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.
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.
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.
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.
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?
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.
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.
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.
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.
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?
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.
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.
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?
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.
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 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.
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?
Purchasing Commercial Insurance
By Michael StonePurchasing commercial insurance can be a frustrating experience for many construction businesses.
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.
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.
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.
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.
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.
Specialty Contractors and Down Payments
By Michael StoneShould specialty contractors require down payments even when working through a General Contractor?
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.
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.
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.
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.
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.
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.
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.”
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.
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?
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.
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.
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.
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.
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 – 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.
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.
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.
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 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.
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?
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
Insurance Repair Projects
By Michael StoneA coaching client shared two recent experiences while doing insurance repair projects. One was positive, one wasn’t.
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.
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.
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.
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.
Owners Supplying Their Own Materials
By Michael StoneShould you let a client furnish their own materials?
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.
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?”
Generals and Subs: Working Together
By Michael StoneIt’s important to define the ground rules of your relationship.
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.
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 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>
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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)
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.
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.
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 …
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.
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.
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.
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.
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.
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?"
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?”