Cash Flow Needs
By Michael StoneIt’s important to know how much cash your business needs, and when, so you can plan ahead and have that cash available.
The Cost of Being Lowest Bid
By Michael StoneWhy would a serious construction-related business owner want to be the lowest bid on a project?
Career Tips from my Hero
By Michael StoneI first heard about Zig Ziglar in 1973 when I attended one of his events. Over the next several years, if he was speaking nearby, I did my best to be there.
Transparency Has Risks
By Michael StoneIf you believe in transparency with your clients, this note is an example of what can go wrong.
Lesson Learned: Lead Generation Companies
By Michael StoneLead generation companies don’t know your ideal clients or your most profitable type of work, and don’t care because they get paid anyway.
Don’t Negotiate Your Price
By Michael StoneDon’t let your clients dictate or negotiate the price of your work.
Everyone Gets Paid
By Michael StoneOver the years I’ve heard from many wives or significant others who were tired of living with no money and essentially no future for the business.
Finding Suitable Construction Employees
By Michael StoneHiring the wrong person costs money. It costs more than just the time and expense you went through before hiring, because you’ll spend time and money to fire them legally and properly.
Structuring Your Construction Company
By Michael StoneMany contractors start out building jobs on their own, but it doesn’t take long before you need to hire others to help with production.
Failing Expectations
By Michael StoneMichael shares a note from a contractor dealing with multiple mistakes he’s made in his business.
Planning for Next Year
By Michael StoneThe end of the year is a good time to look at how you’ve been doing business. What standards have you set, and are you keeping those standards?
How to Have a Profitable Construction Business
By Michael StoneYou can’t focus on being competitive if you want to be profitable. You have to focus on profitability.
Depending on Referrals
By Michael StoneTake charge of your marketing and let the leads you get by referral be the frosting on the cake.
Advice for a New Contractor
By Michael StoneMichael shares a note from a new remodeling firm, asking questions that are often asked by new business owners.
Hope is Not a Strategy
By Michael StoneMichael Stone shares thoughts on protecting your family and construction business from whatever the economy or government throws our way.
Year-End Planning, Part 1
By Michael StoneBusiness planning isn’t exciting. But the effort you put into it has much to do with the results you’ll see next year and in years to come.
Year-End Planning, Part 2
By Michael StoneThis is part two of our year-end planning paper. We’re going to pick this up by continuing an indepth look at your overhead budget for the coming year.
Expect the Best, Prepare for the Worst
By Michael StoneIf the worst happens, will those left behind be able to either carry on or close shop without your presence?
Design Agreement Surprises
By Michael StoneIf you want to avoid problems when selling your services, take steps to prevent problems at your first meeting.
The Same Business Principles Apply to Every Trade
By Michael StoneMost of the training available for construction focuses on production. We talk about business, and business principles don’t vary no matter what type of work you produce.
Make Jobs More Profitable
By Michael StoneMaterials, change work orders, borrowing tools, punch lists, resolving issues.
Improve Jobsite Productivity
By Michael StoneAn efficient, productive construction project makes for more profitable jobs. It’s easier when you pay attention to these details.
Selling Design Agreements
By Michael StoneWith a renovation or remodeling project, your goal from the very beginning should be to sell your services by way of a design agreement. Sell an agreement to design the project since that’s the first necessary step before the job can start.
Setting Priorities
By Michael StoneIf you’re a business owner, prioritizing how you spend your time is critical. There aren’t enough hours in a day to do everything that needs doing.
Estimating Labor, Accounting for Trash
By Michael StoneEstimating a construction project requires working through the details. The better you cover those details, the more accurate your estimate.
Building Inspectors and Your Estimate
By Michael StoneThe building inspector who shows up can increase the cost of your project. That’s why you need to add an inspector factor to your estimate.
Estimating Construction Costs
By Michael StoneEstimating errors cost money, because the purpose of a construction estimate is to know how much to price a job.
Trucks, Phones and Language
By Michael StoneKeeping your business sharp and profitable is an ongoing process, and it’s easy to get lax about little things that can cost big money.
A Guaranteed Price
By Michael StoneWhen selling construction services, quoting a guaranteed price protects homeowners from the price increases that happen with a too low price.
Paying Taxes Beats Losing Money
By Michael StonePaying income tax means you’re running your business well.
Who You Listen To Matters
By Michael StoneAs I watch young people decide to become a coach or consultant in construction, I wonder how much they really know.
Get Ahead of Job Delays
By Michael StoneJob delays are often caused by the things we don’t see; you can’t stop all delays but you can get ahead of them.
Increasing Your Markup
By Michael StoneLike many of you, I read industry magazines to keep up on new ideas. Much of what I read is good, but a recent article titled “Strategies for Increasing Your Markup” requires a comment.
Business Survival
By Michael StoneI often start the year with a reminder to check your business practices, and this year I think it’s more important than ever to get on top of and make sure you have your business in order.
Value Your Work
By Michael StoneYour work is vital; rather than worrying about your price, recognize and sell the value you bring to a project.
Your Work Has Value
By Michael StoneI’m addicted to the creature comforts that my home provides. Those comforts are provided by skilled workers in the construction industry.
Profitable Planning
By Michael StoneAs the business owner you’re taking risks, so you deserve to be paid a fair salary and make a profit. This is how it gets done.
Invest In Your Business
By Michael StoneInvesting your time and effort in discovering how to run a successful construction business is a key to success.
Educating on Quality
By Michael StoneHome and building owners need to know that hiring the least expensive contractor often means compromising on quality.
Renegotiating the Price
By Michael StoneHow should you respond when a client wants to change the price AFTER the job has started?
Sales: Setting Ground Rules
By Michael StoneMichael shares a few situations you’ll run into when selling construction-related services that provide the opportunity to set ground rules for the relationship.
The Advantage of Continuing Education
By Michael StoneIt doesn’t matter if you’ve been doing things the same way for 1 year or for 65 years, taking the time and initiative to find out if there’s a better way increases your odds of success.
Is Cost-Plus the Solution to Underpriced Jobs?
By Michael StoneBoth fixed-price and cost-plus contracts carry risk. Is cost-plus the solution?
Resolve Estimate Details Before Quoting
By Michael StoneHis salesperson sold a kitchen remodel without resolving some details. The homeowner insisted it wouldn’t be a big deal. It was a big deal.
Employees: Details that Cost You Money
By Michael StoneNothing is more frustrating than to work hard only to find out your business isn’t making money. Michael discusses three things that can make a big difference on the bottom line.
Estimating Construction Profitably
By Michael StoneEstimating Construction Profitably is a guide to estimating; or more accurately, a guide to creating your own estimating system.
Changing the Terms of the Contract
By Michael StoneWhy do clients enter a contract and then think they can unilaterally change the terms?
Motivate Your Construction Employees
By Michael StoneIn construction, employees are motivated and engaged when they know the reason behind their work. They need to know their jobs matter.
After the Sale; Pre-Job Layout
By Michael StoneThe pre-job conference or pre-job layout is when all the details get ironed out that can easily be forgotten. It’s when the job is handed from sales to production. After this meeting the production manager is in charge.
In Construction, Communicate the Details
By Michael StoneAre you giving your clients the information they need to be confident you’re building the job they want?
Business Skills and Your Construction Business
By Michael StoneIt’s easy to think we already know all we need to know. If you want to be successful, continually improve your business skills.
Should You Join a Trade Association?
By Michael StoneDuring a recent “Sharing Ideas” online discussion, the subject of trade associations came up: Is joining a trade association worthwhile?
Residential Construction Quality Standards
By Michael StoneIn residential construction, it’s not unusual for your client to have an unrealistic quality standard. That’s why you need to establish the standard ahead of time.
Growing a Construction Business
By Michael StoneGrowth is inevitable when you successfully market your business and have solid business practices but growing a construction business brings a few challenges along with the blessings.
Managing Jobs: This is Where it Went Bad
By Michael StoneMichael shares a story from a contractor who delegated to the wrong person, and that’s where the job went bad.
Sales: Are You There to Help?
By Michael StoneWhen selling, are youhere to find out how much money you can make, or to provide a service and help?
Calculate Your Cost Per Lead
By Michael StoneWhen you calculate your cost per lead, you’ll know what you need to spend on marketing to meet your sales goals.
Getting Between the Owner and a Sub
By Michael StoneA subcontractor causes a problem on a construction job, the general contractor needs to make it right. It happens a lot, this time with a twist.
Doing Things Right
By Michael StoneMichael shares a valuable tool that will improve both your sales and your relationships.
Doing Things Wrong
By Michael StoneIt’s painful to see people who don’t know better get taken advantage of by those who do or should know better.
Doing Work Without a Permit
By Michael StoneDoing work without a permit is a mistake. Pulling permits protects the homeowner; when a contractor doesn’t want to pull a permit, there’s always a reason.
Should I Change My Markup If I’m Not Making Sales?
By Michael StoneShould you change your markup method if you aren’t making sales? Don’t spend hours fiddling with numbers; invest the time in your sales skills.
It’s All About Sales: Gaining a Commitment
By Michael StoneCan delayed job starts impact material prices and profitability? Not if you gain a commitment first. It’s all about the sales process.
Liquidated Damages in Construction
By Michael StoneWhen customers start talking about liquidated damages in construction, it’s time to ask why.
Contracts Matter; Collecting Final Payment
By Michael StoneWhen you provide a dishonest client a cost breakdown of their job, things can go wrong.
Make Time by Delegating
By Michael StoneIt’s easy to fool yourself into believing it’s better to do it yourself, until you realize the things you’re supposed to do aren’t getting done.
Character Matters
By Michael StoneYou can’t always determine if the person you are about to do business with is ethical, but you do know your own behavior. Choosing to operate your business with integrity is within your control.
Make Construction Work for You
By Michael StoneConstruction can be a tough business, dealing with clients who don’t realize what we’re worth, while our bodies take a beating to make their homes better.
Beliefs That Limit Your Profit
By Michael StoneOwning and operating a construction business requires a strong will and self-direction, but those qualities can also lead you to hold on to beliefs that limit your profit.
Definition of Terms
By Michael StoneWhat does a general contractor do? What is a specialty contractor? How do remodeling and new construction differ?
How Do You Measure Success in Construction?
By Michael StoneOur goal is to help contractors build more profitable businesses, but how do you measure success? How do you know your pricing will result in a profit?
Paying a Salesperson: Commission on Sales, not Profit
By Michael StoneIf you employ a salesperson to help you sell something, you need to pay them for their services. I am a firm believer in paying sales people by commission
Purchasing Commercial Insurance
By Michael StonePurchasing commercial insurance can be a frustrating experience for many construction businesses.
Unit Cost Estimating
By Michael StoneUnit cost estimating is breaking down a project to simple assemblies. It’s the best way to consistently acquire accurate estimates.
Handling Customer Complaints
By Michael StoneNo matter how careful you are, you, your crew, or one of your subcontractors will upset a client. How you handle customer complaints says a lot about your business and your character.
Price Proposal Deadlines
By Michael StoneAll price proposals need a deadline because you never know when material and labor costs will increase rapidly.
Construction Sales: Make Time Count
By Michael StoneConstruction sales take time and your time is valuable. Avoid these common time-wasters when selling construction services.
Construction Cash Flow and Business Success
By Michael StoneConstruction cash flow is like every other business; there must be more cash flowing in than flowing out or the business won’t survive.
Rapidly Increasing Material Costs
By Michael StoneQuoting a firm fixed price is riskier when material costs are increasing rapidly, which is why your contract needs to address unexpected material cost increases.
Design Agreements and the Budget
By Michael StoneThe purpose of a design agreement is to get a commitment from your client to design the project so you don’t have to do the design for free. How do you keep the design within the budget?
The Cost of Callbacks
By Michael StoneHaving to return to a previous job and fix something that’s wrong costs money. Knowing the cost of a callback helps you or your crew to be more diligent to avoid them in the future.
Wrapping Up a Difficult Project
By Michael StoneIt can a challenge to finish a project, especially when it was priced too low for a difficult client and with a weak contract.
Habits for Success
By Michael StoneAre your habits helping your company grow, or are they holding you back?
Financial Plan for Success and Survival
By Michael StoneIf you thought you were the captain of your ship, 2020 taught otherwise.
Construction Websites that Generate Leads
By Michael StoneA construction website should be a lead generating asset. It doesn’t have to be expensive, but if it doesn’t generate leads it’s a waste of time and effort.
Why Do You Need a Written Construction Contract?
By Michael StoneAlmost all conflicts contractors face could be avoided or quickly resolved if there is a clear, detailed construction contract between the parties.
Charging a Fair Price
By Michael StoneYou can be the most ethical person in the world and if you aren’t charging enough for your work, you stand a good chance of cheating someone else.
Lowball Pricing in Construction
By Michael StoneIt’s not unusual to find a contractor who sells by deliberately underpricing or underbidding jobs and making up the difference with change work orders.
Specialty Contractors and Down Payments
By Michael StoneShould specialty contractors require down payments even when working through a General Contractor?
Remodeling Sales: Setting the Budget
By Michael StoneA business owner in the UK asked a question that illustrates that remodeling sales challenges are the same regardless of your location.
The Skinny on Change Work Orders
By Michael StoneA compendium on change work orders on a new home, remodeling or renovation project; why they matter, how to price them, what to include, and more.
Building a Successful Construction Business
By Michael StoneI take many calls from contractors whose business is more like a low-paying job than a successful construction business. Some ask, “Is it even possible in today’s economic climate? Can my business make money?”
Family Matters More Than Business
By Michael StoneOur goal is to help construction-related business owners build a better business. We receive many phone calls and notes from our clients, and most of the time we hear good things. Sometimes we hear another side of the story.
You Have Better Things to Do than Estimate
By Michael StoneGetting a commitment from potential clients is critical if you want to save yourself a ton of time and work putting together an estimate that won’t go anywhere. You have better things to do with your time.
Clients and Your Job Schedule
By Michael StoneOne of the concerns a homeowner has when they’ve hired a contractor is whether they’ll do what they said they’ll do. It is a legitimate concern. They don’t know what’s going on in your head, only what’s happening with their job.
Who Pays for On-the-Job Training?
By Michael StoneTraining in construction is important, especially with a shortage of employees. A general contractor asked about a subcontractor who is training an apprentice.
The Sales Call: Budget and Design
By Michael StoneBudget doesn’t need to be a major worry during the design and build of a project if you handle it properly during the sales call.
Cost-Plus Contracts
By Michael StoneWhy cost plus and time & material contracts should be avoided, for both contractors and building owners.
Shady Contractors
By Michael StoneIf you’re doing residential construction, you’ve met all kinds of people. There are also all kinds of contractors, and some of them don’t operate ethically.
Estimating Labor in Construction
By Michael StoneOur last newsletter triggered a question on estimating labor.
Estimating Errors Cost Money
By Michael StoneEstimating the cost of a remodeling, renovation or specialty project accurately is critical if you want to be profitable.
When Business Returns
By Michael StoneAt some point this health crisis will slow down and go away. When it does, there’s a good chance we’ll be doing some things differently. But some things won’t change.
When Business Dries Up
By Michael StoneIf sales have dropped off significantly or you’re under a stay-at-home order, here are 3 things that you need to do now for both your business and your family.
Four Diamonds of Communication
By Michael StoneSales is about communicating and interacting positively with others. Those skills make life easier in any delicate conversation.
Hang On – Getting Through These Times
By Michael StoneMichael Stone offers suggestions on how to keep your construction business strong during this Coronavirus emergency.
It’s Not For Us
By Michael StoneMichael Stone shares about a note from a contractor who initially found the Markup & Profit Revisited book “too extreme” and “not for us” – but now realizes it makes sense.
Unclear Change Work Orders
By Michael StonePricing changes for a change work order isn’t easy when the scope of work isn’t clear.
Time and Material Woes
By Michael StoneTime and Material contracts are full of risk, especially on larger jobs.
Investing in Your Business
By Michael StoneConstant input from others is necessary if you want to stay on top of both your business and your personal life.
Business or Charity?
By Michael StoneIf you’re a business owner and take on a project out of the goodness of your heart, recognize you might not get paid and will be funding the project.
Borrowing Jacks
By Michael StoneI recently had to face what I thought would be an uncomfortable personal conversation. I fussed all morning, then went to visit the person involved.
Payment Methods
By Michael StoneI don’t think writing a check is old fashioned, but there are so many advantages to using a credit or debit card that it’s become the preferred payment method for many.
Protect Your Time
By Michael StoneSome people are used to snapping their fingers and having others jump. It’s irritating, but you have to remember that they’re writing the checks.
Clear Sales Communication; It’s Your Responsibility
By Michael StoneI want to share a recent phone conversation with a contractor concerning a problem they were having with a client.
Hiring a Salesperson
By Michael StoneI’m a firm believer in treating salespeople well. When they’re treated well, they’ll sell. When they sell, you win.
Let’s Discuss an Acceptable Hourly Rate . . .
By Michael StoneThis note is a painfully perfect example of why you shouldn’t provide details on your pricing.
About Your Exorbitant Markup . . .
By Michael StoneFrom a contractor: “I am definitely going to do a better job in pre-selecting my clients after this one.”
Words from an Expert on Hiring Contractors
By Michael StoneA contractor sent us an online article written by a real estate investor with the purpose of educating you on “how to develop a fair relationship with your contractor.”
Protecting Yourself from the Protector
By Michael StoneI’m not a fan of working with government agencies, but some situations are unique.
Final Payments and Guarantees
By Michael StoneWhen clients try to change the terms of the contract, you don’t have to go along.
On Politely & Confidently Qualifying Leads
By Todd MiltonA guest article: How do you avoid going out on sales calls to look at jobs for folks who obviously do not qualify to purchase from your company?
A Yardstick for Success
By Michael StoneIt’s the last Wednesday of the summer, which is a great time to look back and see how your business fared.
What Happens To Your Business If You Can’t Be There?
By Michael StoneIf you own a business, your illness or death will create business problems for your families and your employees.
Why Do You Need To Make A Profit?
By Michael StoneDon’t confuse profit with salary or hourly wages. Making a profit isn’t optional: Your business needs profit to survive.
Promoting Your Business: The County Fair
By Michael StoneIt’s summer, and that means community gatherings for people wanting to have fun. In our area, the main event is the county fair. I’m confident there is a similar event in your area.
Cell Phones on the Jobsite
By Michael StoneI am not opposed to the use of cell phones on the jobsite as long as the phone is used solely to communicate information about the job, and the calls are direct and to the point.
Overhead Differences: New Homes and Remodeling
By Michael StoneA construction company building both new homes and remodeling needs to calculate a separate markup for each type of work.
Honest Relationships
By Michael StoneThere are always at least two sides to any scenario, but if you want to stay in business, consider this a lesson on how not to treat a subcontractor.
Taxes and Profit and Markup
By Michael StoneMichael addresses a few different questions we’ve heard recently, primarily dealing with taxes and profit and calculating your markup.
When Success Looks Impossible
By Michael StoneAfter reading our books and trying to do things right, why is he still not making any money?
Focusing On Price
By Michael Stone“The #1 reason I lose jobs is ‘your price is too high.’ What am I doing wrong?”
Spare Topics
By Michael StoneIt’s time to catch up on some spare topics I have lying around. These aren’t earth shaking but they can and will impact your bottom line.
Sales: Have Options Ready
By Michael StoneGive clients options when you quote the work they want done.
Contract Language That Puts You at Risk
By Michael StoneOver the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.
Subs: Take Care of Business
By Michael StoneA contractor friend called to complain about problems he’s having with specialty contractors in his area. This isn’t a one-time complaint; I’ve heard the same from others around the country.
Transparency and Partnerships
By Michael StoneWhat do you do when your partner is listening to someone who knows nothing about construction, but still thinks they knows what’s best?
Know Your Numbers: Current Ratio
By Michael StoneThere is a measure you can use to determine how financially solid your company is at any given point in time. It’s called the current ratio, and it’s a good idea to check it regularly.
Handyman vs Service Agreement
By Michael StoneIs it a good idea to have a service agreement to cover small jobs under a certain amount?
Estimating, Labor Burden, Cost of Goods Sold
By Michael StoneWhen you own a small business you wear a lot of hats. Understanding the numbers might not be your favorite hat, but numbers are important because they show where you stand financially.
First Time Homeowner, Uncommunicative Builder
By Michael StoneWe’re aware that homeowners also visit our website. This letter is from a first-time homeowner who’s ready to buy, but his builder isn’t cooperating.
How to Calculate Markup
By Michael StoneWhen I teach a class or webinar, sometimes I wonder if my listeners understand what I’m trying to say. After reading some of the questions that came in during a recent webinar, I realized I missed the mark.
Pricing Mistakes
By Michael StoneEveryone, and I do mean everyone, who has ever compiled an estimate has made a math error that put knots in their stomach once it was realized.
Design Agreement Fees
By Michael StoneThe last thing I want to do is cause a family problem, but apparently I did with one family.
Homeowner Advice: Some Misguided, Some Correct
By Michael StoneFlaky contractors make us all look bad. But not all advice given to homeowners to protect themselves from fraud is good advice.
Marketing Your Business
By Brian JavelineDon’t come up with excuses to not be marketing your business. Eventually you will be in the worst position of all, and that is when you say “I need quick help to get my phone to ring”.
Liability Insurance Tangle
By Michael StoneSome time back we received a well-written letter about liability insurance from a contractor in Washington state.
Protect Your Business – Get Paid
By Michael StoneAvoid losing money by recognizing some of the games that building owners play to avoid paying.
Protect Your Business – Change Work Orders
By Michael StoneMichael discusses a ploy some building owners use to not pay for all of their change work orders. It happens in both residential and commercial projects.
You Can’t Ask Too Many Questions
By Michael StoneWhen something seems amiss, don’t stop asking questions. A contractor shares his experience on a recent sales call.
Give Them What They Need to Make a Decision
By Michael StoneClients are changing, and if you want to stay in the game and make something more than a living, you’ll need to change with them.
Overhead and Profit on Change Orders
By Michael StoneYou shouldn’t sign a contract that stipulates what you can charge, even if it’s just on the change orders.
Protecting Design Work
By Michael StoneA contractor who has designed projects asked how to protect his design work.
Writing a Business Plan for a Construction Business
By Michael StoneA business plan is different than year-end planning. A business plan looks at the big picture. It’s a roadmap for the whole journey.
Make Things Happen
By Michael StoneWithout looking, how do you think your business did this year? Are you feeling more profitable or less? Is your business running more smoothly or are the problems overwhelming?
Training an Architect
By Michael StoneA contractor we’ve known and worked with for many years sent us a note about his experience working with a new architect. Ideally, the architect would have been working with the contractor from the beginning so he could have educated the client as well.
Share Your Cards
By Michael StoneBusiness cards are a simple, inexpensive way to provide everyone you come in contact with the information they need to reach you.
What Should You Do With Your Profit?
By Michael StoneThe best way to avoid paying taxes is to not make a profit at all, but it’s a rough way to live.
Avoiding a Potential Pain in the Assets
By Michael StoneA good guy we know was recently working with a potential client when he ran into some concerns.
Dodging Payment
By Michael StoneThere are things you can and should do when a client tries to dodge making payments.
Canvassing: Connect with the Neighborhood
By Michael StoneOne of the more unpopular things I recommend is canvassing the neighborhood around your jobs. It’s unpopular because it’s misunderstood.
Avoiding Jobs That Don’t Fit
By Michael StoneIt’s smart to specialize on the work that makes you the most money. It’s even better if you know contractors who can pick up the leads outside your specialty.
Setting and Keeping a Schedule
By Michael StoneThe job is sold, schedule is set, project gets started, and suddenly it’s behind schedule. When it happens, it eats into your profit and upsets your clients.
Unrealistic Price Expectations
By Michael StoneIf they called you, doesn’t that mean they need or want the work done?
Family Fights
By Michael StoneThe topic is uncomfortable but if you’re involved in residential sales, you’ll see family disagreements. It helps to know what to do.
Make Every Possession Count
By Michael StoneMany contractors who write us are having a problem with their business, and in many cases, it’s because the contractor has lost focus on what’s important.
Clients Working on Their Job
By Michael StoneShould you let a client work on the job they’ve hired you and your company to build?
Doing What’s Right
By Michael StoneHow should you handle a mistake? What if it’s a mistake you made over a decade ago?
Breaking Down Price Detail
By Michael StoneSince the end goal for both the architect and the contractor is a satisfied client, how about working together from the beginning?
Making The Trades More Attractive
By Michael StoneIf you want to attract the best people, you need to make them a good offer.
Share The Satisfaction of Working in the Trades
By Michael StoneThere’s a reason that working in the trades isn’t appealing. But if you do the work, you know there are positives that outweigh the negatives.
Profit and Loss and Markup
By Michael StoneWhen your books are set up properly, it’s easy to calculate your markup, and it’s also easy to compare your actual results to your estimates.
Calculating for Taxes
By Michael StoneTaxes are the price you pay for being profitable. It’s a good thing when your business is in the black and you need to pay taxes on it. It’s not good when you’re taken by surprise.
Making Money or Keeping Busy?
By Michael StoneWhen everyone but your family benefits from your business, it’s time for a reality check.
Lower Your Price, Gain Exposure
By Michael StoneShould you take every opportunity to increase exposure for your business?
Can They Find You?
By Michael StoneIf you’re a dependable, responsible construction-business owner, do potential clients in your area know you exist?
Getting Ahead
By Michael StoneAs we head into Memorial Day weekend, we want to share an upbeat note we received in April from a client.
Looking for a Deal
By Michael StoneIt’s amazing the things a potential client can think of to get you to lower your price.
Working With a Designer
By Michael StoneIs there a common ground or way that the designer and contractor can do business together, each make the money they need to, and not overcharge the customer?
Job Superintendent / Leadman
By Michael StoneFinding good employees is difficult, and you want to keep the ones you find. Sadly, I’ve spoken with a few contractors who’ve had their lead person, the one running their jobs, quit in frustration.
Construction Business Safeguards: Fraud and Embezzlement
By Michael StoneWe hear many stories from business owners who have had to recover from the theft of funds by their own employees. Today we’re sharing a list of things you can do to protect yourself and your business.
Hiring Friends and Family
By Michael StoneWhen you own a small business you’re often asked to hire family or friends. Sometimes it works out great, but not always.
Pricing Handyman and Service Work
By Michael StoneThere are two schools of thought on pricing handyman projects and service work: T&M or flat rate pricing. They both have advantages and disadvantages.
Single Discipline Leads, Referral Fees
By Michael StoneThe note stated, “Because I’m the middle man, my subcontractor loses out a potential project.” That’s true, and it’s one reason you shouldn’t get into the position of being a middle man.
Do Your Work
By Michael StoneFor the past few years I’ve had general contractors tell me that they can’t get specialty contractors to return their calls, show up on time or show up at all for a job. Now I’m hearing from generals who are getting calls from subs, looking for work.
Dishonest Clients
By Michael StoneWe often hear from contractors dealing with a client who, for whatever reason, has decided to change the terms of their contract. Other professionals have the same problem.
Sales: Ask Questions and Get Answers
By Michael StoneThe one question too many salespeople stumble over is the budget for the job. They are worried that it looks bad to ask.
Justifying Your Price
By Michael StoneIf your lawyer believes you have to justify your pricing just because someone doesn’t want to pay their bill, it’s time to find another lawyer.
How Productive Are Your Employees?
By Michael StoneAs you add employees to a growing company, you’ll both increase production and decrease productivity. You need to account for it when you’re estimating and pricing your jobs.
Transparency – Or Maybe Not
By Michael StoneIs transparency the way to go when selling? Be careful who you listen to.
Loaning Your License
By Michael StoneIt’s interesting how friends, relatives, and other contractors try to rope you into their schemes by asking to borrow your license to build their jobs.
Subcontractor Payment Schedules
By Michael StonePayment schedules need to be in writing, that includes between a general and specialty contractor.
Collecting Payment from a Dishonest Homeowner – Updated
By Michael StoneNot all of your clients are honest. There are even a few who have no intention of paying you for the work you do.
Markup or Margin: Be Logical
By Michael StoneIf they tell you the formula to use will make you more profit, that’s baloney. It’s the numbers you use that determines your profit.
A Reputation for Cleanliness
By Michael StoneEvery day we drive by a new home under construction. I don’t know how many people pass this new home every day but I would guess it’s in the thousands; the road is always busy.
Resolve Their Challenges, Make The Sale
By Michael StoneA survey outlines the challenges homeowners say they’re facing when they remodel or renovate their home. It’s valuable info, because it tells you what they need help with. It’s your job to show them you can provide that help.
Pricing Fears
By Michael StoneA recent Houzz survey confirmed what you need to know if you’re in sales; it’s not all about price.
Last Minute Requests Before Closing the Sale
By Michael StoneWhat do you do when a potential client waits until the proposal is together to request itemization on the project?
We Don’t Advertise
By Michael Stone“We don’t advertise” is well meaning mischief at its worst. It cuts your company off from a large pool of potential clients who are looking for a contractor to help them get their job built.
Should You Purchase a Construction-Related Franchise?
By Michael StoneIf you’re considering purchasing a franchise, or if you’ve been contacted by a franchisor because of your success, put your emotions on hold and evaluate it carefully.
Making a Positive First Impression
By Michael StoneBuilding trust always starts when you are first contacted by a potential client. Michael discusses how to do it right, and how to do it wrong.
Objections Book
By Michael StoneAn objections book is a history of your sales calls. It includes everything you said and did, right or wrong. I have only met two or three others in my thirty-plus years of direct selling who took the time to compile a book, but each one became outstanding in their profession.
An Opinion on Itemized Estimates
By Michael StoneA building owner challenges our statement that contractors shouldn’t itemize their estimates.
Job Costs and Overhead
By Michael StoneI’ve seen contractors try to apportion overhead on a daily, weekly, monthly or per job basis when compiling their estimates. I don’t recommend any of those approaches.
Cost-Plus with a “Not to Exceed”
By Michael StoneA contractor asked for my opinion on a request he recently received. It’s not a win-win proposition.
Setting the Budget First
By Michael StoneIn our book, Profitable Sales, A Contractor’s Guide, we discuss the need to set the client’s budget for a project. One of our clients sent a note recently that explains why setting the budget up front is important.
Let Them Know What to Expect
By Michael StoneIf you’re doing service work, make sure your client knows what to expect before you start.
Cancelled Design Agreements
By Michael StoneA call came in from a friend recently. It seems that a client of his wants to cancel a signed design agreement.
Estimating Incomplete or Conceptual Plans
By Michael StoneTo be blunt: projects like this are a waste of time. I’ve rarely if ever seen a request like this turn into a contract
Clients Changing the Contract
By Michael StoneI’ve written before about clients who decide to make changes to a contract. Last week I heard from two different contractors who had to deal with this, and I want to share their stories.
Website SEO Scams
By Brian JavelineI received a note from Michael Stone. He said, “You wouldn’t believe some of the stories I hear from contractors being approached by people claiming they can help with SEO or getting leads. I want to cover this in a newsletter.”
Are You Worth It?
By Michael StoneConstruction is a tough industry. For some, the hardest part is making the sale. They’re out of their comfort zone. They don’t want to talk about money or ask for the sale.
Can You Be Both Competitive and Profitable?
By Michael StoneYou can be competitive, or you can be profitable. You can’t be both.
Generational Differences
By Michael StoneI’ve been reading advice in a few construction magazines on how to sell to millennials, and I don’t understand the fuss.
Who Generated The Lead?
By Michael StoneWhen subcontractors or employees are approached, they are obligated to notify the general contractor who brought them there, and let him handle the lead.
Mediation or Arbitration?
By Michael StoneYour contract should call for arbitration, not mediation, to settle disputes.
Contractor Issues with Architects & Designers
By Michael StoneThese relationships can be profitable for both parties, but they can also quickly become squabbles if the relationships aren’t valued.
Pricing Without Plans
By Michael StoneIt’s important to remember you aren’t in business to drive around and give out numbers. If you’re a specialty contractor, you also aren’t in business to provide numbers to architects or general contractors.
I Don’t Need Any Leads!
By Michael Stone“I have more work than I can do. I tell new leads to call me after the first of the year.”
Client Causing Job Delays
By Michael StoneIf you want to lose money on a job, agree to let your client do part of the job or provide their own materials without setting clear boundaries.
Business Owner, or Hired Labor?
By Michael StoneEver heard the old saying that something “pushed your buttons”? It’s an emotional reaction, usually not positive. Well, Devon took a phone call last week that pushed my buttons.
Right of Rescission
By Michael StoneWhen I’m working with a group of contractors, I often ask how many are providing a Right of Rescission form with their contracts. Many contractors aren’t even aware of the document or realize its importance.
Pricing Small Jobs
By Michael StoneIt’s hard to remember what you’re worth, especially if you’re spending time on jobs that cost you money.
Preparing to Estimate
By Michael StoneEstimating is necessary, but it isn’t easy; it’s hard, tedious work. There are four basic things you need before you begin your estimate.
An Unbalanced Partnership
By Michael StoneI’ve written before about middlemen in the construction industry: I’m not fond of them. There is another type of middleman in the construction industry, facility and property management companies.
Construction Allowances: What They Are, How to Use Them
By Michael StoneA construction allowance is a dollar amount included in the contract for a particular item. There are two types of construction allowances: material and installed.
Working for Big Box Stores
By Michael StoneA young guy asked if signing on with one of the big box stores was a good idea. He hasn’t discovered yet that getting a lot of work doesn’t mean you’ll make lots of money.
Markup Worries
By Michael StoneRemember, you’re in business to provide a service and make a profit doing it.
Subs or Employees – Are Subs More Expensive?
By Michael StoneDoes subcontracting raise the price of the project?
Don’t Be This Contractor
By Michael StonePlease don’t be this contractor. Please don’t be that homeowner.
Your Labor Rate and Your Markup
By Michael StoneUsing the wrong labor rate, or using someone else’s markup when you don’t know their assumptions, is one of the biggest mistakes we see and the difference can be thousands of dollars.
Adjusting Your Markup
By Michael StoneIn Markup & Profit Revisited, we explain how to calculate your markup. We’re often asked if you can adjust your markup based on the length of the job.
Hiring A Contractor: Truth vs. Myths
By Michael StoneSome advice on hiring a contractor is just plain wrong.
The One-Legged Sales Call: Find Out If They’re Serious
By Michael StoneOne-legged sales calls. Frankly, this is much to do over a problem with a fairly simple solution.
Careful What You Pay for a Lead
By Michael StoneI recently read an article reviewing a new lead-generating service, and it stated, “Our contractors only pay us a 5% referral fee, once they win the job.”
Bidding or Selling?
By Michael StoneAre you bidding on jobs, or are you selling them? There’s a difference.
Are Your Clients Thinking “So What?”
By Michael StoneOn a sales call, if you’re speaking and your potential client is thinking “so what?”, you’ve lost them.
Insurance Repair Projects
By Michael StoneA coaching client shared two recent experiences while doing insurance repair projects. One was positive, one wasn’t.
Clients Wanting Cost-Plus
By Michael StoneMany building owners want a Cost-Plus contract because they believe they’ll have more control over the total cost of the project. It’s your job to educate them on the downside.
When Your Client Sets the Price
By Michael StoneWhen your client wants a lower price, something has to change. It shouldn’t be just your price.
Maintaining Your Right to Lien
By Michael StoneAt least once a week I hear from someone who can’t get paid for work they’ve done.
Getting Quotes from Subs
By Michael StoneWithout a paid design agreement from the client, you aren’t sure you’ll get the job. Your subs are even less sure they’ll get the job.
Thank You Notes
By Michael StoneI’m a strong proponent of thank you notes. We received a creative note from a contractor the other day.
Documenting Jobs
By Michael StoneThere are two benefits to documenting your jobs. One is protecting yourself in case there is a disagreement about the project. The other is providing information that will help you when you’re promoting your business.
Itemization Woes
By Michael StoneWe’d like to share an email received from an anonymous homeowner. If you believe that it’s smart to provide an itemized invoice, this will make you reconsider.
Sharing Company Goals
By Michael StoneIt’s the time of year when you should be planning for the coming year. Once you set your plans for the year, how much of those plans should you share with your employees?
Your Sales Presentation
By Michael StoneGiven how valuable leads are, once you get one, you need a sales procedure to help make the sale.
Finding a Trustworthy Contractor
By Michael StoneIf you’re trying to make a living in residential remodeling or specialty work, it’s important to know what the general public is being told about you.
Hire Slowly, Fire Quickly
By Michael StoneIssues that eat into profitability: It’s easy to hire someone who looks good on paper. If the resume is terrific and their references are glowing, they get hired.
Stay the Course
By Michael StoneEver had a day, maybe a week, where you said, “That’s it, I’m done. Enough already.” You wanted to put a sign in the front window: “FOR SALE: One Construction Company, CHEAP! (I’ll pay you to take this stupid thing off my hands.)”
Pricing Too Low
By Michael StoneIt is a fact of life that when you sell construction-related services, you’ll have clients tell you that your price is too high. Bless their hearts. They have no idea what would be a fair price for the work they want done, they just know that your price is too high.
Low-Value Jobs
By Michael StoneI read many articles on the construction industry looking for, among other things, information on how the construction industry is doing and what we can expect in the immediate and near future. One statistic that always interests me is the size of the average remodeling job.
It’s Time to Stop Being Superman
By Michael StoneIn every business, some things we do eat into our profitability. Do you run your business or does your business run you?
Markup on Subs
By Michael StoneA lot of contractors don’t believe they need to use their full markup on subcontractor quotes. Let me explain why that can be a mistake.
Proprietary Business Information
By Michael StoneAn architect he knew asked him to meet with the owners of a proposed new home. As they were discussing the project, the architect asked our friend, in front of the clients, “What’s your overhead and profit percentage?”
Bookkeeping, Markup, Taxes, Advertising
By Michael StoneThis week I want to catch up on a few things that have been bothering me.
What’s a Reasonable Advertising Budget?
By Michael StoneHow much should you spend on advertising? How much is too much?
Owners Supplying Their Own Materials
By Michael StoneShould you let a client furnish their own materials?
The Salesperson’s Real Job
By Michael StoneWhen I think about major influences on my sales training, I think of Tom Hopkins. He was an outstanding salesman who become a gifted sales trainer, and I still receive and read his newsletters.
Dishonest Clients; Collecting the Final Payment
By Michael StoneHow do you deal with a dishonest client? I recently corresponded with a contractor concerning this issue.
Are They Helping or Hurting?
By Michael StoneI’m not convinced that Porch is interested in helping our industry. From what I’ve seen, I think they’re only positioning themselves to make money off contractors.
Referral Fees and Sales Commissions
By Michael StoneA referral fee is what you pay to the person who provides you a lead. A sales commission is what you pay a salesperson to close a sale.
Lead Generation Tactics
By Devon StoneBrian Javeline of MyOnlineToolbox presented a 24 minute webinar that introduced what you need to know to take charge of your own website marketing, and how to begin to put up your own defense against the Lead Generation companies.
Wasting Time: Red Flags on a Sales Call
By Michael StoneA potential client wanted to get a bid on some work at her home. Our coaching client was pretty sure the lead was dead, and wanted to know if she should have done anything differently to have made the sale.
Who should do the talking?
By Michael StoneI was asked recently by an electrical supplier, “Why do general contractors often not want their subcontractors to have any communication with the home owner?”
Another Myth: Lower Your Markup for Larger Jobs
By Michael Stone“I am working on designing a few jobs with the job costs starting around $125,000 and up. What is your opinion on markup when the job costs are getting bigger? I want to make sure I am staying competitive.”
Work Product Exclusion, Hiring Subcontractors
By Michael StoneLast week’s article discussed the pros and cons of using employees or subcontractors to get jobs built. This week, Myles Corcoran of Myles F. Corcoran Construction Consulting Inc., presents another point of view.
Subs or Employees, That is the Question
By Michael StoneRecently I’ve had a number of discussions with company owners about how to get their jobs built. It all comes down to using subs or employees, or as some like to say, “Should I be a paper contractor or a real contractor?”
Payment Schedules on Small Jobs
By Michael StoneIt’s important to manage the payment schedule on your jobs, but not all jobs are the same.
Penciling a Salesperson
By Michael StoneIf salespeople know the business owner will back them up and pay them fairly, they’re motivated to produce profitable sales. If they aren’t motivated to make sales, the business is in trouble.
Client Outrage
By Michael StoneReal or fake outrage can be a client’s attempt to elicit an emotional response from you to get what they want. It often puts you in the position of questioning yourself and your company, not dealing with the subject at hand.
The Downside of Commission Sales
By Michael StoneI’ve long been an advocate for paying salespeople on straight commission. Not everyone agrees, not even all the experts, but in my experience straight commission is the best way to go.
Generals and Subs: Working Together
By Michael StoneIt’s important to define the ground rules of your relationship.
Design Agreement Contract, Letter of Intent
By Michael StoneA design agreement allows you to get paid for your work. Don’t waste your effort or your time.
A Few More Contract Issues
By Michael StoneRetainage clauses, removing the finance charge clause on the last payment, “we’ll pay you when we get paid”.
Contract Language for Client-Caused Damage
By Michael StoneWhat do you do when a client calls about a problem they created? Preventative measures make the difference between a profitable job and losses.
They Want a Bid Today
By Michael StoneEvery once in a while, your phone will ring and the potential client on the other end will tell you they want a bid today. What should you do?
Business Protection for Contractors
By Michael StoneThe popular belief is that contractors are the villains and homeowners are the victims. But if you’ve worked with the public for very long you know there are also dishonest clients.
Final Payments, Emailed Quotes
By Michael StoneNever let your final payment exceed 2% of the sales price. And your contract should include a finance charge clause for payments not made on time.
Progress Payments: Keeping a Positive Cash Flow
By Michael StoneWe used to get three payments on jobs. 1/3, 1/3, 1/3. That’s not a smart business practice.
Money Changing Hands
By Michael StoneIt's easy to ask someone to do something; it's harder to hand over money. Your client isn't committed until they've written the first check.
Accounting – Keeping Track of Your Jobs
By Michael StoneIt’s easy to know if you’ve made a profit when every transaction is complete in a day. It isn’t as easy in construction, where a job might take a week, a month, or even more than a year to complete.
Pay Salespeople Fairly: Commission Sales
By Michael StoneThere are lots of opinions on how to pay a salesperson. Your salespeople have to be able to make a good living and provide for their family.
What’s Your Specialty?
By Michael StoneIf you're one of the many contractors who start an advertising message with, "We specialize in . . . ", good for you. But if you follow that statement with a long laundry list of things you do, you're hurting your business.
Supply and Demand
By Michael StoneThe services offered by construction businesses are in high demand right now. Can we look at this industry from another viewpoint?
The Games People Play
By Michael StoneWhy would a developer ask for a cost plus quote to replace a fixed price quote? Because he wants the very same work done at a lower price.
Getting Involved with a Storm Chaser
By Michael StoneLast week, a contractor called to ask my opinion on getting involved with storm chasers that were in his area.
Getting Paid
By Michael StoneIf the payment schedule is adjusted after you’ve started a job and they aren’t willing to pay what’s owed, file liens. You must protect your right to be paid.
Getting Business as a Sub
By Michael StoneOne of the questions we’re asked most often is how a subcontractor can get jobs. How do you go about meeting general contractors and letting them know you’re available to build their jobs?
When Clients Do an End Run
By Michael StoneStay ahead of your clients. Write a detailed contract that protects you from as many unpleasant scenarios as possible, and work from written agreements with both your subcontractors and your employees.
Most Profitable Construction Business Model: Do You Need Employees?
By Michael StoneWhat is the most profitable construction business model? Do you need employees? /p>
Subcontractors or Employees?
By Michael StoneSometimes they request you use employees instead of subs, or work on a T&M basis. Clients don’t understand how the construction world works. It’s your job to educate them.
When Should You Cut Your Markup?
By Michael StoneAs the economy slowly improves, we are being asked to revisit issues we haven’t discussed for many years.
Can You Afford to Hire?
By Devon StoneCan you afford to hire a new office employee, or take on any overhead increase? (video)
Things That Cause Problems, or, How to Upset Your Clients
By Michael StoneSeven issues that upset clients. And when clients are upset, either you won’t make the sale or you might not get paid.
Making Money, Losing Money or Breaking Even, what now?
By Michael StoneLast week we discussed knowing where you stand financially, whether you are making money, losing money, or breaking even. What now?
Making Money, Breaking Even, Losing Money
By Michael StoneThis is the criteria I use to tell if a company is making money. It isn’t the only measure, but it’ll give you an idea of how your business is doing.
Contracts, Change Work Orders, Punch Lists and More
By Michael StoneA selection of issues that should be written into every contract to protect your profitability.
Let’s Not Talk About the Backlog
By Michael StoneA major mistake contractors make is to tell a client they can’t start the job for 3-4-5 months. “We are backlogged, can’t possibly start your job before then.”
Markup Materials Only?
By Michael StoneIn a perfect world, estimated costs will match actual job costs. At the end of a perfect year, total job costs will equal projected job costs. It’s not a perfect world.
Contracts to Avoid
By Michael StoneIf you are going to deviate from a standard fixed price contract, look at your approach from your client’s point of view. Make sure they know what to expect and what you’ll do.
Contract Commitment Language
By Michael StoneCommitment language in your contracts, payment schedules that help cash flow, right of rescission language. With a few extra comments.
Contracts – Dates, Times, Conferences
By Michael StoneMany construction-related disputes can be avoided with a well written contract. Here are a few of the things that need to be included.
Website Ideas for Contractors – 15 Website SEO Ideas
By Devon StoneIf you missed our webinar earlier this week with Brian Javeline of MyOnlineToolbox.com, 15 Website Lead Ideas in 20 Minutes, the recording is available here.
Estimating Construction
By Michael StoneEstimating construction isn’t easy. When profits are down, missing the estimate on jobs is almost always part of the reason.
We Want To See Your Receipts
By Michael StoneWhat if you agreed on a price, now customer wants all receipts for material? Without a clearly written fixed price contract, it's a problem waiting to happen.
Race to the Bottom, or “How Low Can I Price This Job?”
By Michael StoneCutting your price to get a job is a money losing approach. Over time, you won’t be making a profit and you’re only working yourself into debt.
Where Do You Get Your Leads?
By Michael StoneA new business wants to market your construction business and provide leads. It'll also give homeowners ammunition making it harder to sell jobs. There’s an alternative.
Side Jobs in Construction
By Michael StoneHave you ever had a client go behind your back and ask your employees and/or subcontractors to work for them outside your company?
How Much Should a Contractor Charge?
By Michael StoneMany of our website visitors aren’t contractors, they’re clients looking for help with a Cost Plus project gone wrong, or wondering if their contractor is overcharging.
Adjusting Your Markup Based on the Job
By Michael StoneMany contractors use a variable markup or margin to price jobs. They believe that in the construction industry you have to reduce the price to get the job.
A Poorly Written Contract Will Cost You Money
By Michael StoneToo many contractors use a poorly-written construction contract, or no contract at all, leading to different interpretations of an issue.
Making Selections for Their Project
By Michael StoneIf you're a remodeling or new home contractor, how can you get clients to make their selections before you write the contract? Make it easy for your client.
What’s the Right Contractor Salary?
By Michael StoneIf you’re a contractor, how much should you be paid to own and run your own construction company? How much should a construction company owner be paid as salary?
What’s the Average Price of . . . ?
By Michael StoneWhat’s the average cost per square foot for a remodel? Average contractor markup? Average contractor fee? There is no average anything in construction, and here’s why.
State by State Guide to General Contractor Bond Amounts
By Devon StoneGeneral contractor licensing and surety bond requirements by state to help prepare for running a sound business.
Itemized Estimates
By Michael StoneWhy clients request itemized estimates, and how you should respond.
You Can’t Make This Stuff Up!
By Michael StoneWe use Google Analytics on our website. It tells us how many visitors we’ve had and what brought them to our website.
Markup and Margin Calculations
By Devon StoneOur newest six-hour class, based on the book “Markup & Profit, A Contractor’s Guide Revisited”, second hour, on markup and margin calculations.
Paying Owner’s Salary
By Devon StoneOur newest six-hour class, based on the book “Markup & Profit, A Contractor’s Guide Revisited”, is now available. This clip is from the first part on financial requirements.
It Isn’t Your Price. It’s You
By Michael StoneAddress their fears so they feel safe purchasing from you.
Pricing Jobs Right
By Michael StoneNot charging enough for your work is the major reason construction companies fail. Here are some of the mistakes contractors make when pricing their jobs.
Markup and Profit Recording
By Michael StoneMichael Stone discusses why contractors go out of business, the correct formula for markup, charging for change orders, employees and cash flow, and payment schedules.
How to Estimate Construction Costs
By Michael StoneEstimating errors cost money. Lower your error factor by considering these common mistakes.
Hire Your Own Subs
By Michael StoneFrom time to time, you will go out to see a potential client about doing work for them and they’ll ask if they can choose their own subs for their job.
Specifics on Change Work Orders
By Michael StoneLast week we discussed having signed Change Work Orders (or Additional Work Orders). Today we’ll discuss 4 mistakes often made when writing Change Work Orders.
Like breathing, being profitable isn’t an option
By Michael StoneIf your construction business isn’t profitable, it won’t survive. You have an option of being competitive in construction. You don’t have the option of being profitable.
Residential vs. Commercial Contractors
By Michael StoneI’ve long suspected that commercial and residential contractors look at the construction industry differently, and this thread confirmed that suspicion.
Letter From an Architect
By Michael StoneBy providing background, Michael Beck helps us understand how the relationship between architects and contractors has developed over the years.
It’s Your Business
By Michael StoneA contractor on the east coast was frustrated with how he was being treated by architects. For starters, they were requesting a list of all his subcontractors.
I Have to Be Competitive!
By Michael StoneYou don’t have to be competitive. You have to be profitable. If you aren’t profitable, your business won’t last.
What Readers Say
By Michael StoneThe Markup & Profit newsletter is published every two weeks. It provides valuable, pertinent information for any construction-related business owner.
All that Glitters . . .
By Michael StoneIs buying a construction business franchise a smart idea? The sales pitch is good, promising a proven method to run your business and a proven path to wealth.
Paying Yourself
By Michael StoneYou’re in business to provide a service and make a profit doing it. Having the financial info you need to make decisions is critical for your business success.
Cleaning the Jobsite
By Michael StoneIf you're an employer, these are things you should watch for and be prepared to deal with. If you're an employee, check to see how you're doing.
Insurance Repair Work
By Michael StoneA construction magazine said half of their subscribers were in the path of a hurricane. How many of those contractors are taking advantage of the potential new business?
There is No Industry Standard
By Michael StoneDon’t take any job where the client tells you how much you can charge for your work.
Construction Estimating: The Basics
By Michael StoneThe basics of construction estimating, so you can create more accurate estimates in a shorter time.
Your Price is Too High
By Michael Stone“Your price is too high” means you haven’t done your job as a salesperson.
How to Start Your Website
By Devon StoneBuilding a website for your small business doesn’t have to be expensive, and it isn’t that complicated when you understand how it works.
Guidelines for Success
By Michael StoneGuidelines to a more successful construction-related business.
Ten Cardinal Rules for Construction Business Owners
By Michael StoneTen Cardinal Rules for a successful construction-related business.
Employees Can Generate Sales Leads
By Michael StoneEmployees, properly motivated, can generate a lot of new business for you.
Close Out Package
By Michael StoneAs you’re walking out the door on a finished project, you want your clients to remember you as the company that went the extra step for them.
Contract Cancellations
By Michael StoneCancellations happen, even with the best of salespeople. Clients have all kinds of reasons to cancel an agreement, and you need to be prepared.
Overhead Creep
By Michael StoneOverhead creep is one of those subtle things that business owners often don’t notice. It leads to cash flow problems real quick.
Watermelons and Sales Leads
By Michael StoneYou might not think of watermelons, but one of our clever coaching clients shared a method he’s used to attract new leads for his business.
Payment Schedules for Cash Flow
By Michael StoneA good payment schedule keeps you paid for the work you are doing. If you're using a 1/3, 1/3 and 1/3 schedule, you are financing most of the job out of your pocket.
Rounding Up, not Down
By Michael StoneWhen we talk about making money, it's rarely about big chunks of change. One overlooked item that costs money is rounding numbers. For instance, your markup.
Employees to Volume Ratio
By Michael StoneIn our book we talk about the ratio of employees to dollar volume of business. Many contractors ignore this ratio and get caught up in the urgency of building a job.
Cost-Plus – A Homeowner’s View
By Michael StoneA very nice gentleman called me last Friday. He related a story about his home remodeling project. It was done a Cost Plus job, the "plus" was negotiated at 18%.
Marketing is just like planting seeds
By Michael StoneFor those who don’t understand the need for an ongoing marketing and advertising program for your business, let me try this analogy:
Business is business
By Michael StoneWe’ve noticed the same problem that we’ve seen with other specialties. They believe that because their work is focused on one thing, their business operates differently.
Transparency
By Michael StoneTransparency, as I understand it, is opening your books to your potential clients and showing them all the numbers pertaining to a job you are quoting.
Connecting with Potential Clients
By Michael StoneIf you aren’t getting a response to your advertising, either printed or on the web, you aren’t connecting with your potential clients. You must connect with them.
Paying a Bonus to Employees
By Michael StoneWe are approaching the time of year when the subject of bonuses comes up. Your employees might be saying, “Do you suppose they will pay us a Christmas Bonus this year?”
Missed Opportunities Cost Money
By Michael StoneI talk with contractors all the time who miss one opportunity after another and never seem to connect the cost of this miss.
Your Clients and Your Subs
By Michael StoneNow, if you are a subcontractor, it doesn't matter what trade, if a general contractor has hired you to work on a job your obligation is to that general contractor only.
Be Debt Free
By Michael StoneThe final item on our list of things you can do to assure positive cash flow is to avoid debt. If you are in debt, set the goal of becoming debt-free.
Be Prepared to Pay Taxes
By Michael StoneFar too often when contractors come to us for help they are behind paying one or more of their taxes. Don’t let this happen to you.
Watch Your Overhead
By Michael StoneIt's important to set goals for your business. It's also important to track, on a month by month basis, how close your actual finances are to those goals.
Use the Right Payment Schedule
By Michael StoneIf you want positive cash flow in your construction business, make sure you're using the right payment schedule on your contracts.
Create Accurate Estimates
By Michael StoneIf you forget to include the cost of insulation, you’ll be paying for it out of your own pocket.
Your Opportunity Clock
By Michael StoneAre you getting the most out of your day? Are you taking advantage of your time here, to do your best, both for yourself and your family?
A Bait and Switch Scam?
By Michael StoneLast weekend I passed a billboard on the side of the road. It loudly declared, "We will build your new home for $32 a square foot."
Pass those savings along?
By Michael StoneI read an article where the author talked about passing savings on to clients. This sounds well and good, but place it low on your priorities when putting a job together.
Do You Pay Bonuses for Work Done?
By Michael StoneIf you’ve raised kids in the past 20-30 years, you know the new rules – no one loses, everyone gets a prize. Don’t keep score because it hurts their feelings.
Learn to Paint Pictures
By Michael StoneConstruction (with the exception of new homes) is a service business. Your focus can't be on putting pieces together to build a job, it has to be on your clients.
Sending Invoices for Construction or Handyman Work
By Michael StoneInvoicing is one way clients delay paying. "Thanks for doing that work, send me an invoice, okay?" Why do contractors agree? Maybe they believe everyone does it.
Plus Overhead Plus Profit
By Michael StoneA reader recently sent in a note asking for my input on this statement that a government agency attached to a "bid package" for work they want done.
Asking for a Lien Release Prior to Payment
By Michael StoneA specialty contractor said, "A general contractor called and asked me to send a lien release. If I do that, he will send a check for what he owes me."
Bigger doesn’t always mean more profitable
By Michael StoneOften when I talk with contractors, I hear, "I want to grow my company so I can make more money." Consider this, if size mattered, dinosaurs would still be here.
The Job Price Isn’t Negotiable
By Michael StoneI wrote a Blog post for another company recently stating that I didn't think it very smart to negotiate the price of your work. A reader agreed with me and said:
Cleaning Up After a Low Bid Contractor
By Michael StoneThis potential client had a house built using the “lowest bid” contractor. The builder cut corners, leaving out little details like collar ties on the roof rafters.
Who Pays Your Salary?
By Michael StoneThe next time anyone, including yourself, wants to complain about how much money you make, think about this quote from Henry Ford.
Recover Overhead and Profit in your Labor Rate
By Michael StoneThere are four basic ways to charge for construction services. These are fixed fee or lump sum pricing, Time & Material pricing, Cost Plus, and using an hourly rate.
Should Salespeople Have to Generate Leads?
By Michael StoneSomeone asked me recently if I thought a salesperson for a construction-related company should help provide leads, and how many. Yes, they should help provide leads.
Who Asks the Questions?
By Michael StoneMost contractors I talk to believe their neck of the woods is different. They believe their clients are more difficult to sell to than anywhere else in the country.
Unlicensed Contractor
By Michael StoneThe old law said that the owner could recover 100% of the money they had paid a contractor if it was found that the contractor did not have a valid license.
Construction Insurance Repair Job That Could Have Gone Bad
By Michael StoneA friend was doing an insurance job, repairs to an exterior wall. The siding had been improperly installed, and around here, if you don't keep water out you'll see rot.
Newsletters for Marketing your Construction Business
By Michael StoneWe receive newsletters every week from construction-related companies around the US and Canada. We applaud all of you using a newsletter as a communication tool.
What Would You Do? Getting Cut Out of a Sale
By Michael StoneI was working as a salesperson for a fairly well run remodeling company. I went on a sales call to the home of a CPA that I’d know for some years.
Owning a Residential Remodeling Business isn’t Easy
By Michael StoneHe expected to make "millions". He wanted me to teach him how to do estimating "easily". That, he claimed was the only thing that he didn't know about this business.
What Goes On a Business Card?
By Michael StoneOne of the topics was business cards, we spent several minutes reviewing the value of a business card and how it can help promote your company.
Relationship Between Sales and Owner’s Salary
By Michael StoneWe had a question come in this week from a contractor asking about how to calculate the volume of business a company needs to support the owner’s salary.
Do Construction Jobs Have a Life Expectancy?
By Michael StoneDoes a job have a “life expectancy”? I believe it does and you should be aware of the warning signs.
Construction Company Turnaround
By Michael StoneDo you wonder if the book, Markup & Profit; A Contractor’s Guide can help your business, even in today’s economy? Check out a note we received earlier this month.
What Makes the Most Money?
By Michael StoneI’ve talked about focusing your attention on the 1, 2, or maybe 3 things you do well and make the most profit on. Doing a good job of advertising and promoting those.
Do You Have Business Interruption Insurance?
By Michael StoneBusiness Interruption Insurance is among the least understood and often most poorly written coverage.
A Market in Holiday Lighting
By Michael StoneYou need to start planning your advertising to potential clients that you are available to install and take down Christmas lights and decorations.
Selling On Price Alone
By Michael StoneI was reminded again recently of the need for in-house training on what it takes to pay the bills in a construction related company.
A Homeowner’s Point of View
By Michael StoneIn case you don’t think it’s important to have change work orders signed and paid BEFORE making a change, read this note I received from a homeowner yesterday:
Becoming a Construction Business Owner?
By Michael StoneWhen people lose their jobs, many decide to start their own business
“Transparency” or Proprietary Information?
By Michael StoneSomeone once said, “No man’s business is safe while the legislature is in session.” Here is another example.
Your Image in a Few Words
By Michael StoneHave you thought about the image you project? It's important to create an association between what you provide and what your potential client wants or needs.
Construction Business Employee Manual
By Michael StoneMany old timers in this business will tell you to be slow to hire and quick to fire. That is just the opposite of what too many construction-related businesses do.
Price Fixing in Construction
By Michael StoneDuring a recent survey, comments were made about price fixing. They referenced the Sherman Antitrust Act and association warnings about the appearance of price fixing.
Construction Business Advertising Example
By Michael StoneI don’t know much about their company, but I do know they understand communication with their customers and all those they do business with.
Markup or Margin . . . Which is Better?
By Michael StoneAre markup and margin interchangeable? Is a 1.55 markup the same as a 55% gross margin?
Using Gross Margin Correctly
By Michael StoneYesterday markup – today gross margin. Let's look at using your gross margin to calculate the correct sales price for your work.
Markup vs Margin
By Michael StoneThere’s a lot of confusion over using markup vs margin to price jobs.
Construction Coach Success Story
By Michael StoneA young couple came to us for coaching in February, just two months ago. While their P & L was not all that bad they could and wanted to do better.
Selling a Construction-Related Business
By Michael StoneI’ve heard any number of people say they are going to build their business up, then sell it. Let’s talk a bit of reality.
Run a Profitable Construction Business
By Devon StoneMichael takes a minute to talk about the value of making a profit. (video)
Production Budgets
By Michael StoneWe recently heard from a company that took over a $200,000 hit (spread over several jobs) because of actions the job superintendent took.
Every day, in every way, I’m getting better and better
By Michael StoneThe housing economy leaves a little to be desired. Don't count on the government to solve that problem. We have to take responsibility for and solve it ourselves.
The Pain of Discipline
By Michael StoneThis quote from Jim Rohn is particularly true for construction business owners. There are a lot of things that need to be done and we need the discipline to do them.
Moonlighting Construction Employees
By Michael StoneA question came about moonlighting employees. This is an ongoing issue for construction business owners.
Employee Benefits for a Construction Business
By Michael StoneIf a company offers no sick pay or vacation pay…but is about to start – which is more important to offer first, anticipating that the next year we can offer the other?
Labor Rate for Construction
By Michael StoneI’m frequently asked for the “industry standard” rate per hour for various types of work. There isn’t an industry standard markup, and there isn’t an industry standard hourly labor rate.
Is It Gouging or a Fair Price?
By Michael StoneAn earlier post of ours is getting a few homeowners riled up. The post discusses homeowners who have contacted us, unhappy about the prices their contractor is charging.
Is a Contractor’s License Important?
By Michael StoneWhy would you choose someone that has chosen to work without a business license for 30 years?
Running a Business or Being a Craftsman?
By Michael StoneEarlier this year I had the opportunity to interview with Brian Javeline for The Contractor Show. Our episode was just posted.
Markup for Insurance Work – What’s Fair?
By Michael StoneThe truth is, no contractor can survive on 10% overhead and 10% profit.
Becoming Part of the Solution – from Dakota Supply Group, Part 2
By Michael StoneIf being a lawyer is just like any other job, why do so many people regard it as a better career than that of a tradesperson like an electrician, carpenter or plumber?
Becoming Part of the Solution – from Dakota Supply Group, Part 1
By Michael StoneAll of the industries that we work with share one thing in common: they employ tradespeople . . . But there’s a problem: there’s not enough of you to go around.
Downpayment on a construction job
By Michael StoneGot a phone call recently from a contractor doing a job in the $150K range. Everything is fine, contract signed, and the job is going great.
Free Estimates: when you don’t give your work away
By Michael StoneThe contractor presented a design agreement with a $3,000 fee to design the job, 1/2 of the fee would be credited back when a contract was signed for the final job.
General and Specialty Contractor relationships
By Michael StoneIn the last month I’ve heard from more specialty contractors having problems being paid by generals than I’ve heard in years.
Fixed Price Quotations or Itemization?
By Michael StoneI read an article telling general and specialty contractors to give itemized estimates. Oh joy. It talks about goodwill, trust, comparing estimates, and other tripe.
Choosing a Contractor – Dealing with a Bad One
By Michael StoneThere is no way on God’s green earth I could pretend there aren’t unethical contractors.
Using a Variable Markup to calculate Construction Job Price
By Michael StoneA young lady told me her husband is using a variable markup on jobs. He marks up labor 3 or 3.5 times and materials 1.5 times. He adds 10% to subcontractor quotes …
Why You Need a Well-Written Contract
By Michael StoneA client decided to change the rules of their contract. She decided not to pay the full amount or on time as the contract specified.
Overhead Expenses in Accounting Software
By Michael StoneI was reminded again this week by a dear friend who is an expert in the use of QuickBooks of the necessary care that needs to be taken when you set up your accounting.
Construction-Related Franchises
By Michael Stone“I was wondering if you had any advice for contractors when approached about a franchise opportunity.”
Finding and Keeping Good Subs
By Michael StoneMy biggest challenge as a residential remodeler is obtaining and keeping qualified and experienced sub-contractors willing to do smaller type projects.
Upselling: Give Them Options
By Michael StoneIf you are in business, you are in sales. No rationalizing, you are in sales. If you don’t sell something at a profit, you are going to go away.
Charging for Estimates
By Michael StoneIf you’ve been in construction sales very long, you’ve met potential customers who ask for an estimate, but after a lot of work you learn they were just shopping.
Business Education and Construction – Willing to Learn
By Michael StoneAt a recent class, I was covering the basics of getting paid for additional work orders. I gave an example to emphasize the necessity of getting paid for your work.
OH&P in Construction – Using Figures Wrong Hurts Your Business
By Michael StoneAdding overhead and profit to job costs to calculate sales price is a mistake. Contractors should use a markup calculated for their construction business.
Is it a Construction Business, or a Hobby?
By Michael StoneQuestion came from a friend the other day. He said, "Michael, how do you determine whether someone in construction has a business or a hobby?"
Is My Contractor Overcharging Me?
By Michael StoneWe have had two e-mails in the past week from homeowners asking about the “Industry Standard” for pricing, wondering if their contractor is overcharging them.
Provide a Service, Make a Profit
By Michael StoneA young businessman called. He was in a state of shock after checking his books over the weekend and found over $11,000 in receivables, much of it over 30 days.
Price Your Construction Jobs Correctly
By Michael StoneIf you are tired of starving because you have enough work but don’t have the money to pay your bills, heed these words.
Cost-Plus, Cost+, Time and Materials, T & M
By Michael StoneA coaching client was working with a potential customer who wanted a remodeling job on a cost-plus basis instead of a fixed fee contract.
Construction Employees – It’s Break Time!
By Michael StoneAt the start of break, the crew jumped in a truck, drove 15 minutes to a doughnut shop, had coffee and a doughnut or two, drove 15 minutes back to the job site.
Salary and Markup
By Michael StoneOne of our clients called with cash flow problems. Leads were coming in, sales and production was good, correct number of employees for the volume of work, but no money.
Be Fair to your Customers – and Yourself
By Michael StoneI talked with a young guy the other day who called about our coaching service. His company was upside down and I could tell he was hurting.
Estimated Time for a Construction Project
By Michael StoneIf your employees consistently take longer than you estimated, you need to change your method of estimating. The human body can only work so fast.
Specialize in Construction – Stay Focused
By Michael StoneAfter working with a few hundred coaching clients, I believe that the key to profitability in construction is staying focused on doing a few things well.
Getting Paid for Quotes – Part 1
By Michael StoneDesign agreements, letters of intent – get paid for written quotes.
Definition of Terms – Construction Accounting
By Michael StoneTime for a quick review of some terms: gross profit, net profit, owner’s salary, owner’s wages. Owner’s salary is overhead, owner’s wages are a job cost.
How Much Do You Pay the Owner?
By Michael StoneDuring a recent class I taught, it was clear many in the audience didn’t understand that their sales volume must be enough to support the salary of the company owner.
Subcontractor, General Contractor Relationships
By Michael StoneWe keep hearing complaints about sub-contractors that don't show up on time, if at all. You need to take the time to explain the importance of being on time.
Does Your Construction Business Have a Website?
By Michael StoneToday websites are becoming a must as the customers who have money to spend are doing so by way of the Internet.
Couples in Construction (Working with your spouse)
By Michael StoneThe most profitable construction company today is a husband/wife combination with one other person either supervising the construction or selling for the company.
Rent or Purchase Construction Equipment?
By Michael StoneDo you rent or buy your tools or equipment? Here is a quick and dirty rule to follow. Don’t tie up money in tools and equipment that seldom gets used.
Let Construction Employees Learn from Mistakes
By Michael StoneI’ve talked to numerous construction company owners recently who are having problems with scheduling, getting jobs done, getting the right people to the right jobs, etc.
Customer Furnished Materials
By Michael StoneA recent note said, "The client wants to furnish all the materials. They are going to give me the money to go buy the materials, should I add my markup on the materials?"
Excavating, Digging, Dirt
By Michael StoneThis morning, on my own home, I remembered what it's like to find surprises on a construction project, like a water line that runs from I don't know where to I don't know where.
Underbidding a Job
By Michael Stone“I’m a contractor and underbid a house. I’m almost done and just figured that out. I can’t afford this loss. What can I do besides bankruptcy?”