July 16, 2025 • 53 mins
The most successful construction business owners know a secret that others learn the hard way: understanding cash flow is the difference between thriving and barely surviving. In this powerful conversation with Scott Peper, CEO of Mobilization Funding, we unpack why so many blue-collar businesses show healthy profits on paper but struggle with empty bank accounts in reality.
Scott brings thirteen years of experience financing specialty contractors and analyzing thousands of construction cash flows to explain why the construction industry faces uniquely challenging cash flow cycles. He walks us through the perfect storm that occurs when expenses accelerate while payments drag, and delivers a masterclass on the critical difference between margin and markup that every contractor must understand.
You'll discover why adding a 10% overhead allowance and 10% profit can actually leave you with negative cash flow during project execution once retainage is factored in. We also explore why commercial construction projects create such intense cash flow pressure and how to prepare your business before taking that next big job.
The heart of our discussion focuses on practical solutions: finding industry-specific financial professionals, implementing proper reporting systems, building redundancy in your crews, and most importantly, giving yourself grace during the growth process. Scott shares the profound advice to "treat your business like a baby," prioritizing its needs and protecting its growth without expecting immediate returns.
Whether you're just starting out or working to scale your blue-collar business, this episode provides the framework and information you need to make better financial decisions. Stop guessing about your numbers and start building the foundation that will support your business for years to come.
Ready to gain control of your cash flow and transform your business? Hit subscribe, share this episode with a fellow contractor who needs this wisdom, and implement these strategies to build a financially sound future.
Click the link above for a free marketing audit with insights to boost your blue collar business!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Hey guys, welcome to the Blue Collar Business Podcast
, where we discuss the realest,rawest, most relevant stories
and strategies behind buildingevery corner of a blue collar
business.
I'm your host, cy Kirby, and Iwant to help you in what it took
me trial and error and a wholelot of money to learn the
information that no one in thisindustry is willing to share,
whether you're under that shadetree or have your hard hat on,
(00:30):
let's expand your toolbox, guys.
Welcome back to another episodehere at the Blue Collar
Business Podcast, sponsored andpresented by podcastvideoscom.
This team been with them almostsince the start, other than the
first five to 10 episodes, andthey have transformed what this
show is today and how it'spresented to you guys on all
(00:53):
your podcast platforms.
But you can also listen orwatch directly from
wwwbluecollarbusinesspodcastcomand just leave it running in the
background.
You don't have to have asubscription to listen to every
single episode While you're onthe website.
Subscribe to that newsletter soyou can get a preface into your
email inbox every Wednesdaywhen we go live with a new
(01:16):
episode at 5 am Today.
Guys, I have been lookingforward to this for some time.
This gentleman has not onlyalready been a help to me in
ways he doesn't understand, butthe willingness and the product
that he has is helping guys justlike me and all you guys
(01:38):
listening today Coming fromcorporate America and helping
the blue collar man and woman inAmerica today.
I can't thank you enough, mrScott Pieper, ceo of
Mobilization Funding.
Thank you so much for beinghere, brother.
You're welcome man.
Thanks, si, I appreciate youhaving me on A little background
for you guys that I've learned.
(01:58):
Mr Scott started entrepreneurialpretty much his entire life,
spent a lot of it in corporateAmerica and has learned a lot of
things that me and you aregoing to learn about today.
But our main focus and topichere that he has learned that is
so crucial of a monster thatwe're going to talk about an
entire episode on and nobodybetter to talk about it with.
(02:20):
But we are talking about cashflow today, guys, and the
monster that it can become, andnobody better, seriously, than
the man himself to talk about it.
Can you just start off with?
Give us a brief synopsis ofwhat is cashflow to that one to
three-year guy that reallydoesn't even know.
(02:40):
He hears the term all the timebut he doesn't really understand
the impact.
Speaker 2 (02:44):
Yeah, Well, I like to think.
A lot of times you hearcashflow represented as the
lifeblood, but you called it themonster of business.
I guess they're both accurate,but depending on how you want to
frame them up.
But look, cashflow if you'retalking about the person that's
in the one to three year stageof business.
What cashflow is is essentiallyit's the differences to why.
(03:06):
You put your bid sheetstogether, you have profit built
into it, you execute the job,you get paid, but yet you still
feel like you have no cash.
And you look in your bankaccount and you're like why am I
not making any money?
That's what cashflow is.
That's what it is for the oneto three-year business guy.
(03:26):
Now why does that happen?
Well, it's just a combinationof timing between when your
expenses go out the door andwhen you actually collect the
money from your customer.
And if you only did one job ata time and then never did
anything else, it would allcatch up with itself pretty
quickly.
But what happens in business,especially when you're doing
(03:49):
what you're supposed to be doing, is you jump from project to
project, so you're alwaysstarting a new one.
You also happen to start takingon bigger projects, so they
have more cash needs.
Sometimes projects take longerto get paid.
So you have a drag on the backend in terms of of when money's
coming in and you have anaccelerant on the front end of
when money's going out, and it'sthe perfect combination to
(04:12):
create cashflow issues.
You know, look, cy, if you dida job every single day, went
there, did the job, soup to nutsand got paid and walked home
the only thing you're waitingfor is a check to clear every
night.
Okay, like that doesn't feellike pain right At all.
But that's not what happenshere.
It's just not the way it works.
It's the reason why a lot ofcommercial construction
(04:33):
businesses that happen to haveresidential departments or
service-based work tend to be alittle bit cashflow.
They tend to cashflow a littlebetter depending on the size of
the residential department orservice business compared to the
commercial business.
But it's one of the reasons whythey can kind of float overhead
or you can layer.
You hear the things like I layerall my overhead on on the
(04:55):
service business and it allowsme time to do the commercial
work.
So what that?
What they mean by that is allthose like your overhead and in
terms of insurance or staffsalaries and you know everything
from like pens and pencils andcomputers and things that cost
money in your business that youdon't allocate to a specific job
(05:17):
.
If you put them all onto aservice business or you didn't
even do it intentionally, butthe service business, because of
the nature of the cash flow, ispaying for those things it will
allow you to feel a little bitmore comfortable in terms of
when you're looking at yourcommercial side of the business
and a commercial project andit's taking longer to get paid
and you have that bid and youknow what profit is, which
(05:39):
really is really no more thanyour gross margin on that job.
No more than your gross marginon that job.
It will allow you to not feelas much of the pressure.
But unless you have a thrivingservice business that has a
totally different, quicker cashflow or a residential side that
might have a quicker cash flow.
It's what I explained in thebeginning.
It's that pain that you feelwhere you just don't feel like
you have any money but yetyou're completing work and doing
(06:00):
it and then the double rammycomes at the end of the year
when you do your taxes and theyactually like show that you made
the profit too, but you stillhaven't realized it.
And then you got to pay taxeson the profit and then, by the
way, if you don't show that youmade a profit, then you're never
going to get out of this racebecause you'll never get
financing.
If you show it, your businessis unprofitable.
(06:20):
All because you're just tryingto save money on taxes, which is
certainly reasonable, but itdoesn't help you when you're
trying to get access to cash inan industry that has a horrible
cashflow problem because of thenature of the business that
you're in.
Speaker 1 (06:35):
Man, you talk about a snapshot of all of it wrapped
up in one.
You just hit it Because I gotto probably tell on myself
starting right off the bat yeah,I had that resi work.
I had jumped into commerciallane and I found a lane that was
(06:57):
monthly, getting a check or twoa month.
Obviously, doing a lot ofvolume of work comes with a lot
of volume of money.
That's great.
But if you're not sitting therewatching profitability on that
cashflow which I also want youto talk about a little bit,
because I think a lot of guysget kind of confused, especially
(07:19):
if they've been listening tothis show long enough oh, you
got to have margin, you got tohave margin, you got to have
margin.
Well, you do, you absolutely do, especially on these big
commercial jobs.
But on that resi work or yourcash flow, at the same time you
have to have margin on to coverindirects and overheads, like
you were speaking of, and maybetalk a little bit about that too
(07:40):
, scott.
But you don't have to have asmuch margin as these back and
forth.
You know what I mean On thatconsistent coming in and out.
You know what I mean.
Speaker 2 (07:53):
Yeah, it's interesting.
It all depends on how you wantto tackle the problem first.
So if I were to start with, Ithink I want to tell everyone
you should give yourself somegrace, because here's just some
facts for you.
Take all the businesses in theworld and all the industries in
the world and construction folks, especially owners, are tough
on themselves.
Like you know, they're grinders.
(08:13):
You're getting after it.
It's not easy.
You have a lot of discipline topush yourself to do it, make it
work and get accomplished.
There's a lot of assumptionsmade in construction too, of
what we don't know, what wethink it's supposed to be like,
what we are, what everyone elseis doing and you know this is
the industry is no different.
Everybody's lying to each otherabout what they're actually
(08:34):
doing and what they're not,cause we're worried about our
egos or pride.
Okay, so if we're going to cutthrough it, where I'm coming
from on this, is I mobilizationfunding real, just to back up.
Where I'm coming from on this,is I mobilization funding, just
to back up.
We've been in business 13 years.
We finance constructioncontractors, specifically
specialty contractors in thecommercial trades, and what we
(08:56):
focus on is providingmobilization funding, loans at
the beginning of projects tohelp people get from the start
of a job to the point in which aproject cash flows.
Well, how do we know that?
Well, we build the cash flowsout.
So we know and see numbers.
And because we're not aconstruction company but we work
with hundreds or even thousandsof construction companies at
this point and we analyzeanywhere between 25 to 50 plus
(09:21):
projects in a given week,sometimes we've seen a lot of
cash flows and we've alsofinanced a lot of projects.
So our reps in terms of themath are just really high.
It doesn't mean that we're thegreatest in the world.
We just have a lot more repsthan everyone else because of
the nature of what we see.
So we've learned a lot overthat decade to 13 years.
(09:41):
So why I'm telling you thisisn't because I'm like the
greatest.
If you put me on a site or ajob site, I would mess this
whole thing up and I would makeit look like a complete train
wreck in this heartbeat.
But if you told me how to makemore, see how the math works,
that I can tell you fromexperience.
So where I'm coming from onthat is, you have to give
yourself some some grace,because it is literally one of
(10:02):
the most difficult cashflowcycles, if not the most
difficult cashflow cycle in allindustries, and for a few
reasons.
One it's a lot of money.
Okay, so we're not selling likewidgets that cost 10 bucks and
we can figure out how to financethem on a credit card.
That's number one.
So it's a lot of money.
With a lot of money comes a lotof risk.
(10:22):
With a lot of risk comes a lotmore rules.
With a lot more rules comesmaking it a lot harder.
Okay, that's number one.
Number two you're typicallyoutside, okay, and like you got
weather, you got extraordinaryconditions.
Number three you have a lot ofemployees and like, the more
employees, the harder it gets.
It's just like any otherbusiness.
It's not like an AI companywhere you're just like a paper
(10:44):
folder and you're just movingpaper around.
It doesn't work that way.
So those are hard.
So now that we've establishedwhy it's hard, you can give
yourself some grace that you'redealing with a hard industry in
the nature of the way cashflowworks.
So knowing that it requires youto have more information and
the right information, and thenyou can make great decisions.
(11:06):
So then you're like, okay, well, what information do I need?
Well, if no one shows you whatreports to have and how they'll
use those reports, then you'rejust winging it like you did
when you first started, andthat's not wrong with that.
But if we all first started as atechnician and you're going to
go, let you're in the concretetrade, right, well, okay, maybe
you start paving driveways.
(11:28):
Okay, well, you got aresidential driveway, like you
can mess some things up there.
But like, how bad, can youreally mess it up where?
If you're gonna go pour a padfor an amazon date, um, you know
fulfillment center, like yeah,you could screw that up pretty,
pretty good, it could cost ashit ton of money, you know.
(11:49):
So like there's a lot of workthat goes into the prep and
everything and the same thing inthe site work.
You know you go clear off someland for someone to build a
residential home Okay, go clearoff some land to build 200
residential homes Okay, a littledifferent, right, like it's the
same concept.
So just think that's what Imean by the scale and size of it
.
So now that you've givenyourself some grace, you need
just reports that you can manageand lead and those projects.
(12:11):
If a project takes just a dayor a week, you can remember what
happens today, tomorrow andthree days from now, but if a
project instead of a week takesthree months, you can't remember
what happens over the course of12 weeks and try to forecast
that.
You need to have info coming toyou.
So now that you understand thataspect of it, like you've given
(12:32):
yourself some peace.
It's all about the reports andthe information, and that means
now you have to have thewillingness to go.
Get that help.
Bring on the accountant early.
Bring on the right accountantconstruction accountant, not
like a family member that got aCPA license.
Not every accounting firm cando construction accounting
(12:52):
either, by the way.
So you got to find the rightpeople.
And then you got to lean onsome mentors early that have
been where you're at beenthrough the first three to five
years.
If they could save you half themistakes you normally make in a
five-year period, you'll bewildly successful.
And then the last thing I wouldtell you, if I was going to just
sum this up for you, is don'tthink about top-line revenue,
(13:14):
think about bottom-line revenue.
And if someone says I want tohit a million dollars, your
question should be likebottom-line or top-line, and you
should only be interested inthe bottom line million dollars,
not a top line, because I'veseen more businesses that are
two or three times the size ofanother business and they make
no money.
And a business that's a quarterof the size makes a ton.
(13:37):
So those are the kind ofsummations I would give you on
the basics of cashflow andthings to be thinking about.
So the next question is likehow do you cashflow your?
Speaker 1 (13:50):
business right.
That's the goal of the takedown, that's where I was, that's
literally where I was goingwith that is.
But you hit something sospecific that I say on here all
the time and it's so nice tohear from somebody else that has
the experience and theknowledge set that you do is go
to that industry specific CPAearly.
(14:11):
I sit here and I tell theseguys not because I know, I know
now you know, and so I luckilywent through four or five really
wrong CPAs and it costs you alot of time and money to get
there.
So, yes, go to them early.
(14:32):
And then most guys were likewell, I can't afford a full-time
CPA, well, we're not asking youto.
There is so many fractionalsout there.
But the other thing I ran into,scott, is this is exactly why
this podcast is here.
Is that hell?
Two years ago I didn't evenknow what a fractional anything
was.
I thought I had to keepbringing full-time employees on,
(14:53):
train them, which is the mostexpensive thing for any
blue-collar industry to do, orany industry with employees, for
that matter.
Training is expensive.
And so once you finally getthere, and then, if it's not
anyhow going a little off therails there, but find that
industry specific CPA and cutyour losses early In three
(15:13):
months.
If you're not getting theproper reporting and they're not
talking to you about what youeven if it's what you don't want
to hear half the time, that'swhat you do want to be doing,
because they're telling you thehard, honest truth and going hey
man, look, you got too manymachines.
Hey man, you got too manypeople, and I wish I would have
had that so much earlier on inSaigon and I tried to trust the
(15:38):
right folks, led down the wrongpath a couple of times, but be
willing to cut your losses early.
Go find that constructionindustry specific even maybe
fractional CFO or bookkeeper oraccountant or whatever level you
need there's fractional spotsfor each and get yourself
reports every 30 days.
(15:59):
I can't tell you how many years,guys, that I sat there myself.
I'm not sitting here talking atyou, I'm talking with you, guys
.
I need you to understand that I, in just the last couple of
years, have figured out thatinside accounting and inside
internal 30-day reporting iseverything and that the
executive level accounting and aproject per project level of
(16:22):
accounting there needs to beseparate.
There's executive and there'sproduction.
Anyways, I'm going a little faroff there.
But I really wanted to hammerthat home brother, that you
highlighted that, becausethere's so many times I hear I
can't afford.
No, I understand you can'tafford a high level $100,000 CPA
to just handle your one to twoor $3 million annually.
(16:42):
I totally get that.
But there is a lady or a manout there that's handling four
or five of those companies thatwould love to take you on and
probably give you some direction.
But yes, my next question wouldbe is how do you cash flow a
business sir, with those fourbeautiful points you gave us,
yeah, Look, every business isdifferent.
Speaker 2 (17:01):
Where you're starting from now, not at the beginning,
if you're two, three years in,if you had a bad project, a
problem, the bottom line is youhave to start with a good
foundation and in the first setof foundation you have to get is
your information.
Where are you at truly rightnow?
And once you can figure thatout, the good, the bad and the
ugly, no matter what.
(17:22):
There's no such thing as nosolution.
There's always a solution and aplan.
But you have to be startingwith honest information at where
you are.
And so, again, without having aspecific example on, like a
demo here in front, and say, oh,this business and this is how
you do it, because everybusiness is a little different.
But let's just speak ingeneralities.
Get the right information first.
(17:44):
So find out where you are.
And before I go into this, letme rephrase, let me reframe this
for you.
I think sometimes, in thisworld and industry specifically,
we think about things in tooshort of a time period.
I think if you were to say Iwant to be wherever it is you
want to get to, okay, think ofit five years from now.
(18:04):
And if you set the pace like,that's where I'm going to be
five years from now.
And then you walked into it andsaid, okay, I'm not going to
get there though 20% at a time.
The first year I might get only5% of the way there.
The second year I might onlyget another 15.
I might be 20% of the way there.
Third year, 30% of the waythere.
(18:26):
Fourth year, I'm 50% of the waythere.
And then the fifth year youactually make up the whole other
half.
And it was 10 times easier inyear four and year three to make
up that 50, 60% of the goalyou're trying to get to.
Then it would have been thefirst three, but what you're
doing in those first three yearsis you're learning the mistakes
that you're going to make, theissues you're cleaning up.
(18:48):
They're going to be at a muchmore palatable number.
They won't kill you.
They'll wound you but theywon't kill you the likelihood of
them killing you.
And then, by the time you getto that five-year point, which
goes by fast anyway, and unlessyou're like 65 years old and you
only got five years and you'relike, well, I'm burning it down,
then you've got time.
You're going to work past that.
So I think if you set thatstandard up front, you'll have a
(19:10):
lot more likelihood of beingsuccessful and even beating that
number.
When I say successful, meaninglike successful to hitting your
goal.
So in the beginning, there youfind out where you are.
What does that mean?
Well, okay, like if youactually bid a project today and
executed that job and finishedit, are you comparing exactly to
(19:31):
the penny what your actualcosts were, what your execution
was, what your labor cost was,what was your?
We call it a gain fade analysis.
Did you actually hit it righton target?
Did you overachieve,underachieve?
What were the cost structure?
Was it labor, was it material?
Here's a fun fact for you, and afriend of mine, scott Kimplin,
(19:51):
told me this from FMI Corp.
They are been in businessforever.
Amazing.
He's a great follow on LinkedIn, has amazing information.
He told me that many businessesthat are even in that 50 plus
million dollar range they stilldon't track their gain fade and
reporting accurately.
They look at it overall andthey actually realize, oh yeah,
(20:14):
we were right on track.
But what they don't realize isyou usually save 10 or 20% on
your material and vendor costs,but it's labor that overruns a
business and so you think you'redoing well, but reality is you
save 10 or 20% on your materialand vendors but never made it to
the bottom line because youblew your labor budget out by 25
(20:34):
, 30%.
Now if you get stung on aproject, all of a sudden you go
25 or 30% over labor and you canrun a project over.
You can run your profit out intwo seconds.
So if you don't know thesethings and you can't readily see
them, you don't know how you'reexecuting to it.
You don't have a report card oneach project, whether it's
(20:55):
weekly, monthly tracking,depending on how fast it is, and
let alone your financials.
It's hard to ever know whatyou're doing.
And if you don't know howyou're doing to what your plan
was, then yeah, you can surviveand move, but you're never going
to make progress because youdon't know what you can tweak.
It's all going on gut feel andfolks, it's just gut feel is
never going to work.
(21:15):
When you start scaling abusiness to seven figures, it
just doesn't work.
Let me tell you, yeah, becauseyou can't do everything.
And let me tell you, I learnedthat lesson in my own business
here at Mobilization Funding thehard way.
You can't, you just can't.
So there's no business isimmune to that what I just said
there.
You got to have the rightinformation.
So once you build thatfoundation of information now,
(21:37):
you can start to build on it.
Now here's the good news, and Ican tell you.
I learned this from evenspending 20 years in corporate
America with two differentmedical device companies.
Both are publicly listed.
One is Stryker OrthopedicsEverybody on earth's probably
heard of Stryker Orthopedics,stryker Corporation, and the
other one was AngioDynamics.
Tons of smart people with allthe brains and finance, and you
(21:59):
put all those people in the room.
Let me tell you somethingMaking decisions was very rare
to hear anyone make an effective, congruent, specific decision
Talking to construction businessowners of all sizes, whether a
couple million dollars a year orless, or even up to 30, 40, 50,
100 million dollar businesses.
(22:19):
When they have the rightinformation, they make clean,
clear, crisp decisions andexecute on them.
Like 99% of the time, they knowexactly what to do.
And what I learned by that?
What I learned by this, is it'snot these decisions that
everyone gets beat up about inconstruction or you beat
yourself up about.
It's not poor decisions.
It's the lack of informationthat led to a poor decision.
(22:43):
Because you didn't have theinformation, you're just flying
blind, like with your gut.
When you have all theinformation right, they look at
it and they're like, oh, this isa problem, this is the solution
.
I'm going to go do that rightnow and they come back and fix
it.
And that happens all the time.
Right now, and they come backand fix it.
And that happens all the time.
So that's why I'm so confidentwhen I say, like the right
information, every constructionbusiness owner can have a
(23:03):
significantly greater chance ofsucceeding into their goals and
what they're trying toaccomplish with the right info.
So that's really the first step.
Where am I setting up the rightfoundation of reports and
information?
The right team members, whichmeans inside the business.
That's going to be a goodbookkeeper, at a minimum, maybe
controller.
(23:23):
It's going to mean greatproject management,
superintendent, an estimatorfollowing a system and a process
.
And your estimators.
Everybody beats up the estimatorabout how much money was made,
but really truly like anestimator?
At the end of the day,shouldn't they just know what
your costs are and then you, asthe owner, go and figure out
what you want to add to it ornot.
Right, that's the importantthing.
(23:47):
So get that team right, getyour outside team right.
Find a construction lawyer thatcan read your contract so that,
if and when a big problemoccurs, you're in the best
possible situation you can be inand your accountant can give
you the reports you need andbuild what's the foundation of
reporting for you, and then inthat reporting we'll get you
(24:09):
information.
That's what your bookkeeper isgoing to put in, and then your
accountant is going to give youthe reports you need and then
you can make decisions.
That's really the key.
And then the rest of it's time.
Don't rush it.
Let time bake the cake.
Speaker 1 (24:23):
Blue Collar Performance Marketing guys.
They are the team I have beenwith in our marketing campaign
as a whole.
They help the podcast videosteam, but they also help on the
YouTube side of things.
Strategy the value Ike and histeam bring to Cyclone Excavation
in a help in regards ofmarketing has truly been
(24:44):
something different for me toexperience.
I know a lot of you guys outthere are questioning oh,
marketing this, when do I needit?
When do I need it?
And then you spend the moneyand you never see any results.
Results are everything.
Every 30 days you're gettingresults and you're making
strategy off of it.
Same topic of the day of MrScott's cashflow analysis that
we just spoke about.
(25:05):
If you have the rightinformation going out, it'll
come back.
So get with Blue CollarPerformance Marketing
bcperformancemarketingcombackslash bcbpodcast.
They'll give you a fullanalysis, completely free of
overview, of your entiremarketing package.
So get with them, guys.
But back to it here, scott,I've got.
(25:25):
I've got it.
You were hitting all the nailson the head directly for the
where I've been through in thecashflow side, but you're right.
You can't in the cashflow side,but you're right.
It's all about accurateinformation.
Labor overruns are huge and ifyou're not time tracking your
guys on a simple software thatthey can clock in and out from
(25:48):
with a location-based that willchange everything.
Look at your labor report everyweek.
Start making a tally.
These things that Scott aresaying isn't just completely out
there.
This can all be done on anExcel spreadsheet but it takes
time and dedication.
But the estimation andproduction teams you have to
have a certain known cost.
(26:10):
You have to know your cost iswhat Scott's ultimately saying
here.
Guys, you have to figure thatout and that takes some time
sometimes.
How do you figure that out?
By your production rates andanalyzing your production rates
to give your estimator a goodchance of standing against when
we go and bid this sameproduction job.
So you've got to figure outyour estimation.
(26:31):
And, scott, I hope you hit on alittle bit of indirects and
overheads here too, becausethere's a way that we handle it
and percentage base it now.
But there's so many guys outthere that they're just like,
well, material costs, here it is, and they just let it fly and
oh well, I put 10% margin on it.
So I'm hoping you get into that.
But the last thing I want totalk about estimation and
(26:53):
production.
Here, guys, before I let Scottgo thing.
I want to talk about estimationand production here.
Guys, before I let Scott go,two manholes say we've got 20
manholes, we're doing thisanalogy hit me so hard in the
head.
Brother.
Say we're doing 20 manholes andwe've got two guys bid out
estimated for it and truck,trailer forms, et cetera.
(27:20):
We've got two days perproduction per manhole.
Well, bill goes out there andhe actually took Jose and George
with him.
So now we got three guys onthere, right.
And so then we get over thereand man, we got into three or
four manholes and we're actuallylike four days per manhole.
So my question in here is andthe question that got pointed
and directed at me was when didyou find out that we were
(27:41):
burning four days per manholeinstead of that two?
And when did you find out thatthere was an extra guy?
When we've only bid for twoguys on this job, why has the
third guy been there the wholetime?
And is that at manhole numbertwo?
Is that at manhole number 10,20, six months after the job?
And never?
And guys, I want to tell you,I'm telling you straight up from
(28:01):
me and my experience, there wasa lot of nevers.
There was a lot of six monthsafter the job, there was a lot
of at the end of the year, andthen the keys and the tools that
Scott is sitting here tellingyou about.
Guys, isn't crazy hard to getgoing.
It takes time and showing alittle grace, but I hope you
like that analogy, brother.
Speaker 2 (28:20):
It does.
I mean you're right, becausewhen you find this first of all,
we're going to make mistakesand you're going to have
problems, right, so that'shappening on anything.
But when do you find it out?
It totally is an indication ofhow fast can you fix it and how
big of a problem is it.
If you're finding mistakes outlike right away, well, you can
mitigate against those and fixthem.
Hopefully you can see mistakescoming based on certain
(28:44):
behaviors or trends.
That's the secret sauce of allbusinesses, right, and that
comes with time.
But at a minimum, if you have20 manhole covers and you track
in the first two and you can seethat the first one takes four
days, okay, no problem, we justgot on site, you know
everybody's trying to figure itout.
Second, second manhole takesfour days.
Third manhole takes three and ahalf days.
(29:05):
Fourth manhole goes back tofour days.
Now, like, now start waving theflag like something's,
something's going wrong, right,yeah, and so, um, finding that
out is the only way you knowthat is.
It's not.
Hey, talk to your projectmanager.
How's the project go?
He says good, define, good,like what are we talking about?
Yeah, so details matter forsure.
You mentioned margin and addingmargin and markup, right.
(29:31):
However, I was going to talkabout that.
I don't know if that's theright time.
I'm going All right.
So margin and markup are twocompletely different things,
okay, and so I have an example.
I used it in my book that Icame out because I was trying to
think of the most basic way todo it.
So I actually can use itbecause I haven't memorized, so
I'll give it to you.
Taking a million dollar job Okay, when you're doing a project
(29:57):
and you're billing a project toa customer, you put in a bid and
it's a million dollars and youwin and they say congratulations
, you're going to invoice us amillion dollars to do this work.
And as you do the work, you putup the million, you bid, you
invoice against the milliondollars, and then the waterfall
starts at the million and worksits way down.
Okay, well, think about the.
That is the exact opposite.
(30:18):
When you bid a job, you startokay, what are my costs?
And you build up from thebottom.
So that same million dollar jobthat you invoice, that you won.
Let's just say, for example, ithas $800,000 of cost, okay, so
you look at it afterwards You'relike, oh, I'm going to make 200
grand and you say, oh, that's20%, perfect, no problem.
(30:42):
But it's not 20% if you startat the bottom and add 20%, and
that's what most people do, andthey make the mistake of doing
it.
So, for example, an $800,000job where you add 10 for
overhead and 10 for profit is a$960,000 bid.
Now you might say, well, thatI'm going to make 20% on that.
(31:06):
No, you're not.
You're actually making 16.66%.
And why is that a problem?
Well, because the retainage of10% is coming off the 960, which
is not 10% anymore of what youthought you had.
It's actually taking 96,000 of$160,000 quote profit and
(31:28):
putting it into retainage, whichwe all know.
You're not getting retainage toany of it to cashflow your job,
though you're not gettingretainage to any of it to
cashflow your job.
So now you're running that joboff of a 6.66% cashflow.
Someone might say, okay, well, Ican do that.
Okay, great.
Well, what if your overhead isa 10% allocation, like you say
(31:49):
it is, because that's how youbid it?
Well, you're going to have torun this job at a 4%, 3.33%
negative cash flow just toexecute the job.
And what does that mean?
That means you essentially haveto take every penny that you
make off that job and only spendit on job-related costs.
(32:09):
And before you even have theopportunity to do that, you have
to have enough cash probablylikely $250,000 to $300,000
minimum, depending on how you'repaid to invest into that job,
of which you're never going toget that cash back out at all at
any point to use again untilthe very end when you get paid
(32:31):
your retainage, which, as youcan tell, if you've done this
before and you have no cash inyour account and you're
wondering why you don't have anycash and you spend money, this
is exactly how it happens righthere, and you did nothing wrong
other than you didn't have yournumbers in correctly and you
made a mistake, thinking 10%addition and 10% for both is
(32:51):
going to count up.
But then they keep what reallyis 75% of your profit, because
$96,000 against 160,000, I don'tknow what the quick math is,
but it's close to 70%.
So 70% of your profit, which isalso your free cashflow of the
project, is locked intosomething you're not going to
ever get until you're done withthat project.
So you're hosed-.
(33:15):
You're set up to fail before youeven get started.
Speaker 1 (33:19):
Yeah, I was literally .
When you said the retainageword, you saw my face.
It stings, man.
You don't know what you don'tknow.
And that's again why we'resitting here today helping these
guys, because everybody seemsto want to jump from that resi
to commercial world so fast.
I was a victim of it too.
I wanted to do it.
I wanted to do it so fast.
(33:40):
I wanted to get out of theneighborhoods, not knowing how
healthy my business was then.
You know what I mean.
And so then I jumped into thecommercial world and found a
good cashflow.
But instead of building aroundthat, I used what I had, went
strictly commercial and boy, therocky road commenced.
(34:01):
Because my first project, I waslike all right, where's that
money at?
you know what do you mean?
You're only paying 90%.
Well, that's my profit.
And they're like well, we know,is this your first time?
Yeah, you stupid, like we'regoing.
Is this your first time?
Yeah, you stupid Like we'regoing to hold it until we're
done.
Sir, that's a three-year project.
(34:22):
Yeah, we know, you signed thecontract.
Stupid, did you not have yourlawyer look at it?
And oh my God, dude, I've beenthere and just be crushed
because if you're just like anyother business owner or any
entrepreneur, you're thinkingsix months, 12 months, five
years ahead, you've alreadyspent that money as it's coming
in and where it's going and howyou're going to reinvest that,
(34:42):
to buy this machine, to movethis amount of dirt for that job
.
Here's the next one Plug getspulled and that dirty word of
retainage.
But yeah, you're exactly right.
And I can't tell you how manytimes I've ran projects on that
manner right there and not knewany different until I got to the
end of the year and, looking atmy P&L that my tax guy finally
(35:04):
got to me and I'm like man, lastyear was rough man.
I sure wish I would have knownthat in month one or three or
six.
And so these guys, they justdon't.
Scott and I didn't either.
Speaker 2 (35:19):
I didn't realize what we were doing, and you know why
it shows up in a bigger job allof a sudden too.
Because you can do 150,probably even 250, $300,000 jobs
, right, even if that same jobtakes six months.
And the reason you can float itis because you have access to
credit like credit card you canget.
You can get a hundred grand onyour credit card, right, that
(35:40):
you can put, float, that, pay itdown and it's all fine, there's
no problem there.
Um, why it jumps up at you atthe half million dollar job, the
$750, the million dollar job,all of a sudden you're getting
stung is because that materialthat's normally 100 grand is now
250.
And guess what?
You don't have a credit cardfor 250.
And guess what?
(36:00):
Your supplier, because it's abigger job, they're not letting
you float 250 for 60, 70 days,25, sure.
And you're like what's going on?
What are you talking?
I thought I have 70 day terms.
Yeah, for 25 grand, but not for250.
And that gets back to myoriginal point where I said this
is a big dollars.
So the credit manager down atthe vendor, right, whatever
vendor you're buying from,depending on what your specialty
(36:22):
is.
Yeah, they're all cool withtaking some risk on you for 25
grand, but they're not cooltaking the same risk at $250,000
.
And so that's why it shows upon the big job.
It's why, if you do thesefinancials and get these reports
in the younger stages of yourbusiness, you'll know when it's
a $50 problem and just startadding zeros.
(36:45):
Later on in life.
You're going to learn it oneway or another.
It's better to learn it whenit's a $50 problem, and so
that's the point of why we bringthose things up, and it's also
the reason why I said in thevery beginning think of where
you want to be in a five-yearperiod.
Get 10% of the way there inyear one.
Get to 20% of the way there inyear two.
Worry about taking the biggestchunk of that in year four and
(37:05):
five, when you're ready, becausethat's what you're going to
learn.
You're going to learn all theselittle things that you have to
learn that no one's immune to inbusiness, myself included.
I mean, look, I'm sitting hereright now confidently explaining
this and they're like yeah,this guy's never been on a site.
He said he never did it andyou're right.
But let me promise you this Atany given time, we may have 100
(37:26):
plus different loans that areactive with across 70 to 100
customers and they're of alldifferent sizes.
We work with businesses that area couple of million dollars a
year in revenue, all the way upto maybe a hundred million
dollars a year in revenue.
Some of them have bankfinancing, some of them don't,
because these growth factors allneed extra capital.
(37:48):
If you think it's easy tocashflow 75 projects across, you
know, a hundred projects across75 different clients with money
coming in and out.
I promise you, if you saw ourcashflow sheets, that we utilize
to manage the cashflow ofmobilization funding, because
we're not going to the federalgovernment and just pulling
money out like a bank does,right, so it's very systematic
(38:11):
and organized.
So in the early days learningthis, the first eight years in
business nine years even wefumbled around and made every
mistake on earth, not knowingwhat to do, how to do it, and
not just on the individualprojects.
I'm talking about just managingthree customers versus 10
customers at a time, 10customers versus 20.
(38:31):
And so it took eight years.
We've been in business now 13years, but the last five years
we've really refined thatprocess.
And you have to, because everybusiness is cash flow.
No one's immune to that, no one.
Speaker 1 (38:47):
No man, you hit it nail on the head again.
But I think there's three keypoints to sum this up, and I'd
like you to talk a little bitmore about truly mobilization,
funding and what it offers.
I'm hearing from you and youuse those influences with the
(39:13):
information, you have to make aplan.
And, yes, I couldn't agree withyou more.
Hey, let's do a growth plan anddo 10% here, 20% here in the
second year or whatever it maybe, instead of, oh, let's just
go out just like every othercrazy gut guy.
Oh, let's just go out and buysome equipment.
We got plenty of work until youdon't, because you're not
(39:35):
concentrating on sales, becauseyour production team can't get
off a job.
But those were the three mainthings that I heard, guys.
And we talk about relationships.
I do believe every singleepisode nurture those
relationships.
I do believe every singleepisode nurture those
relationships.
I do wish I would have had afew more influences and
resources to at least askquestions.
(39:57):
These guys can at least throwit in here to the show and if I
don't know, I'm going to reachout to resources like yourself
and get them an answer.
So talk about a little bit.
Yeah, you've, you, you've,you've.
You've 7,200 customers.
That is mind boggling, numberone.
But for when do you think thepoint is, since you're dealing
(40:20):
with customers from one to three, all the way up to that hundred
range, what point do these guysreally start?
You know how much they'rehaving to deal with in year one
to three.
What point?
Is there a revenue point thatthey've really got to?
Hey, I've got to set everythingaside.
(40:41):
Until I have this figured out,I can't move forward.
I understand that's a reallyhard pinpointy timeline and it's
, in most cases, generalisticterms.
Hard pinpointy timeline andit's, in most cases,
generalistic terms.
But is there a, a guide, Iguess per se, for these guys in
the first year or two, they'rejust trying to get this, let
alone uh, and complete it, letalone find out if they're doing
(41:04):
it profitably.
Speaker 2 (41:06):
Well, here, here's the, here's the catch 22.
The earlier stage you are, themore important every single
project is, and you really can'tdo a project without profit.
So that's the sad business.
And you hear you're talking toa mentor, like, yeah, they say
sometimes it's okay to take onthat project at a little bit of
a lower margin or maybe even aloss because you're gaining the
(41:26):
new customer, no problem.
Yeah, well, you just talked toa 15 year old business doing $25
million a year and they'retalking about a $400,000 project
.
Well, you're an $800,000 a yearcompany.
That $400,000 a year project is50% of your revenue.
You can't do it at a loss.
You can take on a $40,000customer, and so it's these
(41:49):
principles that you hear.
Or you hear someone else say itdoesn't mean they were wrong or
they gave you bad advice, youjust didn't get the right
context with it, and so that'sone aspect of it I would tell
you.
But so, if I heard yourquestion correctly, it's like
when do you know when is it okayto hit the gas right?
(42:10):
When do you know when is itokay to like hit the gas Right?
I would say when you know,first and foremost, that you're
you're, you can.
You can trust that you're goingto perform a job for a customer
, leaving them with anexperience where they would feel
, um, they would feel scared notto give you the next job
because it was such a goodexperience for them, it was so
(42:32):
easy.
When you can replicate that, Iwould say that's one side on the
performance side.
When you're performing projectswith your team, to where you
know that customer is gettingsuch a great experience over and
above what their expectationsare, and certainly of your
competition and certainly ofyour competition, that's one on
the performance side.
Number two when you have atleast two crews, two managers of
(42:58):
crews or two superintendentsthat you can really count on and
trust, because when you onlyhave one, you have none and when
you have two, you really onlyhave one, because somebody
leaves, you can be totally hosed.
And I'm going to give credit to,uh, my boy, andy forcilla, who
taught me that.
I asked him how do you scalebusiness if you guys don't know
(43:18):
andy forcilla?
He's amazing guy.
Jump on the oh man, jump on themfceo podcast, you can follow
him on real af.
And he, he taught me that and Iwas I've been in the arte
syndicate with him, learned from.
I mean he taught me that andI've been in the Arte Syndicate
with him, learned from him along time.
He taught me that straight up.
He said when you have one, youhave none, when you have two,
you have one.
And it's true, because ifanybody's had one of your people
(43:41):
leave before you know exactlywhat I'm talking about.
So and why that's important islike if we're being honest with
ourselves, like if you think,and why that's important is if
we're being honest withourselves, if you think all your
crews operate the same way andeffectively create the same job
the same way, you're just lyingto yourself.
That's just not the way it is.
So if you have standard pricingand effectiveness for every
(44:02):
single one of your crews, well,that's not the way it is.
There's no way that's the case.
So same thing with yoursubcontractors.
They're not all the same on thesame day.
Some of them are good atcertain projects, some are bad
at others.
Some are good in flat work,some are better at elevation
change.
I mean, it just depends.
(44:23):
You got to know that stuff.
So I would say that's one onthe performance side and then on
the financial side, which isactually easier and faster than
the performance side is get theright infrastructure in place.
You go to a great constructionaccountant, cpa, ask him to put
the right structure together, asif you are a $10 million
company and you're like, but I'monly a half a million dollar
(44:43):
company, so what?
Build it to?
Where you're going?
The reporting structure is thesame.
It's just like a strongfoundation.
You wouldn't put a footer in tosupport a one-story building.
When you plan on putting atwo-story building on it, it's
no different.
And don't think about the costyou're spending on things like
that as too much.
Those are investments, and ifyou think about the mistakes
(45:07):
you're going to make in a badproject, in the same regard, as
that's too much, those areinvestments too.
So I'd much rather make aproactive investment in what I
think is too much in anaccountant to set up my right
foundation so that when I buildand you'll make that cost up in
mistakes that you won't make,that's how I would really think
(45:28):
about that.
Once you're in that position andyou run through the cycle of
half dozen jobs with the rightfinancial foundation two crews
instead of one you know that youhad bid a job a certain way and
you ran it and you're close toyour range of effectiveness in
terms of what your profitabilitywas and execution, then I'd say
, start taking on the fifth job,when you're used to doing only
(45:52):
four at a time.
Then take on the half milliondollar job, when you're used to
only doing $250,000 jobs, andsee how that box all of us know.
If you're talking aboutbusiness, you got this rattling
box.
It just shakes.
It's like shakes.
Sometimes you duct tape it andit goes away.
Sometimes it only shakes for aday.
Every time you take a step up,the box starts to shake again.
(46:14):
And you got to find out wherethose levels of shake are so
that you can calm it down beforeyou start going.
If you run through too fast,the box gets going crazy.
And another mentor of mine toldme, like if you treat your
business like a baby, you'llalways be better off.
And I said what the heck doesthat mean?
All right, here it is.
(46:35):
A newborn baby can't feeditself, can't live in the wild,
can't do anything.
Everything has to be cared for.
It can't communicate.
You have to take care of it atall times.
You wouldn't leave your newbornbaby next to a lion.
You wouldn't give your babyjust to anybody.
You wouldn't feed your baby,just anything.
(46:57):
You wouldn't spare any cost totake care of your baby.
And so if you treat yourbusiness the same exact way and
you would also feed your babybefore you fed yourself, you
also wouldn't take something outof your baby's hands for the
benefit of you if your babyneeds it.
And so if you treat yourbusiness like a baby, you'll
(47:20):
have a much more successfulbusiness and as that baby grows,
all of a sudden that baby willtake care of you because it will
become an adult and that whenit's an adult, then the business
, the baby, will take care ofyou.
And you have to be patient todo that that's.
I was like, damn, that is agreat analogy.
I'm definitely.
It all came together for mewhen I heard that and that's it.
(47:41):
And so some there's, sometimesthere's still this day I'm
trying to make a decision.
I think, well, what would I doif this baby was, if his
business was a baby?
And then the decision comes.
It's pretty easy.
You know, that's what I wouldsay to scale man.
I hope that answers yourquestion.
I mean, that's a tough one.
I'm trying to give you as bestof analogies as I possibly could
.
Speaker 1 (48:00):
No, I think you hit it again.
I hate to sound like a brokenrecord.
Hit a nail on the head, brother.
You have made this podcast apleasure, I've got to tell you
because I agree with you.
I think the production side ofit is way harder.
I think if they go to thatindustry-typed CPA especially if
you're in the constructiontrades guys hammer it home all
(48:20):
the time.
Go as soon as you can.
Find that person, year two,year one, year two.
Find that person.
Let them set you up in a growthpath.
Hey, yeah, set me up like I'mdoing $10 million and then guess
what.
You have that person.
Let them set you up in a growthpath.
Hey, yeah, set me up like I'mdoing $10 million and then guess
what.
You have that foundation.
Go figure out production andyou can screw it up because you
got financial gurus back heregiving you a accurate
(48:42):
information every 30 days.
Hey, something's going on,something's skewy, something
just happened, Not six monthsdown the road, and you don't
know what's going on.
So I would completely agreewith that.
I absolutely switching gearshere.
And I've got one more questionfor you, sir.
I truly enjoy following you onLinkedIn personally, so make
(49:03):
sure you go and find him.
Scott Pieper and MobilizationFunding on LinkedIn.
And where else can we find yourbrother?
Speaker 2 (49:11):
We have a pretty big YouTube channel, lots of videos
anding on LinkedIn and whereelse can we find you, brother?
We have a pretty big YouTubechannel, lots of videos and
content on there.
It's on YouTube Mobilization,funding, and you can also, of
course, find us on our websiteat mobilizationfundingcom I am a
big advocate of just a littlebit ago.
Speaker 1 (49:30):
Youtube has got a special place in my heart as
well and I really hope to seeyou guys flourish on there as
well.
Yes, I mean, having thousandsof subscribers is a big YouTube
channel, sir, so that isimpressive and all the
information if you want Scott togo off further is on there.
Go watch the videos.
(49:50):
I've spent a little time.
There's 600 plus videos on hisYouTube channel and I know how
much time and dedication thattakes, but it shows how much he
cares about me and you and ourgrowth.
So, guys, spend some time there.
The last question that I askeverybody on the show brother,
(50:10):
what's the takeaway for thatblue collar worker and I think
it's so cool that you mentionedMr Purcella dude, that guy,
motivation king.
But what's the takeaway for theblue collar worker who's just
sick and tired of being stuck inthe mud, whether mentally,
physically, emotionally,entrepreneur, or maybe that guy
(50:31):
just starting out on his track?
What's the takeaways?
Speaker 2 (50:35):
I would say like you're not that special man.
We've all been there, so don'tfeel bad about it, Like anyone
telling you they haven't, it'sjust full of shit.
So I would say like it's allgood, Like it's part of the game
.
If you feel like shit, you'reprobably getting closer to being
great.
You may, hopefully.
That's enough, that feeling'senough to just get you on track.
(50:56):
Information's everywhere.
You just have to do it andexecute it.
Do you start with doing thethings we started with today?
Reframe your timeline.
It's usually one of the bestthings you can do.
Like if everybody feels like aloser right now, but the reality
is like it takes time, man.
So like you, just if youreframe your timeframe of what
it's going to take, that is ahuge help Cause like otherwise
(51:18):
you just can be going for 10years and you feel bad every
single day.
It's more progress over whereyou're at, getting the right now
.
It's more making progress towhere you want to go.
Measure the progress.
And I would say when I sayyou're not that special, I mean
like we've all been there andsomeone's already recovered from
where you're at.
Someone's already recoveredfrom way harder place and you
(51:38):
could do it too.
You already know what to do.
You probably know what mistakesyou made.
Don't make them again.
Pick, pick up, place one stepin front of the other.
It just takes a lot of work andyou picked a hard industry, so
give yourself some grace.
Nothing's easy.
That's what I would do.
Speaker 1 (51:53):
Man, spot on and real and raw, and I really
appreciate that.
You're right, Not all of ushave been there, but don't beat
yourself up, and I am king of it.
You want to talk about and mosttrue, half percenter
entrepreneurs they are.
They're hypercritical ofthemselves.
That's what drives them to bebetter.
Right, but I agree, For outsideof that entrepreneurial ring it
(52:19):
ain't that bad Big dog rock onOne foot in front of the other.
I cannot tell you guys, thishas definitely been one of my
favorite episodes.
Been one of my favoriteepisodes.
I've learned reassurance intowhat my thinking and the massive
turning of the ship of thatI've been speaking about, that
I've been doing internallywithin our, you know, within
PsyCon, and, uh, having Scott asa resource has already been
(52:44):
relieving, I guess.
Would say that you know youain't doing it that bad.
You are in a spot, but guesswhat?
You just didn't know.
Now you do.
Don't make it again.
So, brother, I can't thank youenough.
I'm looking forward to maybebeing.
Speaker 2 (53:01):
I think we're coming up Friday, man, two days from
now, it's Wednesday afternoon.
We're filming this, but Friday,two days from now, you'll be on
our podcast.
Yeah, and where can we findthat?
That is called the MobilizationMindset.
You can find it on any one.
You can find it on our YouTubechannel, but you can also find
it on any place you like tocatch podcasts.
Speaker 1 (53:24):
I'm telling you, guys , the resources are there.
We're bringing them here to thebluecollarbusinesspodcastcom.
Check them all out there andmake sure and go find Scott Guys
till next time.
You guys, be safe and be kind.
If you've enjoyed this episode,be sure to give it a like.
Share it with the fellers.
Check out our website to sendus any questions and comments
about your experience in theblue collar business.
(53:46):
Who do you want to hear from?
Send them our way and we'll doour best to answer any questions
you may have.
Till next time, guys.
Hey guys, welcome to the Blue Collar Business Podcast
, where we discuss the realest,rawest, most relevant stories
and strategies behind buildingevery corner of a blue collar
business.
I'm your host, cy Kirby, and Iwant to help you in what it took
me trial and error and a wholelot of money to learn the
information that no one in thisindustry is willing to share,
whether you're under that shadetree or have your hard hat on,
(00:30):
let's expand your toolbox, guys.
Welcome back to another episodehere at the Blue Collar
Business Podcast, sponsored andpresented by podcastvideoscom.
This team been with them almostsince the start, other than the
first five to 10 episodes, andthey have transformed what this
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(00:53):
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You don't have to have asubscription to listen to every
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Subscribe to that newsletter soyou can get a preface into your
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(01:16):
episode at 5 am Today.
Guys, I have been lookingforward to this for some time.
This gentleman has not onlyalready been a help to me in
ways he doesn't understand, butthe willingness and the product
that he has is helping guys justlike me and all you guys
(01:38):
listening today Coming fromcorporate America and helping
the blue collar man and woman inAmerica today.
I can't thank you enough, mrScott Pieper, ceo of
Mobilization Funding.
Thank you so much for beinghere, brother.
You're welcome man.
Thanks, si, I appreciate youhaving me on A little background
for you guys that I've learned.
(01:58):
Mr Scott started entrepreneurialpretty much his entire life,
spent a lot of it in corporateAmerica and has learned a lot of
things that me and you aregoing to learn about today.
But our main focus and topichere that he has learned that is
so crucial of a monster thatwe're going to talk about an
entire episode on and nobodybetter to talk about it with.
(02:20):
But we are talking about cashflow today, guys, and the
monster that it can become, andnobody better, seriously, than
the man himself to talk about it.
Can you just start off with?
Give us a brief synopsis ofwhat is cashflow to that one to
three-year guy that reallydoesn't even know.
(02:40):
He hears the term all the timebut he doesn't really understand
the impact.
Speaker 2 (02:44):
Yeah, Well, I like to think.
A lot of times you hearcashflow represented as the
lifeblood, but you called it themonster of business.
I guess they're both accurate,but depending on how you want to
frame them up.
But look, cashflow if you'retalking about the person that's
in the one to three year stageof business.
What cashflow is is essentiallyit's the differences to why.
(03:06):
You put your bid sheetstogether, you have profit built
into it, you execute the job,you get paid, but yet you still
feel like you have no cash.
And you look in your bankaccount and you're like why am I
not making any money?
That's what cashflow is.
That's what it is for the oneto three-year business guy.
(03:26):
Now why does that happen?
Well, it's just a combinationof timing between when your
expenses go out the door andwhen you actually collect the
money from your customer.
And if you only did one job ata time and then never did
anything else, it would allcatch up with itself pretty
quickly.
But what happens in business,especially when you're doing
(03:49):
what you're supposed to be doing, is you jump from project to
project, so you're alwaysstarting a new one.
You also happen to start takingon bigger projects, so they
have more cash needs.
Sometimes projects take longerto get paid.
So you have a drag on the backend in terms of of when money's
coming in and you have anaccelerant on the front end of
when money's going out, and it'sthe perfect combination to
(04:12):
create cashflow issues.
You know, look, cy, if you dida job every single day, went
there, did the job, soup to nutsand got paid and walked home
the only thing you're waitingfor is a check to clear every
night.
Okay, like that doesn't feellike pain right At all.
But that's not what happenshere.
It's just not the way it works.
It's the reason why a lot ofcommercial construction
(04:33):
businesses that happen to haveresidential departments or
service-based work tend to be alittle bit cashflow.
They tend to cashflow a littlebetter depending on the size of
the residential department orservice business compared to the
commercial business.
But it's one of the reasons whythey can kind of float overhead
or you can layer.
You hear the things like I layerall my overhead on on the
(04:55):
service business and it allowsme time to do the commercial
work.
So what that?
What they mean by that is allthose like your overhead and in
terms of insurance or staffsalaries and you know everything
from like pens and pencils andcomputers and things that cost
money in your business that youdon't allocate to a specific job
(05:17):
.
If you put them all onto aservice business or you didn't
even do it intentionally, butthe service business, because of
the nature of the cash flow, ispaying for those things it will
allow you to feel a little bitmore comfortable in terms of
when you're looking at yourcommercial side of the business
and a commercial project andit's taking longer to get paid
and you have that bid and youknow what profit is, which
(05:39):
really is really no more thanyour gross margin on that job.
No more than your gross marginon that job.
It will allow you to not feelas much of the pressure.
But unless you have a thrivingservice business that has a
totally different, quicker cashflow or a residential side that
might have a quicker cash flow.
It's what I explained in thebeginning.
It's that pain that you feelwhere you just don't feel like
you have any money but yetyou're completing work and doing
(06:00):
it and then the double rammycomes at the end of the year
when you do your taxes and theyactually like show that you made
the profit too, but you stillhaven't realized it.
And then you got to pay taxeson the profit and then, by the
way, if you don't show that youmade a profit, then you're never
going to get out of this racebecause you'll never get
financing.
If you show it, your businessis unprofitable.
(06:20):
All because you're just tryingto save money on taxes, which is
certainly reasonable, but itdoesn't help you when you're
trying to get access to cash inan industry that has a horrible
cashflow problem because of thenature of the business that
you're in.
Speaker 1 (06:35):
Man, you talk about a snapshot of all of it wrapped
up in one.
You just hit it Because I gotto probably tell on myself
starting right off the bat yeah,I had that resi work.
I had jumped into commerciallane and I found a lane that was
(06:57):
monthly, getting a check or twoa month.
Obviously, doing a lot ofvolume of work comes with a lot
of volume of money.
That's great.
But if you're not sitting therewatching profitability on that
cashflow which I also want youto talk about a little bit,
because I think a lot of guysget kind of confused, especially
(07:19):
if they've been listening tothis show long enough oh, you
got to have margin, you got tohave margin, you got to have
margin.
Well, you do, you absolutely do, especially on these big
commercial jobs.
But on that resi work or yourcash flow, at the same time you
have to have margin on to coverindirects and overheads, like
you were speaking of, and maybetalk a little bit about that too
(07:40):
, scott.
But you don't have to have asmuch margin as these back and
forth.
You know what I mean On thatconsistent coming in and out.
You know what I mean.
Speaker 2 (07:53):
Yeah, it's interesting.
It all depends on how you wantto tackle the problem first.
So if I were to start with, Ithink I want to tell everyone
you should give yourself somegrace, because here's just some
facts for you.
Take all the businesses in theworld and all the industries in
the world and construction folks, especially owners, are tough
on themselves.
Like you know, they're grinders.
(08:13):
You're getting after it.
It's not easy.
You have a lot of discipline topush yourself to do it, make it
work and get accomplished.
There's a lot of assumptionsmade in construction too, of
what we don't know, what wethink it's supposed to be like,
what we are, what everyone elseis doing and you know this is
the industry is no different.
Everybody's lying to each otherabout what they're actually
(08:34):
doing and what they're not,cause we're worried about our
egos or pride.
Okay, so if we're going to cutthrough it, where I'm coming
from on this, is I mobilizationfunding real, just to back up.
Where I'm coming from on this,is I mobilization funding, just
to back up.
We've been in business 13 years.
We finance constructioncontractors, specifically
specialty contractors in thecommercial trades, and what we
(08:56):
focus on is providingmobilization funding, loans at
the beginning of projects tohelp people get from the start
of a job to the point in which aproject cash flows.
Well, how do we know that?
Well, we build the cash flowsout.
So we know and see numbers.
And because we're not aconstruction company but we work
with hundreds or even thousandsof construction companies at
this point and we analyzeanywhere between 25 to 50 plus
(09:21):
projects in a given week,sometimes we've seen a lot of
cash flows and we've alsofinanced a lot of projects.
So our reps in terms of themath are just really high.
It doesn't mean that we're thegreatest in the world.
We just have a lot more repsthan everyone else because of
the nature of what we see.
So we've learned a lot overthat decade to 13 years.
(09:41):
So why I'm telling you thisisn't because I'm like the
greatest.
If you put me on a site or ajob site, I would mess this
whole thing up and I would makeit look like a complete train
wreck in this heartbeat.
But if you told me how to makemore, see how the math works,
that I can tell you fromexperience.
So where I'm coming from onthat is, you have to give
yourself some some grace,because it is literally one of
(10:02):
the most difficult cashflowcycles, if not the most
difficult cashflow cycle in allindustries, and for a few
reasons.
One it's a lot of money.
Okay, so we're not selling likewidgets that cost 10 bucks and
we can figure out how to financethem on a credit card.
That's number one.
So it's a lot of money.
With a lot of money comes a lotof risk.
(10:22):
With a lot of risk comes a lotmore rules.
With a lot more rules comesmaking it a lot harder.
Okay, that's number one.
Number two you're typicallyoutside, okay, and like you got
weather, you got extraordinaryconditions.
Number three you have a lot ofemployees and like, the more
employees, the harder it gets.
It's just like any otherbusiness.
It's not like an AI companywhere you're just like a paper
(10:44):
folder and you're just movingpaper around.
It doesn't work that way.
So those are hard.
So now that we've establishedwhy it's hard, you can give
yourself some grace that you'redealing with a hard industry in
the nature of the way cashflowworks.
So knowing that it requires youto have more information and
the right information, and thenyou can make great decisions.
(11:06):
So then you're like, okay, well, what information do I need?
Well, if no one shows you whatreports to have and how they'll
use those reports, then you'rejust winging it like you did
when you first started, andthat's not wrong with that.
But if we all first started as atechnician and you're going to
go, let you're in the concretetrade, right, well, okay, maybe
you start paving driveways.
(11:28):
Okay, well, you got aresidential driveway, like you
can mess some things up there.
But like, how bad, can youreally mess it up where?
If you're gonna go pour a padfor an amazon date, um, you know
fulfillment center, like yeah,you could screw that up pretty,
pretty good, it could cost ashit ton of money, you know.
(11:49):
So like there's a lot of workthat goes into the prep and
everything and the same thing inthe site work.
You know you go clear off someland for someone to build a
residential home Okay, go clearoff some land to build 200
residential homes Okay, a littledifferent, right, like it's the
same concept.
So just think that's what Imean by the scale and size of it
.
So now that you've givenyourself some grace, you need
just reports that you can manageand lead and those projects.
(12:11):
If a project takes just a dayor a week, you can remember what
happens today, tomorrow andthree days from now, but if a
project instead of a week takesthree months, you can't remember
what happens over the course of12 weeks and try to forecast
that.
You need to have info coming toyou.
So now that you understand thataspect of it, like you've given
(12:32):
yourself some peace.
It's all about the reports andthe information, and that means
now you have to have thewillingness to go.
Get that help.
Bring on the accountant early.
Bring on the right accountantconstruction accountant, not
like a family member that got aCPA license.
Not every accounting firm cando construction accounting
(12:52):
either, by the way.
So you got to find the rightpeople.
And then you got to lean onsome mentors early that have
been where you're at beenthrough the first three to five
years.
If they could save you half themistakes you normally make in a
five-year period, you'll bewildly successful.
And then the last thing I wouldtell you, if I was going to just
sum this up for you, is don'tthink about top-line revenue,
(13:14):
think about bottom-line revenue.
And if someone says I want tohit a million dollars, your
question should be likebottom-line or top-line, and you
should only be interested inthe bottom line million dollars,
not a top line, because I'veseen more businesses that are
two or three times the size ofanother business and they make
no money.
And a business that's a quarterof the size makes a ton.
(13:37):
So those are the kind ofsummations I would give you on
the basics of cashflow andthings to be thinking about.
So the next question is likehow do you cashflow your?
Speaker 1 (13:50):
business right.
That's the goal of the takedown, that's where I was, that's
literally where I was goingwith that is.
But you hit something sospecific that I say on here all
the time and it's so nice tohear from somebody else that has
the experience and theknowledge set that you do is go
to that industry specific CPAearly.
(14:11):
I sit here and I tell theseguys not because I know, I know
now you know, and so I luckilywent through four or five really
wrong CPAs and it costs you alot of time and money to get
there.
So, yes, go to them early.
(14:32):
And then most guys were likewell, I can't afford a full-time
CPA, well, we're not asking youto.
There is so many fractionalsout there.
But the other thing I ran into,scott, is this is exactly why
this podcast is here.
Is that hell?
Two years ago I didn't evenknow what a fractional anything
was.
I thought I had to keepbringing full-time employees on,
(14:53):
train them, which is the mostexpensive thing for any
blue-collar industry to do, orany industry with employees, for
that matter.
Training is expensive.
And so once you finally getthere, and then, if it's not
anyhow going a little off therails there, but find that
industry specific CPA and cutyour losses early In three
(15:13):
months.
If you're not getting theproper reporting and they're not
talking to you about what youeven if it's what you don't want
to hear half the time, that'swhat you do want to be doing,
because they're telling you thehard, honest truth and going hey
man, look, you got too manymachines.
Hey man, you got too manypeople, and I wish I would have
had that so much earlier on inSaigon and I tried to trust the
(15:38):
right folks, led down the wrongpath a couple of times, but be
willing to cut your losses early.
Go find that constructionindustry specific even maybe
fractional CFO or bookkeeper oraccountant or whatever level you
need there's fractional spotsfor each and get yourself
reports every 30 days.
(15:59):
I can't tell you how many years,guys, that I sat there myself.
I'm not sitting here talking atyou, I'm talking with you, guys
.
I need you to understand that I, in just the last couple of
years, have figured out thatinside accounting and inside
internal 30-day reporting iseverything and that the
executive level accounting and aproject per project level of
(16:22):
accounting there needs to beseparate.
There's executive and there'sproduction.
Anyways, I'm going a little faroff there.
But I really wanted to hammerthat home brother, that you
highlighted that, becausethere's so many times I hear I
can't afford.
No, I understand you can'tafford a high level $100,000 CPA
to just handle your one to twoor $3 million annually.
(16:42):
I totally get that.
But there is a lady or a manout there that's handling four
or five of those companies thatwould love to take you on and
probably give you some direction.
But yes, my next question wouldbe is how do you cash flow a
business sir, with those fourbeautiful points you gave us,
yeah, Look, every business isdifferent.
Speaker 2 (17:01):
Where you're starting from now, not at the beginning,
if you're two, three years in,if you had a bad project, a
problem, the bottom line is youhave to start with a good
foundation and in the first setof foundation you have to get is
your information.
Where are you at truly rightnow?
And once you can figure thatout, the good, the bad and the
ugly, no matter what.
(17:22):
There's no such thing as nosolution.
There's always a solution and aplan.
But you have to be startingwith honest information at where
you are.
And so, again, without having aspecific example on, like a
demo here in front, and say, oh,this business and this is how
you do it, because everybusiness is a little different.
But let's just speak ingeneralities.
Get the right information first.
(17:44):
So find out where you are.
And before I go into this, letme rephrase, let me reframe this
for you.
I think sometimes, in thisworld and industry specifically,
we think about things in tooshort of a time period.
I think if you were to say Iwant to be wherever it is you
want to get to, okay, think ofit five years from now.
(18:04):
And if you set the pace like,that's where I'm going to be
five years from now.
And then you walked into it andsaid, okay, I'm not going to
get there though 20% at a time.
The first year I might get only5% of the way there.
The second year I might onlyget another 15.
I might be 20% of the way there.
Third year, 30% of the waythere.
(18:26):
Fourth year, I'm 50% of the waythere.
And then the fifth year youactually make up the whole other
half.
And it was 10 times easier inyear four and year three to make
up that 50, 60% of the goalyou're trying to get to.
Then it would have been thefirst three, but what you're
doing in those first three yearsis you're learning the mistakes
that you're going to make, theissues you're cleaning up.
(18:48):
They're going to be at a muchmore palatable number.
They won't kill you.
They'll wound you but theywon't kill you the likelihood of
them killing you.
And then, by the time you getto that five-year point, which
goes by fast anyway, and unlessyou're like 65 years old and you
only got five years and you'relike, well, I'm burning it down,
then you've got time.
You're going to work past that.
So I think if you set thatstandard up front, you'll have a
(19:10):
lot more likelihood of beingsuccessful and even beating that
number.
When I say successful, meaninglike successful to hitting your
goal.
So in the beginning, there youfind out where you are.
What does that mean?
Well, okay, like if youactually bid a project today and
executed that job and finishedit, are you comparing exactly to
(19:31):
the penny what your actualcosts were, what your execution
was, what your labor cost was,what was your?
We call it a gain fade analysis.
Did you actually hit it righton target?
Did you overachieve,underachieve?
What were the cost structure?
Was it labor, was it material?
Here's a fun fact for you, and afriend of mine, scott Kimplin,
(19:51):
told me this from FMI Corp.
They are been in businessforever.
Amazing.
He's a great follow on LinkedIn, has amazing information.
He told me that many businessesthat are even in that 50 plus
million dollar range they stilldon't track their gain fade and
reporting accurately.
They look at it overall andthey actually realize, oh yeah,
(20:14):
we were right on track.
But what they don't realize isyou usually save 10 or 20% on
your material and vendor costs,but it's labor that overruns a
business and so you think you'redoing well, but reality is you
save 10 or 20% on your materialand vendors but never made it to
the bottom line because youblew your labor budget out by 25
(20:34):
, 30%.
Now if you get stung on aproject, all of a sudden you go
25 or 30% over labor and you canrun a project over.
You can run your profit out intwo seconds.
So if you don't know thesethings and you can't readily see
them, you don't know how you'reexecuting to it.
You don't have a report card oneach project, whether it's
(20:55):
weekly, monthly tracking,depending on how fast it is, and
let alone your financials.
It's hard to ever know whatyou're doing.
And if you don't know howyou're doing to what your plan
was, then yeah, you can surviveand move, but you're never going
to make progress because youdon't know what you can tweak.
It's all going on gut feel andfolks, it's just gut feel is
never going to work.
(21:15):
When you start scaling abusiness to seven figures, it
just doesn't work.
Let me tell you, yeah, becauseyou can't do everything.
And let me tell you, I learnedthat lesson in my own business
here at Mobilization Funding thehard way.
You can't, you just can't.
So there's no business isimmune to that what I just said
there.
You got to have the rightinformation.
So once you build thatfoundation of information now,
(21:37):
you can start to build on it.
Now here's the good news, and Ican tell you.
I learned this from evenspending 20 years in corporate
America with two differentmedical device companies.
Both are publicly listed.
One is Stryker OrthopedicsEverybody on earth's probably
heard of Stryker Orthopedics,stryker Corporation, and the
other one was AngioDynamics.
Tons of smart people with allthe brains and finance, and you
(21:59):
put all those people in the room.
Let me tell you somethingMaking decisions was very rare
to hear anyone make an effective, congruent, specific decision
Talking to construction businessowners of all sizes, whether a
couple million dollars a year orless, or even up to 30, 40, 50,
100 million dollar businesses.
(22:19):
When they have the rightinformation, they make clean,
clear, crisp decisions andexecute on them.
Like 99% of the time, they knowexactly what to do.
And what I learned by that?
What I learned by this, is it'snot these decisions that
everyone gets beat up about inconstruction or you beat
yourself up about.
It's not poor decisions.
It's the lack of informationthat led to a poor decision.
(22:43):
Because you didn't have theinformation, you're just flying
blind, like with your gut.
When you have all theinformation right, they look at
it and they're like, oh, this isa problem, this is the solution
.
I'm going to go do that rightnow and they come back and fix
it.
And that happens all the time.
Right now, and they come backand fix it.
And that happens all the time.
So that's why I'm so confidentwhen I say, like the right
information, every constructionbusiness owner can have a
(23:03):
significantly greater chance ofsucceeding into their goals and
what they're trying toaccomplish with the right info.
So that's really the first step.
Where am I setting up the rightfoundation of reports and
information?
The right team members, whichmeans inside the business.
That's going to be a goodbookkeeper, at a minimum, maybe
controller.
(23:23):
It's going to mean greatproject management,
superintendent, an estimatorfollowing a system and a process
.
And your estimators.
Everybody beats up the estimatorabout how much money was made,
but really truly like anestimator?
At the end of the day,shouldn't they just know what
your costs are and then you, asthe owner, go and figure out
what you want to add to it ornot.
Right, that's the importantthing.
(23:47):
So get that team right, getyour outside team right.
Find a construction lawyer thatcan read your contract so that,
if and when a big problemoccurs, you're in the best
possible situation you can be inand your accountant can give
you the reports you need andbuild what's the foundation of
reporting for you, and then inthat reporting we'll get you
(24:09):
information.
That's what your bookkeeper isgoing to put in, and then your
accountant is going to give youthe reports you need and then
you can make decisions.
That's really the key.
And then the rest of it's time.
Don't rush it.
Let time bake the cake.
Speaker 1 (24:23):
Blue Collar Performance Marketing guys.
They are the team I have beenwith in our marketing campaign
as a whole.
They help the podcast videosteam, but they also help on the
YouTube side of things.
Strategy the value Ike and histeam bring to Cyclone Excavation
in a help in regards ofmarketing has truly been
(24:44):
something different for me toexperience.
I know a lot of you guys outthere are questioning oh,
marketing this, when do I needit?
When do I need it?
And then you spend the moneyand you never see any results.
Results are everything.
Every 30 days you're gettingresults and you're making
strategy off of it.
Same topic of the day of MrScott's cashflow analysis that
we just spoke about.
(25:05):
If you have the rightinformation going out, it'll
come back.
So get with Blue CollarPerformance Marketing
bcperformancemarketingcombackslash bcbpodcast.
They'll give you a fullanalysis, completely free of
overview, of your entiremarketing package.
So get with them, guys.
But back to it here, scott,I've got.
(25:25):
I've got it.
You were hitting all the nailson the head directly for the
where I've been through in thecashflow side, but you're right.
You can't in the cashflow side,but you're right.
It's all about accurateinformation.
Labor overruns are huge and ifyou're not time tracking your
guys on a simple software thatthey can clock in and out from
(25:48):
with a location-based that willchange everything.
Look at your labor report everyweek.
Start making a tally.
These things that Scott aresaying isn't just completely out
there.
This can all be done on anExcel spreadsheet but it takes
time and dedication.
But the estimation andproduction teams you have to
have a certain known cost.
(26:10):
You have to know your cost iswhat Scott's ultimately saying
here.
Guys, you have to figure thatout and that takes some time
sometimes.
How do you figure that out?
By your production rates andanalyzing your production rates
to give your estimator a goodchance of standing against when
we go and bid this sameproduction job.
So you've got to figure outyour estimation.
(26:31):
And, scott, I hope you hit on alittle bit of indirects and
overheads here too, becausethere's a way that we handle it
and percentage base it now.
But there's so many guys outthere that they're just like,
well, material costs, here it is, and they just let it fly and
oh well, I put 10% margin on it.
So I'm hoping you get into that.
But the last thing I want totalk about estimation and
(26:53):
production.
Here, guys, before I let Scottgo thing.
I want to talk about estimationand production here.
Guys, before I let Scott go,two manholes say we've got 20
manholes, we're doing thisanalogy hit me so hard in the
head.
Brother.
Say we're doing 20 manholes andwe've got two guys bid out
estimated for it and truck,trailer forms, et cetera.
(27:20):
We've got two days perproduction per manhole.
Well, bill goes out there andhe actually took Jose and George
with him.
So now we got three guys onthere, right.
And so then we get over thereand man, we got into three or
four manholes and we're actuallylike four days per manhole.
So my question in here is andthe question that got pointed
and directed at me was when didyou find out that we were
(27:41):
burning four days per manholeinstead of that two?
And when did you find out thatthere was an extra guy?
When we've only bid for twoguys on this job, why has the
third guy been there the wholetime?
And is that at manhole numbertwo?
Is that at manhole number 10,20, six months after the job?
And never?
And guys, I want to tell you,I'm telling you straight up from
(28:01):
me and my experience, there wasa lot of nevers.
There was a lot of six monthsafter the job, there was a lot
of at the end of the year, andthen the keys and the tools that
Scott is sitting here tellingyou about.
Guys, isn't crazy hard to getgoing.
It takes time and showing alittle grace, but I hope you
like that analogy, brother.
Speaker 2 (28:20):
It does.
I mean you're right, becausewhen you find this first of all,
we're going to make mistakesand you're going to have
problems, right, so that'shappening on anything.
But when do you find it out?
It totally is an indication ofhow fast can you fix it and how
big of a problem is it.
If you're finding mistakes outlike right away, well, you can
mitigate against those and fixthem.
Hopefully you can see mistakescoming based on certain
(28:44):
behaviors or trends.
That's the secret sauce of allbusinesses, right, and that
comes with time.
But at a minimum, if you have20 manhole covers and you track
in the first two and you can seethat the first one takes four
days, okay, no problem, we justgot on site, you know
everybody's trying to figure itout.
Second, second manhole takesfour days.
Third manhole takes three and ahalf days.
(29:05):
Fourth manhole goes back tofour days.
Now, like, now start waving theflag like something's,
something's going wrong, right,yeah, and so, um, finding that
out is the only way you knowthat is.
It's not.
Hey, talk to your projectmanager.
How's the project go?
He says good, define, good,like what are we talking about?
Yeah, so details matter forsure.
You mentioned margin and addingmargin and markup, right.
(29:31):
However, I was going to talkabout that.
I don't know if that's theright time.
I'm going All right.
So margin and markup are twocompletely different things,
okay, and so I have an example.
I used it in my book that Icame out because I was trying to
think of the most basic way todo it.
So I actually can use itbecause I haven't memorized, so
I'll give it to you.
Taking a million dollar job Okay, when you're doing a project
(29:57):
and you're billing a project toa customer, you put in a bid and
it's a million dollars and youwin and they say congratulations
, you're going to invoice us amillion dollars to do this work.
And as you do the work, you putup the million, you bid, you
invoice against the milliondollars, and then the waterfall
starts at the million and worksits way down.
Okay, well, think about the.
That is the exact opposite.
(30:18):
When you bid a job, you startokay, what are my costs?
And you build up from thebottom.
So that same million dollar jobthat you invoice, that you won.
Let's just say, for example, ithas $800,000 of cost, okay, so
you look at it afterwards You'relike, oh, I'm going to make 200
grand and you say, oh, that's20%, perfect, no problem.
(30:42):
But it's not 20% if you startat the bottom and add 20%, and
that's what most people do, andthey make the mistake of doing
it.
So, for example, an $800,000job where you add 10 for
overhead and 10 for profit is a$960,000 bid.
Now you might say, well, thatI'm going to make 20% on that.
(31:06):
No, you're not.
You're actually making 16.66%.
And why is that a problem?
Well, because the retainage of10% is coming off the 960, which
is not 10% anymore of what youthought you had.
It's actually taking 96,000 of$160,000 quote profit and
(31:28):
putting it into retainage, whichwe all know.
You're not getting retainage toany of it to cashflow your job,
though you're not gettingretainage to any of it to
cashflow your job.
So now you're running that joboff of a 6.66% cashflow.
Someone might say, okay, well, Ican do that.
Okay, great.
Well, what if your overhead isa 10% allocation, like you say
(31:49):
it is, because that's how youbid it?
Well, you're going to have torun this job at a 4%, 3.33%
negative cash flow just toexecute the job.
And what does that mean?
That means you essentially haveto take every penny that you
make off that job and only spendit on job-related costs.
(32:09):
And before you even have theopportunity to do that, you have
to have enough cash probablylikely $250,000 to $300,000
minimum, depending on how you'repaid to invest into that job,
of which you're never going toget that cash back out at all at
any point to use again untilthe very end when you get paid
(32:31):
your retainage, which, as youcan tell, if you've done this
before and you have no cash inyour account and you're
wondering why you don't have anycash and you spend money, this
is exactly how it happens righthere, and you did nothing wrong
other than you didn't have yournumbers in correctly and you
made a mistake, thinking 10%addition and 10% for both is
(32:51):
going to count up.
But then they keep what reallyis 75% of your profit, because
$96,000 against 160,000, I don'tknow what the quick math is,
but it's close to 70%.
So 70% of your profit, which isalso your free cashflow of the
project, is locked intosomething you're not going to
ever get until you're done withthat project.
So you're hosed-.
(33:15):
You're set up to fail before youeven get started.
Speaker 1 (33:19):
Yeah, I was literally .
When you said the retainageword, you saw my face.
It stings, man.
You don't know what you don'tknow.
And that's again why we'resitting here today helping these
guys, because everybody seemsto want to jump from that resi
to commercial world so fast.
I was a victim of it too.
I wanted to do it.
I wanted to do it so fast.
(33:40):
I wanted to get out of theneighborhoods, not knowing how
healthy my business was then.
You know what I mean.
And so then I jumped into thecommercial world and found a
good cashflow.
But instead of building aroundthat, I used what I had, went
strictly commercial and boy, therocky road commenced.
(34:01):
Because my first project, I waslike all right, where's that
money at?
you know what do you mean?
You're only paying 90%.
Well, that's my profit.
And they're like well, we know,is this your first time?
Yeah, you stupid, like we'regoing.
Is this your first time?
Yeah, you stupid Like we'regoing to hold it until we're
done.
Sir, that's a three-year project.
(34:22):
Yeah, we know, you signed thecontract.
Stupid, did you not have yourlawyer look at it?
And oh my God, dude, I've beenthere and just be crushed
because if you're just like anyother business owner or any
entrepreneur, you're thinkingsix months, 12 months, five
years ahead, you've alreadyspent that money as it's coming
in and where it's going and howyou're going to reinvest that,
(34:42):
to buy this machine, to movethis amount of dirt for that job
.
Here's the next one Plug getspulled and that dirty word of
retainage.
But yeah, you're exactly right.
And I can't tell you how manytimes I've ran projects on that
manner right there and not knewany different until I got to the
end of the year and, looking atmy P&L that my tax guy finally
(35:04):
got to me and I'm like man, lastyear was rough man.
I sure wish I would have knownthat in month one or three or
six.
And so these guys, they justdon't.
Scott and I didn't either.
Speaker 2 (35:19):
I didn't realize what we were doing, and you know why
it shows up in a bigger job allof a sudden too.
Because you can do 150,probably even 250, $300,000 jobs
, right, even if that same jobtakes six months.
And the reason you can float itis because you have access to
credit like credit card you canget.
You can get a hundred grand onyour credit card, right, that
(35:40):
you can put, float, that, pay itdown and it's all fine, there's
no problem there.
Um, why it jumps up at you atthe half million dollar job, the
$750, the million dollar job,all of a sudden you're getting
stung is because that materialthat's normally 100 grand is now
250.
And guess what?
You don't have a credit cardfor 250.
And guess what?
(36:00):
Your supplier, because it's abigger job, they're not letting
you float 250 for 60, 70 days,25, sure.
And you're like what's going on?
What are you talking?
I thought I have 70 day terms.
Yeah, for 25 grand, but not for250.
And that gets back to myoriginal point where I said this
is a big dollars.
So the credit manager down atthe vendor, right, whatever
vendor you're buying from,depending on what your specialty
(36:22):
is.
Yeah, they're all cool withtaking some risk on you for 25
grand, but they're not cooltaking the same risk at $250,000
.
And so that's why it shows upon the big job.
It's why, if you do thesefinancials and get these reports
in the younger stages of yourbusiness, you'll know when it's
a $50 problem and just startadding zeros.
(36:45):
Later on in life.
You're going to learn it oneway or another.
It's better to learn it whenit's a $50 problem, and so
that's the point of why we bringthose things up, and it's also
the reason why I said in thevery beginning think of where
you want to be in a five-yearperiod.
Get 10% of the way there inyear one.
Get to 20% of the way there inyear two.
Worry about taking the biggestchunk of that in year four and
(37:05):
five, when you're ready, becausethat's what you're going to
learn.
You're going to learn all theselittle things that you have to
learn that no one's immune to inbusiness, myself included.
I mean, look, I'm sitting hereright now confidently explaining
this and they're like yeah,this guy's never been on a site.
He said he never did it andyou're right.
But let me promise you this Atany given time, we may have 100
(37:26):
plus different loans that areactive with across 70 to 100
customers and they're of alldifferent sizes.
We work with businesses that area couple of million dollars a
year in revenue, all the way upto maybe a hundred million
dollars a year in revenue.
Some of them have bankfinancing, some of them don't,
because these growth factors allneed extra capital.
(37:48):
If you think it's easy tocashflow 75 projects across, you
know, a hundred projects across75 different clients with money
coming in and out.
I promise you, if you saw ourcashflow sheets, that we utilize
to manage the cashflow ofmobilization funding, because
we're not going to the federalgovernment and just pulling
money out like a bank does,right, so it's very systematic
(38:11):
and organized.
So in the early days learningthis, the first eight years in
business nine years even wefumbled around and made every
mistake on earth, not knowingwhat to do, how to do it, and
not just on the individualprojects.
I'm talking about just managingthree customers versus 10
customers at a time, 10customers versus 20.
(38:31):
And so it took eight years.
We've been in business now 13years, but the last five years
we've really refined thatprocess.
And you have to, because everybusiness is cash flow.
No one's immune to that, no one.
Speaker 1 (38:47):
No man, you hit it nail on the head again.
But I think there's three keypoints to sum this up, and I'd
like you to talk a little bitmore about truly mobilization,
funding and what it offers.
I'm hearing from you and youuse those influences with the
(39:13):
information, you have to make aplan.
And, yes, I couldn't agree withyou more.
Hey, let's do a growth plan anddo 10% here, 20% here in the
second year or whatever it maybe, instead of, oh, let's just
go out just like every othercrazy gut guy.
Oh, let's just go out and buysome equipment.
We got plenty of work until youdon't, because you're not
(39:35):
concentrating on sales, becauseyour production team can't get
off a job.
But those were the three mainthings that I heard, guys.
And we talk about relationships.
I do believe every singleepisode nurture those
relationships.
I do believe every singleepisode nurture those
relationships.
I do wish I would have had afew more influences and
resources to at least askquestions.
(39:57):
These guys can at least throwit in here to the show and if I
don't know, I'm going to reachout to resources like yourself
and get them an answer.
So talk about a little bit.
Yeah, you've, you, you've,you've.
You've 7,200 customers.
That is mind boggling, numberone.
But for when do you think thepoint is, since you're dealing
(40:20):
with customers from one to three, all the way up to that hundred
range, what point do these guysreally start?
You know how much they'rehaving to deal with in year one
to three.
What point?
Is there a revenue point thatthey've really got to?
Hey, I've got to set everythingaside.
(40:41):
Until I have this figured out,I can't move forward.
I understand that's a reallyhard pinpointy timeline and it's
, in most cases, generalisticterms.
Hard pinpointy timeline andit's, in most cases,
generalistic terms.
But is there a, a guide, Iguess per se, for these guys in
the first year or two, they'rejust trying to get this, let
alone uh, and complete it, letalone find out if they're doing
(41:04):
it profitably.
Speaker 2 (41:06):
Well, here, here's the, here's the catch 22.
The earlier stage you are, themore important every single
project is, and you really can'tdo a project without profit.
So that's the sad business.
And you hear you're talking toa mentor, like, yeah, they say
sometimes it's okay to take onthat project at a little bit of
a lower margin or maybe even aloss because you're gaining the
(41:26):
new customer, no problem.
Yeah, well, you just talked toa 15 year old business doing $25
million a year and they'retalking about a $400,000 project
.
Well, you're an $800,000 a yearcompany.
That $400,000 a year project is50% of your revenue.
You can't do it at a loss.
You can take on a $40,000customer, and so it's these
(41:49):
principles that you hear.
Or you hear someone else say itdoesn't mean they were wrong or
they gave you bad advice, youjust didn't get the right
context with it, and so that'sone aspect of it I would tell
you.
But so, if I heard yourquestion correctly, it's like
when do you know when is it okayto hit the gas right?
(42:10):
When do you know when is itokay to like hit the gas Right?
I would say when you know,first and foremost, that you're
you're, you can.
You can trust that you're goingto perform a job for a customer
, leaving them with anexperience where they would feel
, um, they would feel scared notto give you the next job
because it was such a goodexperience for them, it was so
(42:32):
easy.
When you can replicate that, Iwould say that's one side on the
performance side.
When you're performing projectswith your team, to where you
know that customer is gettingsuch a great experience over and
above what their expectationsare, and certainly of your
competition and certainly ofyour competition, that's one on
the performance side.
Number two when you have atleast two crews, two managers of
(42:58):
crews or two superintendentsthat you can really count on and
trust, because when you onlyhave one, you have none and when
you have two, you really onlyhave one, because somebody
leaves, you can be totally hosed.
And I'm going to give credit to,uh, my boy, andy forcilla, who
taught me that.
I asked him how do you scalebusiness if you guys don't know
(43:18):
andy forcilla?
He's amazing guy.
Jump on the oh man, jump on themfceo podcast, you can follow
him on real af.
And he, he taught me that and Iwas I've been in the arte
syndicate with him, learned from.
I mean he taught me that andI've been in the Arte Syndicate
with him, learned from him along time.
He taught me that straight up.
He said when you have one, youhave none, when you have two,
you have one.
And it's true, because ifanybody's had one of your people
(43:41):
leave before you know exactlywhat I'm talking about.
So and why that's important islike if we're being honest with
ourselves, like if you think,and why that's important is if
we're being honest withourselves, if you think all your
crews operate the same way andeffectively create the same job
the same way, you're just lyingto yourself.
That's just not the way it is.
So if you have standard pricingand effectiveness for every
(44:02):
single one of your crews, well,that's not the way it is.
There's no way that's the case.
So same thing with yoursubcontractors.
They're not all the same on thesame day.
Some of them are good atcertain projects, some are bad
at others.
Some are good in flat work,some are better at elevation
change.
I mean, it just depends.
(44:23):
You got to know that stuff.
So I would say that's one onthe performance side and then on
the financial side, which isactually easier and faster than
the performance side is get theright infrastructure in place.
You go to a great constructionaccountant, cpa, ask him to put
the right structure together, asif you are a $10 million
company and you're like, but I'monly a half a million dollar
(44:43):
company, so what?
Build it to?
Where you're going?
The reporting structure is thesame.
It's just like a strongfoundation.
You wouldn't put a footer in tosupport a one-story building.
When you plan on putting atwo-story building on it, it's
no different.
And don't think about the costyou're spending on things like
that as too much.
Those are investments, and ifyou think about the mistakes
(45:07):
you're going to make in a badproject, in the same regard, as
that's too much, those areinvestments too.
So I'd much rather make aproactive investment in what I
think is too much in anaccountant to set up my right
foundation so that when I buildand you'll make that cost up in
mistakes that you won't make,that's how I would really think
(45:28):
about that.
Once you're in that position andyou run through the cycle of
half dozen jobs with the rightfinancial foundation two crews
instead of one you know that youhad bid a job a certain way and
you ran it and you're close toyour range of effectiveness in
terms of what your profitabilitywas and execution, then I'd say
, start taking on the fifth job,when you're used to doing only
(45:52):
four at a time.
Then take on the half milliondollar job, when you're used to
only doing $250,000 jobs, andsee how that box all of us know.
If you're talking aboutbusiness, you got this rattling
box.
It just shakes.
It's like shakes.
Sometimes you duct tape it andit goes away.
Sometimes it only shakes for aday.
Every time you take a step up,the box starts to shake again.
(46:14):
And you got to find out wherethose levels of shake are so
that you can calm it down beforeyou start going.
If you run through too fast,the box gets going crazy.
And another mentor of mine toldme, like if you treat your
business like a baby, you'llalways be better off.
And I said what the heck doesthat mean?
All right, here it is.
(46:35):
A newborn baby can't feeditself, can't live in the wild,
can't do anything.
Everything has to be cared for.
It can't communicate.
You have to take care of it atall times.
You wouldn't leave your newbornbaby next to a lion.
You wouldn't give your babyjust to anybody.
You wouldn't feed your baby,just anything.
(46:57):
You wouldn't spare any cost totake care of your baby.
And so if you treat yourbusiness the same exact way and
you would also feed your babybefore you fed yourself, you
also wouldn't take something outof your baby's hands for the
benefit of you if your babyneeds it.
And so if you treat yourbusiness like a baby, you'll
(47:20):
have a much more successfulbusiness and as that baby grows,
all of a sudden that baby willtake care of you because it will
become an adult and that whenit's an adult, then the business
, the baby, will take care ofyou.
And you have to be patient todo that that's.
I was like, damn, that is agreat analogy.
I'm definitely.
It all came together for mewhen I heard that and that's it.
(47:41):
And so some there's, sometimesthere's still this day I'm
trying to make a decision.
I think, well, what would I doif this baby was, if his
business was a baby?
And then the decision comes.
It's pretty easy.
You know, that's what I wouldsay to scale man.
I hope that answers yourquestion.
I mean, that's a tough one.
I'm trying to give you as bestof analogies as I possibly could
.
Speaker 1 (48:00):
No, I think you hit it again.
I hate to sound like a brokenrecord.
Hit a nail on the head, brother.
You have made this podcast apleasure, I've got to tell you
because I agree with you.
I think the production side ofit is way harder.
I think if they go to thatindustry-typed CPA especially if
you're in the constructiontrades guys hammer it home all
(48:20):
the time.
Go as soon as you can.
Find that person, year two,year one, year two.
Find that person.
Let them set you up in a growthpath.
Hey, yeah, set me up like I'mdoing $10 million and then guess
what.
You have that person.
Let them set you up in a growthpath.
Hey, yeah, set me up like I'mdoing $10 million and then guess
what.
You have that foundation.
Go figure out production andyou can screw it up because you
got financial gurus back heregiving you a accurate
(48:42):
information every 30 days.
Hey, something's going on,something's skewy, something
just happened, Not six monthsdown the road, and you don't
know what's going on.
So I would completely agreewith that.
I absolutely switching gearshere.
And I've got one more questionfor you, sir.
I truly enjoy following you onLinkedIn personally, so make
(49:03):
sure you go and find him.
Scott Pieper and MobilizationFunding on LinkedIn.
And where else can we find yourbrother?
Speaker 2 (49:11):
We have a pretty big YouTube channel, lots of videos
anding on LinkedIn and whereelse can we find you, brother?
We have a pretty big YouTubechannel, lots of videos and
content on there.
It's on YouTube Mobilization,funding, and you can also, of
course, find us on our websiteat mobilizationfundingcom I am a
big advocate of just a littlebit ago.
Speaker 1 (49:30):
Youtube has got a special place in my heart as
well and I really hope to seeyou guys flourish on there as
well.
Yes, I mean, having thousandsof subscribers is a big YouTube
channel, sir, so that isimpressive and all the
information if you want Scott togo off further is on there.
Go watch the videos.
(49:50):
I've spent a little time.
There's 600 plus videos on hisYouTube channel and I know how
much time and dedication thattakes, but it shows how much he
cares about me and you and ourgrowth.
So, guys, spend some time there.
The last question that I askeverybody on the show brother,
(50:10):
what's the takeaway for thatblue collar worker and I think
it's so cool that you mentionedMr Purcella dude, that guy,
motivation king.
But what's the takeaway for theblue collar worker who's just
sick and tired of being stuck inthe mud, whether mentally,
physically, emotionally,entrepreneur, or maybe that guy
(50:31):
just starting out on his track?
What's the takeaways?
Speaker 2 (50:35):
I would say like you're not that special man.
We've all been there, so don'tfeel bad about it, Like anyone
telling you they haven't, it'sjust full of shit.
So I would say like it's allgood, Like it's part of the game
.
If you feel like shit, you'reprobably getting closer to being
great.
You may, hopefully.
That's enough, that feeling'senough to just get you on track.
(50:56):
Information's everywhere.
You just have to do it andexecute it.
Do you start with doing thethings we started with today?
Reframe your timeline.
It's usually one of the bestthings you can do.
Like if everybody feels like aloser right now, but the reality
is like it takes time, man.
So like you, just if youreframe your timeframe of what
it's going to take, that is ahuge help Cause like otherwise
(51:18):
you just can be going for 10years and you feel bad every
single day.
It's more progress over whereyou're at, getting the right now
.
It's more making progress towhere you want to go.
Measure the progress.
And I would say when I sayyou're not that special, I mean
like we've all been there andsomeone's already recovered from
where you're at.
Someone's already recoveredfrom way harder place and you
(51:38):
could do it too.
You already know what to do.
You probably know what mistakesyou made.
Don't make them again.
Pick, pick up, place one stepin front of the other.
It just takes a lot of work andyou picked a hard industry, so
give yourself some grace.
Nothing's easy.
That's what I would do.
Speaker 1 (51:53):
Man, spot on and real and raw, and I really
appreciate that.
You're right, Not all of ushave been there, but don't beat
yourself up, and I am king of it.
You want to talk about and mosttrue, half percenter
entrepreneurs they are.
They're hypercritical ofthemselves.
That's what drives them to bebetter.
Right, but I agree, For outsideof that entrepreneurial ring it
(52:19):
ain't that bad Big dog rock onOne foot in front of the other.
I cannot tell you guys, thishas definitely been one of my
favorite episodes.
Been one of my favoriteepisodes.
I've learned reassurance intowhat my thinking and the massive
turning of the ship of thatI've been speaking about, that
I've been doing internallywithin our, you know, within
PsyCon, and, uh, having Scott asa resource has already been
(52:44):
relieving, I guess.
Would say that you know youain't doing it that bad.
You are in a spot, but guesswhat?
You just didn't know.
Now you do.
Don't make it again.
So, brother, I can't thank youenough.
I'm looking forward to maybebeing.
Speaker 2 (53:01):
I think we're coming up Friday, man, two days from
now, it's Wednesday afternoon.
We're filming this, but Friday,two days from now, you'll be on
our podcast.
Yeah, and where can we findthat?
That is called the MobilizationMindset.
You can find it on any one.
You can find it on our YouTubechannel, but you can also find
it on any place you like tocatch podcasts.
Speaker 1 (53:24):
I'm telling you, guys , the resources are there.
We're bringing them here to thebluecollarbusinesspodcastcom.
Check them all out there andmake sure and go find Scott Guys
till next time.
You guys, be safe and be kind.
If you've enjoyed this episode,be sure to give it a like.
Share it with the fellers.
Check out our website to sendus any questions and comments
about your experience in theblue collar business.
(53:46):
Who do you want to hear from?
Send them our way and we'll doour best to answer any questions
you may have.
Till next time, guys.
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