A Framing Contractor's Story

To protect his privacy we will refer to him as John, not his real name. After a few years working on a production framing crew for a tract home builder John decided to strike out on his own and start a framing company working for custom home builders because he was sick and tired of the fast paced go-go-go environment of tract home building.

John's first customer was a custom home builder whom I will call Bob The Builder, not his real name either. Bob The Builder had been a custom home builder for a number of years and was definitely a customer, not a client.

For the record we have worked with a lot of custom and spec builders and most of them are men and women of high integrity and honor. Construction is a tough industry and I have written several articles about it and one of the best ones can be found by clicking here. For more about Construction Psychology click here.

A client is someone who pays a fair price for goods and services and is under the protection and care of a professional. A customer is someone who treats everyone and everything as a commodity negotiates the lowest possible price, leaves nothing but bad feelings, squeezes every last ounce of value and withholds payment as long as possible.

Very quickly John realized he had gone from one bad experience to another because the custom home building environment was all about change-change-change. As soon as a wall was up or a floor was sheeted the home owner would want to change something.

Bob The Builder was skilled in negotiation and would always get a signed change order and payment from the home owner and then tell his sub-contractors the change was no big deal and should be done as a "favor to the homeowner".

Bob The Builder used the Carrot & Stick approach on his subcontractors by suggesting there was a lot more homes coming up to bid on (Carrot) and there is no money in the budget (Stick) for each and every little change on the current job.

After putting up with this nonsense for a while John attended one of our QuickBooks for Contractor classes, we host webinars and at various locations in person, where we cover some basics of construction accounting and a quick overview of Contractors Business Process Management and he learned about the difference between Strategy and Tactics.

"If The Grand Strategy Is Correct - The enterprise will prove successful; however, efficient operations cannot overcome bad strategy" - Paraphrased from Sun Tzu.

When I put up the image of the 80-20 Rule For Construction Success Bob practically jumped out of his chair and sat back down in a slump, dazed and confused.

The 80-20 Rule

• 20% of your customers normally generate 80% of your net profit. 

• 20% of the goods or services you sell contribute 80% of your revenue

• 20% or 2 out of 10 of your staff create 80% of the value for your customers.

The frightening consequence of the 80/20 rule is that 8 out of 10 hours we spend at work drive almost no value to the bottom line and the biggest drain is trying to save money doing our own contractor bookkeeping instead of reviewing the Key Performance Indicator (KPI) Reports. Especially now when they can be accessed 24/7 without opening QuickBooks for Contractors.

John described in great detail and living colors his experiences and asked if I knew Bob The Builder. I could only say that if Bob The Builder was customer we would have suggested he make some changes in his attitude or we would fire him.

We have a comprehensive screening process to eliminate "customers" and invite "clients" and yet once in a while we are fooled. When that happens they are discharged quickly.

"It Is Better To Make Than To Take" - Maker Paradigm (Randalism)

We understand the difference between "Natural Behavior" and "Adaptive Behavior". When a contractor is lashing out from stress they use certain key words and phrases which indicate they have a "Maker Paradigm". They are hurting and need our help; so we respond with empathy and active listening and do our best to help and support them any way we can because they are the true contractors.

"It Is Better To Take Than To Make" - Taker Paradigm (Randalism)

When a contractor is attempting to take advantage of someone they use a different set of key words and phrases which indicate they have a "Taker" paradigm and we suggest they read some good books and spend time with successful people in order to Level Up. In the end there are no bad contractors just good people who have gotten off the track just like there are no bad trains, just trains that got off the track and need help getting back on track.

John became a consulting client and we took over his contractor bookkeeping services needs. He wanted us to pay his bills and reconcile his bank and credit card accounts. We agreed to provide his contractors bookkeeping services needs including reconciling the bank and credit card accounts but not pay his bills. I asked him to read an article entitled Bookkeeper Theft which explains why contractors should never, ever let anyone get control their money and he understood exactly and very grateful for the insights.

We helped John put together his very own Contractor' Business Process Management Strategy and he hated almost every minute of it because he had to THINK. We had several strong discussions as were needed in order for him to level up because he did not like change. I reminded him the only people who embrace change are babies wearing wet diapers.

In the end it was worth it because he was able reposition his construction company to do more than just framing houses and as a result he generated substantial profits which allowed him to purchase some income producing assets and together with the proceeds from the sale of his company he was able to retire comfortably.

We visit now and then and I ask when is he going to start another construction company and he replies "Not for a while yet, but if I ever do you will be my contractors bookkeeping services provider and mentor.

QuickBooks Expert Specializing In Construction Bookkeeping Services