Is college REALLY the only path to a stable income and rewarding career? Is construction REALLY a “dead-end” job?
Of course not. But many Americans believe them to be true.
It’s important for those of us in construction to change the narrative, raise awareness, and offer a new perspective for the industry.
This was a panel conversation featuring leaders from the skilled trades and higher education. We focused on the pros and cons of going to college or going into the trades, the myths versus the reality for both, and how the best solution for people might not be an “either/or” mentality, but a path that can encompass both.
Autumn Sullivan 01:40
So we have we have people joining, and we have a lot to talk about. So let’s go ahead and get started. Thank you, everyone for joining us today. With me, as always is my co host and the CEO of mobilization funding. Scott Cooper. Hi, Scott.
Scott Peper 01:56
Welcome. Thank you. Welcome, everybody.
Autumn Sullivan 02:00
And our guests today are we have a Selye Mubarak, who is an author and keynote speaker in the construction industry. We have Natasha Sherwood, who is the Executive Director for independent electric Electrical Contractors Association of is it West Florida or
Natasha Sherwood 02:16
Florida, Florida, west coast, but it’s it’s everywhere except for four counties.
Autumn Sullivan 02:22
And we have Matt Vetter, who is the president of Shaffer construction. Thank you all so much for being here with us.
Matt Vetter 02:28
Thank you. Thank you.
Saleh Mubarak 02:29
Thanks for having us.
Autumn Sullivan 02:31
Um, to kick it off, I would like to ask each of you to share your story on how you got into the construction industry. And also, I want to know whether or not you went to college? Where do we start?
Natasha Sherwood 02:45
I’ll start. Like, I’ll just run with it. My name is Natasha shoreway. How did I get into the construction industry and my dad was a construction attorney. So that’s probably how I first got into it as a as a kid. But then am I was actually a K through 12 principal. And we started addressing education needs and found out that in Hillsborough County, and in Florida, we were importing more in construction labor than we had. And we were actually paying for DMS and I got on a task force that ended up finding can transfer me to this job with anything electrical contractors. And so then really just got in depth with our apprentice program and kind of took on a life of its own. So now run the Florida apprenticeship Association, as well, which runs all kinds of construction, and all kinds of it apprenticeship. So that’s how I landed here. And yes, I went to college for seven football seasons, and received a lot of degrees in that timeframe. None of which Am I using?
Saleh Mubarak 03:46
Likewise, which I share a similar story to that. So why do you want to go next door? Sure.
Saleh Mubarak 03:53
Well, going to college was was not an option. My mom was a school principal, very tough on us. The The thing is, I have a one brother older than me and one sister also older than me, both medical doctors, and another sister who’s a pharmacist. So there was pressure on me to go to the medical field and I kind of you know, registered and then this is back in my home country in Syria that time. And then I changed now I don’t want to be dissecting frogs. And so I changed to civil engineering, which I liked. And in my graduate school here in the US, I did my master’s degree in structures and mechanics. So I had work experience in structural design. And then I found that it’s dry subject. You know, you’re going to sit in by yourself in a cubicle, doing design and I’m, I’m very talkative. I’m, like, you know, I’m a people’s person. So I find aren’t that project management is my cup of tea and I switched I did my PhD at Clemson University. So as they say, my blood runs orange. And I love it. And this is new news. Nobody knows except for my wife. I signed a contract two days ago with why my publisher Whitey, for my third book on construction project management. That’s awesome. Good for you. Thank you. So you guys are my references if I need help, Matt, Scott and Natasha. And, of course, you know, if I need a question and construction management, you are my references, please?
Matt Vetter 05:44
Absolutely, anytime. So, with that, I’m Matt better. I’m the president of Shaffer construction. We are a commercial general contracting firm in southeastern Michigan, I got my start in construction. In my my late high school days, I started on a residential crew, basically carrying wood around the job sites and kind of a general labor. Through that I’ve, I’ve worked in and touched almost every type of construction, I switched into the commercial realm. And right around 2008, when everything was kind of falling apart, I’ve owned several companies. And now, you know, Shaffer construction is where I’m where I’m at, it’s my, it’s my burn the ships project, and we aren’t looking backwards. So we’re rapidly growing and having lots of fun doing it. I did go to college, I graduated from U of M, University of Michigan. I have a weird story about my past, we can get into that maybe later. But my degree is in psychology. And I would say I actually use it probably every day. And when I do.
Saleh Mubarak 06:56
Math, what kind of construction do you do?
Matt Vetter 06:59
So we build everything other than single family homes. We do a lot of light industrial, commercial work. We built office space back when people still use them. You name it, we do it. Vertical construction, not not horizontal, right.
Scott Peper 07:17
For those of you that don’t know, I got my start construction working for my dad he had it was commercial Glaser contract, man, contract laser, doing glass and aluminum. So I wouldn’t be on those job sites in high school and summers, certainly all through college. And like Matt, I just basically did whatever I was told I carried wood, I peel the stickers off of the class. Back when I was doing insulated glass, they actually used to take two panes of glass and a hot rubber gun and insulated themselves. I know that doesn’t exist anymore. But I had plenty of burns from that. As well as peeling all the little stickers off the glass and carrying it to the polisher and who knows what else working even on the cutting table. And that definitely helped me understand that I wanted to get into the construction was fascinating. And I liked it. But I also went to college, mostly because I wanted to play basketball when I left high school and I needed somewhere to continue that dream of mine. But I ended up getting a degree in marketing and business and food, hotel Hospitality Management. And candidly, I probably don’t use much of what I learned there. I’m sure I learned some structure. I learned how to make some friends, I learned how to get in trouble. And fortunately, I made my way out. And so that’s where I land now.
Autumn Sullivan 08:30
Yeah. Yeah. I think that’s a good segue into my next question, which is do you how do you use your, your college education? Now in your construction career? Like Matt, you were talking about that you got a psychology degree, but you feel like you kind of use that every day? So whoever wants to go first? Or if you don’t use it at all?
Natasha Sherwood 09:02
Matt, you’re gonna jump in with psychology? Yeah,
Matt Vetter 09:05
I can I can touch on that. So I, I do feel like I use it every day. You know, my role now is the owner and kind of the guy leading the ship. You know, I deal with everyone from the day laborers on job sites to C suite executives that we’re working for, and, you know, in in sales and marketing in general, learning the human psyche and how, how we all work, how we tick, you know, it’s proven to be very helpful. Now, I would be lying to you if I told you that when I was coming out of high school and going to school, going to college that that was my plan. Right? I mean, my my colleagues and my co workers that have degrees, they have construction management degrees or engineering degrees and you know, normal track education for what they do. So it’s part luck, I think and it’s part you know, the universe working for me but it is It started off really as a, as a field that interested me just on a personal level. And I’ve been able to kind of take that and spin it to help what I do now.
Natasha Sherwood 10:11
I would say I said, I didn’t use any of it, I have degrees in public relations, sports administration, mass communication, and political campaigning, I just thought I would like try to cover all the colleges at the University of Florida and see if I could get something from all of them. And I will be made, I would, again, be remiss to say I don’t use it, I do a lot of legislative and lobbying work, but I’m never running a campaign again in my life. And obviously, I’m sitting here on a webinar, so I use mass communication. But a lot of what I feel like I use from my experience in college is the things that I did outside of that I did while I was in college, but it truly was on the job training. So whether it was working in a legislators office, I work for the football team, and it is that structure it is that dealing with people it is the Getting Things Done. And I think that aspect is really transferred into being able to work well in the construction industry that we do, especially coming in from someone outside, when I came in the past few years is that anywhere I’ve gone, and I probably learned this again, working outside the classroom is learning all the aspects of it. So whether it’s the carrying the wood, or scraping the stickers off, you know, I was trying to learn. So I would go out to my contractors and try to figure out what they were doing. And I think working with people is the part that I probably learned the most of college if definitely wasn’t learning how to like, write the code to do a website back in 1992. Because none of that exists anymore. Right? So some of that coursework is not there. But I think it’s the part that I learned outside of the classroom in college that really transfers into what we’re doing now.
Saleh Mubarak 11:41
I have to interesting story about my using my background. You know, there’s there is a match now between my educational background and what I do, but what I did in the master’s degree was structured design. And I finished that in 1985. So it was a long time. In my work, brief work experience was in 8283 in instructional design. Now fast forward, maybe almost 30 years from now, If Natasha, you are in Tampa, right? Correct. Remember when we had the big hurricane? Was it Irma? Or was it thinking I was almost like 2006 ish timeframe? Like we had like,
oh, no, no, it was something was 2016 17. I don’t remember exactly. But it was a Michael, Michael. Michael. Yes, Michael. So it was funny that at that time I was with my mother who passed away later on. She lived with my brother and sister in Panama City, Florida. And my children, the you know, all the guys put they have an annual trip. They went outside the United States at that time and they left their wives and kids and we felt my wife and I sorry that the wives and we have one daughter and two daughters in law. They were without their their husbands. We have to go back to Tampa. So we drove back and we looked like crazy on the highway. Everyone was leaving Tampa when we were the only vehicle driving coming back to Tampa. A shock was when they decided that they wanted to go so they travel all of them all the you know, ladies with the children, they traveled to Atlanta, we have relatives in Atlanta and I told my wife, I’m not leaving Tampa. So I decided to with the limited means I had to board my glass doors and so on and I used my structural background, I told my wife, I said, failure happens because of deflections. And the deflections happened in the middle of the pain. You know, talking about glass, scotch. So I pulled some furniture, I got some two by fours I had and some boards. And I bought all my house and said I’m not leaving. And we got stuck on the TV waiting for the news. And then and we prepared and walk in closet to sleep in and then by 11 o’clock pm. I remember the good news that it’s not going to be as bad. Right?
Autumn Sullivan 14:25
Which is always one thing with hurricanes in the Tampa Bay. Well knock on wood so far that has been I think
Natasha Sherwood 14:33
it’s because there’s Jose Gasper is gold is buried in Tampa Bay and no hurricane get hit. According to my dad, I get structural engineering forget anything else. The whole thing is in causes gold is down there somehow helping us. Yeah, and I
Scott Peper 14:46
have heard that many times myself.
cavalier about it? Yeah.
Autumn Sullivan 14:52
I think you guys all touched on a really interesting point. And it’s one of the things I want to focus on in this webinar, too is is the whole fact that it’s Learning like college is a way to learn. And we’ve also talked about, you know, we all have probably, I guess, by our ages and slay you are nice enough to announce how long you’ve been Where you’ve been working. But it’s it’s your education over time. It’s not just one way one method and college can be that. But it doesn’t have to be that immediately after high school, I can tell you personally, I would have benefited much better learning in college, if I went in four or five years later, I can also tell you that I’ve learned more from the books that I’ve read than I ever did in college, cumulatively. And even even candidly, from even some of the experience of certain work experiences I’ve had, I probably learned more from books, I certainly today in my everyday life, implement, use, and actively apply the things I’ve learned from a book in my everyday life that I that I couldn’t even draw a line to, and anything I learned in a classroom or a study. Now, I’m not an accountant or a doctor or a civil engineer. So there’s some there’s some perspective to have there. But what I think is, it’s the maturity level of going from high school directly into a college and trying to indoctrinate yourself into what do you want to learn, and oftentimes, you go to college, you don’t even know what you want to major in yet. And I think you couple that with an expensive cost to it. And then you look at the practical nature, what happens when you get out life? economy, jobs, inflation, other things, and you realize quickly that that might not have been the best thing for me at the moment. Is there anything that you guys can touch on as to why you think there’s a stereotype that you have to go do that? And for the people that don’t? Why don’t why does it okay, are just as accepted to jump out into that? And I guess what’s related to construction a little bit to Scotty, I
Saleh Mubarak 16:55
I was going to say, I may not agree with you that going to college? Well, it can happen four or five years later, but I would say the United States has a very flexible academic, you know, system that allows you and we are the only country as far as I know, as far as I know, in the world, that allows you to go the first year freshman as undeclared. And then the other flexibility is that, okay, let’s say you you chose marketing, after two years of studying marketing, you said, That’s not for me, I like computers, I want to switch to it. So they allow you to switch, yes, you may lose a couple of credits, but at least they allow you many other systems in other countries, they don’t allow you. But what you say what you said, applies to graduate school. During my work as a professor, I get people who come to me once want to do a master’s degree, and they want me to be there, you know, to supervise their thesis and so on. And I see a profound difference between those who did have work in engineering or construction after the bachelor degree, and then come back later, 10 years later, five years later to do the masters. And those who want to do it immediately after the bachelor degree, I will mention only one difference. Those who don’t have experience, they come to me and say, Professor, can you give me a subject to do my thesis on the others have subjects on mind? And they want me to critique I want to do with this or this. So that’s, but it’s very interesting. I promised autumn that I have a brief PowerPoint presentation on experience versus education. As much as time allows us, I can I can show you a few words, slides.
Natasha Sherwood 18:58
I think that’s changed some too, even though it gives us I have a daughter as a freshman in college now. And I have a high school sophomore, and as they are, she had to you can apply undeclared, but like when I applied it, no one declared a major but so many of them you are applying to certain colleges even even as a freshman now I think that is leading into some of that disconnect, you know, my my freshman who my who just finished her years changed her major three times and you know, eight months, right you know, I mean, she went in this pre med and I think she’s coming out as accounting or some you know, it’s it’s a little bit of craziness on that and I think from some of the studying I’ve done I was a K through 12 principle I put it in my bio I am like a recovering college for everybody. I ran a school for low income students to try to make them college ready thinking that that’s how I was going to solve or contribute to my community like that’s that’s what I was going to do to make a difference until we started finding out that there were options that were not only fulfilling and essential you know that crazy word I never want to hear right essential is one of those words we can we can ban from addiction arena we can be happy is that I wasn’t exposed that that was a career and I, from my research and so forth, a lot of that happened post kind of World War Two. So you went into that area that was at 1944 timeframe when it started becoming the push towards college rather than hard work. And there’s even a poster that says, you know, work smarter rather than harder, and that somehow hard work became the bad thing. And so I think that’s what they have, I believe led to some of the idea that college and then we, we sold a somewhat of a lie. And I’ll say I sold somewhat of a lie that college was a way to escape poverty. And that college was going to be the answer. And whether that was basketball, so let’s play sports to get you out of poverty to get you into college, or let’s do really good in school, they get you out of poverty and, and then what we’ve done is created a gap of skills that we all need. And we’ve created a gap of with people with education that doesn’t necessarily fit what they’re passionate about. And we’ve somehow to an extent as a mom, a high schooler, but we’re starting to, in my personal opinion, ruined some of high school. You know, my, my high schooler can’t take the classes that she’s liked to, that she’s to have fun and learn and actually learn about so she wants to learn about marine biology. But we’re telling we, her guidance counselor, Tiller is no need to take AP Physics and AP, calc A B and A B BC. And she’s like, I hate math. But if you want to get into college, you’ll take D she’s like, but I want to work with sharks. I want to take marine biology, you know, and so it has trickled down. And at some point, I believe we’re making that turn kinda like the hurricane that turned off in a far right, we’re just not turning quite as quickly as some of those Hurricanes were kind of turning slowly. But I think we’re starting to see that, that gap, as in need to fill and so you go back to Scott, when you said kind of about accounting or med school, I, my personal thing is, and maybe 10 to 15 years, we will see college more as an apprentice program. And many of those, if you look at med school, it really kind of is a really the apprentice program, right? Like you are doing related technical instruction during the day. And you are interning and doing other programs. And I think we’ll see a shift towards that, except for things. Engineering is one of the ones I always think of engineering accounting, where there are actual things you learn in class, they’re actually applicable to your class. But I think that’s where we went that post, you know, World War Two, or poverty kind of hit and we wanted to get out of it. And there’s that poster that many of us all, you know, you had the guy working dirty and tired, and the guy had a graduation cap and gown, and somehow one was better than the other instead of both being great additions to our country. Right.
Matt Vetter 22:35
So I think that’s that’s just it, Natasha, and I don’t know that it was even necessarily that long ago, I think within the last 30 years, we have allowed our public school system to go down the toilet. And, and we started removing shop classes from school around 30 years ago, and there was there was economic, purely economic reasoning for that, because you can’t put a standardized test on a shop class or a whole Mac class. You can’t standardize that, and therefore schools can’t can’t fight and gain funding. And, you know, I could go down a rabbit hole of governmental corruption and making the people more reliant on government by forcing us to not learn how to how to handle things on our own, how to build how to create, I don’t know how much time we have or
part two. Yeah,
Matt Vetter 23:27
but I think that’s just it in that, you know, we’ve we’ve, we’ve told kids, that college has to be the way that if you don’t go to college, you’re going to be the the dirty mechanic, turning a wrench. And somehow, we’ve made we’ve allowed that dirty mechanic to be the poster boy for what we don’t want in life for our children for our futures. You know, and instead, we push kids, you know, 18 year old kids to Scott’s point, and we push them into college, we wrap them up in with hundreds of 1000s of dollars of debt that many of them will never repay. And we kind of kick them off the dock and say, go go swim. And let’s see what happens when we could we could change this scenario, and start pushing more trade based education for those kids that were at Fitz, right. College is a great choice for some. I don’t want my brain surgeon to come in and tell me that he learned how to do brain surgery by watching YouTube videos. But it’s not the right choice for everybody. And I think there needs to be that that distinction made and then a larger effort to kind of popularize and promote trade based education.
I think it’s important just go ahead.
Scott Peper 24:38
I was just gonna say if if they if the folks come out of college knew that the dirty guy turned on the ranch have a better, much better ability to pay the college debt off. Then they might actually just went into that right out of the start because a lot of folks come out of school and they just want to make as much money as they can. They don’t necessarily have us. That is a high end goal for them. At the top of the list of four or five things more than it is, this is my purpose in life. And this is how I want to attack it. And for those people in particular, I think you might find, go into somewhere where you get some money, you feel good about yourself, you’re making that money, and then maybe you, you find out dig in to the mechanic aspect. You love cars, and you want to either own a car dealership or you want to bring in exotic cars, you can find your niche in there, and then you can go to school for that and slays point you could do that at night or on the Internet, or you could go to school, while you’re going to add to touch I didn’t want to
Natasha Sherwood 25:35
know it’s always it was just tagging on to put that in as we and that’s part of my huge that’s why I was in Tallahassee yesterday is working on those trade schools and apprentice programs and, and presenting them in this is my big part is not in an alternative to college, that is an equal opportunity to college. And that the assumption we need to change the mind frame and so I’ll be at the American guidance counselor’s conference sometime coming up, I think in June, like guidance counselors, teachers, parents, that it is not the alternative just because your kid is not smart, that we will give them a great option that’s, that is trade school. It is that this amazing kid has the option. Every amazing kid has the option of what is best for their future. So is that college is that CTE career technical education is that an apprenticeship is that trade school? And I go back to my daughter who’s number five or 10 in her class. So the child’s like, you know, she’s just got a mind the world. They never asked her if she wanted to go to college. Now, she probably will. They just assumed that she wanted to. And they were making her drop her career technical education that said, she’ll be vet tech certified. When she graduates she’ll probably make more money than me with regret she could if she wanted to graduate high scoring, she culinary marine biology, she was they were telling her she had to drop one of those. And not even finding out what her passion was. They just assumed that college was the answer. And that’s the part that I think the biggest the tag on to what Matt was saying is lame at some point, gotta figure out what people students are passionate about, or want to do. So then when they go into the workforce, whether it is as an engineer, as in construction, whether it’s marketing, whether it’s running in association, that you can be passionate about it and want to go do well. And just assuming that college is it can be it may be the right thing. Like it can be great. It is a great, man, I have great time in college. Don’t get me wrong, I like going back. But I think the same as I would have done a lot better. My graduate school grades are a lot better than my undergraduate school grades. You know, because I I appreciate it. I read books for information rather than the night before hoping to pass an exam. And so I think that’s the part is in it’s even lower than high school. We’re working with middle schoolers now. So we’re working with Junior Achievement and middle schoolers. And it’s like you have this big gap. Everybody remembers kindergarten when you had like, let’s learn about the helpers week. So you learned about firemen and you learned about you know, law enforcement and did we ever bring in a mechanic? Probably not. But who fixes your car and who builds your building? But then after kindergarten we stop right we forget about any kind of helpers and all we worry about is social emotional learning and this and that. And and then it’s high school and oh yeah. Do you remember in kindergarten which which which helper Do you want to be? And so it’s that aspect of you know what that mechanic turning the wrench may have to Corvettes in a really nice pickup in his backyard to you know, that he paid for without debts. And those are good. You got to make construction sexy.
Autumn Sullivan 28:33
That’s the that’s so I love what you just said we have in Florida we have. We have the great American teacher. I don’t know why it’s called the Great American when apparently only Florida participates in it. But but maybe it’s just aspirational, and we need more states to get on board. But I went and talked to my daughter’s kindergarten class about what it meant to be a professional writer like to make writing your career. And I was thinking to myself, gosh, we should really have a campaign where like construction leaders and laborers come in and talk about what they do for a living like they were interested that I wrote for a living but what they really wanted was for me to read them a kid’s book right because they’re kindergarteners. But if my husband had gone in and brought like ductwork and talked about H fac they would have been fascinated because duct work looks cool, right? Like they they’re a bulldozer
or Right exactly. It’s you step on in the middle of the night when you have little kids you know they just goes because the fire man brings the fire truck and the police officer brings her police her cruiser you know so So bringing back you know bringing back the the fascination with construction as a career and at a young age I think is an important part. I’m interested though because all of you used the same you know, dirty mechanic stereotype. And yes, the eye That is the stereotype around construction, right? There are lots of negative stereotypes around construction and lots of really positive stereotypes around going to college. I am curious if that is, if there is a chicken in the egg component to the culture problems that we see in construction? Do we have the problems we have in construction in terms of culture? Because we were painted this way? Or are we painted this way? Because we have our cultural problems. And anyone who wants to jump in on that question is it’s from an outsider’s perspective. I’m curious about that. Because my construction career started when I started here at mobilization funding.
Natasha Sherwood 30:38
I think it starts with why is dirty, bad? Right. So why is getting dirty, bad? So, you know, I think that’s probably where you get it. And I don’t know which psychology match the chicken or the egg, which, you know, what is it but I think it is that assumption, and it goes back to working hard is not bad. Working dirty is not bad. And that just, you know, and, you know, wasn’t bad when you were a kid to get your hands dirty. Now we sent you know, Hannah ties everything. And heaven forbid, you know, you, you eat some dirt. So I think, in my opinion, it probably starts somehow that dirty is bad. And we associated hard work and being sweaty because, hey, that’s hard. I don’t know,
Matt Vetter 31:18
when it’s, I think it’s our language. It’s how we communicate. So we talk about things right? When I was in high school, voc tech is what we call it. Right? And you could do that. But it was the burnouts, right? It was the kids who were barely hanging on to a high school diploma by a thread that would go and do voc tech. And it was, you can go to college and have have the crown or you can be the burnout and have no options in life. It shouldn’t be pasted as an alternative, it should just be an option. Yes. Yes, I agree. But autumn to your point about culture. I’m going to push back a bit, I don’t think we have a cultural problem in construction. I think, I think the United States in general, as a culture has a problem recognizing that, I think that we have a very vibrant and healing culture that I see. I mean, certainly not in my company, but in in the general industry around us. I think the culture is there, I think people recognize that you can start as a laborer, you could dig a ditch today, but you can own the excavation company, and in 10 years and 15 years, and it, you know, I’m not trying to crap on the construction, or the excuse me, the college route at all, I just think it needs to be on an equal footing as an option, and not one better than the other. Because kids learn differently. Kids have different motivations. And we need to push that men that message to create the culture that we want in this industry.
Saleh Mubarak 32:48
Right. Right. Right. Yeah, I agree with Matt, that it should be an option. And there is a stigma, it’s much worse in other cultures outside the United States that if you don’t go to college, you, you’re doomed to be a low class and so on. So I think in Germany, they have the, the vocational route very well, you know, discipline, and people that are very well respected, and so on. And I mentioned to autumn in a previous conversation, that one of the things, the differences between experience and education is that in experience, you learn how to do it. But in education, you know, also why you do it this way. So for, for example, in reinforced concrete, and I’m, I’m a concrete kind of person, we put the rebar, sometimes in the slab, sometimes on the top, sometimes in the bottom. Why do we do that? You know, that when we explained that in education, but I want to go back to work quickly, to one point about following your passion. I’m a strong advocate of following my passion. And I have five kids, none of them is in engineer so I didn’t put any any pressure on them. Two of them are in the car industry. One works with BMW, the other one with Nissan, and one who might end the I end, my own son, my fourth son, who is crazy about sports, all sports, especially basketball. And now he got a job as a event manager, sports event manager, International Academy. So but at the same time, there is a problem with following your passion, that you get the tunnel vision. You don’t want to learn other supportive subjects, and you focus too much on a narrow niche that this is my passion. I do I want to learn anything about marketing computers, this, this this. And I think that college education gives you the rounded knowledge, which is really, really important. I’m sure that all of you guys probably listen to Steve Jobs commencement speech at Stanford University. And he mentioned how his those courses he took in graphic design came back. So this rounded knowledge, let’s say history took, you know, I had the issues with my older son, who is OCD. And who would ace some courses, take a and other courses flunk them, you know, he cannot be dumb. Otherwise, he would flunk everything. And he would question that why I’m studying this, why should I take a course in history. And I said, Son, it’s rounded knowledge, that rounded knowledge is good. If you sit in a, you know, with a bunch of guys discussing history, geography, politics, I think you should know a little bit about that. So that’s the problem with following your passion blindly. Without the rounded knowledge,
Scott Peper 36:12
you guys have all touched on something that I heard many say in our just collective individual conversations, whether I’ve talked to you folks or even just our clients. And it’s one thing that I draw attention to is the construction industry, I think is very unique in that if you think about the macro factors of the world that can help you or hurt you. It’s not if you get those big ones, right, you can lay it on a good path. And I think so often college you have to you’re forced to focus, we’ve talked about focusing or know what you want to do or get into the right spot. And then you have this stigma like healthcare as a doctor or nurse or construction as turning a wrench or dirty. And in reality construction, you can do anything in construction, if you start as turning to try to emit you hit the nail on the head, you could be an executive in finance, you can be a labor, you can be middle senior executive leadership and management, you can be a CEO, you can expand out of construction, if you get bored with one scope, and there’s 50 scopes to go into no building. In addition to that, no matter what is going on in the world, your things are going to be getting destroyed and things are going to be getting built, they’re going to be getting rebuilt, the world’s going to change and need new stuff. And all of it is construction. And one of the things I like to say is construction is really the heartbeat of America and a country anything anyone is doing today is directly tied to the construction world where we set what we do how we go about someone had to build it, someone had to create it and constructions attached to it. And so it’s this industry, and we thought about it like that. And you are any type of skill or any type of desire you want, you could if the message was only Hey, look at construction, you could fit it into the construction industry and all these different 50 different spots. And if you try to compare that to other industries, you might not be able to you get there, maybe there’s only 10 spots you could get into or 20. And if it was framed like that, I think we find a lot more people say, You know what, I’m just gonna go get in that industry. And I’ll figure out what I want to do in any way I can get in return a wrench or whatever, go to school first go school later. I don’t know if you any of you share the same thoughts, or have you heard other people frame it that way, or what’s your general,
Natasha Sherwood 38:32
we frame it that way a lot when we go into especially in schools, so we’re always, always promoting our apprenticeship programs. So the idea is after you know, after high school or even in high school, we’ll start you into the apprentice program. And the idea that once you get in even the electrical industry as a subsection of construction is there’s HR, there’s marketing, there are estimating, there has been specialist some guys are sitting there they you know, if you like playing virtual reality at home, you’d be great been specially you know, so you know, there is so many different routes. So we have even from a national level, and from our IC national organization, as we are out there trying to recruit apprentices is putting those different levels where they can be so in what form and a superintendent, you might be in the office, you might be doing the estimating, you might be doing the sales, you might do the marketing. It’s truly a microcosm of college, where you can do that, where you are dealing with people and when we share our office space with one of our contractors and I love going in there and chatting with him in the the cafe area, you could run into the sales guy talking to the low voltage guy, he’s talking to the cybersecurity guy. He’s talking to the estimating and everybody’s chatting about how when where they got to, but it is an industry that doesn’t doesn’t stop. When I was driving home from Tallahassee. I was frustrated yesterday on the road because there were a million semis in front of me, right, you know, they’re taking up the road and they’re slow and I was trying to get home and then I just stopped from him. I was like, you know, two years ago, we were praying for the roads to be back open, right? We wanted you know, trucks and trucks couldn’t move and half those trucks were filled with, you know, lumber and pipes and you know, and I was like, okay, so Ah, this is your industry, this is what’s building, okay, so I’m gonna slow down and enjoy the drive I didn’t have anywhere to be. But that’s the one thing that didn’t stop in as to your point won’t stop. I mean, we’re in Florida, you’re going to need air conditioning, it doesn’t matter if anything happens, your air conditioner has to work. You don’t you don’t know, no offense map, but you don’t call that, you know, mental health counselor, a psychologist or the psychiatrist, or the public relations person. The one thing that you cannot live without in Florida, is air conditioning. You know, you can, you know, we can live without, you know, hurricanes don’t scare us, unless we’re going to turn off our power, we have generators for air conditioning. You know, nothing else matters. And it’s so it is a industry and a career for all of those paths. So whether you do go in as an accounting degree or whatnot, it is it is a career that is long term, and you can move up in it. I mean, there are ways there are set paths, some places you get, you never know where the next step is. There’s some clear paths in construction on where you want to go if you want to. And some just apps, one of my greatest instructors doesn’t want to do anything he loves being in the field. That’s what he loves. Yeah. And I think we all need to realize that. That is what some people want to do be in the field, be outside, be working with your hands, and that is admirable. And that is honorable. And that is an amazing and lucrative with his ideas when I took about two Corvettes and a pickup truck later.
Matt Vetter 41:26
I think to follow up on soleus point about passion. You know, I think a lot of passion is kind of kind of bullshit. Excuse me, but I don’t think an 18 year old kid knows what passion is. I think you have to go out and experience life for 10 years, 20 years, maybe even longer. Before you really can even know what your what your passion is. And I think I did. I did too. I think the rounded learning that you mentioned, I think that’s that’s critical. I don’t know that it has I don’t think it has to be in college. I think you can get a rounded learning and education through numerous avenues. But I think that’s that’s critical to developing and even finding what our real passions are internally.
Saleh Mubarak 42:12
You’re right, Matt. In fact, in fact, I can take that in big corporations, big disciplined corporations. When a new employee a young employee comes in fresh from college, they rotate him or her on all the, you know, divisions. So they first of all, it’s for two purposes, one of them you should have a my long inch deep knowledge of everything. The second thing is that to find your passion, you find it only after you experience it, it’s not just and I’ll tell I’ll tell you the strangest thing about passion. I was a professor at Georgia Southern University in Statesboro, Georgia, in the 1990s, between 92 and 98. And one of my best students who wasn’t a student in the program was called construction management. In his third year, he came to me to sign that paper. He said, I’m changing my major. And I said to what he said to history, and I kind of jumped What are you changing from construction management to history? You gotta be crazy. He said, I love history and said, okay, so I signed the paper in the it was the ad dementia. That’s because it’s stuck.
Autumn Sullivan 43:35
Alright, our Chief Customer Officer, John Draco had recently had a post on LinkedIn about how he his college major was art history. And he’s like, No, I, I don’t necessarily use my art history in in what I do now. But I did. But I did learn a lot. And I did learn to learn, right like I it what it taught me was was a continuous love of learning and how to be a good learner. And I think that’s important. And to your point, Matt, I agree. I don’t think that that has to be done in a college setting. I brag all the time that my husband who has a high school diploma is one of the most well read individuals I’ve ever met he out reads me hands down. And, and is has an incredibly well rounded education because of it. But it all happened, you know, on his break in between installing commercial air conditioning systems, because that was his passion. His passion was reading and learning. I want to so we’ve got 15 minutes left. And one of the things I want to talk about is that higher education because I used to work in marketing agencies and I did a lot of marketing for colleges and universities. They spend an awful lot of money, marketing the idea that their education is the path to following your passion. and having two quarterbacks in a pickup truck, right? Like they tell a very effective story. And, and we don’t we construction as an industry does not spend a lot of money on marketing, and especially not on marketing for recruitment purposes. So my question to you guys is what could construction companies be doing that would help tell the story of the potential of our industry to those younger audiences? Natasha, I know you guys do a ton of work with with young, younger audiences, but but also like, what can the actual companies be doing to take control of that narrative?
Matt Vetter 45:40
I mean, get out and talk to these kids. Exactly what Natasha is doing exactly what we’re doing. We talked to local high schools constantly. We, we started a high school aged internship program this year, just to kind of give kids an opportunity to, you know, step into our world and just see what it looks like. And we give them the the flexibility that they can come in, they can pick which route they want to see, they can come and hang out with me and do estimates and talk about marketing and sales, I can put them in the field with my superintendent, and they can get dirty, you know, whichever area they can, they can run social media, you know, but, but I think that’s the critical nature of his because we don’t spend a lot of money on it. But we’re also fighting, you know, 3040 years of, of a mentality that we’re trying to shift, and the only way to do that is, you know, without blowing up the complete education system, the only way to do that is to reach these kids, early enough to give them the opportunity to make those decisions for themselves. And I think it’s just through talking, you know, we, we can only do so much,
Natasha Sherwood 46:46
hey, I think you should just blow up the education system, you know, like, you know, I’m on a mission,
Natasha Sherwood 46:53
there’s, then there’s a couple things that we’ve identified two that I think is important that we’ve talked about, and in a lot of it is we’ve done is making sure that our our teammates that are in the construction industry with us are proud of what they do and talk about it and don’t say, I’m just this, I’m just that, you know, because you’re not, it’s, it’s the same thing as I’m just a stay at home mom, or I’m just a project manager, I’m I’m I’m just an electrician, you know, those are a part of it is changing that. And part of it is and this I’m going to use my my master’s degree from it is being involved in the politics of the Liberal government of your chamber of commerce, politics, school board elections, and is making your voice heard. And that is one aspect that we do with our association is that we are we try to get behind those people that are not only for small business, and you know, for businesses in largest is making sure that as people that are understanding those options is we learned more than anything during this pandemic, that school boards are very powerful in what school stay open, and if they’re wearing masks or not. And if they’re enjoying school, and we are lucky here in Florida, that we are not experiencing a lot of what other places are but I think it is you know, being proud of what you are doing it is getting involved in the politics and it’s like Matt said it is getting in the schools however you can whatever toe you have to be in as you know, volunteering however, you you know, being involved in, you know, Pop Warner Football is that are around you’re talking to those kids, the junior achievements in your area, the great American teaching, whether it’s a great Florida teaching or not, I don’t know whatever it is, it is it is being in there and being proud of what you’re doing and sharing it is how that will be. That being said we’re also spending a crapload of money right now right now here and in sample on doing some billboards about built by you, that’s one of our new things we’re doing with HCC built by you and just really showing the images of what people are building and it is social media advertising. If I can figure out a tick tock for some construction electrician to do that we’ll be doing catch on I see behind that. And sometimes it may seem some of it maybe when we show them about a little bit silly or whatnot, but to grab that age group that we need to to fill, I’m sure it’s the same in construction, we have more electricians who retire every day than I can bring into the industry. So I have to grab their attention. I have to do it quickly. But they have to see people they want to be like and so that is that’s the part of putting it out there. So you know, if you’re not involved in your chamber or your local association, whether it’s ABC or IEC or whatever, you know, union it is in that area. Those are the areas I think that need to start to make those differences so that you do have those options.
Scott Peper 49:43
And go where they are is really what I’m hearing you say go where they are and their online, go online showcase the jobs. I mean, there’s some of the coolest stuff I see on LinkedIn or social media is a construction site and the video attached to it and what it looked like before and what it looks like Like after buy, you know and use the bulldozer analogy we’re talking about for two guys in a build, those are for five days can have the most some of the most impressive video from start to finish and a five day period than anything you possibly see on LinkedIn. And if all of a sudden you attach, like, here’s what these folks make to every single one of those, someone might say, You know what, that’s awesome. I thought, in accounting, I’m going to go in there and I’m going to make X and by the way, the correlation in those worlds, they have no idea if you put $1 sign of what the person is making an accounting after a four year degree. Next to their perception, I think, oh my gosh, this was so much more than what last and the perception of what they thought the person the bulldozers making, compared to what they were they are making, they might be like running towards that bulldozer. So I think the marketing aspect of just that alone would be so critical to helping shape some of the perspectives that people have just so it’s a fair perspective, just so someone’s not thinking the wrong thing. Yeah.
Saleh Mubarak 50:59
You call it a bit of marketing, and you know, it’s marketing slash education, that I think, you know, following your passion, requires you to know all the options. I mean, you may find somebody who likes certain type of food. This is my, you know, favorite food, have you tried other types of food? So I think you the trade schools that Matt talked about was was great. You know, I remember in college, we took trades, you know, welding and carpentry and so on. It’s a good thing when you have a root rotational system that you get exposed to everything. And after that you tell me, you know, which one you you fell in love with? Yeah,
Scott Peper 51:47
I had a mentor, tell me one, start listening to people, not the TV, you know, don’t listen to the government for the day, follow, find a person that you like someone that’s a human that you know their name. And like, you don’t have to know them. But you at least know it’s a person you’re listening to and not a day, or them or a government entity, or the state says or the CDC, like find the human at a place and not just the place. And I thought it was good perspective. And it’s really helped me a ton, many decades ago later. Yeah.
Autumn Sullivan 52:23
We have just a few minutes left. And we do have a question. Jeffrey asks, one thing I’ve always found missing from the trades is clear career path. Some unions do well at this, but the building industry in general has done poorly in explaining how a young person can go from labor to manager and defining that path. So who wants to respond to Jeffrey’s comment?
Natasha Sherwood 52:48
He’s spot on? Spot on? Yeah. And I think you know, that that’s literally what were my, like I said on our National Board for, for IEC. And that’s what we’re trying to delineate, and we’re trying to work out what is that path so that we can explain helper, apprentice, electrician, foreman, Superintendent, you know, project manager, what’s next and and then the salaries and dollars that go with it. And then some of them, then, you know, the, it’ll split out. And there is that is part of the education that we have not told them that you can spend four years in college and go be an accountant, and it’s been four or five years, and then you get to be a senior accountant, or you can spend four years as an apprentice working, you’re probably a good superintendent, by the time you get out of that apprentice program if you work for one company. And so we’ve done a poor job. And I think that is part of the marketing that has to be done is to show those and not just to the student, and not just to the employee that has to be shown to the guidance counselor, and the parent. I mean, let’s be you know, those parents want to say my kid went to XYZ college. That’s why you know, 70,000 people apply to Harvard, when they’re going to accept 3000, they just want to say, we know where they went. So it needs to be this is the path. But it’s interesting, because how many people really know the path of a CEO? You know, how did you how many people really know the path of an accountant, but because those came from college, somehow that gets to Trump that what is the plan, you know, for construction someone in the construction industry, but we do we have to take extra steps that we maybe didn’t before.
Autumn Sullivan 54:27
It’s interesting, because I’m thinking from, from a marketing standpoint, because I always am. That’s an easy, that’s an easy Tiktok to make, actually, to show a person you know, labor and what they make and then one year later and what they make and show that progression. I mean, that’s that’s an easy viral item
Natasha Sherwood 54:45
to find some good yet. Don’t ever vote to have that one post that went viral on LinkedIn. 1.6 million views. It’s the worst thing in your entire life to go viral because it beings all night on LinkedIn, bing, bing, bing, and if you You turn it off, and somebody disagrees with you, and you haven’t responded. So but yeah, so a via it would be an easy viral Instagram. But um, but it’s funny that that that post is exactly what we’re talking about essentially is normalizing the idea to the four year trade school is as good as a four year college. If I
Saleh Mubarak 55:17
can add one thing quickly here, in the path itself, there are paths, not just one, many people don’t understand that, that having a technical skills does not necessarily mean that you can run an organization that if you are a good in repair of HVAC, you mentioned HVAC, okay, you may be a brilliant technician, but a miserable manager. Those kinds of skills, some of them you’re born with, and some of them you have to polish those those skills. I know I have a brother in law, who now passed away, who was a great chef in in culinary school in he worked with the Disney Corporation, you know, he was brilliant. He tried to run his own business, and he failed miserably. So and some people are, by nature enterpreneurs they want to do their own business. Some of them are better stay as employ employees for the rest of their lives. So I don’t know how to put it, but you need to learn the skills required because before and be ready before you jump in.
Autumn Sullivan 56:34
That’s so true. That’s so true. One of our podcasts this season, we have a podcast called The real innovators. If you haven’t subscribed yet, please go subscribe after the end of this webinar. It’s available everywhere you get your pods, but one of our one of the episodes was with a business owner, Calvin Weathersby. And he talked about how he meets with his team and asks them what their what they want to accomplish. You know, where do you see yourself in three years, five years, and then he actually works with them to create their path? Because you’re right, when you walk into college, they’re like, Oh, you’re going for English? Well, then you want to be an English teacher, here are the courses you have to take. This is your path. But I went to college for English and I didn’t want to be an English teacher that sounded like hell on earth to me, I. And I’m pretty sure it’s like, I don’t want to do that. But no one said to me, you could get into marketing, or you could be an editor or you there was just one path. And it didn’t work for me. So we need to get better about showing that there are lots of paths, you know, to entrepreneurialism, to, to whatever it is you want to accomplish.
Natasha Sherwood 57:41
It’s not mutually exclusive. I mean, we talked about like, my students who are my apprentices are in college. So they’re taking RTI related technical instruction from us, they are doing four years at the college, they walk out with 32 to 46 college credits if they want to go take the next step. And we’re doing a horrible job of explaining that to it’s like a it’s like a community college scholarship. That it doesn’t mean that this is the end goes back kind of thing. It’s got to be any I’d have been a much better college student if I’ve done something else years. Yeah, before I got into college, even just
Scott Peper 58:26
On the next webinar, we’ll talk about having your phone or your face stuffed in your phone for eight hours a day isn’t going to help you either. From my parental conversations that I’m suffering through on my own children.
Autumn Sullivan 58:54
Well, that is our time for today. I can’t thank you all enough for taking time out of your busy days to join us for this conversation. It was hugely valuable for our audience and super entertaining to be a part of. So thank you.
Matt Vetter 59:09
Thanks for having us. I mean, this isn’t a conversation. This could have gone three hours.
Scott Peper 59:16
Review, if there’s anything that Autumn and I could do or through us that can help you in creating that meme that Tiktok a slide, anything that you could use with your network, let us know I’d love to be able to give that to you guys as our gift for you. If it’s a way of helping we different contacts we have if you said hey, it’d be great if I had a video that did this, this and this. And it was some cartoon and you could utilize it tasked us with doing that. You tell us how and we’ll do it. And I’d love to make that part of what you guys can push out from here to actually make it more than just a one hour conversation and actually turn into producible results. Absolutely.
Natasha Sherwood 1:00:00
If I may have to do that, that Tiktok does, like now it’s spinning my head. I’m like, we can just pop point, point point point. I’m like, I’m going through all the stupid dances in the stupid Instagrams eyes. Watch. I’m like, we have to be together auto email me.
Scott Peper 1:00:11
Yeah. Well, you will text us what it is. If I had this, I could do this much more than that. And we’ll do it. We’ll make it happen. Will you ask us we’ll figure it out and we’ll deliver it. What would be the thing that would help? Yep.
Autumn Sullivan 1:00:29
Thanks so much. All right. Thank you,
Scott Peper 1:00:33
everybody. Appreciate it. Take care.
Cash flow can make or break the success of your project. It can empower your team to succeed — with the right amount of labor & materials available at the right time — or it can cripple their performance.
Mobilization Funding CEO Scott Peper knows the power of effective cash flow management. Since 2013, he has walked contractors through a cash flow exercise to show them exactly how much cash they need on a project and when they need it, transforming how they think about cash on the project and how it propels their company’s growth.
Now, we’re bringing that exercise to you.
CASH FLOW MANAGEMENT: BID TO BUILT
This is the ideal webinar for construction contractors, manufacturers, and any business owner who struggles with balancing cash flow in their business.
WHAT YOU WILL LEARN:
1. Why mapping out a project cash flow on a weekly basis BEFORE THE WORK starts can improve performance and profitability on every project.
2. How to use our Cash Flow Projection Tool to estimate and track your project’s cash flow.
3. Why effective project cash flow management is the secret to organizational growth.
Cash Flow Webinar Transcript
Autumn Sullivan 06:49
Let’s go ahead and get started. Thank you. Thanks, everyone, for joining us today, Scott Peper, the CEO of mobilization funding, is going to walk us through our new cash flow management tool and talk to you about why project cash flow management is so important how it can help managing your cash flow on a project week by week can help you increase your profit and profitability, build efficiencies into your schedule and grow your business.
Scott Peper 07:20
Thanks, Autumn. So cash flow is something that’s very important to us. And we speak about all the time here with our clients, we work in the construction world, and anyone that I assume is on this call that’s in the construction world. They don’t need me to introduce them the impacts of cash flow, why it’s important, how it impacts everybody. But what is important today is we’re going to give you a solution that’s going to give you an information and a tool that allow you to actually make proactive decisions, outline exactly what your cash flow is, and then more importantly, be able to see it in a project live. So there’s a few things here I’m gonna just my camera quick, a few things that we’ve noticed over the last seven or eight years and talking to clients is a couple main general themes. One is, clients think that they’re weak at cash flow, they don’t understand it, and there’s something wrong with them. And I’m here to tell you right now that that’s not the case, it is absolutely a function of the industry of construction. More importantly, how the waterfall of monies flow from the top of the project all the way down throughout a project. And what I mean by that is whoever’s financing it the developer, the general contractor, the subcontractors, the subs have subs, all the way through, you do all the work, first, you put a payment in, the work only gets paid for depending on what’s actually been done after an inspection, it takes 30 days to do the work because you can only do it once a female invoice once a month typically. And then it takes 30 or 45 days to inspect the work that you did. And it just takes a long time. So that is the reason for it.
Now, are there people that aren’t great at finance, that working construction? Of course, but that’s like any other industry and business. So like most other industries and business, there’s tools, there’s professionals, there’s roles and responsibilities inside the organization and outside that can help and all those are still available to construction. Now whether they’re used or not, is a different story. But we’ve created a tool. And this tool is going to add the third component to what we’ve also recognized. One of the things that becomes very commonplace that we’ve heard over the years is that we’ve noticed, if you ask any construction company, whether just sub or general contractor, they’re very good at estimating what the work is going to be. They look at a schedule of values. They can look at a set of plant I’m sorry, they look at a set of plans. They can look at a schedule, they can estimate and bid pretty accurately what their general total costs are going to be. In addition to that, they know exactly what the work schedule is going to look like. Of course it changes of course if there’s rain or delay Are other trades and things like that. But at the most part, they have pretty detailed and specific, much more so than most other industries, in my opinion of what their man hours are going to be the labor portion of that the materials, equipment, rentals, costs, they do an extensive amount of work to get bids and estimates for all those things. So they know what their total amount of work is. What I mean by that is, if you did all the work tomorrow, and it was done in one day, and you can invoice it the next day, you probably haven’t really accurate margin dollars.
The problem is construction takes a long time. So it gets spread out over a couple of weeks, or sometimes a couple of months, or sometimes a year or more. And so what we’ve done now is take the third component that’s missing from that equation and marry up, how much cash do you actually need to execute on the schedule that you know, for the expenses, any actual cost that you know, you’re going to incur? Material labor, etc. So you can see week by week, alright, how much cash do I actually need to execute this project on the schedule that I want to work it on, and for which I’ve already bid the project and one, and now you can know, okay, I’m going to need a couple $100,000 Or I need a million dollars. So I’m going to show you what that tool looks like. So it’s, we’ve created an elaborate spreadsheet that we’ve always used here internally, to figure this cash flies we speak to our clients. And what we realized is we could share this spreadsheet with everyone, and it’s on our website, it has been for years, except what we also realize is not everyone’s Excel savvy. Candidly, I’m not our CFO created this spreadsheet. I didn’t I know how to read it. And I certainly know how to input and use it. But that’s but I’m not It’s not intuitive to me until I’ve done hundreds of them. But what is intuitive? And what we can do is anyone can answer questions, we ask you a direct question, you can give us the answer, especially if it’s specifically related to your estimates, and the work schedule. So what we’ve done is we’ve created a tool on our website, on the resources page that anybody can go to you don’t have to be a client mobilization funding, you don’t have to pay for it. You don’t have to get us emailing you every other day and calling everybody in your company to use it. It’s basically we need we don’t need your email, so we can email you the spreadsheet and the inputs. But that’s the purpose of it. We’re not going to use your email to sell it market to it or anything else. Okay. So um, Autumn, what did I miss so far? Anything?
Autumn Sullivan 12:33
No, that’s a great set of I am curious how often when, when you talk to clients, how often is this the first time they’ve ever thought about their projects cash flow in this way? I mean, on like, on a weekly basis to this granular level?
Scott Peper 12:55
It’s a great question, I would say and forget, I’m going to generally speaking here, I would say 95 98% of people know the first two things, they have a great bid, they estimated it well, it had made a ton of thought into it. And it’s probably accurate. If it was one single snapshot of the world, those costs are accurate. I would say on the flip side, and same thing with the schedule, I would say on the flip side, when it marries up to okay, what’s the when I say okay, how much cash is going to take to do that? I would tell you that 98% of the folks that we speak to, and just generally in the construction world, whether our clients or not probably don’t know the answer to that question right offhand. Some measure the cash flow, but it’s more of like, Hey, I know what kind of money they have coming in, it’s across the whole business or project they don’t necessarily know as they before they start a job a project. That said, if a project is only two weeks long, or three weeks long, I would say it’s probably a little higher than most No, I need 5060 grand this week, or this month in order to do it. But when you start having to order materials, now, they have lead times on them, you have different payment terms for materials. And then when you get when they land on the site, you can invoice for them. But sometimes you have to pay for them in different that becomes too complicated of a process to really map into a project. So I would say very few is definitely single digits, in my opinion, less than 10%.
Autumn Sullivan 14:23
And you talked about how contractors know the first two things, right? They know the costs, and they know what the schedule is going to be. But we talk a lot about the things that they might be missing when they’re considered when they’re putting their bid or when they’re thinking about the cash flow of their project. I’m specifically thinking about how you’ve talked about calculating the the real overhead can do you want to talk about that just for a little bit? I know we will get into putting margin down later.
Scott Peper 14:54
Yeah, so it’s a good question. So I know this cash flow tool will specifically out lined the cost of the project, which is really in in the estimate, as well, and it’ll show you how much cash you need to flow through it. But when we’re looking at estimates and bids, most often your your average bid doesn’t include the proper overhead allocation or margin, what it means is that they just sort of get blended in with the cost. Sometimes it’s marked up Oh, at 10% for overhead and profit. And I add 10% For markup. And it depends what your costs are. As soon as your costs go higher, it’s great. If that’s the cost, it’s even better if the costs actually come in lower. But I be surprised at how many folks on here, it’d be great if anyone has questions and want to put it in the in the chat box. But how many people actually end up with less cost on a project than they do more cost, you know, or neutral. So it gets us tough, but the way we’re going to calculate the margin, that’s that’s the biggest issue we see is a lot of times you have overhead costs, those come monthly. But they’re you know, they’re your rent expense. They’re your your payroll for your staff and your salaries, they’re things that are not related to the exact project. And when you pull money off of a project that isn’t cashflow positive to pay for those things, you actually make the project significantly even more cashflow negative. And if you look at if you know what the projects, how the project is going to cash flow itself, prior to using any of those dollars, it can really help you make some good decisions on how you want to use the cash you do have, or the financing that you have in place lines of credit, etc, etc.
Autumn Sullivan 16:33
So in terms of in terms of the schedule, because we all know that construction schedules change quite often, right? They they’re definitely prone to change. So if you have this cash flow spreadsheet that we’re going to show our audience in just a second, how does how does having a cash flow projection help you manage a construction project schedule changes?
Scott Peper 17:00
So great question. So this tool you’ll see goes week by week, what your expenses are, if a schedule changes, and you pull a crew off of that project, the beauty of this projection schedule is as you go week, by week or even over the course of a month, you can update those to actually become actuals. So that week will be an actual expense. And so you can keep track of it in real time. And it allows you to know, okay, this project gets delayed three or four weeks, what does that mean, for me in terms of the pay apps, I’m going to actually submit instead of the ones I plan for, if I move my pair, if I move my a couple crews off of this job, and I put them on a different job, then I can move that cost expense off of that project, too. If my costs are too high, based on what I rent equipment for, versus maybe I want to purchase some equipment, you can see how that’s going to impact things. When you order your materials. If you have to pay for your materials under certain terms, you can see how that will impact your job. That’s a big one. And we’ll share those in detail. Why don’t we go? Why don’t I open up a spreadsheet? And then some of those things will make more sense. And I can answer that too for Yeah, let’s do. So what I’m going to do guys, first I’m gonna show you what the out the final outcomes gonna look like. So you can get a visual cue of what we’re doing. So here’s what this spreadsheet is going to look like. Okay, we’re going to actually fill this out completely on our website. So this is the final output of what you’re going to see. Okay, this is what would get emailed to you along with a PDF that has all the information you submitted. So really quickly here, and I’ll show you this. There’s some important notes here tells you what this all means. But generally speaking, each one of these columns is a week, you can see that the job starts on, you know, eight, in this case, April 8, it goes week by week and automatically contat tabulates. What you input and all the way through your up here is what you’re submitting for your pay apps to your customer. Here’s what your submit, here’s what your actual expenses are. And then down here, you’re going to see what car much cash you need, or explore the surplus or deficit on a weekly basis. And then the cumulative amount of cash you’re going to need over the course of this project until money start coming in from the project. And we’ll show you that. So before we get to here, and then of course at the end it’ll total this up for you and show you okay, you have a $3.9 million project less retainage you’re going to get 3.7 million coming off of this. Here’s your costs all broken down, gives you what your margin percentages gives you what your margin dollars are. This looks awesome 31% project with one point, almost $1.2 million of profit that doesn’t even include the retainage profit. But when I show you what cut much cash you need, which in this particular case, you’re going to need upwards of a million dollars at some point in this project to you’ll need a million dollars over the first Many weeks to actually get this thing going before you actually see this job become cashflow positive.
So let’s go through some of this real quick. And I’ll show you how it works on a website. So, you go to our website, which is mobilization, funding calm. Now you’re on the homepage here, right up here, in the top corner, you’ll see resources. And you’ll see cash flow tool, you click on that. You go down here, you see this little video of myself here kind of explains the cash flow tool and some of the importance of it, I won’t bore you guys with that, when you put your email in. And then you click build my cash flow tool. Alright, so we do fund other types of projects other than just construction and mobilization funding. So purchase, if you’re, if you’re a manufacturer, or you’re doing general assembly or fabrication, or you pretty much, let’s just say you work off of a purchase order more than you work off of construction, this might be the tool, this might be the version for you. They’re all the same, and ultimately, but they have different questions based on it. And if you have inventory in house and you sell a specific product, this might be a better version. But we’re going to go through the construction one here today. So you click on construction. Alright, so I’m just going to type this in here, type, my name, email, company name, the state you’re in, got it the project name, we’re just going to call this 123123 project. The purpose of this is it’ll this will for your caspo. It’ll give you the the project name on the spreadsheet, right? When does the project start? Okay, I got my little cheat sheet here. So this is going to be Oh, 401 2022.
Autumn Sullivan 21:48
And that’s just to stop you for a second. That’s my first question, technically, for the audience here is does the project have to start in the future? Or can they do this where the project has already started?
Scott Peper 22:00
You can definitely use this tool on the projects already started. And like I like I was saying before these sheets, if you’re doing it the beginning before it starts there, they’re your estimates, right. If you’re in the middle of a project, you can actually, if you’re four weeks into a 10 week project, you can use actual costs for your first four weeks, and then your projected costs for the next six weeks so that you can use it completely that way. And again, once you fill this out, it’s a good question. Because once you fill this out, you get a spreadsheet and the spreadsheets pretty easy to see at that point, you can you can clearly edit it and manipulate it and the formulas are all in there. But if you’re familiar with Excel, this is an easy way to get it going. And then the it’s just an Excel file that’s not locked or anything you could do whatever you need to do with it.
Alright, so you’re then here, just Bay, this is just basic information on the project. Here’s your contract value. What’s your direct prayer payroll, again, the idea this is to come right off of your bid sheet. So if you’re looking at your totals on your bitch, so in this case, direct payroll is $410,000. My sub labor is 1,000,008 oh two 310. I have 202,000 of direct materials. This is an actual project cost that we have, by the way for our client happens to be a Makita an H back and mechanical contract. And so some of the a lot of the material big chillers and whatnot are in the subcontract labor includes material. And then that this is this is the direct materials that they have as well. So the equipment rental is 43,000. No bond on this job, and 139,000 in miscellaneous costs. So it’ll tell you right here, total contract value, your total costs added up for 2596. This project has 5% retainage, and happens to be a school in Florida. And in Florida. For those of you that don’t know there’s a lock on government workforce that has 5% retainage instead of 10. Otherwise, it’s typically 10.
Autumn Sullivan 24:04
Why is it important to put retainage in the cash flow spreadsheet?
Scott Peper 24:09
Great question. So retainage is part of your margin. And it’s definitely important, you’re going to make that money. But it’s not you’re there withholding this, this cash back. So if this is a cash flow tool, the reason that you hope that the retainage in here is this is this money is not going to come off this project for you to be able to use so regardless of what you invoice. In this particular example 5% of it is not cash that’s going to be available on this job. But we got weekly, I’m sorry, you submit your paps on a monthly basis. The from the time you submit it put in my zip code there from the time you submit your Pap, in this particular case they get paid in 45 days. The name of your general contractor his or your customer, whoever you’re working for will just Call maybe see GC. And my expected margin on this is 40%, for example, have received no money today, I don’t have any joint checks on this project.
Autumn Sullivan 25:16
And why are joint checks relevant to get to the cash flow of the project?
Scott Peper 25:20
The joint checks are important because if you joint check a supplier for those of you that don’t know what a joint check is a joint check, as defined by us, at least for this example, is when if I’m a general contractor and autumns the subcontractor and I say autumn, I’m gonna give you this contract. But I’m going to join check your material supplier and autumns gonna put up, you know, her material supplier is the supplies that I need to I’m going to sign a joint check agreement with autumn enter supplier, which means, as the general contractor, I’m going to pay her supplier. And when she submits what her pay app is, every month, I’m going to then pay her supplier directly in the form of a joint check to her and the supplier. Why is that important? Well, it’s important because that money is also not going to be available to Hodel, it’s going to, it’s going to go directly to the supplier. So that’s a good thing. But you want to be able to account for that in your project cash flow. So in this case, you might have thought you had a 40% margin, or you estimated it, but it tells you right here, you’re calculating margin, 34 and a half percent, so it gives you the total. And I’ll show you what happens next. Okay, so now it’s a 25 week project broken down, this is going to be six, you’re gonna have six pay apps if it starts in April. So I’m just going to input the pay apps here. First one’s 200,000. The next one’s 400,000.
Autumn Sullivan 26:44
While you’re inserting the pay apps, we have a question from Stephen. He asks, we have one client with multiple projects, do we have to do a separate setup for each project, we have to do this exercise for each project? Or can you roll it all up into one cash flow?
Scott Peper 27:03
You can absolutely roll it all up into one cash flow. As you’re going on, you can see if you if you really want to do that you could total these together. Um, and the spreadsheet is totally functionable to use as all three. Now that said, and I don’t know if the next question is Scott, do you think that’s a good? Do you think that’s a good thing to do or not? If it is, then I’m gonna give you the answer that question I would say don’t do that. Because each project is going to stand on its own, even though they’re a general contractor, you’re gonna, you may have different costs or different expenses or different suppliers. But to get the effect of the projects in the same way rolled up together, once you get a separate spreadsheet file for each project, you can put them in separate tabs on the spreadsheet. And then you can aggregate those tabs all into the one Summary tab that gives you this will give you the same benefit as if you aggregated them all in this exact template form. So I would go through and do this exercise for each individual spreadsheet, I’m sorry, each individual project, you’ll receive a individual spreadsheet for each project, you can then merge those onto a separate tab into one file. And then you can marry through Excel will pull each of those cells from each of those and marry it up into one template and a summary for you. And if you if you didn’t know how to do that, we can certainly show you how to do that we have a few Excel wizards here that if you had those three files, we can put them into one template for you, you run a quick, there’s a functionality to Excel that allows you to pull from each one of those tabs and run a quick and run a quick summary. And then you’ll be able to do everything you want. And then if things change in those individual tabs, you can make individual tab changes in the project and see the impact of that. And in addition, you’ll be able to actually go in and then see how it impacts this the Summary tab tips. You can see him all world. Okay. Alright, so I put my payoff amounts in for each month. I got my total contract here that marries up to what it is. I’m going to click Next. So now do I have direct payroll on this job I do. My direct payroll is weekly. My direct payroll amount weekly, is $16,400. And basically what I did was I know I have 410,000 of direct payroll, I have 25 weeks set up. So I’m just going to divide by 25 to get my to get my at least get this in here. Now sometimes your payroll may not be the same every single week. That’s okay. Once you get the spreadsheet, you can manipulate the weeks that you need to but for the purpose of getting this in and told him correctly. That’s the easiest way to manage that. Do you have sub labor? Yes, we do. We know what that is. Okay. So this is subcontractor pay Myth number one. So as you guys know, here tells you I have $1.8 million of sub labor. That doesn’t mean though, that I’m going to only pay them one time. So I want to input when I need to pay them and what the payment date is. So in this particular case, I’m just going to enter sub one, what’s, let’s say that’s the subcontractors name and scope of work is installation, the total amount of the path to them to start is going to be 450,005 7750. I got to pay them on June. Third, because if they’re starting to work in April, they’re going to work through April, I’m gonna it’s gonna take 30 days or so to get paid, I pay them when I get paid in this particular case, or I pay them 30 days afterwards, in this by agreeing with them to pay them 30 days after they submit. So that’s June third. Okay, so then I’m just gonna go add subcontractor payment two, same thing, I click sub one, everything automatically populates here. Now in this particular case, this is the same amount, I’m going to estimate billing. And so now this payment is going to be not going to be on the 15th of July.
July 5 had subcontractor. So one same thing. This is going to be on August 5, at subcontractor payment number four, that’ll be the last one. And that’s going to be on. Oh, 902. Okay, that’s my sub labor totals up, click Next.
Autumn Sullivan 31:39
So if you had if you had different subcontract labor, if you had different providers for that you can enter multiple subcontract labor. Right, you could do sub two sub three?
Scott Peper 31:53
That’s right. Yeah, if you have 2-3-4 subs, you’re going to put sub one first, when you’re going to Oh, then you’d go to sub to do the same exercise sub three, same exercise, all those payments will track in there. And you’ll see how they flow right into the, into the spreadsheet here in a second. So we I have one, they actually have one material supplier on here, which was for $202,000. But let me look to autumns point here. Let me show you guys what that what that looks like. So this is just going to be material. Now what do I currently owe this material supplier? Right? Let me do this material supplier one, I don’t owe them anything. So this just gives you an idea of you owe the money already, and you want to pay them and it gives you an idea, but otherwise this will be zero. And again, we said the total is going to be 202,000. But instead of me doing this as one material supplier one payment, let me do it as 1023 66. And this is due on ordering it on the fifth and payments gonna be due. I have 30 day terms. So I’m going to pay for on the sixth. Now I’m going to add one more material order. So I’m gonna show you guys how this would come about material. Two. I’m going to add the other 100 grand in here zero amount to pay.
Grand same border day. And my payment day. Is this kind of equipment. Yes. Vendor. Stick with our theme here equipment one equipment. Cash balance is zero. This is 43,000. You guys get the idea here. There’s no bomb on this project. So you can skip that. Do you have miscellaneous expenses? Yes, they do.
What is the name, you can enter these as much as you want. This particular happens to be per diem and travel slash Hotel 139,000. And I’m pretty much going to accrue weekly. So what this will do is spread this out weekly on the model. Like next. Okay, now it’s reviewing. Now what this is going to do is give you a chance to see the spreadsheet here in a little circuit, you can kind of cycle through to make sure it kind of calculates, right and it moves its way through and you have it you get to the end here. You’ll see okay, you got it all and so if anything doesn’t look right to you, you can sort of kind of go through this and figure it out. In summary, it’s going to show you here everything that you input all the way through and this is what you’re going to get a PDF of basically right here and that’s actually what I’m looking at here on this sheet. My little print out that before So it gives you a summary of what you did, you can make sure you did it correctly. If you need to go back and edit anything, you can do that. And then you basically get to the bottom. If it all looks good, you hit submit projection. Boom, you’re done, it was successful, he goes to our underwriting team, they turn around the spreadsheet quickly, and email it over to you. And then we’ll send it to you. And it comes in a nice little email. So let me show you now what you’re getting. Now we’re back to the cash flow. So we come up to the top, let’s start with the Summary tab. Again, just to refresh reminder, each one of these is a week. And if you remember, we started the project on the eighth of April. So each it automatically calculates every week all the way through. Okay, in summary, we’ll go to the end of this shows you here a $3.9 million project. Last 5% of retainage. Here’s the net amount you received from the project before retainage. Yeah, 410,000 in payroll, million eight and subcontract labor, 202,000 in materials, and $43,000, here in equipment, okay, and then your miscellaneous expenses.
Now, this shows materials and only show supply one supplier, I forgot, because it takes a little while to put that spreadsheet together, what I actually input was something I already did. So I already had the output spreadsheet. So but otherwise, it would show you here supplier two, and there’d be another row that would say supplier one, and it would break it down and have a total up here at 202. So my apologies for that. But anyway, go back to the beginning. So what this is going to show you again is here’s where you’re invoicing at the end of April, it takes 45 days to get paid. So you’re not seeing any of this money. So what this is basically showing you here, these are the expenses you have by week. This is the actual expenses you’re incurring this specific week, and you can see payroll, you pay weekly, so you’re gonna have to incur payroll that way, your per diem and hotels, you’re paying for that weekly as well. But you can see the material equipment and bond premiums, you don’t have that yet. Okay. So the spreadsheet automatically calculates two things here for you weekly cash flow deficit or surplus, which means how much money do I have coming in from the project? That’s zero right here? How much money do I have going out on the project, and that’s 21,000. So it keeps it then this is the cumulative total. So each week over the first three or four weeks, you incur your payroll, and your per diem, so you can see this cumulative total of cash that’s needed on this project goes up week by week by those amounts. Okay. So in this particular case, the first seven weeks, 12345678 weeks, I’m sorry. You incur payroll and premium for a total of like, for a total of 175, almost $176,000.
What does that mean? That means that through the first eight weeks of this project, you’re going to need $176,000 of cash in your business to put onto this project before any money’s coming off so far. Okay. Now, here we are, you’ve worked now at this point through eight weeks, you’ve submitted a payout for 200,000 and a submitter, Pam for 400,000. So you are essentially owed less retainage. You’re owed $570,000. Okay. But you have 45 day terms. So you submitted the end of April, they’re going to pay you in 45 days. Well, that means that this $190,000 isn’t getting paid to you for six weeks. Okay, so 123456 Here it is right here at the beginning of that seventh week. Week Seven, you now have that $190,000 comes in, you can see cash received from the project 190,000 cash going out that week, I’m sorry, is only 21,000. So you have a surplus of 168,000 from that path. But here’s what’s important to look at. You’ve you had to pay your material supplier for or your subcontractor $450,000 already because you Oh, that’s that’s what you said. That’s what these are your numbers, you submit it. So that’s there. And you also have to pay for Some other direct material that’s 202,000, and some equipment, not to mention the payroll. So if you look at this cumulative project Cash Flow tab here, by the time you’ve received any money off of this project, you’ve had to invest $915,000 on this job. So you either have to get that money from other jobs or projects, have that money in the business, or have some way to finance that along the way, okay? Or what we would encourage you to do is now that you have this upfront, figure out how you can manipulate some of these numbers here, can you pay your material supplier in 45 days? Well, that would be really helpful because that would move it that would move it farther down the line that would drop this 915 by half. Okay? Or same thing with equipment suppliers, can you get longer terms? And if you can’t, okay, no problem. But you have to know in advance that this is what you’re going to need. So maybe you need to rework the schedule, maybe you need to go back to your customer, see if you can get paid in 30 days instead of 45. If that’s possible, if that’s not possible, okay. Can you get a deposit up front? No, if that’s not possible, Alright, great. Can you get some financing for this? And now you know how much financing you’ll actually need? And more importantly, you’ll know where you’re going to need it. Do you really need not earn? 15,000? All on day one? No, you really need 21 grand a week for the first few I’ve gotten.
Scott Peper 41:33
So going through this tab will show you Okay, boom 915,000. Now it drops the next week. Well, why is that? Well, that’s because you got 168 grand that is surplus between what went out that week and what came in for the project. And now it starts to accumulate again, until the next big one. So the maximum outlay on this job is going to be 1,000,001 million $263,000 of cash that you have to put onto this project. Before you can become cashflow positive through July. If you look here, it’s actually going to get even higher up to 1,000,004. Because it takes till August 12. Before you get your first big pay app in pay do now the project starts to really get better and better by the time this next pap comes in. Six weeks later, you have 400,000 The next one comes in. Now you’re cashflow positive. So here’s the thing. It’s important. This is October 14, okay, based on your schedule and your expenses, you’re starting on April 8. So six months later, this job becomes cashflow positive by itself. And yes, you have a great margin and you make great money you got to get through this period, you got to get through those six months to get to the point where this project can cashflow itself. And then you’ll make you’ll make this money. The problem is a lot of folks are looking at these totals and saying this is great, I got 31% margins gonna work out awesome, blah, blah, blah. But the reality is now you know, do I have 1,000,004 to invest in this project? To get to it? No. Okay, how am I going to execute on it? Now, let me show you guys one thing, just one simple adjustment, here’s the week of August 5, okay, let’s just say you’re able to get your payment terms for 45. All your expenses stay the same, but you’re able to get your payment terms from 45 days down to 30. Okay, remember, this week, this column here, August 5, stop sharing this. Share the 30 day version. Alright, now all I did here was I moved these payments from 45 days to 30. You’ll see here this 190,000 to do 1234, paid Week Five instead of paid week eight. And look at these cumulative cash flow here. As you go on. You don’t have that big $900,000 One, it’s only 769 725. That week of August 4 Fifth where we had that big fat number was 1,000,004. Well, it’s only $623,000. Now. So literally, just knowing that in advance and negotiating that upfront, is critical. It means you literally need in this case $780,000 less money, less real cash on this job to execute this project.
Autumn Sullivan 44:47
So what would you what would you recommend when when you’re looking at this spreadsheet and you see that and you start playing with those numbers and you see how much how much being paid by in 30 days would would help your cash Do you recommend taking this spreadsheet to the GC? And having that conversation? Because I know that some of our audience is going to say, Yeah, I’m not going back to my GC and asking for different pay terms. Because I can’t afford the job, right? They’re, they’re gonna think I’m weak because I can’t afford the job, they’re gonna think I’m bad with money because I can’t afford, like, talk to me about how you present this to the GC.
Scott Peper 45:23
So it’s a good question. So I think you’ve covered a few, you’ve asked a few things there my mind. Um, first thing is, I think this is eye opening. I think a lot of I think a lot of subcontractors will have those feelings, hey, I’m just gonna make me look weak. I can’t finance it. The GC might give it to somebody else. And you know what they might all that’s true. But here’s the thing. Like, who cares? The who cares? If they think you’re weak? First of all, you’re not weak? Because they’re not investing a million dollars into this? I mean, if they want to tell them, Okay, fine. You can pay all my material suppliers, here’s the line items, just pay him, then you pay him? Because like, watch what happens here. If they take on that and pay this instead? And I zero these out here? Well, yeah, now you only need 172. And even if they took it, even if they took the 799, from here, it’s less than you have to pay. So there’s a lot of options that you could go back to. I just simply wouldn’t worry about those things in the same capacity. Because it just the truth, the truth is, it’s not worth losing your business or getting upside down on it or giving away all your profit. I personally think yes, that’s a hard conversation. Yes, it is. It’s, it might make you look bad, they might think you look bad, but you know what, the only person that’s gonna make you look bad is yourself. You You’re not who cares what their opinion is, like people are gonna have that’s their opinion, you say, Look, man, I do great work, you gave me this contract, you actually gave me this contract, because I do good work, and I know how to do it. And let me tell you something, I don’t do work, that that is gonna put me upside down a million dollars. So I need to work something out. Now I can show you how I’ve sophisticatedly put this together using this cash flow tool, I can show you how this expenses, you don’t need to show them what your margin is, you just need to show them Look, I have 30 day terms with them. My suppliers give me 30 day terms, you can use this information, but you don’t need to show them all this you can delete all your margin. Now they don’t need to know your cost. All they need to know is what you have to pay. And what you what you owe and certain periods of time and what you have up here. Maybe you don’t even need to use use this product, you just need to go show him and based on these terms, I need 30 day terms. Why? Because I gotta pay my suppliers in three terms, I got to pay my labor. But basically, here’s here’s what it is Mr. General Contractor in a nutshell, I got to put a million dollar million $1.4 million on this job before I get cashflow positive, and that’s just too much. So we need to figure out how we’re going to work that out. What can you do? Well, you can pay me in 30 days, I can’t do that. Okay, well, what can you do? And get your deposit up front? Okay, cool. What kind of deposit can you get? I mean, you can start to have real conversations. Now, if you don’t want to talk to your general contractor, then what you can do is you just start to leverage your, the, your customer, not your customer, but you can start to leverage your suppliers. Well, you can take it to your supplier, here is a prime example your supplier, you have 30 day terms with right? Well, they’re $900,000, your sub, your sub is 900 grand or million eight of your payments. Well, can you stretch them to 45 days or paid when paid? That’ll make a huge difference. Okay? Can you take your material, provide suppliers and get better terms from them? Those are the types of things you can do with this information in real time. Long before you’re sitting there with a crisis, not wondering why you’ve got these big buildings and, and for anyone that said to yourself, Man, I owe X amount of dollars to my suppliers. I owe 750 grand in my suppliers, and I got my AR I have a million games I have $1.3 million owed to me if I could just get the money owed to be paid to me I’d be square like I’m sure everybody said that themselves. Well, it doesn’t work that way. But yes, you’re right. If you did get that money right away, you would. So what I suggest doing in these cases, then is using this information to figure out how you can manipulate it.
But this is powerful just to know if they’re talking to me about how how looking at the project, from, from this perspective, from a weekly cash flow perspective, can help you increase your team’s performance.
Well, if you’re going to run projects, and they’re going to have a major deficit, it’s going to put stress on everybody, right? So if you’re stressed, it’s going to put your team under stress and if you’re the leader of that business, or you’re managing the project on a project When you’re stressed out, it’s going to add stress to everyone else, it’s going to hurt their performance. If you if with this info, it’ll also let you know where you can provide some incentives. You know, like, you know, here’s a perfect example, if you can get this $200,000, invoice up to five or 600,000, how can you do that? I don’t know, maybe there is something you can do, maybe you can pre order some materials to get the materials on site, maybe you can, maybe it makes sense to put three or four crews on this job. Because the payroll is pretty even if you’ve doubled your payroll, it’s pretty negligible here, right? Not too much. But if you could double this first pay app, or get one of these 800,000 or $700,000, pay apps here up front, where you can manipulate your schedule of values into a different reconstruct them in a different manner to get more money up front here. Now you know exactly how that would impact where your cash flow is, which is going to make your team more incentivized, if you give them goals of hey, look, this is what we need to finish. With month one, we have to get this much done. I don’t care if you get it done it let’s work six days instead of that are all authorized some overtime or whatever you need to do. It just gives you a lot of leeway and flexibility to a motivate them. But also be keep yourself out of stress, which is only going to get pushed down to your team.
Autumn Sullivan 51:25
And I know we have the story. We have a customer story from Andrew Ammons where he did exactly that he was looking at the cash flow tool. And yes, he used our financing but but the cash flow tool was was showed him that if he put two crews on the job, and if he had the super additional additional supervisor and ordered the materials in advance, he would save I think it was eight weeks of of payroll, he got the job done eight weeks earlier.
Scott Peper 51:54
Yeah, so instead of using one crew and and he was abused roofing contractor, so instead of using one crew to go in and prep the roof, and then that same crew to go back in and install the roof, he basically put a whole two whole crews on one one of them that one crew went out a couple of days in advance and started the prep and started to rip the roof off and put the put everything together. And the second crew came in this is a big government, a VA hospital. So the second crew went out behind them and started prepping the roof at the same time. Well, why that was important is they had free rein of that site for that first 10 or 12 weeks of the project. And if he spent one crew going out and doing all that, and that took them six or eight weeks, and then he spent sent that same crew back out for another six or eight weeks, they would have not got as much done where he was able to put get it done was while they had free rein in the roof, they were able to get on that roof with double the amount of people and just work right in tandem behind each other. And they got all of it done in basically instead of 12 or 15 weeks, they got it done in six or seven weeks. So to save them a week’s worth of time, and a week’s worth of labor that was budgeted.
Autumn Sullivan 53:05
So my last question and then we can open it up, we have a few minutes, we can open it up to the rest of the to the audience either on a LinkedIn, if you’re on LinkedIn live, please just drop a chat in the message box. Or if you’re on Zoom, drop it in QA or in chat. But my last question is how can you use project cash flow tracking to grow your business?
Scott Peper 53:32
Well, you know, the first that asked before, should they do a separate project for each one? That’s a great question. Because if you’re mapping out these projects, and you take your bid, you map each one out, and you know exactly how much cash it’s going to take to execute on it. You can do to a couple different things, you can start to determine how much financing does my overall business need? I’m going to go get an SBA loan, should I get half a million dollars? Do I need $2 million? Like what do I need? Right? You’ll know because you can map out what you’re working presses you can map it out on on these sheets to see what how much cash you actually need. The second thing is you can make these decisions in advance of starting the project which will give you the ability to think more about being on top of your business instead of every week, just managing crisis’s that are in your business. And if you’re on top of your business, thinking about what’s next and where we’re going to go. You can start to build your growth strategy a lot easier. So it’s really about knowing that the debt cash so you can figure out the right way to finance the growth or do you bring in equity or do you try to get debt Do you want to bring in a partner if you bring in a partner? How much should you bring him in for, you know, these are all the kinds of things that you’re thinking about when you’re going to want to grow and knowing your numbers by project and then aggregating them all together is going to be key for you. So I think that’s really how that works, but also let you know how you want to incentivize your team. If you gotta grow, you want to make sure you have a great team. If you have a great team and everyone’s working hard, then they’ll be they’ll be more motivated. If they if you know how to incentivize them and put things together for them, they’re going to be, you know, more involved and have a more sense of ownership and equity as opposed to, and I wonder if we’re going to be okay, my God, my owner seems stressed, the project manager seems stressed, is everything gonna be alright? Yeah, that’s not just that’s not a good environment to try to grow in.
Autumn Sullivan 55:27
So we have a question that just got dropped into the chat. And I’m guessing it’s a little tongue in cheek, but I do think it’s a it’s a good moment for you to talk about our do your part campaign been asked? And the real question is, why are we contractors instead of developers? Which, right? Which I do think I would love for you to talk about the do recruit campaign to kind of answer that question.
Scott Peper 55:55
So it’s funny, you know, like, again, and I think that I think the part that we’re getting it there is that, you know, you finance the whole job, you’re basically developing it, someone else has the idea. I think you’re right, you know, it’s true, you finance the whole project for the developer, it’s, you do take a ton of risk, and it is a lot of heavy lifting, too. I will tell you, if it’s a private project, and a developer is doing it, the developer definitely has risk in it to make because the banks aren’t going to give them 100% financing. The the general contractors probably offloading their risk more on on you than the developer might necessarily be in those cases. For example, if it’s a $10 million project, and a developer goes out to get financing, they’ve most likely put in at least $2 million of real money real cash before the bank gives them that 80% Or seven, seven and a half million, that example. So I would tell you that they probably have some significant skin in the game beforehand. Now they don’t want to put any more that money off the project, but your general contractor probably the one that is taking a little offloading some of that risk on to you. The other thing I would say is our do your park campaign is there’s been some things I would call them. Stuff that is goes about and construction that’s just accepted. And it shows up in chats, just like you did right now. It shows up in the side conversations, it shows up on the job site, but it doesn’t necessarily show up in the job trailer, or it doesn’t show up when when you have developers and GCS and banks talking. They just accept this. And one of those things are is that subs do finance the whole job. And it’s not right. Why does it take a bank 30 days to come out and inspect the project? Why can’t they just pay people within seven or 10 days, we just showed you that impact of two weeks, 45 days instead of 30. Imagine if that 45 days went down to 15, you would need maybe a quarter of the money or maybe not even maybe maybe even less. So those things are the things that are do your part can be exposed to talk about and do your part is let’s get out of the habit of living in these moments that we have to figure out like, oh, we can’t bring it up to our GC RG GC is gonna think our week well, you’re not we like subs are not weak. I mean, anyone living in this subcontract, and this is cash flow environment is going to suffer, I’m in a restaurant until the pay feed everybody for a month, fill up, fill everybody at the end of the month and wait 30 days get paid, you wouldn’t have a restaurant in sight, they’d be all gone. So does that mean restaurant owners a week that mean restaurant owners suck at finance, that mean owners that make terrible oh, it just means it’s a shitty finance scenario. And that’s the ones that is for construction. So get that out of your heads if thinking like, I’m going to look weak, or it’s going to be bad, or they’re going to give the job to someone else. Look, in this scenario here, if you don’t have a million for to put on this project, despite the fact that you’re gonna make 1,000,002 If everything goes well, you’re not going to make that million two unless you have 1,000,004. We all know that. So it’s not a good project to take doesn’t mean that anything wrong to me, it’s not a good project to take. And you’d be surprised when you start telling general contractors that want to give you the work, that you can’t do it or won’t do it because it just doesn’t meet your doesn’t have the right terms, you’ll be surprised what they’re gonna be willing to do. It’ll be just like, you don’t want to talk to them. They don’t want to talk to the developer. So they take the path of least resistance, which is push it to you. But if you push it back to them, and they look, I’m going to do great work. The way I do great work is I have a finance partner that helps me or B, I don’t take terms like this to do these projects, or C whatever it is. They’re gonna respect that. And it’s really my opinion, it’s more the insecurity that a subcontractor has that they need to get over than it is anything else. And if you’re not willing to have that conversation, do you really deserve different terms? If we’re going to be honest, probably not. So have the tough conversation. Bring it up. You’ll be surprised you’re going to get what you want more often than you’re not
Autumn Sullivan 1:00:00
We have another question. Even Steven asked, Should we go to mobilization funding? What are your general terms?
Scott Peper 1:00:08
Yeah, I think, of course, we’re a great option for many people. We can’t finance everyone. But we do finance a lot. We’re a great option for something like this. I mean, this is a real client of ours that submitted this, we can’t lend them a million for so we let we typically lend up to 20% of projects contract value, our general terms, and when we layer in a finite, so give you an example, we’ll take a sheet like this, and then try to build a loan to essentially fill the cash flow shortages that you saw that that cumulative project cashflow deficit, we try to bridge the gap of cash that’s needed from the start of the job till when it gets cashflow positive. So let’s say for example, this is a $3.9 million job. It’s it’s a big one, but it doesn’t matter if it’s a million or 500,000 Doesn’t matter. So let’s just say in this particular case, we could lend up to $100,000 on this job. And someone said that we it takes a million for and by the way, I have 800,000 I just don’t have a million for Can I borrow 600 from you? Sure. that would that would work and they would put their 800,000 in and we would put our 600,000 in and we bridge that gap from zero to there, we’d show you what the cost of the financing is in that. And so you would know if when you get to the end of that project sheet. You know, I’m just going to show you guys while we’re sitting here on this. When you get to the end of that sheet here, and you’re at the bottom here, and you see what your cost expenses are, just imagine another line item. And just imagine another line item in here that showed you what the financing costs were. So let’s let’s just say the financing costs were $50,000. So instead of 2,596,000 expense, you have $2,646,000 in expense. And then we would show you what the impact is to your gross margin. Instead of 31% gross margin, you end up with 29% or 28, or whatever that math is, but our typical costs on a project are somewhere between one and 3% of the overall gross margin points. So again, that example that’s 31, you might end up with 29.2% of the project, the way we charge is a monthly interest rate on whatever the outstanding balance is, at that specific time. So even though it’s $100,000 loan, you only needed $22,000 a week, well then you’re only paying interest on the amount that cumulative amount as the loan gets trumped, we call it tranches, you kind of think of it like a project line of credit that you can draw down and use again you just draw down but you don’t draw it down and take more payback take more it just it just gets drawn down. So it takes you from the start to cashflow positive, but that gives you a general idea of the of the dollars. The beauty of this is the spreadsheet that we create comes back to you with the actual project and the way the financing would work in it and the exact cost of that financing and dollars and exactly how it impacts the project. So then you can make real good decisions and we don’t have application fees or anything like that too. So someone applies it doesn’t cost you anything to get the information. Like I said we can work we work with law we can work with everybody and now every project is perfect. But um but yeah, we’re certainly a great option.
Autumn Sullivan 1:03:38
So if you want to try the cash flow tool, and I highly recommend that you do you can visit us at mobilization funding.com I did drop a link if you’re on LinkedIn live I dropped it right in on Scott’s LinkedIn. So it’s right there in the chat. We will have a replay of this webinar available on our website if you’re joining us on LinkedIn live I will share it on our mobilization funding LinkedIn platform and Scott watch I’m sure Scott will share it on his personal social as well. And I encourage you if you like what you see here we have lots of cash flow content. Scott’s actually working on a book on cash flow we but we have tons of blogs about it. And the best way to stay in touch with us is to sign up for Scott’s newsletter comes out twice a month has personal letter from Scott and then whatever our most recent content is and our upcoming webinars as well. Scott was there anything I didn’t ask that I should have asked or any closing thoughts.
Scott Peper 1:04:41
If you guys like this, you think it’d be beneficial please, please tell people about it. Share it. It’s it’s not it’s available to everyone. There’s no cost to it. It’s it’s our way of doing our part. We have a mission to do our part in this do your part mission and that do your part mission. As to change these nuances of construction for the better, you know, let it be accepted that you can have a finance partner in construction, let it be accepted that you can have a conversation with your GC that you need different payment terms without looking weak, let it be accepted that you’re not weak, because you can’t finance a project for everybody you know, and that it’s okay to talk about and, and that no one is terrible with finance you actually find with finance, it’s a cash flow scenario, you know, so we want to change those conversations, providing this tool to that we created internally for us to evaluate loans, basically, to give it to everybody to use for themselves is our way of do just one of the ways we want to do our part in changing the way cash flow and construction and stress and is related to construction too often. And we want to eliminate that. And this is a great way to do it by giving information and education. So please share with everybody the best you can and and go out and have a great day basically what all I want to say.
Autumn Sullivan 1:06:05
Thank you so much. Thank you for your time today, Scott. Thank you everyone for joining us. And yeah, try the cash flow tool and then let us know what you think. Have a great rest of your day.
Scott Peper 1:06:17
Thanks everybody and find me find us on LinkedIn and let’s get back there. Appreciate you.
Matt Vetter (Schafer Construction) and Mike Kepsel (Campbell & Shaw Steel) were two of the first people to join our mission, probably because their companies are already living by the DO YOUR PART principles.
This GC/Sub partnership is built on respect, trust, and integrity. They show up ready to actively listen to each other, to collaborate in order to find solutions to challenges, and to focus on present performance, not past perspectives & stereotypes.
Hear their story first-hand and learn actionable strategies to build better relationships with your partners.
Autumn Sullivan 10:57
All right, awesome. Yeah, we had, everyone was just waiting room was waiting at the door. So we’ll go ahead and we’ll get started. Thank you, everyone for joining us today. Today is our very first webinar in our do your part campaign. This is our mission at mobilization funding, and hopefully yours too. Since you’re joining us today, to reframe the way people view think and talk about construction both inside the industry and out. If you have not yet joined our mission and taken the do your part pledge you can find it at on our website, and Scott posts about it on LinkedIn quite a bit as well. So I hope that you join us today I am delighted to bring you the CEO of mobilization funding Scott paper with our special guests, Matt better who is the Vice President of Shaffer construction, and Mike capsule, who is the General Manager of Campbell and Shaw steel. They’re going to share with you how their two companies have built a solid GC subcontractor relationship based on common values, clear communication and shared successes. Scott will be leading the conversation. We want this to be collaborative. So please put your questions in the q&a box. And I will let the guys know when you have a question. And with no further ado, take it away, guys.
Scott Peper 12:10
Awesome. Thank you very much, everybody. Thank you for joining, Matt. And, Mike, I really appreciate you guys joining. I’m super excited about this topic I’ve been. Matt, you. And I’ve talked about this endlessly on previous webinars on different other conversations personally in private. And I just moved so excited that as soon as we thought about this topic we launched to do your part campaign mission of ours. We wanted to have live relationships on that could actually talk about how they do this the right way. And I knew reaching out to you, you’d have a great person and you’d have a great trade partner. And Mike, I’m so glad you agreed to join us. Welcome. And thank you very much. Welcome. Awesome. Well, as autumn talked about the do your part mission for us is really about just removing the stigmas that around the GC sub relationship. Ironically, I actually had a meeting at the local ABC chapter here in Tampa this morning, where these exact topics came up. Everybody in the room wants to have a different conversation. But yet everyone is sort of scared to start it off. And so we’re in a unique place to be in the middle of both. We’re not necessarily we’re not a general contractor. We’re not necessarily in construction. We’re certainly not subcontract or trade partners, materials, suppliers or anything in between, but yet we work with everyone. And so we have a unique perspective. I think, to that I want to share with everybody and doing that with my folks that I talked to routinely and even knew, I thought this would be a great forum. So I again appreciate you guys for doing it. And if you want I think it’d be great if everybody could just kind of give maybe a little one minute overview who you are your business. Where are you located? And then I have a list of questions. I’m excited to ask you guys
Mike Kepsel 13:59
go first man.
Matt Vetter 14:00
Sure, sure. I’ll jump in saw Matt Vetter. I’m actually now the president of Shaffer construction or a commercial general contracting firm we’re based in in Brighton Michigan, which is Southeast Michigan. We’ve been in business this is our 25th year and we we build everything short single family homes.
Mike Kepsel 14:23
I’m Mike Kepsel. And the general manager Campbell and Shaw steel. I business has been there probably 30 years we do commercial and industrial steel frames for buildings
Scott Peper 14:39
do key thing that’s what we need for sure. So how did you guys get into construction both then your businesses or decades all? How did you get into construction?
Mike Kepsel 14:52
Um, I think mine I was going to school to be an architect and somehow or another was drafting class. And I was approached by one of the teachers instructors that a local steel company needed, needed help as a draftsman or something. And I went to reply and got the job. And they offered me apprenticeship. And I basically ended up quitting school and became the structural steel detailer through them. And then it just progressed.
Scott Peper 15:26
I think you haven’t tried to go back and design buildings where you bend steel into a perfect arc. Do you try to keep them pretty straight?
Mike Kepsel 15:34
Now we’ve done it all. Yeah, curves don’t bother us yet places we Google stuff. Like, go ahead, Matt.
Matt Vetter 15:43
I was just gonna say I think you make it better steel guy than architect Mike’s, I’m glad you went that route. I got my start in my late high school years, because, quite honestly, I could make a lot more money moving lumber around job sites, and I could do almost anything else at that age. And, and so that’s really where it Springboard I built houses for a long time, moved into commercial in early 2000. Around that timeframe, and it’s just been kind of snowballing ever since.
Scott Peper 16:18
So one of the things that we’ve always seen is this, this natural tension that’s created sometimes, or seems like a lot of times and between a trade partner in any train, and also the general contractor. And some think that it’s maybe because of the nature of your own opposing views on the control on the actual contract itself, that you have the projects, you have others. Can you guys each give a little bit of background, or just a perspective on the way you viewed it? Maybe Maybe all along the your career or or if that’s changed at all?
Matt Vetter 16:57
I’ll jump first, Mike. You know, when I first started in commercial, especially, we did a lot of plan spec work. And it was all, you know, low bid shit that, frankly, nobody really wins in, you know, whoever ends up with a job was typically the guy that made the most mistakes on his estimate. And I think, you know, that that mentality of the the low bid construction is kind of what, what puts us at odds with each other, right? Because nobody wants to admit, nobody wants to lose money, first and foremost. But then to do that, nobody wants to admit fault. And so I think it creates this, this unnatural tension between between the GC and the trade partner. You know, we it gets pretty heated in that. And, you know, we’ve tried to avoid that now. But I can see it very vividly in my, in my memory of times, when that happened when it just leads to screaming matches, and it’s, it wasn’t any fun for me, which is why I got out of it. Like, what do you think?
Mike Kepsel 18:01
I kind of have to agree. You know, and that’s, I have I balanced that with the estimators at the office, and they’ll come to me the projects. And I guess first thing we asked, you know, who’s the contractor? How’s he gonna do it? And you’re like, yeah, that guy’s gonna do the low bid. Why waste your time where I’ve kind of changed the direction the companies go on to more partnerships, and not always have to chase the low bid, build relationships with the contractors, because when you’re fighting with them, or if you know, you end up in a battle, whether it’s no fun. And it’s at the point where by age, as long as I’ve been doing this sometimes, like it’s not worth the effort anymore. There has to be easier ways of doing it. Trying to reach out and build relationships going in trying to help with design ideas. Oh, seems to work out better. And chasing the little bits all the time just never seems to work.
Scott Peper 19:02
I think one of the key things you both just mentioned that it was exactly where my brain was going when we first got into this business was anytime we saw a low margin or low bid, write it everybody lost. And candidly, anytime we financed or work with someone in a low bid situation, we ended up losing two. And we had we went through the same evolution as you both described, but yet we were not a trade partner or general contractor. We weren’t even on the project side. It’s it’s you couple that with the natural, just challenges of a construction project, specifically cash flow and how a fault flows from the bank, to the owner and so forth all the way down. You’re right focusing on something that’s low bid is going to create problems for everyone. So the folks I listed on this I think that’s the key takeaway. We talk about all the time, performance rules the world and that’s the most important thing it’s not price and if you’re thinking price when you’re Estimating. Just know, you hear it, you’ve heard it here that price leads to problems and just change your focus on that. Which brings me to what’s the first construction projects you both worked on? And how did you realize you both had the same synergies and thought processes? The first project
Matt Vetter 20:18
we worked on together, yeah. Holy cow. So I met Mike. Got to be 10 plus years ago now. Yeah, I was running the pre construction department at a, at another company, another GC. And actually, at the time, Mike was at another steel steel supplier. And to be honest, at that time, I knew Mike because he was he was a grumpy as steel guy that you could call it questions. And I was the stressed out, you know, kind of asshole estimator who had no patience and want everything now. And, you know, we we worked together on a lot of projects, when we were both of those separate companies. I don’t remember when you when you move to Campbell, Shawn, Mike, I think it was a bit before I left, where I was at, I think, and tell me if I’m wrong, but I think the real synergy between us kind of happened after we both changed and took over different roles in new companies. Yeah,
Mike Kepsel 21:18
I agree with that. Yeah. I can always remember the conversation, we have the architect, an engineer on the motorcycle shop, on the big fancy canopy, and the architect was looking at it saying, well, the owner needs to get his arms around the project, or whatever it was. And so the only thing the owner gets his arms around is his checkbook, it’s not going to let go that
Matt Vetter 21:44
I remember that conversation.
Scott Peper 21:48
How did you guys manage through it?
Mike Kepsel 21:52
We basically totally architect an engineer, this is what we’re going to do to make it work. And you just have to go along with it. Because we know where the owner is. And all we have to do is pick the phone call up and this is what he’s going to pay for.
Matt Vetter 22:04
Yeah, we were, they were trying to strong arm us into, you know, going back to the owner, and basically saying, You’re a wealthy guy, you should start spending more money. And I can’t say who the owner is, but But Mike knows him, and I know him pretty well. And that wouldn’t have gone well, we would have ended up probably in a ditch somewhere to be quite honest with you. So yeah, it was, it was probably that day that that I really started pushing back on the design consultants, you know, because it’s real easy as a, as somebody with no skin in the game, to just say, just put this in there and pay more money, right, when you have nothing to lose, because you’re going to get your damn fee, hell or high water, whether the project goes, whether it falls apart or otherwise. And I’m not knocking on the design guys, completely. But I think it’s just a different mentality that, you know, the, you know, kind of the blue collar side of the of the industry brings to the table, we got to be more realistic, right, where we’re fiduciaries of our clients, of our clients dollars and of their needs. And that’s what kind of spawned this whole, you know, real design build that we do now, where we try to take the onus of that responsibility onto ourselves so that we can provide the best for our owners, Mike, and I still get along real well, at the end of the project, everybody makes money, and we all win versus yelling and screaming and pointing fingers.
Scott Peper 23:37
Interesting. You know, before you before you guys had these individual experiences, did you ever have any preconceived notions about, like Mike and your case, other general contractors that either were from previous experiences that cemented for you that a negative feeling or a positive feeling? And then your interactions with Matt, change some of that, or, or maybe others? Can you talk a little bit about that?
Mike Kepsel 24:04
There was always, you know, as coming up in the steel business as being in engineering and a detailer. And then I got involved with a larger contractor design build. And Matt used to work there. But this goes way back before Matt’s time, we were brought in way ahead of the design part with one of the partners and had to sit down we would have lunches and basically the napkin sketch. You know, we put it together figure out what it was. He had numbers he wanted to get to as budget and we’d work to help them get to that. And then they would bring in the design team. And so this is where we’re going to go with it. This is what our base sizes were heights, etc, all that stuff. And they design to it. But then you go back to the plan and spec and quoting that’s a whole different animal. that’s already designed and stuff. And then the contractors trying to work for the owner, I don’t know that or the owner trying to push the contractor or beating them up just to keep getting a better product for less money goes back to chase and low bid. A long time ago, I decided I don’t even want to do that. I just want to work with this and do the design, build stuff up front and be able to get in, you know, the front door within a relationship with the contractor. And then Matt came on, I don’t know, a few years later, probably about 10 years ago or so. And I think he caught on to the whole thing, or he was working towards the same thing. It just grew from there.
Scott Peper 25:44
Now on your on your side, you’re working with a guy like Mike who’s got the experience, he’s gone through the evolution of low bid margin, clearly can understand both sides of it. How do you shift when you’re working on projects that whether they maybe Mike’s not working on them, or you know it better yet, it’s just a whole different trade? And that business owner or person you’re working with has a different philosophy than Mike, how do those interactions go? And how do you try to coach them up? Or let him understand or feel comfortable that, you know, you can have a different thought process with you as a trade partner than maybe what the stereotype is?
Matt Vetter 26:26
It’s not easy, you know, that? That’s the simple answer is it’s not easy to convince some guys, that that we as a general contractor are not out just to hose everybody else. Because that’s, that’s the mentality that was driven by the low bid process by the the architects, frankly, that that pumped on that drum. So, you know, when we come across new subcontractors that are either looking at projects we’re working on, or we’re trying to build a new relationship, it takes a lot of work to foster that trust for for me to foster that trust from them that, okay, we’re not, we’re not going to string you out to dry. And I can talk all I want, you know, I can paint a real good picture of my vision and how this industry should work and where we’re trying to take it. But you know, at the end of the day, you’re dealing with folks who have quite likely been burned pretty bad in the past by this system that we were all kind of forced to work in. So it just, it takes time. And you know, Mike touched on relationships. That’s it, like, you have to build that relationship before it ever works. And, you know, to answer your question directly, Scott, there is no quick answer. I don’t think, you know, if they if they believe me right off the bat, and I sold them on my, my outlook then great. But I think more often than not, it just takes a lot of time, a lot of conversations, before we get to that point where there is a mutual trust.
Scott Peper 27:56
Mike anything you’d add to that?
Mike Kepsel 27:59
No, I mean, I agree with them. It’s all about the trust and conversation. Before I was with Campbell & Shaw I was with the previous place. And that’s still company, they chased the low numbers, they would lowball it. Because their attitude was we’re gonna make it up in extras and back charges, and then you’re chasing a whole different animal, you know, down that rabbit hole, it doesn’t work. And you get into all these conflicts with the contractors and it was just nuts. It was a nightmare.
Scott Peper 28:29
In conflicts cost money to
Mike Kepsel 28:31
Yeah, it was a lot of time to chase that. And, you know, in the end, it would settle for 50% of it, but you still everybody’s like, you know, you walk into a building or to a meeting and they know, okay, that’s the lowball guy. I didn’t want to be none of that and didn’t take long at all for me to get tired of it.
Scott Peper 28:52
So, you know, both of you have probably developed younger guys on your own teams, or are new to the business, how do you coach and teach and train inside your own organization to help shape the mentality to approach your new customers or customers you want to work with with the with the mentality that may they may they may have been precondition with before
Mike Kepsel 29:16
That’s what we’re working on now. And kind of bring people in and that’s part of the problem with this business is the lack of people that come in it’s Matt and I’ve talked trying to chase guys and get him into the business or bring kids in you know, they’re just not walking in the front door, throwing an application at you and and looking for a job right now. I mean, wait, go ahead. Go ahead. I’ve got two guys that I work with to help them and they were estimators I guess where they came from, and they were used to a certain thing, you know, plan and spec but didn’t do a lot of design build. I came along when the owner was there and start non teaching, because it’s a different way of doing things, working with different people and kind of turning that corner away from those contractors, like just throw things out the bed, because we know it’s a waste of time, and getting them to help, and I’m introducing them to contractors. I’ve got I’m missing the maths golf outings. So good to know those people. And it’s just changing, changing the whole the aspect of trying to do business.
Matt Vetter 30:34
Yeah, and, you know, we’ve done it on the, on the GC side, I’ve, I’ve tried to shape and mold numerous estimators in my career. And you can tell a very distinct difference when you get a guy that comes from one of the, you know, the big five construction firms versus somebody who comes from something maybe smaller or, or who has never done it before. And to be quite honest with you, I would rather the latter, I’d rather the guy who has no experience in construction whatsoever, but has an open mind and is willing to learn, then try and take the guy from I’m not going to use her name, but the giant paper pushers and bring him into my world and try and deprogram that that mentality because it’s it I’ve found it’s nearly impossible. Maybe I just suck at doing it. But I’ve gone through more candidates and more new hires, from that world trying to bring into mind that I care to even admit, it’s really difficult.
Scott Peper 31:35
Hard to deprogram and reprogram it takes a special person to have it that has a desire to want to realize, Hey, I’ve learned a bunch of things that probably don’t suit me well. And by the way, I want to accept the fact I’m going to blank them out and relearn. It is a special kind of person, regardless of your training skills, man.
Matt Vetter 31:56
Yeah, it definitely is.
Scott Peper 31:58
So what let’s talk a little bit I mean, we probably have, we have a lot of subcontractors, general contractors, material suppliers, different administrators of different companies that are here on this webinar listing. For folks, they’re like, what are some proactive, specific things that they can both do to help change the culture around the GC, subcontractor relationship on their projects? What would you recommend, first and foremost that they could they could do? They don’t have the trust, yet? They got a job jump out in their project, they have a culture around them. That’s either the way we’ve been talking about that’s the norm. And or it’s some combination of both. And how could they go do their part to help make it different?
Mike Kepsel 32:44
Talk? have discussions? Yeah. Have a discussion. The sad part, I think right now is we don’t have data, we don’t have enough face to face discussions, don’t have enough meetings, Graham, you have this whole virus thing that screwed that up. And technology today is made it easier not to have face to face meetings, and discuss things and get views. I think we need to go back to that person. I’m old school. So I guess that’s the old guy you’re talking?
Matt Vetter 33:21
Well, I’m not that much younger. And but I agree with you. I mean, this sort of stuff is great, because right we’re having a conversation from different different sides of the country. And it’s got its purpose. But you know what, what Mike and I do on a day in day out basis for our our actual jobs, you learn much more you communicate better when you’re when you can sit across a table from somebody, you can have an old fashioned set of paper drawings, and you know, highlighters and you can scribble on them. I think talking is a huge point. But I think just shutting up and listening more would would serve a lot of people because I’m gonna keep going back to the relationship side of it, you have to get to know Mike, right, you have to get to know where he’s coming from and what his mentality isn’t to understand how he’s approaching a project. And until you can do that, you’re just going to be spinning wheels. So I think overall communication is really the key. And as a society we’ve gotten away from that.
Scott Peper 34:24
Yeah, I agree. Yeah, it’s funny, um, I was talking to I had friends now for as I get older, and I’m almost I’m in my late 40s But while I get well I get lots I’ve gotten older and I’ve done different deals or negotiated different stuff, whether it’s either inside mobilization funding or out I’ve just you get more confident with yourself and as soon as it’s like almost like one day and you can think about along your journey people tell you hey, you’re you’re okay you know, you’re pretty good. Like Thank you take those comments. Sometimes you don’t, you don’t accept them and other times you start to get some on the one hand, so there’s you believe them all and you think you’re better than you are But ultimately, as you build some confidence, that competence also says, hey, look, I did a good job. But here’s all the other reasons why I did. And in this case, it’s you focused on performance, you didn’t do a little bit, well have the confidence to know why you are good. Be specific, hey, you know, I don’t bid low bid jobs, just be who you are, and that people are gonna either like it or not. And just be clear about who you are, what type of projects you want to work on. You know, if Matt’s telling you, hey, look, we did this one time, this is gonna be tough, but you just tell him, Hey, man, I’m not your guide. And I can’t do that kind of work. I can’t afford to carry the cost. But you know what, when you have this type of job, and this one, this one, I’m your guy, and I can do great on that frame. And here’s the reasons why, like, then Matt doesn’t waste time, you’re not wasting time and vice versa. And Mike, you don’t have to burn up your resources. I’ve just found over the years that if I get more clear with what I can do well, and what more importantly, what I can’t, it allows the other person to hone me in where, where they can see me fit well. And I think it applies to construction really, really well, in the same manner. Because every projects different. You know, they’re all the trades are different. Everything can be specific. I think if everyone just talks like you said, Mike, I mean, that’s the best advice, just talk. And when someone else is talking, now, you and the other side, listen, and do it without judgment. And everyone can get a little more confident to be vocal. And if you’re inside an organization, and you’re not the boss, or you’re not the head of something, ask questions challenge why people are doing it, you know, why do we do it that way? Well, that’s the way we’ve always done it. If you hear that answer, you’re on the home run spot and keep peppering that thing until someone gives you a better reason than because we always did it that way. Because to Mike’s point. It’s there’s a lot of technology out there now. And there’s better ways to do things. None of it’s better than sitting face to face, in my opinion. But there’s technology that definitely helps a construction project, there’s technology that definitely helps bids, and designs and workflows and all kinds of stuff. So those would be some pieces of advice that I would offer up on just listen to you guys conversation. I think you guys in well nailed them.
Matt Vetter 37:14
Yeah, you know, look, this industry is is stressful as hell. So the way I’ve started looking at it in the last, you know, half a decade or so is if I’m going to stay in this industry, and I’m going to sweat and toil to make a living doing what I what I do love to do. I want at least have some damn fun, right? And if if every day is stressful and miserable, because you’re not, you know, you’re always at odds with somebody, and then what the hell’s the point? Because nobody, nobody is getting mega mega rich doing what we do, we can do pretty well. And we’ve got other opportunities, but you know, you’re not hitting billionaire status by being a smaller scale general contractor in southeastern Michigan. Sorry, if that’s a newsflash to you, you know, you can do well, you can have fun, though, you can make a good living, but you got to be able to do it on your own terms.
Scott Peper 38:05
Yeah. Mike anything you’d offer up on that,
Mike Kepsel 38:11
No, I gotta agree with them. You know, it’s this business is stressful, it’s, it’s hard and can be long bass and times, and you got to figure out how to enjoy it. I guess I come to the conclusion here lately, you know, we build buildings, put a product out there. But I have to remind myself, and I’ve started to remind everybody else, one thing we do is we just built buildings, we’re not all surgeons, we make a mistake, can own up to it. Nobody’s gonna die an operating table, if we make a mistake, or something gets broke or something falls down. We can get back up tomorrow and fix it and keep going. And that’s just kind of the attitude we have to take and keep plugging along.
Scott Peper 38:57
So, here’s an opportunity for you guys. Let’s just say this entire webinar was being heard by all the major owners and bankers and architects and designers in the world. What what are the one or two things that you guys wish they were doing differently at the top of the waterfall that would help impact everyone positively?
Matt Vetter 39:24
You know, I think it comes back to communication but learning to you know, we have a constant struggle seemingly lately, especially with with lending institutions that do not understand the design build model of construction. They only understand and they only have on paper, you know, the rules that that govern the old, the old school design bid. Right? And trying for us and that’s been one of our biggest pain points in the last few years is as we’re growing as a company and working on larger and larger projects where we’re, by the nature of the beast dealing with more and more banks and lenders firsthand and trying to educate them that. Look, this isn’t the way that you think it’s done. This isn’t the way you’ve been told, it’s always been done, we do things differently, there’s a different approach here. For example, architects, in our model, I hold the architecture contracts, where in previous models or other models, the owner does or the developer does, we have a constant battle with lending institutions to even get them to understand that I’m in a battle right now I have a have a call with my attorney after this, to discuss this very topic, because we have a bank wanting me to get my architect to sign over rights and to agree to a bunch of nonsense, should the project go south, so that he would essentially then be working for the bank? To which I said that it’s not impossible, right? We hold their contract. So so maybe we could have that relationship with the lender. But, but it can’t be a way around, and it’s just, uh, you know, I’m not knocking on them. But it’s, it’s an old school mentality, or that they don’t, they don’t seem to want to figure out or want to learn how it is that we do business. It was a long winded answer around it. But you know, we were seeing it constantly, it seems, and I don’t know how best to fix it. Because just talking hasn’t, hasn’t helped.
Scott Peper 41:34
I think developing relationships in the banking world are just as important. You know, I, I’ve found a lot of friends that are developers or partners, and they, you know, who their bankers and how they develop those relationships and educate them along on what they do and how they do it. Is, is important, you know, if you think back if banks can land into the world, where they’ll allow a developer to clear a piece of land, and they’ll understand that there’s going to be ultimately a building on it, and they have a lease with a tenant that for something that’s going to be built, they’re going to turn it over, they can understand the construction side, too. They can they’ll get the design build some of them. But you’re right. It’s not it’s not every bank, it’s certainly not the big ones, either. I can promise you that. Big banks are not going to be the ones that gonna take time to figure that out. Um, is there any, is there one or two things that you guys have found that are in that AIA Contract that you wish for change? Or you do change often, to benefit one and I?
Matt Vetter 42:41
I mean, I do by not using them? We’ve, we’ve moved away from them completely. We still have some legacy projects that were under AIA documents. But But there’s other options out there. You know, and, again, I sound like I’m shitting all over the architecture profession. I’m really not. But an AIA document was written by architects, and is designed to protect the architect and the owner and it it does nothing. For the general contractor. It certainly does nothing for the subcontractors, and it causes divisions in and of itself. So there’s other options we have used. Consensus docs has a pretty reasonable set of documents that protects everybody, but it’s got it was written with input from subs and from GCS, not just the design side. There’s, there’s other forms and formats. That would be my answer, just stop using them.
Scott Peper 43:41
Yeah, it’s interesting, because it’s why I brought that up. Mike, anything you want to use? What do you see working with different folks
Mike Kepsel 43:48
to agree with him? I mean, I’ve done some routes from what Matt calls the Big Five area, and I’ve gone through their contracts that use those and I’ve redlined them and marked a mountain. So I’m not going to do this, or I don’t agree with it, or, you know, and I’ll send it back to him that sign and so you need to change, revise it. And I’ve literally had their legal call me and say, You can’t mark it up as well that I’m not signing the contract. You know, you’re going to go to the next guy. Next thing, you know, no red, line it and blank it out and I’ll get the contract. But it’s always a nightmare. And if you don’t take the time spent a whole day reading the contract and going through it. You’re leaving yourself exposed. Yeah. Matt says there’s there’s better ways.
Scott Peper 44:38
Matt, is this contract something that you have that you guys have created or modified? Or is it something that everyone can go get on their own? At least start with from a template perspective?
Matt Vetter 44:48
Nope. Consensus docs. I think it’s consensus docs.com Or someone something around that it’s it’s not free. I mean, you got to pay for it but But anybody can go and buy their their template. That’s, which is what we’ve done. And then we modify them accordingly, you know, based on based on project based on need, you know, we, you can start from scratch. You know, my, my attorney is always asking me to let her create us a contract. And while I appreciate the intent, I think more of it is to get the billable hours and doing so. But, you know, again, the consensus docs, it’s not perfect. It’s not perfect by any means. I don’t think there is any perfect contract. But it’s, in my mind, from what I’ve seen, it’s, it’s way more well rounded.
Scott Peper 45:34
You know, I can say, from our perspective, having read reading a lot of contracts that are executed that come to us, the AI is definitely and most of our con, most of our customers are subcontractors. And it’s definitely not a favorable contract without some tweaks to it. And you’re you hit the nail on the head, Mike, matter of fact, one of the webinars we did was with an attorney having to be out of Texas, but very familiar with the doctrines and he recommended the five or six places that you really should like, make some modifications. If you want to have like, any, if anything bad happens, you’ll at least be in a somewhat okay spot versus just a disaster. And so I recommend everyone go do that. We can post that later on and show but you got the money you spend on those contracts. Redlining is worth every penny and a couple hours you spend your trade new than it is getting in a fight?
Matt Vetter 46:26
For sure. 100% agree. Yeah. So many people don’t read them. You know, and that on the GC side, the sub side, the owner side, so maybe we’ll just, you know, if we could all work on a handshake, that’d be great. I’d love it. But that’s not the world we live in. And if you don’t take the time, and spend the money to really understand what the hell it is you’re signing. Good luck to you.
Mike Kepsel 46:52
Yeah, you need to read them.
Scott Peper 46:56
I’m gonna look and see here we have some questions. It looks like there’s been some comments, I want to ask you guys a couple of right from the audience here. Um,
Autumn Sullivan 47:04
We do have questions. We have one from Ben, that says, What have you done to educate the project owners who are hesitant to do the design build approach, it seems they’re hesitant because they don’t personally know or trust, a GC or subcontractor. So they feel like they’ll get taken advantage of Whichever one of you wants to jump in first,
Mike Kepsel 47:30
I guess I probably got the longer exposure. We sit down, going back to that one contractor, and he would bring a lot of his trades in and meet with the owner face to face. And we will put numbers together. And he was shown those numbers. It was basic, open book. We had a profit margin, but I could do it with Matt, anybody, I’d sit down and show you our cost for all of our materials, show your labor hours, and our profit margin. Do. You know, if a contractor is willing to do that with an owner? I, I don’t see how it couldn’t work. Maybe they’re not showing up. So maybe that’s how the honors who like maybe they get taken.
Matt Vetter 48:21
I think that’s just it, you know, Ben, he mentioned that they don’t know or they don’t trust the person that that’s the first three rules of sales, right? You got to you got to get your client to know like, and trust you. And if you’re trying to pull the wool over somebody’s eyes, why would they trust you? You know, we operate still, like Mike just said on a on a very open book, I’m happy to sit down with an owner and any of my trade partners that that are there and and we’ll show them every number, I’ll show you exactly what what I’m gonna make Michael show you what he’s gonna make. You may not like it, but, you know, at least it opens up the door for conversation. And that’s the way we change this industry is we have to start having those conversations, to gain the trust from the ownership community as a whole. Because it, you know, design builds been around forever. But for a very long time, it’s just been a catchphrase. You know, it’s been like hanging your core values on your wall and calling that good. People would throw it around to use it as a marketing term. We have to do better as an industry to really teach people what the hell it means and how it can actually work and benefit not just us but the owners also.
Scott Peper 49:34
The owners want their buildings built that mean that they’re not interested in the construction of the building doesn’t help them what that’s not the purpose of the building. It’s not certainly not going to make them any money. It’s not going to occupy itself. So I think we you just hit the nail on the head both of you is the confidence to actually say I’m making money on the project. By the way, guys, like I’m definitely doing that number one, and here’s how much I’m making. And I don’t feel bad about making that money and There’s a lot of risk, like on paper right now I make this money if I could put my fingers and it’s done, yeah, that’s what I’ll make. But you know what, there’s a lot of things in here that have risk I have to perform, I have to manage people, there’s a 10 month project, it’s a two month project, whatever it is, a lot has to go. Right for me to make that money more often than not, I’ll make less, sometimes I might end up making more if I can be efficient, but who cares? Like, you know, I’m making money. That’s it. And it’s that’s the brain shift that I’ve seen in our group, while we work with different folks that, and I’m sure there’s folks on here now thinking like, that’s insane. I’ve never done that before, I promise you, if you do that, you’re gonna win more bids. Because I believe it’s the unknown that people don’t trust, not what they know, if they know you’re, you show them all the numbers, they know, you’re gonna make 25%. And they think you should only make 15. They’re, they’re happy that you’re not making 30 As if that was on the table before 40 or 50, or whatever. And they feel like, okay, 25 is more, but they know, at least they know and they’re like, Alright, then they can talk to you about the things that are actually important, right? If I give you this, you’re gonna do a good job, like you promise you’re gonna do a good job. And this is why and here’s how I think they can run with that.
Matt Vetter 51:15
That’s what I believe. Well, why the by the F, wouldn’t we do that? Right? It’s, it’s, we have already talked about how stressful the industry is. It is fun, I like building stuff. But it’s not that fun that I want to do it for free. I’ve got plenty of things I could occupy my time with, if I wasn’t making any money, and it wasn’t concerned with paying bills, and it probably wouldn’t be building buildings. So we do it as a profession, we do it to make a living to put food on our family’s plates, you know, why the hell not have those conversations? And if the owner doesn’t like that, I’m putting 15% on it. We can have a debate, you know, but But you get back to that, that age old conversation. Well, what is my experience worth? Because you can’t do this yourself? That’s why you’re talking to me, you know, just like, I can’t do surgery, but I can build a hospital. You know, and and Mike’s got, you know, decades of experience under his belt, why the hell Shouldn’t he charge for that? Because nobody else has that you can’t, you can’t reproduce that, you know, there’s no technology ever that can reproduce that sort of thing. So we’ve all got to stop being so chicken shit about making money. We’re that’s why we’re doing this. That’s why we have these conversations is why we’re in business.
Scott Peper 52:36
I couldn’t agree more. You know, um, the other point I was gonna make was as you as you start to jump into these, you’re having these conversations about dollars and cents and money. You realize also Okay, yeah, 20% is whatever, like, that’s the margin, let’s say, for example, but they’re holding 10% of retainage. And they’re talking about 20%. And you’re like, Listen, man, I’m running the job on 10, which is hard. Like, how about I hold 50% of your profit? I mean, 10 seems like 10. But it’s really 50% of the profit. I mean, then you can might be able to get into a conversation where the owner might say, Okay, well, if you could bring your margin down to, you know, 5%, then I won’t hold any retainage. And then you have a choice, then you can make some decisions one way for you advantageous to you, maybe you’d rather have more of your money up front, and you can do it for less. Or maybe you can say I get a hold, you know, you can pay my guys or I can pay this or I can get better terms if you allow me to do this as a nurse. So yeah, I’ll do that. If you give me 10%. Up front, I’m a contract. And I can actually get out and get started and do this more efficiently. Now you can get into the meat of real conversations that actually will make the job more efficient, you can actually make more money on it. By spending less, you can get into some conversations, if you get past the price. And when everybody’s making just slap it on the table. That’s my personal opinion. I’ve seen that in my own world, with different business ventures. I’ve definitely heard folks like you guys who do that just just like this. And they’re every one of them are more happy. They do better projects, they avoid problems. And there’s less ambiguity, always.
Autumn Sullivan 54:13
Yeah, there’s an added benefit to talking about money. Oh, I’m sorry, not in that the perception of construction is that it’s and we talked about this in the Do Your Part campaign, that the perception of construction as an industry is that it’s a dead end job. And that you have to go to college and you know, all the stories that we all know, right? But if the if, if, if the industry is willing to start talking about what you actually can make and construction if we’re just like you said less chickenshit and willing to talk about the money that can be made here. It’s it that’s part of changing the perception, you know, for the for the younger people who are coming into the industry, that it’s an actual viable career where you can make real money
Matt Vetter 55:00
Yeah, you don’t have enough time to get me on that soapbox. That could be a whole nother episode, but I will be 100% agree with you awesome.
Autumn Sullivan 55:13
Yeah, we’ll have you on for that one, I promise.
Scott Peper 55:17
Also say if everyone hangs out on this and complains about the topics we’re having, and do nothing different than I guess you deserve what you’re getting. But now that you’ve been on this and listened, try it. Pick the person have the best relationship with go show how much you’re gonna make on their project. Ask them if there’s anything you could do for them to help them better. Think about it from their perspective and ask them to think about the project from your perspective. And you’ll both find a lot of value in that and probably a great relationship. I promise you the unknown. This is a long lasting as the unknown is what people don’t trust more than anything else. The unknown.
Autumn Sullivan 55:59
Yep, very true. All right. And if you haven’t yet, go to our website, take the do your part pledge. Join us in our mission. Thank you guys so much for joining us. We don’t have any other questions. So I’ll go ahead and give you 15 minutes back to your day. Scott, did you want to close this out?
Scott Peper 56:17
Yeah, there was one in the chat. I think we answered it. It had to do with Luis, I saw your earlier will we be sharing this recording? Yes, absolutely. We’ll send out a link to this to everyone. We’ll also put on LinkedIn, it’ll be live. I’m sorry, not live. It’ll be on YouTube, you can always go get it. You can see this as and as many times as you want and slow motion. Rewind. And fast forward. Are you able to see it all? Um, I think we Matt mentioned that consensus docs was another question in the chat about where the documents are. And everyone that’s had so many positive comments, I thank you very much. We appreciate it. And most importantly, Matt and Mike, thank you guys so much for your time, I appreciate you guys having the courage to share this. Your own relationship and journey and interaction. I applaud both of you for having the confidence to do it the way you do it. And most importantly, this do your part mission you guys definitely represent and are already leading the way on it. And I’m so glad we chose you guys to Nashville, and most importantly, you accepted to jump on, it’s great to watch the both of you and what you’ve cultivated. And I’m certain one or a few people, if not hundreds, hopefully will be impacted by this and start to have a little bit different conversations. And soon enough, the world keeps spinning. And it’ll permeate out farther and farther. And will all of a sudden one day someone’s going to come to you and show an owner is going to walk in your guy’s dorm show you how much money they’re gonna make and ask you how much you’re gonna make. And maybe they’ll even give you a little more taste on.
Matt Vetter 57:50
That Scott, I appreciate you having us on. It was it was fun as always. Mike, I’m glad you came. Thanks for Well, thanks for helping along the way, buddy.
Mike Kepsel 57:59
Oh, welcome. Thanks for having me.
Autumn Sullivan 58:01
Thank you guys so much.
Scott Peper 58:04
Please join us in the do your part mission. There’s some cool guests, there’s lots of stuff we’re doing, it costs you absolutely nothing. We’re going to help educate things just like this type of topics, more gas, more conversations, different blogs, different ideas. Our part in this deer park mission is launching our cash flow tool that we will have we’ve gone through webinars on this before, but it’s a cash flow tool. It is 100% free. Anyone can download it right on our website, what is the cash flow tool, it basically helps you figure out if you haven’t been in an estimate and a schedule you need to keep. It’ll show you exactly how much cash you need to execute that job. And if you don’t have enough cash, just imagine knowing that in advance, and then you have the options and tools to be able to do it. Perhaps you take that tool into your GC or your owner and you show them Hey, man, I need $5 million to run the project because you’re taking too long to pay me if you pay me in 30 days, I only need 2 million. So help me out or hundreds of 1000s or whatever it is. But that tool is very impactful that may help you make proactive decisions and it’s 100% free. And all the tools are there for you to use it and show it and work off of it. So thank you all again, Mike. And Matt. I really appreciate you guys. Thank you so much. Thanks. Take care, everybody. You too
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.
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
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.
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.
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.
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
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?
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?
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,
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?
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.
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?
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.
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.
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
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?
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,
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.
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?
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?
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.
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.
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.
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.
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.
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,
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!
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?
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.
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.
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.
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?
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.
Okay. Did anyone want to jump in on that? Or do we want to keep moving?
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.
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?
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.
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
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.
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?
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.
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.
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
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?
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.
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.
Yeah, let’s not have student loan debt, I’ll cry.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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
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.
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?
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.
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.
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.
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?
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.
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.
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.
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?
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.
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.
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.
And many companies will pay for it after you’ve been there. That’s right, you do have a degree to get that degree.
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.
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.
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?
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.
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.
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.
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.
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
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
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
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.
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.
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.
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.
Cash is the lifeblood of your contractor business but getting that cash can be a nightmare. We asked Lori J Drake, CBA, Levelset‘s Payment Professional’s Community Manager, to join MF CEO Scott Peper for a conversation about the most common reasons payments get delayed, what to do if a GC payment is late, and how to keep your cash coming in on-time.
Why does it take so long for subcontractors to get paid?
The best place to start is to understand that payments in construction operate on a waterfall model. Subcontractors are at the end of that stream of cash, and so their wait is longer. It typically starts with a bank or financial institution, the one financing the owner or developer.
Are there “bad” general contractors out there? Sure. Bad owners, bad projects. But the majority of the problem stems from the macro factors around construction cash flow — things you cannot change. The owner or developer has already put in a lot of work before the project is off the ground. They typically have put a lot of their own cash in long before they secured funding from the bank or a government fund.
The GCs are in a similar boat — they have a lot to do and manage before the work starts. And of course, the subcontractor does the work, has it checked two or three times before it is approved and submitting it for payment.
Then, if you submit your pay app correctly, you wait 30-80 days for payment.
And that is another reason payments are slow in construction — a complex and laborious pay application system. Many GCs only pay once a month, and if your pay app misses the deadline or has errors, you have to wait another month before you get paid.
Lori recommends making sure everyone on the job knows you exist right from the start. “Send a preliminary notice on any job that you do. … anyone that you want to make sure that your risk is minimized. If you don’t send a preliminary notice the owner of the property, other subs, GCs — anyone in that payment waterfall — if they don’t know you exist, they can’t make sure that you get payments. So that I would say is the number one step.”
Nervous to file a preliminary notice? Don’t be. Preliminary notices aren’t a threat; they aren’t hassling your GC. They are your normal operations, your due diligence to protect your company so you can focus on PERFORMANCE. “When you do great work, you expect to be paid,” says Scott. “To keep honest people honest, we put locks on doors. To keep money flowing when it’s supposed to you let people know you’re there.”
How can subcontractors ensure faster payments?
The first step in ensuring faster payments happens before you ever put boots on the site. Check the credit worthiness of your general contractor. Levelset has a Contractor Profile tool that shows how many jobs a contractor has performed annually, how they performed, the types of jobs, and feedback from the people who have worked with them. “It gives you a whole bunch of information that you really can’t find anywhere else,” says Lori. “It’s kind of like a trade reference on the GC but with a lot more information.”
If you are working on a government project, you can relax a bit. There’s usually a payment bond in place.
Document everything. Follow the spirit and the letter of your contract. Ask your General Contractor any questions you have about documentation, change orders, pay apps — literally anything you are unsure of. Scott puts it like this, “I had a boss that used to tell me, ‘You know, Scott, I can protect you from anything, you just have to make yourself bulletproof. If you’re in the construction world, and you have a contract that says you need to do something specific each day or each week, then do it. Keep yourself bulletproof.”
Submitting the preliminary notice also helps speed up payment. It lets everyone on the job know that you exist and that you are doing your due diligence to get paid. You can also send conditional waivers with each invoice or pay application. The GC has to sign it, acknowledging what you are billing them for, and agreeing to contact you if there are any issues.
Submit demands for payments promptly. If you have 20-day terms with your GC, then remind them you are still waiting for payment on day 21. Don’t worry about appearing annoying (unless your approach is to be annoying, in which case slow payments are not your biggest problem.) “The ones that ask questions are the ones that get paid faster,” says Lori. “If you’re not asking, they’re not worried about it.”
Finally, you can speed up payments with technology. Accepting online payments and credit card payments eliminates the wait for paper checks to make it through the mail. It also removes the chance that your check gets lost in the mail. When you get paid online, you get your money immediately. “Most GCs love to pay with a credit card,” says Lori. “They get rewards off it and get another 30 days to pay their credit card. If you can find a way to do that, it’s definitely going to be in your favor.”
What to do when a payment is late?
A popular, if drastic, option is a mechanic’s lien. It’s important to know the laws in your state — when you have to send a preliminary, when you send a first or second, when you file a lien, when you have to foreclose on a lien, etc. This course of action can lead to negative repercussions, but it is a way to get recourse and get your money back.
Get everything in writing. If your contract says that the GC is supposed to pay in 30 days and it’s day 33, that’s a breach of contract. If the GC doesn’t do what they are supposed to do, even in the smallest detail, it is a breach on contract. Lori says, “If you had any inclination that this person isn’t going to pay you even prior to sending notices, you can file suit on that and then continue to send notices. It’s a very strong law that does get played out a lot.”
Scott adds that working with a construction lawyer can help avoid payment issues and get you paid when an issue arises. Because contract laws, and contract language, can be hard to interpret and different laws and policies can help or hurt you.
For example, if you have a Paid When Paid clause that you’ve agreed to, it may impact your ability to utilize a prompt payment law. A contract lawyer can help you remove some of the ambiguity. Scott says,
“One hour of an attorney’s time to review your contract can pick the four or five or six main clauses that can keep you from a real disaster.”
Simple things like good documentation and good communication with the GC upfront can make a real difference, adds Lori. “Stay on top of your deadlines. Make sure you keep in contact with people. Stay aware of what’s going on with each project and everybody that’s on it. It’ll make a big difference.”
Manufacturing business owners want to grow and thrive like any business owner, no matter what the future brings. The COVID-19 global pandemic has made that a truly legendary feat. Supply chain disruptions, operational shifts, and financial consequences are all pressing down on you, making your goals seem insurmountable. They are not. The truth is manufacturing in America can emerge from this pandemic stronger than ever. It will take a strategic plan that addresses your goals for the future AND the pitfalls of the present. That’s why Mobilization Funding & Dare Capital have brought together manufacturing & banking experts to arm you with the information, insights, and tools you need to succeed.
Full transcript below
Cole Harmonson 0:11 Hey everybody, welcome. It’s Cole Harmonson with Dare Capital and you know what time it is for the Dare Capital dialogues this week brought to you along with Mobilization Funding, and Dare capital which both of us provide capital on manufacturing and construction projects. Today, we are joined by Stephen Shang and Robert Conley. They are both longtime entrepreneurs in this space and have a wealth of experience operating, running, growing selling businesses, and today we’re going to talk about what’s going on with the changes in the space regarding pre-COVID, post-COVID and how you can deal with it. So, we’re very excited to have these guys joining us today, we’re going to go ahead and get started with the background. We’re going to start with Mr. Stephen, tell us a little bit about your illustrious background and how you went from Silicon Valley into the current business that you are running today. Thanks for joining us.
Stephen Shang 1:22 So, um, thank you for hosting this. It’s really an honor to be on here. And hello to all the participants, hope everyone’s doing well. So my background, I came out of school, went to a management consultancy, but then got the startup bug and so went to Silicon Valley and started pretty much about seven different companies and raised about $90 million in equity capital pissed it all away and all I have to show for it is a picture of me with blue hair. But in 2002, came back to Austin and said, Look, you know, can we really build a real business? And we thought about a lot of different industries and we saw the portable storage industry is a very interesting space. So, we started dropping storage in 2003. And that was really just buying containers and renting them out for $125 a month or so. My VC friends were joking at the time like, oh, wow, Falcon storage is that gigabyte or terabyte technology? Like, it’s uh cubic feet. But then over time that that portable storage business evolved into what it is today, which is Falcon structures, as we worked with containers, more and more shipping containers, we found that there was a lot of applications for them in building them into workspaces, living spaces, equipment, enclosures. And so, we really transformed the company from just a little portable storage company to now a manufacturing company that serves pretty much the entire US Caribbean, in Africa.
Cole Harmonson 2:42 Wow. That’s great. Thank you for that. Robert, tell us about yourself.
Robert Conley 2:50 I refer to myself as a mutt. (laughs)
Robert Conley 2:55 I bought my first business at 21. Owned it for six years. Just kind of went on to do we help other companies grow. Sales and Marketing is kind of the base of my background. Went back to business school at 37, which is a little bit rare for most people and got what I consider to be a great education. Went on to apply that education with, and I give this gentleman this, like I state his credentials to give him respect and to kind of help folks understand how close to the heartbeat I felt like I was, but I went to work for a gentleman named Dr. Jim Ashton, Jim’s a PhD for MIT in structural mechanics and Harvard Baker scholar. And he started the F16 Fighter program for General Dynamics and went on to produce the most defect-free, on-budget, on-time airplanes that have been produced. And he took that that formulation and kind of created a management framework and tools around that. And when I went to work for Jim, we were doing private equity LBOs, kind of in the industrial space job shop manufacturing. And we applied those tools and principles throughout. And because we were a small group, we did not only the kind of financial engineering, but we worked with executives, took executive positions within the companies, to get them turned. And we typically bought under-managed businesses. So super-cool environment to take that business school knowledge, kind of entrepreneurial background, and then really refine it with a brilliant individual over, you know, a 10-year period. And so, we were industry agnostic as long as it was complicated. And in and so with a gentleman like Jim, he said to me one time he said, I can do most complicated math formulas in the world, Robert, but unfortunately, it’s really not that valuable unless you’re solving that specific problem. He said, because People don’t do complex and they don’t do fast. And so, we typically we’re dumbing down manufacturing complexity into simplicity, which is a challenge. And so, you know, that’s really what I’ve been doing. I just finished a turnaround, my actually partner is doing that. He’s the CEO now. And it still works. It’s very effective. And so that’s quickly how I got to where I am at this moment.
Cole Harmonson 5:30 Awesome. Well, great. We look forward to digging into some of that as we go along here. We’re also going to have an audience poll today. So, I know the audience has been growing and you just joined us. Today we’re again we’re talking about planning for the future in terms of what’s going on in manufacturing and we want you to take full advantage everyone now is Zoom efficient these days. We want you to take full advantage of the chat function, ask questions. We want this to be participatory exercise. So please feel free to, to join in. And we are going to have a poll question here in terms of what you think is the peak of disruption behind us, and maybe not what we wish to have happen. But what we believe is going on Yes, the peak is behind this or no, it’s not or, man, we don’t know you’re not sure. So, feel free to join in that poll. And we’ll talk about that at the end as well. But thank you guys all for being here. And again, please feel free to use that chat function liberally as I’ve got my partner, Casey Conlon, on the ready for questions. So, thank you guys very much.
Cole Harmonson 6:53 So, let’s talk about before COVID let’s talk about some of the biggest challenges in manufacturing. Let’s start with you, Stephen, tell us, you know, what you think is going on? And what was going on sort of before all of this disruption happened?
Stephen Shang 7:16 Yeah, for us, you know, before all this disruption happened, I think our biggest challenge was really, like Robert was saying, more of a Sales and Marketing Challenge. We had a certain physical plant that we had built up. And the question was, how do we utilize that to the highest level of efficiency, and really grow into this niche that we’re filling with container-based structures? And so, a lot of head scratching was really focused on sales and marketing, and how to how to dominate those markets. Gotcha.
Cole Harmonson 7:47 Robert, same question.
Robert Conley 7:50 So, one of the tenants that we work with and by the way, I forgot to say thank you for having me and welcome to everybody. I haven’t done a lot of these. So, I get a little bit lost sometimes. So, in manufacturing long supply chains are ugly supply chains. And I think there’s been a pretty consistent misunderstanding that low price is the siren song that you’re after and what we believed in. And typically we wouldn’t choose an overseas supplier if we could avoid it, even if you pay a little bit more. And, and so, I think that pre-COVID the universe was working on what I consider to be a flawed principle of long supply chains and low price, or what you should be pursuing. And what you really should be pursuing, at least from my perspective, is the close supplier that can satisfy you in short lead times with relative values of inventory and competitive price. And by doing that you effectively flush the system of working capital a bit. And reduce inventories. You do a lot of really cool things for your business. And so, I think, you know, if you look at manufacturing today, that probably is one of the opportunities that pre-COVID wasn’t really being viewed or looked at. And post-COVID or during COVID is in. I mean a high level of scrutiny right now because of the disruption and the inability to actually deliver products that you’re relying on those long supply chains to bring to you.
Cole Harmonson 9:48 So, for those of us who are not familiar with some of this industry jargon regarding long supply chains, could you just flesh that out just a little bit for us?
Robert Conley 10:00 Sure, I can probably give you an example. In the last company that I was running, we bought a finished product from India in China. And as we strategized, in this 50-year-old family run business that we were doing a turnaround in, what the premise was, is how do we buy our fabric product, because we have manufacturing in Mexico, closer to the heartbeat? You can buy it pretty cheaply in India. But if you looked at the unit economics, Jim always said raw material costs are not that materially different between, even if it’s high volume, between manufacturers. And so what we did was is we went to try to work with a fabric supplier in Mexico versus buying that same fabric from a supplier we’re getting finished product from an India. What we found is that the costs, our price for that product, weren’t materially different. And if you look at the long supply chain, so, if you go FOB or XWorks India, you then start — So you got to pay for something XWorks India on their dock. Now, you start a 34 to 45-day process of moving that material to you. Well, now my cash is being used in that process. And so, it really, fundamentally if I compress that down to effectively my backyard, I reduced the risk what if my container falls off the ship as an example. Now, it doesn’t happen very often. No, but does it happen? Yes. What if they’re late? Well, all of these things add risk to you being able to supply your customer with their finished product, if it’s A value add component that you’re buying, or the finished product if you’re buying it, so that risk is not preferable if you can avoid it at relative costs of supply. We might say that clearly enough.
Cole Harmonson 12:18 I think so. Stephen, I don’t know if you have anything to add to that, or if you share that same philosophy, I’d love to hear your thoughts on the differences.
Stephen Shang 12:29 No, I think I think Roberts encapsulated pretty well. But yeah, long supply chains are ugly supply chains. I would totally agree with that.
Cole Harmonson 12:37 Got it. And do we think that that sort of post-COVID look at reality is just because of all I know, the sort of the nationalistic sentiment, I think is going on across the world now. Do we think that that is going to substantially change? Or how do you guys think about problem now?
Stephen Shang 13:02 I mean, so our raw materials are shipping containers, right? So, it’s not the stuff inside the shipping containers, but we need a consistent flow of shipping containers coming in, from Asia, from Africa, from wherever. And I’ll say, you know, if all you believed was kind of the news and the nationalistic kind of news at the reporting on and all that you would think that shipping has ground to a halt. But based on our data, it slowed a little bit when the COVID first hit, but now it’s back to kind of the levels that were used to be at prices. Albeit they are a little bit higher, but I wouldn’t say they’re so much higher that we can’t absorb those costs or pass those costs on to the customer.
Cole Harmonson 13:42 Yeah, I would echo that sentiment. I have a client in the Port of Los Angeles who does nothing but shipping containers, and there was a dip in volume, but it’s back now. Although I feel like there’s more diversification and I’d like to just get your thoughts on how someone could diversify and in their supply chain if you know they were relying on China, will that still be the case? You know, going forward, you know, what will the relationship with China kind of morph into if any changes?
Robert Conley 14:27 So, I got a LinkedIn question from a woman who’s making garments the other day, and she was wanting to move her manufacturing back to the US. And what I would say is, is still consistent with what I said earlier, which is, um, textiles left the US and probably rightfully so those organizational structures, unions, different things cause prices to increase on labor basis. But if you look at our neighbor, Mexico, the unit economics and I believe strongly in unit economics, the unit economics of Mexico are not dissimilar from China. The capabilities of Mexico are very strong and the ability to move supply chains from a long distance to a near distance with preferable tariff structures, etc. is very valuable. Now, is there a risk? And is there a concern with being able to assess those supply chains? And I would say yes. All suppliers are not created equal and promise a lot deliver very little sometimes, but I think that China could be displaced in certain realms. Not all because they’re very good at many things and very fast and governmentally sponsored to invest in infrastructure. because capitalism structures are not. So, it depends. But yes, it’s very possible. what we would call high tolerance industries. There was something where you’re using a micrometer or where, you know, fractions of a hair distance between panels or parts matter. Those could return to the US in a nanosecond, the oil industry has had some experience with those things. It’s really a matter of being able to support that. I think that will some people find it hard to figure out. I don’t know if I answered that correctly or not. Clearly,
Cole Harmonson 16:40 There are no wrong answers here at the Dare Capital Dialog, so thank you.
Stephen Shang 16:49 Well, I would add that to that, too. I mean, yes, there definitely is risk of trade war, kind of sitting out there. And as a Chinese American who grew up in Oklahoma, my perspectives probably don’t represent the majority. But I’m reminded of as you know, my daughter about two, three years ago was starting to learn how to read. And she just was looking at me and said, Dad, why does it say everything is made in China? Right? And I mean, it’s legitimate if you think about it. And so, if we’re really going to kind of take all these different supply chains where we have so much product flowing into our country, so much capital flow in there, and then some product is going back as well. I mean, it would be extremely difficult to pull the two countries apart, to really disrupt kind of international shipping at that level.
Cole Harmonson 17:36 Yeah. And not to, you know, have a moral component about this. That’s not the that’s not the conversation. But is there the move to American manufacturing, is your take on that, that it’s more hype than anything else or is will it, will we onshore, will that actually happen? Or can it even happen? And if so, then what’s kind of the time frame?
Stephen Shang 18:11 So, I can speak about containers itself. Like to manufacturer containers in the US with US labor in US steel, you know, is probably two to two and a half x what it costs to do in China. So, the question then is, you know, Does that even make sense? And can we catch up to that kind of productivity and cost gap? I think it’d be extremely difficult. I think the offshoring of manufacturing that we’re seeing, like Robert saying is really for some pretty technical high value-add type products in China, and then India, for that matter will continue to produce some of the more commoditized type items, data.
Cole Harmonson 18:54 Any follow on there, Robert?
Robert Conley 18:59 So, my belief is that humans are a bell-shaped curve. And we revert to the mean over and over, meaning that we try to learn from history or current experience, and then we return to the crimes we’re comfortable with. The reason that Jim Ashton liked job shop manufacturing is because he liked solving complex problems. And I would submit that growing a manufacturing base in the US is a challenge. Very doable, but that for the most part, the human component will cause themselves to want to do something and then actually return to what’s comfortable and familiar versus taking the longer road which is changing their paradigm. I think it’ll happen in certain instances, opportunistically, but broadly speaking, I hope, I hope for Mexico, because I like Mexico and I like that environment. You can do a lot there that they benefit. If they’re smart, they will work on that. But, broadly speaking, I think Stephens corrected. You know, it’s not likely to be disrupted upon the whole.
Casey Conlon 20:33 Yeah. Stephen, there’s a question here from the audience. You mentioned there’s two and a half times the cost for those containers, what’s driving that cost increase?
Stephen Shang 20:46 I think part of it is just we don’t have steel foundries in the US to really spit out the kind of steel that you need to build containers with. And then the other component of that is just the labor rates there are just insanely low and — it’s a pretty, it’s not a complex weld that you have to put on it. And so, they’re able to achieve big cost savings. So, both material and labor.
Robert Conley 21:11 I also think from a Chinese perspective, one of the things that people don’t weigh in enough in relation to that is the government sponsorship of the companies that are producing the products, whether it be steel, labor, robots. Because I would, I would argue that a lot of those containers are probably made with robotic welds. And so, you know, the ability to set up a robotic line, what robotic tooling line that’s 100 yards long, with a government paying for a good portion of it, well that company doesn’t have the same unit economics or economics that that a US company or any other company would have. And so, you’ve got a strong imbalance in understanding why that’s true and an unnatural scenario with Chinese governmental support, skewing what would otherwise be very challenging, like capitalistic basis or free markets basis. From a supply chain standpoint, if that makes that makes sense.
Stephen Shang 22:18 Yeah, makes a lot of sense.
Casey Conlon 22:22 And I think, kind of following up a little bit different tack you mentioned, obviously the Chinese government subsidies help lower their costs. We have another audience member asking, you know, the NAFTA agreements been in the news or the rewrite lately. Have you seen any effect on that because of COVID talking specifically us to Canada or us to Mexico, the effects there?
Stephen Shang 22:48 I don’t do that much business with Mexico or Canada. So, Robert, have you had an answer that I don’t have a strong opinion?
Robert Conley 22:56 Yeah, we bought, we had about 700 employees in Mexico. I’m very aware of the NAFTA agreement in, in really the NAFTA, the new NAFTA is a very positive thing for all parties, let’s just say. You know, it still has the good effects in it. There were some aspects that, you know, the government was trying to kind of unweight it, if you will, to have Mexico kind of support some of its own costs in certain ways. But you know, we bought a company a Mexican company in 2019 as a vertical integration play and phenomenal, great investment, great conditions. Plenty to work with, I strongly recommend and am in support of strengthening the North American continent between all three parties.
Casey Conlon 24:04 How do you feel, you know, talking about the China trade deal as a follow on? Do you feel like it that will get done? Or how do you plan to that?
Stephen Shang 24:16 Again, I have a strong background in that either.
Robert Conley 24:25 No, it’s okay. I mean, this stuff is, so, I love it. I spend a lot of time in lots of different aspects of it, but I think you need to get a helicopter out on the Chinese deal and take a longer-term perspective of what’s occurring globally. When you talk about oil reserves, arguing about islands. I think there’s some aspects of the Chinese agreement that are more about leverage over the long term, not about the target scenarios and the Chinese have a very long-term perspective of what they’re accomplishing. And the US is not as good at that and needs to be better at it. But you’re talking about a global superpower. Changing the economic landscape, globally speaking. And in GDP right now is redistributing itself on a global basis. And they’re trying to siphon off as much of that GDP as is possible. You know, as it is it kind of changes the places that it goes. You got to watch out for China. I mean, bottom line, you got to watch out for China.
Casey Conlon 25:54 Awesome. Thanks. That’s, your answers are definitely been helpful, Robert. Appreciate it. We’ve got some more audience questions that we’re gonna go with. So, kind of jumping in here. You had mentioned, Robert, earlier the government sponsorship within China, do you see any role of for us defense, either the Department of Defense or any other organization in terms of US government sponsorship?
Robert Conley 26:22 I’m not I’m not sure I understand that question well enough to answer it’s more.
Casey Conlon 26:31 I’ll see if a Jason is listening. Maybe he can chime in. So, I’ll read it just straightforward. It says speaking of government sponsorship, do you see any role for US defense in this?
Stephen Shang 26:43 I’m able to take a stab at that. You know, we have traditionally done a lot of work with Department of Defense. And what we have seen is that some of these very large private contractors, defense contractors, they become part of this kind of industrial military complex where they’re just intertwined with the government. And you see people kind of leaving the government and going to work for these companies immediately. Right. And so, it did. We may not call it sponsorship here in the US in the same way that you know, China, when you start a business, the government really is a second or third partner in that business. But I do think there is quite a bit of support for these, especially these defense contractors that are part of that complex.
Cole Harmonson 27:32 That’s a good thing. So, let’s talk about and by the way, I know we were I think we had this plan for 30 minutes and I knew it would go longer. I just want to let everybody know if you do have to jump off you will be able to find this on YouTube on the dare capital channel on YouTube or you can find it in my Twitter feed at @coledoescapital and then we can also send out a little link to everyone, just in case you have to jump off, but our audience seems to be growing, not shrinking over time. So, so this is a really great discussion, we want to keep going. Thinking about, sort of with COVID situation, where we are today. What do you guys think the biggest challenges are for operators to think about? And then what are the steps that these operators can take in order to mitigate some of these challenges? So, problem and solution with COVID? So, maybe, Stephen, you want to kick us off on that one?
Stephen Shang 28:46 Sure. I would say, you know, as we’ve thought about it as a leadership team at Falcon, I think the number one challenge that we see out there is worker health. Right. And so obviously on the manufacturing floor as we’re still running, you know, how do you keep everyone healthy? How do you keep everyone productive? How do you maintain the levels of efficiency or increase from there when you have to socially distance? Those are kind of the more obvious answers. But there’s also the aspect of worker health for the office staff or the overhead in a manufacturing organization, because a lot of those folks start working from home to protect the worker safety on the manufacturing floor, and they become untethered. And so you really wonder about the mental health of those employees, how do you keep them engaged and all that and I think the opportunity there that we really seized upon is to really up our game as far as transparency goes. And I think in the last 90-120 days since all this has been happening, I think with that heightened transparency you know, really sitting down laying out what is the 90 day plan all the things that you and I learned in EO, Cole, you know it would really applying in spades now, and really being intentional about it, versus pre COVID you kind of took all that stuff for granted to some extent. Like oh, yeah, business is great business is great, you know, but now really focusing on worker health, as it has become the opportunity. And I think the companies who do that well, who can demonstrate leadership and then demonstrate transparency because really, nobody has the answers. And as a leader, you’d be faking it if you said you did. I think that’s really going to separate a lot of winners and losers in this environment.
Cole Harmonson 30:32 I feel like I’m always faking it, but Okay, I know I love that. I love I love Your love that on the mental health side, I’m curious on that. You know, that’s a, that’s a very personal area for people even to admit. So I applaud you for jumping in on that and just even acknowledging folks. Because I mean, what I’ve seen and again, we talked to thousands of lots of employees if you just count all the folks that we talk to, and, you know, anxiety, fear, people’s, you know, job security, you know, I mean, there’s a lot of processing, if you will, that’s happening with folks these days. And, you know, sort of the tools for doing so, are, are very limited, I would say, at a corporate level, or even folks even wanting to have that conversation just generally. So, you know, the, the caring and the empathy piece, you know, just to just even work, quote, unquote, hold space for that is, is, I think about 90% of it, but I’m just curious, how do you how do you even get into that with your team?
Stephen Shang 31:52 So, I would say there are two ways. One is pretty simple, and I think everyone could pull something like this off but the second one I’ve had to be more intentional about. The first one, you know, in the Rockefeller habits, Vern Harnish talks about doing your, you know, five-minute huddle every day. And typically, we would do that with the office staff, which is about 25 folks. We’d all get in the conference room, we would do that well, when COVID hit. You know, that was the last thing we really let go of, because that was just a daily rhythm, a daily habit that everyone kind of synced up felt connected because of that. And so now that we were all virtual, we kind of go on teams, and we still do the same huddle. And you know, I spent 15 minutes before the huddle, just prepping my mind, to be upbeat, to be optimistic, to tell my funny dad jokes that aren’t really that funny, right, just to get that so that when we do hit that we kick off the day correctly and really come together. Once again albeit through a different medium. The second one’s been harder for me, but I mean, I’m sure you can relate. You kind of get into your daily routines and you have like a to-do list of you know 20 tasks, you get all these emails coming at you now people are pinging your Microsoft Teams, and just never seems enough time to do all the things you need to do. Well, two days a week, I come to the factory. And I actually make space in my schedule, that’s just whitespace, not to hit all those to-do list items. But to just walk around, go talk to the factory workers, spend time with them, ask them how they are, asking how their family is, and not being in a rush about it to genuinely care for those that you’re responsible for. And we found that that, that’s I think, really helped us kind of hold together mental health piece because they can tell me about their fears. They can tell me about what they’re excited about, you know, and that’s been something that that I’ve had to be disciplined about doing and not letting my day get away from me.
Cole Harmonson 33:46 Wow, that’s strong leadership. Very strong. I applaud that very much. I think people need that and I think people are looking for that sort of stability, if you will. Robert, how about you what do you think are some of the biggest challenges and you know how to how to mitigate those are operators going forward?
Robert Conley 34:09 I agree with you, my heroes strongly tenants and connecting to people. And you know, one of the things in the frameworks that I use is really they’re fundamentally about people. And, and so you know, people deserve to be treated with dignity, respect and a non-punitive environment. When you realize there’s 168 hours a week, and as a single individual, there’s really not a lot you can do in those 168 hours that’s going to truly drive your business forward. He realized quickly, you need others and, and so, you know, I think one of the things I’m proudest of most in most companies that I have ever taken over or, you know, been involved in is, is a cultural change. Related to what Stephen is getting at. And that’s putting people in front of whatever the decisions are, whether it’s guiding the team, enabling them to understand what pieces they hold in the business and why it’s important and how that work goes into each other. And you know, that transparency, we use a tool called Ops Review every month, where, it’s basically we’re, you know, CEO, CEO, CFO, etc, come together, every department presents kind of where they are, what they’re working with challenges, they’re having successes. And what happens is the organization begins to teach each other and when an organization sees each other, that empathy begins to grow within the organization, not just for the work and the customer, but for each other and how they fit into each other. And in the leader, we have another saying, Fish stink from the head down. And so, in Stephens case, you know, the fish is doing, you know great things and helping people feel connected to the business. And that’s a missing piece in a lot of cases, at least from our experience of taking under-managed companies. So, I completely agree transparency, consistency, being patient, being tolerant, understanding, caring about others, those parts of business are not well formed enough, nor are they pushed enough in the business environment. Because leaders get locked into their egos or they’ll get locked into the mission or they get scared like over forecasts, or whatever it is, you know, and I’ll touch on this which is, if you if you don’t see me see you pay attention, what companies are reporting and the things that are happening in the universe related to COVID, forecasting is so difficult right now. The Black Swan effect, no one’s been through this, there isn’t a way to get concrete about most of these things because it’s, it’s like pushing down on a sponge, you know, it’s gonna pop out different areas. And so, it may not be the right visual, but this is really challenging right now. And being patient with the team or the organization to know that this too shall pass. But people are doing the best they can right now. I mean, in a lot of cases, I think that’s all you can do. So, you know, forecasting is very challenging right now, for all companies do it, from every single thing that I hear, have conversations about and understand. I don’t care what size you are.
Cole Harmonson 37:56 Yeah, I’d love to, if you don’t mind typing that link into the chat for the panelists, and we’ll get that published out that tool you mentioned sounds like something that everybody could benefit from. In terms of we got an audience question here, around challenges. A quick overview of the cost of goods increases due to logistic issues. And what is the plan to keep that low?
Stephen Shang 38:30 We’ve not seen dramatic price increases on our raw materials. We have seen it kind of shipping the final product would be a truck that seems to have gone up slightly. But I think that’s being offset somewhat by the price of fuel going down as well. So, it’s not something that we’ve identified as a as a big threat. If it does increase, we will definitely just increase our prices and see if the market will bear that.
Cole Harmonson 38:54 Yeah, spot rates I think have gone up just because there’s been a lot of trucking companies and logistics businesses in the US that have gone out of business because of, you know, too much supply. So also, this is specifically for you, Stephen, regarding I know you mentioned earlier sort of pre COVID that your challenge was on the sales and marketing side. Is it more of a challenge now and how have you worked with that?
Stephen Shang 39:32 Um, is it more of a challenge? I would say it’s, it’s a different kind of challenge. I wouldn’t say it’s more or less of a challenge. It’s a different kind of challenge. You know, before it was really we a big part of our business which exposed to oil and gas and with kind of COVID hitting and then the price of crude oil going negative and everything like that a lot of the oil and gas market is just a bloodbath. But you know There are two challenges we presented to our team in the first 90 days. One is like, okay, we’ve been hit by COVID we’ve got a product that can be applied to a lot of different industries, can we pivot to some industry that that may be using container-based structures? And if so, how do we go after them? How do we develop the products and all that? And then the second thing is, is you know, one of our other themes was sharpen the saw and that one was much easier to implement in the sense that Okay, we’re pretty good at what we do. But you know, what, if you’re sitting around at home and you have to do sales, marketing, sometimes it’s just it’s really hard to get inspired to, to make those calls or to really write that content. How can we sharpen the saw and so we really revved up the sales training in the first 90 days pretty dramatically and really focused in on that now the first part of UK so what else can we go after? You know, I just my team was just blew me away because one day said okay, let’s develop a COVID line of products, which are COVID testing labs, you know, mobile hospital rooms, Things like that, that you can put inside a container. And in a matter of, you know, a few days, they came up with the draft of it. And then a few weeks, they had fully published all the marketing collateral. I’m like, why can’t we do this and pre COVID? Wow, they came out with an amazing line. And we were able to get that out to the industry. And we’ve seen some really good hits on that. But then the other one was the sales team, they really focused on listening to the customer more. And so, you know, who’s doing well, in the COVID crisis? Well, grocery stores are doing well. Well, can’t we do like you help them with curbside pickup? Because that’s what they are needing. And so, we’ve been building a lot of curbside pickup units to give grocery stores additional space for that. And so, it’s that you know, it there’s that saying that if you focus on problems, you’re going to just come up with more problems. You need to figure out why you can’t succeed. But if you focus on opportunities, well then when luck hits, you’re going to be ready to take that right. And so, I think our team has done just a fantastic job on keeping their head up and focusing on what opportunities are really out there.
Cole Harmonson 42:01 Love that. I love that. So, to kind of sum up regarding challenges, and mitigation around those, and I’m curious if you guys have anything else to add, that really it sounds more like personnel issues. I won’t call it HR, but I’ll call it culture and being able to listen, being able to care, show empathy, and being able to, you know, actually do something about that and deliver to your team, which is always a challenge. But I guess what I’m hearing you say, both of you say is that most of the issues are centering around, you know, caring for the people on your team. Is that a good summation? And anything else to add, before we kind of move on to what, what are the opportunities?
Stephen Shang 42:57 Yeah, I mean, if you really kick it up to a whole other level, On the caring for the people on your team, when COVID first hit, you know, I think a lot of us were confronted with a choice, because we didn’t know how bad is gonna get or how long it was going to take. Maybe we should just hunker down and shut down or lay off a bunch of people and all that, right. I mean, those were decisions that we as president CEOs were faced with. And, and, you know, I really did a lot of soul searching and that like, you know, I love my people, and what’s the best way to care for them? We’re going to stay open, right? We’re gonna, we’re just gonna go for broke if it’s gonna last for a long time or whatever, you know, but we’re going to do that’s going to be the most important thing we focused on. And fortunately, it worked out for us. But there could have been a scenario where it would have just been, we all crashed and burned.
Cole Harmonson 43:43 Yeah.
Robert Conley 43:48 I, I will say that. And again, I applaud Stephen, like, what a great guy and a great guy to work for and those are the case. So that’s it. That’s a beautiful thing to hear. I would say, because I’m a bit different in that, you know, I’ve entered companies that are broken most of the time. And most of the time, what we say is that we’re freeing employees from their captors. And, and COVID from my perspective, is an emergency response to something that should be consistent throughout. You know, in in so, I don’t give a, but sometimes I say things very candidly, I apologize, that’s harsh, but I don’t give leaders a lot of credit for responding to something they should be doing all the time. And, you know, in the emergency because, you know, every single thing organizational chart ultimately is about operating leverage, and the better that the individuals feel, feel connected to and otherwise Understand the box that to you no matter what chart and the better the leader works with them, it connects to them, the more that that structure because that’s what it’s called organizational structure is able to produce more, and ultimately is literally about the human inside the box. And so, you know, I brought doughnuts and coffees and tacos, you know, on Fridays myself, stopping by the store. You know, these connections to humans is what people get pissed off about every single day in business every single day — they’re underpaid or undervalued, they’re not communicated with. And so when a leader steps into that particular position, and is patient and understanding and guides humans to the targets that businesses are trying to achieve, amazing things happen both in their personal lives and in the company’s life. And so, whether it’s COVID or it isn’t COVID I think leaders have to look at themselves very distinctly, and do more of what Stephen’s doing, and get out of themselves and into their people, you know. My karate instructor said, Don’t, you know, put your ego in your back pocket and let’s go to work. And you got to care for your people. So COVID can be an excuse for those things but the bottom line is these things should be happening and should have been happening for a long period of time and need to continue to happen regardless of emergency what’s in front of us.
Cole Harmonson 46:33 Agree 100% and I’m just having to throw this out there as we’ve been doing these dare capital dialogues and discussions with leaders across various industries slash things, we’re interested in. One of those things is culture. Communicating with your team, I would say I’m a throw out three sorts of tools here. I think that are helpers in accomplishing the things you guys have been mentioning. One is Workify, that’s an Austin based company here that it’s a sort of listening tool to measure culture to actually help you put some teeth behind some of the things that you put you know forth in your culture, that’s Workify. And then we had Rob Lynch on and talking about the Rockefeller habits. So a lot of folks have heard about that and there’s a book and then the tool set that we use is called Khorus.com, KH O R U S .com, and that tool is meant to help you keep some of those rocks that you establish in your Rockefeller habits present and communicated transparently across the team. And that’s Khorus.com as well. So as far as tools, at least for me as leader, you know, I need some something concrete you know, so I can look to it and say, okay, we either are doing this or not, we’re either listening or not the thing I liked about Workify so much is that it has an anonymous feedback function so people feel free to it’s like, Cole, hey, you’re full of shit. You said this, you did this, like, you know, how did this all work out? So just helps you kind of put some, some teeth behind it. I don’t think we have any more open questions I want to kind of move on to the opportunities that you guys see on the horizon that are coming up because of COVID specifically, what on your mind as far as opportunities that are going to be occurring for folks and how to take advantage of those. Robert you want to start?
Robert Conley 48:47 I’m gonna go back to forecasting and you know if you, if you buy and sell companies one of the things that private equity hates are, you know, the one percent of the market share or etc. And one of these things can cause us to go do is to, and I think Stephen said a minute ago, which is, we went back and try to listen to our customers and hear them better. And what that really is related to is doing it from the ground up. And you know, when you build a structure from the ground up, whether it’s the weld strength materials you use, or the humans that do that work to connect to the customers, the markets. I think that’s probably one of the biggest opportunities to realize, Oh, crap, we win this or lose this one customer at a time. What is it that they want and need and how do we forecast those needs built in? I think on my LinkedIn profile, I have a piece that Dr. Ashton wrote for Harvard related to understanding how deep you can go in your core business. Value is destroyed by moving outside of their core. But if you build your business up and you really focus on the customer, I think these are the opportunities and times where you realize, oh crap, we didn’t understand that doing well. And there’s a better way to understand it and getting granular and knowing why people buy from you what’s important to them, what they care about, is a way to strengthen your business during a time of what we’ll just call pandemonium, if that makes any sense.
Cole Harmonson 50:37 Got it. Understood. Stephen, same question.
Stephen Shang 50:41 So, we see plenty of opportunities in container-based structures, but I don’t think that’s interesting for the group as a whole. I think if we’re speaking about manufacturing, like what opportunities are there in manufacturing, I see two global themes that we are positioning ourselves to capitalize on the first one Is counterparty risk. And I think with COVID with, you know, companies going out of business and things like that, I think people who are looking for suppliers looking for manufacturers, their purchasers, their CFO, all that they have a heightened awareness of counterparty risk, which may not have existed in 2019 or 2018. And so being able to position a manufacturer as Hey, look, we’re the guys you want to go to, because we’ve been around and we’re going to be around, we’re going to take care of you, you’re not gonna have a disruption to supply chain, I think that’s a huge opportunity. And if companies that are healthy right now aren’t trying to figure out a way to talk about how they’re healthy and how they can help, you know, supply the materials that that their customers are wanting, that should be something that is, you know, mission number one. The second one would be, you know, the talent that is on the market right now. For example, one of the things that we just turn on the spigot on hiring as Director of Sales and I think During the kind of pre COVID days, man trying to get people to even apply for that was close to impossible. And our HR managers told me we’ve had like 30 applicants in the first two days, right? And half of those people are unemployed, unfortunately, and half of them actually are in current positions, but looking for a change, because maybe they see the writing on the wall. So, I think there’s a huge opportunity to bring on some talent in kind of this time, and the question is, when do you do that? From my own, you know, capital conservation standpoint.
Cole Harmonson 52:33 Got it. On the capital preservation, I mean, the, the counterparty risk. Could you talk a little bit more about that? I don’t know if I fully understand what you’re, what you’re saying there in terms of how to how to take advantage of that. How would one think about moving themselves there?
Stephen Shang 52:58 Yeah, so it really is I mean, the way that we’ve implemented at Falcon is twofold. One is what we’ve done is, you know, in the last four years, we’ve really invested in being a thought leader, its kind of a cliché term, in our industry. There are a lot of people thinking in the container-based industry. So it wasn’t that hard to become a thought leader. But to position ourselves as the authority on a lot of the trends that are happening in the industry, the other part of it is to really demonstrate Hey, look, you know, this is our track record. This is how we’ve responded in times of crisis. This is how we responded in COVID. And you know, what, we’re going to come out of this stronger and that’s more of a messaging, to potential customers so that when they’re looking at us versus, you know, Brand X, they’re gonna say, Man, you know, yeah, Falcons more expensive, but Brand X, I just don’t have the confidence that they’re going to be around to deliver on this entire project.
Cole Harmonson 53:51 We’ve seen some opportunities come about because folks across the globe are now requiring cash up front up front. And so, they can position themselves as almost distributors here in the US because other folks can’t afford to put down the cash. And that’s, again, what Mobilization Funding, you know, they help sort of pre-invoice funding, once it becomes an invoice then, you know, folks like us and asset based lenders and factors can then, you know, provide the working capital necessary. But I’m curious if you had seen any changes on the working capital side, in terms of what folks are requiring, you know, as, as you’re looking at your vendor list.
Stephen Shang 54:41 I think people are much more understanding when we do charge people for, you know, bigger deposits upfront, but I do think there’s a unique opportunity for folks like Dare to gain market share over like banks, because I think a lot of banks from a working capital funding standpoint because they have to reserve that cash and they’re less certain that they, that’s leaving kind of a market gap for that type of an instrument.
Cole Harmonson 55:04 Yeah, we’ve certainly seen more of that. And, you know, banks, I think are going to be in risk off mode.
Robert Conley 55:13 It’s interesting, is what you guys are really talking about is balance sheet strength. And, and balance sheets are not well understood by many, many people in business. And, you know, ratios and the ability to explain the value of those ratios, to Stephens point, about counterparty risk, what you’re really asking is, can you sustain me? Are you going to fail? And, and the ability to, to illustrate a balance sheet strength position is a is a pretty powerful message to send when you’re taking cash from, from customers. And it can, I think you have to agree with Stephen completely, which is, it actually can — if you can illustrate the strength of your balance sheet and why they’re cash is safe with you — really differentiate and give you probably that pricing power that you know, you can pay for certainty, you know, kind of thing from a messaging standpoint. And so, I think that’s a, I applaud you for having that perspective on counterparty risk. It’s a nuanced awareness of the market and I, as you said, banks are risk off how banks are always risk off, but if you understand the balance sheet and the nature of receivables, payables and you know, aging and different things of that nature and inventory hole I mean, question mighty you know, if you go strong balance sheet, you have the potential to win big in this particular environment. If that makes sense or not, but I like me some balance sheets.
Cole Harmonson 56:55 We’ve got a couple more questions here. We’re gonna throw those in and then We’re going to move to the last part, which is predictions in closing thoughts just right after we answer these guys. Yes, questions.
Casey Conlon 57:09 So, one question here. I know the four of us are all in Texas, but the question was where kind of what are your best, better and then you know, bad states to locate a company, specifically in manufacturing in the US. Where would you say, okay here are the best here’s okay, and then don’t locate here. A lot of laughter I know we’re all in Texas.
Stephen Shang 57:42 That might be too political of a statement, I’ll just say there’s a reason that Gigafactory is looking at, you know, camping out to two exits from us here in Falcon.
Casey Conlon 57:52 Got it. Robert, I think your laughter says your position pretty well here. So, no worries, that thing
Robert Conley 58:02 3800 companies left California. 1900 of them I believe, you can check the statistics and please don’t you know, give me if I’m if I’m really out of line here, but believe about a very large portion of those companies ended up in Dallas. Texas is, and I think what you’re really talking about at the end of the day is, regulations and business are like oil and water. And so when you find states, forget about political bendings, leanings, that welcome with low barrier, whether it be tax or otherwise, OSHA, you know, socialistic perspectives, etc. on business, you can you can count on those environments being challenging and remaining challenging. Bottom line. Done. I can tell you I may be unpopular for that. But low regulations are your friend as it relates to business. And I’m not talking about disrupting the environment.
Cole Harmonson 59:19 Casey actually changed the question, you know, to be a little bit more politically correct, because it was, why is Texas so much better than every other stae? Thank you for doing that. The very adeptly there, Casey, I think we got one other.
Casey Conlon 59:35 Yeah, we’ve got one last question very specific. It says, I have to import or export lithium batteries in Japan, their material safety data sheets, the form is still the same, but do you think because of COVID they can be quarantined? I did I read this word for word. So
Stephen Shang 59:57 I’m sorry. I have no expertise in neither of those things.
Robert Conley 1:00:01 MSDS sheets mean, I’m not so. But I think that anything you’re coming from locations where infection rates are high can be quarantine. I know that from an international Import Export standpoint, just having played in those arenas, all materials that have caustics in them, as batteries do, you know will have Import/Export requirements based on every government that you’re dealing with. And so I’m not sure I understand the question, but I mean it in these times, you can expect for governments to make knee-jerk reactions related to anything that they deem as being risk related.
Cole Harmonson 1:00:56 We are we’re going to go we’re going to go over lightning round here to you guys, which sounds fun on predictions, and we’ve got a number of topics supply chain diversification, Internet of Things. 3d printing, how to collaborate work, work force diversity. So lightning round supply chain diversification, Stephen go.
Stephen Shang 1:01:27 It’s good to keep your supply chain happy and yes, we are looking for alternate sources we have any suppliers on here watch out, but yeah, it’s a good thing.
Robert Conley 1:01:40 A fundamentally believe in small numbers of suppliers with high concentrations of those suppliers that can prove they can deliver within the criteria we have very specific criteria that we help them understand. Many companies will try to spread their purchases out and attempt to get better pricing, we find that that doesn’t work, as well as concentrating purchases with competent, capable proven companies.
Cole Harmonson 1:02:13 Gotcha. Gotcha. Okay. On to Internet of Things. How is IoT gonna change supply chain management? and How else will technology change in manufacturing operations from this? Stephen, your first lightning round.
Stephen Shang 1:02:30 No strong opinions on that either way. Don’t know.
Cole Harmonson 1:02:37 That’s a very fast answer.
Robert Conley 1:02:40 I can give you an example of a potential IoT effect in the last company that we were running. We were talking about putting RFID tags on the units that we were producing. If you think about the, as an example, I’ve got a stack of material and I’m doing vendor managed inventory. where I want to be just in time, once that stack shrinks to a certain point, being able to read when a bag or something leaves a stack and begins to travel. If you understand the count in that particular IoT environment and you have something that can track it, then you can be more just in time in that vendor managed inventory environment. Now, technologically speaking, it’s, it’s somewhat complicated to set those environments up and can be cost intensive. But trackability and IoT, ultimately, the window industry saved a ton of money and IoT by understanding how parts degrade and maintenance etc. There’s a lot there, but infrastructure is typically the problem in getting IoT to the point of concept from concept to practical applications. So beautiful pie in the sky. Think about it in the 2000s as being able to deliver the software that you can that you can sell, and actually a company have the ability to make use of that software that they purchase, hopefully getting all this value from it, you got to mature into it. So IoT has got a future when it really gets recognized as industry specific, I think
Cole Harmonson 1:04:28 3d printing will lower the barrier of entry for new, less capital-intensive manufacturing companies?
Stephen Shang 1:04:41 We are not currently using 3d printing. It’s really hard to 3d print a container. I know Evan Lewis is 3d printing concrete homes, but what more power to him on that but yeah, I don’t think we can 3d printers Pick your dinner.
Robert Conley 1:05:01 Yeah, I had I had a quick discussion with a young man on 3d printing this week or last week, maybe it’s 3d printing is just machining in a different form. And speed is critical specs are always critical that you know, 3d printing has got to come a long way and it certainly is perfectly valid in all industries is valid. The question is, what’s the infrastructure cost setup to get 3d printers to produce it the rate that a company needs, retail you’re talking about is displacing labor. If you do a unit economics on it, you know, it’ll be viable and high tolerance environments, maybe more so than others, but it’s a combination of machining and robotics. You know, from that perspective, and certainly viable, but, you know, maturity is required, and changes required in organizations to actually be able to benefit from it. And, you know, there’s advancements happening but fast all the time.
Cole Harmonson 1:06:04 Collaborations as far as the industry partnerships with universities and others, is this going to spark new innovations new ways of working together? Stephen go.
Stephen Shang 1:06:19 Are they actually having school this fall?
Cole Harmonson 1:06:24 I think they they’re all saying yes, we’re having school and then at the last minute they’re gonna slip over to What?!
Stephen Shang 1:06:32 I do think there are a lot of great ideas that come out of universities. It’s really like working with University of Texas, how, how do they have a technology transfer program and a licensing program that works for industry and works for academia. And so, I think it’s really University specific.
Robert Conley 1:06:49 I spent I spent time on the phone with a guy that’s very engaged in material science, um, a few days ago, a good friend of mine and he actually works with university He says on multiple boards related taking technology outside out of universities and I think the focus on those products and those technologies that are coming out and it was becoming larger, he said to me, there’s been 1000 research papers produced on a hydrophobic coating from universities in the last 48 months. So, you know, universities are a very, very key part. commercialization of those particular products is a challenge in the manufacturing environment typically is going to be the place that those things take place. Manufacturing doesn’t do hockey sticks. I think Stephen would attest to that. And, but universities have lots and lots to offer. It’s the ability to understand how to commercialize those things. That’s the real challenge, but there are definitely people out there that are working with them and working on those things at this time.
Cole Harmonson 1:07:58 Nice Last lightning round question, work, workforce diversity. How does a diverse workforce impact financial performance? No one wants to touch that one.
Stephen Shang 1:08:19 No, I mean, I’m pretty diverse myself. I just was hoping Robert would go first for once.
Cole Harmonson 1:08:23 No.
Robert Conley 1:08:28 So, part of the philosophy, the frameworks and tools that I use that we use, all humans are created intrinsically equal, hundred percent. However, in an organizational structure, you find whether it be through pay scales, or other ways of understanding people and their capabilities. You can’t look at it Diversity is being the thing you’re after. But what an organization and unfortunately, you know, when you’re a capitalistic society, which I would, I would submit that economics drives the universe period disconnect from that if you like, but what an organizational structure should be agnostic to diversity, because what an organization is looking for is the best person for the role that is required to propel it forward. And as an organism, as and that is what an organization is. You want the health and well-being of the organism to be supported by every single box that you put into it, regardless of its diverse nature. Now, that may be very wrong from political standpoint. But stack the deck with the best people you can find Regardless, and things end up happening in a very beautiful way. And again, all humans are intrinsically equal, deserve dignity and respect, and should be treated with the value that they bring, which is immense when you get the right person.
Cole Harmonson 1:10:21 I think you’re running for office. That’s awesome. I think you’re running for some sort of office. That was a great answer. Thank you for that. Stephen prop.
Robert Conley 1:10:31 Man, these are true beliefs.
Stephen Shang 1:10:35 I mean, the only thing I could add to that, and Robert, that was masterful. Thank you. Thank you. Thank you. The only thing I would add to that is, you know, we’ve got about 80 employees at Falcon and the way that it was just organically grown was it created a very diverse workforce. We have Hispanics, we have blacks, we have women. I mean, it’s just we have me, right? So, it’s a very diverse workforce, not by design, but because that was kind of how it grew. I think how does a diverse workforce impact financial performance. I think when you build it like that, almost like a meritocracy would Robert saying, you’re going to have a very good workforce, and you’re going to have a great financial performance. If you build your workforce, purely for the sake of looking good, or satisfying diversity requirements, then it will probably negatively impact financial performance. Not always, but it may do that, right.
Robert Conley 1:11:32 You’re such a bright guy. I mean, I, you know, here’s the thing, I believe what you’re trying to do is get a company to mesh, right, you’re trying to get individuals to mesh. And what happens is, is that people are smart, they come to work to do good things and want to be in a company that’s doing good things. All of these are parts of these principles and components that we use in running a company. And so, when you get a company, what you have is these individuals, and what they’re doing is they’re looking each other and they’re always looking And each other. And so, what they want is to know that you’re trying to put them in connection with the best person on the other side of the work that can be put in. And so, they know when you don’t do that, and guess what happens? they separate. And so, if they separate, do you get that structure to come together? No, you don’t. And so, we can kid ourselves into believing that we’re going to do something for the betterment of the universe. But if economics are the driver the world around, I don’t care what country you’re in, then and look at all of the countries are trying to become capitalistic but can’t separate from socialistic tendencies. Well, the bottom line is, is it’s about value. And the closer that you can that lattice work together to support whatever it is you’re trying to do the mission you’re trying to accomplish growth. You know, whatever it is, you’re the right person in there. Forget about it. Every single person that’s in that structure then begins to move. And guess what happens believe, because you are guiding the organization do something that is the best thing that you can do for each other, increase strength within it.
Cole Harmonson 1:13:14 I love that you guys are bringing the heat today. Really appreciate it. We put this slide up last, the best way to predict the future is to create it. And I know if it was left in the two of your hands, we’d all be in a better place. So, thank you very much. Any closing thoughts you want to throw out there? Again, your time is very much appreciated today. The floor is open to whoever wants to go first.
Stephen Shang 1:13:45 All right, Robert, I’ll take this one. Um, I mean, Roberts exactly right about forecasting. I don’t think anyone out there that can put out a good forecast. We told our board we’re not looking any further than 90 days out because it’s just, you know, ridiculous to try to do so. But when I would say about the future one, one very strong belief I have about the future is that, you know, if you’re constantly looking to the past and reminiscing about when we got to go to restaurants, when we got to go on business trips, when we went to football games and stuff like that, there’s no way you’re going to see what future is coming at you. And so, I think the future, the people who win in the future are those who are looking forward and not calling it a new normal or anything like that. But just looking forward to where the opportunities are coming from. Right. As opposed to just constantly thinking about the past. Being nostalgic and all that. Yeah, forget about that. Eyes wide, open, facing forward, see what’s coming, and then make adjustments as you need to who knows what this world is going to look like, but it’s going to look different. And that’s how you win the future is you’re able to assimilate that data and take action on it.
Robert Conley 1:14:55 Yeah, no, I do. I what you just said from is, you know, fear trepidation, if you if that’s your reality that will be your reality. And look, go back. And there’s some graphics out there that you can look I found on LinkedIn. But if you look at the pandemics and the Epidemics that have happened throughout history, we’re experiencing one, they’ve experienced some robotic plague, etc. You name it. Where are we today? We’re farther. All Things have continued to push forward. And the bottom line is that back to the humans are a bell-shaped curve, we move through this. And in business, you know, you’re talking about a disruption, not a decimation. Now, certain industries and things are gonna be decimated. But that’s a circumstance. It’s not the reality of the universe. as it sits markets are not going to completely disappear. You know, global trade and things aren’t going to disappear. They shrink Which is whatever scares everybody. And then you go, oh my god, the sky is falling. No, you just got smaller, you know, got a little closer to you. But the Universe Today is the same as it was before COVID. Today, you have the potential to get a higher probability of dying than you did before. But the universe is still the same. It’s going to be the same. And so, preparing for the sameness to return is to build on Stephens is I agree with him 100% look forward, deal with reality, dealing with the pain that it creates. And just move through it. You know, this too shall pass.
Cole Harmonson 1:16:48 Nice, nice. Well, we put this last slide up here. And it’s got everyone’s contact information. We’re gonna again, send this out to everyone. They can have a link to it again, it’s also on the YouTube channel for Derek capital. And we encourage you to go look at that or share it with your friends or whatever. If you found this valuable today, go and comment and follow us on the YouTubes and all of the other socials. I would do want to mention, too, that we have an upcoming webinar with the CEO and President, the chairman of Keystone bank. On August 4, he’s also a fellow austinite and fellow iau member as well, Jeff Wilkinson. We’re going to be talking about how community banking is going to play its part in the upcoming recovery out of where we are today. So, we encourage you to join us for that if that kind of stuff is interesting to you. And once again, thank you guys very much, Casey, thank you for participating and joining them. Robert and Steve You guys were excellent, excellent guys to have on and we really, really appreciate your time. We will see you next time. Hey,
Robert Conley 1:18:14 Yeah, absolutely I want to say one thing. So, Stephens got a full-time job right now. I’m just playing with things. But if there’s help that I can provide to someone that’s been on the call or that, you know, I’m 100% open and willing to have some dialogue about any of these things. So truly don’t hesitate to reach out if I can be valuable to you happy to do that.
Cole Harmonson 1:18:35 Yeah, we do some follow up with everyone who participated. So, we’ll make sure we include everyone’s contact information. So
Stephen Shang 1:18:41 I’m calling Robert after this. He’s got some really good ideas.
Cole Harmonson 1:18:49 Alright, thanks, guys. Everyone. Have a great day.
Transcribed by https://otter.ai
Cash flow can make or break the success of your project. Mapping out a project’s cash flow on a week-by-week schedule allows you to see the gaps and solve for them in advance. Getting it right starts by getting your bid right. Establishing the costs of your project, and the cost of running your business, is critical to estimating your bid. Finally, when you have the cash flow of every project estimated and scheduled, you have a solid foundation on which to build your business’s profitability.
CEO Scott Peper and Senior Commercial Underwriter Andrew Schwartz joined Michael Williams of Levelset for a complete crash course on setting up your cash flow to get the work done AND make a profit.
The difference between margin and markup, and how much you’re REALLY making
How to accurately estimate your company and project overhead for a smarter bid
Why properly mapped out weekly cash flow will save you from penalties and conflict
You can also access the video and a full transcript on Levelset’s website.