everything that you do, and things like late arrivals can make them wonder what you will be like if they hire you. A track record of timeliness puts them at ease.

Put Your Best Foot Forward
In the first meetings, you’re getting judged on everything, including your appearance. You don’t have to look like an A-list actor to get a job, but you should put your best foot forward. Keep a clean set of clothing that you can change into, especially on days when you are interacting with potential clients in person. If you have to go straight to meeting with a client after doing dirty work, do your best to clean up in the interim. Wearing slightly-messy work clothes might not be as intimidating if you can offer clients a clean and tidy office in which to meet.

Be Prepared
Of course, your initial presentation to the client can be helped or hurt by the degree of preparedness that you can demonstrate. If you think that the client may be signing a contract at the appointment, you should have the contract ready for their review. Invest some time to try to anticipate the questions that they may have so that you can answer them as fully as possible. Err on the side of being overprepared rather than underprepared. Clients will be less bothered by seeing documentation that they don’t need than they will if they ask for documentation that you don’t have.

Make Expectations Clear
When clients hire a contractor, they are expecting you to have the most expertise in the room. That puts you in a position of power, but you should exercise it with care. Clients may have no idea what to expect from the process, hoping you will be able to inform and guide them. The way that you act shows them what they can anticipate from you. Make your expectations clear, especially any limits you have with the project. Outline everything that you need, as well as the best ways that the client can meet them. Give clients time to review this information, and make sure that they understand. You’ll avoid a lot of problems that way.

Impressing clients takes a lot more than you might expect, especially in the first couple of meetings. For more advice about how to start your own contracting business, contact CSLS today!

How to Turn Failed Bids Into New Sales

Sometimes, you bid on a project and you don’t win. It happens from time to time, and it’s hard to know why. The good news is that you may have a second chance to make a first impression. In some cases, you only missed out because the client was looking for something you didn’t offer, or even that they made a choice they would later regret. Here are a few ways that you can help turn it around.

Keep Them on the Mailing List
If you’re working primarily with clients who aren’t businesses, you don’t necessarily have to trash their contact information once you learn that you didn’t land the project. Clients go with different contractors for a variety of services. Just because you weren’t the right fit for the first one, it doesn’t mean you’re out of the running forever. If they signed up for any kind of mailings that you offer, printed or electronic, continue to send it to them. This is one way that you can stay on their radar for future projects.

Request Feedback
If you have the ability, it’s always worth asking them why they chose someone else other than your business. In this case, you have to be prepared to hear some constructive criticism, and possibly some less-than-constructive criticism as well. Nobody wants to hear about the mistakes that they made, but you won’t be able to improve unless you’re aware of them. Sometimes, it’s simply a case of who arrived first and landed the job. In other cases, a few simple decisions on your part could have made the difference between coming in first and coming in last.

Identify Obvious Problems
Based on that feedback, identify obvious problems with your workflow as it relates to your bid for that particular project. For example, many contractors take too long to return client phone calls or emails. Clients might still be interested in getting a consultation for comparison, but there’s not much you can do if you show up after they have mostly made the decision. Similarly, clients may expect that most of the transactions will happen in a digital format. If you’re still working off paper and pencil mostly, it might be time to upgrade.

Keep Lines of Communication Open
When you’re interacting with colleagues and larger business clients, keeping the lines of communication open is key. In a world of construction labor shortages, coming in second as a subcontractor on a contractor’s list isn’t necessarily a disaster. It just means that the next time they need to hire a subcontractor, you may still have a chance. Assuming that you know why you weren’t chosen, it’s worth following up with the contractor to thank them for the opportunity. Treat it as a long-term professional relationship, and they’ll be more likely to do the same.

Stay Positive
It’s OK to admit that losing out on a project is really frustrating. However, letting it take over your mood and make it difficult for you to interact with others can create problems long-term. Keep in mind that many business owners hear the word “no” many times before they start to consistently hear the word “yes.” It takes practice to learn how to create a fair bid that clients are likely to accept. If you can take your early experiences in a positive light, you’ll be more likely to learn from them and improve over time.

Learning how to fail and bounce back even stronger is a big part of running a contracting business. You’ll get better with practice, especially if you get the right foundation. To discover more about starting your construction career, contact CSLS today!

Who Should You Hire for Your Contracting Business Team?

Your contracting business might just be you at first, but you should plan to change that over time. After all, if it’s just you, then you have no one else to help you shoulder the load of running all aspects of the business. You don’t need to hire a huge staff, but a few specific hires could be a big help. Here are five roles that you may want to consider hiring for your contracting business.

Project Manager/Team Lead
Working in construction often involves wearing multiple hats for different roles, and this is how a lot of businesses can end up in trouble. If you are trying to work on multiple projects at the same time, there’s a chance that you may accidentally overbook yourself or your equipment. A project manager can oversee all the people working on the project, as well as equipment that you need to buy or rent and supplies for the job. If you don’t have the ability to have a dedicated project manager, even designating an employee as a team lead with appropriate responsibilities can help to ensure that the project finishes with fewer problems.

Office Manager
There are tons of administrative tasks that you need to do in order to run your business. Without them, you may not be getting paid, paying your bills, ordering supplies or responding to clients. An office manager has the ability to ensure that all of these administrative tasks get done, even if you are outsourcing certain services like marketing or accounting. They can also serve as a point of contact for these services so that if there are questions or concerns, you are not interrupted in the middle of your project.

Making sure that you are up-to-date on your expenses and taxes is crucial. Without it, your business may come crashing to a halt. There are a variety of different services that you may need in this area, including:

  • Invoicing
  • Accounts payable
  • Payroll
  • Year-end reconciliation
  • Tax preparation and filing

There’s a lot of software out there that you can take advantage of to help you keep your cash flow under control. For some of these tasks, you’re going to need someone who is trained and has the appropriate expertise. The good news is that by making an investment here, you’ll save yourself a lot of time and stress trying to figure it out on your own.

Marketing Manager
In order for you to get clients on a regular basis, customers have to know that you exist. And while word-of-mouth is a practical tool in many construction industries, it may not be sufficient. Marketing is the way that you promote your services and ensure that you have a steady stream of possible leads. Sales provides qualified people who can answer questions for potential customers and explain how your company beats the competition. This is another field that requires expertise, so it’s worth hiring someone to make sure that you can get it right and keep up with the latest trends.

Labor Support
Once you have at least a small team of employees, you need someone who can support them. Otherwise, you’re on the hook to answer phone calls or respond to text messages when people have to call in sick or have questions about their paychecks. Being responsible for all of your employees can take away from the time that you need to work on projects. Hiring a human resources manager or even someone who is dedicated to labor support can save time and ensure that your employees get the answers and assistance that they need.

Running a business sure involves a lot of roles. If you feel the most important ones, you’ll have more time to focus on a great finish for each project. To start on the path of becoming a licensed contractor, contact CSLS today!

5 Ways Your Contractor Licensing Exam Studies Help You Run a Successful Contracting Business

Getting your contractor license is a major step toward being able to run a contracting business. But did you know that the way that you work toward your goal can also affect the way you run a business? Here are five ways that improving your approach to studying can help increase your business prospects.

Investing Time
At some point in time, even the people who did very well as young students will have to learn how to study. In fact, investing time into learning the craft and all the details that go into it can set you up very well to run a business. Although you may discover that some things about a business feel relatively effortless, lots of them will be a hard slog with a lot of time involved. There will be moments when you feel like you aren’t going to see the light at the end of the tunnel, but you keep going. The ability to make the investment and see it through will give you more opportunities to succeed.

Learning to Focus
There’s a difference between performing a repetitive task and learning a large amount of information. For the former, you can develop an understanding of how to do the work and let it help you complete the task without necessarily requiring a lot of focus. If you want to do well in your studies, focus is a major priority. It’s easy to check out and think that you are picking up details, but the exam will be the final arbiter of your success. The more focus you have, the faster you will learn and the quicker you will achieve your goals. And when you go to start a business, you’ll be able to take that focus to the next level.

Attention to Detail
When you run a business, you are the one who was ultimately responsible for every detail. Studying for an exam is similar. You can’t have someone else take it for you, and you’ll be on your own on the day of the test. Your ability to refine your attention to detail is what will help you earn a passing grade. Once you start to establish a business, you will quickly learn that there are a lot of details that you simply can’t miss. Mastering the finer points of your studies translates into evaluating contracts and ensuring the quality of your finished work.

Solving Problems
Of course, studying for the exam and running a business often involve dealing with problems. At points during your exam preparation, you may notice that there are certain faults in your study habits. If you can’t overcome them, you will struggle to do well on the exam. Similarly, you’ll encounter plenty of problems in your business that require you to look inside yourself and change the way that you do things. Your ability to be flexible and make changes to improve yourself will show you and your clients what kind of business you can run.

Becoming a licensed contractor is more than something that you need so you can perform certain kinds of work in California. It’s also an accomplishment and one that not everyone is able to achieve. When clients are looking for a reliable contractor, they want to know that the person that they hire is committed to the success of the project. Knowing that you have seen your goals through to completion will give them a greater assurance that you will do the work that you propose. In time, you’ll find that history of success makes it easier to create more success.

Getting ready for the contractor licensing exam may feel like a temporary process. In fact, it’s getting you ready for your contracting business. To learn more about expert exam preparation, contact CSLS today!

5 Items to Keep in Your Contracting Business Vehicle

If you’re like a lot of contractors, you’ll have a vehicle that you often use for business. Having everything you need makes life easier. Here are five things to put inside the vehicle, to keep your workflow running smoothly and safely.

Tools and Materials
If you do most of your work at client sites, you will need to bring a variety of tools and materials with you. Big equipment and supplies may be shipped directly to the location, but the things that you bring from your workspace will probably go with you. Install a storage system that allows you to keep the most common tools and materials in your vehicle. A checklist will make it easy to confirm that you have everything before you leave. Make sure to create an inventory of materials, and update it as you use them. That way, you don’t have to worry about arriving to the client site and realizing that you don’t have what you need.

Extra Documentation
If you’re not doing virtually everything electronically these days, you’ll need extra forms. You can’t always anticipate when you will need to write out an estimate by hand, or create a contract for a client to sign. Even if you plan to take most of your work back to your business for preparing and sending out, it’s a good idea to have a way to take notes on the site. Being able to explain what you’re talking about might require you to draw it out, and it will be a lot easier that way.

Record-Keeping System
Having a way to keep track of your records is important, particularly if you go to multiple client sites every day. It’s easy to lose a copy of an estimate, particularly if you do it in writing. Choose a filing system that you can grab and go, that won’t take up too much space in your vehicle. Better yet, consider upgrading to an electronic filing system that you can access from a laptop or other device. If you do plan to work with an electronic system for estimates, payments and other records, make sure that you have Internet access wherever you go. A mobile hotspot is usually sufficient, but it’s not always enough.

Vehicle Maintenance
One of the best places to keep the maintenance tools for your vehicle is in your vehicle. Make sure that you have all the items you need for regular upkeep, such as:

  • Tire pressure gauge
  • Spare tire and jack
  • Road hazard cones
  • Jumper cables
  • Cleaning supplies

Many contracting business owners practically live out of their vehicles during the day, which means that they can get pretty dirty by the end. Of course, the last thing that you want is to show up to a client site with a huge mess. Keep a small quantity of cleaning supplies, especially single-use cleaning wipes and garbage bags. That gives you an easy way to tidy up in a hurry, without leaving a lot of used supplies behind.

Safety Equipment and Supplies
It’s hard to tell when you’re going to get caught in some kind of weather-related disaster. As a general rule, you should always plan to keep a handful of safety supplies in case of an emergency. These include:

  • First aid kit
  • Blankets
  • Water bottles
  • Shelf-stable food
  • Battery-operated radio with spare batteries
  • Spare phone charger

Remember that if you ever get stuck in your vehicle and you’re unable to leave it during very hot or very cold weather, your best bet is to stay put and call for help. The vehicle provides protection that you won’t have if you get lost trying to get to safety.

Working out of your construction vehicle can be a great idea, as long as you have everything you need. For more tips on starting a contracting business, contact CSLS today!

5 Ways to Manage Inflation in Your Contracting Business

Like it or not, inflation is a factor in the construction industry at present. If you want to keep it from cutting into your profits, you have to find a way to manage it. Try these five methods to keep an eye on the situation and provide greater protection for your contracting business.

Research Prices
Inflation doesn’t tend to run at the same rate for everything. As a result, you might notice a significant increase in prices for certain materials, while others remain stagnant or even drop in cost. The only way that you are going to know what to expect is to do that research on a regular basis. Now is a good time to keep an eye on what you can expect to pay for common building materials in your area, particularly things like steel and lumber. It’s best not to look at it every day so that you’re not riding on a roller coaster of shifting expectations. But updating your information every couple of months can make your estimates more accurate.

Buy at a Strategic Time
You can’t always anticipate what the market will do in six months, but you may have opportunities that allow you to buy equipment and materials at a better time. Read expert forecasts about pricing, and check the news for information about delays in the supply chain. If you wait too long to order something for a project, you may realize that you can’t get it. Inflation happens when supplies are harder to get, so prices go up. If you see a good deal on something that you know you’re going to need, now might be the time to go for it. This presumes that you have sufficient cash flow to purchase materials a bit before you need them, but ideally, you should.

Protect Cash Flow
You can’t always pass on increased costs to your clients, so it’s a good idea to protect your cash flow as much as possible. Cash flow is the money that you have available between your income and your expenses. If your expenses are too high, you might not have enough cash flow to keep paying your bills or staying ahead of projects. Take a look at your expenses, and see if there is anything that you can trim back. Selling equipment you don’t use is an easy way to increase your cash flow. If you signed up for services that you don’t really need, canceling them or switching to something less expensive can dramatically lower your overhead.

Raise Prices
Of course, inflation often translates into higher prices for clients. It’s tempting to keep your bids at the bottom, as a way of securing more clients. But if inflation eats into your profits, you don’t want to end up in a situation where you are working for inadequate income. Your clients may be aware of worldwide problems with the supply chain, particularly as it relates to building materials. Be frank with them about what you are expecting for those costs, and make sure that your estimates are flexible enough to accommodate changes. That way, you’re not taking a hit for inflation that happens from one month to the next.

Work With Your Clients
There will be moments when prices are changing so radically that you feel like you don’t know what to expect. In those cases, it’s a good idea to get input from your clients. Some clients are prepared to pay more, in exchange for the ability to have the project done at the perfect time. Others may need to stick to a budget more than they need to stick to a timeline. Some might be flexible in the types of materials that you use or be willing to allow you time to source alternatives. You won’t know until you ask them, so it’s wise to get their opinions before you make big decisions that change the nature of the project.

Keeping inflation from damaging your business can be tricky, but it’s not impossible. To learn more about running a successful contracting business, visit CSLS today!

Is Weekend Work the Right Choice for Your Contracting Business?

You’re probably aware that businesses can operate at any time during the day or night, particularly in construction. At times, you may consider bidding on projects that require you to work on the weekends. You might even decide that you’d prefer to work a weekend schedule. Here are a few things to think about before you determine your availability.

Worker Availability
It’s easy to think that running a business on the weekends could be an easy way to complete more projects and possibly even start your business while you still have a full-time job. But unless you are planning to do all the work by yourself, you’ll need to confirm that you have workers available to do projects on the weekend. Construction can happen at any time, and in some cases it’s better to operate on weekends or weekday evenings. But that doesn’t mean you’ll be able to find people who want to work that schedule. It’s worth asking potential employees what works best for them before you make a decision.

Reasonable Working Schedule
Before you start counting all of the extra projects that you could do with weekend work, it’s a good time to evaluate what you consider a reasonable working schedule. As a general rule, most people expect to work no more than 40 hours per week. That is usually spread out across several days, and some of those days could include the weekend. But if you’re also thinking that you will be doing work during the week, you might be setting yourself up for more than you can manage long-term. Think about the number of hours that you can reasonably work, and see how that affects the number of days you want to be operating your business.

Project Constraints
Once you start lining up projects, you can evaluate the logistics of scheduled labor to see how weekend work might fit. In some cases, operating more than five days a week provides you with the ability to stagger work schedules. That way, if you have tasks that must be completed in tandem, you’re not losing the weekend in order to get them done. But again, you’ll need to make sure that you can schedule those tasks in such a way that the workers or professionals you’ve hired are available at the time that you need them.

Local Guidelines
You may have the ability to operate your business seven days a week. But you should consult local guidelines to determine if they place any limitations on the type of work you do, and the time you’re most likely to do it. Local guidelines usually set restrictions on the things you can do in particular areas as they relate to these categories:

  • Noise
  • Traffic
  • Environmental Concerns

For example, if you’re mostly working in residential areas, you may have a shorter duration of work that you can do on the weekends, particularly if it generates a lot of noise.

Personal Preference
Running your own business does give you a lot of opportunities to choose your own path, so it’s smart to evaluate your own personal preference. Many people like to work a schedule that includes the weekend, because it affords them more opportunities to do things in their off-hours during the week. If you’re used to working a schedule like that, or if you’d like to work a schedule like that, you may be able to make it a priority. Just make sure that you can get enough projects to run through the weekend, without having to compromise too much on the type of work you want to do.

Choosing to work on the weekends isn’t necessarily a requirement for running a contracting business. But for some people, it’s a perk. For more information about how you can become a construction professional, contact CSLS today!