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.
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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.
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!
Cash flow in construction is complex, but managing your company’s cash flow shouldn’t feel impossible. What you need are a few simple, actionable strategies that will take your cash flow management from chaotic to clear and productive.
Cash flow experts Scott Peper (Mobilization Funding), Suzanne Cox, CPA, CIT, (Saltmarsh, Cleaveland & Gund) and Lori Drake, CBA, (Levelset) will share their best practices for managing, tracking, and forecasting cash flow in your construction company. See how effective cash flow management can increase your team’s performance and your company’s ability to grow!
Autumn Sullivan
Okay. Thank you, everyone for joining us today. My name is Autumn Sullivan. I’m the Marketing Director at Mobilization Funding and I’m so excited to bring you these three cash flow experts. We’re going to talk about cash flow management and construction. I have Scott Peper, the CEO of Mobilization Funding. I have Lori Drake, who is the community manager of payment professionals from Levelset. And Suzanne Cox, who is a partner at Saltmarsh, Cleveland and Gund. And Scott will be leading the conversation, they have a list of topics. But if you have a specific question you want to ask, please drop it in the q&a. And I will make sure they get that. And without further ado, I’m going to go behind the curtain, hide my screen and monitor our LinkedIn conversations in our chats. You guys have a great conversation.
Scott Peper
Thank you very much Autumn and welcome, everybody, Lori, and Suzanne, I really appreciate you guys joining me and going through this topic, I know the three of us are very impassioned by cash flow specifically for construction, how people get paid, when they get paid, how we can make it better how we can fix it.
And I think each of us have a shared perspective, but also comes from different ends of that cash flow waterfall spectrum. So I find it really interesting and exciting to be able to go through that with you guys. And kind of, I think the genesis of how we all landed on this spot together from where we came from with these clients, I think is gonna be really impactful and beneficial to the collective audience. So jumping right into it, first and foremost, thank you for joining me. I’m glad to be here. Thank you.
All right, jumping into it, I want to talk about basically the flow of cash in and out of a construction business, and how it’s a little bit different than many other industries, cash flows. And what I mean by that is, every business has I like to call a revenue cycle you get in order to do work today. And ultimately, you either perform that work, you make a product or a service, and then you invoice it and you get paid. To me that’s the revenue cycle. And then there’s cash needs all along the way just for that specific opportunity revenue. And then that may has to marry up to the cash flow needs of your overall business. But specific to construction, there’s some unique things about that, that are very different for than other industries. And so, Suzanne, can you just can you share what experience has been like working with contractors in your role as a CPA, and what you do to help manage contractors cash flow? And I might have a follow up question or two after that.
Suzanne Cox
Sure. So I’m I’m making a wild assumption that we have some contractors on the phone here. So you guys probably already know why cash flow is a challenge. So I won’t back up and talk about why. But obviously, there’s this time period between you know, when you may have mobilization costs, and you’ve got labor costs and supply costs, and all of these costs, and they’re rolling in the door, and you may not get paid for 60 to 90 days, you know, depending on who your customers are. So you’ve got this very long wait time in between when the services are performed. And when you get paid, unlike, say, a restaurant who also has the same thing, supplies, people, etc, etc. But the minute you give that service, you’re getting paid, you know, there’s no 90 day wait time to pay for your meal that you just had, you know, so there’s obviously a huge challenge of that.
I would say that I have some contractors that have desperate cashflow needs, and then I’ve got contractors that are sitting pretty nice. And it depends, like on a few things, what kind of construction they do, who they work for who their customers are. If they’re working for the government, perhaps they’re getting paid really timely, and they’re submitting on you know, line and they get paid in EFT and a couple of days. But that’s not going to be your most of your, you know, contractors out there. So it does depend on what type of construction you’re in, you know who your clients are, how well you manage your you know, your business, and I’m not sure if you asked me part of that. But you know, my my contractors that are paying close attention to cashflow, they’ve got a dashboard. They’re constantly monitoring what their AR turnover is. And what that means is how quickly they get paid. So they send a bill. And that time in between when they send that Bill and when they collect the cash is is essentially a turnover rate.
And so the people that are monitoring their collections and their turnover very closely, and they’re monitoring their payables, you know how soon they’re paying people and can they negotiate better terms, both on the front side and the back side, the contractors that are focused on those are obviously usually in a better, you know, cash position, the ones that are just winging it. And I say that because a lot of people do when times are good, and there’s a lot of work. Some of these, like accounting, boring, you know, boring accounting details, they tend to get pushed to the backburner. And so the contractor is, you know, not really focused on that they’re about going out and making money getting new work and Getting it done. And they’re very focused on the production side of their business and maybe not so much on the, on the boring accounting side of their business. So that’s when I, you know, come in and help from, you know, let’s do a cash flow forecast, let’s talk about a budget, you know, let’s get things in order in your house, so that you can go out and have the infrastructure to take on more work. And, and that sort of thing. Did that cover what you’re looking for?
Scott Peper
I think so. Yeah. Lori, you know, you have an interesting perspective, you know, prior to the role that you serve now level set, you are a credit manager for a supplier working directly with construction subcontractors, general contractors, and their their purchasing. Can you give us some insight into what you saw in that aspect of your life? And how you manage that from a supplier perspective?
Lori Drake
Absolutely. So it’s always been a big issue, like you say, I was a credit manager for over 20 years in construction. And obviously, we work on the past two accounts. That’s our big focus. And typically, those are the ones that have the cash flow issues, we found that when it one of two things was always the case, they either had strong cash flow, but they didn’t have any profit, or they had a bad cash flow with a lot of profit. And unfortunately, that usually means that they are making so much a third excuse me, it means that they are not covering their liabilities. Because their profit margins and earnings are not coming in high enough, it could happen because they’re not budgeting for retainage. They may have a high DSO, they’re not collecting on their accounts and kind of closing that past due GAAP, they might not be projecting their cost estimates and progress payment Billings. And there’s a lot of different ways they can do that. But we definitely find the ones that we were typically working with, they had the bad cash flow, because they were just trying to get the profit in there, they may be trying to pay their bills to get that 10% discount or 1% Discount within 10 days with that some other suppliers. They’re just not managing the money like they’re supposed to be managing, we had a lot that were trying to pay us in terms. Well, they weren’t paid yet. So not paid paid pay when paid paid not paid, that it has a big effect on contractors, especially, you know, the ones that are working on the back of this truck, you know, they may not have the big office and other resources that they could use. So managing that cash flow was definitely something that we tried to help them out with.
Scott Peper
So, so question to both of you guys, do you think the average contractor that you work with? I guess in any phase, regardless of the size of business, do you think they understand cash flow? And the management of it and how to use it as an effective tool? We I know they all understand cash flow in my in my opinion, I don’t know if they understand. And I’m curious what your thoughts is to what the power of it is, when you when you when you actually can control it and understand it, what you can do with it, I guess, same question to you. What is your opinion on that? In my opinion,
Lori Drake
In my opinion I don’t think that they do. I mean, a lot of people start construction businesses, they’re the labor side, you know, they don’t really know how to do the business side. And then they hope to hire somebody that does have that experience or knowledge, but not understanding the cash flow side of it. I mean, they may get a bunch of jobs, and they don’t have payroll to pay somebody to work on those jobs. So those jobs just sit out there. They can’t grow, if they don’t have the cash flow coming in to pay the labor to buy the materials. I mean, it’s kind of a vicious cycle. And fortunately, if they keep getting these jobs and not getting the labor and materials to get out there, they’re kind of going to go in more debt. It’s kind of that same old sale where it’s not a sale until it’s paid. I honestly, I just don’t think that a lot of them know how to manage that. I know, we’ll talk later on different policies, but there are ways you know, that even their credit manager to supplier can help them. You just got to ask for that help. And they can kind of walk through what’s going on in their company currently, and try to make some changes on where they see that it could improve.
Suzanne Cox
Yeah, sure. So that we, of course, are issuing tax returns and financial statements. And the first question I get when anybody gets a financial statement is on the cash flow page. And, of course, there’s a difference between accounting cash flow, and perhaps what we’re discussing here, you know, cash flow forecasting and things like that. But that’s always the first question. They’re like, I have more cash than that. I definitely made more than that. And they they’re not sure what’s you know, the inflows are and the outflows are so it of course, is a top top concern for contractors to to understand what that page and all those numbers mean. And, and so it’s really nice to work with them to be able to simplify it and say, Okay, here’s, you know, cash inflows from receipts of AR and from that, you know, if you’re getting inflows of cash, and then here’s your outflows and you know, breaking it down and showing them where their cash is coming in and out. I would say our contractors that are maybe a little bit bigger and have an in house person that has an accounting background or doing a little better in this area, are smaller contracts. that aren’t you know, spending money on the accounting again, the backroom, you know, processing infrastructure type things. If that’s not a focus or priority, then you you do see that suffer in their numbers you see that suffer in their profitability, you see the suffrage in their cash flow. It’s pretty obvious which contractors have spent money to pay attention to these things and which ones haven’t.
Scott Peper
So it’s interesting I one of the things I love about doing these webinars is I’ve watched lots of webinars, and I think that a lot of webinars can point out all the problems, but they never offer any solutions. And one of the focuses that we always have, and what I appreciate about both of you, and what you do individually, but also whenever we’re working collectively is you always have a solution. I’ve talked to many CPAs, accounting firms, or even just CFOs that are either employed by a business or they’re an owner of a business or sometimes even like your largest fractional CFO organization where you make their a CFO for hire. There’s one thing that always resonated with me that unanimously they all say is like the first or immediate second thing that they do when they enter in a business is a 13 week cash flow forecast. And anytime I bring that up, you guys are nodding your head, anything I bring that up in a close relationship with our one of our clients. Probably 80% of the time they say, Scott, what is a 13? Week cash flow? whisper to me aside. And can can you guys one? Tell me if that’s your also my opinion? Or my perspective is do you share that? And two? Can Can you explain what a 13 week cash flow is? And the why that is the first thing you would do before you do anything else when you jump if you were to jump into a business to try to help?
Suzanne Cox
Sure. I Lori were you about? So we do fractional CFO work? We have a team for that. So I’m not always the one the one diving into that specific need. But the reason is, again, back to like, how is this business going to stay afloat? You know, how are they going to stay in business? That’s one of the first things we analyze from a risk perspective. As CPA, we analyze risk. So we’re coming in there going, Okay, well, is this business gonna be able to make it you know, three months or six months, you know, what’s their long term sustainability? And you know, of course, we do a lot of valuation work. And that’s one of the ways you value a company is based on their cash flow. So it’s one of the most important things for our company to know, even if it’s just a basic, just basic knowledge of what’s coming in and what’s coming out. And, you know, what, what is my forecast for the for the next, you know, like you said, 13 weeks, so it’s just important to understand how the business runs, you know, how do you make money? And what’s the viability of you existing past 13 weeks? Yeah.
Lori Drake
Yeah, and I think we’re on different sides of it. When I used to work in the credit side, Suzanne, when I worked with the companies, the first thing we did was look at the financial statements, like you said, cash flow page, which usually didn’t really exist. But the biggest issue that we always found was that they didn’t have a credit policy in place, or they weren’t enforcing them when they had and like you said, the credit policy is what assesses the risk and lets them know what risks they can take and what risks they can’t take. So we would work with them not on the 13 plan thing, but we would work on setting up the credit policy, just to you know, know when they should invoice timely you know, when they should deal with waivers, contracts in writing, there’s just a lot of different specific things that once they’re focused on it, it would help that cash flow side a lot better.
Scott Peper
Yeah you know, and to add what I look at as a cash a cash flow third job what it really does for for contracting business, is when you’re when you know you have receivables of $100,000 $200,000 or 150 year you’re going to invoice X amount each month, which the funniest part about the construction world is the the business owners extraction world know an amazing amount of detail about their business, they can tell you who all their customers are, how much is getting invoiced to them, what they’re estimated to be invoiced them. There’s a tremendous amount of detail broken down into three, four or five, six major categories on a job. It’s it’s just never has all the infrastructure been put together to marry up to it, but when it is, those contractors with all the knowledge they have are able to make such good a good decision.
So to explain to the audience, in my viewpoint, what a cash flow a 13 week cash flow does for you is it tells you basically where your sources of cash are coming from when those sources are expected to come, which is it which are inputs that you would provide, and then more importantly, what the cash flows. The cash flow sheet is going to do is then tell you how you can use that cash and when you can use it, you might not be able to use that $100,000 exactly the way you want. But when When you look at it over a 13 week period, it gives you a chance to forecast at least four or five, six weeks in advance and also look back four or five, six weeks, so you can see exactly what you have going on. So you know, when you get this specific $100,000, check and exactly how you can use that, and exactly how much cash you need to leave out of that. So you’re not in you might be in panic mode one week, but you’re not going to be in panic mode every week on every Monday trying to figure it out, it’ll eventually will become a problem that you’re solving, you might have panic today. But as that money comes in, if it’s used appropriately, and it’s managed in this way, you will not have a panic Monday or a panic month, it’ll eventually smooth itself out. That’s what it will do for you.
Suzanne Cox
Well, and I think part of that to add is, you know, management of your cash flow, which a lot of people underestimate how much control they may have over the management of the cash flow. So if you’re doing a 13 week projection, and you can see, hey, I’m going to get paid in this week, but the expenses are due in this week, you know, is there a possibility, you could call that vendor and say, hey, you know, I needed two week, you know, grace period, you know, this this month, because I’m running a little bit behind, you know, ask, talk to your, you know, suppliers and your vendors and have open conversations with them, or, you know, Scott, what do you do for a living, you know, look into some, you know, quit, you know, financing alternatives to maybe traditional debt, or, you know, there’s a lot of options, and that, again, goes back to managing your cash flow. So I think it’s really important that you not just do the projection, but then you do something with it.
Scott Peper
No, right. And when we decide to make loans, we it’s exactly what we do, we build out a cash flow forecast for that specific project, or groups or projects, so we can see where the sources of cash are, but when it’s needed, and then how we’re going to use those sources of cash all the way along, and we use the exact same information that you would put in to a 13 week cash flow for the overall business.
Lori Drake
So I was just gonna say, I think that’s a big deal to you, we’re saying that you do the cash flow for the job, a lot of issues that contractors are having as well is they may not have enough money for one job. So they take it from another job and put it into that job. So I mean, it just messes it up across the board. And that’s a really bad cycle to get into.
Scott Peper
It can be very dangerous, you know, and that’s a great segue to my next question for you guys. You guys are so we didn’t plan that at all. How you came up with that. But my question is, we all obviously you hit the nail on the head, we know that cash flow can impact the performance on a job pretty significantly. What are some of the ways that each of you have seen with your experience and clients on exactly what has happened when cash flow isn’t manage what shows up what other problems or issues show up?
Lori Drake
Well, like I was saying, on the jobs, if you can’t afford the labor to put out on the job, then you’re obviously not gonna be able to meet your deadlines. If you can’t pay your bills, you may not be able to get the material out there in time for when you need it especially you know, right now when it’s so far delayed even getting material out there. You see a lot of notices get sent out see liens possibly file, that’s kind of your reputation, if you don’t have good cash flow, you’re gonna unfortunately wind up with a reputation of they can’t pay their bills or they can’t manage their money. So unfortunately, like I said, I always saw the bad side of it. I never saw the positive side of it. But I mean, knowing that jobs have different parts of them, they can change orders, they have progress billings, if you can’t manage any of that stuff, it’s gonna throw everything up in the air.
Suzanne Cox
I was gonna say the same is that I think it’s more long term than short term effects of the long term effect is you have vendors that will no longer you know, be your vendor because they’re not going to get paid you have you know, customers that don’t want to work with you because you clearly can’t run you know, manage your business so that it’s just long term reputation is the biggest effect that I see is that if you are especially a new contractor and you want to establish that you know what you’re doing and establish yourself in the market as a true player and you need to have your ducks in a row before you go out because you will get a bad reputation and people will not want to work with you
Scott Peper
specific to a companies that are trying to grow or are growing how have you seen cash flow become an obstacle in front of them to grow? So obviously you pointed out some things related to vendors if you can’t keep maintain vendor relationships with a lot of companies sometimes they might have hovered at a good level they have a good amount of cash and they get they get a good feeling and justifiably so. So they step up and start taking on a different project or a bigger project and they the same offense from a cash flow perspective and management of that cash flow that’s always worked for them. What shows up now and how does that lack of cash flow infrastructure so to speak, where does that show up as a business is trying to grow?
Suzanne Cox
So I think we haven’t you know, touched on it yet but construction in Most areas of construction, you’re going to require bonds. And so there’s also this is a topic we, you know, need to address here is the ability to acquire bonds. So if you do not have a plan, you know, if you don’t have financing in place, if you don’t have an open credit line, if you don’t have six months of backlog to cover your expenses, you know, all of these things is going to affect your ability to get bonded, so it’s gonna affect your ability to get work. So like you, you know, you mentioned, you know, hey, they’re on this job, and they’re borrowing from this job to do this other job, at some point in time, the bonding company is gonna hold their hand up and be like, yeah, we’re not bonding you for any more jobs, because you, you know, you’re clearly not managing your cash flow, and we don’t want to get hit at the end of this train, you know, train wreck. So I think that’s a big thing that we haven’t really discussed yet, you know, is your ability to be to be bondable.
Lori Drake
Yeah, I would think the bonds is a huge deal as well. But even you know, some states don’t require it, but even getting your licensing or getting your insurance, you know, workers comp, any of that stuff, you know, if they don’t see what they want to see, when they you submit your application and turn in all your financials on that, you’re going to have issues getting all of that stuff. And I think it’s on the same line of things. But like, if you don’t want your contracts, I mean, if you do the pay when paid or the pay, if paid. And you’re not managing that because you know, you’re kind of shooting yourself in the foot saying that, hey, you don’t, you don’t have to pay me until you get around to it, you’re not going to have any of that cash coming in to mess around with so it’s gonna affect you a lot.
Scott Peper
Lori, when you were in the credit markets, for our Ma, she’s MTU as well is, have you ever seen the reverse of this, where you have a client who has very aggressive, very organized cash flow manager, they’re very detailed reports. And with that also came a comfort level to for them to know them, and they use them. And then they use those as tools to either get credit they otherwise might not have or get jobs or other ways, some ways they’ve used those tools to get more work or grow or get credit they might not have gotten before, do you have any stories or proactive things that customers did do that
Lori Drake
I kind of look at that as our no notice list, we have certain customers, you know, they’re big customers, or they have great reputations, you know, we just do a lot of work with them. So you just extend and you extend all this credit, and you don’t notice them, because you made that agreement with them. And then as a supplier, you run out of all the funds from any of those, and you don’t have any right to get them back. So I think that they can put yourself out there too far, maybe and not have any repercussions for it. Because you gave up your lien rights. So they there’s no like pressure to make them pay on time. To me, it would just kind of throw them off track there.
Suzanne Cox
I do probably have a specific example of a client back in the first downturn of the economy in recent years, back in the old 910, you know, area area seemed like contractors got hit a little bit later. So it might have been in the 1112 timeframe that I’m speaking of, but I had a contractor that was very, very tight on on cashflow, and they were to the point of like, hey, we may need to like close our doors because we can’t make it happen. So we advise them to go look for alternative financing. So we’re like, look, just, you know, even if the interest rates are crazy at this point, like you’ve got to get something you’ve got to get anything to, you know, get back on your feet, you know, get get something interim, not long term, but you know, do something interim to keep them afloat. And they did they were able to find some short term financing that was you know, like a year, it was highly aggressive interest rate. And I don’t always suggest that, but it just happened to be, you know, at a pinch point, and it made sense. And it was a good decision. And they made it through, they got the short term financing, they were able to finish the jobs, they were able to pay their suppliers, and they were able to, you know, keep going. So I think to answer your question is yes, I probably have more than one example of a contractor without availability to get cash has been able to, you know, continue his business where if he didn’t even have the ability to get that, you know, extra, you know, cash, he wouldn’t have been able to take on any more work. So the contractors that are positioning themselves in the market, to have some excess cash, or the ability to get excess cash, are the ones that are able to capitalize on having that available capital to take on jobs. You know, that’s part of when you’re assessing the risk of should I take on this work, you have to assess Well, you know, what’s my cash flow? Can I take on this additional work? Can I hire these extra people and pay the suppliers to get on site and start doing this work? If you don’t have cash available? You may doubt you know, you may turn down that work. And so cash up front and handy handy cash, you know, available cash is going to let contractors capitalize and maybe take work that other contractors can’t because they don’t have financing available or line of credit or something like that.
Lori Drake
No, I’ll add it when I was doing the credit and all that I had never even heard of like your company’s Sunday. options that are out there. Now, I think contractors now have a lot more opportunities to get that cash flow flowing, or at least to get the help for it and to be taught how to deal with it, to where they can take on more jobs, they can pay their bills, I think it’s a nice thing to have not to, you know, sell you here. But you know, what your company does puts a lot of help out there.
Scott Peper
You get to see that one. Thank you very much. I appreciate appreciate you saying that. But have you guys also, have you seen companies use those financial reports to gain new customers or maybe win a job that they might not have won before or in your case, or when credit that you wouldn’t have given to them that they didn’t come in and say, hey, look, this is why I needed I’m running my business like this.
Lori Drake
Kind of sorta, maybe a lot of our credit was extended based on whatever the job was not really the customer. I mean, even if the customer has bad cash flow, or they don’t pay their bills, we always have those lien rights to go on to the GC or then go on to the owner. So not really, it’s just whatever the job is, if we determined that it was a good job, you know, then we would find that
Scott Peper
what about uses and you have clients that come to you, maybe they ask for capabilities letter or financial stamp of approval that they can use sort of in their, their brag book to kind of win an award or to show up a customer of theirs and owner, developer general contractor? Hey, you give me the contract, you know, here’s my sort of stamp of approval,
Suzanne Cox
So we get asked a lot, we get asked for financial viability, I think was your term that you just used, we’re actually precluded from from issuing that that’s an opinion that we can’t make, without doing a formal, you know, valuation of the company and a formal engagement. So we don’t actually issue financial viability letters. Although I do get asked a lot. What has to stand alone is really your your financials, whether they’re, you know, compiled, reviewed or audited? Or, you know, again, a formal, you know, projection or cash flow analysis or something like that. We can’t just send a letter without doing any subsequent work to support that opinion, for our own risk reasons,
Scott Peper
obviously, yeah, no, that makes sense. Well, you know, what we’ve done immobilization funding early on, I got some advice to always audit our financials. So we do a full financial audit of our financials. And at first, it felt like an extra expense. And I couldn’t really understand why we’re doing I mean, I knew why but it didn’t, it didn’t feel like it, me or the typical clients.
I tell all of our clients all the time, like I am exactly the same as you, they’re, I’ve been dragged into them all the things I’ve done. So I’m just now part of helping people drag along, so I can at least say what it feels like on the other side. And you know, what happened? What I realized is when I did as the business grew, and I did need to go get more capital for which we use to make loans, it was a lot easier when I sat down with an individual with Financials, and certainly when we went to the bank, who basically thought we were in saying,
Suzanne Cox
Thank you like here, because like, you know, there’s no chance Why would we ever make loans to you, Scott, so that you can make loans to people we would never make loans to, and, you know, having an audit financials that they could trust, verify, that basically just eliminates their questions off. I mean, they’re gonna have questions, but they don’t, it doesn’t, they’re not trying to figure out if you’re lying or not, or if you’re, you know, that’s an extreme word, they don’t think you’re lying, per se, but they don’t know if they can trust it. When you have third party assurance, you know, fully reasonable, their, their risk is, at a certain level. And from our standpoint, you know, bonding companies and banks are some of our obviously biggest referral sources, because they need those things to do their work. So it depends on what level they need. So if you need a large line of credit, or a large term loan or something that may require an audit, if it’s a smaller line of credit or smaller term loan, then you may be able to get away with a review or compilation. And those are three different levels of our assurance that we put on that, but the audit is the gold standard, you know, or platinum, you know, that says, hey, this is that we did the most work for this one. And obviously, our risk is the highest there as well. Because we’re opining saying that yeah, these people, their financial statements are not materially misstated. You know,
Lori Drake
you know, it’s kind of funny, we assume that everybody has financial statements, but when you’re extending credit 90% of people don’t have them. And if you can actually get financial statements from somebody, you actually do award them more credit, you treat them back because they actually, you know, you know that it’s putting orders on they’re
Suzanne Cox
paying attention to their house, you know, back to the House comment, they’re paying attention, they’re managing their house and and they’re getting themselves positioned. And you know, in this market, it’s very hot right now, obviously for transactions and we noticed that a lot in transactions is somebody will get a deal on the table and they haven’t had an audit or any sort of assurance from an outside you know, person And now all of a sudden, they’ve got caught with their pants down, and they’re scrambling and rushing, you know, trying to get due diligence work and financials prepared and all of these things. And so, you know, part of that is getting your house in order, you know, having these financial statements ready and the cash flow projections ready. Because when someone comes knocking in right now, there’s a lot of people knocking, you know, you’re going to be like, bam, here’s my folder, you know, and I’m ready. So it’s just good business.
Scott Peper
I mean, one of the things we’ve talked about that, just just to your point, Lori, and Suzanne, is when we get those financials, we care what they said. But what we really want to see, first and foremost is, does the Does, does the company owner care enough to get that monthly scorecard? Like, do you really do care if you really care, you want to know how you’re doing how you’re doing as a business is your financials. That’s how you that’s your scorecard in a business world, at least in my opinion, a lack of that certainly can demonstrate to someone regardless of the size of your business, it demonstrates that it doesn’t mean you don’t care. But it does mean that you only care to a certain degree. And if you’re trying to lend money to someone, or you’re looking for someone to lend you money and trust you and care about what your business is, and partner with you. It’s a really key important thing. And when you’re working with your suppliers, they’re lending you money, extending credit is no different than giving you cash, they want you to be paid back, sure they have lien rights, and sure they have other things. But at the end of the day, they’re trying to run a business too. And they’re trying to find the right people to partner with. So it is important, and I’m sort of letting people know a little bit of the secrets behind what we do and why we look at Scott Warren to look at that. But I’m so important. One other thing is cashflow management, one of the key things as getting paid on time. And Lori, do you guys have tips at level set that you recommend for every contractor to do to basically ensure their timely payments
Lori Drake
Absolutely. So you definitely want to make sure you invoice timely, I mean, that’s going to be your biggest thing with a lot of GCS, they also have specific pay applications that you have to submit. So you want to make sure you understand how and what you’re billing for. Otherwise, it’s just not even going to matter, you’re not going to get paid. You want to protect your lien rights, even on your GC, a lot of people get scared, they will think that they won’t get any more jobs if they like send a notice on their GC or something. It is so common in construction, it people just you know, goes in one ear out the other. So protect your rights, you never know what’s going to happen. We say to definitely send reminders, you know, if they’re not paying in time, like Susan said, you can call your supplier ask for a little more leeway on that, like I mentioned the contracts, definitely make sure you do not sign any pay when paid or pay if paid contracts. You mean you don’t want that risk put on yourself. And we also just Sorry, I lost my place there. But now,
Suzanne Cox
I’ll pick up this, you know, maybe they don’t touch on there is no contract negotiation is really big. A lot of contractors feel like their hands are tied, and they have no, you know, ability to negotiate their contract. But when you start a relationship with someone new, you need to be very transparent about, hey, this is you know, these are the deals that I think would be mutually beneficial. Don’t just take it, you know, if a GC is saying, hey, you know, this is how we do business, ask, you know, ask and maybe maybe ultimately they say no, that’s fine. But, you know, be very transparent about what your needs are as a subcontractor as well, I think communication is really key. And I know some of those conversations can be very difficult to have, but they’re so worth it in the long run.
Lori Drake
So a lot of those contracts will even throw the indemnification clauses in there. I mean, you definitely want to make sure you’re looking through it and make edits, you know, have some initial it off and just have them change, right align it. Yes, most people don’t say anything. So that you know,
Suzanne Cox
they don’t, they’re just like, Oh, I better do whatever they tell me. And yeah, that’s not always true. I think that’s a miss a myth. Yeah.
Scott Peper
We actually did a webinar on that topic. We have an attorney that we worked pretty closely with and they went through basically, there are five or six things that you can negotiate in a construction contract as a subcontractor to a general contractor, that are just key three, four things that are usually pretty negotiable. Most general contracts will accept but they can make a huge difference when it comes to indemnification agreement. And the key real important things to help you within the in the event of a disaster or a bad situation prevent you from being the only person that gets hurt. And you can go to that webinar right on our YouTube channel and find that is posted but it’s great. They lay out the five six main areas and tell you exactly what you can negotiate you know, for a couple 100 bucks. You can have those sections, read them. run by an attorney, and in the front end, and it will save you 10s of 1000s of dollars or more on the back end, and give you a little one more thing to that last.
Suzanne Cox
Maybe question is Lori brought it up is, you know, friendly reminders to get paid? You know, one of the things we do, which is why I’ll tell you no one likes audits, because we come in and ask a bunch of hard questions that they don’t have answers to. And when you know, you’re asking things like, Hey, who’s your collections person? Do you have a person that’s assigned with collections? You have someone calling? And they literally? Don’t think so?
Lori Drake
No, yeah, no, it’s amazing how many contractors do not have anybody calling for their payments?
Suzanne Cox
Not gonna pay for it? Oh, yeah, they feel like that would be inappropriate, or they’re too pushy, or they’re very scared, you know, they’re scared of it. And, and don’t let fear drive your business, you know, that that’s since it should not be driving your business. And so when we ask this question almost 98% of the time, it’s, it’s no, we don’t have anyone doing flexions. Or they’ll say, Oh, the project managers in charge of that. So then we call the project manager, and they’re like, oh, yeah, I don’t do that. You know, and so there’s nothing wrong with asking for payment, especially if someone is past due, you know, so that’s just good. Again, good business structure is to have someone that’s in charge of paying attention to your collection rate, and, you know, calling people and saying, Hey, friendly reminder, your past your 25 days,
Lori Drake
well, that’s where you find out too, if your invoice wasn’t accepted, you know, maybe
Suzanne Cox
it may have been declined, and you didn’t even know it. And that’s, you know, part of the you you mentioned also Lori was, you know, some people have very specific payoffs that they require to be filled out to the near the decimal imperfection. And if there’s one thing wrong with it, or they just don’t really like the font it’s in, they’ll decline it. And so if you don’t have somebody following up on those paths, you your invoice could just be sitting there, and you think, Oh, they’re not paying us because they think our work was crappy, but really, they’re not paying you because they thought your font was bad, you know, so you need to make those calls and understand why you’re not getting paid.
Lori Drake
And two other things on that contract side of things with the invoicing is you have to watch the billing dates as well, a lot of contractors will have like the 15th cut off or the 20th cut off, if you don’t get your invoice in before that time, they’re going to push it off to the next month. And then also retain that you really got to watch your contracts of when retainage it’s easy to hold it out of your drawers, that’s fine. But to find out when you’re going to get paid retainage is that when you’re done with the job is that when the job is totally complete, is it when somebody buys the property, I mean, you definitely want to make sure because otherwise that money is just sitting out there and you can’t count on it for
Suzanne Cox
anything. Absolutely Good point.
Scott Peper
And you know, you know what your know, in reality, what how many days it actually takes for your business to get paid. Because if you think it’s 30 days, or that’s the terms in your contract, but you’re really not, you’re 35 or you’re 45 planning your impact that has a dramatic impact on your cash flow, and showing that maybe you can’t pull your cash flow for maybe your customer is going to pay your 45 Even though you are contracted for 30. But you can make those adjustments and modifications to planning and helping yourself so you’re not in that weekly or daily or monthly stress of cash and managing it. So you the other thing is just be really honest with yourself do the work, don’t just look at the terms that you have, but look at what is in reality you are is actually happening and you are getting paid. A lot of times it’s net 30 After inspection, and maybe the inspection takes an extra six days. So it’s really 36 days from when you submitted the invoice. I mean, there’s a lot of things but just be really, really, really hone in on that and lock in that real number that when you’re doing your planning,
Lori Drake
I can tell you on that same note is there’s a lot of contractors out there that won’t pay until you call and ask for it because they get interest on that money as long as they have it their money there. You know, I watch that. Yeah.
Scott Peper
Well, guys, is there any questions that I should have asked you that I did not?
Suzanne Cox
Maybe not questions, but just maybe additional comment on? You know, it was maybe a few questions ago, if you have bank covenants, or you know, financial ratios that you need to meet for whatever financing you have, or, you know, for bonding or anything like that. So you paying attention to those before you fail them is always a good policy. Yeah. So if you do have cash flow metrics that you need to be aware of, I cannot stress how many times I have met with a client and said hey, what are your you know, does your loan have any covenants? And they’re like, no, no, I don’t have any. And then I open up their loan document and it’s like seven, you know, and I’m like, Well, I think you missed this page. So let’s go over them and usually they’re cash based, you know, they and it’s that’s, you know, service coverage and debt to equity. All these other fun, you know, covenants and so if you’re on this call right now and you haven’t looked at your debt covenants, you may want to take a peek at those because they may relate to cash flow or when you’re closing new financing, you know make sure that you’re asking what are my covenants? What are my responsibilities to not be in default for this you know, financing whatever it is line of credit loan, whatever good questions to ask. So write them write them down a lot of people are just completely unaware of, of some of their covenants and, and cashflow directly ties into them. So another good reason to track it.
Lori Drake
Yeah, I was going to say just as far as your suppliers, ask for help if you need it. I mean, I don’t know any credit manager out there that wouldn’t help somebody that asks for it. We’re used to people just not wanting to pay their bills, or they’re ignoring this. Yeah. But if you actually want help, say you have a new GC that has a path, they will help you, you know, learn how to fill it out. And they’ll help you close the gaps on your aging. And actually,
Suzanne Cox
if you do good work, yes.
Scott Peper
You don’t want to be thrown in a bucket, or have someone make an assumption about you because of previous experiences that aren’t justified. So it’s always good to be honest and upfront with why there is a cash flow concern if there is they don’t think you’re just not trying to paint. So and you know, to the point you made about covenants, actually, Suzanne, I think it’s those should become part of the scorecard that you managed yourself to every month. So when you get those financials, get a list of where are you in those debt coverage ratios, those loan covenants, those other items, and know what they are, so you can know ahead of time. So you can make you have a month or two to manage to that versus all of a sudden, it’s a problem. And it’s getting exacerbated over the next two months, you can start to fix it and adjust it. Which is also the reason why accountants don’t just do your taxes.
Suzanne Cox
So we’re not once a year people. If you have a once a years VBA start calling, you know, on around. Right, I noticed the question in Chad, based on our contracts about getting paid when paid. So we’re not saying that you can always have that leverage, and you may not always be able to negotiate it. So it sounds like it’s not worked for you in the past. And, you know, perhaps Perhaps that’s true, perhaps the GCS you were working with, or the people you were working with. And no, that’s just not something we negotiate on. That may very well be the case. But that’s not the case with everyone. And also this goes back to the more valuable you make your work and your service, the more apt they are to negotiate with you. So that’s just something to consider also, as if someone new that you’re working with, they may say, hey, we don’t know these people we’re not really comfortable with the more work that you do with them. And the more comfortable you are with relationship, you get to the point where you can negotiate those things. So just think of it as a, you know, maybe it didn’t work today, but it might work next year.
Lori Drake
And as you go through, you’ll learn what she sees, we’ll negotiate on that which won’t, and you just decide if you want to take that job, right,
Suzanne Cox
you decide who you want to work with on the flip side as well.
Scott Peper
And working with an attorney to let you know what the risks are of accepting that clause. So you can at least make a good business decision whether you want to accept those risks or not.
Autumn Sullivan
Awesome. Thanks, guys. I just wanted to jump in real quick and let our participants know that I will be sending a replay of this webinar and an email later today or possibly tomorrow morning really depends on how long it takes YouTube to process the video.
A financial capability letter shows your GC that you have the capital to do the project right. Financial capability letters are an important X-factor when bidding on government contracts, but they should be part of every bid you submit as a component of your capability statement. After all, one of the largest concerns a General Contractor has when hiring a subcontractor is whether they have the ability to finance the work that needs to be done before the first payment. A financial capability letter in your capability statement delivers the right message to the GC.
What is a capability statement?
A capability statement is a document included in your bid package to show the General Contractor why they should consider you for the project. The capability statement is much like a personal resume. It shows who your company is, your relevant experience, and differentiators that set you apart from the competition.
When should you send a capability statement?
Many government agencies will require capability statements from contractors as part of the bidding process. Consider the extensive bidding process for government jobs as the gold standard of bidding. Why not go for gold with every bid?
Making a capability statement part of your regular bidding process will give your company a competitive advantage, showcasing the skills and experience of your team and also your commitment to the performance of your team.
What to include in your capability statement?
Remember that your capability statement is much like a professional resume for your business. It needs to SHOW the General Contractor who you are, not just list previous jobs. At a minimum, your capability statement should include:
- An introduction and basic overview of your company
- Share what your company is all about and what you are most proud of
- If they hire you tell them what they can expect from you and your Company every day on that job site / project
- Contact information
- Core competencies
- Your business’s differentiators – Why you?
- Specific experience that relates to the project
- References from General Contractors or clients
Remember, the capability statement is telling a story. Your company is the hero. You are showing the GC that choosing your team is the right decision for this project. Keep it relevant, engaging, and concise.
Include a financial capability letter
Construction has a lot of upfront expenses at the beginning of a project. Those costs — payroll, material orders, equipment, etc. — are almost always handled by the subcontractors on the job. Having sufficient cash flow in place is critical.
Your GC knows this. They’ve seen projects suddenly experience delays because subcontractors can’t afford labor or materials. These delays impact everyone on the job.
Put your GC at ease by showing your numbers in your bid — how much it is really going to take do the job and how you plan to cover those costs. The financial capability letter verifies the “how.” Often in the form of a loan pre-approval letter, a financial capability letter shows that your company’s financial standing has been verified.
If you are not using third-party financing, your bank or CPA should be able to provide a financial capability statement. If you are using third-party financing, your lender will provide one.
Nervous about revealing that you are using financing? We get it. Consider this: The owner or developer has a financing partner. The General Contractor probably does, too. Business, especially construction, requires a lot of upfront cash and long cash flow cycles. It’s normal to need financing. It’s SMART to use financing.
Very few people think the job is being financed with cash in the bank; make your customer comfortable by telling them how you do it. Own the fact that you have a finance partner and that having a good one is how you are able to perform.
Capability statements and financial capability letters may sound like a lot of extra work, but they can be the differentiator that makes all the difference. Invest in creating a capability statement that makes your bid stand apart from the competition, that showcases your ability to perform, and that ensures you have a plan to cover the costs of getting the job done.
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Autumn Sullivan
We have a lot A lot to cover. So we’re gonna go ahead and get started. Hi, everyone. Thank you so much for joining us today. My name is Autumn Sullivan. I’m the Marketing Director at mobilization funding. And today’s webinar is about solving the constructure construction labor challenge. I have amazing guests with me today I’m going to let them introduce themselves and their organizations. Um, Natasha, can we go ahead and start with you?
Natasha Sherwood
Absolutely. My name is Natasha Sherwood. I’m the Executive Director of the independent Electrical Contractors Association ever here on the Florida West Coast and chapter we actually run from Tallahassee in the panhandle, and down to Sarasota ish area, electrical contractors, merit based shops that are constantly looking for labor at all times. So I’m interested to find out if Steve has a solution for me. All right, well, hello, everyone.
Steve Cona
My name is Steve Cona. I’m the president and CEO of Associated Builders and Contractors. We are one of the largest trade associations in the state of Florida. And we also run one of the largest apprenticeship training programs in the state as well. So it’s great to be here. And I was hoping Natasha had all the answers. So that’s why I was here today.
Benjamin Holmgren
Well, that’s three people without the answers. But I’m Benjamin Holmgren, I’m with BuildWit. And we we have to two companies, we have one which is a construction marketing. So we work with heavy civil contractors, dirt companies, earthwork companies, drilling mining, and and we help people tell their stories, we help these companies tell their stories, we help them find great people, we help them with all their marketing, certificate marketing services. And ultimately it comes down to telling stories. Our second business that I’m kind of heading up now is a new project that we just launched called billet leaders, I might talk a little bit about it later. But Bill what leaders is, is really training and development for employees, for teams for leaders. And it’s really about growing leadership in construction. And so I’m sure today, I’ll share a little more about kind of our philosophy behind that and why we started that, because it really has a lot to do with solving the challenges in construction and the the labor shortage. So looking forward to this.
Autumn Sullivan
Awesome, thank you guys so much for your time today. Let’s go ahead and get started. I do want to make a quick note, if you have a question for the panel, please drop it in the q&a section or in the chat. I will be checking that in between questions. And if we don’t get to your question during the webinar, fear not, I will get back with our our guests. And we’ll create a YouTube video specifically answering your question and then we’ll load it up on mobilization fundings YouTube channel. So I promise we’ll try to answer everyone’s questions. Um, so this webinar actually started when I was researching a blog topic on construction labor, and I read a CNN article that said, the construction industry is losing workers faster than it can attract new ones. And I’m going to open this question up to Steve first, Steve, what are some of the factors that are causing this great resignation in the construction industry?
Steve Cona
Well, I don’t I don’t think it’s necessarily a resignation. I think it’s a it’s retirements. I think there are a lot of folks who are aging out of our workforce. And, you know, unfortunately, for our industry, we haven’t done a good enough job to actually replace those folks that that are coming in. So I think a lot of things had to do with it. I mean, obviously, we had a few recessions that hurt our industry. And we just, you know, we just didn’t get the skilled labor backlog. As far as getting our folks trained up now. It is kind of a crisis for us. And we are looking at all avenues to ensure that we are training the next generation of skilled workers.
Autumn Sullivan
Okay. Did anyone want to jump in on that? Or do we want to keep moving?
Natasha Sherwood
I would echo the same thing as electricians are retiring. And it’s mostly retiring faster than we can keep up with it also, I think, and Steve and I live in the same area, it’s kind of seeing the same college for everyone and a big push for college, which, and, you know, my daughter’s at college. It’s it’s great option. But it was in for many years that there was a gap in skilled labor being shown the attention that it should be and the fact that it’s I don’t think it’s an alternative to I think it’s an equal option to college. And that hasn’t been what’s been pushed and so now not only are you overcoming the stigmas with guidance counselors, but teachers And parents and, and there’s a whole new learning cycle that we have to go through. And so we’re seeing that gap between the generation that’s retiring. And this generation that I think we are starting to reach, but it leaves a big gap in the middle. And so I think coming out of these apprentice programs like ABC and IEC offers, is helping to close that. But I think that’s probably one of the most difficult ones is because everyone has been told that college is the first option and if you can’t do college, then we might have these other things for you. And I’m a former K through 12 principal, you know, so I push College on for it but but it’s not for everyone and not just because isn’t the best option. So I think that’s probably what’s driving a lot of our gap.
Autumn Sullivan
Yeah, and we’re gonna we’re gonna get into that, that that narrative precisely in just a little bit. Let’s talk about, um, recruiting and retaining millennials. Then you had the amazing opportunity to speak with Jocko willing on your podcast about millennials and construction specifically. Do you want to talk a little bit about that conversation and what? What is it? What will attract millennials and what will attract millennials to the construction industry?
Benjamin Holmgren
Yeah, so there’s there’s two quick qualifiers before I start one, my boss Aaron, he’s kind of this celebrity Aaron wit. And so I worked for him. He was the one that talked with Jocko. I’ve met Jocko, he’s a great guy. And I saw their conversation. But it wasn’t me. So I just want to clarify that. The second the second is there, there is the millennials conversation. But what’s funny is like, as more time goes on, it’s less and less about millennials, because we’re seeing millennials, like that’s my generation, right? Millennials are all of a sudden in charge. And now we have like Gen Z and these others, these other youngsters that are coming up, and I know I look like I’m 16 years old, but but those kids need to know, you know, and so it’s not just millennials, it’s it’s the next generation as well. So I’ll tell you what we’re seeing and and the conversation with Jocko. This is gonna be maybe the most inflammatory thing I’ll say all day. But I really, really don’t believe that it’s so much a labor shortage, as it is a shortage of leaders who know how to lead the next generation. And that maybe makes a cute soundbite. But ultimately, that’s what the world has changed. And it seems to me that, you know, from traveling around seeing these job sites, talking with people who either are struggling with this, or people companies who have have solved this that, you know, at their level, it’s leadership. Everything’s a leadership issue. And my generation, the younger generation, kids coming out of high school, are less interested in how business was run 40 years ago, kids my age want to get want to have a mission to get behind. They want to have a vision, they want to understand their career path. They want to be led and trained and developed. And, and as Natasha was talking about, the college thing is like, that’s been the you know, we’ll talk more about that. That’s been the big push. But it doesn’t mean that if if I come into the industry or the trades, that I don’t want to be developed that I don’t want to learn, and I don’t want to have education. Absolutely, I do and my generation does. And so that’s one of the big things that we took away from our conversation with Jocko. And it’s, it’s really just backed up everything we’ve been seeing for a couple of years now traveling around the companies who have solved this on the individual level. They understand that it really it’s not about millennials, and the longer that we blame millennials, the longer we blame Gen Z, the worse this is going to get baking ownership of solving this for your company is is the elixir that’s that’s the solution. It’s not millennials.
Autumn Sullivan
It’s not millennials and avocado toast the My Favorite makhado. Toast the well. And I love that you said that because because another data point that I was reading during my research was that culture work culture was actually a major factor in a lot of skilled trade veterans, you know, people who have been in the industry for a long time, it was the reason that they decided to leave. It’s either the reason they decided to leave their current place of employment for another or it’s why they leave the industry entirely. So while we often frame the idea of work culture as a new thing that young people are pushing for, it really seems like everybody wants to talk about work culture in construction. And so my question is open to the panel. Whoever wants to go first. How are you seeing the industry respond to this new call for an awareness of your of your workplace culture. Don’t all jump other ones
Natasha Sherwood
I don’t mind at all I definitely see and you say about, you know, we have a vast, diverse group of contractors, you know, from small to large. And you can tell that no matter the age of the employee, and so we work with our apprentices who are just coming in, you know, just starting in the electrical industry, still into long term. And employees, as we’re looking for the manpower trying to find labor, and they are all looking for a culture that it’s not the perks that we always hear associated with millennial, but it is the benefits, it’s not always a financial benefit, I will see people take a job at a, maybe even a few dollars, even, you know, $1 less an hour type job, but for a good culture for a good company that has benefits and not just like a health insurance benefit, but a family atmosphere, a group that works together flexible time. And, you know, they they are interested in that I just helped a fourth year apprentice with graduate who had opportunity to go anywhere, he took a job at a company that paid I think $2 less an hour, because it was a good fit. And and then we’re also seeing and I’m sure you know, the other thing, we’re seeing people move in from all over the country moving into Florida. So they’re they’re coming in droves. I mean, I think like 900 a day to the state, but many of them are looking for that culture, that they have a feeling of being welcomed, or being included, of having an opportunity to grow and learn whether they’re an 18 year old, or they’re, you know, we just had an apprentice graduate who’s 60 years old, you know, who who wants that opportunity to develop and I think that goes into that culture is that they’re appreciated and that and, and maybe that’s something we did learn from that millennial or, or Xenial. Age Group or whatever, that there’s that level of appreciation that is sometimes more important than the dollar bottom line. And I think that’s sometimes a difference you see between them, but the culture definitely changes where I see them stay, because I see them move the lead here, and they go there, and you kind of track where they go. And I can almost pinpoint clearly where they will end up.
Autumn Sullivan
We had a question from the audience, which I think is an interesting one. And it was about oops, sorry, it was about the correctional industry. So you’re looking at correctional institutions, and working with them as viable solutions for pipeline verge for talent pipeline. Do any of you have any experience working with and I know, there are some groups? I know there’s one out in Seattle, but Do any of you have any experience working with groups that specifically work with, with correctional institutions to train for for construction?
Steve Cona
Think jump in here for a second? Yeah, I think, you know, we’re our our pipeline is we’re looking for all sorts of avenues to fill the pipeline. And one of those avenues obviously, is folks coming out of corrections. And coming back into the industry. What we are saying is that we are getting asked by state leaders, state politicians, to actually, you know, work with them to actually help develop skills while folks are still incarcerated. So we can build some skills when they’re in, in prison or in jail and and work to whenever they get out, help get them back plugged in to society, because I think everyone realizes that if you can give folks opportunities and jobs, when they get out of being incarcerated, I think the chances of them are going back are very, very slim. So we need to make sure that we are doing that investing and I think our industry and Atocha can tell you is very open to partnering with, you know, state lawmakers, state correctional facilities to help us, you know, engage those folks and get them into the workforce.
Natasha Sherwood
We we just started a pre apprenticeship program with the DOJ out of Tallahassee. So I know it sounds weird, but it falls into our area. So it’s our Tallahassee Community College. And the idea is that they will learn a portion of it while they’re in and then they’ll be able to move into a higher level. So whether they test into our second year or third, our programs, a four year program. And so the idea is to start that program, it’s not it’s just in development, and you know, it’s using our curriculum wise but the idea is to provide those workers and both in so you know, it’s a win win is providing some more for them. It means that they have the knowledge something to do while incarcerated. So they have a reason to continue to move towards release. And then from there, they have a skill when they get out a highly employable skill. And then for our contractors who have invested in that in the idea of this program, they have skilled labor coming to them And yeah, I would hope it would expand it is something we’ve just started in. But I see it as, obviously a great place not only for our contractors, but for our state.
Autumn Sullivan
Thank you. Um, so we talked a little bit about, we talked about Gen Z. So let’s talk about shop class, since we’re talking about, since we’re talking about Gen Z and the younger kids, because Gen Z is all the way from 1995 to 2012. Right. So some of them are very little while some of them are already in college. So shop class was almost completely extinct. It’s slowly coming back now. But there’s still a big trade education gap, particularly in high school, but also in middle school. It used to exist and now is almost completely gone. So I’m Natasha, can you talk a little bit about the role of apprenticeships and mentorships, and how they help fill that gap and how companies can get involved? Right, definitely
Natasha Sherwood
Definitely a couple of different ways. And that we work. And I’m going to flip it over to Steve at the end, because he does a lot just not with ABC, but in his own personal life. But so there’s different ones, we work with specific schools that have programs already. And it’s not so much the shot class, what I would love to see is that new to it, it is available at all the high school. So it’s not just you’re going to one school just for that same as the school that we’re working with our pre apprentice type programs, we’re again, they’re kind of taking the first year of our program over four years. And by the time they graduate from high school, they’re able to come into a second year of our program. There’s some programs and with AI built out of Orlando or ACE program, which we are looking to actually copy and look at it, which is providing that mentoring what you’re talking about. So it’s sending workers from our contractors, and to partner with those schools that are right now more considered technical schools, and their speakers or their job shadowing, when they’re allowed off the campus, we get out of COVID, you know, they can go on field trips, and so forth. But that is and what we’re seeing is those contractors that are more involved in the mentoring are having a much better hiring because they already know, you know, that the students know those names of companies and so forth. But I think beyond that, I think it is a it is a figuring out from a community based and I build is one of the ones we’re working with in Orlando and Tampa areas trying to bring the contractor the school together, to better the community. But there still are some of those bridges that aren’t, they’re not burned or anything, just like you said, they’ve been left alone for years. You know, they haven’t, you know, they’re a little wobbly on the bridge. And I think there’s that aspect, but the one we’re not talking about is really trying to bring that into every high school, you know, so that every kid gets that exposure to it. Because if I don’t make that decision in middle school, like you talked about, so if I didn’t make a decision to go to Tampa Bay tech or whatever, technical school, I probably don’t have the chance to change my mind. By the time I’m in ninth or 10th grade. Like I can’t change schools, especially in our districts. It’s not super easy to change High School. And then do you Where are you in the program. So it really does transfer down into that middle school. And we’ve been working with junior achievement on they do and they did a huge program here out of Pinellas a virtual career fair. We used to do real real I went but trying to hit the middle schooler. So the idea was middle schoolers doing some hands on and just seeing the opportunities. And it was everything from, you know, cosmetology, to electricians, to building constructions to graphics, and so forth. And I think that’s where we have to look at is is introducing it and middle schools and making it more available through more high schools, which is where Steve was doing a great job in my area with and trying to really expand it through Hillsborough?
Steve Cona
Well, I will say, the greatest benefit to our industry would be a solid pipeline out of high school into the trades. That is what we are focused on as an association and as an industry, we have to do a better job of attracting students right out of high school into into our industry. I mean, that’s that has to be the main focus and how that works. Obviously, you know, we have to do a better job from a state perspective, from a educational perspective in making sure that our students are aware of all of the opportunities that are available them after high school, you know, not just a particular welding program at a high school or an electrical program at a high school, it has to be a statewide effort to in our educational system to promote opportunities in in all occupations that don’t necessarily require a four year degree and I think that is what we need to see what needs to happen. Because that’s our greatest pipeline right now in our apprenticeship training program. The average age of our apprentice is 2627 years old. That has to be we have to get that lower we have to get that to be 20 to 21 years old, because, you know, we are getting these folks coming into our program, as you know, it’s an afterthought to them, right? They didn’t go to college, they don’t want to work fast food, they don’t want to work in these, you know, hourly jobs, they want to build skills and careers. They shouldn’t have to wait till 26 We should start promoting that in middle schools and and throughout their, you know, K through 12 career.
Natasha Sherwood
Or they went to college and it wasn’t for them. And now they have a lot of debt and they need a real job.
Autumn Sullivan
Yeah, let’s not have student loan debt, I’ll cry.
Benjamin Holmgren
I agree with what Steve said wholeheartedly. And I would chime in on this from our perspective. So admittedly, we’re a marketing firm. So take it with a grain of salt. But yet again, like I bring us back to Gen Z, millennials of where are the eyeballs? I think that we need to do a better job at telling the story of the trades of working in excavation in utilities in electric, electrical and plumbing. And and understand where the eyeballs are. It’s one thing to put on a show at a trade show or a jobs fair, which I admire that I applaud that. I think that’s awesome for local, all of us kind of that’s, that’s good. That’s a great solution. But what about Instagram? Tick tock, I know you’re everybody’s rolling their eyes, whatever. But But you wanted me on the panel.
Autumn Sullivan
This is what this is why I want to do on the panel. But there’s a there’s whatever. 100 Something eyeballs watching this clip right now. And one thing that they could start doing today, if you’re not doing is using social media, to start telling this story of your business of what you’re up to show people what it’s actually like to work in your industry. Talk about it. Like that’s what we see works time and time again, it’s not that you have to try to make it look cool. The trades is already cool. Like it’s amazing. Like get in here and get get into an apprenticeship program. We’re getting to work with a a journeyman for a while, get some years under your belt come like Come join us. That’s what we need to be telling people.
Autumn Sullivan
Yeah, and the comments rolling in really back that up or people are talking about, you know, do you know how many kids leave the foster care. Without a career path? Why aren’t we tapping into them? What about people who leave the military without, you know, having only served two or three years they’re still young they have a lot of they have they already have a good skills background, they obviously have the dedication, so why aren’t we reaching out to them. And what you’re talking about then really makes me think about how the military does a great job of recruiting kids with ROTC officers and billboard campaigns and all of that. So really wrapping wrapping construction into a cool message that that people can that young people can identify with to make it a more generic really to illuminate that it is a viable option. It’s not it’s not a substitution. It’s not lesser than college, it’s just a different path. And, and telling that whole story of not just it’s cool, and it’s fun. But also you can feed your family, you can travel around the country, like there’s a lot of opportunity here, depending on what where you want to go with it.
Benjamin Holmgren
Exactly right. And to to polish off the point. It’s, we need to the narrative, there is the college thing, but the narrative of it’s not just cool. It’s not just fun. But this is absolutely critical. But we can do with fewer underwater basket weaving degree majors week, we need people to put in pipelines? How are you going to turn on your electricity? How are you going to turn on your shower in the morning, if like, where’s your sewage gonna go? This needs to happen. And this is a critical infrastructure. And so that that’s like, there’s more fulfillment in it than people give it credit for. And this is this, this is it’s critical needs to happen.
Autumn Sullivan
And to Steve’s point and to what you just said, it’s more than just, it is more than just construction, we need to give options that we just need all of those skilled trades options that don’t require a four year degree and you and you can still get one if you want. And we’ll talk about the options for continuing education. And maybe that’s where we where we talk about that is is right now. You can still get a college degree and work in construction, but you can be making a good paycheck in the meantime. So Natasha, Steve, whichever whoever wants to take this, let’s talk about the role of offering continuing education as an incentive to retain workers.
Natasha Sherwood
Well, I think there’s two things you talked on. One is continuing education for our industry there are required to use as well so there’s that part where they have to continue learning but then there’s the optional part. So similar to like what Benjamin said about leadership. So where do those next superintendence? Come where those next forming come? And when? Where do you identify them. And Steve and I both also have apprentice programs. So our apprentice programs, we actually were on a call last week with one of our community college partners. So our kids are not only in an apprentice program where they’re on the job training, they’re actually at a community college where they’re you’re earning college credits that they’re not paying for, you know, that they are, and they’re being paid. So there’s that option. But in In addition, and one of the things I’m working with Florida, Prince of association is articulation agreements. And that’s something as a state that we can do. As well as if we provide those articulation agreements that are across the board for the state college system, then it becomes ongoing learning. So not only is what they’re learning to become an apprentice, giving them college credit, they’re then connected with that State College and able to maybe take business classes, and maybe they do want to become, do want to own their own, become a contractor on their own, they want to become estimators, they want to move up. And those options are available through our partners. But then as well, we’re able to do as an association. And I know Steve does similar trainings that make our contractors better, whether it is technical knowledge, business knowledge, or just contributing community knowledge. And I think that does keep them engaged. And it goes back to that Ben was talking about in the culture is it’s an engaged employee, someone who stays with you. Right? So they like where they’re working. You you do business with people you like, it’s not, you know, so you if you have them continuing to become engaged in investing in them. That’s another part of that culture. So yeah, we do everything from fire alarm, burglar alarm, and OSHA and journeyman prep. And similar to what you know, I’m sure and Steve’s doing down there, but the leadership training, and that really is identified, again, getting those kids when they’re 18, to 24, rather than 24 to 26. They get in that pipeline, they’re running jobs by the time they’re 26.
Steve Cona
Yeah, and just to kind of piggyback I think, you know, what we’re saying is, in this day and age in this economy, you have to invest in educating your workforce, there are no unemployed, electricians, and plumbers sitting on the sidelines, they’re already employed. So if you’re gonna build your pipeline, you have to build your pipeline by investing in people who might not necessarily have the skills that you need at that time. But if you’re going to create your own pipeline, investing in your employees, training them, putting them in apprenticeship programs, and you know, what, and actually maintaining it through their lifecycle as an employee, I can tell you right now, one of the things that we’re we’re doing is, you know, training superintendents on how to lead apprentices. Right. Yeah, we talked about Ben, you brought up a good point earlier, like, this is how, you know, you lead to engage, you know, the younger folks coming into the workforce. So, you know, where as, as an association, we’re offering as many courses as we possibly can to focus on how employers upskill their employees and, and, you know, that’s going to be a continuing effort. And we’re gonna see more and more of that, as we as we grow as an industry.
Benjamin Holmgren
Absolutely, this this is sound like a completely shameless plug. But just to back up what both you just said, I mentioned build with leaders during my intro, that’s exactly what we’re doing for the heavy civil dirt, interest industry, like how our vision is, we’re going to create this training platform, it’s live, you can go look it up, you can sign up today. But we create this training platform that teaches Yes, the skills. And we want to be able to take someone from total total newbie out of high school, teach them how to be a great grade checker, or great laborer, and then teach that guy or gal, how to be a great operator, and then how to be a great foreman, to a great superintendent to a great project manager and estimator, and eventually a business leader, like and we can teach all that those are tangible skills. And I think the important thing that that to note is that we need to give youngsters a path. Like we need to show people a path, and that they’re making progress toward a goal that they value. So many people the narrative is that construction is this dead end job. And if you bump into somebody two years later, and they’re like, Yeah, I’m still working in construction. It’s like a bad thing. Like, no, that’s not a bad thing. I’m on track. Yeah, I’m almost through my apprenticeship program or I’m all I just became a foreman. Now I’m learning how to lead my my crews how to deal with superintendents. So that’s what we built build leaders about and for and that’s what that’s the philosophy is like, give people a path, develop your people invest in people as Steve, Steve said, that’s, that’s exactly what we’re seeing. And that’s the huge part of the solution.
Autumn Sullivan
That’s awesome. We have Question from an audience member. Christina asked, What are we doing to address workforce development in disadvantaged and underserved populations. And it dovetails very nicely with one of my questions, which was about diversity as part of the labor challenge. The last research I did had 6% of the workforce of the construction work workforce was African American, and 10% of the workforce was made up by women. So obviously, a lack of diversity is part of the problem. So, Steve, let’s start with you. What strategies would you recommend for a construction company to address their diversity challenge as part of their talent? And pipeline challenge?
Natasha Sherwood
Yeah, no, you’re? That’s a great question. And you’re absolutely correct. But I will tell you from a construction standpoint, and from our apprenticeship program standpoint, we run a very diverse program, I would say, you know, we are we’re probably hovering around, you know, 35%, Hispanic, 18%, African American, where we do struggle, and it’s something that we have to be better at is getting women attracted to coming into our industry. Now, that has changed quite a bit, when you talk about the, from a general contractor’s perspective from project managers to, you know, Assistant Project Managers, you’re seeing a huge influx of females coming in to those positions. We need to be better from a trade perspective training, giving females the options to come in and be electricians. I think right now, in our program, we probably have, we’re training about 350 apprentices and I would say, you know, 12 to 15 of them are female, which is great. I, you know, I’d like it to be I’d like it to be more, but I’m encouraged by what we’re seeing. And to get to the question on, you know, low income, disadvantaged folks, this is the greatest career path for any individual, the quickest way to become a owner. A CEO, is, in my opinion, through the construction industry, once you learn a trade, and then figure out a way to monetize it, you know, it, you can quickly become, you know, from a from a apprentice to a CEO, in a very short period of time, we’ve seen folks that we brought into our programs from disadvantaged communities, I’ll we have an example of a black female apprentice who started two years ago. Now she’s in our, she’s in our program right out of high school, she bought herself a new car, she’s doing very well, providing for her family. So I tell people all the time, this industry doesn’t really see color, it sees skills. And when, you know, if you have those skills, those skills can can take you pretty much anywhere in our industry.
Natasha Sherwood
And I would get our numbers, I just pulled them up to make sure. So we have about 403 across the state, we only have eight women, it’s super sad in an organization run by a woman here and I you know, I still struggle. We diversity wise, it we do better, you know, so we’re pretty similar numbers, we’re probably about 25%, African American, 25%, Hispanic, and then the percent white and other and so forth. And that area seems to work. But I think part of that the diversity is just getting there is again, back up the very first question that gap. So we’re talking a long time ago, when electricians were first being it then we didn’t educate them. So now we’re catching up and, and diversity, we do have a, I think a good handle on but some of that’s reaching out. So like we work with a migrant workers, and we’re heavily involved with the migrant workers around the area and Ami, which is a group with works with kids who have maybe gotten a little trouble and so forth. And then some just disadvantaged groups, and you mentioned foster children as a super big heart of mine. And we have looked at how do you reach out into those groups, as well. And we do have some work with Eckerd. And those are, really is to get to, I mean, believe me, I drove my daughter all the way up to college two weeks ago, being like, you could be an electrician, if you want to do my apprentice. You’d own it for years, like I wouldn’t be dying for this college to drive you to and then I got I got 90 employers where you and you you can pick which one and they will they will hire you. If I get resumes in and if I get a minority woman it is a bidding warfare on my resume first. No, give me the resume first. And then but we do we do have a lack of availability in to connect with them. And I don’t know exactly what it is Steve and I weren’t like I said we were working on a community college today. How do you how do you reach that at that point? population and part of it is a stigma is is again, breaking down those stereotypes that what is involved in it, I think, you know, there’s positives coming out of COVID. And we got to find some right there’s got to be something is that we’ve I want to send workers are none among I’ve stopped working, most of them are working overtime from March 13 2020. They haven’t stopped yet. And so there is there’s that aspect, but also for us to learn how to reach out and some of it comes to the military, someone was asking about the military reach out and some of it is women coming out in military and and where do we direct our resources? And I think it may be one of those things where we have to start working more to all the skilled labor together, you know, kind of working as how to where and how do we reach out and then working with our educational partners? Let’s use some of the funding they get from the state to go target those people who will best build our tomorrow’s literally and figuratively.
Autumn Sullivan
Yeah, there’s there was a great comment in the in the chat that said, it’s not that the space is disadvantaged, but that it lacks opportunity reach outs, and I think that that really speaks to like, you know, each individual organization, each of you are doing great work reaching out to these different to these different populations, these different groups. But it’s really hard to get, you know, to your point, where are we going to put our resources, and it’s it to me, it speaks to a need of a strategic cooperation among many different organizations or many different skilled trades to address this issue. But it’s it’s very, it’s, it’s to me, it’s a positive to see how much work is being done in that area. And then, you know, someone else was talking about, oh, Natasha, real quick, we had a question in the chat. What does that
Natasha Sherwood
mean? I’m actually looking at the actual what it means is AMI kids in in Tampa. And so it’s a group that it’s across the whole state. So I’m looking at real quick what it actually stands for, because I should probably know that but I just always call them I started out as I’m really working with Marine Institute to take students who may have had problems in schools or problems at home, and it took a man they taught them they did High School, and really probably a what you would call apprenticeship but worked on Marine, and that’s what it was, was Marine Institute. But now it has gone out they have pre apprenticeship, construction, pre apprenticeship trainings, and so forth for the students that’ll, so instead of going through their juvenile detention, or to some other diversion, this is a process they can use. And I’m looking it up right now it’s ami kids.org. But let me find out what it actually means. So, um, but it works across the state and they have chapters across the state. And it may be like FFA, FFA, where they’ve gone away from Future Farmers of America. Now they’re just FFA that doesn’t. Yeah, and I’ll tell you if I find it. My kids, it’s all about hey, my kids, but that’s what it is. And if it Yeah, they say my kids.org. So if anybody is interested in how that does work out, I don’t get any kickbacks or anything. They’re just a great group.
Autumn Sullivan
I love it. We have a bunch of questions in the q&a. I have one last question for the panel, which is about that narrative, the narrative that construction is a last resort, the narrative that construction is a dead end job. We know that that is a systemic problem in the industry. We also know that we can’t change the whole industry, because we’re only for people. And so my question for you guys is what can an individual company do to start changing that narrative? What is some of you know, what would you recommend a business owner turn around and start doing today? To to help change that narrative?
Steve Cona
I can I can start. Look, I come from a family of carpenters. Right. You know, my grandfather owned a general contracting business, he built a huge amount of homes in the Tampa Bay area. And when I would work with for my grandfather’s company in the summer, my grandfather would tell me like, you need to go to college, so you don’t have to work like this. So it’s self inflicted, right? So as you know, as we, you know, my grandfather had and you know, an eighth grade education. But he also learned to be a carpenter learned a skill, and, you know, and he ended up having beach houses and a really nice house and, and really nice cars. And I can remember saying, Well, why don’t I want to do this. So I think as an industry, we need to the folks who work in this industry, we need to be are the biggest promoters of that. We need to talk to parents, look, there are parents of, you know, electricians that still want their kids to go to college. And when they say they want to be an electrician, you know, the parents are like, well, but you know, so we have to change the culture. We have to change the narrative, because, you know, this country was built because people learned skills and built it. And, you know, no one can say this country was built because people went to college and I know that sounds bad, but this country was because people learn skills and created things and build things, and I think that’s what we need to continue to push. And you know, and as a parent, I want my kids to learn skills that that can self sustain them, whether it’s college, or whether it’s learning to trade. So as parents, as an industry, we need to be better avenues for pushing, you know, the narrative that this is a viable option.
Natasha Sherwood
I think part of it is also showing what we’re doing that narrative, and we’re making sure that we are living that narrative, but we’re also whether it’s the videos if the TIC TOCs, it’s it’s the espousing the virtues of it, the fact that you can go home, you know, your workday and start early, but you can be home with your kids, you can buy, you know, you’re getting your home, because you’re earning instead of collecting debt, and it’s, um, there is that aspect of reaching to the kids, the TIC TOCs to the kids, but there’s also that part of getting into the guidance counselor’s in the high schools, or the middle schools and, and creating that set, you know, one of the things we’re looking at is what we do field trips, for the guidance counselors, we see what it takes to run a, you know, come see an electrical contract or day an electrical contractor, come see how many aspects you know, come meet my vice president of XYZ company that has a nice boat, and a nice car, and a nice house and no college degree. And, and I think that part of it is it’s discussions like this, it’s discussions that we have as a community is it’s working with our chambers and, and working with our legislators working with our Councilman our representatives. And we’re lucky with the papeles career and we have a governor who is gung ho about funding apprenticeships, and you know, that kind of workforce investment, and I think it’s championing that is talking about it. And it’s not saying just, that’s my worst thing, when I hear I just know, you didn’t just do anything, and yeah, I don’t, I don’t like that I’m just a stay at home mom, or I’m just an electrician, or I’m just an apprentice. And, you know, it is changing that narrative on that part that this is cash, and let’s be honest, financially can be awesome. I mean, let’s speak their language, you know, you can buy a car, you don’t have debt, you can buy a nice house, you make good money, and you have good hours. In there’s also lots of overtime, if you want it and you can go be an instructor, you can be a lifelong learner. And I think those aspects that apart, you know, I didn’t do a good job with my first kid, I got three more, maybe one of them, I’ll get to be an electrician, and that’ll be awesome. But and I think that’s what it is. And it I said I was a K through 12 principal and knew nothing about these opportunities. And any, and I’m like, wow, and I worked with all so low economic kids, you know, the 34,000 for a family for and didn’t know this opportunity existed. And I want to like, you know, hit my forehead like, gosh, I didn’t tell it to these kids. So it’s how, you know, it’s changing that narrative and talking about it.
Benjamin Holmgren
You very well said, Oh, echo some of what you said. But I also want to make a point. Because for, I don’t know, 567 years, owners and leadership in construction, have been saying, We just it’s so hard to find good help. You asked them what what their biggest problem is like, Oh, we just can’t find good help. We have all this work, we can’t find good help. Don’t people get tired of talking about how they can’t find good help. But don’t you just get exhausted saying the same thing for five years, seven years, 10 years. We know you can’t find good help do something. And this is kind of an ironic thing, because we’re on this on this conversation about solving the challenges of labor shortage for the industry. I’m not interested in solving the industry’s labor shortage challenge. But if there’s one person on here, who can take something from this, and it lights a spark and may consult it for them. That was a win, you’re not going to solve the problem for the industry micro isn’t going to fly, bless his heart, he’s not going to fly to your house and help you solve your your, you know the industry’s labor problems. But you can solve it, you can do something for you. And we work with dozens of partners who build it ourselves. We have 40 people, we don’t have a hiring problem. We don’t have a retention problem. Because we tell stories. We see it with our partners all the time, these contractors who are having people moved to new cities to come and work for them. We have dozens of case studies like that, where someone was like, I didn’t even realize that existed. Cool, but I saw you on Instagram 100 times. And now I’m going to move to Tennessee and work for you as a scraper operator, because that’s a bargain. No, by the way dirty little secret is he makes 80 or 100 or $120,000 a year doing so. And so I’ll echo what Steve said well said my friend, we need to be like if you’re if you’re in this and you’re struggling with this, but you’re not talking about it. You’re not being The biggest promoter of it, you’re part of the problem, you need to be telling this story. That’s That’s it and telling a story can look like Instagram and Tiktok. But it can also look like reaching out to your schools and starting these programs and apprenticeships, but it’s on you. That’s the that’s the point, you’re not going to solve it for the industry. Don’t worry about that. Solve it for you.
Autumn Sullivan
Yeah, and that, you know, we talk a lot Mobilization Funding about being a purpose driven business and putting a purpose behind what you do every day. And I really think that that is, is key when it comes to to the talent, the talent challenge as well, if you are, you know, if you are a woman owned business and construction, and you are passionate about spreading that message of opportunity, then you need to be reaching out to those organizations, to see how you can help put your efforts toward, you know, toward that success, reach, reach down, reach out and be helping the next the next generation, you know, whether it’s working with kids, whether it’s working with people coming out of the correctional facilities, whatever it is that you’re that’s part of your purpose, that aligns to your purpose, because when you have that, that authenticity, you will pour into it and it doesn’t feel like extra work, it actually lights you up. And if your team is behind that your whole team becomes advocates for that message, you can really like your whole company becomes part of that machine. And I you know, I could get on my high horse about that for all day. But this is about you guys. So we have a we only have like 10 minutes left. And we have a ton of questions in the q&a. So I’m going to start firing these off. First is from Seth. What about processes for employees seeking to apply? I’ve seen many companies who don’t have a formal process, or make it way too over complicated. And so so that people just don’t apply what what would you guys say to that about processes for hiring?
Natasha Sherwood
I’d say some of ours are super quick, like I got a resume Monday and the guy’s already hired today. And he starts Thursday. But there’s some of my contractors that have a much longer process. And some of it depends on the size of their company and their company. Same thing, their vision and mission. And some of them have a longer process. And some of them, I send them a resume and they’ll hire them. And I think getting past maybe some of those stigmas that it’s difficult, or working with those who don’t, but ours, ours is super simple, but I just don’t think people maybe no, it is, for the most part, not fill out an application. It is send me a resume and it goes out to 90 people. And they probably will have five or six phone calls before I finished sending out the email. Again, like Steve said, there’s no electricians or plumbers sitting waiting for the jobs for the most part anywhere.
Steve Cona
Yeah, and I and I agree with Tasha and and to be perfectly honest in this, in this day and age, not even sometimes a resume is necessary. Sometimes someone who is just willing to get to work and makes the right call or the right call a company, I can tell you that. I would say seven out of 10 of our our companies are hiring right now. So really all you have to do, you can go on the abc.org website, look at our membership list, make calls, just call the company and ask if they’re hiring. If they are, I think it’s a great opportunity for you to take advantage of.
Benjamin Holmgren
It’s important to note that recruiting is sales. So don’t make it hard to sell. You know, don’t make it hard for people to buy from you or come and work for you make that process easy.
Autumn Sullivan
Our next question is from Sharon Do any of you believe a four year degree in construction sciences or construction management adds value and or makes a difference in being promoted?
Steve Cona
I can tell you, as you know, someone who was a college trustee and a school board member, one of the things that I fought for the most is we have all of this amazing curriculum in our industry and Natasha, she has the same. The curriculum is amazing. Why do why does the educational I like to call them the educational authority not say that that curriculum is worth an associate in arts degree or in a bachelor’s degree. You know, it requires the same amount of work and rigor and in fact more because it requires on the job training hours as well. So I think we need to get the educational institutional complex on board with actually saying if you have these credentials, then we will give you you know, a degrees and bachelor’s degrees because there’s no rhyme or reason why someone who is a trained electrician shouldn’t have the same degree as somebody who’s an English major in my opinion, I just don’t see the difference in that and we’ve tried and we’re gonna push and that really needs to change from the educational sector in my opinion.
Natasha Sherwood
Kind of just again, it’s one of the main pushes I have in this apprenticeship Station. association is to make those state colleges to look at our curriculum across the board across the state of Florida. All the state colleges. Here’s if you do this, you take this many courses, this OJT counts for that. So it doesn’t, you know, come back to the questions as a four year, you know, construction degree. My college roommate has a four year construction degree and works in a construction agency and the construction contractor and worked with people who don’t have a degree. And on the same level as he does. He put in his work, I would say four years in college, many of them put him for years and OJT. I don’t know, that necessarily gets them ahead. I think some of what it does is there are some exposure to some other courses that they sometimes are able to see which, which opens your horizon a little bit when she gives you sometimes it This isn’t fair, but I mean, it’s just the honest truth. It gives you the courage to apply for jobs you might not necessarily apply for I don’t necessarily think that you’re any more necessarily qualified. But all of a sudden, there’s that stigma associated and that history that we have, and that I have a college degree I can apply for this job. So many jobs require well requires a high school degree, but preferred is a bachelor’s and I used to be K through 12 teacher I had some great teachers that were a teacher assistants that were much better teachers with no degree than some of my teachers, you know, who went through the master’s degrees? And so does it help? Yes, it helps. But it is more sometimes I think, because of the courage that and sometimes the, the they feel I get from it not because they necessarily know a whole lot more. And I think we’re changing and moving away from that. And I wouldn’t be surprised to see college degrees. And college programs become more mirroring our apprentice programs than vice versa. You know, you already see specialized degrees that are steering away from the undergraduate liberal arts and are steering more towards really getting into their industry, which essentially as an apprentice program.
Benjamin Holmgren
I’ll just ask who’s paying for it? If mom and dad are paying for it, help yourself? Yeah, go for it. If you want to just become a construction superintendent. And you think the degree is gonna help, I would just go to go to work. Again, you don’t settle up yourself with six figures in college debt, and end up in the same spot.
Natasha Sherwood
And many companies will pay for it after you’ve been there. That’s right, you do have a degree to get that degree.
Benjamin Holmgren
Yeah. But if you can go as Natasha said, you can go and, and get exposure to other things and network and all that. And have a good time. Congrats, good for you.
Autumn Sullivan
So our next question is from Amanda, a big thing we’re seeing in outreach efforts is job readiness, or lack of job readiness, which is you know, being on time and preparing ahead. This varies from high school age to other groups. How would you address job preparing people job readiness for a job and construction, the details of like, you have to be here on time and should probably wear close toed shoes.
Natasha Sherwood
It’s so true. We have in front of our new a new worker training on the new worker trainings we do. But we make it available for our contractors, but it’s something that’s being developed but we see it even in the resumes or applications. I say resumes because sometimes they don’t know how to write a resume, right? So they don’t even though they’ve been through high school, not necessarily capitalization is not a big thing anymore, right? It is you text is all in all lowercase. And so some of it’s that and then showing up and some of there is some talking through what’s appropriate to wear. And it doesn’t have to be nice. It can it can be from the goodwill down the street, a nice pair of khakis and go for you know, $2 khakis and a $2 collared shirt and, and then also just answering questions. But showing up not just on time showing up for an interview is something that we’re working through. I was Dakota, I just had a board meeting and one of the members said, Yeah, he got a raise, because he made it to the second interview. And I was like, wow, okay, you know. And so we do have that problem. But I don’t think it is specific to construction. It is specific to where we are in this and the world we live in right now. And we were virtual for a year like we didn’t we didn’t leave our houses like we didn’t leave PJ’s. And, you know, we put on shirts and maybe had on shorts. So there is that aspect. And it is a portion of, we go over dress code, the first night of our apprentice program, and that is, please don’t wear opaque clothing. And please wear things that I don’t see, you know, cover your shoulders. And I don’t want to see portions of you that don’t need to be seen. And that is something we go over the soft skills, per se is what you say, you know, and we talked about proper email. And those things are important for them to do that progression. And that is that constant learning that Ben was talking about is it may not be constantly learning about bending pipe. It may be constantly learning about how to work with people because essentially what we’re all doing right, we’re all working with other people. If we’ll learn along the way, it’s great, but if you can’t work with people, you’re probably not going to do well in any industry, any industry, right?
Steve Cona
That’s exactly and I think one of the things that Sorry, sorry, sorry, Ben, I think one of the things that and I’ll be quick, one of the things that, that we tell our apprentices is look, or people who are wanting to get into the trade, you know, show up, be on time and be eager to learn. That’s all you have to do. That is all you have to do. But that, but but that’s tough for some folks. And I think, you know, that’s kind of the world we live in today. But you know, be present, be on time and be willing to learn. And I think if, if they can, if they do that, they’ll go far in our industry.
Natasha Sherwood
And I would ask, I would add, one thing we’ve told them is to ask for help. There is a unwillingness to help ask for help. So whether it’s you need a ride, because many of the kids is 18 year olds, they don’t have driver’s license, like to me was the biggest thing, that driver’s license, because they never even thought about getting a car, or they would be able to get a car. So if you need help, ask if you don’t understand the math of it, ask. And that has not something that’s always been pushed in there K through 12. world, but ask ask ask.
Autumn Sullivan
Well, and interestingly enough, I’ve read a lot of material about how that’s part of the construction culture that that has been pervasive and now is changing is it’s a culture of you don’t ask what you don’t know. You just, you just figure it out. Or you just pretend that you know and hope that it works. But But now research is showing that that that’s a productivity issue. It’s a performance issue, it’s also a safety issue. So it’s a huge safety issue. So So that’s part of the culture that is changing. And that’s kind of opening up the topics of it’s okay to admit you don’t know something, it’s okay to ask a question. It’s okay to be a little bit, a little bit vulnerable, right. And this, you know, kind of what has been historically a male dominated kind of tough industry, it’s starting to open up and say, Look, you have to be able to talk because if you don’t know how to do something, not only does it mean that we’re gonna have to redo this later, but you might get hurt. So our next question is from John, and it is how can technology play a role in attracting new construction workers gently is a great and great topic to dive into in our last few minutes. I’ll go first.
Benjamin Holmgren
We already talked a little bit about social media, the internet, the interwebs. But I would also say that what we’re seeing there’s there’s more and more technology being developed, to help do the job better. Everything from you know, and you guys see it in your industry as well. But But laser, and, and GPS, and all this stuff, there’s actually like a, there is a tremendous amount of technology in the industry. And I think that’s another dirty little secret. People think that if they go work for a dirt company that say that they’re going to end up with the, you know, the dumb end of a shovel all the time. It’s like, No, you can you can, if whether it’s software or hardware, there’s tons of technology that takes a lot of learning and a lot of training and a lot of skill to be able to use there. Like it is incredible. It’s like someone’s rocket surgery. So I think there’s a lot of, there’s a lot of opportunity there for people who may be more interested in a kind of a technology background, like you can work for a company who work for an electrical contractor, and have a heavy tech bent, and get what you need. From that, get your get your kicks from that.
Natasha Sherwood
I think we’ve also seen I mean, the electrical industry goes, it’s changes, right? So we’re always gonna need electricity. It’s just where’s that electricity coming from? So is it low voltage? Is it solar? Are they coming from, you know, what aspects are that? You know, you’re, we’re gonna need air conditioning for it right? You’re always gonna need air conditioning, it’s just not gonna not be something you need in Florida. So how’s the air conditioning? Getting? Is it solar? Is it ah, you know, are you low voltage? Who’s working on it? Who’s putting it in your cars? Like, are you gonna plug your car in? Well, that’s electricity. So there are those new edge parts of technology. But then kind of going back to almost an old technology, like we’ve started offering more of our apprenticeship programs, apprentice programs online, so our students are working in different parts of the state, and they’re going in, we’re making that available to them. Again, we had a small program online, COVID hit and we’re like, Okay, this can work. So now there’s a larger portion. And we’re able to reach more students and students who might not have been in an area, but it also identified an area where, where we didn’t necessarily know that there was a gap in that technology. So as the technology becomes positive, it’s also opening up those areas where we know that technology is maybe a deficit. So I think it’s both
Steve Cona
just to add and kind of what Natasha and Benjamin both hit on. A lot of these commercial buildings are built online way before they’re actually built in real life. So You know, they are building jobs because of the lack of workforce. A lot of these jobs are very efficient and they’re built and you know, someone who sits in a, in a, you know, in a forklift or you know, those things are air conditioned now, like it used to be before. So technology is radio a lot easier. Yeah, technology is making it a lot easier for, for our for our skilled labor workers. And, you know, we’re we’re proud of all of the technological breakthroughs that we’re having in the construction industry right
Autumn Sullivan
now. Well, it’s 101. I want to respect everyone’s time. Thank you guys so much for doing this. I think each one of you said you didn’t have all the answers. But I think collectively, you provided an awful lot of answers and an awful lot of help for our audience. So thank you so much. I appreciate each and every one of you. And thank you, everyone for for joining us today. It was a huge turnout, I am so honored that you chose to spend an hour with us. The last comment in the q&a is great conversation on preparing for the future. Any suggestions on resources to find construction management type folks, quality control superintendent, safety managers? I’ll let you guys answer that. But one thing I did want to say is, I know for a fact there are some recruiting people who specialize in construction who are in the audience right now. There is a LinkedIn event chat for this for this webinar. You can email me at a dot Sullivan at mobilization funding comm if you need a link for that. But if you go on to LinkedIn and you look up, mobilization funding, you’ll find it, I thoroughly encourage all of you to introduce yourselves in that chat and what you do so connect with each other, there were 200 people on this webinar, let’s start connecting, let’s start building these things. Let’s find the solutions for each other. So I just wanted to put that out there. And then if any of you have a resource for finding those kinds of high level people, then let’s go ahead and share and then we’ll we’ll wrap up for the day. Well, if
Steve Cona
you want to go to ABC, FL golf, Gu lf.org, go to our website, my email addresses on there, you can look at all of our resources, you can look at all of our member companies. And if you are interested in any careers in the construction industry, please feel free to email me and my email addresses on the website.
Natasha Sherwood
And I would say I mean ours is ours is IEC florida.org. And I don’t know where to find them. If you do if you’ll let me know because my people would like to hire them. But in the end, I think the part is is building them to part of him is investing and you may have to create your own pipeline for me who you have. But similar to Steve’s all my informations on there, you can reach out through the IEC florida.org. And we do have resumes on there under resources for people looking for jobs. They’re not they’re very long, they don’t last a whole long time. So feel free to check them out. And I think the other part is there are kinda like answer. There’s some staffing companies that work specifically in that some trade partner and there’s just different ones you can look out. If you look up, you know, construction, and temp jobs and so forth, they sometimes will have people in there or join one of our associations, I’m sure I’m sure it will take a member I definitely remember I’ll tell you we don’t borrow. So that is our solution. When I’m one of my guys, one of my companies needs more workers they borrowed from another company in our association. So that’s how we we solve that. So if you’re an electrician, give us a call and give Steve a call. I definitely can help you with this or we’ll train them for you put on my apprentice program. We got some good ones.
Benjamin Holmgren
Okay, yep, for anyone who’s left on the call here, please reach out to me on LinkedIn, just send me a connection request so you can kind of be in touch I post about this stuff all the time, like nearly every day on LinkedIn. So that’s a great place to reach me. And then we also have a handful of recruiters that work for us in house so if you’re interested in anything in dirt in excavation, heavy civil, we can we can definitely help with that either. If you’re if you’re somebody looking for a job or if you’re looking to recruit people we might be able to help with help you out with that at Build with so reach out to me.
Autumn Sullivan
Thank you everyone. If you had to leave early or you didn’t get to join live just so you know we will be doing a webinar replay it will be available on YouTube and I will be sending out an email with a link to that to everyone who registered so you can watch it again and again. Thank you everyone so much take care be well.