A strong team is one of the best investments you can make in your construction business. Competing priorities, hard deadlines, physical labor — all of it is easier when you are all working together as a team. A strong team will rise to challenges, overcome difficulties together, and GROW together. Surprisingly, building a winning team isn’t just about hiring the person with the most experience. You have to sit down and plan out your team building strategy with intention.

And it starts with a little introspection.

A tale of two owners.

Mike and Joe are both construction business owners. Mike runs a mid-size commercial and residential HVAC company, while Joe’s specialty is concrete. They’ve known each other for years, have helped each other over their careers, and even get their families together on the weekends.

One afternoon, over beers and burgers in the backyard, Mike tells Joe he’s planning to put more focus on commercial HVAC installations, and that he’s excited to roll out the plan to his team.

“They’ll hate it,” says Joe. “They hate anything that sounds like more work.”

Mike frowns. “Not my team. They’re usually onboard with our goals because they know it’s good for them, too.”

Joe shrugs. “I can’t get my guys to do anything but fight.”

Mike pauses for a minute, then looks Joe in the eye before saying, “Sounds like the problem might be with you.”

Read more about Becoming a Purpose-Driven Leader.

Building a winning construction team starts with you.

Joe assumes that his guys won’t work hard for him because there is something wrong with them. The truth is most people will work hard if they believe in the goal, if they can see their own growth in that goal, and if their leader inspires and empowers them to believe in themselves.

To build a construction team that wins, the first step is defining yourself as a leader. You need to know yourself—your values and principles and purpose—so that you can look for those same values in others. You don’t all have to be exactly the same (diversity is an important part of a healthy and productive team) but you should have a bedrock of shared values to stand on.

Mike encourages Joe to get a journal and answer these questions. (And we encourage you to do this exercise, too!)

• What do I believe in?
• What do I stand for?
• Am I living up to the standard I want from myself and others?
• What are my strengths?
• What are my weaknesses?
• What kind of culture do I want to work in?
• What is my purpose in going to work every day?

Joe sits with these questions for a few days, and ultimately comes to a powerful realization. His core values at home—respect, honesty, ownership and giving 100% to every job—are not alive in the shop. He hasn’t been setting the standard he wants to see from the men and women on his team.

“I’m going to talk about our core values at our next company meeting,” Joe tells Mike the next time he sees him.

“That’s awesome,” says Mike. “Once you’ve got your people with you on your core values, you can start setting goals that all of you can get excited about.”

“Isn’t making more money the goal for everybody?” asks Joe, half-joking.

“Ah, young Jedi,” says Mike. “You have much to learn.”

Read more about Making Core Values Part of Your Business Strategy.

Setting goals with purpose.

Without a purpose behind your goal for more money, your team’s enthusiasm for hard work will fade like a flame under glass. And without a purpose for that new revenue, chances are you won’t make the necessary changes in your organization that will make the money feel more impactful.

Goals need a purpose or they’re not really goals. The adage that “a goal without a plan is just a wish” is true, but it is also true that a goal without a purpose is just a task to finish. It doesn’t inspire or motivate.

Once you have a purpose for your growth goal, your next step is to lay out the roadmap for how you and your team will reach it. If you don’t have all the answers, that’s okay. That’s actually great — bringing your team into the planning process can help them buy into the plan earlier and with greater intent.

Lastly, make sure that your goal is big enough that each of your team members can see their goals fitting inside yours. Joe knows that Natasha, one of his estimators, is really interested in accounting. He thinks about how he could use some of the additional revenue to help her get certified in accounting. It would be great to have someone in the office who understood cash flow better than he does . . . and it would give her an exciting new role in the company.

Read more about Setting Purpose-Driven Goals.

Hire what you can’t do.

Mike and Joe see each other at a networking event a few weeks later, and Joe shares how excited he is about the recent changes at his company. “My only problem,” he says, “is all of these changes need to be processes, systemized, so that we do them every time the same way every time.”

Mike nods. “You need an Operations person.”

Joe rolls his eyes. “Do you have one?”

Mike nods again. He winks at Joe and answers, “I do. And a CPA. And a Marketing Coordinator.” He looks at his friend and offers him this advice, “Hire for the things you’re not good at.”

Joe considers this. And you should too.

Nobody is an expert at everything—that’s why they’re called experts. And some of us have personality traits or inherent gifts that make us naturally better at some tasks than others. Listen—not being good at something doesn’t make you weak. Not hiring great people to do the things you’re not good at? That will make your company weak.

Joe hires an Operations Director, and a CPA. The Operations Director puts together a book of processes and a training schedule for new team members. Now things are running smoothly and scaling the company’s growth becomes easier.

Bonus — Joe is delighted when the CPA says she’d be happy to mentor Natasha so she can take over more of the day-to-day financial management of the company.

“Now you’re cooking with gas,” Mike says. “Time to start hiring new recruits. Have you identified who on your team will mentor them?”

Joe pauses before answering. “I was thinking about Nate. He’s been with me the longest. But now that I’m thinking about it, he can be a bit of a jerk. I don’t think he represents the way I want new people to behave.”

Mike claps his friend on the shoulder. “Now you’re getting the idea.”

Start from a foundation of teamwork.

It’s a natural assumption that your senior members can and will train new recruits, but that only works if your senior members are good teachers and good examples of your company’s culture.

That starts, of course, by hiring people who align with your core values. And if someone who is already on your team becomes a bad apple in the bunch, you may even have to let them go. That’s a tough pill to swallow, but culture and core values are too important to success to let someone ruin all your hard work.

Once you have your senior construction team aligned around your company’s core values and mission or purpose, the next step is identifying who among them is the best choice to mentor new team members. Not every rock star worker likes the idea of teaching others, or even has the aptitude to do so effectively.

Joe thinks about his team, watches them interact with each other and customer, and finally decides that Thomas, who has only been with the company for two years but is definitely a rock star employee, is the right person to train new people. Thomas is thrilled at the chance to represent the company, and turns out to be a natural mentor and teacher.

Thomas also gives Joe a piece of feedback that turns out to be a gamechanger. “Some of the new people that have been paired up with Nate say he’s really hard to work with.”

Joe shakes his head. Nate, a great worker, is becoming a real problem on the team. “Why aren’t they saying anything to me?”

Thomas laughs. “You know how it is. They’re afraid.”

Joe sits with this for a while, and realizes he still has work to do to build his winning team.

Create a culture of communication.

Toxic culture behaviors like bullying and gossiping destroy companies from within. Your best people will leave if they feel like they’re being disrespected, and it will become harder and harder to find new team members.

Culture is a hiring differentiator, and it is also part of a health and wellness strategy at your company. When people feel like they can’t talk to their peers or their leaders, they bottle up stress and hide real issues that can affect their performance, sometimes even their safety.

To change the culture at your company, you need to model good communication behaviors. That means actively listening when others are speaking, and speaking from a place of confident vulnerability. It means focusing on solutions rather than blame when something goes wrong, and taking responsibility for the actions of all of your construction team members.

Joe meets with Nate and has a frank, honest conversation with him. Nate shares that he’s struggling with depression, that he and his wife have been fighting, and that he feels like he should be doing more for his family.

Joe has known Nate for years, but this is the first time they’ve ever had this kind of conversation. He recommends a counselor for Nate, and they schedule weekly check-ins. Finally, Joe and Nate build a plan for Nate to become a mason and an estimator.

Joe knows Nate is a good person and a great worker. He invests in him because he believes in him.

And that is the final lesson in building a winning construction team — invest in them.

Invest in your construction team.

Toward the end of the year, Mike and Joe get together and talk about all the changes, successes, setbacks, and growth both their companies experienced.

“I’m taking the team to a zipline course and then out for dinner,” says Joe. “They’ve busted their asses this year, and they deserve acknowledgment of their hard work.”

Mike looks at him over his beer. “I’m impressed. Actually,” he says, and looks a little sheepish, “I hadn’t even thought of that. We usually just have a little champagne toast in the shop. But they deserve more this year.”

Joe smiles at his friend. “The student has become the master.”

The reality is that Joe has already been investing in his team, by including their goals in his company’s goals and helping them find paths to fulfill those goals. Natasha is going to school for accounting and is now full-time running the books at his company, and Nate is like a whole new person. He’s kept two superstar employees because he took the time to invest in them as people.

Your construction team needs and deserves acknowledgement, both as a group and individually. Some folks are fine with a “Good job” once in a while, and others may prefer a more formal recognition. If you’re spending time investing in them individually, you’ll know the right strategy for your team.

You can’t underestimate the power of the little things. Coffee and bagels may seem like nothing, but it lets your construction team know you were thinking of them. Gas cards, company lunches, even something as seemingly small as a birthday card—all of these are little investments that go a long way toward making your team feel and act like a team. 

Joe gets the proof of his new company strategy when a client tells him, “Everyone at your company is helpful, friendly, and positive. We always know we’re in good hands with you guys. Even if something does go wrong—and let’s be honest, it always does in construction—we know we can count on your team to be part of the solution, not part of the problem.”

That’s the biggest win of all in Joe’s book. And of course, he shares the email with his team. It’s a win they all deserve.

If you like what you just read, consider joining our Do Your Part mission. We’re “doing our part” to change the construction industry–for good.

Cash flow can make or break the success of your project. It can empower your team to succeed — with the right amount of labor & materials available at the right time — or it can cripple their performance.

Mobilization Funding CEO Scott Peper knows the power of effective cash flow management. Since 2013, he has walked contractors through a cash flow exercise to show them exactly how much cash they need on a project and when they need it, transforming how they think about cash on the project and how it propels their company’s growth.

Now, we’re bringing that exercise to you.

CASH FLOW MANAGEMENT: BID TO BUILT

This is the ideal webinar for construction contractors, manufacturers, and any business owner who struggles with balancing cash flow in their business.

WHAT YOU WILL LEARN:
1. Why mapping out a project cash flow on a weekly basis BEFORE THE WORK starts can improve performance and profitability on every project.

2. How to use our Cash Flow Projection Tool to estimate and track your project’s cash flow.

3. Why effective project cash flow management is the secret to organizational growth.

Cash Flow Webinar Transcript

Autumn Sullivan 06:49

Let’s go ahead and get started. Thank you. Thanks, everyone, for joining us today, Scott Peper, the CEO of mobilization funding, is going to walk us through our new cash flow management tool and talk to you about why project cash flow management is so important how it can help managing your cash flow on a project week by week can help you increase your profit and profitability, build efficiencies into your schedule and grow your business.

Scott Peper 07:20

Thanks, Autumn. So cash flow is something that’s very important to us. And we speak about all the time here with our clients, we work in the construction world, and anyone that I assume is on this call that’s in the construction world. They don’t need me to introduce them the impacts of cash flow, why it’s important, how it impacts everybody. But what is important today is we’re going to give you a solution that’s going to give you an information and a tool that allow you to actually make proactive decisions, outline exactly what your cash flow is, and then more importantly, be able to see it in a project live. So there’s a few things here I’m gonna just my camera quick, a few things that we’ve noticed over the last seven or eight years and talking to clients is a couple main general themes. One is, clients think that they’re weak at cash flow, they don’t understand it, and there’s something wrong with them. And I’m here to tell you right now that that’s not the case, it is absolutely a function of the industry of construction. More importantly, how the waterfall of monies flow from the top of the project all the way down throughout a project. And what I mean by that is whoever’s financing it the developer, the general contractor, the subcontractors, the subs have subs, all the way through, you do all the work, first, you put a payment in, the work only gets paid for depending on what’s actually been done after an inspection, it takes 30 days to do the work because you can only do it once a female invoice once a month typically. And then it takes 30 or 45 days to inspect the work that you did. And it just takes a long time. So that is the reason for it.

Now, are there people that aren’t great at finance, that working construction? Of course, but that’s like any other industry and business. So like most other industries and business, there’s tools, there’s professionals, there’s roles and responsibilities inside the organization and outside that can help and all those are still available to construction. Now whether they’re used or not, is a different story. But we’ve created a tool. And this tool is going to add the third component to what we’ve also recognized. One of the things that becomes very commonplace that we’ve heard over the years is that we’ve noticed, if you ask any construction company, whether just sub or general contractor, they’re very good at estimating what the work is going to be. They look at a schedule of values. They can look at a set of plant I’m sorry, they look at a set of plans. They can look at a schedule, they can estimate and bid pretty accurately what their general total costs are going to be. In addition to that, they know exactly what the work schedule is going to look like. Of course it changes of course if there’s rain or delay Are other trades and things like that. But at the most part, they have pretty detailed and specific, much more so than most other industries, in my opinion of what their man hours are going to be the labor portion of that the materials, equipment, rentals, costs, they do an extensive amount of work to get bids and estimates for all those things. So they know what their total amount of work is. What I mean by that is, if you did all the work tomorrow, and it was done in one day, and you can invoice it the next day, you probably haven’t really accurate margin dollars.

The problem is construction takes a long time. So it gets spread out over a couple of weeks, or sometimes a couple of months, or sometimes a year or more. And so what we’ve done now is take the third component that’s missing from that equation and marry up, how much cash do you actually need to execute on the schedule that you know, for the expenses, any actual cost that you know, you’re going to incur? Material labor, etc. So you can see week by week, alright, how much cash do I actually need to execute this project on the schedule that I want to work it on, and for which I’ve already bid the project and one, and now you can know, okay, I’m going to need a couple $100,000 Or I need a million dollars. So I’m going to show you what that tool looks like. So it’s, we’ve created an elaborate spreadsheet that we’ve always used here internally, to figure this cash flies we speak to our clients. And what we realized is we could share this spreadsheet with everyone, and it’s on our website, it has been for years, except what we also realize is not everyone’s Excel savvy. Candidly, I’m not our CFO created this spreadsheet. I didn’t I know how to read it. And I certainly know how to input and use it. But that’s but I’m not It’s not intuitive to me until I’ve done hundreds of them. But what is intuitive? And what we can do is anyone can answer questions, we ask you a direct question, you can give us the answer, especially if it’s specifically related to your estimates, and the work schedule. So what we’ve done is we’ve created a tool on our website, on the resources page that anybody can go to you don’t have to be a client mobilization funding, you don’t have to pay for it. You don’t have to get us emailing you every other day and calling everybody in your company to use it. It’s basically we need we don’t need your email, so we can email you the spreadsheet and the inputs. But that’s the purpose of it. We’re not going to use your email to sell it market to it or anything else. Okay. So um, Autumn, what did I miss so far? Anything?

Autumn Sullivan 12:33

No, that’s a great set of I am curious how often when, when you talk to clients, how often is this the first time they’ve ever thought about their projects cash flow in this way? I mean, on like, on a weekly basis to this granular level?

Scott Peper 12:55

It’s a great question, I would say and forget, I’m going to generally speaking here, I would say 95 98% of people know the first two things, they have a great bid, they estimated it well, it had made a ton of thought into it. And it’s probably accurate. If it was one single snapshot of the world, those costs are accurate. I would say on the flip side, and same thing with the schedule, I would say on the flip side, when it marries up to okay, what’s the when I say okay, how much cash is going to take to do that? I would tell you that 98% of the folks that we speak to, and just generally in the construction world, whether our clients or not probably don’t know the answer to that question right offhand. Some measure the cash flow, but it’s more of like, Hey, I know what kind of money they have coming in, it’s across the whole business or project they don’t necessarily know as they before they start a job a project. That said, if a project is only two weeks long, or three weeks long, I would say it’s probably a little higher than most No, I need 5060 grand this week, or this month in order to do it. But when you start having to order materials, now, they have lead times on them, you have different payment terms for materials. And then when you get when they land on the site, you can invoice for them. But sometimes you have to pay for them in different that becomes too complicated of a process to really map into a project. So I would say very few is definitely single digits, in my opinion, less than 10%.

Autumn Sullivan 14:23

And you talked about how contractors know the first two things, right? They know the costs, and they know what the schedule is going to be. But we talk a lot about the things that they might be missing when they’re considered when they’re putting their bid or when they’re thinking about the cash flow of their project. I’m specifically thinking about how you’ve talked about calculating the the real overhead can do you want to talk about that just for a little bit? I know we will get into putting margin down later.

Scott Peper 14:54

Yeah, so it’s a good question. So I know this cash flow tool will specifically out lined the cost of the project, which is really in in the estimate, as well, and it’ll show you how much cash you need to flow through it. But when we’re looking at estimates and bids, most often your your average bid doesn’t include the proper overhead allocation or margin, what it means is that they just sort of get blended in with the cost. Sometimes it’s marked up Oh, at 10% for overhead and profit. And I add 10% For markup. And it depends what your costs are. As soon as your costs go higher, it’s great. If that’s the cost, it’s even better if the costs actually come in lower. But I be surprised at how many folks on here, it’d be great if anyone has questions and want to put it in the in the chat box. But how many people actually end up with less cost on a project than they do more cost, you know, or neutral. So it gets us tough, but the way we’re going to calculate the margin, that’s that’s the biggest issue we see is a lot of times you have overhead costs, those come monthly. But they’re you know, they’re your rent expense. They’re your your payroll for your staff and your salaries, they’re things that are not related to the exact project. And when you pull money off of a project that isn’t cashflow positive to pay for those things, you actually make the project significantly even more cashflow negative. And if you look at if you know what the projects, how the project is going to cash flow itself, prior to using any of those dollars, it can really help you make some good decisions on how you want to use the cash you do have, or the financing that you have in place lines of credit, etc, etc.

Autumn Sullivan 16:33

So in terms of in terms of the schedule, because we all know that construction schedules change quite often, right? They they’re definitely prone to change. So if you have this cash flow spreadsheet that we’re going to show our audience in just a second, how does how does having a cash flow projection help you manage a construction project schedule changes?

Scott Peper 17:00

So great question. So this tool you’ll see goes week by week, what your expenses are, if a schedule changes, and you pull a crew off of that project, the beauty of this projection schedule is as you go week, by week or even over the course of a month, you can update those to actually become actuals. So that week will be an actual expense. And so you can keep track of it in real time. And it allows you to know, okay, this project gets delayed three or four weeks, what does that mean, for me in terms of the pay apps, I’m going to actually submit instead of the ones I plan for, if I move my pair, if I move my a couple crews off of this job, and I put them on a different job, then I can move that cost expense off of that project, too. If my costs are too high, based on what I rent equipment for, versus maybe I want to purchase some equipment, you can see how that’s going to impact things. When you order your materials. If you have to pay for your materials under certain terms, you can see how that will impact your job. That’s a big one. And we’ll share those in detail. Why don’t we go? Why don’t I open up a spreadsheet? And then some of those things will make more sense. And I can answer that too for Yeah, let’s do. So what I’m going to do guys, first I’m gonna show you what the out the final outcomes gonna look like. So you can get a visual cue of what we’re doing. So here’s what this spreadsheet is going to look like. Okay, we’re going to actually fill this out completely on our website. So this is the final output of what you’re going to see. Okay, this is what would get emailed to you along with a PDF that has all the information you submitted. So really quickly here, and I’ll show you this. There’s some important notes here tells you what this all means. But generally speaking, each one of these columns is a week, you can see that the job starts on, you know, eight, in this case, April 8, it goes week by week and automatically contat tabulates. What you input and all the way through your up here is what you’re submitting for your pay apps to your customer. Here’s what your submit, here’s what your actual expenses are. And then down here, you’re going to see what car much cash you need, or explore the surplus or deficit on a weekly basis. And then the cumulative amount of cash you’re going to need over the course of this project until money start coming in from the project. And we’ll show you that. So before we get to here, and then of course at the end it’ll total this up for you and show you okay, you have a $3.9 million project less retainage you’re going to get 3.7 million coming off of this. Here’s your costs all broken down, gives you what your margin percentages gives you what your margin dollars are. This looks awesome 31% project with one point, almost $1.2 million of profit that doesn’t even include the retainage profit. But when I show you what cut much cash you need, which in this particular case, you’re going to need upwards of a million dollars at some point in this project to you’ll need a million dollars over the first Many weeks to actually get this thing going before you actually see this job become cashflow positive.

So let’s go through some of this real quick. And I’ll show you how it works on a website. So, you go to our website, which is mobilization, funding calm. Now you’re on the homepage here, right up here, in the top corner, you’ll see resources. And you’ll see cash flow tool, you click on that. You go down here, you see this little video of myself here kind of explains the cash flow tool and some of the importance of it, I won’t bore you guys with that, when you put your email in. And then you click build my cash flow tool. Alright, so we do fund other types of projects other than just construction and mobilization funding. So purchase, if you’re, if you’re a manufacturer, or you’re doing general assembly or fabrication, or you pretty much, let’s just say you work off of a purchase order more than you work off of construction, this might be the tool, this might be the version for you. They’re all the same, and ultimately, but they have different questions based on it. And if you have inventory in house and you sell a specific product, this might be a better version. But we’re going to go through the construction one here today. So you click on construction. Alright, so I’m just going to type this in here, type, my name, email, company name, the state you’re in, got it the project name, we’re just going to call this 123123 project. The purpose of this is it’ll this will for your caspo. It’ll give you the the project name on the spreadsheet, right? When does the project start? Okay, I got my little cheat sheet here. So this is going to be Oh, 401 2022.

Autumn Sullivan 21:48

And that’s just to stop you for a second. That’s my first question, technically, for the audience here is does the project have to start in the future? Or can they do this where the project has already started?

Scott Peper 22:00

You can definitely use this tool on the projects already started. And like I like I was saying before these sheets, if you’re doing it the beginning before it starts there, they’re your estimates, right. If you’re in the middle of a project, you can actually, if you’re four weeks into a 10 week project, you can use actual costs for your first four weeks, and then your projected costs for the next six weeks so that you can use it completely that way. And again, once you fill this out, it’s a good question. Because once you fill this out, you get a spreadsheet and the spreadsheets pretty easy to see at that point, you can you can clearly edit it and manipulate it and the formulas are all in there. But if you’re familiar with Excel, this is an easy way to get it going. And then the it’s just an Excel file that’s not locked or anything you could do whatever you need to do with it.

Alright, so you’re then here, just Bay, this is just basic information on the project. Here’s your contract value. What’s your direct prayer payroll, again, the idea this is to come right off of your bid sheet. So if you’re looking at your totals on your bitch, so in this case, direct payroll is $410,000. My sub labor is 1,000,008 oh two 310. I have 202,000 of direct materials. This is an actual project cost that we have, by the way for our client happens to be a Makita an H back and mechanical contract. And so some of the a lot of the material big chillers and whatnot are in the subcontract labor includes material. And then that this is this is the direct materials that they have as well. So the equipment rental is 43,000. No bond on this job, and 139,000 in miscellaneous costs. So it’ll tell you right here, total contract value, your total costs added up for 2596. This project has 5% retainage, and happens to be a school in Florida. And in Florida. For those of you that don’t know there’s a lock on government workforce that has 5% retainage instead of 10. Otherwise, it’s typically 10.

Autumn Sullivan 24:04

Why is it important to put retainage in the cash flow spreadsheet?

Scott Peper 24:09

Great question. So retainage is part of your margin. And it’s definitely important, you’re going to make that money. But it’s not you’re there withholding this, this cash back. So if this is a cash flow tool, the reason that you hope that the retainage in here is this is this money is not going to come off this project for you to be able to use so regardless of what you invoice. In this particular example 5% of it is not cash that’s going to be available on this job. But we got weekly, I’m sorry, you submit your paps on a monthly basis. The from the time you submit it put in my zip code there from the time you submit your Pap, in this particular case they get paid in 45 days. The name of your general contractor his or your customer, whoever you’re working for will just Call maybe see GC. And my expected margin on this is 40%, for example, have received no money today, I don’t have any joint checks on this project.

Autumn Sullivan 25:16

And why are joint checks relevant to get to the cash flow of the project?

Scott Peper 25:20

The joint checks are important because if you joint check a supplier for those of you that don’t know what a joint check is a joint check, as defined by us, at least for this example, is when if I’m a general contractor and autumns the subcontractor and I say autumn, I’m gonna give you this contract. But I’m going to join check your material supplier and autumns gonna put up, you know, her material supplier is the supplies that I need to I’m going to sign a joint check agreement with autumn enter supplier, which means, as the general contractor, I’m going to pay her supplier. And when she submits what her pay app is, every month, I’m going to then pay her supplier directly in the form of a joint check to her and the supplier. Why is that important? Well, it’s important because that money is also not going to be available to Hodel, it’s going to, it’s going to go directly to the supplier. So that’s a good thing. But you want to be able to account for that in your project cash flow. So in this case, you might have thought you had a 40% margin, or you estimated it, but it tells you right here, you’re calculating margin, 34 and a half percent, so it gives you the total. And I’ll show you what happens next. Okay, so now it’s a 25 week project broken down, this is going to be six, you’re gonna have six pay apps if it starts in April. So I’m just going to input the pay apps here. First one’s 200,000. The next one’s 400,000.

Autumn Sullivan 26:44

While you’re inserting the pay apps, we have a question from Stephen. He asks, we have one client with multiple projects, do we have to do a separate setup for each project, we have to do this exercise for each project? Or can you roll it all up into one cash flow?

Scott Peper 27:03

You can absolutely roll it all up into one cash flow. As you’re going on, you can see if you if you really want to do that you could total these together. Um, and the spreadsheet is totally functionable to use as all three. Now that said, and I don’t know if the next question is Scott, do you think that’s a good? Do you think that’s a good thing to do or not? If it is, then I’m gonna give you the answer that question I would say don’t do that. Because each project is going to stand on its own, even though they’re a general contractor, you’re gonna, you may have different costs or different expenses or different suppliers. But to get the effect of the projects in the same way rolled up together, once you get a separate spreadsheet file for each project, you can put them in separate tabs on the spreadsheet. And then you can aggregate those tabs all into the one Summary tab that gives you this will give you the same benefit as if you aggregated them all in this exact template form. So I would go through and do this exercise for each individual spreadsheet, I’m sorry, each individual project, you’ll receive a individual spreadsheet for each project, you can then merge those onto a separate tab into one file. And then you can marry through Excel will pull each of those cells from each of those and marry it up into one template and a summary for you. And if you if you didn’t know how to do that, we can certainly show you how to do that we have a few Excel wizards here that if you had those three files, we can put them into one template for you, you run a quick, there’s a functionality to Excel that allows you to pull from each one of those tabs and run a quick and run a quick summary. And then you’ll be able to do everything you want. And then if things change in those individual tabs, you can make individual tab changes in the project and see the impact of that. And in addition, you’ll be able to actually go in and then see how it impacts this the Summary tab tips. You can see him all world. Okay. Alright, so I put my payoff amounts in for each month. I got my total contract here that marries up to what it is. I’m going to click Next. So now do I have direct payroll on this job I do. My direct payroll is weekly. My direct payroll amount weekly, is $16,400. And basically what I did was I know I have 410,000 of direct payroll, I have 25 weeks set up. So I’m just going to divide by 25 to get my to get my at least get this in here. Now sometimes your payroll may not be the same every single week. That’s okay. Once you get the spreadsheet, you can manipulate the weeks that you need to but for the purpose of getting this in and told him correctly. That’s the easiest way to manage that. Do you have sub labor? Yes, we do. We know what that is. Okay. So this is subcontractor pay Myth number one. So as you guys know, here tells you I have $1.8 million of sub labor. That doesn’t mean though, that I’m going to only pay them one time. So I want to input when I need to pay them and what the payment date is. So in this particular case, I’m just going to enter sub one, what’s, let’s say that’s the subcontractors name and scope of work is installation, the total amount of the path to them to start is going to be 450,005 7750. I got to pay them on June. Third, because if they’re starting to work in April, they’re going to work through April, I’m gonna it’s gonna take 30 days or so to get paid, I pay them when I get paid in this particular case, or I pay them 30 days afterwards, in this by agreeing with them to pay them 30 days after they submit. So that’s June third. Okay, so then I’m just gonna go add subcontractor payment two, same thing, I click sub one, everything automatically populates here. Now in this particular case, this is the same amount, I’m going to estimate billing. And so now this payment is going to be not going to be on the 15th of July.

July 5 had subcontractor. So one same thing. This is going to be on August 5, at subcontractor payment number four, that’ll be the last one. And that’s going to be on. Oh, 902. Okay, that’s my sub labor totals up, click Next.

Autumn Sullivan 31:39

So if you had if you had different subcontract labor, if you had different providers for that you can enter multiple subcontract labor. Right, you could do sub two sub three?

Scott Peper 31:53

That’s right. Yeah, if you have 2-3-4 subs, you’re going to put sub one first, when you’re going to Oh, then you’d go to sub to do the same exercise sub three, same exercise, all those payments will track in there. And you’ll see how they flow right into the, into the spreadsheet here in a second. So we I have one, they actually have one material supplier on here, which was for $202,000. But let me look to autumns point here. Let me show you guys what that what that looks like. So this is just going to be material. Now what do I currently owe this material supplier? Right? Let me do this material supplier one, I don’t owe them anything. So this just gives you an idea of you owe the money already, and you want to pay them and it gives you an idea, but otherwise this will be zero. And again, we said the total is going to be 202,000. But instead of me doing this as one material supplier one payment, let me do it as 1023 66. And this is due on ordering it on the fifth and payments gonna be due. I have 30 day terms. So I’m going to pay for on the sixth. Now I’m going to add one more material order. So I’m gonna show you guys how this would come about material. Two. I’m going to add the other 100 grand in here zero amount to pay.

Grand same border day. And my payment day. Is this kind of equipment. Yes. Vendor. Stick with our theme here equipment one equipment. Cash balance is zero. This is 43,000. You guys get the idea here. There’s no bomb on this project. So you can skip that. Do you have miscellaneous expenses? Yes, they do.

What is the name, you can enter these as much as you want. This particular happens to be per diem and travel slash Hotel 139,000. And I’m pretty much going to accrue weekly. So what this will do is spread this out weekly on the model. Like next. Okay, now it’s reviewing. Now what this is going to do is give you a chance to see the spreadsheet here in a little circuit, you can kind of cycle through to make sure it kind of calculates, right and it moves its way through and you have it you get to the end here. You’ll see okay, you got it all and so if anything doesn’t look right to you, you can sort of kind of go through this and figure it out. In summary, it’s going to show you here everything that you input all the way through and this is what you’re going to get a PDF of basically right here and that’s actually what I’m looking at here on this sheet. My little print out that before So it gives you a summary of what you did, you can make sure you did it correctly. If you need to go back and edit anything, you can do that. And then you basically get to the bottom. If it all looks good, you hit submit projection. Boom, you’re done, it was successful, he goes to our underwriting team, they turn around the spreadsheet quickly, and email it over to you. And then we’ll send it to you. And it comes in a nice little email. So let me show you now what you’re getting. Now we’re back to the cash flow. So we come up to the top, let’s start with the Summary tab. Again, just to refresh reminder, each one of these is a week. And if you remember, we started the project on the eighth of April. So each it automatically calculates every week all the way through. Okay, in summary, we’ll go to the end of this shows you here a $3.9 million project. Last 5% of retainage. Here’s the net amount you received from the project before retainage. Yeah, 410,000 in payroll, million eight and subcontract labor, 202,000 in materials, and $43,000, here in equipment, okay, and then your miscellaneous expenses.

Now, this shows materials and only show supply one supplier, I forgot, because it takes a little while to put that spreadsheet together, what I actually input was something I already did. So I already had the output spreadsheet. So but otherwise, it would show you here supplier two, and there’d be another row that would say supplier one, and it would break it down and have a total up here at 202. So my apologies for that. But anyway, go back to the beginning. So what this is going to show you again is here’s where you’re invoicing at the end of April, it takes 45 days to get paid. So you’re not seeing any of this money. So what this is basically showing you here, these are the expenses you have by week. This is the actual expenses you’re incurring this specific week, and you can see payroll, you pay weekly, so you’re gonna have to incur payroll that way, your per diem and hotels, you’re paying for that weekly as well. But you can see the material equipment and bond premiums, you don’t have that yet. Okay. So the spreadsheet automatically calculates two things here for you weekly cash flow deficit or surplus, which means how much money do I have coming in from the project? That’s zero right here? How much money do I have going out on the project, and that’s 21,000. So it keeps it then this is the cumulative total. So each week over the first three or four weeks, you incur your payroll, and your per diem, so you can see this cumulative total of cash that’s needed on this project goes up week by week by those amounts. Okay. So in this particular case, the first seven weeks, 12345678 weeks, I’m sorry. You incur payroll and premium for a total of like, for a total of 175, almost $176,000.

What does that mean? That means that through the first eight weeks of this project, you’re going to need $176,000 of cash in your business to put onto this project before any money’s coming off so far. Okay. Now, here we are, you’ve worked now at this point through eight weeks, you’ve submitted a payout for 200,000 and a submitter, Pam for 400,000. So you are essentially owed less retainage. You’re owed $570,000. Okay. But you have 45 day terms. So you submitted the end of April, they’re going to pay you in 45 days. Well, that means that this $190,000 isn’t getting paid to you for six weeks. Okay, so 123456 Here it is right here at the beginning of that seventh week. Week Seven, you now have that $190,000 comes in, you can see cash received from the project 190,000 cash going out that week, I’m sorry, is only 21,000. So you have a surplus of 168,000 from that path. But here’s what’s important to look at. You’ve you had to pay your material supplier for or your subcontractor $450,000 already because you Oh, that’s that’s what you said. That’s what these are your numbers, you submit it. So that’s there. And you also have to pay for Some other direct material that’s 202,000, and some equipment, not to mention the payroll. So if you look at this cumulative project Cash Flow tab here, by the time you’ve received any money off of this project, you’ve had to invest $915,000 on this job. So you either have to get that money from other jobs or projects, have that money in the business, or have some way to finance that along the way, okay? Or what we would encourage you to do is now that you have this upfront, figure out how you can manipulate some of these numbers here, can you pay your material supplier in 45 days? Well, that would be really helpful because that would move it that would move it farther down the line that would drop this 915 by half. Okay? Or same thing with equipment suppliers, can you get longer terms? And if you can’t, okay, no problem. But you have to know in advance that this is what you’re going to need. So maybe you need to rework the schedule, maybe you need to go back to your customer, see if you can get paid in 30 days instead of 45. If that’s possible, if that’s not possible, okay. Can you get a deposit up front? No, if that’s not possible, Alright, great. Can you get some financing for this? And now you know how much financing you’ll actually need? And more importantly, you’ll know where you’re going to need it. Do you really need not earn? 15,000? All on day one? No, you really need 21 grand a week for the first few I’ve gotten.

Scott Peper 41:33

So going through this tab will show you Okay, boom 915,000. Now it drops the next week. Well, why is that? Well, that’s because you got 168 grand that is surplus between what went out that week and what came in for the project. And now it starts to accumulate again, until the next big one. So the maximum outlay on this job is going to be 1,000,001 million $263,000 of cash that you have to put onto this project. Before you can become cashflow positive through July. If you look here, it’s actually going to get even higher up to 1,000,004. Because it takes till August 12. Before you get your first big pay app in pay do now the project starts to really get better and better by the time this next pap comes in. Six weeks later, you have 400,000 The next one comes in. Now you’re cashflow positive. So here’s the thing. It’s important. This is October 14, okay, based on your schedule and your expenses, you’re starting on April 8. So six months later, this job becomes cashflow positive by itself. And yes, you have a great margin and you make great money you got to get through this period, you got to get through those six months to get to the point where this project can cashflow itself. And then you’ll make you’ll make this money. The problem is a lot of folks are looking at these totals and saying this is great, I got 31% margins gonna work out awesome, blah, blah, blah. But the reality is now you know, do I have 1,000,004 to invest in this project? To get to it? No. Okay, how am I going to execute on it? Now, let me show you guys one thing, just one simple adjustment, here’s the week of August 5, okay, let’s just say you’re able to get your payment terms for 45. All your expenses stay the same, but you’re able to get your payment terms from 45 days down to 30. Okay, remember, this week, this column here, August 5, stop sharing this. Share the 30 day version. Alright, now all I did here was I moved these payments from 45 days to 30. You’ll see here this 190,000 to do 1234, paid Week Five instead of paid week eight. And look at these cumulative cash flow here. As you go on. You don’t have that big $900,000 One, it’s only 769 725. That week of August 4 Fifth where we had that big fat number was 1,000,004. Well, it’s only $623,000. Now. So literally, just knowing that in advance and negotiating that upfront, is critical. It means you literally need in this case $780,000 less money, less real cash on this job to execute this project.

Autumn Sullivan 44:47

So what would you what would you recommend when when you’re looking at this spreadsheet and you see that and you start playing with those numbers and you see how much how much being paid by in 30 days would would help your cash Do you recommend taking this spreadsheet to the GC? And having that conversation? Because I know that some of our audience is going to say, Yeah, I’m not going back to my GC and asking for different pay terms. Because I can’t afford the job, right? They’re, they’re gonna think I’m weak because I can’t afford the job, they’re gonna think I’m bad with money because I can’t afford, like, talk to me about how you present this to the GC.

Scott Peper 45:23

So it’s a good question. So I think you’ve covered a few, you’ve asked a few things there my mind. Um, first thing is, I think this is eye opening. I think a lot of I think a lot of subcontractors will have those feelings, hey, I’m just gonna make me look weak. I can’t finance it. The GC might give it to somebody else. And you know what they might all that’s true. But here’s the thing. Like, who cares? The who cares? If they think you’re weak? First of all, you’re not weak? Because they’re not investing a million dollars into this? I mean, if they want to tell them, Okay, fine. You can pay all my material suppliers, here’s the line items, just pay him, then you pay him? Because like, watch what happens here. If they take on that and pay this instead? And I zero these out here? Well, yeah, now you only need 172. And even if they took it, even if they took the 799, from here, it’s less than you have to pay. So there’s a lot of options that you could go back to. I just simply wouldn’t worry about those things in the same capacity. Because it just the truth, the truth is, it’s not worth losing your business or getting upside down on it or giving away all your profit. I personally think yes, that’s a hard conversation. Yes, it is. It’s, it might make you look bad, they might think you look bad, but you know what, the only person that’s gonna make you look bad is yourself. You You’re not who cares what their opinion is, like people are gonna have that’s their opinion, you say, Look, man, I do great work, you gave me this contract, you actually gave me this contract, because I do good work, and I know how to do it. And let me tell you something, I don’t do work, that that is gonna put me upside down a million dollars. So I need to work something out. Now I can show you how I’ve sophisticatedly put this together using this cash flow tool, I can show you how this expenses, you don’t need to show them what your margin is, you just need to show them Look, I have 30 day terms with them. My suppliers give me 30 day terms, you can use this information, but you don’t need to show them all this you can delete all your margin. Now they don’t need to know your cost. All they need to know is what you have to pay. And what you what you owe and certain periods of time and what you have up here. Maybe you don’t even need to use use this product, you just need to go show him and based on these terms, I need 30 day terms. Why? Because I gotta pay my suppliers in three terms, I got to pay my labor. But basically, here’s here’s what it is Mr. General Contractor in a nutshell, I got to put a million dollar million $1.4 million on this job before I get cashflow positive, and that’s just too much. So we need to figure out how we’re going to work that out. What can you do? Well, you can pay me in 30 days, I can’t do that. Okay, well, what can you do? And get your deposit up front? Okay, cool. What kind of deposit can you get? I mean, you can start to have real conversations. Now, if you don’t want to talk to your general contractor, then what you can do is you just start to leverage your, the, your customer, not your customer, but you can start to leverage your suppliers. Well, you can take it to your supplier, here is a prime example your supplier, you have 30 day terms with right? Well, they’re $900,000, your sub, your sub is 900 grand or million eight of your payments. Well, can you stretch them to 45 days or paid when paid? That’ll make a huge difference. Okay? Can you take your material, provide suppliers and get better terms from them? Those are the types of things you can do with this information in real time. Long before you’re sitting there with a crisis, not wondering why you’ve got these big buildings and, and for anyone that said to yourself, Man, I owe X amount of dollars to my suppliers. I owe 750 grand in my suppliers, and I got my AR I have a million games I have $1.3 million owed to me if I could just get the money owed to be paid to me I’d be square like I’m sure everybody said that themselves. Well, it doesn’t work that way. But yes, you’re right. If you did get that money right away, you would. So what I suggest doing in these cases, then is using this information to figure out how you can manipulate it.

Why Subcontractors Need to Talk About…

Autumn Sullivan

But this is powerful just to know if they’re talking to me about how how looking at the project, from, from this perspective, from a weekly cash flow perspective, can help you increase your team’s performance.

Scott Peper

Well, if you’re going to run projects, and they’re going to have a major deficit, it’s going to put stress on everybody, right? So if you’re stressed, it’s going to put your team under stress and if you’re the leader of that business, or you’re managing the project on a project When you’re stressed out, it’s going to add stress to everyone else, it’s going to hurt their performance. If you if with this info, it’ll also let you know where you can provide some incentives. You know, like, you know, here’s a perfect example, if you can get this $200,000, invoice up to five or 600,000, how can you do that? I don’t know, maybe there is something you can do, maybe you can pre order some materials to get the materials on site, maybe you can, maybe it makes sense to put three or four crews on this job. Because the payroll is pretty even if you’ve doubled your payroll, it’s pretty negligible here, right? Not too much. But if you could double this first pay app, or get one of these 800,000 or $700,000, pay apps here up front, where you can manipulate your schedule of values into a different reconstruct them in a different manner to get more money up front here. Now you know exactly how that would impact where your cash flow is, which is going to make your team more incentivized, if you give them goals of hey, look, this is what we need to finish. With month one, we have to get this much done. I don’t care if you get it done it let’s work six days instead of that are all authorized some overtime or whatever you need to do. It just gives you a lot of leeway and flexibility to a motivate them. But also be keep yourself out of stress, which is only going to get pushed down to your team.

How Cash Flow Impacts Performance in…

Autumn Sullivan 51:25

And I know we have the story. We have a customer story from Andrew Ammons where he did exactly that he was looking at the cash flow tool. And yes, he used our financing but but the cash flow tool was was showed him that if he put two crews on the job, and if he had the super additional additional supervisor and ordered the materials in advance, he would save I think it was eight weeks of of payroll, he got the job done eight weeks earlier.

Scott Peper 51:54

Yeah, so instead of using one crew and and he was abused roofing contractor, so instead of using one crew to go in and prep the roof, and then that same crew to go back in and install the roof, he basically put a whole two whole crews on one one of them that one crew went out a couple of days in advance and started the prep and started to rip the roof off and put the put everything together. And the second crew came in this is a big government, a VA hospital. So the second crew went out behind them and started prepping the roof at the same time. Well, why that was important is they had free rein of that site for that first 10 or 12 weeks of the project. And if he spent one crew going out and doing all that, and that took them six or eight weeks, and then he spent sent that same crew back out for another six or eight weeks, they would have not got as much done where he was able to put get it done was while they had free rein in the roof, they were able to get on that roof with double the amount of people and just work right in tandem behind each other. And they got all of it done in basically instead of 12 or 15 weeks, they got it done in six or seven weeks. So to save them a week’s worth of time, and a week’s worth of labor that was budgeted.

Autumn Sullivan 53:05

So my last question and then we can open it up, we have a few minutes, we can open it up to the rest of the to the audience either on a LinkedIn, if you’re on LinkedIn live, please just drop a chat in the message box. Or if you’re on Zoom, drop it in QA or in chat. But my last question is how can you use project cash flow tracking to grow your business?

Scott Peper 53:32

Well, you know, the first that asked before, should they do a separate project for each one? That’s a great question. Because if you’re mapping out these projects, and you take your bid, you map each one out, and you know exactly how much cash it’s going to take to execute on it. You can do to a couple different things, you can start to determine how much financing does my overall business need? I’m going to go get an SBA loan, should I get half a million dollars? Do I need $2 million? Like what do I need? Right? You’ll know because you can map out what you’re working presses you can map it out on on these sheets to see what how much cash you actually need. The second thing is you can make these decisions in advance of starting the project which will give you the ability to think more about being on top of your business instead of every week, just managing crisis’s that are in your business. And if you’re on top of your business, thinking about what’s next and where we’re going to go. You can start to build your growth strategy a lot easier. So it’s really about knowing that the debt cash so you can figure out the right way to finance the growth or do you bring in equity or do you try to get debt Do you want to bring in a partner if you bring in a partner? How much should you bring him in for, you know, these are all the kinds of things that you’re thinking about when you’re going to want to grow and knowing your numbers by project and then aggregating them all together is going to be key for you. So I think that’s really how that works, but also let you know how you want to incentivize your team. If you gotta grow, you want to make sure you have a great team. If you have a great team and everyone’s working hard, then they’ll be they’ll be more motivated. If they if you know how to incentivize them and put things together for them, they’re going to be, you know, more involved and have a more sense of ownership and equity as opposed to, and I wonder if we’re going to be okay, my God, my owner seems stressed, the project manager seems stressed, is everything gonna be alright? Yeah, that’s not just that’s not a good environment to try to grow in.

Cash Flow Can Make or Break Your Growth…

Autumn Sullivan 55:27

So we have a question that just got dropped into the chat. And I’m guessing it’s a little tongue in cheek, but I do think it’s a it’s a good moment for you to talk about our do your part campaign been asked? And the real question is, why are we contractors instead of developers? Which, right? Which I do think I would love for you to talk about the do recruit campaign to kind of answer that question.

Scott Peper 55:55

So it’s funny, you know, like, again, and I think that I think the part that we’re getting it there is that, you know, you finance the whole job, you’re basically developing it, someone else has the idea. I think you’re right, you know, it’s true, you finance the whole project for the developer, it’s, you do take a ton of risk, and it is a lot of heavy lifting, too. I will tell you, if it’s a private project, and a developer is doing it, the developer definitely has risk in it to make because the banks aren’t going to give them 100% financing. The the general contractors probably offloading their risk more on on you than the developer might necessarily be in those cases. For example, if it’s a $10 million project, and a developer goes out to get financing, they’ve most likely put in at least $2 million of real money real cash before the bank gives them that 80% Or seven, seven and a half million, that example. So I would tell you that they probably have some significant skin in the game beforehand. Now they don’t want to put any more that money off the project, but your general contractor probably the one that is taking a little offloading some of that risk on to you. The other thing I would say is our do your park campaign is there’s been some things I would call them. Stuff that is goes about and construction that’s just accepted. And it shows up in chats, just like you did right now. It shows up in the side conversations, it shows up on the job site, but it doesn’t necessarily show up in the job trailer, or it doesn’t show up when when you have developers and GCS and banks talking. They just accept this. And one of those things are is that subs do finance the whole job. And it’s not right. Why does it take a bank 30 days to come out and inspect the project? Why can’t they just pay people within seven or 10 days, we just showed you that impact of two weeks, 45 days instead of 30. Imagine if that 45 days went down to 15, you would need maybe a quarter of the money or maybe not even maybe maybe even less. So those things are the things that are do your part can be exposed to talk about and do your part is let’s get out of the habit of living in these moments that we have to figure out like, oh, we can’t bring it up to our GC RG GC is gonna think our week well, you’re not we like subs are not weak. I mean, anyone living in this subcontract, and this is cash flow environment is going to suffer, I’m in a restaurant until the pay feed everybody for a month, fill up, fill everybody at the end of the month and wait 30 days get paid, you wouldn’t have a restaurant in sight, they’d be all gone. So does that mean restaurant owners a week that mean restaurant owners suck at finance, that mean owners that make terrible oh, it just means it’s a shitty finance scenario. And that’s the ones that is for construction. So get that out of your heads if thinking like, I’m going to look weak, or it’s going to be bad, or they’re going to give the job to someone else. Look, in this scenario here, if you don’t have a million for to put on this project, despite the fact that you’re gonna make 1,000,002 If everything goes well, you’re not going to make that million two unless you have 1,000,004. We all know that. So it’s not a good project to take doesn’t mean that anything wrong to me, it’s not a good project to take. And you’d be surprised when you start telling general contractors that want to give you the work, that you can’t do it or won’t do it because it just doesn’t meet your doesn’t have the right terms, you’ll be surprised what they’re gonna be willing to do. It’ll be just like, you don’t want to talk to them. They don’t want to talk to the developer. So they take the path of least resistance, which is push it to you. But if you push it back to them, and they look, I’m going to do great work. The way I do great work is I have a finance partner that helps me or B, I don’t take terms like this to do these projects, or C whatever it is. They’re gonna respect that. And it’s really my opinion, it’s more the insecurity that a subcontractor has that they need to get over than it is anything else. And if you’re not willing to have that conversation, do you really deserve different terms? If we’re going to be honest, probably not. So have the tough conversation. Bring it up. You’ll be surprised you’re going to get what you want more often than you’re not

Autumn Sullivan 1:00:00

We have another question. Even Steven asked, Should we go to mobilization funding? What are your general terms?

Scott Peper 1:00:08

Yeah, I think, of course, we’re a great option for many people. We can’t finance everyone. But we do finance a lot. We’re a great option for something like this. I mean, this is a real client of ours that submitted this, we can’t lend them a million for so we let we typically lend up to 20% of projects contract value, our general terms, and when we layer in a finite, so give you an example, we’ll take a sheet like this, and then try to build a loan to essentially fill the cash flow shortages that you saw that that cumulative project cashflow deficit, we try to bridge the gap of cash that’s needed from the start of the job till when it gets cashflow positive. So let’s say for example, this is a $3.9 million job. It’s it’s a big one, but it doesn’t matter if it’s a million or 500,000 Doesn’t matter. So let’s just say in this particular case, we could lend up to $100,000 on this job. And someone said that we it takes a million for and by the way, I have 800,000 I just don’t have a million for Can I borrow 600 from you? Sure. that would that would work and they would put their 800,000 in and we would put our 600,000 in and we bridge that gap from zero to there, we’d show you what the cost of the financing is in that. And so you would know if when you get to the end of that project sheet. You know, I’m just going to show you guys while we’re sitting here on this. When you get to the end of that sheet here, and you’re at the bottom here, and you see what your cost expenses are, just imagine another line item. And just imagine another line item in here that showed you what the financing costs were. So let’s let’s just say the financing costs were $50,000. So instead of 2,596,000 expense, you have $2,646,000 in expense. And then we would show you what the impact is to your gross margin. Instead of 31% gross margin, you end up with 29% or 28, or whatever that math is, but our typical costs on a project are somewhere between one and 3% of the overall gross margin points. So again, that example that’s 31, you might end up with 29.2% of the project, the way we charge is a monthly interest rate on whatever the outstanding balance is, at that specific time. So even though it’s $100,000 loan, you only needed $22,000 a week, well then you’re only paying interest on the amount that cumulative amount as the loan gets trumped, we call it tranches, you kind of think of it like a project line of credit that you can draw down and use again you just draw down but you don’t draw it down and take more payback take more it just it just gets drawn down. So it takes you from the start to cashflow positive, but that gives you a general idea of the of the dollars. The beauty of this is the spreadsheet that we create comes back to you with the actual project and the way the financing would work in it and the exact cost of that financing and dollars and exactly how it impacts the project. So then you can make real good decisions and we don’t have application fees or anything like that too. So someone applies it doesn’t cost you anything to get the information. Like I said we can work we work with law we can work with everybody and now every project is perfect. But um but yeah, we’re certainly a great option.

Autumn Sullivan 1:03:38

So if you want to try the cash flow tool, and I highly recommend that you do you can visit us at mobilization funding.com I did drop a link if you’re on LinkedIn live I dropped it right in on Scott’s LinkedIn. So it’s right there in the chat. We will have a replay of this webinar available on our website if you’re joining us on LinkedIn live I will share it on our mobilization funding LinkedIn platform and Scott watch I’m sure Scott will share it on his personal social as well. And I encourage you if you like what you see here we have lots of cash flow content. Scott’s actually working on a book on cash flow we but we have tons of blogs about it. And the best way to stay in touch with us is to sign up for Scott’s newsletter comes out twice a month has personal letter from Scott and then whatever our most recent content is and our upcoming webinars as well. Scott was there anything I didn’t ask that I should have asked or any closing thoughts.

Scott Peper 1:04:41

If you guys like this, you think it’d be beneficial please, please tell people about it. Share it. It’s it’s not it’s available to everyone. There’s no cost to it. It’s it’s our way of doing our part. We have a mission to do our part in this do your part mission and that do your part mission. As to change these nuances of construction for the better, you know, let it be accepted that you can have a finance partner in construction, let it be accepted that you can have a conversation with your GC that you need different payment terms without looking weak, let it be accepted that you’re not weak, because you can’t finance a project for everybody you know, and that it’s okay to talk about and, and that no one is terrible with finance you actually find with finance, it’s a cash flow scenario, you know, so we want to change those conversations, providing this tool to that we created internally for us to evaluate loans, basically, to give it to everybody to use for themselves is our way of do just one of the ways we want to do our part in changing the way cash flow and construction and stress and is related to construction too often. And we want to eliminate that. And this is a great way to do it by giving information and education. So please share with everybody the best you can and and go out and have a great day basically what all I want to say.

Autumn Sullivan 1:06:05

Thank you so much. Thank you for your time today, Scott. Thank you everyone for joining us. And yeah, try the cash flow tool and then let us know what you think. Have a great rest of your day.

Scott Peper 1:06:17

Thanks everybody and find me find us on LinkedIn and let’s get back there. Appreciate you.

How Communication Impacts Cash Flow

Matt Vetter (Schafer Construction) and Mike Kepsel (Campbell & Shaw Steel) were two of the first people to join our mission, probably because their companies are already living by the DO YOUR PART principles.

This GC/Sub partnership is built on respect, trust, and integrity. They show up ready to actively listen to each other, to collaborate in order to find solutions to challenges, and to focus on present performance, not past perspectives & stereotypes.

Hear their story first-hand and learn actionable strategies to build better relationships with your partners.

Transcript

Autumn Sullivan 10:57

All right, awesome. Yeah, we had, everyone was just waiting room was waiting at the door. So we’ll go ahead and we’ll get started. Thank you, everyone for joining us today. Today is our very first webinar in our do your part campaign. This is our mission at mobilization funding, and hopefully yours too. Since you’re joining us today, to reframe the way people view think and talk about construction both inside the industry and out. If you have not yet joined our mission and taken the do your part pledge you can find it at on our website, and Scott posts about it on LinkedIn quite a bit as well. So I hope that you join us today I am delighted to bring you the CEO of mobilization funding Scott paper with our special guests, Matt better who is the Vice President of Shaffer construction, and Mike capsule, who is the General Manager of Campbell and Shaw steel. They’re going to share with you how their two companies have built a solid GC subcontractor relationship based on common values, clear communication and shared successes. Scott will be leading the conversation. We want this to be collaborative. So please put your questions in the q&a box. And I will let the guys know when you have a question. And with no further ado, take it away, guys.

Scott Peper 12:10

Awesome. Thank you very much, everybody. Thank you for joining, Matt. And, Mike, I really appreciate you guys joining. I’m super excited about this topic I’ve been. Matt, you. And I’ve talked about this endlessly on previous webinars on different other conversations personally in private. And I just moved so excited that as soon as we thought about this topic we launched to do your part campaign mission of ours. We wanted to have live relationships on that could actually talk about how they do this the right way. And I knew reaching out to you, you’d have a great person and you’d have a great trade partner. And Mike, I’m so glad you agreed to join us. Welcome. And thank you very much. Welcome. Awesome. Well, as autumn talked about the do your part mission for us is really about just removing the stigmas that around the GC sub relationship. Ironically, I actually had a meeting at the local ABC chapter here in Tampa this morning, where these exact topics came up. Everybody in the room wants to have a different conversation. But yet everyone is sort of scared to start it off. And so we’re in a unique place to be in the middle of both. We’re not necessarily we’re not a general contractor. We’re not necessarily in construction. We’re certainly not subcontract or trade partners, materials, suppliers or anything in between, but yet we work with everyone. And so we have a unique perspective. I think, to that I want to share with everybody and doing that with my folks that I talked to routinely and even knew, I thought this would be a great forum. So I again appreciate you guys for doing it. And if you want I think it’d be great if everybody could just kind of give maybe a little one minute overview who you are your business. Where are you located? And then I have a list of questions. I’m excited to ask you guys

Mike Kepsel 13:59

go first man.

Matt Vetter 14:00

Sure, sure. I’ll jump in saw Matt Vetter. I’m actually now the president of Shaffer construction or a commercial general contracting firm we’re based in in Brighton Michigan, which is Southeast Michigan. We’ve been in business this is our 25th year and we we build everything short single family homes.

Mike Kepsel 14:23

I’m Mike Kepsel. And the general manager Campbell and Shaw steel. I business has been there probably 30 years we do commercial and industrial steel frames for buildings

Scott Peper 14:39

do key thing that’s what we need for sure. So how did you guys get into construction both then your businesses or decades all? How did you get into construction?

Mike Kepsel 14:52

Um, I think mine I was going to school to be an architect and somehow or another was drafting class. And I was approached by one of the teachers instructors that a local steel company needed, needed help as a draftsman or something. And I went to reply and got the job. And they offered me apprenticeship. And I basically ended up quitting school and became the structural steel detailer through them. And then it just progressed.

Scott Peper 15:26

I think you haven’t tried to go back and design buildings where you bend steel into a perfect arc. Do you try to keep them pretty straight?

Mike Kepsel 15:34

Now we’ve done it all. Yeah, curves don’t bother us yet places we Google stuff. Like, go ahead, Matt.

Matt Vetter 15:43

I was just gonna say I think you make it better steel guy than architect Mike’s, I’m glad you went that route. I got my start in my late high school years, because, quite honestly, I could make a lot more money moving lumber around job sites, and I could do almost anything else at that age. And, and so that’s really where it Springboard I built houses for a long time, moved into commercial in early 2000. Around that timeframe, and it’s just been kind of snowballing ever since.

Scott Peper 16:18

So one of the things that we’ve always seen is this, this natural tension that’s created sometimes, or seems like a lot of times and between a trade partner in any train, and also the general contractor. And some think that it’s maybe because of the nature of your own opposing views on the control on the actual contract itself, that you have the projects, you have others. Can you guys each give a little bit of background, or just a perspective on the way you viewed it? Maybe Maybe all along the your career or or if that’s changed at all?

Matt Vetter 16:57

I’ll jump first, Mike. You know, when I first started in commercial, especially, we did a lot of plan spec work. And it was all, you know, low bid shit that, frankly, nobody really wins in, you know, whoever ends up with a job was typically the guy that made the most mistakes on his estimate. And I think, you know, that that mentality of the the low bid construction is kind of what, what puts us at odds with each other, right? Because nobody wants to admit, nobody wants to lose money, first and foremost. But then to do that, nobody wants to admit fault. And so I think it creates this, this unnatural tension between between the GC and the trade partner. You know, we it gets pretty heated in that. And, you know, we’ve tried to avoid that now. But I can see it very vividly in my, in my memory of times, when that happened when it just leads to screaming matches, and it’s, it wasn’t any fun for me, which is why I got out of it. Like, what do you think?

Mike Kepsel 18:01

I kind of have to agree. You know, and that’s, I have I balanced that with the estimators at the office, and they’ll come to me the projects. And I guess first thing we asked, you know, who’s the contractor? How’s he gonna do it? And you’re like, yeah, that guy’s gonna do the low bid. Why waste your time where I’ve kind of changed the direction the companies go on to more partnerships, and not always have to chase the low bid, build relationships with the contractors, because when you’re fighting with them, or if you know, you end up in a battle, whether it’s no fun. And it’s at the point where by age, as long as I’ve been doing this sometimes, like it’s not worth the effort anymore. There has to be easier ways of doing it. Trying to reach out and build relationships going in trying to help with design ideas. Oh, seems to work out better. And chasing the little bits all the time just never seems to work.

Scott Peper 19:02

I think one of the key things you both just mentioned that it was exactly where my brain was going when we first got into this business was anytime we saw a low margin or low bid, write it everybody lost. And candidly, anytime we financed or work with someone in a low bid situation, we ended up losing two. And we had we went through the same evolution as you both described, but yet we were not a trade partner or general contractor. We weren’t even on the project side. It’s it’s you couple that with the natural, just challenges of a construction project, specifically cash flow and how a fault flows from the bank, to the owner and so forth all the way down. You’re right focusing on something that’s low bid is going to create problems for everyone. So the folks I listed on this I think that’s the key takeaway. We talk about all the time, performance rules the world and that’s the most important thing it’s not price and if you’re thinking price when you’re Estimating. Just know, you hear it, you’ve heard it here that price leads to problems and just change your focus on that. Which brings me to what’s the first construction projects you both worked on? And how did you realize you both had the same synergies and thought processes? The first project

Matt Vetter 20:18

we worked on together, yeah. Holy cow. So I met Mike. Got to be 10 plus years ago now. Yeah, I was running the pre construction department at a, at another company, another GC. And actually, at the time, Mike was at another steel steel supplier. And to be honest, at that time, I knew Mike because he was he was a grumpy as steel guy that you could call it questions. And I was the stressed out, you know, kind of asshole estimator who had no patience and want everything now. And, you know, we we worked together on a lot of projects, when we were both of those separate companies. I don’t remember when you when you move to Campbell, Shawn, Mike, I think it was a bit before I left, where I was at, I think, and tell me if I’m wrong, but I think the real synergy between us kind of happened after we both changed and took over different roles in new companies. Yeah,

Mike Kepsel 21:18

I agree with that. Yeah. I can always remember the conversation, we have the architect, an engineer on the motorcycle shop, on the big fancy canopy, and the architect was looking at it saying, well, the owner needs to get his arms around the project, or whatever it was. And so the only thing the owner gets his arms around is his checkbook, it’s not going to let go that

Matt Vetter 21:44

I remember that conversation.

Scott Peper 21:48

How did you guys manage through it?

Mike Kepsel 21:52

We basically totally architect an engineer, this is what we’re going to do to make it work. And you just have to go along with it. Because we know where the owner is. And all we have to do is pick the phone call up and this is what he’s going to pay for.

Matt Vetter 22:04

Yeah, we were, they were trying to strong arm us into, you know, going back to the owner, and basically saying, You’re a wealthy guy, you should start spending more money. And I can’t say who the owner is, but But Mike knows him, and I know him pretty well. And that wouldn’t have gone well, we would have ended up probably in a ditch somewhere to be quite honest with you. So yeah, it was, it was probably that day that that I really started pushing back on the design consultants, you know, because it’s real easy as a, as somebody with no skin in the game, to just say, just put this in there and pay more money, right, when you have nothing to lose, because you’re going to get your damn fee, hell or high water, whether the project goes, whether it falls apart or otherwise. And I’m not knocking on the design guys, completely. But I think it’s just a different mentality that, you know, the, you know, kind of the blue collar side of the of the industry brings to the table, we got to be more realistic, right, where we’re fiduciaries of our clients, of our clients dollars and of their needs. And that’s what kind of spawned this whole, you know, real design build that we do now, where we try to take the onus of that responsibility onto ourselves so that we can provide the best for our owners, Mike, and I still get along real well, at the end of the project, everybody makes money, and we all win versus yelling and screaming and pointing fingers.

Scott Peper 23:37

Interesting. You know, before you before you guys had these individual experiences, did you ever have any preconceived notions about, like Mike and your case, other general contractors that either were from previous experiences that cemented for you that a negative feeling or a positive feeling? And then your interactions with Matt, change some of that, or, or maybe others? Can you talk a little bit about that?

Mike Kepsel 24:04

There was always, you know, as coming up in the steel business as being in engineering and a detailer. And then I got involved with a larger contractor design build. And Matt used to work there. But this goes way back before Matt’s time, we were brought in way ahead of the design part with one of the partners and had to sit down we would have lunches and basically the napkin sketch. You know, we put it together figure out what it was. He had numbers he wanted to get to as budget and we’d work to help them get to that. And then they would bring in the design team. And so this is where we’re going to go with it. This is what our base sizes were heights, etc, all that stuff. And they design to it. But then you go back to the plan and spec and quoting that’s a whole different animal. that’s already designed and stuff. And then the contractors trying to work for the owner, I don’t know that or the owner trying to push the contractor or beating them up just to keep getting a better product for less money goes back to chase and low bid. A long time ago, I decided I don’t even want to do that. I just want to work with this and do the design, build stuff up front and be able to get in, you know, the front door within a relationship with the contractor. And then Matt came on, I don’t know, a few years later, probably about 10 years ago or so. And I think he caught on to the whole thing, or he was working towards the same thing. It just grew from there.

Scott Peper 25:44

Now on your on your side, you’re working with a guy like Mike who’s got the experience, he’s gone through the evolution of low bid margin, clearly can understand both sides of it. How do you shift when you’re working on projects that whether they maybe Mike’s not working on them, or you know it better yet, it’s just a whole different trade? And that business owner or person you’re working with has a different philosophy than Mike, how do those interactions go? And how do you try to coach them up? Or let him understand or feel comfortable that, you know, you can have a different thought process with you as a trade partner than maybe what the stereotype is?

Matt Vetter 26:26

It’s not easy, you know, that? That’s the simple answer is it’s not easy to convince some guys, that that we as a general contractor are not out just to hose everybody else. Because that’s, that’s the mentality that was driven by the low bid process by the the architects, frankly, that that pumped on that drum. So, you know, when we come across new subcontractors that are either looking at projects we’re working on, or we’re trying to build a new relationship, it takes a lot of work to foster that trust for for me to foster that trust from them that, okay, we’re not, we’re not going to string you out to dry. And I can talk all I want, you know, I can paint a real good picture of my vision and how this industry should work and where we’re trying to take it. But you know, at the end of the day, you’re dealing with folks who have quite likely been burned pretty bad in the past by this system that we were all kind of forced to work in. So it just, it takes time. And you know, Mike touched on relationships. That’s it, like, you have to build that relationship before it ever works. And, you know, to answer your question directly, Scott, there is no quick answer. I don’t think, you know, if they if they believe me right off the bat, and I sold them on my, my outlook then great. But I think more often than not, it just takes a lot of time, a lot of conversations, before we get to that point where there is a mutual trust.

Scott Peper 27:56

Mike anything you’d add to that?

Mike Kepsel 27:59

No, I mean, I agree with them. It’s all about the trust and conversation. Before I was with Campbell & Shaw I was with the previous place. And that’s still company, they chased the low numbers, they would lowball it. Because their attitude was we’re gonna make it up in extras and back charges, and then you’re chasing a whole different animal, you know, down that rabbit hole, it doesn’t work. And you get into all these conflicts with the contractors and it was just nuts. It was a nightmare.

Scott Peper 28:29

In conflicts cost money to

Mike Kepsel 28:31

Yeah, it was a lot of time to chase that. And, you know, in the end, it would settle for 50% of it, but you still everybody’s like, you know, you walk into a building or to a meeting and they know, okay, that’s the lowball guy. I didn’t want to be none of that and didn’t take long at all for me to get tired of it.

Scott Peper 28:52

So, you know, both of you have probably developed younger guys on your own teams, or are new to the business, how do you coach and teach and train inside your own organization to help shape the mentality to approach your new customers or customers you want to work with with the with the mentality that may they may they may have been precondition with before

Mike Kepsel 29:16

That’s what we’re working on now. And kind of bring people in and that’s part of the problem with this business is the lack of people that come in it’s Matt and I’ve talked trying to chase guys and get him into the business or bring kids in you know, they’re just not walking in the front door, throwing an application at you and and looking for a job right now. I mean, wait, go ahead. Go ahead. I’ve got two guys that I work with to help them and they were estimators I guess where they came from, and they were used to a certain thing, you know, plan and spec but didn’t do a lot of design build. I came along when the owner was there and start non teaching, because it’s a different way of doing things, working with different people and kind of turning that corner away from those contractors, like just throw things out the bed, because we know it’s a waste of time, and getting them to help, and I’m introducing them to contractors. I’ve got I’m missing the maths golf outings. So good to know those people. And it’s just changing, changing the whole the aspect of trying to do business.

Matt Vetter 30:34

Yeah, and, you know, we’ve done it on the, on the GC side, I’ve, I’ve tried to shape and mold numerous estimators in my career. And you can tell a very distinct difference when you get a guy that comes from one of the, you know, the big five construction firms versus somebody who comes from something maybe smaller or, or who has never done it before. And to be quite honest with you, I would rather the latter, I’d rather the guy who has no experience in construction whatsoever, but has an open mind and is willing to learn, then try and take the guy from I’m not going to use her name, but the giant paper pushers and bring him into my world and try and deprogram that that mentality because it’s it I’ve found it’s nearly impossible. Maybe I just suck at doing it. But I’ve gone through more candidates and more new hires, from that world trying to bring into mind that I care to even admit, it’s really difficult.

Scott Peper 31:35

Hard to deprogram and reprogram it takes a special person to have it that has a desire to want to realize, Hey, I’ve learned a bunch of things that probably don’t suit me well. And by the way, I want to accept the fact I’m going to blank them out and relearn. It is a special kind of person, regardless of your training skills, man.

Matt Vetter 31:56

Yeah, it definitely is.

Scott Peper 31:58

So what let’s talk a little bit I mean, we probably have, we have a lot of subcontractors, general contractors, material suppliers, different administrators of different companies that are here on this webinar listing. For folks, they’re like, what are some proactive, specific things that they can both do to help change the culture around the GC, subcontractor relationship on their projects? What would you recommend, first and foremost that they could they could do? They don’t have the trust, yet? They got a job jump out in their project, they have a culture around them. That’s either the way we’ve been talking about that’s the norm. And or it’s some combination of both. And how could they go do their part to help make it different?

Mike Kepsel 32:44

Talk? have discussions? Yeah. Have a discussion. The sad part, I think right now is we don’t have data, we don’t have enough face to face discussions, don’t have enough meetings, Graham, you have this whole virus thing that screwed that up. And technology today is made it easier not to have face to face meetings, and discuss things and get views. I think we need to go back to that person. I’m old school. So I guess that’s the old guy you’re talking?

Matt Vetter 33:21

Well, I’m not that much younger. And but I agree with you. I mean, this sort of stuff is great, because right we’re having a conversation from different different sides of the country. And it’s got its purpose. But you know what, what Mike and I do on a day in day out basis for our our actual jobs, you learn much more you communicate better when you’re when you can sit across a table from somebody, you can have an old fashioned set of paper drawings, and you know, highlighters and you can scribble on them. I think talking is a huge point. But I think just shutting up and listening more would would serve a lot of people because I’m gonna keep going back to the relationship side of it, you have to get to know Mike, right, you have to get to know where he’s coming from and what his mentality isn’t to understand how he’s approaching a project. And until you can do that, you’re just going to be spinning wheels. So I think overall communication is really the key. And as a society we’ve gotten away from that.

Scott Peper 34:24

Yeah, I agree. Yeah, it’s funny, um, I was talking to I had friends now for as I get older, and I’m almost I’m in my late 40s But while I get well I get lots I’ve gotten older and I’ve done different deals or negotiated different stuff, whether it’s either inside mobilization funding or out I’ve just you get more confident with yourself and as soon as it’s like almost like one day and you can think about along your journey people tell you hey, you’re you’re okay you know, you’re pretty good. Like Thank you take those comments. Sometimes you don’t, you don’t accept them and other times you start to get some on the one hand, so there’s you believe them all and you think you’re better than you are But ultimately, as you build some confidence, that competence also says, hey, look, I did a good job. But here’s all the other reasons why I did. And in this case, it’s you focused on performance, you didn’t do a little bit, well have the confidence to know why you are good. Be specific, hey, you know, I don’t bid low bid jobs, just be who you are, and that people are gonna either like it or not. And just be clear about who you are, what type of projects you want to work on. You know, if Matt’s telling you, hey, look, we did this one time, this is gonna be tough, but you just tell him, Hey, man, I’m not your guide. And I can’t do that kind of work. I can’t afford to carry the cost. But you know what, when you have this type of job, and this one, this one, I’m your guy, and I can do great on that frame. And here’s the reasons why, like, then Matt doesn’t waste time, you’re not wasting time and vice versa. And Mike, you don’t have to burn up your resources. I’ve just found over the years that if I get more clear with what I can do well, and what more importantly, what I can’t, it allows the other person to hone me in where, where they can see me fit well. And I think it applies to construction really, really well, in the same manner. Because every projects different. You know, they’re all the trades are different. Everything can be specific. I think if everyone just talks like you said, Mike, I mean, that’s the best advice, just talk. And when someone else is talking, now, you and the other side, listen, and do it without judgment. And everyone can get a little more confident to be vocal. And if you’re inside an organization, and you’re not the boss, or you’re not the head of something, ask questions challenge why people are doing it, you know, why do we do it that way? Well, that’s the way we’ve always done it. If you hear that answer, you’re on the home run spot and keep peppering that thing until someone gives you a better reason than because we always did it that way. Because to Mike’s point. It’s there’s a lot of technology out there now. And there’s better ways to do things. None of it’s better than sitting face to face, in my opinion. But there’s technology that definitely helps a construction project, there’s technology that definitely helps bids, and designs and workflows and all kinds of stuff. So those would be some pieces of advice that I would offer up on just listen to you guys conversation. I think you guys in well nailed them.

Matt Vetter 37:14

Yeah, you know, look, this industry is is stressful as hell. So the way I’ve started looking at it in the last, you know, half a decade or so is if I’m going to stay in this industry, and I’m going to sweat and toil to make a living doing what I what I do love to do. I want at least have some damn fun, right? And if if every day is stressful and miserable, because you’re not, you know, you’re always at odds with somebody, and then what the hell’s the point? Because nobody, nobody is getting mega mega rich doing what we do, we can do pretty well. And we’ve got other opportunities, but you know, you’re not hitting billionaire status by being a smaller scale general contractor in southeastern Michigan. Sorry, if that’s a newsflash to you, you know, you can do well, you can have fun, though, you can make a good living, but you got to be able to do it on your own terms.

Scott Peper 38:05

Yeah. Mike anything you’d offer up on that,

Mike Kepsel 38:11

No, I gotta agree with them. You know, it’s this business is stressful, it’s, it’s hard and can be long bass and times, and you got to figure out how to enjoy it. I guess I come to the conclusion here lately, you know, we build buildings, put a product out there. But I have to remind myself, and I’ve started to remind everybody else, one thing we do is we just built buildings, we’re not all surgeons, we make a mistake, can own up to it. Nobody’s gonna die an operating table, if we make a mistake, or something gets broke or something falls down. We can get back up tomorrow and fix it and keep going. And that’s just kind of the attitude we have to take and keep plugging along.

Scott Peper 38:57

So, here’s an opportunity for you guys. Let’s just say this entire webinar was being heard by all the major owners and bankers and architects and designers in the world. What what are the one or two things that you guys wish they were doing differently at the top of the waterfall that would help impact everyone positively?

Matt Vetter 39:24

You know, I think it comes back to communication but learning to you know, we have a constant struggle seemingly lately, especially with with lending institutions that do not understand the design build model of construction. They only understand and they only have on paper, you know, the rules that that govern the old, the old school design bid. Right? And trying for us and that’s been one of our biggest pain points in the last few years is as we’re growing as a company and working on larger and larger projects where we’re, by the nature of the beast dealing with more and more banks and lenders firsthand and trying to educate them that. Look, this isn’t the way that you think it’s done. This isn’t the way you’ve been told, it’s always been done, we do things differently, there’s a different approach here. For example, architects, in our model, I hold the architecture contracts, where in previous models or other models, the owner does or the developer does, we have a constant battle with lending institutions to even get them to understand that I’m in a battle right now I have a have a call with my attorney after this, to discuss this very topic, because we have a bank wanting me to get my architect to sign over rights and to agree to a bunch of nonsense, should the project go south, so that he would essentially then be working for the bank? To which I said that it’s not impossible, right? We hold their contract. So so maybe we could have that relationship with the lender. But, but it can’t be a way around, and it’s just, uh, you know, I’m not knocking on them. But it’s, it’s an old school mentality, or that they don’t, they don’t seem to want to figure out or want to learn how it is that we do business. It was a long winded answer around it. But you know, we were seeing it constantly, it seems, and I don’t know how best to fix it. Because just talking hasn’t, hasn’t helped.

Scott Peper 41:34

I think developing relationships in the banking world are just as important. You know, I, I’ve found a lot of friends that are developers or partners, and they, you know, who their bankers and how they develop those relationships and educate them along on what they do and how they do it. Is, is important, you know, if you think back if banks can land into the world, where they’ll allow a developer to clear a piece of land, and they’ll understand that there’s going to be ultimately a building on it, and they have a lease with a tenant that for something that’s going to be built, they’re going to turn it over, they can understand the construction side, too. They can they’ll get the design build some of them. But you’re right. It’s not it’s not every bank, it’s certainly not the big ones, either. I can promise you that. Big banks are not going to be the ones that gonna take time to figure that out. Um, is there any, is there one or two things that you guys have found that are in that AIA Contract that you wish for change? Or you do change often, to benefit one and I?

Matt Vetter 42:41

I mean, I do by not using them? We’ve, we’ve moved away from them completely. We still have some legacy projects that were under AIA documents. But But there’s other options out there. You know, and, again, I sound like I’m shitting all over the architecture profession. I’m really not. But an AIA document was written by architects, and is designed to protect the architect and the owner and it it does nothing. For the general contractor. It certainly does nothing for the subcontractors, and it causes divisions in and of itself. So there’s other options we have used. Consensus docs has a pretty reasonable set of documents that protects everybody, but it’s got it was written with input from subs and from GCS, not just the design side. There’s, there’s other forms and formats. That would be my answer, just stop using them.

Scott Peper 43:41

Yeah, it’s interesting, because it’s why I brought that up. Mike, anything you want to use? What do you see working with different folks

Mike Kepsel 43:48

to agree with him? I mean, I’ve done some routes from what Matt calls the Big Five area, and I’ve gone through their contracts that use those and I’ve redlined them and marked a mountain. So I’m not going to do this, or I don’t agree with it, or, you know, and I’ll send it back to him that sign and so you need to change, revise it. And I’ve literally had their legal call me and say, You can’t mark it up as well that I’m not signing the contract. You know, you’re going to go to the next guy. Next thing, you know, no red, line it and blank it out and I’ll get the contract. But it’s always a nightmare. And if you don’t take the time spent a whole day reading the contract and going through it. You’re leaving yourself exposed. Yeah. Matt says there’s there’s better ways.

Scott Peper 44:38

Matt, is this contract something that you have that you guys have created or modified? Or is it something that everyone can go get on their own? At least start with from a template perspective?

Matt Vetter 44:48

Nope. Consensus docs. I think it’s consensus docs.com Or someone something around that it’s it’s not free. I mean, you got to pay for it but But anybody can go and buy their their template. That’s, which is what we’ve done. And then we modify them accordingly, you know, based on based on project based on need, you know, we, you can start from scratch. You know, my, my attorney is always asking me to let her create us a contract. And while I appreciate the intent, I think more of it is to get the billable hours and doing so. But, you know, again, the consensus docs, it’s not perfect. It’s not perfect by any means. I don’t think there is any perfect contract. But it’s, in my mind, from what I’ve seen, it’s, it’s way more well rounded.

Scott Peper 45:34

You know, I can say, from our perspective, having read reading a lot of contracts that are executed that come to us, the AI is definitely and most of our con, most of our customers are subcontractors. And it’s definitely not a favorable contract without some tweaks to it. And you’re you hit the nail on the head, Mike, matter of fact, one of the webinars we did was with an attorney having to be out of Texas, but very familiar with the doctrines and he recommended the five or six places that you really should like, make some modifications. If you want to have like, any, if anything bad happens, you’ll at least be in a somewhat okay spot versus just a disaster. And so I recommend everyone go do that. We can post that later on and show but you got the money you spend on those contracts. Redlining is worth every penny and a couple hours you spend your trade new than it is getting in a fight?

Matt Vetter 46:26

For sure. 100% agree. Yeah. So many people don’t read them. You know, and that on the GC side, the sub side, the owner side, so maybe we’ll just, you know, if we could all work on a handshake, that’d be great. I’d love it. But that’s not the world we live in. And if you don’t take the time, and spend the money to really understand what the hell it is you’re signing. Good luck to you.

Mike Kepsel 46:52

Yeah, you need to read them.

Scott Peper 46:56

I’m gonna look and see here we have some questions. It looks like there’s been some comments, I want to ask you guys a couple of right from the audience here. Um,

Autumn Sullivan 47:04

We do have questions. We have one from Ben, that says, What have you done to educate the project owners who are hesitant to do the design build approach, it seems they’re hesitant because they don’t personally know or trust, a GC or subcontractor. So they feel like they’ll get taken advantage of Whichever one of you wants to jump in first,

Mike Kepsel 47:30

I guess I probably got the longer exposure. We sit down, going back to that one contractor, and he would bring a lot of his trades in and meet with the owner face to face. And we will put numbers together. And he was shown those numbers. It was basic, open book. We had a profit margin, but I could do it with Matt, anybody, I’d sit down and show you our cost for all of our materials, show your labor hours, and our profit margin. Do. You know, if a contractor is willing to do that with an owner? I, I don’t see how it couldn’t work. Maybe they’re not showing up. So maybe that’s how the honors who like maybe they get taken.

Matt Vetter 48:21

I think that’s just it, you know, Ben, he mentioned that they don’t know or they don’t trust the person that that’s the first three rules of sales, right? You got to you got to get your client to know like, and trust you. And if you’re trying to pull the wool over somebody’s eyes, why would they trust you? You know, we operate still, like Mike just said on a on a very open book, I’m happy to sit down with an owner and any of my trade partners that that are there and and we’ll show them every number, I’ll show you exactly what what I’m gonna make Michael show you what he’s gonna make. You may not like it, but, you know, at least it opens up the door for conversation. And that’s the way we change this industry is we have to start having those conversations, to gain the trust from the ownership community as a whole. Because it, you know, design builds been around forever. But for a very long time, it’s just been a catchphrase. You know, it’s been like hanging your core values on your wall and calling that good. People would throw it around to use it as a marketing term. We have to do better as an industry to really teach people what the hell it means and how it can actually work and benefit not just us but the owners also.

Scott Peper 49:34

The owners want their buildings built that mean that they’re not interested in the construction of the building doesn’t help them what that’s not the purpose of the building. It’s not certainly not going to make them any money. It’s not going to occupy itself. So I think we you just hit the nail on the head both of you is the confidence to actually say I’m making money on the project. By the way, guys, like I’m definitely doing that number one, and here’s how much I’m making. And I don’t feel bad about making that money and There’s a lot of risk, like on paper right now I make this money if I could put my fingers and it’s done, yeah, that’s what I’ll make. But you know what, there’s a lot of things in here that have risk I have to perform, I have to manage people, there’s a 10 month project, it’s a two month project, whatever it is, a lot has to go. Right for me to make that money more often than not, I’ll make less, sometimes I might end up making more if I can be efficient, but who cares? Like, you know, I’m making money. That’s it. And it’s that’s the brain shift that I’ve seen in our group, while we work with different folks that, and I’m sure there’s folks on here now thinking like, that’s insane. I’ve never done that before, I promise you, if you do that, you’re gonna win more bids. Because I believe it’s the unknown that people don’t trust, not what they know, if they know you’re, you show them all the numbers, they know, you’re gonna make 25%. And they think you should only make 15. They’re, they’re happy that you’re not making 30 As if that was on the table before 40 or 50, or whatever. And they feel like, okay, 25 is more, but they know, at least they know and they’re like, Alright, then they can talk to you about the things that are actually important, right? If I give you this, you’re gonna do a good job, like you promise you’re gonna do a good job. And this is why and here’s how I think they can run with that.

Matt Vetter 51:15

That’s what I believe. Well, why the by the F, wouldn’t we do that? Right? It’s, it’s, we have already talked about how stressful the industry is. It is fun, I like building stuff. But it’s not that fun that I want to do it for free. I’ve got plenty of things I could occupy my time with, if I wasn’t making any money, and it wasn’t concerned with paying bills, and it probably wouldn’t be building buildings. So we do it as a profession, we do it to make a living to put food on our family’s plates, you know, why the hell not have those conversations? And if the owner doesn’t like that, I’m putting 15% on it. We can have a debate, you know, but But you get back to that, that age old conversation. Well, what is my experience worth? Because you can’t do this yourself? That’s why you’re talking to me, you know, just like, I can’t do surgery, but I can build a hospital. You know, and and Mike’s got, you know, decades of experience under his belt, why the hell Shouldn’t he charge for that? Because nobody else has that you can’t, you can’t reproduce that, you know, there’s no technology ever that can reproduce that sort of thing. So we’ve all got to stop being so chicken shit about making money. We’re that’s why we’re doing this. That’s why we have these conversations is why we’re in business.

Scott Peper 52:36

I couldn’t agree more. You know, um, the other point I was gonna make was as you as you start to jump into these, you’re having these conversations about dollars and cents and money. You realize also Okay, yeah, 20% is whatever, like, that’s the margin, let’s say, for example, but they’re holding 10% of retainage. And they’re talking about 20%. And you’re like, Listen, man, I’m running the job on 10, which is hard. Like, how about I hold 50% of your profit? I mean, 10 seems like 10. But it’s really 50% of the profit. I mean, then you can might be able to get into a conversation where the owner might say, Okay, well, if you could bring your margin down to, you know, 5%, then I won’t hold any retainage. And then you have a choice, then you can make some decisions one way for you advantageous to you, maybe you’d rather have more of your money up front, and you can do it for less. Or maybe you can say I get a hold, you know, you can pay my guys or I can pay this or I can get better terms if you allow me to do this as a nurse. So yeah, I’ll do that. If you give me 10%. Up front, I’m a contract. And I can actually get out and get started and do this more efficiently. Now you can get into the meat of real conversations that actually will make the job more efficient, you can actually make more money on it. By spending less, you can get into some conversations, if you get past the price. And when everybody’s making just slap it on the table. That’s my personal opinion. I’ve seen that in my own world, with different business ventures. I’ve definitely heard folks like you guys who do that just just like this. And they’re every one of them are more happy. They do better projects, they avoid problems. And there’s less ambiguity, always.

Autumn Sullivan 54:13

Yeah, there’s an added benefit to talking about money. Oh, I’m sorry, not in that the perception of construction is that it’s and we talked about this in the Do Your Part campaign, that the perception of construction as an industry is that it’s a dead end job. And that you have to go to college and you know, all the stories that we all know, right? But if the if, if, if the industry is willing to start talking about what you actually can make and construction if we’re just like you said less chickenshit and willing to talk about the money that can be made here. It’s it that’s part of changing the perception, you know, for the for the younger people who are coming into the industry, that it’s an actual viable career where you can make real money

Matt Vetter 55:00

Yeah, you don’t have enough time to get me on that soapbox. That could be a whole nother episode, but I will be 100% agree with you awesome.

Autumn Sullivan 55:13

Yeah, we’ll have you on for that one, I promise.

Scott Peper 55:17

Also say if everyone hangs out on this and complains about the topics we’re having, and do nothing different than I guess you deserve what you’re getting. But now that you’ve been on this and listened, try it. Pick the person have the best relationship with go show how much you’re gonna make on their project. Ask them if there’s anything you could do for them to help them better. Think about it from their perspective and ask them to think about the project from your perspective. And you’ll both find a lot of value in that and probably a great relationship. I promise you the unknown. This is a long lasting as the unknown is what people don’t trust more than anything else. The unknown.

Autumn Sullivan 55:59

Yep, very true. All right. And if you haven’t yet, go to our website, take the do your part pledge. Join us in our mission. Thank you guys so much for joining us. We don’t have any other questions. So I’ll go ahead and give you 15 minutes back to your day. Scott, did you want to close this out?

Scott Peper 56:17

Yeah, there was one in the chat. I think we answered it. It had to do with Luis, I saw your earlier will we be sharing this recording? Yes, absolutely. We’ll send out a link to this to everyone. We’ll also put on LinkedIn, it’ll be live. I’m sorry, not live. It’ll be on YouTube, you can always go get it. You can see this as and as many times as you want and slow motion. Rewind. And fast forward. Are you able to see it all? Um, I think we Matt mentioned that consensus docs was another question in the chat about where the documents are. And everyone that’s had so many positive comments, I thank you very much. We appreciate it. And most importantly, Matt and Mike, thank you guys so much for your time, I appreciate you guys having the courage to share this. Your own relationship and journey and interaction. I applaud both of you for having the confidence to do it the way you do it. And most importantly, this do your part mission you guys definitely represent and are already leading the way on it. And I’m so glad we chose you guys to Nashville, and most importantly, you accepted to jump on, it’s great to watch the both of you and what you’ve cultivated. And I’m certain one or a few people, if not hundreds, hopefully will be impacted by this and start to have a little bit different conversations. And soon enough, the world keeps spinning. And it’ll permeate out farther and farther. And will all of a sudden one day someone’s going to come to you and show an owner is going to walk in your guy’s dorm show you how much money they’re gonna make and ask you how much you’re gonna make. And maybe they’ll even give you a little more taste on.

Matt Vetter 57:50

That Scott, I appreciate you having us on. It was it was fun as always. Mike, I’m glad you came. Thanks for Well, thanks for helping along the way, buddy.

Mike Kepsel 57:59

Oh, welcome. Thanks for having me.

Autumn Sullivan 58:01

Thank you guys so much.

Scott Peper 58:04

Please join us in the do your part mission. There’s some cool guests, there’s lots of stuff we’re doing, it costs you absolutely nothing. We’re going to help educate things just like this type of topics, more gas, more conversations, different blogs, different ideas. Our part in this deer park mission is launching our cash flow tool that we will have we’ve gone through webinars on this before, but it’s a cash flow tool. It is 100% free. Anyone can download it right on our website, what is the cash flow tool, it basically helps you figure out if you haven’t been in an estimate and a schedule you need to keep. It’ll show you exactly how much cash you need to execute that job. And if you don’t have enough cash, just imagine knowing that in advance, and then you have the options and tools to be able to do it. Perhaps you take that tool into your GC or your owner and you show them Hey, man, I need $5 million to run the project because you’re taking too long to pay me if you pay me in 30 days, I only need 2 million. So help me out or hundreds of 1000s or whatever it is. But that tool is very impactful that may help you make proactive decisions and it’s 100% free. And all the tools are there for you to use it and show it and work off of it. So thank you all again, Mike. And Matt. I really appreciate you guys. Thank you so much. Thanks. Take care, everybody. You too

Your company’s approach to communication impacts your cash flow, for better or for worse. How you and your company communicate will determine whether you are successful reaching your goals.  That might seem crazy—how can emails and phone calls affect our bottom line?—but it’s true. There are lots of opportunities throughout a construction project, from start to finish, where how you communicate can mean the difference between having the cash you need to do the job . . . or not.

Your bid: Start communicating with confidence

If your first thought when you start a new project bid is, “What price do I need to have in order to win this project?” then you are thinking, and likely communicating, from a mindset of lack. When price is the pillar of your bid, you aren’t communicating confidence in your team’s performance.

Ask yourself instead, “What will it take to do this job the RIGHT way? How much cash will we need to ensure we have the labor, materials, and equipment for us to do our best work?” Plan out the project’s weekly cash flow—the money coming in and off the job—so you know exactly how to build your schedule of values. Make sure to use real, accurate numbers. What are your costs and terms right now with your current suppliers? What is your current labor cost and capabilities? Start there and see how many adjustments you would need to make to do the job effectively and profitably.  

Remember, your team’s ability to perform is the key and what matters most.  Just because another company might be able to do the job for less money does not mean your company can right now. Every company has different expenses, supplier terms, supplier pricing, labor capabilities, etc. Know what your team’s capabilities are and then be honest with yourself about them when you are bidding a project.

Then, show your work in the bid. Put your price down and explain how you got there and what that number will mean to the GC in terms of schedule and performance. Share your cash flow projection with them, so that they can see any potential cash flow gaps you point out. How are you funding the project? Add that to your Capability Statement. Trust us—the vast majority of GCs won’t judge you even if you use outside funding. Instead, they will be relieved to know you have a plan for funding. The general contractor’s worst nightmare is the subcontractor who suddenly runs out of cash and has to stop work or rely on them to finance the subcontractor.

Explain why a certain part of the design plan needs to be done a certain way and therefore will cost more time or money. Point out any red flags or errors you see in the schedule—make sure the GC knows this is calculated in your bid and they should make sure other subs are thinking the same thing. Save the GC—and you—the trouble of change orders that could have been avoided. Bid the job the way it needs to be bid to actually do the work, and explain how you got there.  This will help you stand out from your competition and be much more valuable to the GC and the project.

Remember, numbers don’t tell the whole story; your thoughtful analysis of the project and its costs will show the GC that you’ve put the work in ahead of time to make sure the project is done right.

When you approach each new bid with this mindset, you ensure that every new project has the cash flow schedule needed to fund itself, that your team can perform to the best of their ability, and that your company will make the profit you need to flourish and grow.

During the build: Clear communication is key

A formal process of communication between the general contractor and your company is critical to your ability to manage costs on the project. Don’t be afraid to push if a GC wants to verbally submit a change order. Remember, and remind the GC, that clarity is in the best interest of everyone on the project. Change orders can have dramatic consequences for your cash flow, and you need to be able to ensure that you can bill for the new scope of work and get paid for it.

The same theory applies to preliminary notices. Sending a preliminary notice isn’t a threat, unless you make it sound like one. Preliminary notices are good business practice — they let everyone on the project know that you are a member of the team and what your expectations are, according to the contract, regarding payment, and that you are only preserving your contractual rights to get paid. Subcontractors who submit preliminary notices are actually more likely to be paid on time than those who do not.

Questions, problems, challenges, issues . . . call them whatever you like, but the fact is that they happen A LOT in construction. It’s just the nature of the industry — the design looks great until you get out there on the site and start working. Sometimes, these issues are inevitable, faults that were missed in design. Other times, someone on the team causes the problem.

Either way, the best way to protect your cash flow on the project is to keep the project moving. That means skipping the blame game and OWNING the problem and more importantly the solutions to the problem. Contact whoever is a stakeholder in this problem—whoever will be needed to fix it and to approve the plan—and spell it out quickly and clearly.

• What the issue is (not who caused it)
• How it will impact the rest of the project and schedule
• How you propose to fix it
• What you’ll need in order to execute that job

Owning problems on-site doesn’t only protect the cash flow on this job, it establishes your reputation as a solid, trustworthy partner for the future. That’s an easy win-win.

Before, during, and after: Keep lines of communication open

Construction is a people business. If you look at each project as nothing more than a job to do, you aren’t building the relationships that will help you reach your larger goals. You need an industry network that supports you, and which you can support in turn. Think more about how you and your team are making your customer’s job easier and bringing value to them.

Before, during, and after the project, be a good communicator by actively listening, responding with empathy first, and communicating clearly. If you pour value into people, listen attentively and with empathy, and focus on bringing cohesion and collaboration rather than conflict and stress, you will find that general contractors want to work with you again. Other subcontractors will refer you, because they want to work with you again. They know what they get when they partner with your company—integrity, transparency, and excellence, and a job well done.

Join your local chapter of Associated Builders and Contractors, or your local trade association. Attend their events and support their causes. If you aren’t on LinkedIn yet, get on there and start connecting with general contractors, subcontractors, suppliers, and other partners in your area. Fifteen minutes a day spent communicating with your network can pay off huge when someone turns to you first when they need a contractor.

None of this works unless you are invested in the people you’re networking with. But, if you are willing to pour value into people, to give your knowledge, experience, and perspective away freely, to be a good listener and a clear communicator, then the good you give will come back to you.

How does that help cash flow? Referrals, for one thing. New opportunities.

Communication is a hidden cash flow superpower

From the bidding process to the project’s end, how you communicate with your GC, your suppliers and vendors, and even other subcontractors on the project, can impact your cash flow. Communicating clearly what you need to perform on a job, owning every problem AND its solution, and pouring value into your relationships will all make it much easier for you to earn what your worth, get paid on time, and build a pipeline of new business that gets your company where you want it to be.

Like what you just read? Awesome! We’re changing the way the construction industry talks to each other and about itself. Take the DO YOUR PART pledge to become part of this important mission!

Communication between General Contractors and subcontractors is critical to the success of the project and the success of the business relationship. Yet many (if not most) GCs and Subcontractor relationships have so many roadblocks to clear and effective communication that it results in tense conversations and even outright conflict as the norm.

It doesn’t have to be like that.

Here are 5 tips for better communication that you can put into practice today.

1. Be a good partner first.

It all starts here. It is very hard to expect more from your customer than you give yourself. Whether you are the general contractor or the subcontractor, your mindset regarding the relationship will set the tone for every interaction you and your team, has with everyone else on the project. It’s up to you to role model a positive, collaborative partnership relationship.  Look at the relationships and culture within your own organization first – it is very likely that problems you have within your organization will also be problems you have outside your organization, so fix your house first!

2. Set expectations early and clearly.

People will treat you the way you train them to treat you. Setting clear boundaries and expectations early around communication will help general contractors know how you as the subcontractor would prefer to interact throughout the project. That starts by including your business policies in your bid’s capability statement. Let the GC know your guidelines for credit and payment terms, as well as how you collect on overdue accounts.  Let them also know what they can expect from you and what you will deliver to them.  Then make sure you stick to what you say you will do.

Nervous about laying down the law with the GC? Don’t be. Most General Contractors will welcome the clear parameters and your company’s attention to the important details.  This will separate you from your competition in a good way!  It will also allow them to set clear expectations for you up front – then you both can agree how you will move forward with both!

3. Be transparent.

One of the best ways to increase transparency is to communicate in writing and in advance of a situation. Yes, that means you send preliminary notices as a matter of course and yes that means you require change orders to be in writing (even if it is just an email).

No, that doesn’t mean you’re sending a message that you don’t trust the GC to pay you. Unless you frame it that way.

Remember, set expectations and boundaries. In order for everyone on this project to perform at their maximum efficiency and skill, we follow these business practices. That isn’t personal, it’s professional.

Subcontractors, when you submit a bid to the GC, you are essentially making a promise. Build trust around that project by showing how the project cash flow will impact your team and how you plan to address it. Focus on telling the story around the numbers. The job requires a certain amount of costs upfront; show the GC that you have secured the cash to cover them in the most responsible way possible.

Written communications build trust as both parties set expectations and meet them. They also leave a clear trail of decisions for both parties to refer to should an issue arise.

4. Become an active listener.

Before your next conversation with your GC or subcontractor partner, commit to being an active listener. Active listening is listening with 100% of your focus on the person who is speaking. It means paying attention to body language as well as what is actually said. Active listening exercises empathy and cognitive thinking, so you understand the issue from the other person’s perspective as well as your own.

Active Listening is the Secret Skill…

When you are actively listening, you aren’t focused on what you’re going to say next or what you need to do after this conversation. You are dialed in completely on what the other person is saying. It can transform how you perceive the speaker and the challenge you are both trying to solve. Jesse Itzler, owner of the Atlanta Hawks says, “Be where your feet are.” That goes for your mind, thoughts, and attention especially!

Active listening isn’t being weak or a pushover. It’s exercising confidence and humility in order to have a greater positive impact on the situation, the project, and your business relationship. It takes a real leader to sit quietly and let someone talk until they feel heard.

5. Create a feedback loop.

The last tip is probably one of the most challenging. You have to ask others how your communication is being received. Then, you have to sit with that feedback and decide what you can change to improve.

Luckily, its also one of the easiest tips to implement, once you get comfortable with it. All you have to do is ask. Ask everyone you talk to. The more feedback you receive about your communication, and the more you implement that feedback when it is valid, the better your communication will be moving forward.

Conclusion: Communication is a team effort.

Everywhere from the shop to the contract to face-to-face conversations on the site, communication is a team effort. When we communicate from a place of empathy, transparency, and collaboration, everyone wins.

Like what you just read? Awesome! We’re changing the way the construction industry talks to each other and about itself. Take the DO YOUR PART pledge to become part of this important mission!

It’s time to Do Your Part! If you follow our newsletter (and if you don’t, now is the time!) you know our CEO Scott Peper talks a lot about how the construction industry needs to be rebuilt. The industry that literally built America and continues to build our future has fallen into disrepair.

There are lots of reasons—resistance to change, a cultural shift toward college over trade careers, outdated and toxic work philosophies—but at the end of the day guess who is responsible for letting those things happen?

WE ARE.

All of us, those who work in the construction industry and those who serve it, are responsible for letting the rust gather, the tires go flat, the tank to run dry.

And that means it is our responsibility to fix it.

Better than that, it is our opportunity to make it better. Each of us have this moment to look inside ourselves and ask, “What can I do to impact the industry? What is my part?”

That’s why we are launching the DO YOUR PART campaign.

We’re asking everyone—GCs, Subcontractors, Service Partners, Material Suppliers, and anyone else serving the construction industry — to take a pledge to communicate more effectively, operate with integrity, and help us rebuild the industry we all love.

What does it mean to DO YOUR PART?

Glad you asked.

Show Up

We need to come to every business call, every meeting, every team interaction with our PURPOSE in mind. Look at these interactions with fresh eyes focused on whatever YOUR PART is in fixing the problem.

Lip-service isn’t enough. Your actions, big and small, day after day, are the only thing that will move the needle on the issues that are impacting construction.

• There’s a massive labor shortage.
• The supply chain is under pressure.
• Stress in the industry, from owners to laborers, is incredibly harmful and impacting people’s lives.
• There’s a perception that the industry is a “dead-end” rather than a road to success.

It’s time to show up for the industry you love to help solve these problems. We no longer have the luxury of waiting for someone else to do it for us.

Step Up

Get comfortable with being uncomfortable. It’s time to push ourselves, to stretch beyond our comfort zones. That means doing the right thing even when it is hard. That means being more transparent about your business, its capabilities, its finances, and your expectations.

It means asking for help and it means offering help to others – regardless of where you or your company fit in the industry. It means telling people what you need in order  to get a job done the right way and the way you want to do it. Proactively look to collaborate over conflict with one another – other trades, subs and GCs, owners and developers. Transforming your work culture to improve your team’s mental health and wellbeing.

It means being a role model of what a leader in construction should be.

When there is a problem, it is a leader’s job to step up and own the solution.

Raise Up

A rising tide lifts all boats is a great saying, but the truth is some boats are already leaking water. Doing your part to restore construction to its former glory means reaching out to help others. Whether that is joining a coalition like the CIASP, working with your local high school to expose kids to trade careers earlier,  or offering business advice to the next generation — doing your part is about more than your own success.

It’s Time to Do Your Part

If you agree it’s time to rebuild the construction industry for good, click here to take the DO YOUR PART pledge and join our mission.

Construction payments are notoriously slow. There are a lot of misperceptions about why that is. Raise your hand if either of these statements sounds familiar.

“General contractors NEVER pay on time.”

“Subcontractors are terrible with money.”

Of course you have; they are two of the most common complaints made in the construction industry. The trouble is that both of these statements over-simplify a complex issue and pin blame where it doesn’t really belong.

Why are subcontractors always chasing down payments? Why can’t GCs ever seem to pay on time?

Slow payments, of course.

Getting paid in construction is like trying to run a marathon where the road is pocked with potholes and carpeted in broken glass. It is an arduous, uncertain journey that starts at the bid and ends . . . whenever (if ever) the subcontractors finally get paid. And retainage—that’s a whole other conversation!

Our industry is just starting to talk about slow payments. It’s about time. If we can change the conversation from the cliched stereotypes about irresponsible Subcontractors and miserly General Contractors, we can instead focus on solving the actual problem.

The Reality Behind Slow Payments in Construction

It’s no secret that construction has the slowest payment timelines of any industry. Levelset’s 2019 National Construction Payments Report detailed that about half of all US contractors do not get paid on time, with a staggering average wait of 83 days. The majority of those are subcontractors, who already operate on extremely tight profit margins. They also finance the bulk of the expenses in the early stages of a project.

On the flip side, the same report showed that most general contractors are paying their subs before they get paid by the owner. General contractors are putting their own business’s profitability at risk to cover payments to subs and suppliers because they aren’t paid on time, either.

A late payment doesn’t only impact one project. One late payment on a project can be the rolling stone that starts an avalanche — especially for subcontractors. Subcontractors often rely on the payment from job X to cover the mobilization costs on new project Y. If that money doesn’t show up, they scramble to find a funding solution. The results are often ugly. Desperate subcontractors grab quick cash from Merchant Cash Advances that end up bankrupting their business and ruining their lives.

Sound far-fetched? The 2018 Bloomberg series, Sign Here to Lose Everything, tells the story of Jerry Bush, a plumbing contractor who attempted suicide after MCA debt crushed his business. One of the lenders told Bush he would pursue him “until his death.”

Slow payments is a serious problem, impacting everyone in the industry. This is the battle cry our industry needs: We have to attack this together. We CAN solve it together. It will take technological advancements in construction finance, operational shifts within contractor companies, and collaboration between General Contractors and subcontractors. That’s right; you guys and gals need to get comfortable talking about cash flow on the project.

But first, let’s look at some of the ways technology is making it easier to get paid.

Getting Paid is Easier Online

The trouble with payment in construction starts with the process to simply request a payment. It’s a marathon of paperwork for the subcontractor, and that is only the first step. The financing on almost any construction job is like a precariously built Jenga tower of invested parties — including the General Contractor, developer, owner(s), lenders, and so on. A mistake in the paperwork chain at any point and the whole thing comes tumbling down.

The process is confusing, prone to failure, and entirely inefficient. Thankfully, there’s hope on the horizon.

Like many industries before ours, the digital transformation is solving some of these challenges. Levelset made waves when it secured $30 million in funding for its cloud-based SaaS company that allows contractors to quickly send a payment app or file a Mechanic’s Lien. On the financing side, Rabbet has created a streamlined, AI-driven construction draw process that makes it easier for lenders to receive, review and approve payments. We’ve undergone our own digital transformation at Mobilization Funding. We utilize digital solutions to make applying for funding, requesting disbursements, and making payments faster and more efficient.

But, technology hasn’t yet solved the subcontractor’s main dilemma. How do I finance 3 months of labor, equipment and materials on this job without a single payment from the job?

That’s where a good old-fashioned conversation can help.

Tear Down the Stereotypes

Before subcontractors and GCs can start talking about money, both sides need to adjust their perceptions of each other.

General Contractors — subs aren’t necessarily bad with money.

Subcontractors — the GC isn’t sitting on a stash of cash and delaying your payment out of malice or neglect.

Both of you were hired to do a job. Both of you are trying to do that job to the best of your team’s ability. Both of you are dealing with the constraints of the construction project, and You BOTH want to SUCCEED. So rather than butting heads over a situation neither of you is responsible for, why not work together?

Acknowledge Reality from the Start

Why wait until the first late payment to talk about what to do next? Subcontractors need to start talking about funding and payments in the bidding stage. Include late payment penalties (and early payment incentives) in your bidding contracts. When estimating your project costs, remember to include the cost of your funding. Because let’s be honest — you have to get funding from somewhere to float three months’ worth of labor, materials, equipment, and so on. Small Business Loan, Line of Credit, Mobilization Loan, “borrow” it from another project, MCA — Just kidding, please don’t take an MCA ever again — there is an associated cost. If you don’t build it into the bid in advance or you didn’t build it in at all, it will come out of your profit margin and you just might end doing the project for no profit at all.  In the case where you take out an MCA you most likely are doing the job to just give all your profit to the MCA lender in addition to ruining your company’s cash flow.

Create a Plan Together

General Contractors and Subcontractors need to sit at the table, put the numbers between them, and figure out how to complete the work at a profit margin that keeps both businesses growing and flourishing. Stop seeing each other as Customer/Vendor and start treating each other as what you really are: Partners.

You have a shared goal, remember: a successful project completed at a profit.

Talk honestly about contingency plans, incentive deals you can kick up to the owner, and discounts or credits you can leverage with suppliers. Build a strategy that reduces tension around money, ramps up collaborative success, and allows you both to focus on the performance of the project.

It is a long road ahead of us to solve the slow payment crisis in construction. It’s a marathon, but it doesn’t have to be hell on Earth. The first step is communication.

Now, go get paid.

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Scott Peper

Welcome, everybody. Thank you for joining us. I appreciate it. I’m very interested to get on this topic today I have an amazing guest someone that we hired here individually Mobilization Funding to just go through with our team, just the outright fraud that’s out in the marketplace, whether it’s through email IT services in the construction space, not only just to help us, but we actually had a client that was impacted by fraud, and it gave us some indications to look into it for ourselves. And then we wanted to be able to share what we learned was a valuable experience. And so I want to welcome everybody, Suzanne Cox, she’s with a company called Saltmarsh, Cleveland and Gund. She is a shareholder in the audit and audit audit and insurance service items I audit and assurance services department. She’s an active member of several associations, a regular contributor for trade publications, and she has a very, very strong background and experience in the emphasis in construction. So Suzanne, welcome.

Suzanne Cox

Thanks. Thanks, Scott, appreciate it. So hey, guys, this platform is a bit new to me. So if I screw something up, I apologize in advance, I am not the it shareholder here. So we’re gonna chat a little bit today about common types of fraud. And then what can you do to either prevented or mitigated or just reduce your risk? And so, you know, Scott mentioned, our firm and what we do, and I am an audit, but I’ve spent about 25 years working with contractors and manufacturers, specifically, not only just in audit, but also in a what we call vulnerability studies and fraud assessments, you know, how susceptible are you to fraud and, and control engagements where we go into companies and we look at their controls, and we, you know, look for areas of weaknesses, where, you know, they may be able to add some controls and, and beef up, you know, security so, so I do have some experience, you know, as it relates to fraud, and obviously, an audit. That’s one thing we look for, and keep our eyes out for.

So I’m going to give you some tips today on what successful companies do and some stories from some unsuccessful companies, of course, and some of it may seem, I know, our audience today is ranging in size of different, you know, size contractors. So you may initially think, well, that’s great, Suzanne, but you know, that just, it’s not really gonna fit my company, I’m a little bit smaller than that. And I recognize that and, and, you know, some of this advice may not be perfect for your company, but it is what the best of the best companies are doing. And so if you’re looking to grow, or you’re just looking to strengthen your, your control area and mitigate risks, these these are things that our companies are doing successful healthy companies, you know, so that’s, that’s where this is coming from. So again, just keep that in mind, I realize everyone is different. And this may not all fit for you, but what can you do at your size and your risk tolerance to you know, mitigate any risks you may have.

So here are some common types of fraud. Not all of these are exclusive to the construction industry, of course, you can see her fake vendors, fake payroll, and employees, credit card fraud, those are very common throughout all industries. Then we get into a little bit more specificity with construction with Bid rigging and change orders. And then we’re going to briefly talk about some of the craziness going on in the IoT world and cyber fraud as a as a general whole. So we’re gonna dive right in here.

So fake vendors. So what does that mean? You’re, you’re probably thinking what, you know, what does that mean? And I don’t even understand. So, for example, we had a client many years ago, that was about 4 million in size, so not a large contractor. And they had a project manager that they trusted very highly. And that project manager was you kind of in charge of a lot. You know, he was out running the jobs running the crews, paying the suppliers he was in, in most cases, choosing the suppliers and or the subs on the job. And he was a subcontractor, but for a larger GC, so it was like a sub of a sub. So he set up a vendor and he he said that this was a subcontractor that was working on the job. And he had the accounting clerk, you know, set up that vendor or that subcontractor and was paying that subcontractor for work performed. And so when the owner was checking in with him, you know, saying, Hey, how’s the job coming? You know, what percentage of completion Are you blah, blah, blah, you know, the guy is telling him hey, we’re like 80% done and And the costs that are coded to the job and that they’ve paid out of the company are in line with 80%, you know, about 80% of the budget has been spent. And so one day, the owner just happened to be driving by this job site. He was a not a hands off owner, but one that wasn’t constantly on job sites, checking things out. He drove by the job site and thought, Hmm, that does not look like 80% Complete to me. So, you know, gets out of the truck tries to figure out what’s going on comes back to the office talking to the accounting clerk, you know, who are we paying? How are we paying these people I don’t understand this job is nowhere near 80% complete. So long story short, they found out, they called us this was a tax only client. And they called us and said, Hey, we need help. We don’t even know where to start. But we know something’s wrong, something’s up. And so we found out that he had set up a fake company.

And so when I say fake, you’re thinking, Well, I don’t understand what that means. So the company probably existed, you know, he, he had to go to the bank, he had to get a checking account. You know, the, the company had a name, but it was not a legitimate company. And so he was paying this company, which was essentially him for work performed that never got performed. So you’re thinking, you know, how do I how do I prevent that from happening? So one thing we recommend to all of our contractors, GC, or sub is to do qualification on if you’re a sub qualify your GC, if you’re a GC, qualify your sub, if you’re a sub subbing to more subs qualify those subs. And so what does that mean? It you know, means going out seeing if they have a legitimate company set up? Do they have a website? Can you call a phone number? Do you get a person? You know, is it a legitimate company. So the second bullet here, double approval of new vendors, or new suppliers. So what that means is, in this case, had the project manager come back and said, Hey, accounting clerk, I need you to set up XYZ company, we need to start paying them. If that clerk at that point, did some research, you know, did it just a couple steps, she could have probably found out that, hey, this is not a live real, legitimate company. So it doesn’t need to be the owner, you know, necessarily always doing this approval process, it could be someone else in the company, because I’m sure you’ve heard of collusion before. So collusion is when two or more people get involved to do something, and and when there’s two people or more that would need to get involved, it significantly reduces the risk of fraud. So if you’ve got just one other person, you know, now the project manager would have to get the accounting clerk to to collude with him to make to make this happen. So it could be just her doing just a couple quick checks on things. It could be an owner, or executive person, just looking over vendors every month, you know, who are the new vendors who have we added Who were you know, just doing a quick oversight.

And so we’re going to talk a lot about oversight today. And in a small company oversight can sometimes, you know, be a struggle to make happen, because you might only have a couple people in the company, if you’re small. But that doesn’t mean that you should ignore it. So it just means you might have to be a little more creative or think of some different solutions to that problem. But it does not mean ignore it. So here’s another one when we get into the IT problems later is confirming payment information via telephone do not send payment information via email, don’t send account numbers, don’t send security or social security numbers, you know that that is just call, just call whoever it is that you’re supposed to be paying, whether it’s electronic deposit, and they need your routing number things like that. Make make those calls not not on email. So the final bullet point here is segregate duties between the person who enters the new vendors and the person who approves or pays the bills. And so let’s go back to our example here, say it wasn’t the project manager say it was the accounting clerk, say the accounting clerk set up a fake vendor and now she is adding bills, and she’s approving them and she’s paying them. If she has custody of all of those activities, that can be really bad. So you want to make sure that if you have an accounting person, that there is some oversight of that accounting function, whether it’s she doesn’t have the ability to pay vendors online or she doesn’t have Signing Authority. You know, that’s got to be approved by someone else. Those are important controls to have in place.

So similar to fake vendors, can also have fake employees or fake payroll. So as an example back to our segregation of duties issue, if you had an accountant that is Set up Joe Smith. And Joe Smith has a social security number that was potentially fake or stolen, who knows. And she or he sets up a new employee and then pays that employee, if that person has control of both setting up the employee and paying the employee. That’s the problem. So that’s another thing, you just want to look again, back to oversight, you know, make sure that someone is reviewing the payroll reports that’s outside of the person that sets up new employees.

So in a larger company, you might have an HR person that’s setting up the employee saying, Hey, we got this new guy, Joe Smith, here’s all his details, and he gets into the system. And then the accounting person pays that Joe Smith, you know, person. So that would be a control. If you have that many people, if you don’t have a formal HR department, which is very common, you would need to get another person involved, whether it’s an owner or an executive, you know, someone to be reviewing payroll to make sure it looks applicable. One of our audit tests that we do when we perform audits, is we will have the owner review everyone on payroll and, you know, say, Hey, do I know who Joe Smith is? If I heard of Joe Smith, you know, make sure that all the employee names sound familiar to him. And again, we realize that sometimes you have some turnover in the field. And we get that, but this is an important thing to keep an eye on, you know, back to the oversight comment. So one thing, I have a story of an employee who sent an email to HR and said, Hey, I want to change my direct deposit account. So he was getting paid on direct deposit. And it turns out that someone had spoofed his email and sent an email to HR saying, hey, I want you to change my direct deposit account. They HR people, they didn’t know any different because they got an email that said, you know, Joe Smith at XYZ company.com. And so they thought, Okay, well, yeah, Joe Smith just wants to change his direct deposit. So they went and changed it.

And the next week, Joe Smith, did not get paid. And Joe Smith calls up and he says, Hey, I didn’t get paid. And they said, Well, we you know, sent the money to your new account, you emailed us through your new account, and Joe Smith is like, I don’t have a new account, I have changed my information. And so who who what happens here, right? So Joe Smith didn’t get paid. So the company has to pay Joe Smith now because he legitimately worked. And now the company is out to two paychecks one, two, who knows who, right and then one to Joe Smith. And so where that company is now left is trying to figure out who got paid and tracking this down. And, you know, many times that that’s a very cumbersome, time consuming headache, huge headache. And so companies will just, you know, say, forget it, whatever, it’s only $500 or, you know, whatever. But this happens, you know, this happens a lot, and it can happen over and over. Again.

So just in ways to fix that is don’t, again, back to the point on the slide before, don’t take things via email, if an employee wants to change a direct deposit account, you know, they need to talk to someone physically and make a change that or you could have a change by direct deposit account form that the employee would have to fill out and sign and turn in. If you’re using cloud based computing systems, you know, you could fill out a form online and submit it, you know, that way as well that can be secured depending on what type of software you’re using. But if you’re not to that point where you have that type of software, then you know, have the employee sign something and send it in if you guys are remote, you know have a mail it in with with our signature.

So those are just some easy ways to fix that. And, you know, again, it sounds time consuming. And maybe it does add a little bit of time or headache. And you get some pushback from from employees, you know about these new controls. There’s so many reasons that we’re going to talk about today as to why you should do it that you’ve just got to say, Hey, this is what we’re doing. As you grow as your company gets bigger, you know, it’s easy to set these controls in place when you’re small. But when you’re big, and then you don’t have the controls in place, it’s so hard to go backwards and then put them in place, especially again, back to like employees push back, you know, you’ve got you’ve got more employees that are going to push back at that point. So it’s easy when you’ve got a small number of people and you can get these controls in place and start you know, functioning like a larger company.

It ended up that that we had another company similar where they changed the direct deposit and it got all the way through to payroll and payroll actually called the guy because she noticed that he was wanting to get paid on a prepaid card if you guys have heard about those, so she called them because she knew him and she’s like, Hey, why do you want to get paid on a prepaid card and they actually discovered it but only because of that only because she like knew the guy and she’s like, why would you want to do this?

So so like I said, I got stories for days on on some of the things. So credit cards, this one is probably the one I get the most pushback on. Of all my all my clients, when you get in there and start lecturing them on, you know, credit card usage and Expense Report usage, it gets it gets heated. So I’ll give you an example of one, the company had issued tire they had, they just called it the tire card. And as you all know, you know, large pieces of equipment require large tires, and they’re very expensive tires sometimes, and so the accounting clerk had access to that tire card, and she could make purchases all day, every day long. And nobody ever looked at the tire credit card, they, you know, just paid the bill and it got paid, and nobody ever looked at it. And so come to find out she had been buying tires, and selling them to other contractors. So this free money for her right, because she bought the tires on the one company and say they were a couple $1,000 She goes out and she sells them for 500 bucks on the black market, you know, the tire black market, and, but she’s pocketing 500 bucks. And you you might think this is this is not this isn’t real like this, she probably didn’t make that much money, she made about 100 grand over the course of a year. And so when we went back and audited the credit card for the tires, we found all the actual tires that the company used. And then we found about 100 grand and tires that the company did not use. And so that was another one where they called us in to help them, you know, find how much she had taken. But so here’s the the downside, right, so they press charges, criminal charges on this woman, and that’s all finding well, except she spent the money, you know, the money was gone. So they didn’t get their 100 grand back. And they’re just left with this, you know, fraud expense on their books now, you know, for 100 grand that she stole from the company.

So a lot of these things, the the retribution is slim for the for the company, they got frauded because the person has run off with the money and they can’t, you know, they certainly can’t pay it back in jail, which is where she landed, you know, so. So that’s just one example, if you do have credit cards, make sure you’re getting support for those things that are purchased on the credit card, make sure that people are approving them, whether it’s an owner, or just another person, an executive or something, you know, reviewing the credit card statements and saying yes, these are legitimate expenses, we have receipts to back them up. And you know, this is this is a legitimate expense. So the expense reports and, and credit cards, some people give fuel cards to their employees, which is I understand super common. The guys are running around, you’ve got a fleet, everybody has a credit card, fuel card, and they can only use it for fuel. Okay, I get it. And and I’ve even talked to owners that have said, well, I don’t really mind if they fill up their own truck, like what’s the big deal, it’s 30 bucks here and there. I understand that accept 30 bucks here and there is going to add up first of all, but more importantly, it is setting a tone that fraudulent or unethical or unscrupulous activity is acceptable. And so that causes a pervasive just overarching issue in the company that this, you know, this kind of behavior is okay. So when you have that kind of environment or culture that you know, starts to bleed into some other things, so when you know that guy might not be at home scheming, of ways that he can fraud the company, but he already knows that the owner doesn’t really care if he fills up his personal car with fuel with the company gas card. So he’s already feeling like the tone of the top is not one that really cares, you know about these types of things. And that can bleed into some bigger issues and some more again, pervasive issues. And so I cannot stress that enough that if, if you want to, you know, benefit your employees are like I’ve heard the term Well, it’s a perk, it’s a perk, you know, they can use the company card for some personal stuff, it’s a perk, you know, the way to give your company your your employees, perks and stuff, pay them more, okay? You want to pay them more, give them a bonus, or give them health health 100% Health care, you know, get a 401k profit sharing plan in place, don’t perk them, quote, unquote, by giving them the ability to fraud the company because that is just the wrong precedents that you want to set.

And so one of the other things I hear a lot is, well, it’s impossible Suzanne to get the guys to turn in all the receipts. So you see my fourth bullet here. No ticky No. Washi I know you guys heard that before. You don’t turn in your expensive orders with receipts you don’t get paid. That’s going to be a tough pill to swallow for some guys in the beginning. But once you say, Hey, you’re not getting paid, they’re gonna, they’re gonna make sure they turn in their receipts. So it is, again, back to that size thing, if you’ve got 20 guys that are filling out expense reports, it’s a lot easier to control than when you might have 40 or 50 guys with the same issue. So get those procedures and controls in place now, you know, make sure you’re getting receipts for things that they’re out spending another another good example of abuse of that type of thing is, you know, a lot of our our guys with fleets, you know, again, they’ll go get a repair on a truck, and they won’t turn in the receipt, and the company will just expense, you know, they’ll pay the guy like, hey, yeah, he had to get his truck fixed, he was on the road, he had to get it fixed. Sure, we understand that, except, we’ve had so many examples where when we’ve called the, the garage to get a receipt from the garage, they have turned in a receipt for a truck that is not owned by the company. And so that again, goes back to like, they’ll call us to, you know, do these vulnerabilities studies or these kind of fraud reviews, and we find out that the car or truck that was fixed was not the company truck. And so this guy now charged, you know, a $3,000 motor rebuild to the company for his personal Suzuki, well, not a Suzuki anymore, but you get my point. So those things, like I said, they can just become you know, issues if you’re if you’re not strict about about getting receipts and things. So

Scott Peper

I have a story for that. I spent probably 10 or 15 years, the majority in medic medical device sales arena with a lot of, you know, highly compensated individuals, both sales, marketing, you know, operations, all different fields, with folks that are making plenty of money to support an entire family, if not others. And in that it was the $20 the $50 $100 little things in this one particular story I remember, like gas was being used a fuel card for literally the entire family, like eight tanks of gas in a territory that if you if you filled the car up eight times, you could have driven around the state of Florida like 10 times in a week. And then another one where flights and tickets are being purchased for entire family vacations. Anyway, the reason I tell you that story is that because if there were unscrupulous people as like normal people that sort of just got upset for one day and push the line by like, expensing the first $10 parking ticket, no big deal. And as soon as you be safe, because if they don’t have clear direction, am I the greatest people with the best intent people are flawed, we all are and you do something wrong, and you don’t even intend to and next thing, you know, just runs away from them and watching that occur is so sad, because when they go back, they know they were wrong, they just couldn’t help themselves. And if you just can put protect your, your family, your work family by putting these guidelines in and look at it from that perspective, you’d be well served, in my opinion.

Suzanne Cox

Yeah, thanks for adding that. So, you know, I mentioned earlier where we’re in a lot of different companies, and within a couple hours, you can tell what the tone at the top is, you know, when you walk into a company where that sort of behavior is acceptable, you know, really quickly, especially when you come in to do audits and start checking up on things, you know, you you can get an immediate sense of whether that company has a culture of, you know, ethical behavior and controls, and you know, things like that, or if it’s a company with a culture of like, Yeah, we don’t really care, whatever. I mean, it’s fine if the guys want to charge their personal fuel, but like Scott mentioned, you know, there’s just so many rippling effects from that type of behavior. And it doesn’t like you said, Scott, it doesn’t start with people sitting at home going, huh, you know, what can I you know, for the, you know, the the company with today, it just happens. So, thanks for adding to that.

24:05

And if you want them to do that, don’t let them use a fuel card, get a $40 visa card and give them the $40 let them use it for whatever they want.

24:13

That’s what we always say like we’re like hey, if you want that to be you know, back to my perk, you know, comment if you want there to be perks like that, give them a separate card and call it a Perk Card. You know, you do run a danger of there having some employees with perk cards and some without and you know, things like that, but that’s a much cleaner, less, you know, fraudulent way to take care of that and so people know like, Hey, I get this 40 bucks or like you said 40 bucks a month for free whatever I want to spend it on. I can you know buy drinks at the gas station or food or snacks or whatever, but you do the perks that way not not with letting them you know, be unethical. Yeah. So we’re gonna move into if I Could we go, I can move my slide here, Bid rigging.

So this is very contractor specific, obviously. And I don’t know if you guys have heard one of the more high profile, Bid rigging schemes in history was not that long ago. And it was related to the Buffalo Billion project. I don’t know if you if anybody’s heard of that, but it was New York State, and they were trying to improve the northwestern part of the state. And so, Cuomo was the governor, and one of his right hand guys was long story short, you know, essentially paying contractors to bid on the work that was, you know, their huge projects. And so he was giving them inside information. You know, he was saying like, hey, you know, even though the proposal says this, we actually were going to do this. And so it was allowing those contractors to be the lowest bidder. And so they knew, you know, inside information, which allowed them to be the lowest bidder and be awarded those projects. Now, if you’re thinking that lowest bidder means they must have lowered their prices, now, they are inflating the margins and the profit on those jobs so much that they were able to give millions of dollars of profit off those jobs back to the campaign for Cuomo for governor. So that’s how it was unveiled, is because now they have a entire laundry list of problems, wire fraud, and law, you know, just all kinds of stuff, they were awarded along with the contracts, they were awarded a couple years of jail time, and some pretty hefty fines. So that one was one of the more you know, high profile cases, but that happens, you know, a lot in in smaller jobs, not just government jobs, although you’ll see it’s very prevalent in government jobs, because that’s, that’s really, it’s just really common. So if a contractor is, you know, supporting a candidate for office, you know, they may rigged some bids to let that contract or get those jobs in response, they get, you know, big contributions towards their campaign.

But on a level that’s more applicable, perhaps, if you are a general contractor, and you are working with a couple subs that you really like, who knows, one of them’s your brother, who knows, but you’re like, Hey, man, you know, I’m gonna give you a little inside scoop on this, this job, so we can give it to you. And you know, that’s the same concept, but on a lower level. So if you’re a sub, now, this gets to where it may affect you, like, really, you know, personally, because you are maybe one of the subs competing against an, you know, one of these other subs. And so, there’s a couple ways, again, you know, that people do this bid rotation. So that’s collusion of several subs. So they get together and they say, Hey, let’s all bid high, one of us will be the lowest, but we’ll all bid high. And then the next job that comes around, you know, the next guy will get it. And so we’ll take turns, or you might see that they all bid high, and then the guy that wins, it uses the other ones as subcontractors on that job. So again, they’re screwing the GC. So if you’re the GC, you want to know about these types of schemes, or at least maybe how to identify these types of schemes so that you do not get screwed. Same thing if you’re a sub that you sub, right, because I have a lot of subs that sub.

So in any situation where you’re subbing work out, whether you’re a GC or a sub, you want to pay attention to a couple things, to make sure that there aren’t, you know, they aren’t rigging your your proposal. So another thing is bid suppression. So again, this is somewhat collusion amongst the subs. So the subs will get together and say, Hey, I’m going to sit this one out, because it’s going to narrow the field and you narrow the competition. And then the next one, somebody else will sit out. This is not uncommon. So you might be thinking, this is just crazy. But my husband’s in flooring, and his dad was in the flooring business before he purchased it from his dad. So they’ve, they’ve had the company in business since the mid 70s. And I got to sit and listen to just they knew I was doing this webinar, you know, stories just in the flooring industry for a good hour the other night. You know, back in the wild wild, they called it the Wild Wild West, you know, back in the 70s in the 80s when this was there weren’t a lot of regulation against it. So people didn’t even get busted. So now you can actually get busted and there’s antitrust violations and like those guys in the Como case got thrown in jail and had fines. It used to not even be illegal. So this still happens. It’s very prevalent in construction.

So complementary bidding is when you could either not like the proposal that you you give out, or the the quote, the request for bid is not complete, you know, it doesn’t have conditions that can be met. But there’s that one guy, the one guy that you want to win it, you know, he knows what they are, and he’s gonna meet him, and he’s gonna make sure that those conditions are met. So that, again, there’s a couple different scenarios under under that, you know, type of thing, but I just want you guys to know that these things are out there. And we’re going to talk about how to identify them. Kickbacks is another thing that could be very prevalent in your specific company. So if you have a project manager that likes a certain supplier, or likes a certain sub, and you know, he’s getting maybe money on the side to always award that guy, that job, or that supplier the work, you know, you want to pay attention to, to that. And if you know, he’s driving a new GT three, you know, just curious why, you know, just look out for these things that that is very common.

And you’re probably thinking, Well, yeah, we like to work with certain people, though. And, you know, sometimes we’ll get to go on fishing trips, and hunting trips and things like that. Because we give, you know, a lot of work to these people there, there is a level of acceptability. You know, I don’t know if you guys know this, but IRS agents, if they come to your office to do work, they can’t even take coffee from you. They’re not allowed to drink your coffee, they can’t take a doughnut, you can’t take them to lunch. And the reason is, because they’re they don’t want there to be any indication that you are bribing them. So that just shows you like the difference in you know, in industries. So there are some acceptable, you know, yeah, sure, you definitely want to take your subs and your suppliers out on hunting trips and things like that. But you’ve got to make sure that line isn’t it, you know that the bids are still fair, and that you’re still fairly choosing these people and not because they take you on big hunting trips. So and again, if you’re the owner, that’s that’s kind of one thing. But if you’re the PM, and you’re not in ownership, you’re screwing the you’re screwing the owner, you know, because that sub that’s giving this higher bid, it’s costing the company money, and you personally, that Pm is getting the kick back. So hopefully that makes sense. So how do you identify some of these things?

So if you go back to that project manager example, if you notice, as the owner, that the same supplier or the same sub is always getting the jobs, you know, that might be something to look into, you might want to look at a report that shows you how often you know, subs are being used or suppliers are being used. And of course, again, you’re thinking, Well, yeah, I use certain suppliers, because they always have the lowest prices just investigated. Just look into it. So I’m not saying it’s unethical or fraudulent. Just pay attention. That’s all. That’s all I’m asking. So back to that Bid rigging slide, you know, the, the company that wins it, or they subcontracted it to the losers. You know, that could be something if you’re a GC and you’re trying to figure out if your subs are Bid rigging your jobs. If the one sub that one is hiring all the subs that last that might be a problem. So you may want to make a few phone calls, you may want to look into that a little bit more. So the third one here, quality of work is not good, or, or the supplies are not good. It’s just again, something to look into just something to pay attention to. Sometimes you just get crappy work, right? But sometimes it’s because of you know, these other other reasons. Now, this one was big when I was talking to my husband, the complaints from other bidders. So in the carpet industry, it’s kind of a weird industry, but you know, there there were a lot of jobs where the other people that bid, you know, like all the bidders that loss would get together and make complaints because they’re like, Hey, this is rigged. The guy that one is not like this is not legit and this was government work. So they were doing work for like schools and the airbase back, you know, in MacDill was fully functional. And so when the rest of the subs are the the biters are complaining, because they think that something’s up, then something’s probably up, you know, so if you’re hearing, you know, rumors or hearing things in the marketplace about reputations of other companies, you know, just look into it, just see, see what the deal is, you know, ask some questions.

Alright, foreign government projects versus private, for sure. It’s definitely more prevalent in government. However, the back to the kickbacks one we see that a lot

Scott Peper

Yeah, and I mean, the jail time and things like that whenever you’re using like federal city, state municipal taxpayer dollars, the crimes are more way bigger. Versus if if a developer who builds this hotels, and they do two hotels a year, and they like the same general contractor, they awarded them every time. Therefore the same subs, you know, that’s not illegal, right?

Suzanne Cox

Exactly. And so the, the, the risk or the downside of of this in general is even if it’s private, and people are charging more, for a job, that means the customer is ultimately paying more. So if the subs are charging the GC more, the GC is going to charge the customer more. And if the customer has to pay more, that means prices are going to go up, right? So to your hotel example, if you’re the customer, and these these guys, the GC always likes to use these guys, this one sub and that sub, you know, can charge as much as he wants, because that GC really likes him and he does good work, the GC is now charging that hotel more. And that hotel, it’s gonna end up in everybody’s in everybody’s fees, you know, it’s inflation. So ultimately, environmentally speaking from, you know, from that perspective, that’s the downside of it on the private side, is it can as your separate question real quick, it’s a little different in your experience as typical subcontractor, and maybe it’s different in the different trades. Y’all let you segregate if it’s important. What are the typical margins that you see gross margin, you see a subcontractor should bid on a project?

Suzanne Cox

What type of industry varies greatly. That’s why I was asking. So I don’t think I would leave it to you to give a range, I would say you got your major trades and thinking like, well, floor at 3015 to 30, the broad range, but my GCS are running a little bit lower, like around five, but sub should be making, you know, 15 at a minimum or you’re doing something wrong,

Scott Peper

right? And if you bid at 15, and there’s 10% retainage. Versus what your Where do you see yourself the subs that your clients you work with? How tight it is or painful it is from them from a cash flow perspective?

Suzanne Cox

Yeah, from a cash flow perspective, it’s tough because GCS expect subs to like cash flow the job, right? So they’re holding all your money, and you’ve got a couple jobs going. So cash is always tight, I don’t have one contractor where cash is not an issue, we spend a lot of time with our subs, helping them like do cash flow analysis and how to, you know how to make make it all happen. Because the and you know, when it comes to that, you’ve got to look at your GCS and who you’re doing work for and qualify them as well. We talked about like qualifying your vendors, but also qualify your customers. So if you’re working with a GC, and they’re expecting you to cash flow their projects, that’s not a, you know, not a good thing either. And, you know, contract negotiation, we’re going to get into that a little bit as well can sometimes help with cash flow.

With the subs that you see growing, having a good business living a less stressful life, where are their typical gross margins in that range between 15 and 30, probably more in the 25 to 30%. So those subs are usually sitting pretty well. Now, keep in mind, margins, depending on how you’re doing your books can vary. So some of you might be thinking, Well, my margins 50%, you’re probably not allocating overhead, which is important from an accounting perspective or a financial perspective. So if you’re not allocating overhead, that means your GNA your expenses, like your general and administrative expenses are too high. And they really should be allocated to jobs. So when I’m using these margins, I’m using in a proper accounting world where GNA is allocated to your jobs. So on some of my like site contractors, their margins can be upwards of, say, 40%, because they don’t have a lot of overhead, right? They, there’s a site guys, but my more specialty contractors are down in the 20 to 25.

Scott Peper

And if you if you have a 15 to 20% margin, and you’re not because you’re not allocating overhead to that, what’s going to happen in your opinion, where do you what do you see happen first with those businesses?

Suzanne Cox

Sure. So if you’re not allocating overhead, if you’re bonded, you’re gonna have to you know, allocate, but if if you’re not, you’re over inflating your margin, which makes most people think that they’re making more money than they are, which will ultimately affect how you’re budgeting, how you’re planning how you’re doing cash projections, how you’re doing cash flow analysis, because you think you have more money than you actually do. And then when you, you know, pay everything on the overhead side, then you’re left with, with less. So I would say that the the contractors that are allocating overhead correctly to get the right job margin are just doing better overall, because they have a better financial picture of, of where they’re at.

Scott Peper

I think that’s important for everyone to hear and listen to. If you’re not allocating overhead, those are real costs that come out. And if you’re one, if you’re living and breathing more out of your checking account, then you are really financial reporting, you’re going to find this that pain point much more severely than anyone else, because you’re going to think you have a lot of cash and all sudden, it’s just gone in your account, if you’re one that is thinking to yourself, I have multiple hundreds of 1000s, or even a million dollars a month coming into my account. And yet somehow, all of it’s gone at the end of the month, and you really can’t see that those are that’s where those problems are going to occurs. Because you’re just, you’re just not allocating the right amount of your real business costs each job or you’re just marking up, for example, your labor or marking up your materials. And you’re, then you have to hope that that’s enough to pay for your overhead instead of really allocating it. So yeah, exactly. So it’s best to do an analysis like a five year spread. Or if you haven’t been in business long, however long you’ve been in business, you know, five years part of what is my overhead rate, we do that for a lot of clients, because they don’t actually know what their overhead rate is. They’re like, Oh, it’s like 8%. And then we do the math. And it’s like 14, that’s a big swing, you know, it’s a big swing and margin. So if your estimator is out there bidding a job, and he’s got his hard costs, and he’s really comfortable with his hard costs, and you add 8% for overhead, and it turns out to be 14, you know, that job might have just gone from 15% to, you know, 9%. So, I mean, that that goes back to like having good financial information and knowing where you’re at, so you can estimate properly.

Scott Peper

Gotcha. Okay,

Suzanne Cox

I know where I think we’re running a little bit short on time. So I’m going to skip over to change order. We’ve talked a little bit on the previous slide on how to prevent Bid rigging, and I think you guys are going to get a copy of the slides. So we’re going to go straight over to change order fraud, here, it’s really similar to, to Bid rigging, you know, as far as the contract might say, you know, here’s the base contract, and then give very favorable terms for change orders. And so just those are the kind of things you want to be careful of, again, when you are giving approval authority to a person outside of the owner, you know, to a project manager, he may be able to, you know, swing the change orders for these huge profit margins and might be getting kickbacks. So in this case, you don’t always need an unscrupulous contractor. Either. It could just be a naive customer or a sub in contract negotiation, you know, you’ve got to have somebody look at your contracts, and see if they are more favorable towards you or the other person, or if they’re pretty equitable. I have a lot of clients that think their hands are tied, because the GC is big, and they run everything, and we just have to do what they say. But that’s, you know, not necessarily true, you need to have somebody looking at your contracts and making sure that your contract terms are favorable for you, as well as for your customer, whether it’s your GC or something like that. And then finally, we’re going to move over to it.

So as you can see this top sentence here, I don’t know what that means. I doubt you do either, right. And that’s what everyone feels like sometimes when people talk about it. Is is Greek, I have no idea what they’re saying. So the the ultimate overarching example here is that if you if you aren’t paying attention to IT security, and you’re not paying attention to this, get with get a good IT company. As an aside, our firm does DO DO IT services. So if you need any help with us, you know, feel free to let us know but if not us any, any IT company to make sure that you have the proper controls in place. This is really, really big right now, especially with the remote world. Everybody’s moving to remote, everybody’s moving to email and cloud computing and things like that. So you want to make sure you’re protected.

Just a couple notes on here, you know, make sure that the from email address, and the to email address if you’re responding to things, just look at them, pay attention to them. Look at them closely. Make sure they’re not different. A spoof is when someone can use your email to send someone else an email with your address. It’s very easy. I could send you an email right now from your own email address. And if if I wanted, I could change the return email to go somewhere else. So again, back to our examples of employee or vendor, you know, fraud. If if someone sends you an email that wants to change their direct deposit account, and you have that they’ve spoofed your email and they’ve sent the return back to a different email address. Now they’re corresponding with you. And that makes you comfortable. Because you, you’re like, Well, I’ve had this back and forth conversation, but really the whole time you’ve been having it with this, this fake spoofed email. So these are things to be, you know, just aware of, and Scott, I know we’re running out of time. So I’m going to just click this, this is just a couple things to check with your IT department or IT person, whether it’s outside or if you’re a savvy, you know, check some of these things yourself and make sure that you are not vulnerable. These are just some obvious ones. To prevent, like the email spoofing and the email hacking, on emails and things like that, I think we’ve seen a lot of people are trying to access money in some way. And to get to the thing that you talked about in the very beginning is if you just have dual controls on certain items, or just at least a two or three step process, these two separate steps, even if you get spooked, and even if someone falls for that second step can almost mitigate a high high high percentage of what ultimately would turn into a loss for you as a business owner. So, exactly. Back to the very beginning of this presentation. Those second steps are really the key thing to help them

Suzanne Cox

double tap question things, ask questions. Don’t you know, don’t trust email, check the TOS in the forums, check. You know, for example, our email is at Salt Marsh CPA calm if somebody were to send something to someone that just said at Salt Marsh calm most people wouldn’t notice that difference that missing couple letters. And they may respond to me you thinking yeah, I’m talking to Suzanne, but they’re talking to Suzanne, at Salt Marsh, calm, not salt marsh CPA calm. So just know those things are aware and start, you know, start checking them. And dual control, like you said Scott, and we talked about earlier is really important when it comes to financial information. If you’re just having a conversation, that’s one thing. But if you’re trading account names and financial information, you don’t want to be doing it with a fake person. So I know we’re short on time. So that was pretty much my last slide. Except questions. I just checked q&a. I didn’t notice any on there. Do you have any Scott that you’ve gotten from your side? Or?

Scott Peper

No, I would just add the only thing I didn’t see any questions. But the one thing I would add is just you know, these things happen to everybody, they’ve happened to us they happen. I mean, just if it happens, don’t beat yourself up over it. You know, if it’s happened before, there’s nothing wrong with you, you’re not you’re not necessarily doing things wrong, you just, you know, we’re all excited. We all own businesses, you all we all want to have success. And you’re it’s exciting when somebody shows interest in something and so just be a little bit more cautious. But set most importantly, set up the systems in advance so that when you are excited and you are there, your systems can catch the things that that you might not. Absolutely,

Suzanne Cox

because I always, you know, like to say, I don’t know how to lay concrete. So I don’t expect to go out and lay concrete Well, I’m going to hire somebody to lay concrete for me. So I T guys and accountants do this stuff really well. So if you’re not sure how to do this, or where to start, you know, hire somebody that knows what they’re doing. And you know, get them involved to help you because you’ve got better things to do you need to be go, you know, out there laying concrete or whatever it is that you do. So we always give our clients and advice that way as well as stick to what you’re really good at. And then trust someone you know, to do this other stuff for you so that you don’t have to keep your pulse on everything. If you’re smaller, you know, maybe that’s not an option yet. But as you continue to grow, you want to make sure these controls are in place, and doing the right thing when you’re smaller is so much better than trying to fix it later.

Scott Peper

Yeah. There was one question. Susanna, if there was if there’s a company that is a victim of fraud, is that lawsuit? Is that a deductible expense that loss?

Suzanne Cox

So if you have insurance that covers fraud, which not many people do, like the example I gave earlier, where the project manager pretty much ran this whole job through this fake company, they did not have insurance that covered that. So yes, it is deductible from, you know, a tax standpoint, right? If you do have insurance that covers it, it would just wash it, you know, wash it. Not a good reason to commit fraud though. Anything else?

Scott Peper

I don’t see any other questions, but we certainly will have our contact informations available and any questions that pop up later on please send them in. We’ll get them answered for you and reply back to anyone that has any and we’ll share this replay Way back as well. So you have the information you can resource use it as a resource.

Suzanne Cox

Absolutely. Well, Scott, anything else I it was great joining you today. I appreciate you having me on. Hopefully you guys learned something, something interesting about about fraud. And like Scott said, you’re welcome to reach out with questions, and we’ll answer them as quickly as we can.

Scott Peper

Then I want to thank you very much. Appreciate it. This is great information. I learned something today. And we’re going to incorporate these things too. And again, remember this came this idea came from us actually having some issues with fraud attempts and phishing and hacking ourselves and we thought it would be important to share with everybody else so thank you, Suzanne, for your help with us. pacifically and also willing to share with everybody else. Thank you.

Suzanne Cox

Absolutely. Y’all have a good one.

Marketing is a lot more than a logo, a website, or a Google ad. It’s everything your company does to build awareness, gain new business and deliver value to your customers.

We invited three AEC marketing experts to share their tips for effective branding, website design, email, social media, and video marketing. Watch the replay or read the transcript below.

Autumn Sullivan

In the meantime, I’m going to go ahead and get started. Hi, thank you all so much for joining me and my special guest today. My name is Autumn Sullivan. I’m the director of marketing for mobilization funding. We are a specialty lender working specifically with construction companies there Jenny’s back. We do contract financing and purchase order financing. You can learn more about us at mobilization, funding calm but that’s not what we’re here to talk about today. So first, I want to give my panelists an opportunity to introduce themselves. Seth, let’s go ahead and start with you. And then we’ll do Stacey and Jenny.

Seth Fargher

Great. Thanks. Awesome to be here. My name is Seth Fargher, I live north of Charlotte, North Carolina. My company is actually called Heightened Creative. It’s a creative marketing agency. I started six years ago, two years ago, I started focusing on construction and realize that to the typical construction, company owner, heightened creative doesn’t sound like much that they’d be interested in. So we’re talking about branding later i i chose to rebrand part of my business as construction video pros. And that’s what I do now is build websites, shoot video and take photos and other marketing tasks for construction companies. So that’s that’s me in a nutshell. I’m married. I have three kids. If you follow me on LinkedIn or social media, you’ll see a lot of pictures or videos of my son and his John Deere plastic tractor, who was three and hysterical so I’ll throw that out there.

Stacey Holsinger 23:10

Hi, I’m Stacy Holsinger from steel toe communications. I started my marketing consulting business about nine months ago now. I have experience over 15 years experience working in mechanical construction, civil engineering and home building helping companies with their marketing. So right now, I’m working with a lot of smaller mid sized contractors to help them compete in the market with the much larger people and I live in New Market Marilyn, most of my clients are in the DC area, but I do have some clients on the West Coast. And I focus on email marketing, social media. I do a little bit of video marketing, newsletter writing anything that relates to content pretty much and I am married with a three year old son.

Jenny Nix-McGerald 24:10

I am Jenny Nix-McGerald. I am the marketing director for Element Engineering today is day six. So my 32nd elevator speech is a little rough so bear with me. Elements focuses in the transportation infrastructure industry. We provide transportation engineering, civil engineering, structure engineering, surveying, subsurface utility engineering and utility coordination services. We are headquartered in the Tampa Bay area where we provide services throughout Florida and we are a disadvantaged business enterprise in the state of Florida.

Autumn Sullivan 25:01

Awesome. Thanks, guys. Let’s go ahead and get started. And we’re going to start at the beginning. We’re going to talk about branding. And I think that branding is one of those topics that a lot of people know is important, but don’t necessarily know what it means. Often it’s confused for Yeah, I have a logo, I have a business name, maybe I have a website. And we know that branding is so much more than that. The quote that I shared today, actually in the in LinkedIn was, I’m going to put it up on the screen super quick. So everyone can see it. It’s a quote from Jeff Bezos, and it’s your brand is what other people say about you when you’re not in the room, which is a controversial statement. Some people disagree with that. But I think it is important to acknowledge that your branding is about a lot more than just your logo. Seth, do you want to start here? Can you talk about your philosophy around branding?

Seth Fargher 26:00

Absolutely, I Thanks. Um, like, like you say, whether people agree or disagree. Marketing, to some degree is subjective. People have different opinions of what’s the most important, what’s the most effective, what works in one industry might not work Same. Same is true for branding.

My personal philosophy is I think branding is largely about two things, the first recognition, if people know who you are, and what you do, when they see your logo, drive by a job site, I’m going to I’m going to speak in terms of construction language, because that’s what we’re doing here. See your job site, an invoice with your letterhead comes across the table, anything every touchpoint that you might have with people, do people know and understand and recognize who you are and what you do.

And second to that is the feelings that that sort of brings up if it’s a if it’s a feeling of angst, you brought up a Jeff Bezos quote, somebody might be I don’t like Jeff Bezos, that’s part of his brand. We just came from Thanksgiving. So some of us had meals, probably the crazy Aunt Edna or cousin Eddie. And they’re a brand when cousin Eddie gets brought up, you know what to expect, because he has a personal brand. And the same thing happens when we build a brand. Everything that without that is associated with that brand can invoke a positive or a negative feeling. And you can spend a ton of money building a logo or a website or a something. But if it’s not, if people still have to ask Yeah, but what do you do, you’re kind of missing the mark. And so maybe it’s a budget conversation, which we’ll get in later.

But I believe branding specifically for construction needs to quickly and conveniently illustrate who you are, and what you do without question. And you can spend $100,000, or $200,000, and get a bunch of brilliant marketing minds, and aboard a boardroom in New York City, to say, here’s a font, and here’s a color. And here’s a shape, and this invokes this feeling. And this is what people are going to think, and it means this and it elevates that, and this is what they’re gonna see. But I don’t think the construction industry needs that because they still can miss the mark.

At the end of the day, you need people to know and understand very quickly who you are and what you do. Everything after that is is a little excessive, in my opinion. So I’ll let Stacy and Jenny have the floor on branding, because they know they both have great ideas as well.

Stacey Holsinger 28:24

Sure, so on your note to everything that you’re saying I do want to give some tips when it comes to logos and identifying who you are.

So especially when you’re small or midsize contractor and you don’t have a large marketing budget to work with, but you know, you want to rebrand or refresh your logo. Or maybe you you had added more services onto your brand and you want people to recognize that or you know, the thing about construction as most of us in our names. It’s a family name, or it’s an acronym like DPR JB G Smith, you know, and if you have a large marketing budget, or a large marketing team, you know who DPR is or JBG Smith, right? But if you’re an underdog and or you’re a smaller company and your EA s or HP s specialty is no one knows who you are, so you have to work harder to you know, you have to work harder in your logo or your brand messaging. So there’s a couple things to consider.

When you’re thinking about your logo, first you want to do a conduct a competitor analysis so check out what your competitors that going on. I recently worked with a glazing contractor and all of their local competition choose the same exact colors. So they’re all they all have the same across the board. So you want to make sure that the colors are different than your competition.

Another thing about colors is you want to choose two colors or less. And the reason for that being is once you do define your logo, the cost and price hikes up, print wise when you get to three plus colors, not just that, but your logo is less memorable, because it you know, we’re inundated with all these logos that we see all the time. And you want, you want it to be really simple and really clean and really easy.

If you’re thinking about that, the other thing with logos, you have to consider, make sure the design, the design isn’t too intricate. And it’s simple, because your logo has to be, you know, scrunched down to fitting on like a pen, promotional items real small, and then really big blown up on the big screen. So you have to really consider that when you’re designing your logo. I think the other thing I wanted to mention, so when you’re a smaller midsize contractor, again, like you don’t have a big marketing budget to work with, but you still can represent what services that you offer. So if you are like an acronym like II s, make sure in your email signature, you spell out your services every chance you can get. So this is exactly what we do on the business card to on your website everywhere. Make sure it’s very clear what you provide. Because if you can’t, you know, if you don’t have that big budget, you really got to spell it out for people.

Jenni Nix-McGerald 31:41

And I will just chime in Stacy, that was a great list of specific mechanics to remember. And says you said earlier something about the feelings being evoked when people think about your name or your brand or whatnot. And I would just remind everybody that specifically in the AEC industry, people work with people, it’s all about relationships at the end of the day. So as you’re thinking about what your brand is, maybe the logo, maybe the website, all these other things. Remember, first and foremost that your people are your brand ambassadors, so if they don’t know what you’re trying to do, they can’t support you.

The other thing is, is that you want to make sure that these people are on. On brand. I didn’t want to use that word, but yes, they are on brand, they have their messaging, even if you’re doing something as simple as providing a quick bid to a contractor. For a small project or whatnot, you’re whoever your client is working with that person is your brand ambassador, they’re going to help continue to build your image with the community as a whole and your clients. So just remember that I’m working with people to ensure that they have a great understanding of the overall brand and purpose of your company.

Autumn Sullivan 33:19

That’s a great point. Um, and, you know, I really feel like every communication that you have with your potential client is is a branding moment. And particularly for the small businesses, the smaller contractors out there, like to your point, Stacy, who don’t have the big budget dollars, they invest in the hats that match with their logo and the you know, the polo shirts, and their whole team wears them. But if your team isn’t empowered to then act on brand, they look on brand, but they also have to act and communicate on brand. And that’s like a bigger conversation. But it is a big part of branding, like when I used to, you know, when I used to go to other companies and do branding workshops, I would always meet with the customer service department, because really, they’re the heart of the brand. like who are you when something goes wrong? And how do you communicate with customers when things are challenging that all of that is part of your brand as well.

Since you brought it up the emails I did want to ask you, Jenny about if you had any tips on turning those moments into marketing opportunities, like if you’re sending a proposal, how can you make your proposal stand out from a marketing perspective?

Jenni Nix-McGerald 34:39

Um, proposals, even simple bid, pricing lists, whatever even if you’re considered in a commodity code and you’re looking at just getting the lowest bid type thing. That piece of the sales cycle is pretty much The cherry on top of all your marketing Sunday, everything you’ve done up until this point. So it’s important to make sure that every thing leading up to this submission of your proposal or bid is that it’s in there. You you demonstrate you’ve heard what your clients been saying you, you understand where they’re coming from their pain points, their challenges, and how you can offer that solution if it’s a qualifications type proposal. And again, it’s just the sort of, it’s the, it’s that it is a moment, but it’s, it’s sort of a combination of many moments, and you want to show more than anything else that you have been listening, and you hear what they’re saying, and you are there to support them, because that’s how you have a repeat client.

Autumn Sullivan 35:57

That’s awesome. Thank you, I, when I work with clients, when I used to do freelance marketing, I would remind them that your email signature is a great marketing moment, it’s always there. And, and a tip that I learned just this year, and I love and we’ve been using in our own efforts, and really seeing the value of is putting a PS underneath your signature. That and that is the the CTA that drives to a value moment. So if you have a really cool video about who you are, as a company, you put PS want to learn more about, you know, ABC contractor, and, and then you have a link off to your video. And the the the click through rates on that are really quite impressive. So that’s, that’s my tip for, for email marketer.

Stacey Holsinger 36:48

And to add to what you’re saying about the email signature, too. You can also link it directly to your websites, all of your social icons. You know, it’s not just who you are, but who your company is what your services provide. And then use it as an call to action, drive them somewhere else on your website, if hirings your thing. And you’re looking for people that you can encourage, you know, if you have a large organization, and you’re really struggling to hire, make sure that’s included in your email signature, like apply here, you know, right to your careers page, they’re a huge opportunity in the email signature for call to action.

Autumn Sullivan 37:29

So let’s go ahead and talk about the the big, the big rock of marketing, let’s talk about websites. We work with a lot of smaller contractors, and a lot of them don’t have a website at all. And when it comes up in conversation, what we often hear is well, our businesses 100% referrals, so we don’t we don’t need a website. Which just as a marketer, I’m like, Oh, my God just died inside. Right? Tiny bargain. We just had a heart attack. Um, but Seth, I know you’ve experienced this as well. And I know you had a story about someone saying that they had kind of a, they had an older website. And but it was fine enough for them. So would you mind telling that story and then kind of talking about why companies need to invest in a website, even if their business is mostly referrals?

Seth Fargher 38:27

Absolutely. I had worked on a company for about a year and a half finally got around the table to have a conversation about helping them redo their website, been in business for 40-50 years long standing history in the community, multigenerational. Those are all the reasons that they’re in business. And in that kind of discovery meeting, they just said, you know, we’ve only we acknowledged we all agreed that they didn’t have a great modern website that really illustrated who they are, are illustrated it well.

And they said, you know, we’ve we’ve only ever gotten one, one lead from our website. And I explained to them so you understand that your website is probably not as good as it could be yet it brought you a lead. Is it possible that a well engaging, impactful video that does a better job of displaying who you are and quickly showing that you’re an authority in your space? might bring more and kind of sat back and the light bulb went on.

So yeah, that’s, that’s the that’s, that’s one of many examples. There’s a lot of of belief and perception around the value of a website, what I always explained to people, regardless of whether your business is 100% referral or low bid, people are looking on the low bid side. There’s a lot of people that submit bids and if you’re the same or close to the same at somebody else, what’s going to be the deciding factor, maybe an existing relationship. But if you’re relying on relationships and that person to do t or whoever’s comparing bids, pops over to look at this website and sees an impactful, engaging video that shows a company that’s investing in their people that’s got cleaning equipment that’s got well maintained equipment. Do you want to bank your referrals or your your relationships so slowly that you’re going to win that job?

So it just gives people a more of an opportunity to see who you are and what you do and build authority. This is who we are, this is what we’re good. And people, it’s about legitimizing who you are, oftentimes I had a company, a concrete manufacturer sent me a text that he got from a superintendent that they were already working with, and the guy just they’d already done the job, they were already a customer. And he just sent him a message. So I just want to tell you guys, you have a really great website, we look forward to working with you guys in the future. That was a that was after the fact that he was telling them that the website was good, they were already a customer. But it goes to legitimize who they are, it shows that companies are willing to invest who they are.

And then the whole the whole looking thing. External people are searching online for sitework companies, massive developer out of town is maybe looking for a site or company or a paver or a painter or whatever, you’re in H fac supplier in that area. Maybe they got their people, but it costs them a lot more to come from out of town, it saves everybody money if the people working on site are going home and feeding themselves and everything at night, then paying for outside lodging and things like that. And so people are looking for local subs to do that work.

And then recruitment and employees, everybody’s feeling the strain of of needing help. I don’t want to keep I keep giving these stories, but they illustrate so well I had a guy contact me said yeah, we need to we need a website, actually, we have a parent company who needs a new website to to be perfectly honest, they own us. And if I was looking for a job, and I looked at their website, I probably wouldn’t apply. So again, perception is huge with recruiting, if someone’s 25 year veteran equipment operator, and they don’t necessarily they go look at your website, you may be you may be a 60 year company that’s been around forever. And they might go elsewhere. Because the the content they see the perception that they get is that this other company is more established or treats their people better, or something to that effect. And so those are a few examples that I that I highlight when talking to people about the importance of websites.

Autumn Sullivan 42:36

Stacey, you guys, you just launched a website today for a client. Yeah. Can you share what you? Do you have like VIP pages, the pages that every company has to have, as a minimum website?

Stacey Holsinger 42:52

Oh well, that depends on what you’re looking for. But I guess if you’re a smaller amount, it really depends. If you’re a vendor supplier, you know, you probably you only need a couple a couple pages, because you’re working with manufacturers. But then if you’re a small GC or sub, you know, that could be up to like 14 pages or something like that. It depends on, you know, the projects that you’re working on and what you want to highlight, it depends if you have a hiring problem.

But what I can say what I wanted to say first is Amanda had a great point in the and I know Amanda, she’s great. So some people do rely on social media, right, instead of building a website. The problem with that is, as we all know, social media can go down, you don’t own social media. And Facebook could go away one day in one day. So they also have you know, their own format their own rules, and they control Facebook or Instagram or however, so you need control of your marketing and your brand. And you’ll get that by having your own website. So that’s the importance there.

But what I would recommend for you know, smaller mid sized contractors, when you are developing your website, some of the things that you want to make sure especially on the home page is define if you’re a commercial residential or an industrial contractor, this is super important because I get phone calls all the time that you know from an H back company that will say we keep getting residential people that are calling us and we only do commercial. So you want to try to like cut down on those phone calls by making sure and all of your marketing that you just say you only do a commercial or you do commercial and residential or you know, whatever, but just make that message really clear.

The other thing on your homepage, you want to make sure the location what is the territory that you guys do. Are you a national organization Or do you only work on a 75 mile radius of DC, something like that, you want to make sure so when the out of town guys do find your website, they know exactly who you are, whether you work in commercial, what locations you work in.

Testimonials are also great. You want to make sure you have that on your website. This was a conversation on LinkedIn not too long ago, we don’t have a place in the commercial contracting industry, where you know, except for Google reviews, where people are leaving those comments. So that’s the only place to really do it, where people can learn about your company and whether or not you’re a good contractor. So you want to make sure you get testament testimonials and permission from your clients that you can put on your website. So when people do see you, especially on the homepage, you know, they’re legit comments.

Another thing that I don’t see on websites that I’d like to see more often is, especially from the smaller contractors, if you hire interns, or apprentices, they’re visiting your website, and they need to learn more about your company and what you offer. So make sure you have a spot for that.

And also an FAQ section. You Your website is strictly for your clients, it’s not for you to brag about your company, you know, you want to make sure that when your clients are visiting their website, your website, they get all of their questions answered. And you establish yourself as a thought leader and an expert in what you do. So those would be my tips for your website.

Autumn Sullivan 46:41

Jenny, did you want to add anything before we move on to our next topic? Yeah,

Jenni Nix-McGerald 46:46

I’ll just wrap it up by saying, um, we do still, to my point earlier, it’s a relationship business, for sure. But these days, we’re all attached to our phones. So if we’re your website is really a virtual business card. And when I get a text saying, Hey, do you know of a firm or contractor that will do XYZ? If I don’t have to have the contact? I’m like, oh, yeah, that one company, we work with them. They were great. I can go real fast. And just shoot them your website immediate and be like, yeah, contact this person. And so yeah, remember, which also

Autumn Sullivan 47:31

like the importance of mobile, right? Like you should have a responsive website, because if Jenny sends that, like, Oh, check out this person, and sends that website link, and they tried to open it up on their phone, and they can’t, well, they’re gonna move on, right? Like, there’s like, Well, that wasn’t like, I’m not going to do the hard work to find this. Right. We’re all busy. So make sure your website is responsive. Um, since we’re talking about Facebook, oh, did you wanna say something? So

Seth Fargher 48:01

I add one more thing. That’s a good segue to Facebook. We can talk details of websites, the importance of imagery, or video, or SEO, or those different things. And a lot of that is very overwhelming to people. One of the themes we talked about for this call, and for companies to not feel like they’re drinking from a water hose is a crawl, walk, run strategy. So if you’re doing nothing, do something, if you’re not spending anything, spend something. And as it relates to websites, it is a tool. And it’s a two way street, it is not just something for people to find you it is something for you to be active with my friend Aaron, who’s tuned in with the construction channel, if you’re not familiar, it’s like a Netflix for the construction world. I get lots of cool stuff on there. He mentioned to me that that’s that so many construction companies don’t put value websites because they get no traffic. Well, part of it is how much how much you pushing it from social media, which we’ll get to how much are you doing to work to drive traffic to your website from your signature, like you mentioned autumn with a P with a PS or those kinds of things. And so having a website, yes, it’s crucial. It’s important, get it there, and then start looking for ways to optimize it to drive traffic to it to get it in front of people, and that kind of thing. And so I wanted to make sure and point that out because and social media. Here’s the segue social media is probably the easiest way for us all to drive traffic to our websites. Well done. You can thank me later for that segue.

Autumn Sullivan 49:31

I’m okay, so social media, strangely enough, is is another platform that I see a ton of value in and I have a lot of contractors. I mean, in my career, a lot of other industries as well, but construction seems to one of them where they say oh, it doesn’t work in our industry, particularly the the commercial contractors. They’re like, Oh, well, my people aren’t on Facebook. My people aren’t they don’t use LinkedIn or they don’t Use Twitter. So Stacy, I know you and I did an entire webinar on social media for the AEC. Industry. Do you want to go ahead and kick us off on this topic?

Stacey Holsinger 50:09

Yeah, I don’t know where to start. Um, yeah. So this is, this is one of the marketing initiatives that I probably get the most pushback from, when it comes to owners of big, you know, large or not large, smaller commercial contracting, why should I even be on there, I noticed most of them that say, that don’t have accounts themselves. So there’s a lack of understanding of the value that social media brings. I also noticed, it’s very much a generational thing, I have a lot of younger family members that are going to be taking over the business in the next like five to seven years. And they’re pushing, you know, their parents, or whoever’s owning the company that they’re related to come on, we got to be on social and they just can’t get the benefits across to them. But social is not going away anytime soon.

You know, LinkedIn has been around for 20 years, it’s the top b2b business to business platform. We’re all on here as a community talking about commercial construction. So you know, it’s not going to go away, it’s a great tool, it’s how we learn about each other, our companies, how we can help each other. It’s another form of marketing, or I’m sorry, networking. So you know, you have in person networking, which is old school, but very, very important. And I would never say not to do that. But you have to digitally participate and connect with people virtually, that’s never going to go away now. So you have to make sure that you’re you’re missing out. Because if you’re if you’re just doing the in person thing, and you’re not connecting with people, you’re missing out on so many different conversations. And your competition is going to beat you to that. So that’s, that’s just some things about social media.

But the four top platforms that the commercial construction industry should be involved with is Facebook, LinkedIn, Instagram, and YouTube. YouTube is your second largest search engine, it’s also connected to Google. So that’s gonna help with your SEO, and we’ll talk about video marketing. But those are definitely the top four platforms. And what I can say, with my personal experience, and 15 years in this industry, Facebook is usually you know, the platform that your employees like to get recognized on, there’s a lot of communication with employees and referrals, it’s a great place to maybe experiment with some recruiting ads. Because as we know, this is very much a family based. The construction industry in general, it’s very family based and, and everyone on Facebook, it’s very much connected with their friends and family. So that’s where you’re going to make those referrals there. So that’s the importance there. LinkedIn is where we’re having professional conversations about what’s going on in the industry.

And people love to see what other projects people are working on. So when you’re, those seem to be the most engaged posts. So when you’re talking about your projects, and you’re giving recognition to your suppliers, your subs, your vendors, your GCS, people love to talk about the projects that we’re working on the same as you know, you hear that story. And you know, your dad’s pointing at all the projects that he built in the city, that kind of thing.

So that same things going on, but on social media, on LinkedIn, the tip I would give for posting though, be very careful that your posts aren’t egocentric, and they’re customer centric. It’s me and Seth talked about this yesterday. But I’m so egocentric, egocentric marketing is just kind of our old school marketing and where you’re talking about, look at me look at the quality we give, we have the best experience top top safety, you know, everyone’s saying that. So you got to be careful to talk about, you know, the challenges that you all overcame on the project. Talk about trainings that you offer, like anything that will give thought to the customer and solving their problems. You always want to keep the customer top of mind.

And then Instagram, you have your pictures and you’re showcasing and Seth could probably talk about Instagram more because he’s more of that visual content person and then YouTube you know, feel free to take take But there’s two

Seth Fargher 55:01

honest ad real quick because there’s a great question that I empathize with Michael Dutcher says, What if you’re opposed to social media platforms? Michael, I am opposed to most social media platforms I despise being on Facebook and the constant barrage of stuff. But I can’t deny that there’s nine, or I don’t know, 9 billion people, a billion people, I don’t know, my numbers are wrong. There’s a gazillion people on Facebook, despite what the kids are telling people about tick tock and Snapchat, and the other million of them, Facebook is still the primary social media probably for your customers, the the reach you can get with Facebook ads, I do ads for a painter down here. And I can go target people within a one mile radius of a pin that I drop on a peninsula of Lake Norman, and just show it to people that live within that and put his ads there. And so that sort of your people are on social media.

So I empathize with you, I don’t love it. It can be it can be like drinking from a water hose. But you don’t have to post five times a day, I’m going to recommend that I wouldn’t post everyday even necessarily, Stacy would be great to talk about the strategy, hire her to talk about that, and your messaging and get that because fewer well crafted posts are going to do more for you than just throwing stuff out there.

I also want to say to Stacy’s point of not like, egocentric, there’s a way to build authority without thumping your chest. Look at me, we’re awesome. A client I’ve worked with that I’m dying to I tell them I’d like you to you need to brag about yourself a little bit more. Because they they invented the slip form machine, their product is on like six continents, maybe five, maybe six. Like that’s marketing gold, you don’t have to brag to the world. But just explain your authority. We started this back then we’ve evolved, we’ve grown we’re American made made in Salisbury, North Carolina, we’ve got people that have been with us for 50 years, we’ve got multi generations, like all that stuff just gives people the warm and fuzzies when they watch a video, they want to do business, it makes them feel good about doing business with an American made company. So in their example, those are things for them to, I say brag on, but they’re not they’re not thumping their chest, they’re just telling their story.

And that’s, that’s part of a huge part of marketing is telling your story and do so with authority. So you carve out that space in that niche as being the authority in your field. There’s a

Autumn Sullivan 57:29

that’s a key point that you just said Seth and I wanted to bring it up because in, in creative writing, which is what my background is, I don’t have a background in marketing. My background is in English and in writing. We have a mantra s uh, the our mantra is show don’t tell. Right? Um, so don’t don’t tell me, you did a great job. Show me you did a great job.

And I think in in in marketing, one of the ways we do that is we focus on the customer, we tell the story of the customer. And by focusing on them and telling that story, we show how we helped we show our authority without ever having to say we’re the best we’re the you know, we have the most what have all those things that everyone old that old school marketing focuses on. Instead, we just focus on the customer and tell that story.

That’s the, and to the you know, I also hate being on Facebook, like, I hate it. And I don’t go there that often. But I can’t deny that it’s in the top five traffic drivers to my site every month. I can’t deny those numbers like it just is what it is. So I don’t engage with the parts of Facebook that I don’t like, right? Like I just go post good content on our company site and respond to the comments.

So, okay, we have so much to get to. Um, let’s go ahead and talk about video. I feel like one of the biggest barriers to video is the cost. Everyone thinks that it has to cost a million dollars to have a video, the

Stacey Holsinger 59:13

video, can I just answer Louis’s question because it’s based on social media. So he said, What can you what can you say about recommended business development efforts for small general contractor firms? So when it comes to social media, I would focus on LinkedIn for your b2b and make sure you’re participating in group discussions. You have a strategy, one of my clients had a strategy the other day and I’m gonna mess up the numbers because I did not write it down. So I have to talk to him. I don’t know if Chris is on this call. But it’s you know, make sure your business development team spends time on LinkedIn or whether you post twice a week. Just say you have you have a commitment to reach out to a couple connections per week, and you post on other people or you visit your target customers and engage with them on their company pages. So that’s a social strategy for a business development person on social media, you also want to make sure that you fill out your profile, there’s so many people in our industry that are still not doing that. Make sure that they understand your brand, what you represent what services you represent, you have a nice banner in the background that represents what company that you represent, and work for. So but LinkedIn is where it’s at for business development, I just wanted to get that answer. And for you,

Autumn Sullivan 1:00:48

absolutely, our sales team and our CEO, we have a monthly LinkedIn meeting where we talk about what are you going to talk about on LinkedIn, and we make, you know, I make sure that all three of them are posting regularly. And, you know, sometimes they’re like, help me say this, you know, which is something that I think is important, just real quick, like if you are afraid to start posting, because you’re afraid of how you will sound or that you’re you know, quote unquote, not a good writer, like, I advise you to go spend an hour reading other people’s posts on LinkedIn, because people who are hugely influential in the construction industry space are not English masters, they what they are, is authentic people, you know, like, we forgive a spelling error. When the story is compelling, we, we don’t care that you don’t know where a comma goes, if you are speaking from the heart, that’s like, forget all of that, put all of that grade school grammar stuff out of your head and just tell the story, or just make the point that you want to make, just start talking. Because what LinkedIn really is, is just an amazing place for real conversations with people to just like Seth says, if you’re doing nothing, just start doing something and and see how it takes off.

Seth Fargher 1:02:08

I would recommend like, optimize your page talk to Stacy about that. Full disclosure, because we’re being real here. Stacy was helping me optimize my LinkedIn page yesterday, because my byline was catchy and saying things that I want it and she’s like, it doesn’t make it painfully clear right off the bat, what you do, and I even updated my image, I had an awesome profile image. She’s like, change it to something with you taking a picture of a piece of equipment, and I did. And so those those those matter very, very greatly.

Autumn Sullivan 1:02:41

Yeah, they really, they really work. LinkedIn provides us new leads and closed one leads every month. It’s which, which didn’t start until our CEO leaned in hard and started checking LinkedIn every day. And now he’s completely addicted to it and loves it. He’s a huge presence on there. But he was very hesitant in the beginning, we had a whole conversation about how it was okay to just be yourself on that platform.

Stacey Holsinger 1:03:04

Definitely have to have a strategy and spend time and know that your strategy is long term. Don’t just post one time and think that no one’s connecting with me. That’s not how this works. Like, you have goals throughout the year and try to make those goals and then you’re going to start seeing that leads will come in and you’re connecting and getting more opportunities, I promise you.

Autumn Sullivan 1:03:28

Let’s go ahead and we’ve had about 15 minutes left. Let’s talk about video for a little bit. Let’s go ahead and get into the video conversation. Seth I know video is your bread and butter. So if a company invests in a produced video What strategies do you recommend for them on on extending the shelf life because I know Stacy has a story about how long those videos but if I’m going to invest in a big video, what do I do with it?

Seth Fargher 1:04:01

You have to begin I always advise people begin with the end in mind. So what are you hoping to i A lot of people I want to put it in a video okay, what do you want to do with it? I don’t know. Tell our story. Okay, who’s it for customers? Is it a recruitment video? Is it a process video? Is it for new hires, and no one outside of the business will ever see it? And so first of all, establish what you’re wanting to do with it. And many video won’t ever go beyond the confines of a safety your training media me or opportunity meeting and that’s fine. But begin with the end in mind what who’s going to be the end consumer of it? Is it for a sub isn’t for a customer? Is it for a GC? Is it are you trying to win someone over with it? Are you just trying to tell your story? What’s the end goal for that video? And then that’s going to determine how you’re going to create it what story you’re going to tell and then ultimately how and where you’re going to publish it as it relates to social media.

Social media is huge. Social media is is quick hype and it’s going to happen a low shelf life, YouTube and Stacy can talk about this. YouTube has less hype beginning, but it lives forever and it ramps up. And so it’s like a snowball that keeps getting bigger as a Rolls where Facebook or Instagram other ones generally tend to trend down.

And so the thing that is the biggest component or asset to video, in my mind, is that it gives you the opportunity to control the narrative. So if you think through, man, people just don’t understand what we do I keep having the same conversation over and over again, take your frequently asked questions that Stacy talked about, use that to develop a script. And so that there’s no denying who you are and what you do at the end of the video, you said showing showing is telling. So you build a video, your your script, answers all those frequently asked questions.

And the imagery just supports that whether you’re H fac, or sitework, or asphalt, you’re building authority, you want it to start here and the person’s emotions through just to be going wow, yeah. And by the end of the movie, they’re going, geez, this is this is who I have to hire I had, I had a very high up executive and accompany remark on a much, much, much smaller, concrete companies video that I did, he’s like, gosh, I got done watching the video, and I wanted to go apply to work for him. And I’m like, they probably couldn’t afford you. But But he invoked with him and told the company culture, how they train their people, they believe in their core values that building strong, capable, confident employees will yield better jobs for their customers. And and it was a it was a here’s who we are, here’s what we do. And we’re successful because of our people. And it was just a huge call to action. Come join our team at the end. And it made that guy. So knowing knowing how and where you’re going to use that Stacy has a lot of good information about teasing videos and things like that, that I’ll let her speak on. But those are some of the big ideas around video.

And then it’s a tool, it’s an outbound tool, put it in your signature, send it to people, there are still people sending a one page like this, like who or what do you guys do or hey, we’d like to get on your your bids list, because you’re just like, You sent a Word document on company letterhead. And, and that’s, that’s, I won’t say that’s not marketing. But in this day and age, it’s not good marketing. So

Stacey Holsinger 1:07:24

yeah, I guess, to add to all the wonderful things you just said, two quick stories about video marketing, we had did a low budget video for a day in the life in each back tech for mechanical contractor that I had worked for. And we drove traffic to the careers page. And this this video, I don’t know how old it is now, maybe eight years old is still to this day driving traffic to you know, the mechanical contractors website and people all over learning about this mechanical contractor. Now. Another one would be you know, if you have your we’re talking about the capabilities sheet, why not do a video on your capabilities, if you have a fab shop, or a project that you want to highlight from beginning to end, that’s so much more valuable to showcase what your team can actually do, and then just listing it out on a paper.

And most of the time when you do have something to share with that, you know, the biggest mistake that commercial contractors make when they do decide to do video and they look at the price and they’re like man, five to $10,000 or something like that. That’s a lot of money. But your video is going to last for you for years down the line. And it’s going to last for you if you have a video strategy to go with it. So what that looks like is you know, you create your video and then you contact your videographer and you’re like, can you please give us a couple of 32nd teaser clips. With that you can use those teaser clips for Facebook ads when you’re recruiting people. Or you can just use them to start the buzz build momentum about the video that’s coming out over a couple of weeks. You know, you don’t want to just you spend a year tracking a project right and you spend all this money and then you just post it once and forget about it. And they get so discouraged that the numbers aren’t there, there was only 100 people that watched it. It’s because you didn’t have a strategy and you weren’t building buzz and momentum up with your videos. So the teaser clips that you want to spread out.

You can also use the video to do a private tour. You could invite clients in and host like a little movie or a happy hour or something like that. And they could watch the video with you if they don’t want to do that. You could do a virtual presentation. You could also do a separate separate event for employees. Whether you do a virtual presentation or show that video at your yearly holiday party that helps, you know, build company retention, people are proud, that kind of thing. And then after that, you publish it on social media, social media live, and then you want to do an email campaign out to your clients. So you do this over a month or two time and people the buzz is starting to create over time, and you’ll see that the engagement numbers are going up, and people are more likely to share the video that you invested in.

Autumn Sullivan 1:10:39

Absolutely, Jenny, did you want to add anything to the video marketing conversation?

Jenni Nix-McGerald 1:10:46

Video was not my strength, I will leave it to the two experts.

Autumn Sullivan 1:10:50

It is not my strength either. In 20, in 2020, when we all had to go home for the pandemic, our CEO, Scott Cooper said to me, I want to do YouTube videos. And I was like, I don’t know how to do that. And, but we started bootstrapping it. And it is now one of our top marketing platforms. And we we love it. And we do we work with a videographer for some of our work. But also sometimes Scott just talks to the camera and answers commonly asked questions, or he’ll get on the camera and say, I just got off a great call with a client. This was their problem, this is how we solved it. And we just, and then I create a super quick design in a free tool called Canva. And I’ll put a link to that in the description for this. And then, and then we have a new video.

So you know, crawl, walk, run, if you’re not doing anything. Start, you can start small. I mean, we literally started when everyone was stuck at home answering the questions our our clients, were asking, What can I do with this PPP loan? How do I figure out if I want to furlough my employees? Or you know, or let them go? It was and we just asked our expert network, which is the other thing, right? Build your network? Have other people come on to your video, it doesn’t have to always be about you.

So we have we only have about eight minutes left? Ah, so I think one of the topics that we really need to talk about is budget. Because it’s I think it’s one of the stumbling blocks with marketing, how much should I spend? Why should I spend anything? How do I prove the ROI? All of that fun stuff, particularly in this industry, where I don’t know what you guys experience, but my experience has been? Someone’s kid does the marketing, because they’re there and they’re young. And so they know, right? Like, they know Facebook there. So so let’s talk about what companies should realistically be looking at in terms of budgeting for marketing.

Stacey Holsinger 1:13:02

Let’s start with what you just said. So there’s problems with getting someone on board that, you know, might they could understand social media? Yes, but do they have a marketing background? Can they simplify a message, do they understand commercial construction, because that’s where you’re gonna run into a ton of branding problems. And they can make a really critical mistake and mess up your brand. And once it’s posted, you can delete it, but someone can take a screenshot of it. So you got to be really careful.

So based on what you said, my best advice would be, you know, you can hire an entry level marketing person with a marketing background, that’s great. But you have to have a plan to make sure that this person is included in your strategic planning meetings. They’re learning about your products and your services on a regular basis. So you’re giving them the training, whether they’re participating in vendor trainings, or whatever, getting involved with the safety team, because God forbid, you post a picture that you think is fine, but you didn’t run it by the safety director. And now you have a OSHA citation photo on your website, which by the way, happens a lot when you’re not familiar with the industry. So that’s why you don’t want to hire someone that just knows social media, like Please do not do that.

Um, and then the other thing is, if you don’t, if you want to hire an entry level person, and you’re going to invest in their education, that’s a solution or you just hire someone with 1510 years of experience that has been through all these life lessons. And you’re going to feel that peace of mind that those mistakes are not going to happen. So those are the points on that.

Oh, and then real quick for outsourcing. If you’re going to just choose a marketing company that’s not familiar with the construction industry. I’ve seen so many mistakes happen with that, first of all, they’re using AI stock images of guys in trenches that are squeaky clean that look like they just got a manicure done. Like that does not represent our industry at all, they don’t have even a paper cut on them, like who’s gonna want to go work for that person. And then the other thing is with that, you know, I had a client who hired an outside marketing agency, and they just got all these AI stock images. And these images were of a company over Asian workers and their, their whole seat safety gear was completely different because of the weather conditions over there. Not to mention, it was all Asian workers in there on their website, photos, and then United States, you know, the State’s website, so you got to be really careful about that you have to choose someone, or a marketing agency that has a construction background. So those are my comments on that. Just be careful.

Jenni Nix-McGerald 1:16:04

I want to go back to your thought about budgets in general on how to create them, and nobody wants to talk about money. Nobody wants to talk about spending money, because that’s just 13. No, we don’t do that. However, there is truth to the statement, you have to spend money to make money. That doesn’t mean you just shove money out the window and see how it goes, you can be really intentional with where you develop your budget, there’s a variety of ways to develop a budget. But I have found over the course of my career. And while I’ve spent the majority of my career in this industry, I’ve been in other industries as well, that goal based budgets are pretty much the best way to be pretty mindful with where your money is being spent in will be able to show you the most return on investment to kind of wrap in that business development question.

So as a as a leadership team, you really figure out what your goals are for the year. And from there, you develop your micro tactics, which include things like the video social media that we’ve been talking about, and also just where you might have participate in industry organizations, or community organizations, where your clients are at, and things like that, by looking at your tactics, maybe you’ll do a website, maybe you’ll do a mailing those still work, actually, all the thinking about those micro tactics, and then putting that plugging in that information.

And then giving yourself a little bit of a cushion is a great way to just have a really solid budget that won’t. That’ll be pretty close to accurate. Budgets are flexible overall. But as you’re going down, you might have to pivot. But um, it’s, it would be easy to say, hey, you need to spend 3% of your sales, revenue on marketing or 10%, or whatever. But at the end of the day, the best way you’re going to know and actually achieve your goals is by having that hard look at your at what your goals are, what your micro tactics are going to be deployable. And by having micro tactics built into your budget, if you know, things shift, you have to maybe make some cuts, that’s easier way to look at you can cut some micro tactics that way. So and that’ll help with your return on investment.

Autumn Sullivan 1:19:03

I love that Mark. Mark jury has a comment in the chat about speak to people about investment. And that’s, I can say that’s very much how I’ve handled. I worked in for marketing agencies for most of my career, and when we would go to clients and we would say we’re going to ask you for you know, $5,000 a month or $8,000 or $12,000 a month. It’s a huge ask, didn’t matter how big the company was, they were all like a huge amount. But when you when you reframe it, as you have told us your goal is x in order to reach that goal, we will have to you know, if it was wedding bookings, for wedding company, we would have to say, well, in order to get that we would have to drive this much traffic in order to drive that much traffic. We’re gonna have to do these micro tactics, those micro tactics are going to cost this. That’s like it really reframing the conversation. As an investment toward the goal has been very helpful. And it’s what I do here, you know, I look at what our sales goal is, and then work backwards from there. What do I need to do in order to reach that? And then how much do I need to spend in order to make that happen? It just really reframes the whole the whole conversation.

Seth Fargher 1:20:21

Oh, and good marketing, good marketing is, is an investment that appreciates It’s tax time. People are expensing things, buying equipment, paying for trucks, let’s buy the CEO a new truck, because we got to spend money and whatever. But everything, no single one of those things depreciates as soon as you buy it and start you good marketing, to the YouTube to the social media to photos, if you got a great photo of your equipment doing something from three years ago, but it’s it’s still applicable. And that guy’s still with you, you can use that on into the future, you can continue using images, not to mention the the snowball we talked about with YouTube and stuff. So good. Marketing is an investment that appreciates over time. And then we got stationed I got a question yesterday about margins and slim margins and projects. Don’t think about this one job has to, I got to write the check now. But it’s not coming from this one job. Divide that because that website, that video will live over the next year, two years on the future, when you look as like, oh, but if we take half a percent off this project, or 1%, we’re paying for it now. But actually, in all reality, it’s dispersed amongst that, because it’s not only related to that, so that’s a way to overcome that for all you to take to your CFOs that will let you spend marketing dollars. Yeah,

Stacey Holsinger 1:21:37

it has a it has a long shelf life. So and you can repurpose things, just as Seth was saying. So you know, just because you post something once doesn’t mean the right person solid. But if it had good engagement, you can repurpose that post. That’s why sometimes on your feed, you’ll see people post the same thing a couple times. And he has a little annoying, but you have to stay consistent with your message. So it rings with people. And yeah, it can have a longer shelf life, especially, you know, when we were talking about video and everything like that.

Autumn Sullivan 1:22:10

Absolutely, yeah, absolutely. And I we’ve even found that our some of our top performing blog articles are from two years ago. And and they consistently are in the, you know, the top five pages visited on our website. So we made videos of them. We made infographics related to them. And we actually, we don’t blog as much as we used to, we do more video now. But we share those blogs on social media over and over again, because they’re because they’re popular because there are top performance drivers. So the the investment in those blogs is long been spent, but they’re appreciating in value. Um, so did you answer the Google Ads question? That was in the chat? did awesome. So we’re a few minutes go ahead.

Stacey Holsinger 1:23:05

I hope I answered that. I don’t know if I did. But I throughout it i throughout in answer.

Autumn Sullivan 1:23:10

There were a few minutes over I did want to ask this one last question. And I did want to tell the audience I will be sending out a webinar replay for everyone, as soon as I get this and I do the magic in YouTube to make that possible. And it will include contact information for anyone you want to contact with. So I’ll include your LinkedIn info, Seth and Stacy are both consultants and so we’ll make sure that you have their website information as well. And if we didn’t get to your question, please reach out and maybe we can do a part two of this we can make it a regular thing. But my last question for each of you is what do you think the number one thing is that holds companies back from particularly in the construction industry from truly great marketing

Stacey Holsinger 1:24:01

fear just fear of you know what the outcomes gonna be are they you know, gonna judge me or whatever. But you know, that’s part of it and you you have to try things and see how the market goes just as long as you you know, have your ducks in a row you have a strategy you know, you really understand and know your customer their pain points and are checking to make sure that the imagery video you use is safe, running it by your safety director, you know, that I’ve seen some really cheesy marketing that does really well up to really boring professional you know, the CEO just talking to the camera and no one really cares what he says. So um, you know, just keep experimenting and trying and that’s what marketing’s kind of all about and eventually you’ll you’ll see also keep an eye on What’s Trending? You know, a lot of the social media have like trending corners do YouTube hasn’t LinkedIn has it, see what people are talking about on Google and YouTube, you can start typing in, for example, commercial painting or something, and then a list is going to populate. Those are the things that people are searching. So that that’s going to give you ideas for content, whether it’s video, blogs, whatever, that’s what people want to learn about. So that will give you ideas. You only want to go next,

Jenni Nix-McGerald1:25:35

or I’ll go next, I see somebody put in their time, fear is a very good answer. And it seemed people forget are all so busy, and they forget how much it takes to actually, with strategy, put something together, put a plan in place. But honestly, at the end of the day, as long as you’re authentic and intentional with how you present yourself, then people are going to want to work with you, you just have to be visible in the in the industry. And as I said at the beginning, people work with people. So empower your people to have their have your message and let them just go out there and do what they do.

Seth Fargher 1:26:26

I would I would echo those things. And I’d say the biggest thing, holding people back is the same thing, holding people back and causing the trades industry to struggle to have to have people in it, which is just a wrong belief.

Overall, people have a wrong belief about what the trades are about construction jobs, or H fac jobs. Or we’re still shoveling our kids to college because gosh, I don’t want them to dig ditches or lay brick or whatever. It’s a wrong belief. Because I know an awful lot of rich people that work in and own construction companies. But a wrong belief about marketing about LinkedIn about its value about social media a wrong belief about having a website a wrong belief about the time

Yes, everything takes time. But it may not take as much time as you thought we’re talking crawl, walk, run, set small manageable, attainable goals, one post a week, you’re you’re doing better than then you have in the past if you haven’t done anything and so just general wrong beliefs about marketing about how much it will cost. You know, those kinds of things. I I love talking to people about these things. You know, exploring, exploring ideas, things you can do so forth.

So you want to talk to me, I’d love to talk with you about ideas or things you can do. And being on LinkedIn is huge if you haven’t gathered that from today, and it’s free. And there’s phenomenal ways you can network with your customers. And you just need to think about it differently and fight that wrong belief. Because I think wrong belief about marketing, what it costs, the time it takes who can do it, your messaging, just creates what they said a lot of fear. And so but but consequently, people do nothing instead. So I would say that wrong belief.

Autumn Sullivan 1:28:11

I love that I think that’s such a good place to land. And I liked what you said about like the response that you gave to mark of Mark shared and Mercury shared in the chat fear of sharing your secret sauce. And Seth responded true with the highest form of flattery. So when copying your work, right, which is, which is great. But also, I’m reading Seth Golden’s famous Purple Cow book. I’m sure anyone who’s marketing is familiar. And I really truly believe that there is no secret sauce. You can go to any Michelin star restaurant, you’re not going to have different ingredients, that the ingredients stay the same. It’s the it’s the presentation, and the execution. And people can’t steal that from you. That’s yours, that that’s what makes you remarkable. So don’t be afraid to share your value. We give away a ton of value on our website. We’re always free with our knowledge, because that’s not what makes us who we are. You know, that’s that’s our service. That’s our people. And they can’t they can’t clone that. So don’t be don’t be afraid to share. Thank you all. So thank you all so much for joining me today. It was so much fun to have all three of you in a conversation today. Thank you all for attending. I hope you’ve got a lot of value from it. Please, if you’re on LinkedIn, follow everyone. They all talk about marketing and share their value freely there. I’m mostly talking about books actually. So so maybe not quite as valuable to follow me.

Stacey Holsinger 1:29:46

Join us on the morning huddle. Oh, yes. At 8am on LinkedIn, just a little plug there. We talk about all trending topics, only for 20 minutes and then you’re welcome to ask our guest Guess q&a for 10 minutes so every Tuesday on LinkedIn

Autumn Sullivan 1:30:05 thanks wonderful thank you guys so much thank you all

Want to learn more about the work Seth and Stacey are doing?

Stacey Holsinger is at https://www.steeltoecommunications.com/ and Seth Fargher can be found at https://www.constructionvideopros.com/. And of course you can find all of us on LinkedIn!

The construction industry is a lot like an American muscle car.

I want you to picture a classic American muscle car. In fact, let’s all take a minute and appreciate this 1968 Ford Fastback Mustang GT.

Gorgeous.

The GT was built with purpose. Every mechanical component, every aesthetic choice, every button, knob and light all work together to communicate and fulfill that purpose: POWER.

That car was built to dominate the road, to kick ass and take names.

When you sit behind the wheel of an expertly-designed, expertly-engineered, and expertly-manufactured vehicle — be it a classic American muscle car or a king-of-luxury Bentley, you know this vehicle was built with PURPOSE.

The construction industry used to feel like that. The industry had a PURPOSE and was built to fulfill that purpose. Every second- or third-generation contractor will tell you that their parents used to take pride in being part of the industry that was building America.

Now imagine that same 1968 Mustang sitting in a front yard somewhere. The paint is faded, the upholstery is cracked, and a family of squirrels is living in the engine. This amazing machine, capable of such power and greatness, left to gather rust.

That’s how the construction industry felt for a long time. Dismissed by society as a “lesser” track. Pushed aside in favor of expensive college degrees. Taken over by bad actors.

You know what, though? That Mustang can be a powerful machine again. It just needs to be rebuilt.

Construction IS  an engine of PRIDE and PERFORMANCE.

It just needs to be rebuilt. 

Who is going to rebuild it?

WE ARE.

We’ve spent a year defining our Purposes, establishing our Core Values, and building our Work Cultures. (If you’re new here, click any of those links to catch up.)

Now it’s time to take all of that purpose and energy and use it to impact the industry that we love.

Roll up your sleeves. Break out your toolbox. It’s time to get to work.  

Subscribe to our newsletter to learn exactly how we are going to do it and how you can help!