Autumn Sullivan, Author at Mobilization Funding

Every challenge is an opportunity. The greater the challenge, the greater the opportunity … if you can see it and capitalize on it.

When many makeup brands were suffering from retailers being closed or having less foot traffic during coronavirus lockdowns, Isaac Duostar, CEO of luxury cosmetic brand Doucce, saw the opportunity for e-commerce cosmetic sales. His company’s approach to sales, as well as their culture and purpose, had them perfectly positioned to grow during a time when many similar brands were struggling.

Full Transcript Below

Scott Peper 0:40
All right. All right. Hello, everybody. Thank you for joining us today. My name is Scott Peper. I’m the CEO Mobilization Funding. I’m really excited today to bring a guest to you Isaac Duostar. He’s the CEO of Doucce, say it’s a beauty brand. He’s also a friend of mine, a client, someone that we’ve worked with before has a super interesting story. I’m very excited to share some of the specifics with you guys. And without further ado, welcome, Isaac.

Isaac Duostar 0:56
How are you? Man? How’s everything?

Scott Peper 0:58
I’m good. How are you?

Isaac Duostar 1:00
Good, busy. We’re in the middle of holiday season. So you can imagine, especially the New World, we’re living in a lot of the DTC businesses, you know, picking up and we got to kind of just keep working with that. Yeah. And then, you know, a couple of stuff that you guys helped us out with those big orders, you know, they’re more, you know, campaigns more than anything else. So the, the feedback is coming in as well, obviously. So, things are, you know, kind of settling down as we wrap up 2020.

Scott Peper 1:35
Well, I’m looking forward to hearing the rest of your story about 2020. And where you come from in 2019. And I know some of that, that some of that original struggles and how you’ve been able to utilize some of those lessons learned. So without further complication or warmups, I would just jump straight into it.

Isaac Duostar 1:54
Let’s do it. My name is Isaac Duostar, CEO of Doucce, we’re a color cosmetic company, based out of New York City. Our mother corporation has been around for 20 plus years, but Doucce as a brand has only been around since 2008. Those early stages, I think we’ve developed and grown significantly over the past 12 years as a brand. We are luxury brand, so distribution is a little bit difficult. But at the same time, I think you know, being a luxury brand into the luxury sector makes things a lot more interesting and you know, allows exponential growth very quickly. We do business all over the world. Primarily, you know, our initial start was in the Middle East. But you know, over the past five, six years, we’ve turned our attention to the United States, Europe, Latin America, and you know, East Asia as well as a result. And you know, we’re looking to grow and expand then 2020 has been a rough but great year, I think for us more than anything, and we’re looking to capitalize on it.

Scott Peper 2:52
I love it. Yeah, well, I really appreciate you join on this. It’s we have we do a lot in construction and a lot of manufacturing, but a lot of our content tends to be construction based, right. I have our manufacturing clients and others just hear your perspective, your approach how you’re handling the course telling your story, but also how you utilize the finance and help drive your volume course, you will be found quickly with manufacturing clients end up in the same struggles from traditional banking or traditional volumes size purchase financing, as our construction clients almost it in some ways, it’s the same context. It’s really weird. So, right, you use that and did it perfectly. And you know, you You’re so cool to share your feedback with us. We don’t get that a lot. So I really like what what I like and appreciate you doing that. Thank you first, but it’s cool. I think other people can benefit from hearing how you do it.

Isaac Duostar 3:50
Oh, absolutely. I think you know, so, as a company we never had, we never had enough funds to begin with. And that’s the reality behind you know, that you had the initial investment in a company, which was a couple hundred thousand dollars on in my industry where you have many, many skews, all of a sudden, a couple hundred thousand dollars becomes nothing, it disappears very quickly. And it’s great. In a sense, where Okay, can you your money, there’s turnover on that money, where are you turning it into inventory. And if you can sell your inventory fast enough, you’re seeing a turnover, maybe four or five times a year, which is wonderful, at the very least in terms of you know, then you have the profit and everything else that comes along with it. But then you have these massive orders that you can process, you’re getting orders, you know, you’re growing as a company, but you don’t have the capital. And the reality is the bank credit line, or anything you can get from the bank immediately isn’t going to solve your problem, because it’s going to cap out, you all of a sudden need half a million dollars to make this work. And it’s just sometimes not enough, when you start working with suppliers. Sometimes they’re willing to work with you, there’s a reality behind it, okay, like, you know, we’ll give you terms on this, or give us a smaller deposit and we move forward. But then you have like, for example, we have a new project that we’re working on, I think you guys can come in very handy as kind of starts to get finalized, it’s a completely new supplier, they’re not going to trust me with any terms of credit for the reality is, they’ve never worked with me, they know of me, they’ve been wanting to work with me and the company, but at the end of the day, they’re not going to put a couple hundred thousand dollars at risk just off the top of that, especially in this environment that we live in. And that’s where you guys are coming immediately, you know, the financing is there, we give it to pay them before we ship. And you know, it doesn’t affect my standard cash flow throughout the year or, for that matter a month or two that we’re dealing with this, where it makes it really easy to kind of, you know, pay this make our money. And you know, and continues to keep doing this as we grow. Because it’s something that you know, it doesn’t affect my actual cash flow. And it allows me to get those bigger purchase orders that I want to get but can’t afford to get.

Scott Peper 5:45
It’s a good point, you bring up an excellent point because you know, when we when we’re talking to potential clients or current clients, it’s just it’s a similar story. You know, they’ve they’ve been grinding as hard as they can. They’ve been marketing everywhere they have they’ve been putting pieces together grabbing this to grab that to make this happen. The whole time marketing, marketing, marketing, and all of a sudden, what you’ve been wanting your whole time in business is that customer the new one that comes in or the existing customer that finally gives you the 15 more SKUs and all of a sudden they do it and you’re like, Oh crap, what do I do now? I just got this million dollar order. I just got this couple hundred thousand.

Isaac Duostar 6:25
Yeah, yes, it’s a a million units at a time for us. I think one of the things you guys help us with with that it was a million and change units. That’s a significant amount of you know, pieces for a company like us. That’s like Estee Lauder quantities and in the cosmetic industry that it’s fun when I need to reach out to suppliers, one million units, they look at me like Are you sure? And then you say yes. And then when you succeed, and the funny thing is some of the sales reps move to a different company, this has happened to us already. They WeChat trying to get your, the you know, they pitch themselves to the that supplier of their, hey, listen, we’re going to come in and we’re a good sales reps, we can bring you a new client that’s already doing these high volumes. And there isn’t that many clients in industry that can bring volume like we are right now. And all of a sudden that becomes very important for them. So you know, they’re willing to work with us, the clients, my clients are willing to work with us on these big numbers. But you know, the monetary funds need to be there for it to actually happen. And that’s the reality behind it.

Scott Peper 7:15
So can you tell a story because you know, you you know, just to give a little background, you had a very successful business, its existing for plenty of period of time. You have current clients. And when you came to us, you had a really unique scenario that was really quite frankly exactly how we just described but instead of me characterize it in general ality maybe you could just take a couple of minutes to tell them, hey, here’s the scenario I had. I went you went out and looked at the marketplace to try to find a way to finance it and you ultimately found us and we were able to move through the transaction. Maybe you can just talk about what you guys did.

Isaac Duostar 7:51
Yeah absolutely. So, as you know, as a company, you know, every company has ups and downs and the reality is 2019 was a rough year for us, it was a lot of adjust, it was an adjustment period. And as a company that relied a lot on specific clients, those oranges didn’t come in for that 2019 year. So put us in a very tough position in terms of the cash flow. So instead of building out that initial cash flow that we had built out, we’re very running low on cash. And we were spending a lot more on marketing to kind of position ourselves for 2020 and 2021. And, you know, obviously, it’s paid off right now, because we have a lot of new clients coming in through the door. And then you had this pandemic happen. So you’re already kind of low on cash, and you’re maneuvering, you got these orders. And all of a sudden, everything just stops for you know, more money, people aren’t paying, everyone is kind of standing in there waiting to see what’s going to happen next. On that moment, you clients are kind of worried about their products, because you know, these are some of these things are actually guaranteed, which makes it a lot easier than more contracted versus just let me purchase the inventory and put it in here. And let’s see what happens to it. This is a very clean transaction where client purchases significant amount gives you six months to deliver, you go ahead and produce it. And I don’t even see the merchandise, it goes directly from factory to clients, without anyone ever touching it. And as this was happening, all of a sudden, your supplier turns around and says, Well, listen, we living in a very difficult time period where we’re not gonna let you ship these products without giving us at least some sort of deposit. When this is not this was a supplier that will give us 60 days credit, which is perfectly fine for us. It took us that amount of time to turn around the money, we would get the money. But all of a sudden, you’re playing with new rules and you know, new game completely. And that’s where, you know, I reached out to somebody who ended up introducing us. And it was like, hey, like, this guy’s perfect for you guys. And that’s where Scott and I met. And yeah, you guys plugged right in. And we did this for I think two or three different ones already. And it just gave us a lot more, you know, anyway, and honestly gave me so much more calm and relaxation, that I was able to start focusing on the business and growing the business differently. Because I know, I got mobilization funding behind, I know I can go ahead and get these purchase orders, I know I can, you know, reach out and really get those big orders where my profit margins are significantly more. But I wasn’t able to do that before, because I had to pay out the money ahead in advance and wish we didn’t have. So it is a very direct transaction. And you guys just kind of came in a plug right in, where you plug that hole of where that monetary funds where it’s going to be at the time. And as soon as that hole gets plugged in that entire sales cycle starts flowing significantly better, significantly easier. And I think more calm across the board.

Scott Peper 10:29
You know, changing gears on it a little bit. I’m curious just to hear, I think what everyone will really benefit from is just hear a little bit about your your story, your thoughts on business? I mean, you pivoted tremendously through COVID. I mean, you guys have operations in New York City of operations in Long Island, you have people you’re ordering suppliers internationally, you’re selling online, all across the US and other places, even outside of the US. It’s a pretty diverse business, both supplier side coming in and who you’re selling to, I think it’d be really beneficial to talk about your your company philosophy and culture, how you pivoted through COVID what what adjustments you’ve made, and how you really thrived and survived making these modifications. I mean, look Coronavirus, has touched everybody. I mean, people might have been open, but their suppliers were closed, that’s a problem. But their customers are closed. I mean, there’s all different issues and you navigating through just about every one of them. Talk about that a little bit, let’s let’s see what wisdom you can pass on to everyone to kind of, you know, stay calm. What you do.

Isaac Duostar 11:15
I can’t take a lot of credit for it. I think you know, sometimes your product, your circumstances, I think that’s the first step. Being the 2019 was such a rough year for us, I think we had already scaled down and kind of from a monetary standpoint, tighter budgets, where you know, if we needed to let someone go, unfortunately, we already had done that. And we were already down to a core skeleton crew to make sure the company functions and operates until we could, you know, get a lot more cash back into play, and really build from there. And that was always the plan for 2020. So initially, I think we were able to absorb the shock a lot better than most brands or companies to begin with, because we were already in that position of Okay, well, you know what, we’re already there. We don’t have to do what other companies are going to have to end up forcing to do. But at the same time, I think working with very strong suppliers across industry, where you know, even during a shutdown, they were concerned as essential even though they don’t produce essential products, but they were the manufacturing arm of you know, for example, we produce 60% in Germany, Germany is back on lockdown, again to an extent and our factories are functioning perfectly fine. You know, there are a lot of automated factories so they need minimal staff to function as is in addition to that, they’re just major corporations that, you know, they weren’t, you know, the government’s weren’t letting them shut down regardless, they’re the backbone of the industry. And I think that that in a way we lucked out with, when choosing my luck, that isn’t these are suppliers. But I think choosing the right suppliers to work with from day one, instead of trying to cut corners, and dealing with the big boys, and you know, people who produce not just for us, but they produce for the bigger brands and industry. It gave us a sense of security and, you know, kind of stability during this time period, as much as Yes, we had issues, you know, in terms of credits, a little seminar, you know, our credits were cut in half. And we were not, we’re not being extended credit, but they were producing and they were moving very quickly through production. In addition to that, having really good relationships with their clients, and always being, you know, very candid myself personally, I like to be very transparent with my clients off top my head. And especially if they’re larger clients, I don’t necessarily hand them off to sales reps within the company. They know who I am, they deal with me directly in person at times. And they felt comfortable, I think we give them a sense of security, understanding if they reach out to us. And we say we can deliver a specific product, they’re in really good shape. And I think that’s what really paid off, where, you know, they came to us, we had actually one of the things we work together was it wasn’t even planned. It was the company, they had orders coming in, suppliers couldn’t deliver the product to those specific brands who were supposed to deliver it to one of our clients. So instead, they end up reaching out to us directly and asking us, Hey, can you deliver 200,000 years, and just luck on the draw? Like, Yes, we can. And you know, they, they come to you, and all of a sudden, it gives you a nice little boost. So I think one of the clients that actually happened to was, you know, revived our business when we hadn’t done business with them for a couple of years. And he revived the business and you know, we’re looking for big, big 2021 with them. And it’s shifted dramatically for us. And it was really great to see, you know, they had that trust and confidence, I think is part of it is always being very forthright and upfront with your people and letting them know what’s happening, even no matter how bad it is, is best to be direct, and you know, paint them the picture. So when reality is when things do hit the fan, they know you’re going to be very candid and direct with them. And they could at least trust you during times of uncertainty. And you know, people just not being very communicative in regards to what’s actually happening.

Scott Peper 14:51
You know, listening to you talk about this as a couple key takeaways that I think are important for that I want to really accept and point out. But what you said a few times that I heard is, performance is the key, like performing performing on your word, performing what you said you’re going to do, taking orders and fulfilling the ones you know you can and if you can’t telling them and setting proper expectations of what you can do when you can do it and why you can’t just in a very transparent manner. I’d bet that even in some of those scenarios that didn’t only help you keep the business you have, but it probably earned you additional business. Yeah. And probably made sure customers knew that, you know, I’m thinking somebody years somebody that can count on so you’ve turned what normally are negatives into, into positives. Yeah. The other thing you said that I thought was really key that you learn from 2019, which I think is great foresight. Because I have a saying in our office, I actually heard a mentor of mine say that, you know, things happen for you, not to you, you know, and in the moment in 2019, you probably felt like a lot of stuff was happening to you. And it was probably nothing compared to what we —

Isaac Duostar 15:55
Yeah, we lost a lot of sleep in 2019.

Scott Peper 16:00
And you know, that all 2019 did was ultimately prepare you for what was about to happen in 2020, which I don’t know all the intricacies of that. But 2020 is probably maybe even arguably could have been a lot worse than 2019. If you had the same infrastructure and you were doing all —

Isaac Dustar 16:20
Yeah, you and I would not be speaking today if that was the case. And that’s the reality behind it. Even you know, we have a credit line with JPMorgan Chase, and PR that they have to reach out to us quarterly and ask us for some paperwork. And hey, I can how’s business going? And you know, he called me more business banker gave me a call, like this is about a month and a half ago. And he just goes, Yeah, listen, I know, we asked for quarterlies and stuff like that, but I think we’re just not going to do it for 2020. This might be and probably half of 2021 because, you know, no one’s business has grown and you know, have problems. I’m like, Well, you could take a look at mine. Were triple what we were in 2019 right now. So if you if you want to give me extra credit, by all means, and he was like laughing, he’s like, I don’t think they’re gonna give you anything. But that’s unreal to hear. And he was like, no, it put us a little bit more at ease to hear Hey, great, Okay, you know what people are doing bad. Makes sense, obviously makes sense businesses down across the board for so many people. But not only did we take this pandemic and grow, but you know, we’re setting the groundwork for future years from a year that was not supposed to be great for a lot of people and you know, as well We were sitting down and talking to a couple of the partners. It was, it was like, you know, like, it could be so much worse for us. And just like we’re on cruise control, in addition to just like, you know, the standard core that is this was on cruise control. But we all of a sudden had this growth spurt that we weren’t even expecting, we were going, we knew we were going to double, we knew that was going to be the case, because reality is 20, we knew we would get back to what 2018 levels were in 2017 levels were inside of 2019. But we weren’t expecting to, you know, profoundly grow. within that time period, especially during this pandemic.

Scott Peper 18:00
You know, for the people that are listening, that’s what I want people to take away from that. And what I certainly am going to is, what you learned in 2019 allowed you to make the adjustments to pivot to put yourself in a place where you could have an opportunity to succeed the next time. And you know, life works in cycles and businesses the same way. For, what happened to you, Isaac in 2019, is what a lot of people are going through right now in 2020,

Isaac Duostar 18:27
if not worse,

Scott Peper 18:28
you know, if not worse, and so if you can survive and thrive and really make the adjustments during this really hard time. And by the way, mobilization funding has had its own struggles. During this time, we’ve done more than a boat, we’ve made adjustments, we’ve worked with our customers, we’re working with our bank, we’re in a great spot. But it took a lot of work and effort to make these adjustments to the last six, seven months. And what we decided to do is a lot of what you decided that we made the adjustments we got to where we needed to be we try to help as many of our customers we can initially really putting out all this type of different content and marketing we did while we were we’re slow and now we’re keeping it up. But the key piece there is what you learned in 2019, you made an adjusted from so that when the next cycle came, you were able to thrive from it instead of get hurt from it. And I want folks listening to this to take this opportunity what’s happening in 2020, if it is hurting you make those adjustments because we’re going to quickly be in another cycle. And that cycle will give you the opportunity to thrive from the problem that you’re having.

Isaac Duostar 22:08
You adjust and you know, I think if you give up that easily, you know, you just have to know it, you have to take risks is the reality behind it. I don’t think everything nothing is going through risk free. I think you know, 2019 was a wake up call for us. But you know, we took those necessary risks going to 2020, we dragged our feet a little bit, we you know, we made those adjustments, but at the same time, opened ourselves to additional risk going into 2020. But you know, we had to capitalize on it, that was a reality behind it. And I think you know, pandemic or not, we want to capitalize on it. And you know, we’re going to move forward regardless of the matter. But just as things have played out, it’s just expanded our business significantly. And I think you know, opportunities come at you when you least expect them. And that’s really what happened here. And, you know, this morning, I can’t say much about it. But I had a very interesting conference call. And it came out of nowhere. And I think it’s going to be it as I was ascribing it to someone else, it’s the biggest fish in the sea, you can fry. And you can really, you can really capture and that’s happening for us in the European Union. And you know, it little by little, I think that that positioning that will give us full grow into 100 million dollar brand without us realizing what’s happening when it’s happening. And you know, if you and I are having this conversation three years from now, I we might be a completely different company, because of it. But you know, I think it’s the opportunity. A lot of brands got kind of washed out in my industry during this time period. And a lot of brands who didn’t survive, for example, like these are public numbers, like our shishido group of companies, they were down 30% in a span of two quarters, that’s significant, you know, Estee Lauder, and L’Oreal not so much because they have mass brands. And you know, they adjusted better, I guess, if you want to call it but you see to where, you know, they focus specifically on luxury, and you know, dealing with specialties, perfume areas such as Sephora, and Ulta. And department stores, where, you know, their retail business had come to a complete halt. They suffered greatly, but you know, brands like myself who you know, adjusted and already knew the market was going towards we were already on the econ business, that was our main focus. And it allowed us to maneuver and because of it where, you know, we’re able to bring new products in towards the end of this year, versus someone like finish you see to a group where now they’re just trying to sell stock, where they don’t even have a proper holiday campaign because they have so much leftover from the past six months in terms of stock. And you know, people are fed up and they’re like, you know what, listen, like dirt. Dirt clients are like, well, we can’t sell your old stuff. Because we need some new stuff. They’re in a position where they can’t just create new stuff because I have all this old stock that needs to you know, they have monetary issues with so it opens the doors for us where you know, brands like us who are, you know, big enough to survive the situation but not big enough to fail. Guess if you want to call it, we’re able to kind of, you know, survive and thrive. And now start capitalizing on those, you know, the shortcomings of the bigger brands and the shortcomings of being too small to, you know, for you to get through this.

Scott Peper 22:33
Yeah. Speaking of brands and philosophies, you have an interesting one, I mean, you you, your brand philosophy says, you know, discover your own individuality. And I think you talk about that both internally inside organization and outside your organization. Talk a little bit about how you came up with that as your branding slogan, how you utilize it internally and externally, and kind of what it might have done was done.

Isaac Duostar 22:55
So this is just me being frank, I think it took a long time for us to get there. I don’t think that was something that was you know, the company was started with this slogan, and that was kind of it. That philosophy took years and years and years to really, you know, get there. I think when the partners first started the company, before I was really deeply involved, at the time, they had an idea, they had an idea for a brand, they had an idea for look other brands, but there was no real story to the brand. Unfortunately, there, they came from a beauty industry and a fashion industry, merged heads and created this thing, which again, looks great. But there was no story behind it when you know, when I first started, you know, dealing with it, and you’re like, what’s the story, I’m like, there isn’t a story. Reality is, this is a brand. It’s a high performance, and it looks great. But that was kind of really it. And it took us a long time to really start developing that philosophy and concept behind it, where I’m like, Okay, so what makes us different? Why are we different? And kind of playing on that different tone? Like, well, you know, what, the world is changing reality. And, you know, I think everyone you know, beauty specific, there’s no real term of beauty anymore. Yes, you can say this person looks great. But getting there is 400 different routes, people are taking, you know, the same concept, you Everything is sorted, evolve, there was no more, you know, one uniform concept of this is what you have to do. And I think as society was changing, we kind of played right into it. And as we started developing these products, like, Well, okay, this is a multi use product, for example, that was like, you know, once major step, this is great. And then we had this thing created called a free Matic system, where essentially, it gave you the tools to create a makeup palette, however you chose to make it. And it was like someone did the math in office is kind of just like a joke. It’s it’s 1.7, septillion different ways of creating a palette. So he really like, Okay, if you make this, it’s super, super unique to you. And as truth is, I swear, if you see some of these orders that come in, on our website, I look at these things, I’m not just for my own understanding of marketing, and I’m like, Whoa, I know, Not in a million years, I did this, I would have even thought about doing something like this, and I created a system. So I think that was the basis of it in terms of, you know, creating something that allows people to really express their individualism, and discovering who they are versus being told who they are. And I think that played a key role in terms of, you know, developing the brand, but in addition to just kind of our company culture and hiring, instead of, you know, being very uniform as a company in which I, I’ve been, I’ve been a very structured person my entire life. And I think this was harder for me to understand, than even other people as we were hiring, I’m like, I need so much diversity in my office all of a sudden, and, you know, things started to change drastically, we were very female oriented, for a very long time, because it’s a pretty brand. So obviously, but then, you know, that we had a mix of guys coming. And we had different ethnicities and backgrounds or races being thrown in there, we had, you know, we had all sorts of people on this office, and we still do so and then comes 2020, where all the sudden, you know, we had this uproar of, you know, inclusion and you know, talking about things, you know, the social mechanisms on how this country is working. And we started having people reach out to us, and beauty brands were hit really hard, where, you know, they were reaching out during the whole Black Lives movement, initially at first. And people were literally messaging us, not just us, every band was getting messages, and we’re being forced to reveal, okay, what is your board look like? How many people in management are people of color and whatever, and I was livid. I’m like, well take a look at whatever they want. Because we are like the United Nations in this office. And it was such an interesting thing for me to look at. And it was we literally have people of all sorts of backgrounds, shapes, colors, whatever you want to call it. reality is we have everything. And it was on like, Look, we are there were so diverse already that I don’t think people realize that. And it was nice, it was very refreshing it you know, didn’t get hit, like nobody had anything bad to say about us. And you know, it was it was very easy going and mainly because of the way it was all plant. So I think we played into that before. Things have already gotten where they are today. And I think It plays into our company culture, and our products. So it kind of everything has come full circle at this point.

Scott Peper 27:19
I appreciate you going through that, because it is interesting. And it’s important. And I think a lot of companies, particularly in some of our other segments of business are really focused on inclusion, diversity, just differences of thought, even let alone the presentation. And people have known. And it’s important not only to what’s going on today in society, but also the customer base is changing, and whether what I’m going to what business you’re in appealing to more people in your, in your focus is, is really key. So I think it’s cool that you guys came up with that brand and kind of grew into his cool story and how you did that.

Isaac Duostar 27:58
Yeah, people don’t believe it. But this, there’s a truth behind it. It just kind of happened on its own, we just let it play out. And more so than forcing the issue, but we’re working on some new things, new brands, specifically. And they have their own ethos and brand stories of their own. But you know, I think they were done right from day one, where, you know, we started to kind of pitch them to clients Little by little, without people really getting the heads up of what’s happening get. And they have their they have their own stories of product sold stories, and you know, whether it’s on the packaging, to the name of the products to the name of the actual brands, and you know, we’ll get into later on, but essentially, they have their own concepts. And their I don’t know if they’re strong enough as though says is because reality is they’ll say it developed because of what was happening versus you trying to make a story and telling that story. This is I think it just kind of as time has gone on, we’ve become the story, the brand has fallen into the reality of life and social mechanisms that are kind of controlling society in today’s world, which aren’t going to change, I think this is the new norm. And it’s a good one. It’s not a you know, I think this is something that everyone has to start, you know, really taking a look at, um, not just in the United States from on a global scale, and world globalism. Israel five years ago, I think traveling was no or what it is today. But now all of a sudden, before the pandemic, we had people visiting countries that they never thought they would ever go to. And as the world is mixing, and you know, people are like I know people who are working in different countries, just because they want to work in a different country, they want to test different, see what the world has to offer. Are they gonna ever come back to New York? Probably, I think they will at some point. But you know, that exchange of culture is significance. And as the world is opening up, as you know, I think more countries are more keen to you know, exchange culture and you know, go about life as is, this is just going to become more and more important, us being accepting and you know, discovering who you are as an individual passing it forward. In addition to being accepting about other people’s individualism, it looks like as well.

Scott Peper 30:04
What’s one thing you wish? Well, two questions I have for you before we close out. One is, what’s the one thing you wish you knew at the beginning of your career that you’ve kind of learned along the way that you would want to share with our audience?

Isaac Duostar 30:18
This is a quote, and I think I was young and stupid. And, you know, life is a journey, not a destination. And I was so quick to try to get somewhere instead of kind of working through it. And I think, I guess I made a lot of judgment calls I shouldn’t have early on, but I think you learn from it. And that’s the reality, I think, you know, don’t try to enjoy it more than anything else. But you know, live it out, write it out there, you know, from rags to riches as a great story. But at the end of the day, it takes time to get there. And you know, patience is a virtue. And it’s key in terms of when it comes to growing a business and you know, going forward in life.

Scott Peper 30:59
I have a saying that I believe in that says you just can’t remove time. From the equation. It’s the thing. The ride is part of the fun. You know, I don’t think any of us are where we want to be. There’s certainly there’s probably certainly thresholds that you can cross over where you feel like you’re there, you made it to a degree.

Isaac Duostar 31:17
It’s like Elon Musk still has problems every day he wakes up, he’s not where he wants, and he’s done so many things that people can’t even imagine. So reality is, yeah, you’re you’re never really there. Doesn’t matter what you do.

Scott Peper 31:28
Enjoy it. Exactly. I couldn’t agree more. Um, I really appreciate you going through the time with us today on the horse on this top. I think it’s very helpful. I love you sharing the just sheer appreciation and thought process I’ve always been really admired since the first time we met not only with your business and what you have, but I could just tell the way you handle yourself your style. You know, I was at first drawn to it, but I’ve really grown to appreciate that really who you are. And

Isaac Duostar 31:34
I appreciate having like being part of this. And honestly, and I’ve said this to you in private before, but I admire your company culture you guys are building, I reached out to you in private about that, I thought it was very cool and very unique. And honestly, from a financial firm, I wasn’t expecting that, more than anything else. I’ve dealt with many different financial firms. And reality is you guys operate like a brand, how we would operate, how I would essentially reach out to a client, I’m trying to, you know, acquire, where we were, kind of give them this ridiculous packaging, and, you know, everything else that comes along with it, and you guys really, you know, stand out in the crowd, and that they’re, you know, and working with you guys has been such a breeze and, you know, you guys totally understand who you are and what our needs are. And you know, you’ve made it very seamless, you know, if we need to do it, you understand this needs to be done. And you know, we can rely on, you know, expect that from you guys.

Scott Peper 32:48
You see me smiling, because it’s really what we try to do for you articulated that way, and be so close or dead on to what we try to do is it’s very rewarding. It’s actually humbling to hear you say that it’s I appreciate it. And, of course, we really do try. So it’s great to hear you say that we don’t get to hear that. We don’t get to know enough. Like we hope that’s when people

Isaac Duostar 33:06
Believe me I actually do wear my mobilization funding t-shirt. I actually do wear and there was another one. We had a couple in the office and one of the partners came into my office. He’s like, what is this? I’m like, Oh, it’s one of our you know, financers? Like, Can I have it? I’m like, yep, and he like he word it comes. But I got a couple of compliments on it. He took off his shirt and put it on and like went outside and came back as midsummer. He’s like, I got a couple of compliments on this shirt. I’m like, well, it’s yours now. So yeah, it was awesome.

Scott Peper 33:31
Well, I appreciate you saying that. I love it. I’m glad that you, you did. And I just appreciate you sharing your story as I do. I’m glad that you willing to do this. I just wanted people to hear it know that there’s there’s definitely cool pathways out there. They’re not all easy. What what looks great comes with a lot of hard work and perseverance and failure, which you’ve already articulated and talked about. And just your candor and genuineness and abilities, willingness to share is great. And I want to be able to know that I just thank you very much.
Everyone, if you thought this was great, please share it. I hope it served everybody. Well. Thank you guys for all joining us. And remember, if there’s anything we can do for you, or if you’d like to reach out to Isaac here, check out his beauty brands and everything else, we’ll leave the contact information right here on the on the screen for you to see. And again, thank you very much and have a great rest of your day.

Isaac Duostar 34:15
Of course. Thank you guys so much. Appreciate it.

Transcribed by https://otter.ai

Construction contract financing for subcontractors solves one of the biggest challenges subcontractors face when they are awarded a new project—financing the upfront costs associated with the work. Materials, equipment, bonding premiums, supplies, and of course labor are all expense types typically incurred before you, the subcontractor, ever invoices your general contractor, let alone sees a payment. More than just a problem-solver, when used strategically a subcontractor can use contract financing as part of their strategy to win more bids and grow their business.

How does Construction Contract Financing Work?

Most forms of financing available to subcontractors relies on proof of work performed. Contract financing is unique in that it uses your contract, not your invoice, as collateral. The lender (hopefully us!) will assess the value of your contract and your ability to perform the work. The value of the contract is the collateral itself, and the loan amount is based on a percentage of that contract value. This option gives you the cash you need to start a job in the most efficient way possible. You can start with and put the right size labor force on the job when you want, order and stage materials in advance, and build efficiencies into the schedule.

Combine the power of construction contract financing with a cash flow projection tool (you can get ours for free by clicking the link below) and you can actually solve your own cash flow shortages AND potential delays in the schedule for your general contractor.

Download Our Cash Flow Tracker Tool
(Don’t forget to get the instructions,too)

What You Should Know About Construction Contract Financing

Contract financing depends on the subcontractor having a signed contract with a general contractor, property owner, or other party. The contract should layout the job requirements, payment schedule, scope of work, and the total value of the contract.

In addition to reviewing the contract, the lender will need to evaluate your ability to perform the work specified in the contract. For example, we look at the type of work being contracted and compare it to work that company has performed in the past. If the project falls within the normal project specs of your company, great! If the project is bigger or more complex than your previous work, what is your plan to execute it? A bigger project isn’t a bad thing — it’s actually great and a sign that you are growing — but your lender needs to be confident that you can perform the work and get paid by your customer. Finally, your company’s financial health will get a quick check-up. The contract is the collateral for the loan, but it isn’t a lifesaver for your entire business. A lender will want to ensure that the rest of your company will be able to operate throughout the loan’s lifetime.

Another important aspect of a construction contract loan is that the cash from the loan is used for project-related costs for that job. The money can only be used for project costs such as materials, supplies, bond premiums, or labor. This ensures the project moves forward, the subcontractor invoices for the work completed, and ultimately the subcontractor (and the lender) gets paid. Imagine doing the extra jobs you want to do or have passed up previously due to cash flow concerns without putting any stress on your existing business. That is what a construction contract loan does for you.

We accomplish this through what is called a “funds directive.” This is the same document a bonding company would use when they approve a bond for a project and have a funds directive stipulation; it is an accepted form in the construction world we all live in. We set up a project-specific bank account in our clients’ business name and their tax ID, and direct all project-related funds in and out of that account including the funds from the loan that are available to use before ever invoicing the project. Need to pay a supplier for materials? It would come out of the project account. Weekly payroll for the project? All comes out of the project account. General contractor ready to pay your first invoice? It goes into the project account. When it comes time for our repayment, that also comes out of the project account and is in line with when you are paid from the project so you don’t have to stress the cash flow of your normal operating business.

How Contract Financing Can Help You Win More Bids

How does a construction contract loan help you win more bids? It depends on your lender. When you work with a lender like us, you get much more than just a loan. You get a financial partner who will help you estimate and plan the project’s cash flow before the work starts.

We sit down with every client to determine what their markup or margin on the project really needs to be. What is your company’s overhead? What is the retainage on this project? What expenses do you expect to incur as part of the project? Having REAL numbers and a breakdown of estimated cashflow for the project signals to the General Contractor that you have done your homework and know what it takes to get the job done right.

You can also ask your lender for a financial capability letter, which shows the GC that you have the capital to perform the job and that the funds will be used exclusively for this project. A financial capability letter is especially important when bidding on government projects.

Construction Contract Financing Helps Subcontractors Succeed

We know that commercial construction contractors can succeed at their highest level of performance when they have the funds to hire the right amount of labor, equipment, and purchase the materials needed for the job. You don’t have to take our word for it! Our customer Andrew Ammons shares how he was able to save time and increase his profit margin with a construction contract loan.

With construction contract financing in place, subcontractors can stop worrying about start-up costs and confidently dedicate 100% of their energy and focus to the task at hand: safely and successfully completing a project on-time and on-budget.

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Why Cash Flow Management is So Complex in Construction

Making money in construction is contingent on many factors, some of them completely beyond your control. Your work is dependent upon the performance of other trades. Project schedules shift due to weather, design changes, and resource shortages (which are typically a cash flow problem in reality).

The complex payment hierarchy means you pay out large amounts upfront and are paid slowly and over time. This makes managing cash in the business more difficult. Sure, there is money in the bank account, but what money is that for? Is that payroll for this week, but for what job? Can I use some of that money to buy materials for the new job starting or is that the money I need to pay for the materials I already used for this project?

As you know, these are real questions and the real answers are not easy to determine if you are operating only out of your checking account and don’t have any reports or cash reports to make decisions off of! You can make this easier and it is easier to do when you have the right cash flow reports and cash management tools. With these tools you will be able to:

Know what bills to pay with each chunk of cash you have come into the business
What to do with the cash that is in the business right now
What money needs to be allocated to the new job and what money needs to stay on the current job
Know if it is the right time to buy the next piece of equipment
Know when you can take some money out of the business for an owner distribution

Complex isn’t impossible, though. There are a number of tools and technology solutions that can help streamline and improve your cash flow management. Let’s start with something really simple: an Excel spreadsheet.

Plan Project Cash Flow in Phases

Many contractors determine project costs as a lump sum, but that is not how those costs are incurred. Similarly, contractors will estimate profit as a lump sum, but that is not how you make your money. To accurately plan the cash flow on a project, you need to not only see how much money you will be spending and earning, but WHEN those amounts become relevant in relation to the project.

Our Cash Flow Tracker tool was created to do exactly that.

Download Our Cash Flow Tracker Tool
(Don’t forget to get the instructions, too)

When you can see your project cash flow broken down on a weekly basis, you can make smarter, more strategic decisions regarding labor, supplies, equipment, and financing.

Bonus Tip: If you want more integration between field and office, use a construction management tool or save your Excel worksheet on a cloud-based document sharing platform like Google Drive or Microsoft Teams.

Let Data Inform Your Bids and Estimates

Doing a bid the right way takes time. A bid is more than just a number and specs — it is the story of how a job should be done, how much it will cost, and why you are the best contractor for the job. Show General Contractors your experience and expertise by building estimates from real historical data, easily pulled from your construction management software.

Power-up your chance of winning by showing REAL historical numbers to back up your estimates.

Integrate Your Teams with Construction Management Software

Construction is an industry of constant change. Changes happen in the office and on the site. Changes to the construction schedule that aren’t properly communicated can result in equipment rentals or material orders happening out of sync with the project’s actual schedule. Each of these cost the business hard-earned money.

Bottom line: Your entire team needs to know what changed, when it changed, and how it impacts the rest of the project — and the rest of your other projects!

Construction Management Software tears down the communication silos between departments. It creates a shared source of truth for every project, increasing transparency and efficiency, and cutting down on email chains, phone calls, and trips to the field.

There are plenty of industry specific tools, but you can also look for a trusted, industry-agnostic solutions like Monday.com or Airtable.

Automate Your Accounts Payable

You will always need a controller, bookkeeper, and/or CPA. However, when it comes to Accounts Payable, manual entry is inefficient, often relies on the knowledge of a single person, and results in errors and manual rework to correct.

Lack of communication transparency between field and office teams means reporting and invoicing is always reactive rather than proactive. Likewise the field is often at least a day behind on new information affecting the project’s cash flow. An automated, cloud-based AP system that is integrated with your construction management system means everyone has the information they need when they need it. If something changes in on-site, the Project Manager and the office team will know about it on the same day. Similarly, if something changes on the project’s cash flow or finances, your office staff and Project Manager know about it at the same time. This increases communication and proactive problem-solving.

Why Cash Flow Management is So Important

Cash is the make-or-break when it comes to construction. You need to be able to pay for supplies, materials, equipment, and labor to keep jobs moving, and cover your overhead costs to keep the lights on, AND you need enough money to invest in your company’s growth. And if you’re lucky, enough free cash flow left over to make a profit for yourself.

Long-term cash flow shortages can ruin a business. If you can’t complete the work and have to leave a job, your reputation suffers. If you can’t pay suppliers on-time, you are less likely to get better terms which inhibits your potential to perform. If you are feeling a cash flow crunch, you are more likely to fall victim to shady funding solutions like merchant cash advances.

Here’s the upside: Effective cash flow management ensures you have the funds to do the amazing work you’ve built your business on. Access to cash is the only way to grow — you need to be able to jump on an opportunity when it happens. The free cash flow created from performing your work enables you to grow your business, build up your balance sheet, and it empowers you to fulfill your company’s broader purpose. Charity, education, whatever it is — you need cash to do it.

When you can see where your cash flow pain points are, you can proactively work to resolve them. When you can accurately estimate, track, and forecast your cash flow, you can take the reins of your future and start really planning for growth.

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Recommended Reading

https://mobilizationfunding.com/2021/01/14/cash-flow-can-make-or-break-your-growth-strategy/

The construction industry has the 2nd highest rate of suicide in the U.S. Globally, the numbers aren’t much better. Construction is a tough job when it comes to mental health, for a lot of reasons: time spent away from family, seasonal wage fluctuations, physical injuries, substance abuse, and a “suck it up” culture that can silence any cries for help.

But, it doesn’t have to be that way.

In this special episode of Built for Growth, Randy Thompson from LivingWorks joins us to share a message of hope for the entire industry. To shift the culture of the industry, all it takes is business owners and leaders (like YOU!) to start talking about the importance of mental health and suicide prevention.

Full Transcript Below

Scott Peper 0:32

Hello, everybody. Thank you for joining us today, I’m really excited about our guests, a special guest, Randy Thompson from LivingWorks. He is the Vice President and business development leader, he is going to spend some time with us today talking about the impacts of mental health awareness, what organizations can do you as individual leaders and how you can help your organization’s and the people that are not only important and close to you personally, but also your team and your friends at work and colleagues. Randy, welcome. And thank you very much for joining us, I really appreciate you taking the time to do so.

Randy Thompson 1:07

God, it’s my pleasure. Anytime we can talk about mental health and suicide prevention, I’m quite eager to participate. So it is my pleasure to be here. My role here with LivingWorks. For those of you who might not know the organization is we are a suicide prevention training company, been in the suicide prevention business for over 37 years, have developed workshops that are globally delivered. So across the world, to help people keep people safe from suicide.

My background is in mental health actually, as a social worker. I’ve worked mostly primarily with organizations around mental health support, so building mental health and wellness programs for organizations. So it’s it’s a topic that’s very near and dear to me, I have shifted over into suicide prevention, as I always felt there was a bit of a gap there when it came to mental health support most organizations and out there, and I think we should really focus on prevention and early intervention. But there’s a piece around suicide prevention that I think needs to be a part of that regular stream of support within organizations. And we focus, of course, on one industry in particular. And that is a construction industry, which we know well Scott has been impacted by suicide more than any other. So happy to talk about that today and the impact of suicide. And I think what organizations can do to kind of shift the culture a little bit around making mental health and suicide prevention, okay to talk about, and know that these, these cultures haven’t been built in a day. And it’s going to take some time to shift it. But as we look at some of the statistics, I think we have a need, and we certainly there is a need out there for us to take a stand. So I’m just excited to be here with you today and have this conversation, then hopefully we’re able to help some folks.

Scott Peper 3:07

I think we will in fact, I know we will. Really one of the things I wanted to talk a little bit about first or hoping you could touch on is how did this become such a topic of passion for you, you’re very well written, you speak all over about this, you’re brought in expert leader and you can tell that it’s a lot more to you than just your job.

Randy Thompson 3:29

Yeah, absolutely. And speaking of mental health, been in the business industry for over 30 years, and I’ve always just had whatever reason to need to help. I used to think it was because I was really poor at math. So I should probably get into the people helping business, but also realize that it is a passion of mine. And suicide in particular is important to me, I lost a brother in a very close friend of mine to suicide A number of years ago. And that really impacted me in a very significant way. Very personal way. In not in a way where I felt like, you know, I probably should have saved him when we can talk a little bit about, you know, how folks who have lived with suicide can manage themselves, but just more around, there’s got to be something we can do about this because suicide is not as rare as people think. And when I started looking into this statistics around suicide, what I realized there is a whole there’s a significant need there for support and I couldn’t find it anywhere I spent my education and social work and very little time did we spend around suicide prevention. So even those who you think are trained in helping people with suicide and dealing with their suicidal ideation and suicidal activities are not necessarily trained to deal specifically with that issue. So that became an issue for me and and LivingWorks just came calling one day. Well, I was I was working with Family Services at the time. And in the employee assistance program. And, and this opportunity came my way I wasn’t looking for it. But it was certainly one that I felt deserve some time. And after we had a number of discussions, I felt like this was the right path for me at this point in my career. And I felt like I could do something about it that I could maybe move the needle a little, because where there is passion, there’s action. And that’s really what drove me into suicide prevention. And I’ve been here now for almost two years. And I’m seeing I’m seeing progress. And I’m seeing opportunities here to help folks and make a difference. And it starts small. And and it builds out into into your communities. And we can talk a little bit Scott about what that could look like.

Scott Peper 5:55

So diving straight into construction, as you know, our audience is a big construction audience, we focus a lot on construction as well. We try continuously to provide value in any possible way we can to the construction leadership teams, our clients, people we know people, we don’t know, anyone out there. And because construction and you mentioned is the number one industry that is prone or more prone to suicide. Can you touch on why that is? And what are some things I’m hoping we can pull from this are some things that are really, leaders in this industry not only can do for themselves, cuz I’m sure some of the leadership is the people that are actually having some of these problems, but also noticing that amongst their teams to help create an environment that’s safe for them to speak up when they’re there.

Randy Thompson 6:41

Absolutely. Yeah. And there are a number of reasons why the construction industry have the numbers that they do. And I certainly look at statistics, and look to read. And I think the latest report is constructions identified as number two, the number two industry but the number one industry is mining and extraction. And we’re, as far as I’m concerned, to me, those are two such similar industries that we can’t ignore the fact that they’re so related, and to me, both need the attention around suicide prevention. So I kind of I kind of cluster that mining and extraction in with construction, very similar industries. When you look at the, the the complexity of those industries, you can understand why there’s they’re at risk for suicide. They have challenging job types, within that industry, anywhere from general labor, then to skilled tradesmen, you’ve got management, you’ve got such a wide variety of different types. And there’s over 11 and a half million construction workers in the US alone. So the numbers itself are quite large. When you think about the working conditions that a typical construction worker has to work with, you can find that challenging as well, just from a weather perspective, when you look at injuries, and chronic back pain, and that type of thing within that industry is quite prevalent. And often when you can’t work, you don’t get paid. So you’re looking at financial issues that are that can be that can drive mental health within that industry. Seasonal and temporary work is very common in the construction industry. So you don’t know from one project to the next if you’re actually going to be able to work and bring you know, bring home the finances. There’s a lot of cases of isolation where fathers are away from their families for a period of time away from their support network. So really reliant on the folks that they actually work with once to complete that project so that separation from family can cause issues. And despite the fact that we hear from other sectors, when it comes to the construction industry, mental health cases are the least reported reason for people to be off. So these folks, these workers are coming in saying that they’re either not feeling well, or they have back pain, or they have other physical conditions. They’re not actually relaying the fact that they’re having mental health problems for fear of bullying, for fear of perhaps losing their job from some type of retribution, that they can be easily replaced. So even though they’re reporting absences, they’re not reporting the right ones. They’re reporting other issues that they might be dealing with. But really, at the end of the day, the focus should be on their mental health. So we’re not they’re not always getting the right help they need. So there’s a huge number of factors that can impact an individual’s mental health, particularly in the construction industry, that can drive to suicidal ideation and suicidal activity. Because for whatever reason, they just can’t get past the issues that they’re trying to cope with.

Scott Peper 9:56

So interesting. You bring those points up, you know, I want this to be very actionable for the leaders that are listening to this. So sure, if we’re speaking directly to the construction leadership team or owners of the business, and they get nothing else from this video, what is one thing they can do to help make this better? Doesn’t have to solve the problem. We don’t have to think too often. In any problem. We all try to go A to Z too fast. But they just make one step, you know?

Randy Thompson 10:25

Yes, absolutely. And it’s not an easy one. And there’s many organizations that often just refute the fact that they may have mental health issues, drug and alcohol issues within the organization. There’s a number of reasons for that. But when you think about it, I always tell organizations these because they come in and say, Well, what can we do? Right? Like you’ve got all these wellness programs and EAP s, and there’s so much out there? Where do I start is often the question I get, and I always tell them start small. You know, this culture that has been built for so long, didn’t happen overnight. And it’s really a culture shift.

And most organizations are doing something, whether it’s in the EAP, or most organizations are trying something to help their employees, but really focused on the right things. So before you decide to get into any type of wellness programs, really think about what are you trying to achieve? Like? What do you want to accomplish? Do you want to build a culture of mental health? Do you want to build a culture of wellness within the organization? What are some of the objectives that you want to achieve? before you even start? best thing you can do is build is like building a committee to get that thing going, right? Build an action plan around some of the objectives that you’ve talked about, and put a committee together to start investigating one, what you’re already doing to what’s working and what isn’t. Three, do a needs assessment around it. solicit your staff, your employees, ask them what’s working, what isn’t? What do they need, but study recent studies, when they asked about you know, if you got anything right up to raises more money, vacation time, what’s the one thing that you would look for in your employer, and for the most part, like I don’t have the numbers in front of me, SCOTUS, about 70% of those that were surveyed said, mental health support in the organization, I want my employer to be able to provide support for me and my family, so I can be safe focused at work. It wasn’t about more money, more paid more vacation time, it was about taking care of me and my family.

Scott Peper 12:34

You know, I watched I have watched a podcast of someone I watch off and they had a guest on and I can’t recall the guests name offhand. We know that a similar question was asked, and the response was, and I’m curious to get your opinion on this, if there was one thing they could do, it would be to hold a meeting with your entire team, bring everybody together. And just tell them all that this is a safe place for mental health, to talk about that.

Any problems you may have, you can always come into the door and talk about it. But they said, you know, just having that one meeting with everyone. And tell everybody you know what mental health is important to me, as your leader, I have had issues where I’m not as happy as I could be, or I’m not before. And I need you all to know that if you ever do feel that way, you can always come talk to me, there’s no judgement at all. It’s not going to be a place that we’re ever going to tolerate type that type of judgment. No one’s brought the issue up, but it’s here. And I want you guys to know. And they said that you can fully expect Not a single word to be mentioned that meaning and no one to say anything, and that’s okay. But the fact that you had that meaning and you offered up anybody to talk and they know will make a huge impact. And I’m just curious if you would agree with that, or anything you would add?

Randy Thompson 13:52

Absolutely. One of the first steps in talking about shifting that culture. And that’s probably why you don’t get much feedback from a comment like that, because kind of catches people off guard. But but the number one, number one, I think the key to a successful wellness program or successful culture shift is really getting that buy in from the top. That they have to hear from leadership that this is important to us. Your mental health is just as important to us as your physical health. You do a lot of training with you know, protective equipment in gear to keep you physically healthy. We are now focused on your mental health. And it’s important to us and from here on in, expect to hear a lot more from us. We’re going to look to engage you in this process. It’s not going to be us telling you what to do. We want you to be a part of it. It’s super important to have your input. And we can build a small committee around this and agree on some objectives and then come up with some recommendations on what do we need to do to make this environment safe for you to talk about mental health safety to talk about suicide prevention, but more importantly, that we have the right resources available to you. And a way that you can access it in a confidential manner in a way that doesn’t put your position or your role at risk, and one that will help you get back to full productivity. And that Scott is such a critical component and a great way to start off that kind of culture shift.

And then as you work together, as that committee does work together, really look at what are the driving issues within your organization? What mental are their mental health issues specifically, that drives that organization? Take a look at your drug costs. Take a look at your HR systems in terms of absence data. Take a look at what you’re seeing. Are your managers trained at identifying someone who might need help? And what are they looking for? There are many ways that you can build around that to start creating before you even start creating programs is really creating what is the need here? And are we engaging the right people in this process to help build these programs. And I’m not talking about a full I mean, you got some organization talking about their wellness program. That didn’t happen overnight. They started with something small. They started with like a nutrition program, because they’re looking at drug data and their cholesterol was through the roof. So they started small, and that to me is the right thing to do. And they just kept building on and they kept and they kept reviewing is this program working? Is it successful? Right, they keep going back to that review. And if it is, and it’s the right thing to do. And let’s build on that because we’ve we’ve had some success. So there is a structure and a strategy to it. But I always tell organizations doesn’t have to be difficult. Start small, engage your people identify what your risk factors are, it’s not hard data is there for you get the right people to work on it, you’ve got HR systems, if you do, if not, you, there’s HR support available out there as well. But you’ve got most of the data to help you get started. So start small, bring in some people you know, who’ve got the experience to help kind of get you going. But eventually you will own it, because you need to. And then you’ll be able to kind of build on that as you go. And before you know it, you have a much more engaged workforce, mental health and suicide prevention will not be such a taboo, there won’t be such stigma attached to it, people will be talking about it freely at the phone, like they talked about Sunday’s football game. And that’s really what you want to build is that type of safety, that type of culture.

Scott Peper 17:30

You say safety, and you mentioned so many times, it really should be part of a safety program that’s already probably in place. Why not, in safety is so key on a job site on a worksite, to your insurance to your people, to your team, to their family. Maybe incorporating that into your safety program, is probably a great way to do it. And I guess I’m talking directly to our audience right now. Make it part of your safety program. And then it doesn’t have to be as in your face, or new, so to speak. It’s just part of a program that’s already there. I would strongly recommend having that meaning, based on what Randy just said, what I heard before, I think just a hearing from the top that it’s okay, and it’s a topic that’s on your mind is going to have a lot bigger impact than than one might think.

Randy Thompson 18:20

Oh, absolutely, you’d be amazed. And it’s just it’s it’s like, we’re now on notice that this is okay. And that. And they it’s exciting to hear something like that right. And, and something that they’re going to participate in and engage in, they’re going to be a part of it. And you can do that where there’s joint committees as well, where there’s a union, where there’s unions involved, I’m a big fan of of bringing in joint committees and having them work together. And there’s talk about mental health and suicide prevention. What a great cause for both those organizations, both those departments to work together. So there’s great there’s great opportunity there.

We’re actually working with some of the larger construction organizations and I met I didn’t mention earlier I’m I’m a proud Board of Trustee member with the Construction Industry Alliance for suicide prevention. And LivingWorks we just developed kind of a one-hour lunch and learn we call it as an it’s kind of like an introduction to suicide prevention, for building awareness around suicide prevention. So it’s kind of at that beginning phase for organizations who really have very little and and the message is, let’s look at embedding this as part of your onboarding process. Let’s make this a part of the person’s first or second day as much as you as you onboard around health and safety introductions. Let’s make suicide prevention and mental health part of that, that onboarding process so that that new employee gets the sense right off the bat that you know what mental health is important to this organization, just as it is, is our physical health. So we’re trying to push the needle a little bit in that direction and make it you know, make it right at the very forefront of a person’s career or within that organization. So that so that it just becomes part of their culture.

Scott Peper 20:13

What is a program, a good program or even a startup cost? Is there? Is there a cost to it? Is it really part of what cost structure is already there? It’s just creating awareness and around it?

Randy Thompson 20:25

Well, that’s a great question. And often that’s what prevents businesses from actually jumping into the site because they feel like, I don’t understand the cost. Is there a cost? Where do I start, there’s a lot of things organizations can do at no cost. And it’s just around the messaging that you can have around your sites around mental health.

There’s organizations like say, where there’s resources available, your employee assistance program comes at a cost, which is quite minimal, when you look into it. So it, there is a certain cost to most programs. But what’s important, Scott is what is the return on investment you should expect in those programs. When you look at a health and wellness program, looking at a smoking cessation program, etc, 97% of organizations today have any EAP, and within many of those EAPS are these types of programs. And folks that are that have the background and expertise to help them develop these types of structured programs, so that the cost can be quite minimal. But it is a targeted program that should have an ROI attached to it. And at the end of the day, these are issues that are driving costs within the organization already. So take a look at that in terms of what is this? What does this issue actually costing us? And then what can we do to mitigate it, so that at the end of the day, we’re not only achieving of return on investment, are actually engaging our staff, our employees, and they’re seeing us as an organization that cares about them. So there are varying degrees of cost Scott, I’m not gonna lie. But that doesn’t have to cost anything to start shifting culture. It’s just in the messaging. It’s just an how you might be training your staff and your, your managers and supervisors. And being able to identify, some of them might need help, and just having a conversation. So they start small, you don’t have to get into these huge programs start small and build from there.

Scott Peper 22:29

So one of the things I I’ve heard from others is, you know, my company is not that big, yet, I don’t need a wellness program, or I only have, you know, three people in the office and two of them are in and out. What is the right size organization is one too small is one too large to have a wellness program and talk about mental health.

Randy Thompson 22:49

Yeah, it’s a you’re never too small, to be honest. And then that’s very real. I’ve worked with organizations with 10 employees, what I always think about is, the smaller you are, the bigger the impact is going to be. Because in most cases, farther, organizations don’t have the resources available to them to be able to support someone in need. And that person while not being treated, their their loss of productivity is hugely impacting the organization. So often, in many cases, it’s more important for them to have the support and resources that that are available to their staff, that they can help resolve them and get them back to work and get them back to being productive. large organizations can withstand a bit more because of their size and because of their resources. But to me, I always near and dear to my heart is that that National Small Business division, because they’re the ones that are that are mostly impacted by mental health. And they’re the ones that need the support the most. So I would say that it’s just as just as important for smaller organizations to think about mental health as it is for large ones.

Scott Peper 24:00

I personally think even if you were in a very, very large organization, your best method for being able to really communicate this and make an impact is to break it into small groups anyway. So if you are a small business, doing it earlier, and often is even better, because then you’re going to create that culture that as you grow and scale and organize your business, it’s going to be part of the normal internal guidance that new employees, new team members, new leaders come into the organization with and can notice and accept and feel right away. So I think I would agree with you. I think the smaller the better. And if you’re too big, if you’re already big, I think you need to figure out how to make it small, have one big conversation but figure out how to get into small groups as fast as possible.

Randy Thompson 24:46

100% I’m a big fan of pilot projects in a very structured manner. And large organizations. If you’re going to throw this program out to everyone, it becomes so unwieldy. Tough to manage tough to monitor. You’re absolutely right together. Start small small focus group, test it out, reevaluate, see what’s working, see what isn’t make the changes you need in those small groups. And then once you’ve got it right, then it’s time to kind of scale it out to other other departments, again, keeping it small, just kind of building from there, and start off with everyone, all on the same page. It’s tough to manage. So two great points. And one that I often recommend to organizations start small, doesn’t have to be daunting, right? You know, just to talk yourself out of it.

Scott Peper 25:34

So where can someone watching this, go get some information, access to information, free information, ways to educate themselves learn? Is there a book you recommend? Is there a website they can go to? Obviously, your organization is key is is there? What’s part of what’s on your website? Is there others? Where did they go, I want this to be an again, an actionable part of this series that we’re doing is I really want people to be able to watch it be moved, but know where to go next

Randy Thompson 26:00

Absolutely. And there, there are a number of resources available, both online and through text, believe it or not, often recommend organizations, particularly around mental health, I know I talked a bit about please systems programs. And that is kind of my background. But I believe that many of them are underutilized. And they often know more about the organization than then than anyone else, particularly around mental health. So I would definitely want to leverage your EAP a lot more. When it comes to suicide prevention. Of course, the CISSP is a great resource for any any construction company, particularly within the US. And you can access support through CHP through their website, which is prevent construction suicide.com. So that’s the cisp website, there is a challenge out there to all construction industries stand up. Or we’re asking construction companies to take a pledge to stand up to suicide prevention. And there is actually free training, or training that are available at a rebate through the CIASP for these construction organizations. So that makes it affordable for everyone. And it’s just like I talked about earlier about creating awareness, there’s a 90 minute online training called start that we developed at living works and launched about a year ago, where people can learn, you know how to support someone who might be in need of some suicide prevention, support, how to identify someone who may be in need, and be able to approach them have a conversation, and be able to link them to someone who might have a little deeper awareness, a little deeper expertise in suicide prevention. But it’s a great place to start, right? Because we’re all built and everything we do is built for helpers. So this is an opportunity if you want to be a helper to actually access that type of support. Our own website, of course, LivingWorks.net has a number of resources available for folks who want to be a helper. Mate’s Construction is a very famous, very well developed organization out of the out of Australia, where they developed a program where the employees themselves own it, essentially, they run it, they manage it. mates provides the resources that are necessary in the training that are necessary for these individuals. But Mates Construction is really a kind of self-owned suicide prevention program that’s showing great success. You can find them at mates.org.au. And again, just lots of research and data available for folks that are looking for. As we near November. We also are nearing Movember, which is a site that’s geared more towards men, and getting support for mental health for men. So that’s coming up in a few weeks, and we’re excited to be working with Movember as well as part of their suicide prevention initiatives. So Movember.com is another resource for men where 93% of this of the construction industry is male dominated. So I think that’s a good one. Then there’s national support. So the Suicide Prevention Lifeline so always available 24-7 to people through suicidepreventionlifeline.org or the one 800 number one 800 suicide there’s so sorry, Scott. There’s lots.

Scott Peper 29:39

That’s great to know, you know what, in the fact that there’s that many resources out there, I should tell everybody something, you know, we’ll we’ll put up what information we can on our resources page. We’ll make sure that there’s obviously links here associated to this video where everyone can access your information they can find easily find you find your website, your organization, and Get information that way too.

Randy Thompson 30:01

Yeah, absolutely. You can even text 741741. And you’ll get some and someone will respond. Some people see younger people even want to use different modalities to get support, you don’t have to make a call, or you don’t have to serve a website, you can actually get text based support as well.

Scott Peper 30:18

Randy, I really appreciate you taking the time to do this for our group for me, for us, our organization and all of our listeners and customers and potential customers out there. I really think it’s an important topic. It’s something that we certainly are important to us here. And I know it’s important everyone else and is anything man, if we could just have impacted even one person today, then it’s certainly worth our time.

Randy Thompson 30:41

Yeah, absolutely. And I and I know it’s a lot of information at one time. And I’m happy to answer any questions or people want to contact me via email, if I could share that is to have a conversation around the world why start or you know what’s available, I’m more than happy to respond.

Scott Peper 31:00

We’ll include your email. And if you want your phone number as well, please feel free to reach out to Randy. Randy, you’re very gracious with your time. And I really appreciate you sharing your email and number and be willing to talk to folks. That means a lot to us. Thank you.

Randy Thompson 31:13

Absolutely. We’ll get more into that. Just kind of putting it out there today. And he said if we helped a few people great. But by all means, feel free to reach out. It’s not easy to do. But once you do, you’ll be glad you did.

Scott Peper 31:27

And we’ll leave it at that. I don’t think I could finish in a better way. Thank you everyone for joining us. Randy, thank you very much for joining us today and sharing your insights and thoughts.

Randy Thompson 31:37

I can’t thank you enough. I appreciate it.

Scott Peper 31:39

Folks. If you do nothing else, have that meeting. Let people know that you care and let people know what’s on your mind. Have a great day and a great week and keep it going. Thank you very much everyone. Take care

Transcribed by https://otter.ai

Delta Construction Partners is the largest and most specialized construction recruiting agency. They focus on finding, hiring, and onboarding superintendents, project managers, estimators, designers, and engineers. More than finding a resume that matches a role, Bob and his team built Delta Construction Partners to do something different: to hire the “difference maker” for your organization. Bob built his company based on a core purpose of making life easier for his clients and making work fun for his team.

Full Transcript Below

Scott Peper 0:38

Everybody, welcome to our latest episode of The Real mFers, I’m super excited today to introduce you guys to someone who I’ve become fast friends with or refer to each other as brothers from another mother even. But this is Bob Magnan. He is the CEO and president of delta construction partners. I’m excited specifically to hear from Bob day too, because he’s bringing a whole different spin to the construction world, from the other side, how to find good talent and retain good talent, he runs an amazing business himself, one that I admire and respect just seeing him in the brief time that we’ve known each other. And I’m really excited to bring what he offers and what he’s built to you guys and you guys to hear what he does in his business and how he can help you too. Bob, welcome. Thank you for joining us.

Bob Magnan 1:22

Yeah, thanks for having me, Scott. It’s an honor. Appreciate. appreciate you having me on your show here.

Scott Peper 1:29

Do you mind I’m just for the audience kind of taken maybe a couple minutes, just walk them through high level who you are, where you from? How you started Delta what delta is,

Bob Magnan 1:40

Yeah, sure thing. I started started Delta in 2007. You know, it was perfect timing, you know, the worst construction recession in the history of the world, it’s probably not the most perfect time to start a, you know, construction recruiting business. But somehow we endured, even though my timing wasn’t the best. The first couple years were tough, you know, sat in a small office by myself, and, you know, really just tried to develop a niche and an expertise in the electrical sector. And so our first clients were electrical subcontractors, all over the country, that basically a commercial work, and we went with that niche for the first 10,15, you know, 10,13 years of our company. And in that time, we proved to be the nation’s largest, most specialized, you know, focus, permanent placement recruiting agency that really focused on you know, finding, and hiring, onboarding superintendents, project managers, estimators, designers, engineers, any of the basic management positions, what we did not focus on are the installation position. So the guys that are actually doing all the hard work on the job site. So that’s, that’s kind of the quick, the quick overall summary of where we’re, where we started today from starting, you know, in a small office 200 square feet by myself, you know, we now have about 35, great teams members, and it’s a very high energy passionate, you know, collaborative team culture, and we have a lot of fun every day.

Scott Peper 3:30

Yeah. So if I were to sum it up, you if I’m, if I’m the owner of a electrical contracting company, and I’m growing, and I’m looking for a leadership, talent, and management in engineering, or estimating or those real, more, anything outside of the labor position between me as the owner and the labor force, you I could come to you and you could help me find and retain and hire that talent.

Bob Magnan 3:55

Yes, that’s exactly what we do. And most subcontractors, you know, they’re they’re experts at what they do. And that, you know, the subcontract the business model is a very difficult business model. There’s a lot of moving pieces. So traditionally, most electrical contractors don’t have time to set up, you know, an in house recruiting department, to go find those individuals and qualify them and onboard them that are real difference makers. And that’s what most of our clients are looking for, at least from us, they’re looking for somebody that could add a lot of value to their company, take their company to the next level. And those people are very difficult to find on job boards, you know, like indeed or zip recruiter or monster. Those individuals that are usually listing their resumes. On those job boards are people that are out of work, or usually their employment stability is barely happy. So our clients call us in because we we have the relationships. We have approximately 75,000 electrical construction, and now mechanical construction as well as general construction professionals in our database that we have relationships with. And we’re able to go out and help them on board, you know, them for the great clients that we work for.

Scott Peper 5:18

So, you know, one thing I really want the audience to understand and hear and I don’t know, if I really want them to take this away from what you just said is I have a background in medical, medical device history, I’ve worked in and around, you know, multiple hundred million dollar medical device companies that I was an employee of one point a salesperson, a manager and in different leadership roles. And we always in that business, oh, literally, for almost every position, whether it was sales or marketing, we would always use outside recruiting agencies, and it was part of our budget, and we spent, I mean, they spend hundreds of thousands of dollars a year, hiring and finding talent. And the reason being is it’s so expensive to make a mistake, and train and educate and bring somebody on board to find out that they’re not a good fit culturally, or tantalize. So what I thought was so cool, when I met you, Bob, is that you’re bringing that huge resource to a, to a subcontracting business, that usually is only out there for what is otherwise hundreds of millions of hundred million dollar companies or even billion dollar companies. But for you to have that expertise, and bring that type of value to a smaller, five 610 million, 2 million $1 million dollar business or more is just a really important resource that I don’t think enough people know is out there, or if they do, I don’t think they really understand the value that it brings, and the amount of savings and cost savings it can bring to their business by not making mistakes.

Bob Magnan 6:43

I mean, I mean, you’re hitting the nail right on the head, are our clients expect, expect us to make their lives easier? Right? There, they’re very complicated, you know, from six o’clock in the morning till seven, eight o’clock at night, most of our clients, their hair’s on fire all day long, dealing with General, you know, general contractors or, or owners and, and the various, you know, the labor issues they have all day long design issues, material issues getting paid. I mean, it’s a very complex business model. So, you know, our kind of motto is, you know, we’re going to make your life easier, Mr. subcontractor. And it’s very important to us that, that we succeed in that area. So when an owner of a company gives us an assignment, we understand exactly what they’re looking for. I had the great fortune of working for maybe one of the, you know, top electrical minds in the last, you know, 50 years in our, in our country, maybe even on the planet. And his name was Mitch Permuy. And Mitch founded Power Design, in 1989. And, you know, grew it from the first set of plans on his kitchen table, to now the company is in the $850 million a year revenue range, and growing to probably 1.21 point 3 billion within the next two years. So, you know, it would be like Scott, you had, you know, chance to work for Steve Jobs. Right? Yeah. You know, just being around that energy and that creativity, and that, you know, that brain for a couple of years, you’re going to, you’re going to gain a lot of experience, so and knowledge. And so I had a really good fortune of starting off. For two years working for Power Design, working for directly with Mitch, I kind of shadowed him for three, four hours, you know, every day for two years, and that insight and experience was his, or, you know, millions to me, because I had a chance firsthand to see how a real leader of electrical contractor thinks, right, and how they, you know, how they react to certain situations. So, when I look at a resume now, I see things that I would never be able to see if I hadn’t had that experience. And that gives us and our firm a huge competitive advantage. So it’s proven on a daily basis to help us add a lot of value to our clients lives as well.

Scott Peper 9:22

Yeah, you could have been in the recruiting business and worked with all the medical device recruiters and separated yourself from the others and been just as successful but you chose electrical contracting. And because you have a background in it, you understand it from an owners perspective, you were trained by one of the hot, highly educated, successful company electrical contractors that grew from smaller to 100 and 50 million. And I don’t think you’ve shared this yet, but I happen to know that your dad was a master electrician in the Navy as well.

Bob Magnan 9:52

You know, I always wanted to kind of keep that, you know, the fact that family you know, tie to, you know, to the electrical business going and my dad being a master electrician in the Navy, it just felt like the right thing to do from maybe a DNA standpoint, I was, you know, very proud of my dad. And so that was a feel good type of relationship to what my new career was going to be all about. But besides that is probably, you know, as important.

Maybe more important was the fact that when I worked at Power Design, I had a chance to interact and on a daily basis, you know, talk to project managers and superintendents and interact with them. And I just thought these guys were the salt of the earth kind of guys. And, you know, I had some prior experiences in the brokerage business. And, you know, the difference in personalities and integrity levels is, is significant. So, I just love working with the construction guys, great family, guys, I love performing for my clients. And it was just a lot of fun. And it’s still fun today, it’s not a it’s not a job at all. And every day I come to work in just passionate about being the best construction recruiting firm on the planet. And that’s, that’s our vision.

Scott Peper 11:21

You know, one of the things that I personally focus a lot on in our business, and I think is super important, really is the key separator between success and failure is the culture that you have within your organization. And being passionate about that and speaking about that a lot as much as I can, not only to my own organization, but just in the community and where I’ve learned, one of the things that I was drawn immediately to you just upon walking into meeting you, but walking into your office and meeting your team and your group, is the culture you’ve created there is very clear and evident, and it’s permeated throughout everybody. Can you please talk a little bit about that? Because that’s, that’s not an accident. And you clearly it’s something you worked on and focus on, and you guys live and breathe every day? How did you learn that? Why did you implement it? And what what have you seen beneficial from that? And how do you relate that over to your business,

Bob Magnan 12:12

It was all those those classes I took in college. No, it had nothing to do with my college. Education. Actually, I don’t remember go to classes, I played a lot of baseball in college, but very little class time. So I became a fan of Stephen Covey and the Seven Habits of Highly Effective People and went through a couple seminars, couple certifications around the certifications to become a, you know, become covey teacher, and the whole nine yards and what I what I really picked up from that experience was that you know, you can, you can, as a business owner, you can go out and buy anyone’s labor, their hands, you know, their backs, dig a ditch, whatever it is, you can go buy that, right. What you can’t buy is their heart, their passion, right. And that’s where the real magic comes from. When you have team members that are all very passionate about your company’s cause, they understand what that cause is, they have a clear vision of your vision. And then they understand the exact role that they play, and the responsibility they have in taking your company to that special place. It just becomes magical. And so that’s one of the requirements to work at our company. You know, if you’re not passionate about helping people, if you’re not passionate about helping our clients, if you’re not super passionate about being part of a team, that is going to be the best team on the planet, at what we do. It’s not a good word, it’s not a good fit for you, you know, it’s probably a place that’s not going to work out for you in terms of employment, you know, I would encourage you to seek employment elsewhere. Because on a daily basis, we have a passion about getting better, both personally and professionally. So we’re always challenging each other. And it’s, it’s, it’s seamless. I mean, it’s that my my team members challenged me on a daily basis. Bob, did you do your meditation this morning? Bob, did you get your run in the morning? You know, did you get your 20 minutes sweating this morning? You know, Bob, did you do anything for somebody else today? So we have these, you know, the criteria that we think make up what it’s, you know, what it takes to really be a highly effective professional and personal development type of character on a daily basis and, and we stick to it, and it’s a lot of fun.

Scott Peper 14:43

I really appreciate you share that story. How do you relate your culture and what you’ve done in your business? How do you carry that over into the recruiting side when you’re working on behalf of one of your customers?

Bob Magnan 14:54

We share a lot of the things that we do with our with our customers, such as You know, we kind of have a saying around our office, you know, you know, catch people doing things, right. And thank them, you know, give them a pat on the back versus a lot of companies, you know, you that we’ve all worked for that manager that, you know, hey, you know, you did this wrong or, you know, you should have done this way. And I understand there’s, there’s a need for that every now and then. But we, we, we like the culture of catching people doing things right and thank them. So to take off on that, that thinking and that thought, every Friday, we have a we have a lunch meeting which we buy lunch for everybody. And usually their night, you know, we have a nice lunch and, and we go over the week’s goals and how we did and plan for the next week. But we also have what we call is a silver box and silver boxes in our office and all during the week and the silver box. We have team members that put anonymous little statements in there about other team members. And on Friday, we pass the box around, everybody picks two slips of paper out of the box and read them. And it would say something to the effect of you know, if I’m reading one of those slips of paper, it would say, Scott, thank you so much for you know, all your hard work this week, coming in early, staying late. You were You’re a real difference maker, and everyone in the team appreciates it. And, and they’re all you don’t know who it came from. So So that’s kind of cool. Because you try to figure that part out, you know, I wonder who said that nice thing about me. But it’s just nice to get that kind of recognition. And we make it a habit. You know, every Friday, we go through that silver box. And I looked at before I came up here, there must be 100 anonymous, you know, thank yous and in the box are ready for this Friday. And it’s what Wednesday at, you know, 11 o’clock in the morning. So that shows me that my team is engaged, that they take that very seriously. And it’s important to them. It’s an important part of our culture.

Scott Peper 17:04

See, personally, I talked to construction contractors all the time. And I always talk to them about our business, because I want them to feel and understand that just because construction has certain connotations to it, or it’s harder work that that the business Business is business in, and your people are your people and all of these concepts, actually the ones that are the most important to whether your success, or is Matt, the way you want it to or not, is all these principles that we talked about. So even though your business is construction, recruiting, and you would hire someone would hire you to help find them the next best Superintendent they have for their job, what they’re going to get from you aside from a superintendent is awesome beliefs on how to make themselves more successful internally. And those are the additional value points that I think are so key. Getting to what you actually talked about there that when you and your actual business. One thing I’ve heard a lot of subcontractors say to me as Oh, I can’t imagine using recruiters when I brought brought you up or just a thought of a recruiter, they’ll say something like, Oh, those are too expensive. It’s too expensive to hire recruiter. And I was like, well, what’s expensive? And the answer I’ll get is up, they want X amount of thousands of dollar fee. And I said, Well, how much does it cost you? If you hire somebody and they don’t work out? They’re like, well, I just hire somebody else. And you know, I’m not equipped as well as you are to answer that question. But I’m sure that dialogue is something you’ve probably had before. And I think we’d be remiss not to touch on that here today. So if I were to ask you, why is your fee valuable? And why should the people just run to you to pay it? I know what I would say, and why I would do it. But what what do you what would you want a contractor to hear? Hear now. So while they’re watching this, so they say, you know what, he’s right, I need to just do this and say myself?

Bob Magnan 18:54

Well, the generally accepted, you know, facts about what it costs to replace an employee is somewhere around 75% of the person’s first year salary. So if we’re, if you hire a guy $100,000, or he only last six months, it’s going to cost you approximately $75,000 to replace that person. And so what what makes up that 75 grand costs are, you know, the amount of time that your team has to put into training that person, you know, you’re talking about, you know, 50 to 100 hours for this, you know, for the normal person just to be trained on systems, processes, culture, the whole nine yards of software. So, so that’s, that’s a big piece of it. In some instances, it could be a lot more. So there’s a there’s a hard cost to replacing somebody that you just can’t get around. And then, you know, most companies don’t take into consideration that. You know, they may be Great contractors, and they may have their area of specialty terms of construction, but it’s very difficult to do that and to be an effective recruiting operation as well. So most subcontractors at water to people in house, maybe somebody in HR, they’re not proactively out there building relationships, they’re actually just taking resumes in and hoping they’re going to find somebody that works out. Usually, their process of reviewing the resumes, doing background checks, bringing the person in for an interview, is is not that efficient and effective. So, so they’re making a lot of mistakes and Madden, and, you know, we eliminate all that noise, and all those processes. And again, our job because, you know, because our fees are expensive to a lot of clients, as far as how they look at it. Like, for 25, or 35 $40,000, whatever the fee may be, we eliminate, you know, the recruitment, the, the contractor having to go through any of that process, we make our prime contractors lives easier, we only deliver, you know, the best of the best the best candidates, because ultimately, our job is to help that company, go to the next level. And there’s not very many businesses that can take their company from A to B, without having difference makers, right. And those are one out of 100, you know, you know, employees that are out there in the pool, and it’s our job to find that person. So I think we had a lot of value. And I think our track record speaks for itself, you know, we’re entering our 14th year of business, we’re still growing at about 15% a year, and we’ve actually doubled in size in the last six months. So if I seem a little frazzled right now, it’s because we got a lot of action going on right now. So we’re moving into an almost 10,000 square foot office in less than four weeks. So a lot of exciting things happening at Delta. And we’re helping more clients now than ever.

Scott Peper 22:09

That’s awesome. You know, one thing I want to share with everybody that I wasn’t planning on, but it’s so relevant, I’ve made personally, so many mistakes, even here at mobilisation funding, especially here, whether it’s bringing in the wrong people having the wrong people on the team keeping them around too long, I can personally attest to you that the costs of making mistakes and hiring or keeping folks that aren’t a good fit, not implementing your culture, or just keeping people around, has caused me personally, probably hundreds of thousands of dollars, and even some, even some personal relationships. I think it’s also cost me opportunity costs of success are especially early on and nearly failure in many cases. Matter of fact, better luck. without some lock, I probably would have failed not had the business because I didn’t have the right people around me and I kept the wrong people around me too long. And if I could have shorten that gap going back if if nobody takes anything else from this, if I could shrink the gap between where I am now and where we started by literally paying, what would it what would be about less than 1% of the cost of the money that I probably lost, to buy Bob, to find me the right talent where I could have stayed on top of a situation that wouldn’t have become a problem because I didn’t have to do all the things I was doing. Or I didn’t get intellectually lazy in my hiring process and just check for a pulse and say, Oh, you sound good. Let’s do it. And we’re in a great spot. Today, we have a great business, we have a great group. But what we’re going to be in three years from now, I probably might even be right now here right now, if I had this advice, or watched what you’ve told me, and I took it to heart and implement it. One of the things I really want you to talk about, we when COVID hit like yourself, we decided that mobilization funding our team that we were going to, we were going to define ourselves in the most looking back at COVID. And say this is one of the greatest times of our company’s history. And what we did, when that happened, doubling down on what we were going to do, how we were going to help people integrating the business really challenging ourselves has made a huge difference for us. And we like yourself are in a great stretch right now and growing. And I think we’re helping people better and doing things even better. And I know you are too. Why don’t you talk with just from a business perspective as an owner, what you did when COVID came about how you used your your human talent, your team and where you guys are now what tell them what you did, because I think it’s pretty impressive.

Bob Magnan 24:36

Sure that you know, very specifically when COVID hat COVID first came out number one, as you pointed out earlier, we got lucky because construction was considered you know, exempt from you know, any shutdowns Basically, there were some sites that were shut down projects but you know, we were able to stay in business, which a lot of companies did not have that good fortune, whether you’re, you know, hair salons or whatever. So we got lucky in that sense. And we’re very grateful for that. But, you know, I went through probably about a week of being really angry at our government, you know, being pissed off and, you know, throwing a pity party for myself, Why me? You know, March was a march was the best month into 2020 in the history of my company, and then COVID happen. I’m just like, you know, this isn’t funny God, you know, this is bad timing, you know, I don’t appreciate your sense of humor right now. So I did go through about a week or so of not probably responding in the most positive way. And then whether it was my wife, or some divine intervention, or my team members, I saw it a different way. And I said, you know, let’s get aggressive, let’s get proactive. We’re going to go out, and we’re going to find 15 new clients, that’s our plan. And so we expand it. And, and, and sped up the process of opening up a few new divisions. So we have a general construction division. Now that’s really kicking butt. We have a mechanical manufacturing division that we’ve picked up 16 new clients in the last two months, we have an engineering division, that we picked up about 20 new clients in the past three months, and we’re opening up probably the biggest division of all, it’s going to be a renewable energy division. So we did all that, within the last six months, hired account managers, for each division, each division is making two or three placements 75,000 $100,000 in revenue a month right now. And so it’s messy, because we’re still in systems and processes and integration stages. But we’re sticking to our core values, which basically is, you know, continuously make our clients lives easier, right, as long as we provide the best of the best of the best candidates, to our clients or businesses like yourself, those leaders, those difference makers, make your life easier. Right. And, and that’s really where, you know, we get all of our repeat business from, there’s really nowhere else our clients can go to get the level of service and the quality of the candidates that we deliver. So that’s what we try to stay focused on, you know, always delivering the best candidate possible for for that search.

Scott Peper 27:35

A couple quick questions for you, before we wrap up that I was really interested in getting your kind of lightning round opinion on so to speak. The first or what is there one or two things that you when you talk into an initial customer of yours or client of yours that you that you say, you know, what, there’s one or two three things here, that really I can tell determine success or failure and in a client for their business?

Bob Magnan 27:58

You know, I love working with clients that are pushing themselves, whether you know, no matter what area of their lives, it may be, or their business, right? So they’re, they’re always committed to, you know, building the best project and adding the most value to their clients lives. And, you know, of course, there’s the fundamental, you know, we want to be around people that like to have fun. People that in clients have a high level of honesty and integrity companies that you know, want to hire you that are looking for a partner, and not just a recruiting company to make a placement. So we, you know, we go way beyond just making placements for our clients, we just we love working for clients that are really looking to become the best of the best at what they do.

Scott Peper 28:46

Is there any size company, whether it’s in revenue, or maybe employee size that you find are have a higher chance of success than others?

Bob Magnan 28:54

Well, we’ve helped a lot of companies, you know, go from, from 10 million to 100 million over the last 10 years. And so that was always fun to it’s always fun to work with smaller companies, because in the case of the company I just mentioned, we helped them find a general manager when they were very small. And that General Manager turned out to be a superstar. And he helped them grow a couple new divisions, and they’re in Chicago right now. They’re the largest merit shop electrical contractor in Chicago, and they’re probably gonna do 125 100 30 million this year. So that was a lot of fun to know that, you know, the one or two key employees that we help them find 10 years ago, are still there. And they built a tremendous company.

Scott Peper 29:39

What What about the companies that are a couple million dollars? Do you see that you can benefit them in the same exact way?

Bob Magnan 29:45

Going from one or two to 10? Yeah, sure. I mean, you know, our fees is a little more challenging for you know, a very small electrical contractor or, you know, any subcontractor or any company, you know, if you’re doing a couple million dollars in revenue So I’m always offering, you know, flexible terms and in fees to make it right, to make it the right fit for that company. And sometimes it’s a lot more fun working for a smaller company where you find a one person, and it helps them double the size of their company in two or three years. So I get a lot of joy, I get a lot of, you know, satisfaction. from doing that. We’ve, we help a lot of companies that do a billion dollars a year in revenue, you know, so anywhere from a couple million to, you know, there’s a few mechanical electrical contractors that do four or $5 billion a year in revenue.

Scott Peper 30:40

You’ve shared a lot of insight and things that I can tell are important to you and I think are really valuable. Is there anything that you wish you heard early in your career, that you go back and tell yourself right now that, you know,

Bob Magnan 30:51

Yeah, just whether you’re a mechanical, electrical general contractor, you know, the key, one of the key, you know, fundamental places, you know, things that you want to have a place is just surround yourself with the best possible people. If you’re the if, you know, if you’re the smartest guy in the room, you know, that’s probably not necessarily a good thing. So I like to surround myself with a lot of very smart people. And I wish I would have done that earlier in my career. I think my ego got in the way a lot and, and that cost me a lot of time and money.

Scott Peper 31:29

I hope you guys all heard that. Ego gets in the way. And as soon as you can park it speaking for myself personally, as well, as soon as you can park that ego is when you really see the success doors open up, for sure.

Bob Magnan 31:42

Well, I say stay humble and grateful for for what I have and appreciate of all the things I’ve got, you know, things go go pretty well. And I think more clear,

Scott Peper 31:53

no, I had another question for you. But I’m not going to ask it because there’s nothing more important than what you just said. And that’s the best way to end it here. But I really, truly thank you and your whole team, because I know it takes a lot to get us get this together. And I really thank you for taking the time to share your insights, your wisdom and your guidance. And I hope everybody got a lot out of this. I certainly did myself, I just appreciate you all taking the time to listen to us today. Bob, thank you very much for your time, your insights, sharing your team, thank you for what you’ve done for me. And thank you for what you’ve done for the folks that I’ve referred to you already. I’ve got nothing but positive feedback for them. And I’m grateful for that. Thank you.

Bob Magnan 32:30

Yeah, thank you very much for having me on, Scott. I really appreciate it and we got a big game six with the lightning. Probably tomorrow night. So go Tampa Bay Lightning. And I’ll see you around soon, Scott. Thanks again.

Scott Peper 32:46

That’s right. Go lightning. Thank you, everyone. Have a great day.

Transcribed by https://otter.ai

Cash flow management is particularly critical for small and mid-size businesses, as these companies often have less free cash flow to help them cover unexpected costs, delays, work shortages, or their growth.

Before we talk about good cash flow management and share a few tips to improve cash flow at your business, let’s back up a bit. What is cash flow, and why is it so important?

What is Cash Flow?

If you’re not entirely sure what we mean when we say “cash flow,” don’t worry—you’re not alone. Cash flow is simply the money coming in and out of your business. A positive cash flow means you can pay all of your company’s overhead costs, debt payments, and other expenses, still have some money left over in the bank account and hopefully provide a buffer against any future issues or challenges. If you have positive cash flow, you can reinvest in your business, take advantage of growth opportunities, and weather financial downturns with less stress.

Cash flow comes in three forms: operating, investing, and financing. We’ll focus on operating cash flow, which is the money your business makes from selling goods or services. Basically, the money your company makes doing whatever it is your company does. Financial cash flow shows the money you use to fund your business, including debt, equity, and dividends. Investing cash flow is money created from investment opportunities.

How Does Cash Flow Management Affect My Business?

Here’s an easy question: Do you know how much cash you have in your business each and every day, what the expenses of the business are that week and how much cash you need in order to manage the week’s needs? If you answered NO to all or any part of that then this is especially for you! (Checking your bank account at any given moment to determine how much cash is there is NOT sufficient to give a Yes to this question.) A report given to you weekly or daily as the business owner is key to your cash flow management success.

Managing your cash flow sources and the consequent uses of that cash can literally make or break your business. A U.S. Bank study showed that 82 percent of small businesses fail because of poor cash flow management. We cannot over-emphasize the importance of being able to estimate, track, and forecast the money coming in and out of your business, especially if you are planning to grow.

Prolonged cash flow shortages can lead to insurmountable debt, while short but chronic shortages can lead to stricter payment terms with vendors and lenders, who know longer trust your ability to pay. It can also impact your company’s credit score, which means banks will be less likely to lend to you when you need funds to grow … or survive.

Cash Flow Management Tips for Small Businesses

Hire an accountant and likely a bookkeeper too. If this is the only thing you take away from this article, it would still be a valuable read. Hiring an accountant is THAT important to your business. Don’t rely on Quickbooks or your friend’s mother-in-law, unless she is a CPA. You need a trusted professional who can help you navigate your cash flow statements, ensure you maximize your cash flow, and help you craft your business growth strategy. If you are saying to yourself, “I can’t spend the money on an accountant or they are too expensive” then you either need a new accountant because the one you have is not helping you, or you are being penny wise and pound foolish.

Know your numbers. The first step toward better cash flow management is to know your numbers so you can perform a cash flow analysis. “Know your numbers” may sound cliché, but it is so critical to your success or failure. You have to know what costs you have in your business—the fixed costs (salaries, rent, debt service, insurance, vehicle payments, etc.) and the variable costs associated to your products or services.

If you use an accounting software—or even better, if you work with a CPA like we mentioned above—you should be able to get an accurate breakdown of your cash flow sources and uses in a cash flow statement.

We all go into business for a completely different reason than “know your numbers” but that does not mean we get to ignore them. If you do your business will most likely fail despite your best intentions.

Estimate, track, and forecast. By looking at a cash flow statement, you can see if you are accurately marking up your products or services to cover the overhead expenses of running your business. Here’s how you determine the accurate markup:

Add the fixed cost of all recurring monthly expenses to get the total monthly cost. Multiply by 12 to get the Total Annual Expense of those fixed costs.
Determine what the estimated Total Annual Revenues will be for the year.
Divide the Total Annual Expenses by the Total Annual Revenues to get a percentage.
That percentage is how much of each dollar you sell will need to go toward paying your fixed overhead expenses. If you add that percentage to every product, project, or bid you will break even and have no profit at the end of the year. What amount or percentage you add above that is what your profit will be.

The next step is to track your cash flow. This is especially true in businesses where costs can change. We specialize in working with construction and manufacturing companies, and their project costs can shift quickly and often. The same could be true for a restaurant, if the prices of ingredients suddenly skyrocket due to a shortage. Tracking your cash flow on a daily, weekly or monthly basis (depending on the nature of cash flow in your company) helps you stay ahead of any potential cash flow issues.

Download our free Cash Flow Tracker Tool.

Make sure to get the Cash Flow Tracker Instructions too.

Finally, when you have a history of cash flow tracking and analyses under your belt, you can start to forecast or predict your cash flow, which is the key to making an effective cash flow plan for growth. You now have the ability to run your business and make good decisions in the moment but also proactively. Decisions like when to buy new equipment, bulk order supplies when there is a good deal, take an owner’s distribution, hire a new employee, give bonuses, etc.

Have an emergency fund. Free cash flow is cash that you do not have to spend on overhead and that you could re-invest into the business. This is the ultimate indicator of financial health. Most accounting professionals recommend you keep three to six months of working capital in reserve. If this seems daunting, start small. Sit down with your cash flow analysis and determine what percentage of your cash can be saved. Then continue to save that percentage even as you grow.

Negotiate terms with suppliers. If you need something, you NEED to ASK for it. Remember that the customer/supplier relationship works both ways. You need their products; they need you to stay in business and keep paying them for product. If you need credit or extended payment terms, you need to ask for it. Get them invested in your success by sharing how the new terms will help you grow and order even more.

Get paid on time. The best way to avoid a cash flow shortage is to get paid when you expected to. In construction, the wait to get paid is often 60 days or more. One easy way to keep cash flowing in is to create a process around submitting invoices so that they are correct and on-time. It can also be helpful to setup reminder emails to clients if you have extended terms of payment.

Why Do I Need a Cash Flow Plan for Growth?

Growth phases are one of the most exciting but also most vulnerable times in a company’s life. Having a cash flow forecast built on solid cash flow tracking will help you determine how much extra you need in order to meet your growth goals. If you plan to grow by 25% next year, a cash flow plan will help you break down what that growth will do to your overhead and other expenses, and how much of your free cash flow can be utilized to cover the cost of growth.

There’s nothing wrong with taking out a loan to grow, but it should be part of a comprehensive financial plan that supports your growth without accumulating too much debt or the wrong kind of debt.

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The Top Manufacturing Jobs You Should Start Hiring For

“We’ve been seeing a positive shift in volume and level of the positions that our clients are hiring for right now, and so we’re learning quickly how to navigate the current talent pool, and discover what skills and talents are making the most sense for the current state of manufacturing.” Says Brian Fowler, CEO at Skye Recruitment Solutions. “it’s especially important now, as people are searching for their own job security, that you dive deeper into finding the right people for your business plans, source strategically, and understand the market.”

Here are some of the hottest jobs we’re seeing in manufacturing today:

Plant Managers: $58k – $185k/yr

Why now?
- With recent changes in the expectation of quality, productivity, and safety inside manufacturing, there is a growing need for people who are responsible and experienced enough to ensure things stay aligned in the right direction, while continuing to push operations forward post-COVID.
Who’s standing out?
- Skye Recruitment Solutions says the best placements made have been people who are mid-career and have experience in long-range plant expansion, conversion, equipment planning, installations and purchases. Key experience in balancing budgets, a good safety record, and a solid set of references have been emphasized by manufacturers looking for motivational leadership and tightening up their plant management.
Resume keywords:
- 5-10 years in a manufacturing environment like yours, LEAN, Six Sigma, leadership, communication skills, budgeting, training, project management, plant maintenance, quality, WASTE elimination, EH&S, Bilingual, continuous improvement, safety, R&D

Plant managers have traditionally balanced workforce health with risk management and plant operations. In the post-COVID era, these forward-thinking leaders will know how to create an agile manufacturing plant— ensuring employee health and retention through automation, big data, and cobotic environments. Their responsibilities now include not only operations and talent management, but most likely a level of data analytics and industrial technology.

Automation/Controls Engineers: $58k – $120k/yr

Why now?
- Now, more than ever, the prioritization of creating a lean manufacturing plant has been brought to the recruiting table. On a daily basis, an Automation Engineer applies improvement strategies for better quality standards, cost-effectiveness and reliability. They support new product development efforts and can help to automate plants.
Who’s standing out?
- For many manufacturers transitioning to smart plants, finding people who research, design, develop or test automation, intelligent systems, smart devices, or industrial systems controls are being prioritized. Skye has found success with people who have moved into Automation roles in their careers in similar industries.
Resume keywords:
- 10-20 years’ in manufacturing. automation, robotics, design engineering, project engineering, LEAN, Six Sigma, product design, fabrication, assembly, PLC / HMI programming, electrical controls, power systems, mechanical schematics, Allen-Bradley, Omron, Mitsubishi, programming, project management, NEC, NFPA, 70E, OSHA, BSEE and MBA in Electrical Engineering

These high-level engineers will be required to develop an evolutionary plan that integrates both the physical and digital elements of a plant’s environment and production. Engineers with the skill set to research solutions, build simulations, and lead cross-functional teams to launch new digital and human applications within the plant are creating the vision for the future of manufacturing, and also leading the march toward its horizon.

Maintenance Mechanics/Technicians: $18 – $38/hr

Why now?
- During the pandemic, it appears manufacturers buckled down and maintenance roles were some of the first cut as they kept old machinery operating to save budgets. Now that demand is back up, and in some cases bigger than ever, technicians that can perform preventative maintenance as well as repair major issues are becoming a critical need.
What to look for?
- Additional IT skills, such as machine health monitoring and predictive monitoring are becoming part of the scope. Travel expectations allow for experience to move into Field Service as well for plants with multiple locations. A good work history and long-term mindset is becoming a requirement for success; and an attitude that aligns with the company’s culture, whatever that may be, is playing a major role in worker retention and quality of work.
Resume Keywords:
- 12-25 years’ of maintenance experience, troubleshooting, preventative maintenance, testing, CMMS, safety checks, pneumatic & hydraulic systems, GMP & OSHA requirements, maintenance, installation/service/repair/resolution, electrical controls, mechanical, power systems, PLC, CNC, machine repair, blueprint reading, AC & DC drives

According to FacilitiesNet, “what executives often fail to understand is that the maintenance and engineering team is the one component of all organizations that is 100 percent control of 100 percent of assets and buildings. This means the maintenance team is in control of an organization’s revenue and profits.”

Good maintenance mechanics and technicians of the post-COVID manufacturing industry will need to be prioritized inside the organization and will be looking for leadership that champions their value.

C-Level Executives $90 – $300k

Why now?
- There has been an impending wave of leadership preparing for retirement and the response to the virus has ignited the requirement for succession planning in several plants. Additionally, there’s a need for leaders that can help with evolving into automation and mass expansion. There is also hiring happening in new leadership roles like Chief Engineering Officer or even Chief Financial Officers, where these jobs were once handled under the CEO or President.
What to look for?
- Manufacturers are now searching for leadership that aligns more with their values and can adapt and evolve a company culture. They’re looking for more focused experience with growth at their pace and ideal size rather than specific industrial experience. Leaders who are articulate and collaborative, but who have grown their own career over time have seen the greatest success in getting hired with our clients.
Resume Keywords:
- Specific to the position, but typically at least 10 years of progressive management/leadership experience, proven track record of success, proactive style, sound judgement, relationship management

Manufacturing leadership pre-COVID was overwhelmingly from the Baby Boomer generation. The pandemic triggered an early retirement exodus, and that has left many companies looking for new leadership.

Hiring new members of leadership team has now become an opportunity for bringing fresh ideas and innovative concepts during a time where everything is being carefully monitored and shifted. However you feel about it, says Peper, now is not the time to try to fill two roles with one leader.

“As a business owner or leader, you must know what you are good at, and more important, what you are NOT good at. You cannot perform every executive function at the best of your ability, and if you try to, your actual duties will suffer,” he continued. “Hire for what you don’t do well, and then hire the best damn one out there.”

Hiring the Right Talent for Top Manufacturing Jobs

In March and April of 2020, 1.4 million manufacturing jobs were lost. However, a surplus of talent does not guarantee you the pick of the litter, either. Smart manufacturers will use this opportunity to develop a long-term vision for the talent pipeline, and invest time and energy in finding the RIGHT person to fill that role both for the present and for the future.

“Don’t scoop up the first person that checks the machine box, take your time and invest in learning about what’s available and what the ultimate goal of the role is, even when it comes to the lowest level hires. Retention always saves money,” states Fowler, “and you don’t need to find them yourself; but if you do hire a partner, make sure they understand your industry and the challenges you’re facing, be transparent, and communicate those goals. A true partnership can make amazing things happen for your business.”

We talk about merchant cash advances a lot. Our clients do too, because so many of them have been burned by these not-quite-a-loan financial products. Taking out a merchant cash advance when your cash flow is pinched can be the “help” that ultimately bankrupts your business. That’s not an exaggeration; there are plenty of MCA horror stories on the Internet, and we hear them everyday from prospective clients looking for a way out.

When someone who has been burned by a merchant cash advance before comes to Mobilization Funding, one of their first questions is, “How are you different?” We are happy to share exactly how we compare with “quick cash” MCAs.

Lender Versus Broker

In most instances, you don’t purchase your MCA from the lending company. You get it from a broker. This is the guy or gal who calls your business promising “quick, easy cash.”

When a broker sells an MCA they add their own markup to the deal, as much as 10% of the loan’s value. That commission becomes part of the total cost of your loan, which, in a way, means YOU pay the broker for the service of delivering you to the MCA company.

We don’t use brokers. We have strategic partners—people and companies who align with our purpose and values. When a referring strategic partner, like a factoring company, brings a client to us, we don’t tack a commission for the referring company on to YOUR loan. We send them a referral fee and a thank you, because that’s how we believe business should be done.

Basis of Funding

Merchant cash advances are basically an advance on future sales or receivables. The funding you receive is based on the average amount of cash flowing through your business’ bank account on a monthly basis (and your credit score — we’ll talk about that in a minute).

The trouble with the MCA’s basis of funding comes when a majority of the cash that comes into the business isn’t profit. If you are a commercial roofer, and your monthly cash flow shows $250,000, but you pay $100,000 to suppliers and vendors, and another $75,000 in payroll, guess what? The MCA company only cares about that first number.

We base our loan on your contract or purchase order. We sit down with every prospective client to map out the weekly cash flow of the project and review their expected margin. It’s important to us that (1) the work gets done, (2) our client succeeds and builds on that success, (3) we get repaid.

By putting people and performance over profit, we can protect our business AND our clients. That’s something merchant cash advance lenders just can’t say.

Personal Credit

We don’t check your personal credit. Merchant cash advances do; they have to, because they base their approval on it and if your business defaults, they want to be able to come after your personal finances as well.

Worse, if a broker is shopping your advance around to several lenders, they can each run your personal credit report. The inquiries alone can negatively impact your credit score.

Cost of Funds

Merchant cash advances do not have “interest” rates. Instead, they have a “factor rate” applied to the loan. The factor rate is a percentage of the borrowed amount, and the percentages vary widely from high single digits to as much as 50 percent or more. That is why a $200,000 merchant cash advance on average is almost three times the cost of a Mobilization Funding loan.

Repayment Structure

Look at that chart again. Merchant cash advances are almost always sold with a daily or weekly debit from your account. That debit typically starts right after funding is received (the next day or possible the next week). A daily debit from your account might be fine if you are a popular restaurant or retailer, but it is almost always a problem for construction and manufacturing companies. Your cash flow cycles simply do not support a daily debit and likely even a weekly debit.

In construction and manufacturing, businesses wait to be paid between 30 and 90 days after they submit an invoice or pay application to their customer, typically at least 30 days after some portion of the work has been completed. That means contractors and manufacturers are perpetually in need of cash to mobilize on each new project, but won’t be paid for the work for at least 60 days. That is not a cash flow cycle that can support a daily, or even weekly, draw on your bank account.

Our CEO Scott Peper puts it like this, “If you have money coming in daily, you may be able to handle a daily debit. If you don’t, you can’t.”

MCAs are based on future sales at a pre-determined factor rate, so it’s actually more expensive as it relates to an annualized interest rate to pay them off early and no benefit to you. (It is possible, but very rare, to find an MCA that offers a lower rate for paying it off early.)

Merchant Cash Advance or Mobilization Loan?

The answer is clear.

We put a purpose behind our business, “to help those we come in contact with.” If our loans aren’t the solution to your needs, we will help you find the right loan provider. If you have questions about how our loan works, we will answer them openly and honestly. (We have several videos on our YouTube channel addressing common questions about our loan program.)

It is our goal to arm you and every member of our community with the information you need to make smart, strategic decisions. When it comes to merchant cash advances, the smart decision is to avoid them at all costs.

Start your application with just 3 questions

If there is one word Camell Williams wants you to get out of this episode, it is DISCIPLINE. Camell is the CEO & Founder of Prime Electrical Services, a commercial electrical contractor located in Apopka, Florida. He sat down with Scott to share his journey from student to contractor to business owner, and why he is still a student of the craft. If you are a construction business owner or a contractor who wants to be a business owner, Camell’s wisdom and stories can save you years of headaches. Camell believes in investing in his team, that business IS personal, and that the best thing you can do for your own success is be humble about what you do know and what you don’t.

Full Transcript Below

Scott Peper 0:38

Everybody. Good morning. Good afternoon. This is Scott peeper with mobilization funding. And I am really excited to bring our second Real MFer series to you guys, and one of my favorite guests. Today I’m going to share with you all his name is Camell Williams. He’s the president, co-founder of Prime Electrical Services Inc, out of Orlando, Florida, and has been a client of ours and become a good friend, and someone I really look up to and admire what he’s done in accomplishing his business. I’m really excited for him to be able to tell his story today. Camell. Welcome.

Camell Williams 1:11

Thank you, Scott. Appreciate the opportunity. How are you?

Scott Peper 1:13

Good. I’m very good. If you don’t mind, Camell, I think what would be good for everyone is to know just a little bit about you your background, how you landed in Florida, where you’re from, a little bit about just the general basis of Prime Electrical Services so folks can understand a little bit about your business, size wise people, etc, that we’ll dive into some questions and go from there. You know, we can tell lots of good stories.

Camell Williams 1:36

Okay, Scott, thanks. My initial visit to Florida was probably back in 83. 81. I’m sorry, I came down here to Florida Memorial University, I went to be what they have participate in HBCU. I just had to have that HBCU experience came out Florida Memorial. Went back to Detroit, late I’m originally from Detroit went back to Detroit. And I gotta tell you, that’s important to point out. The reason I left Detroit because I was determined not to work in the automotive industry. I came down here, got educated about my path and electrical industry and ended up back in Detroit, working in the automotive industry, but on a different level. I mean, I wasn’t on the line, I was working as an electrician there. And it was a great opportunity. I later came back down and I want to say 2006 decided to plant my roots here and started Prime Electrical Services in 2008. Great opportunity. work was growing, everyone said that time is important. I paid one cent of that time. And it was the worst possible time to start a business. This was 2008. But in my opinion, it seemed like the best time because no one was building anything new but everyone was repairing. Hence the name Prime Electrical Services I focused my business specifically on service work being and that was my niche to get back into the electrical industry and own my own company. From then I was in Lakeland, Florida back in 2008. I moved to Orlando and is where we are right now, in Apopka Florida.

Scott Peper 3:21

You mentioned that you definitively knew you didn’t want to be in the automotive industry. But did you know what industry you want to be in? And how did you ultimately decide on construction,

Camell Williams 3:29

You know what it was, I knew I wanted to be electrical as I told you before, my uncle was a master electrician and on weekends and on summer vacation. My mother I was one of those children that my mother say do something with them, take them out and get them out there. So he would take me out in the electrical industry. Now it’s important that I tell you this when I started construction first my father — my grandfather was a mason and he took me out one weekend and brought me back in and told my mother keep that boy and in school. Wait I don’t want him on my job. When my uncle came along and I found that in the electrical industry It was a chance for me to not only use my love for math and my hands on experience but but to build something and be able to turn the light switch on and see the after effects and then made a difference to me and that’s what I focused on. And I knew it was it would be electrical industry.

Scott Peper 4:26

It’s funny you get a lot of experience from your, the people you’re surrounded with the most all throughout life particularly younger, you know spending that time with your uncle, giving you the guidance and instructions. You know, what else did you learn from your uncle aside from just wanting to get into construction?

Camell Williams 4:41

He taught me to approach everything optimistically and to think about it again. My uncle was also an instructor electrical instructor. So we not only taught me to trade but he taught me how to think in a trade because that’s what we need is to I just needed someone to directly in between he and my father kept me thinking He taught me to understand the business. Because he wasn’t a, he wasn’t a business owner, he worked for another electrical contractor. In fact, he worked for one of the first black electrical contractors in Detroit. And that guy was phenomenal. So just being around him seeing him raise my level to know that that’s exactly what I want to do at some point.

Scott Peper 5:23

That’s really cool. One of the things I heard you said, I really want to point this out to the audience, I think is important. And you mentioned 2008. And everyone told you was the worst time and not the time to start, but you thought it was the best time. And I can hear in your voice and knowing you a little better, but especially now hearing you talk about your uncle, that positivity and wisdom and guidance, I think he instilled in you also helped you see opportunities and see the playing field differently than other folks that are even that even though they’re telling you this is terrible, don’t do it. This is the worst comedy, don’t start the business, you found a way not only to add value, but really drive a new business and create a culture around success. And I think I think it’s important to point that out to the people that are listening to this, if you didn’t hear that subtly. That’s the key is how your vision of it is not what everyone else’s vision of it as well.

Camell Williams 6:14

It was the long term visions, but I had, and trust me, it was a hard sell. Imagine telling my wife that, in the middle of this worst time, in a long time, I’m going to start my own business. But my focus was that this business 2008 is going to cause a lot of businesses to fail. I realized that, and the market will pick up in three to four years. And if I started right, then three to four years later, I’d have history. So now when I walked into a general contractor, and asked him to give me opportunity, I wasn’t just starting, when times were good. They can look back and say well, these guys have been in business for four or five years, he’s lasted this long, he made it through 2008 910. Granted, it was small, the smaller number I say small numbers, they were decent numbers. But compared to now, they were much smaller numbers. But I survived it. And I learned a lot. What I didn’t prepare for during those times was their banks were not loaning any money, there was very little capital available and nor was I in a position to to go after it. So the struggle was real. It was real. But the goal was to survive. You know, my, my uncle, as well as a guy I heard from several years later, made a statement to me. And they said, it’s not how well you perform your craft. But it’s how long you can withstand the politics of your industry. And I never forgot that. So I knew if I got into it, dug in deep and stayed there, and eventually reached some success.

Scott Peper 7:48

That’s excellent advice. Just Just keep going. Be consistent with your energy and your efforts and your strategy and make the adjustments when neat when you do and continue to evaluate and innovate. But keep going on work in your favor. You know, it’s a great segue into something else I want to talk to you about. And I think you’re really uniquely positioned to talk about this, from all the reasons just mentioned. But you know, construction is a tough, business overall. And electricity and electricians are even even a tougher portion, depending on different scopes. And I think you’ve done a good job with your folks, both instilling a culture and managing those attributes. Can you talk a little bit about how you do it, and how you manage that and how you help your employees?

Camell Williams 8:32

Yeah, my focus, I have one word in my company. And I always say discipline, stay focused and stay disciplined. Because you’re right, the electrical industry is is a tough industry, because we are not just required. When we look at blueprints, to understand the electrical side, we have to understand the AC side, the plumbing side, we need to read architectural drawings, we need the fire alarm joins, because all these things that tie into our system, you can take plumbing and plumbing as a standalone system HVAC a standalone system, electrical, we need to either put power on those flushable toilets or put power to HBCU. So my team has to have the discipline to not just look at the electrical drawings. But every drawing is sitting there. So I hold them to a higher standard. It’s not always easy, because some guys want to go in and put a switch in and trust me Scott, I have my share of guys who come in and say I’m a journeyman electrician, because I know I lie at my grandmother’s basement, and it works just fine. So I have to deal with that. And I have to always bring them back to discipline. You have to make sure you become student of your industry student of your craft. You know and you hear me talk thru this conversation. I’ll use two words, electrical and contracting. I talk about electrical and focusing on the industry itself. And you and my technicians like field, they have to be students out there, that they keep current with the technology because it’s changing, it evolves. So what I’ve focused is just keep learning, keep growing, and stay disciplined, and you’ll be a great electrician. And that’s been the secret to my success and maintaining adequate personnel in the field.

Scott Peper 10:20

You’ve now taken that discipline, you’ve you’re teaching to it, you’re educating to it, you’re building it into your safety programs. I happen to be in and out of your office and talking to you all the time. And I know what kind of systems and processes you have, and all that stuff isn’t an accident. But not everybody can instill those are no to know how to and if you were going to, if you were going to counsel, a newer entrepreneur, starting not only just a typical business, but any construction business, what guidance would you give him around how to take what you just talked about, but instilling that into your team.

Camell Williams 10:51

I always tell my guys, I got three As that I deal with attitude, ability and attendance. And if you have any tour boats, I can help you get the last one. So when I talk to my team, I try to stress that they find something that they love. And master this, kind of do what you like, want to run conduit, continue to run conduit, if it’s why you like. But know the industry, focus on what you really love. From the administration side, I tell them to constantly learn, constantly go to — I put all type of financial aid programs in place, I have several of my members have their master’s degree that we pay for I have several members of bachelor’s degree that we paid for, because I stress high on learning. Again, it’s all part of that discipline. Scott, I really believe that my goal should be to teach my team everything they need to leave me, but treat them well enough so that they want to stay. That’s the only way I can succeed.

Scott Peper 11:55

I mean, did everybody just hear what he said, and that is so powerful come out and you couldn’t want I couldn’t agree with you more. And I think discipline is how you started the conversation. But what you build on right there, and particularly the three A’s if you have attitude, ability, and attendance, any two of those, you can teach the third. And that’s those are core values that you really instilling in the fact that you focus on continued learning and higher learning. I mean, I just think that’s so important. I just want everybody here, listen to listening to this and really pick that up. That’s a key thing. How do you talk about how do you bring that into the day? You know, I know you didn’t just have one meeting and bring that up? How do you incorporate it, incorporate that daily, weekly, monthly with your team?

Camell Williams 12:36

I tell them when they when they walk in the door. And it’s real important, we try to teach my team to be independent thinkers. Because ultimately, in order for me to move my business to the next level, I need to be in a position where I can trust my employees to do exactly what they’re supposed to do without coming to me. So I try to explain to them and every time if you bring a problem to me, bring to me a potential solution. That means I’m forcing them to think of think about what needs to happen, and to utilize their skills and let them know that their opinions are very important. I don’t want them to appoint me make a decision. I have consistent meetings with them. I consistently try to guide them. But I tell them, if in doubt, if there’s any concern. And I don’t want to sound selfish when I say this, but I said there’s any concern with this building, there’s two things you need to remember it’s the decision you make going to make prime electrical money, or is it going to save prime electrical much, you have to fall into one of these categories, because ultimately, this is a for profit business. And the stronger the company gets, the more I can give to my team, the more I can help them grow, the more I can put into their education, the more I can put into that bonus structure. So as long as they continue to think, make decisions themselves and I keep reminding them that these are the key rules, save the company money and make the company money — it helps them grow. That’s how I do it on a daily basis.

Scott Peper 14:08

Awesome, man. I’m so glad you shared that is the key and focusing on the time you spend with them and making a quality time and empowering them. I think you’re gonna hit your goals. That’s why people do stay with you because they they want to, not because they have to or need to.

Camell Williams 14:24

Well and it’s difficult and in a small business. Some of the challenges got I don’t know if I’m getting ahead, but it’s important that I focus on some of the challenges we have in order to competitively keep your team an owner has to make sacrifices. Prime Electrical Services offers 401 k which is a barrier and we have a very aggressive matching program. We offer major medical, we offer health and wealth. I mean we offer a lot of things that small businesses typically shy away from because they just plain and simple can’t afford them. But in order to get the quality talent you need in order to give your people our home and Let your people know that you’re concerned about them and you care about them, you have to make the sacrifice. Now that means taking less home, what you’re building a team that’s going to stay with you. And that’s committed to growing with you because they understand your sacrifice. So it’s all necessary.

Scott Peper 15:18

I couldn’t agree with you more, let me transition a little bit with you. You’re a business owner, you’re an entrepreneur, you’ve fought the fights and struggles. You’re also an African American doing in this world. And I think there’s different challenges that are out there. Some are well known Some aren’t. And I think you navigate those so well doing it. And I’d like you to talk a little bit about what you feel are some of those challenges that you’ve had to overcome and how you’ve done it and how you’ve utilized your your own abilities and skills to survive and thrive. And what you would suggest other young, African American entrepreneurs what they can do or should do, or how they should think about that to get to a point where they can be successful and thrive with what’s out there available.

Camell Williams 15:58

If I had to sum that up, Scott, I would say, first of all, surround yourself with people smarter than you. It’s really important. As an African American, our biggest problem you can, I have to be transparent here, is we don’t have generations of running a business of doing this with first generation, or second generation. I talked about my grandfather being a mason, a brick mason, but he never dealt with the volume that we deal with here in today’s society numbers are, I mean, he never would have thought his grandson would be doing tech work that I deal with. So we don’t have a father or a grandfather someone to go to for our business needs. My uncle was able to teach me the trade but not the business at the learn that and that’s still surrounding myself with people smarter than me, that’s the first thing, find other African American businesses and have an open forum be in a position where you guys can regularly meet and talk. That’s the other side. Third, which is which is really important, is, I think, the most underrated positions in in business, then again, when you’re dealing with limited capital, you tend to not spend money on things you can’t see, things that you don’t realize you don’t think are important. And that’s accountants, you have to have a good accountant. And that’s, that’s invisible to most people. They buy QuickBooks, and they log on and they put in a few numbers, and it spits out the results. And they think they’re cons. And now you need a trained professional.

Scott Peper 17:33

Camell, you bring up your points that you talked about and surrounding yourself with smart people, talented people, different experiences, meeting and talking with others, finding your accountant in the CFO. And then of course providing capital, the one thing that’s in there that I think a lot of business owners, African American, white, Indian, I don’t think it matters any, I talked to all different types of business owners in this particular setting. It’s pride. And you know, you’re a prideful person, but you don’t let your pride get in the way of just straightforward, realistic conversations. I mean, just listen to what you just said just now. And I think getting out and surrounding yourself with smarter people. It shows your confidence level in yourself. Because you know what you know, you know what you don’t. How did you learn those things you provide it? Or how do you? Where did you get that from?

Camell Williams 18:31

Scott, I’ll tell you a lot of it was trial in there, I can say you might have heard me say this before, I probably couldn’t find anyone out here who has made as many mistakes as I’ve made. Because I went out and listen to the mass. I mean, I attended every outreach, every event, every small business seminar that I could go to. And what they would always tell me is, these are the things I needed to do in order to be successful. What they didn’t understand, and what’s most difficult is the people that were talking to me, were not business owners, they had never been business owners, they had never had to make payroll. So here’s what happens. And a small business, you start you have a good credit, you build your credit to that point. And you’re ready to go off on your own. Well, what happens as you go on business, the first thing you have to do everything that you buy, you have to sign for personal, which means multiple inquiries on your credit report, multiple inquiries, and every time you get an card, that credit goes down. So now you’re in a position where you got your new truck that you started for. And you had a great new car. You got your lease building that you signed for you got your accounts with all your vendors that you signed for. And your credit just went from 700 down to 580. Just because of inquiries you pay your bills on time, but now your cash flows. So at this point, you got to walk into a financial institution. Why do we think we got to go to SBA bank and they’re going to give us all the money we need because that’s what they said at the seminars. You walk in that bank, and that guy pulls your credit and says, You know what? You’re back from your balance sheet your credit, we’re not going to loan you money. And you, and at this point, it is too late. So what do you do? You answer that phone call. Someone said, Hey, we’ll loan you money right now today on your receivables, we will give you cash right now. And you take it and it starts a downward trend. All now you had good intentions when you started this. So that’s the cycle that small businesses, and primarily African American businesses, go through. So when I say you have to put your pride aside, you have to realize that business is very personal. And everyone says Nah, no, it’s not personal. It’s just business. No, business is what feeds your family. It’s what pays your mortgage, what pays for the car your wife drive, but it’s good as your children go to? Now you have to ask yourself is your pride worth sacrificing those things? When you realize it, you realize No, it’s not in my business, to me is very personal. So I have to put my pride aside and go in there and learn all I can learn, grow with these people follow their advice, my opinions matter when I get back in my office. But when I walk in their office, their opinions are only thing I need to focus on. That’s part of my growth. And I did it the other way it didn’t work.

Scott Peper 21:24

So you just said something that I think I really want to make sure everybody hears is tying those decisions and your pride and discipline to something that’s most important to you. And what’s more important really than family. When you when you link those two things, from a business perspective to those decisions you’re making are for your family, how are they going to impact your family, you’re going to make better decisions, you’re going to drop your pride. I think everyone listening to this, if you don’t take anything else from this call today, I think that might be the most powerful thing you said already. Because you’re going to make better decisions, when you’re thinking about it from your wife, your children, your other family members, you’re going to you’re going to you’re not going to let pride get in the way.

Camell Williams 22:04

And one other thing that it’s really important. It’s so intimidating, walking into financial institutions, because there’s no secrets, they don’t leave anything on the table they want to see are your pay stubs. You know what you paid what you spent on dinner last night, I mean, they turn, they turn to you. So it’s a lot easier to do that to someone, you can put a name to the face and who’s willing to talk to you and say I need this. Because this and I need this because of that. And it’s a little less intimidating when you do that. Just imagine buying a house 10 times over. That’s what it’s like when when they get a loan your money in it, and it can be exasperated, really can.

Scott Peper 22:45

You’ve talked a lot about really good topics. And I’ve tried to focus people on those specific things. But is there is there one thing that you believe really separates a contractor success or failure?

Camell Williams 22:58

Yes, knowing your business and mastering the ability to balance your business. There’s two ways that a contractor can fail. One is by under eating, or starvation. The other one is overeating. I mean, and those are the two ways and so you have to get a balance, you have to know when to say no to a job. When to move forward with the job, you have to truly understand your financial numbers, understand whether or not you can finance this job, whether your forecasting is correct. And you have and you have adequate forecasting. I mean, those are the things that I would tell any small business don’t just go and I’ve seen it happen 1000 times I got a $2 million job. And this is going to change the company. Well, maybe so but once you do your due diligence and realize that three months down the road, you’re going to be out of money, and someone else would be finishing this job. So I stressed it to everyone know your business and balance your business appropriately. Know when to say yes. And when to say no.

Scott Peper 24:06

It’s great advice. I’d add one thing to that too. I want to make sure people know that. I myself in this business. I don’t I’m not the person that is the best at finance and forecasts and understand a business. I have a fantastic partner and a CFO. That hands me those tools. And when I see them in a format. I know how to make those great decisions that way. But you don’t have to be the chef. You just have to know how to evaluate the plate at the end.

Camell Williams 24:33

Absolutely.

Scott Peper 24:35

I think what I want to make sure is the connection. You don’t need to go to accounting schools, you need to just find somebody that can give you the information you need in a simple easy format that you can make decisions off of.

Camell Wiliams 24:45

And follow their advice and listen to them. You know that that’s again, that’s what your pride as we put aside, you have to listen to them. You brought them there to give you the best advice and it means nothing if you don’t listen to it.

Scott Peper 25:00

Last question for you. Is there one thing you wish you knew if you go back to the very beginning, and think about anybody that’s out here now starting their business there one thing you wish you knew or you wish you were told that you hadn’t addressed today, or that you just want to highlight from something you’ve already talked about today. That’s the one thing you wish you knew in the beginning that you know, now, maybe we save somebody some years of headache.

Camell Williams 25:22

Man, I’ve had this conversation so many times, and I’ve talked to people and I would think that seriously when I walked into it, if I understood that being good at my craft, would not ensure success in me being a contractor. I wish someone had explained it to me, someone had said, because I felt so much you risk, I felt that I was the best electrician out there, which means I’m going to be a phenomenal contract. And for several years, I ran my head into this block wall thinking that my skill in the industry would make me a success in business. I wish someone had sat me down and told me no, please become a student of your business. As much as you are student of the craft, become a student of your business. Surround yourself with good people have no I’ve said that before, but I can’t repeat it enough. Surround yourself with people who know more than you take the time learn and grow but understand your business. And no one told me that I never knew it. I thought I can buy software that could do it all for it didn’t work. So I found out that do the hard way,

Scott Peper 26:35

I’m gonna leave it there. I don’t know if I could improve on that any better. And I just want to tell you again, thank you so much for taking the time, the effort, the energy to share your stories, your honesty, your discipline yourself and what you’re doing. I think we certainly help people today if, if there’s anyone out there that’s listening to this, they’re going to get least one or if not more things from this conversation we’ve had and your honesty and your ability to share it and talk through it. I know people are going to be better off and I just want to say thank you very much for doing that.

Camell Williams 27:08

Scott. It was my pleasure. Thank you very much for having me.

Scott Peper 27:10

Well, everyone, I hope you guys enjoyed this time. If you have any questions you need anything, you can always find this on our YouTube channel. You can always find this on our website. There’s tons of resources out there that are all free to you. You can download them you can get them there’s cash flow models, all kinds of stuff about business construction topics that we provide totally free to you just on our website on the resources page. So feel free to go there. Thank you again canal. I appreciate it. Everyone have a great afternoon, evening or day. Take care.

Transcribed by https://otter.ai

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Merchant Cash Advance or Mobilization Loan?

The answer is clear.

Start your application with just 3 questions

Download Our Cash Flow Tracker Tool
(Don’t forget to get the instructions,too)

Download Our Cash Flow Tracker Tool
(Don’t forget to get the instructions, too)