Ep. 65 - Profit Is Not A Dirty Word - Blue Collar Business Podcast

Episode Transcript
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SPEAKER_01 (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 what it took
me, trial and error, and a wholelot of money to learn.
The information that no one inthis industry is willing to
share.
Whether you're under that shadetree or have your hard hat on,

(00:30):
let's expand your toolbox.
Welcome back, guys, to anotherepisode of the Blue Collar
Business Podcast, brought to youby and sponsored by Wonderful
Partners, Thumbtack.
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(00:50):
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The success of pros on Thumbtackreally says it all.
If you want to grow smarter,visit thumbtack.com/slash pro
today to book your one-on-onestrategy session.

(01:12):
Let them know that Cy over atthe Blue Collar Business Podcast
sent you guys for a little treatthere.
Guys, I think this is the firsttime I can say that I've had a
returning guest resoundingepisode that I enjoyed that we
didn't really get off into anymeat and potatoes.

(01:35):
We hit a bunch of high-leveloverview topics and about a lot
of the things that, you know,the systems and processes and
procedures that I was literallylearning and going through and
implementing and finding outabout.
And it was honestly a fire hoseof information that I should
have already known, but nobodyteaches you.

(01:57):
And that's literally the designand purpose of the show.
And I I speak very the need youhave to have for a lawyer, an
accountant, bookkeeper, ofcourse, those, and of course, a
great banker, which all three ofthose equal the best team.

(02:18):
But there's another guy, ifyou're gonna be any type of
contractor, especially in thecivil space, you're gonna run
into something called bonding.
And whether you like it or not,you're gonna have to deal with
it.
And so be prepared.
Uh, don't be scared, beprepared.
That's a great one.
And um, I've learned that thehard way over almost 10 years,
and bonding terrifies people.

(02:41):
Although we're not going thatroute today, that's where you
can find uh the last episode.
We talked a little bit moreabout bonding.
We're gonna be talking aboutsomething that all contractors
face.
And this gentleman has helped mepersonally within Scicon over
the last, oh, two plus yearsnow, and truly stood by my side
in terrible times, uh, listeningto me vent and complain, but

(03:04):
also hooks it up when it comesto insurance and knows
everything.
I think, I think I'm gonnaforget more things than he knows
about the uh the bond world.
I mean, he takes care of me,makes sure I understand the
difference and what the riskconnotations are.
You gotta have this gentleman.
But the really cool part aboutit is the better business

(03:26):
practices that he helps teachalong with my aligned
construction CPA.
It's really such a unique teamthat I tell you guys you have to
go find.
And don't stop searching anddon't settle until you find
these gentlemen to be a part ofyour team.
Uh, furthermore, my man, NickPeters, um, the partner at
Sterling C.
Chris Pritchard here in Mom L.

(03:48):
Mom L, right?
Or Little Rock?
It's in North Little Rock.
Okay, fair enough.
Um, we're gonna be talking abouthow we lose money as
contractors.
I mean, that should be anepisode worth tuning into, but
also some tools to help you notlose money.
And it may be a little differentthan what you've heard before,

(04:09):
not the generality, uh, oh, buythis kind of equipment or hire
this kind of leadership or dothis.
It is some standard practicesthat every single contractor, I
don't care if you're anunderground contractor, I don't
care if you're a concrete guy, Idon't care if you're a uh steel
guy.
You guys can all benefit ifyou're running cruise, uh,

(04:30):
commercial, residential, I don'tcare.
If you're running multiplecruise, multiple projects at the
same time, you've got to be ableto job cost, make sure your
estimate, your estimate iscoming in with production and
ensure how to build habits toconsistently repeat good
results.
Did I say all that pretty goodon a word salad sandwich?

(04:50):
Well said, sir.

SPEAKER_00 (04:51):
Well said.
Welcome back to the show, sir.
Thank you, son.
I appreciate you having me.
Um looking forward to it.

SPEAKER_01 (04:57):
I we have been talking several times.
I I get this all the time afterwe do a show.
Dude, I wish I would have saidthis, I wish I would have said
that, I wish I would have saidthis, and we could have talked
about that.
And I think it's cool that itcreates.
I don't think you ever thoughtyou'd end up on a podcast.
I did not.
Exactly.
I when I first brought this up,you were like, Meh, and I'm

(05:20):
like, look, there is so manyguys like me struggling, looking
for resources that haven't foundpeople like yourself.
Please join me on the show.
And guys, go back and watch thefirst episode with Mr.
Peters.
It was wonderful.
And we touched so many differenthot topics, but never really

(05:41):
dove off into anything.
And that's what you shared withme on the phone call.
It was side, dude.
The one thing I consistently canhelp with is how I see these
guys lose money.
And when you might want to givejust a little bit of background
for the new listeners, and shoutout to you guys.
We are growing in some somecrazy numbers, and I really
appreciate all you activelisteners, Spotify, Apple,

(06:04):
iHeart, or you guys that arejust watching directly from uh
blue collar businesspodcast.com,watching or listening totally
for free there.
But um Mr.
Peters, the floor is yours, sir.
Give a little background andlet's talk, let's talk about how
we lose money.

SPEAKER_02 (06:20):
Yeah.
So um when you admission to meabout doing the second podcast,
I'm like, okay, where do we goafter the first one?
And um, so I just reflected onthe conversation that I have
most often with the contractoror with owners, and uh that's
revolves around the word profit.

(06:41):
It's not a dirty word.
It is not a dirty word.
It is not, and so um, and so thethe conversation wrapped around
that.
Peel back another layer to theonion here is you know, there's
the obvious ways a contractorcan lose money.
I'm not gonna spend a lot oftime there, but just put them
out real quick.
You know, bad weather, badowner, bad design, um, bad

(07:08):
superintendent.
Um, I mean, we we can we canname bad sight conditions, bad
sight conditions, um, you know,so bad contract, bad drawings,
yeah.
Sorry.
No, no, you're you're you're Imean, those are the obvious
ones, right?
I mean, and I'm not playingthose down as though they're
they're not important or orhappen often because they do.

(07:32):
But I don't think that that'sgonna be the uh the lead
candidate for um for not beingprofitable.
And I think the lead candidateis is uh for in the in the race
here, the horse, lead horse inthis race is always gonna be you
um you just don't you don't knowyour cost.

(07:53):
And you know, this is a littlebit of a retread from our first
one, but we're gonna dive alittle deeper today.
But so you got the obvious andyou got the not obvious, and the
not obvious is the know theinternal accounting, the c job
costing, you know, and so overmy years of doing this, I'll
come up with these sillysayings, and one of them is uh
estimating reliability,production, accountability.

(08:15):
And so um I'll say that often toCy uh because uh it it takes
truth, man.
And it is, it is.
Now, that is very, very easy tosay.
It is very, very difficult toachieve.
So um, so that's kind of I wantto do a little bit of dive on
that today and kind of talkabout that a little bit.

(08:38):
Um, we don't have enough time togo um in all the different
directions.
Maybe that'll be a good reasonfor part three, part four, or
whatever.
But so so today let's let's divein here a little bit and uh kind
of what I want to do first istalk about the tools um that are
available to you in the toolbox,and then let's talk about the
implementation and yourexperience with that because uh

(09:00):
we would be uh leaving yourlisteners, I think we'll be
leaving them a little a littleshy today if we don't address
the uh the that's the number onekiller.
Yeah, the culture change.
So, you know, I can come outthere and talk to you all day
long, I can bring in theaccounting teams, I bring all
the right players in.
We can teach and preach, but youknow, it you have to have the

(09:21):
buy-in.
You've got a you've got a leadin your organization, and you
know, and it's up to you to dothat.
I you know, as the old sayinggoes, you can lead a horse to
water, but you can't make themdrink, right?
If I can only make them drink.
Man, I would love that.

SPEAKER_01 (09:34):
I would uh yeah, there's I wish I would have
started drinking just a littlebit sooner.

SPEAKER_02 (09:39):
Right.
But hey, you know what?
That's normal.
Um I can line you up the lastthree that we've been through
with this, and every one of themwould say that exact statement
that you did.

SPEAKER_01 (09:48):
So um, so you want to kind of jump in now to Yeah,
the the common practice is likeyou can even bring up me if you
wanted to, you want to, like theconsistent money killers that
how these guys are losing money,and these are I'm not just
talking about you guys likemyself in the zero to ten

(10:10):
category.
I'm talking about these guys, wewere talking about one earlier,
30, 40-year-old companies,they've just been doing it the
same way.
They don't, they think they'remaking money, but if they
actually penciled everything, umare they?
And what are consistent hidden,it's not shouldn't be hidden, it
should be visible if we're doingthe things we're gonna talk
about in this in the toolssection here in a little bit.

(10:32):
But what's the consistent waysthat you see from a financial
production estimation, whateverit may be, or untimely account
accounting was also a big piece,or all three, but maybe some
little bits and pieces of whatthese guys can be looking for on

(10:53):
red flags on like oh man, dude,I remember Nick talking about
this.
Oh, I'm kind of feeling this.
Wait a minute.
Have we seen a report on this?
So talk about a little few waysthat we all lose money because
I've uh I've figured out how tolose a few dollars over here.

SPEAKER_02 (11:10):
So, so one of one of the tools that you know we like
to use, you know, because you'reyou know, when you're a smaller
company and you're the same guydoes the estimating, the same
guy does the production, youknow, you uh you're doing a
couple of million a year inrevenue.
You know, you can be on everyjob every day.

(11:31):
You can eyeball everything.
We call that boots on sitemanagement, you know, and so you
bid the job, so you've got ageneral idea of production
rates, you've got a general ideaof how you thought it was gonna
go, the how you're gonna buildit.
Um, and so you know, you caneyeball that as the project
ticks off and you can kind of weget a good feeling for how it's

(11:51):
going.
But what we typically see iswhen the contractors grow that
uh that type, that style ofmanagement no longer becomes
efficient, you know, and youstart getting north of five,
six, seven million dollars, youcan't be on every job every day.
And so you start yeah, you startlosing control.
And so what tools are there tohelp you?
And one of the most fearful umuh job cost accounting uh

(12:17):
reports out there is known asyour work in progress report.
And so this is one of the mostimportant tools in the tool
chest, and but man, it takes aton to get it to get it going,
you know, because uh you and Ilike to say a lot and know your
cost.
And um I've got a sign up in myuh my uh conference room, and

(12:37):
it's uh you know, it's aconstruction sign and it says
know your cost.
Uh I that come from a PeterKiwit project.
Uh um and uh so that's kind ofwhere I'm telling that story
real quick.
Yeah, yeah.
So I they were doing a projectin downtown Little Rock, they
were widening the bridge, theywere adding a trolley car, and
they had all these orange signsout there you would expect to
see slow down, minute work, youknow, typical stuff.

(13:00):
And then right in the middle ofthe project was this orange sign
that said, know your costs, andit just caught my eye.
I'm like, what in the crap isthat?
Right.
So as the luck would have it,you know, Key Wit is uh probably
the largest contractor in theworld.
And so their manager for thispart of the United States was
next door neighbor to a goodfriend of mine.
And so there was a kid'sbirthday party, and I uh I got
him cornered up.

(13:20):
He's a hard man to catch, youknow, and as you would imagine.
And uh I said, hey man, what'sup with your sign out there?
And he said, Oh, yeah, you likemy sign.
And I was like, I don't know,what does it mean?
And he said, I'll tell you whatit means.
He said, We want everyone in ourcompany, from the guy that's in
the ditch to the guy running theproject, to know what your cost
is and what that means.

(13:41):
And so the example he gave methat day is we've poured a
million manholes in our life.
We know how many hours it takesper manho on average.
So when I estimate the projectand I put Nick and Cy out there,
and we got 20 manholes to do,and I've estimated 25 hours per
manho, and it's taking Nick andCy 35 hours per manhole.
You know, when did I figure outyou rebusted my budget 10 hours

(14:04):
per manhole?
Manhole number two, number 10,number 15, number 19, week after
the job was over, never, youknow.
And so once he planted that seedof thought with me that day,
man, uh my constructionaccountant friend, who is also
your construction accountant,Richard Newland, a shout out to
Ferguson Cobb and Associates inLittle Rock.
Um, Richard is the man and histeam.

(14:27):
What the man.
He's the man.
And so he's taught me a lot,obviously.
And but anyway, he and I tookthat, you know, 20-something
years ago and started runningwith know your cost.
And so he and I uh uh hand outthose uh framed uh posters from
time to time that have that onthere.
But anyway, that that's kind ofwhere we started going with

(14:47):
this.
And so that tool and the toolchest we're talking about here,
the work in progress report,getting back to it.
In in a perfect world, thinkabout it this way, Sai, there's
there's four things, four datapoints that feeds this sheet of
paper.
It's a bunch of columns, it's abunch of numbers.
At first glance, you're like,holy crap, there's no way I'm
gonna get anything out of that.
I mean, there's too much goingon.

(15:08):
But you got to understand whatit's telling you.
What it's telling you in thedata points you got to feed it
is your your value of thecontract that time you bid the
job.
So what they issue the contractfor, uh, what was your cost at
the time of bid?
So those come from theestimating side of the house, so
to speak, from the accountingside of the house, your total
cost to date and your totalbillings to date.

(15:30):
That's the four data points youfeed it.
It produces three or four othercolumns, of which two of them
are under and over billings.
And so under billings simplymeans it's something you can't
or you haven't billed for.
So if you can't bill for it oryou haven't billed for it, you
know, it's basically waving thishand at you going, hey, there's
a problem going on this job.

(15:52):
You might want to go ask somequestions, not sure what's going
on, but it's a red flag moment,right?
And so if you think about it, ifwe had a chart, you know, and if
if we had the beginning of theproject on this side of the page
and the end of the project onthis side of the page, and you
had two data points and theywere running from the beginning
of the job to the end of the jobacross the page, and one is cost

(16:12):
and one is buildings.
In a perfect world, cost andbuildings would be the same as
the project progresses.
But often what we see is costgets ahead of billing, billing
lags behind.
And so, guess what happens?
You're financing the project,right?
Uh, you forgot to billsomething, you can't bill
something.
Typically, I can't bill it, itturns into a loss.

(16:33):
So, how fast can you know it?
So, going back to the manholescenario, if you figure that out
on manhole number one or manholenumber two, then you're not
gonna let Nick and Cy completethe other 18 manholes going 10
hours over per manhole.
We get a chance to explain why.
Yeah, but if we don't give theman acceptable answer, then you
and I are gonna get replaced inthe ditch and somebody else is

(16:54):
gonna build the manholes, right?
So that's a simple analogy towhat we're talking about here.
So this is an accounting toolavailable to you that helps you
track billings and cost as theygo across the page.
You know, if your billings areahead of your cost, then you
know, they're financing theproject.
They paid you for work youhaven't done yet.

(17:14):
So that's always a great case.
Yeah.
So, you know, that's where wewant to be.
But more times than not, it'sthe opposite, it's the
underbilling.
So so in a perfect world, youknow, we would the billing and
the estimate or our cost wouldalways remain the same, but it
doesn't.
And so when it does not, that'sthe alert, that's the red flag,

(17:35):
you know, whistling its side,going, hey man, if I were you, I
would go talk to thesuperintendent on this project
and I would figure out what'sgoing on.
So that's one of the main toolsin the tool chest.
And there's that one tool, wedon't have enough time to
discuss all the different waysthat it benefits you.
But let me let me just put out acommon one that I think
everybody that can relate to isso if I were to say, hey, Cy, if

(17:59):
you take all of your projects,how what percentage of your
projects does a change ordercome up?

SPEAKER_01 (18:07):
Right now it seems to be way higher than most,
probably.
I'd say a 45% of the time.
So not half the jobs, almosthalf there's a change order
something going on.

SPEAKER_02 (18:17):
Mainly because of engineers.
Right.
Right, right.
Exactly.
Lazy engineering.
Let's talk about it.
Right.
So it's out there.
That's another show for anotherday, right?
God bless.
That's a soapbox.
Soap.
You know, and I'm it's kind ofgetting a little deep here on
the on the costing part, but mypoint here to the change order
situation is once you perfectthe work in progress report and

(18:40):
someone gets in there and theyhelp you allocate all of your
cost out to the projects, directcost, indirect cost, all that
has to get out to the job, thenyou have a really true, accurate
picture of performance on thatproject.
Because think about it, if Isaid, okay, Sy, when you're
presented with this change orderscenario, what what what data

(19:04):
point are you using to help youmake the decision whether or not
you fight for this change orderor you give in on it, you eat
it.
Most times people's answer tothat is how much money do I got?
Profit do I have in the job?
And so if you have good data,you have a good work in progress
report that's timely andaccurate because we're feeding
cost into this reportconstantly.

(19:25):
When we go pull this job costreport on this job, we have a
much more accurate picture ofwhat's going on from a
profitability standpoint.
And so that would be a goodthing to know if you're trying
to decide as an owner, do Ifight for this change order or
do I give in?
And so that's just one of many,many, many uses that this, this,

(19:51):
this tool, this work in progresstool gives you.
You know, you've um so not onlyis it whistling to you, hey,
there's a problem on this jobbecause the cost have outpaced
the billings, you know,obviously that's a could be a
potential private issue.
It's also a reference point towhere you're dealing with the
change order.
So I'm just highlighting a fewthings here to show you the all

(20:14):
the uses of this tool.
It's a multi-tool, would be agood way of saying it.
But but but but it's uh, andwe'll get to the implementation
of all that here in a minute,but that's just um, you know, uh
uh one of the I think the mainthings out there that
contractors miss is the internalaccounting.
And so contractors are quick togo out there and spend the money

(20:35):
on getting the best GPS systemput on the dozer.
They, you know, we're gonna go,that's me.
I mean, I was me.
You know, uh, I need anothertrack o, I need another back o,
but I can't I can't spendanother five grand and get her a
better accountant.
I can't spend another, you know,uh whatever X amount and get a
better account.

SPEAKER_01 (20:58):
Hey, you need to slow down this growth, put some
foundation underneath us, oryeah.

SPEAKER_02 (21:03):
I mean, why why why would you not invest internally
in your company like you doexternally?
And so I think that that's wherethe contract is it's not fun.
I get it, but it's probably themost important thing you would
ever do.
And so I would just encourageyour listeners out there, do not
underestimate the power of beinginformed.

(21:25):
And because that's what, at theend of the day, that's what this
tool is doing for you, isinforming you, you know.
And so when we go back to whatyou and I talked about on this
podcast when we first kind ofstarted spitballing about
topics, is you know, how manyways can a contractor lose money
and how fast can he know it?
Well, now we're kind of talkingabout the how fast can we know
it because this is the datapoint that gives you that

(21:47):
information.
And you go look and you talk tothe production team, you talk to
the estimating team, and you tryand figure out what went wrong.
Because think about it, when ajob goes wrong, if we're ruling
out weather and a bad employeeor a bad design, we've gone
through all those bads and thosearen't applicable.
We've determined it's somethingwe've self-inflicted here, you

(22:08):
know.
So who are we, who are we tryingto go to and say, hey, affirm
what they did right and redirectwhat they did wrong?
It's either production orestimating, right?
And and so how do we know, didthey bid it wrong?
Did they build it wrong?
You know, uh, how do we knowthat, right?
And so when you perfectconstruction accounting and the

(22:31):
work in progress report, it willgive you the knowledge to be
able to answer those questions,which eventually gets you to
that estimating reliabilityaccounting or production
accountability.
You know, that's at the end ofthe day, we've got to hold the
guys in the field accountable,right?
You know, and so did we bid itwrong or they put it in wrong.
And so that that's uh in and howfast can you know that?

(22:54):
So we go back to the 20manholes.
If we find out the week afterthe job's over, there there's no
chance to make right on that.
If we figure out on manholenumber two, the rest of the 18
are going to get done right,presumably.
So so that I would say that youknow it's not a perfect world
out there going back to thiscost and the billings as the

(23:16):
project progresses.
It's just it never progresses atthe same rate because there's
all these problems that canoccur.
And then this is uh occur andthis is how it shows up or it
manifests itself from anaccounting tool perspective.
Well, thank you.

SPEAKER_01 (23:30):
That literally, what a great intro to the WIP report.
And I'm gonna let you talk moreand more on that because the
number one thing I will tell youguys from an owner's
perspective, it is the red flagwaiver and it is your time
utilization tool.
Um, once you start getting acouple of crews running a few

(23:52):
different projects or runningfive or 10 projects in a month,
and you guys are spread out, youdon't know where your time needs
to be spent the most.
And I I, out of my personalexperience, and we're not tu-ty,
timely, weekly.
We are this close.
We're getting it every month,we're getting there, as you

(24:12):
heard from Dylan.
But it is the red flag waiverfor me.
It is the, okay, here's this.
Any change orders?
No.
Whoa, why is this going out, youknow, going crazy?
Is it gravel?
Is it go out there, me with myproduction team?
Hey, what are we using for?
Okay, this machine, thismachine, okay, what bucket on
this machine?
But for some reason, you guysare just way over on time.

(24:35):
Well, dude, there's rock goingon.
Well, oh, whoa, whoa, whoa,let's go deal with that and and
rock clause or or whatever thecase may be.
But that equals a change order,is where I was going with that.
Right, right.
But if I'm looking at the joband there's no change order
sold, and I show up and they'reand they're dealing with rock,
what are we doing?
That gave us an opportunity, notsaying that's what we're looking

(24:55):
to do.
I personally would rather bidthe job from a total turnkey
perspective.
Here's your hard cost, and I'dlove to do it for that every
single time.
But I'm an undergroundcontractor.
We literally don't know whatwe're gonna expose and find.
And so it's pretty hard to uhstick to an uncontingent uh

(25:15):
contract.
But before we go off a littlebit further in the WIP report,
and I wanted to mention how bigof a red flag waiver it is for
not just you ownership guys andyou executives, but also to you
project managers and youestimators.
This is a tool your estimates,your estimator can help your
project manager looking atbecause my estimator is obsessed

(25:38):
with it.
He wants to know if hisproject's coming back.
Did he set us up for failure?
Is he bidding too much,especially in a tighter market
right now?
And the one of the biggestquestions that we're still kind
of navigating in an overallgrant scheme of things, we know
what a direct and indirect costis.
But maybe the audience here,we've gone maybe just a little

(26:01):
out ahead of our skis.
Give us a little bit of talk andpoints on direct and indirect
because uh costs that areassociated with a project,
because I have learned so muchabout what does need to be a
direct cost.
And as you guys are sitting herelistening, you may agree, you
may disagree, but from thestandpoint of everything that

(26:22):
you can job cost, job cost.
I've heard you preach it so manytimes before, and you're right.
Now, there is things that areoverhead, and uh that's
different than indirect.
And I kind of want you tonavigate that a little bit from
a conversation because I thinkthat is we barely know our cost.

(26:43):
Okay.
Are these guys, you know, youmay be talking to a guy in
business six months here ormaybe five years?
They're still just trying tozero out their cost.
Don't feel bad, guys.
You're ahead of the ballgame ifyou're doing it in year three
and year five.
I know companies still don'tknow truly their cost, but then
we start throwing them at themdirect, indirect, and we start

(27:03):
throwing overhead.
And we of course profit,everybody knows that one, but is
your profit really your profitif you start throwing indirects
in there and overhead andeverything that it takes to
actually make a job turn?
Speak a little bit on that forme.

SPEAKER_02 (27:16):
Yeah, that's spot on, man.
Uh great question.
So so let's compartmentalizeyour bid.
Let's let that's the word I liketo use to describe it.
So we have direct costs.
So let's just throw a fewexamples out labor, material,
amount of pipe, amount of dirt,uh, concrete, asphalt,
picketrate, uh, the labor, youknow, all that goes into it.

(27:39):
Uh now let's talk equipment.
You know, this is still part ofthe hard cost here.
You know, you've you've got umum you've got the fuel burn,
you've got maintenance andrepairs, you got all that.
So that's got to be in theresomewhere.
Um, sorry, I misspoke.
That's more the indirect cost.
So, you know, Caterpillar, JohnDeere, Pick a Flavor, they've

(28:00):
all been doing this a long time.
So if you are like, how muchshould I charge per hour for my
machine?
I would encourage your yourlistening audience to reference
the owner's manual of the pieceof equipment, and they will
gladly tell you what that costis per man hour, or call up your
local rental house and say, whatcan I rent this machine for?

(28:22):
I don't care if you own it ornot, bid it at that rate.
Um, and that because that rateincludes a variable for
maintenance and repairs.
And because if I went to anydirt or civil contractor at the
end of the year and said, heyman, can you give me a good idea
how much you spent this year onmaintenance and repairs?
Uh uh, did you have to put anundercarriage on it with that

(28:44):
dozer?
That wasn't cheap.
You know, so so you you youcan't don't lie to yourself and
say that's not a big numberbecause that's a big number.
So, how do we account for that?
So that needs to be in in the umthe rate per hour that you bid
the machine at.
Uh so maintenance and repairsare one major oversight that
goes missing in mostcontractors' estimates, is they

(29:07):
leave that variable out.
And um, the second variablethat's an indirect cost is your
labor burden.

So think about it this way (29:15):
when you when you pay a man a$100
bill for labor, what cost didyou generate?
So you generated all the FICA,the SUTA, the unemployment, the
Medicare, all that.
You also generated costs forworkers' comp, jar liability.
What about the insurance on mytruck?
What about the insurance on mybackhoe?
What about the insurance on myshop?
What about the five milliondollar umbrella that I have to

(29:36):
carry for this client?
Take them insurance, guys.
I swear to God.
Uh thank you for requiring thatfive million dollar umbrella
aside.
And so, you know, the so youknow, I think a shout out to the
person that uh or to the uhowner you work for that uh made
you buy that five million uhumbrella.

SPEAKER_01 (29:51):
We appreciate that for those that shout out to him
sell the insurance here.

SPEAKER_02 (29:56):
But no, seriously, back on your part on the
indirect.
So So where where are youputting that in your bid at,
right?
And so we we try to tie that tolabor.
And so you have a labor burden.
And so if you were to, onaverage, add a most contractor's
labor burden when you factor ineven health insurance, let's
throw that in there.

(30:17):
That's a huge SPI.
So I would say safe bet is 50%labor burden.
So if you figure up a labor onthe job and it's 10 grand, you
better put another five grand inthere for your labor burden.
That's your true cost on labor.
So, so that's the commonmistakes we see missed just
right off the bat is theindirect cost for labor burden

(30:38):
and the maintenance of repairson equipment.
So if you compartmentalize yourbid, you got the direct cost,
you've got the indirect cost,and then you got overhead.
You know, an overhead is onethat can be a little tricky
sometimes, but think of overheadas if I didn't have any jobs
going, what are my costs to keepthe doors open?
Well, you got to pay the rent onthe building, you got to pay the

(31:00):
utility bills, you got to paythe clerical staff.
You know, you've you've um, youknow, those are typically, you
know, if you add that up, that'sgoing to give you some idea of
what your overhead is for ayear.
There's a couple of differentways you can apply overhead.
You can do it as a percentage onevery project, or you can arrive
at overhead number.
And if you're if your annualoverhead's 100 grand, then you

(31:23):
go through each job that you bidand you you establish a
contribution for that project tocontribute to your overhead
bucket for the year.
That's a little bit moreadvanced way of doing it.
Um, but um so and then you gotprofits.
And so, so your guys that arelistening out there, to your
guys that are listening, youknow, so think about it.
You'll have all my directs,you'll have all my indirects,

(31:46):
what's my what's my overheadcontribution, and then what's my
profitability?
Because think about it, untilyou cover if your overhead side,
let's just use you as anexample.
Uh, if your overhead is a halfmillion bucks a year, until you
make a half million dollars, youdidn't make any profit.
You ain't made nothing.
And so how long, how quick didit take you to make that half
million?
Did you clear that hurdle by theend of May?

(32:07):
Was it the end of August?
Was it the end of November?
Because if it's the end ofNovember, the only profit you're
gonna make is what you made inDecember.
That ain't gonna be much.
Good luck on that if you're acivil contractor, uh working
anywhere in north of the MasonDixon.
So, you know, so um um, so youknow, it's um overhead is a
thing, so don't don't blow itoff.

(32:28):
Don't, don't, don't turn awayfrom it.
But that that would be a veryquick uh synopsis of it for
sure.

SPEAKER_01 (32:35):
Yeah, the components of the you know, the next the
next thing they're gonna throwat you, you know, the the one
question I know because I wassitting there and I asked you
the question, how the hell am Iever gonna win a job with all
that on there?
Well, guys, let me tell you, youknow your cost.
Well, we started with um Iunderstand operating your

(32:59):
business the way you'reoperating it without accounting
for everything Nick just talkedabout, you are losing money.
And that's one of those hiddenum ways that we all lose money
because we aren't applying allof the costs that are actually

(33:19):
hitting the business because wedon't actually know them, first
of all.
Second of all, there is folksout there that do know them,
spreadsheeted them, and have gotthem out the wazoo, but don't
know how to implement them, youknow, say a husband and wife
team like me and Sarah.
I can straight up, she'd belike, How are we charging for
this?
And this is back in the earlydays, you know, started to split

(33:41):
off, got some other crews, billsare flying, invoices are flying
in the door.
Well, what are we charging thisto?
Was this in the bed?
And she was asking all the rightquestions.
And back then, my ego, oh, youknow, we'll just make some more
on to the next one, you know,we'll figure it out.
And I just spit out excusesinstead of just building a
system to deal with what I'vegot going on.

(34:02):
And I didn't want to face themusic of, no, that rental wasn't
in there, and we were probablyalready over on labor before we
rented that.
And um, ooh, we actually had 10extra loads of gravel.
And those are the hidden ways.
Because if you're not analyzing,let's not even talk about in the

(34:23):
middle of the project, because Iwasn't I wasn't there until in
the last 18, 24 months.
In the last two years, I'mreally starting to dissect in
the last year for dang sure, butit takes a long time to get to
that point.
And that's where we're we'regonna talk about implementing
some of these uh work inprogress reports, and there's

(34:46):
some other tools that we canprobably bring out.
But the one of the one thingsthat I've got to talk to you
owners about just real quick, isyour ego and accountability.
And I've got to tell on myselfbecause I was terrible at it.
God, I was terrible at it, anduh I didn't even realize I was

(35:09):
terrible at it.
And there's a lot of there's nota whole lot of people that are
gonna come into your office andgo, yeah, you can sit there and
tell me all that, Bub.
You suck.
I mean, basically, what thesenumbers are is black and white.
And if you get to the end of theproject and you're not analyzing

(35:34):
what's going on within thatproject, whether you did great,
whether you did bad.
How do you fix the bad to makemore reoccurring good?
Or is it just all bad?
And if it's just all good, okay,let's figure out how to repeat
all of these good systems,systemize it even more, repeat,
repeat, find the bads, ofcourse.

(35:55):
But um literally navigating ontothe accountability piece is it
starts from the freaking topdown.
And just like Mr.
Kiwit wanted the guy on the verybottom to know the trick, the
guy just walking on the job.
He wants him to have anunderstanding, may not be as an
in-depth understanding as thesenior project manager manager,

(36:20):
but there is visibility andtransparency within, hey, you
know, telling your guys' cost isgoing, hey, I bid 20 days of
labor.
That's it.
20 freaking days.
We got to be tested, we got tobe out of there, demobed, gone,
no ifs, ands, buts about it.
Unless we can sell a changeorder during this time to extend

(36:43):
that time, you have 20 days.
That starts into sharing thevisibility and transparency from
the front of the house.
And if you're not sharing yourproduction rates, and this is
where I'm also gonna go with theaccountability piece, is sharing
your production rates beforethey get on the job.
You first have to know yourproduction rates.

(37:04):
How do you get those?
This also, this is also goingoff on all on to me because it's
all about documentation whileyou're in the production.
It's not about work you can do,it's about work you can document
you've done.
And especially being anunderground contractor, it gets
expensive if you need to go outthere and prove your ego about,
hey, the pipe is right where Isaid it is, or you can have some

(37:27):
uh GPS shots or some you knowbenchmarked elevations with a
laser, whatever it may be, youcan topside without uncovering
that piece of pipe.
I know I'm getting a little faroff here, but the accountability
within the systems of theproduction team, once they do
have that production rate, isholding them accountable to that
production rate.

(37:48):
And um, once they're on thatjob, they have that production
rate, recording production dataevery single day.
And if you guys need a tool, hitup Live Switch.
I've got, or hit me up onLinkedIn.
I've got a really fantasticproduct on documentation that
doesn't even serve as an app outto your guys in the field.

(38:10):
Um, but at the same time, thevisibility of the production
data back to the estimator asquickly as possible.
That's one thing that I think wehave done really well is we've
used a software program, uh,shout out Monday, and basically
the guys go in through theirdaily report, hit a link, and
they fill out this fillable,pardon me, fillable form that

(38:34):
cycles into Monday where Dylancan show up the next day, click
on the Monday, this section ofthat uh Monday CRM and go, okay,
Rusty had 160 foot yesterday.
Jesus down here at Heritage haduh 200, and and go and compare
it the next day.
And so it's all of those piecesthat we're fixing to talk about

(38:57):
in the work in progress reportbecause it sounds so easy.
And it like you said, it is easyuh to talk about it, but to
actually stick through it, doit, especially you guys that
were hard-headed like me, thatran the other way for so long,
and then you tried growing andthen you doubled your gross and

(39:20):
then you kept doubling, and nowyou're just sitting there in a
whole pile of crap and you don'tknow what to do.
And you don't even know where tofreaking start to get back to
what we're talking about.
I will encourage you.
I'm still in the middle of it,but I will tell you there is
light at the end of the tunnel.
And if you start holding peopleaccountable, estimators,

(39:42):
production team, you've got tobe clear and visible.
That's what our work in progressreport does for us, gives us
visibility.
But talk about you, I mean,you've been doing this for 25,
30 years.
You've dealt with all sorts oftypes of different owners, good
ones, and I'd like to tell youreference bad owners earlier

(40:03):
because there is just bad ownersout there that never get this
through their skull.
But talk about theaccountability and maybe some
ways to start setting someaccountability up within the
estimation and production teams.
All right.

SPEAKER_02 (40:17):
So um let's talk about um I'll back up one one
step here is typically when wego into the um uh contractor's
office like you, and uh wepresent the program and you go,
dude, that's what I've beenlooking for.
And it starts off great.

(40:37):
But then we do our little deepdive and we come back to you and
give us the give you your firstreport and say, You suck, sir.
There's there's a period ofdenial that happens.
I I mean, and I've done thisenough to know that I'm I'm just
waiting on you to go intodenial, and it's gonna happen
every time because I'm tellingyou you're not making money, and

(40:57):
you're like, Yes, I am.
And I'm like, no, you're not.
And you're going, yes, I am not.
No, you're not.
And so because all the thingsthat we've talked about so far
on this podcast, guess what?
You didn't have in your bid.
You had no indirect.
You didn't even know what any ofit was.
You didn't even know whatindirect was.
Exactly.
You thought I called you a badword.
Um, you know, uh, you dang suredidn't have labor burden.

(41:19):
So all of these jobs, there wasno, there was no um depreciation
cost in there, which that'saccounted for, by the way, in
the production rates or on thethe hourly rate on the
equipment.
So you and if you look at yourincome statement out there, uh
the biggest number you're gonnasee real quick is gonna be
depreciation, which should be inthe cost of the equipment, not

(41:42):
in the overhead.
But there's a lot of accountsout there that don't know that.
But anyway, that's a big number.
So you didn't have any of thosevariables in your equation.
So you're looking at what youthought was a uh utopia of
profit when once I applied allthese other costs you missed,
you were negative, not not evena little positive.

(42:02):
So, so it takes a minute for meto convince you that this is
what's really happening.
And so the ego, as you say, isinvolved here because you're
having to admit, I screwed thisup, I didn't know, you know, and
that's hard for a lot of peopleto do.
I get it, I totally get it.
So, so there's this period ofdenial.
So I I would like for yourlistening audience to know you

(42:25):
you're gonna be in a you'regonna go into some denial.
I hadn't had I hadn't had a guyyet that didn't go into denial.

SPEAKER_01 (42:31):
I did for I looked at you right square in the face
and I said, I got the best damnproduction team you ever seen
this side of Mississippi.
Yeah, and um Mr.
Newland looked at me and said,Go prove it.

SPEAKER_02 (42:44):
Yeah, he um the other thing that Cy said was
that all the all the themunicipalities around here love
me working for them, you know,and the reason they like Sai
working for them is because hewas doing it too cheap, you
know.
So, so uh, you know, and Sythought it was because he was
doing such a great job.
And um, so you know, so tell thetruth today.

(43:04):
I know it hurts, it hurts, butit sucks.
So, so that's the the the thereason that you go into denial
is because you're faced withthose realities, right?
So the second part of it is, youknow, or uh we can kind of mesh
these together is theimplementation of what we teach
and and holding peopleaccountable.
And so um so you have you haveto buy in as the owner and you

(43:28):
have to help push the changebecause we're trying to change
the culture of your company.
It's gonna take two to threeyears to do that.
And so if you buy into thisprogram, but you go back to
doing it what you're way you'redoing it before, and you're
looking at your staff and going,y'all do what Nick says, that's
really not the level of buy-inI'm looking for.
And I'm gonna challenge you too.
It's not gonna work, it's notgonna work.

(43:49):
Been there, done that.
So, so owners out there, I'mtalking straight at you, man.
This is hard.
If it was easy, everybody'd bedoing it.
It's not, that's why a few doit.
So you got to really, reallywant it, and you got to be
prepared for hard.
So, how well did you do hard?
And uh, there's a great videoout there, by the way.

(44:09):
It was either a University ofNorth Carolina or North Carolina
State, and um, it's the women'sbasketball coach, and she does a
quick snap on how well did youdo hard.
It's the one of the mostmotivational speeches I've ever
heard in my life.
So encourage you guys to go outthere and check it out.
Wish I can remember names, sorryI don't, but it's it's an
awesome three-minute clip.

(44:30):
But you know, you gotta yougotta want to do hard, man,
because this is hard.
It's a grind, but you're gonnawant to quit.
You're gonna want to quit a lot.
So I'm not trying to scare you,I'm just trying to prepare you
for what's to come.
And so so you've got theimplement piece of it.
So you got we got they're gonnafollow your lead, side.
So if they didn't they see thatyou're kind of halfway bought

(44:50):
in, they're not gonna buy inbecause there's a lot of ripples
in this pond of implementingthis culture change.
So we're even going out into thefield and talking to your
superintendents who are someblue-collar guys, and we're
asking them to look, we'reasking them to do some
white-collar things in terms ofcapturing data production rates
for the day, et cetera.
They've never had to do itbefore.

(45:11):
You're gonna get some pushbackthere.
Why don't we got to do that?
Never had to do that before.
This is bull crap.
So you're probably gonna losesome people.
So now you've got to replacethem right in the middle of
redoing everything.
So it's even more hard.
So, so there's a lot of ripplesin this pond, man.
So, so from an implementationstandpoint, I encourage buy-in
and push, push, push, push.

(45:32):
The second or third part is theaccountability piece.
And so the accountability pieceis making sure that when we ask
your estimate, estimating teamto do certain things the new
way, we ask your production teamto do certain things uh uh a new
way, your accounting team to dothings a new way.
We've got to get all three ofthose people in the same room at

(45:53):
the same time and talk aboutestimates, talk about
production.
You know, what if the job'scomplete, let's pull them all
in, talk about what went right,what went wrong.
That's a good that's a good uhbest business practice to do
there.
So, so there's uh so it kind ofgets back to that thing I say in
the beginning, estimatingreliability, production,

(46:13):
accountability.
We've we've got to hold peopleaccountable.
And and I think this is kind ofwhat separates really the most
uh my witness of doing this for30 years is with business
owners, is those that arecomfortable holding people
accountable seem to excelquicker, further, faster.
The ones that don't likeconflict, that avoid conflict,

(46:36):
um, I would say that's a majorvariable in this equation.
So you if you don't likeconflict, I don't know if this
job is for you, man.
Um not trying to hurt yourfeelings, just saying that's 30
years of experience talkingthere.
And then and then the last partof the this is gaining
confidence in what we're tryingto get you to change.
And so uh si is smiling rightnow.

(46:59):
So uh as any any of my customersthat I've taken through this
process is because we go inthere and we go, hey, in your
estimating department, you'vebeen leaving out indirects,
you've been leaving outequipment rates, you've been, I
mean, uh uh uh labor burdens.
I mean, there's rental rates.
I mean, you're leaving out allthis stuff.
So now you're like, man, how howam I ever gonna be low on a job

(47:22):
if I'm I'm barely winning thejobs now?
So if I bid like you tell me tobid, how's this gonna work?
This is gonna be a failure.
You know, so so that's also anexpectation that I'm
anticipating, maybe it's abetter word for you, your
reaction to this process.
And so, you know, it you justgotta stick with it, you gotta
keep doing it, you gotta bidmore jobs.

(47:44):
Uh you probably wouldn't biddingenough work.
That's right.
You know, you're bid more equalswomen.
Right, right.
You know, so you gotta, yougotta bid more.
Um, and so it it just takestime.
You gotta be patient and yougotta be persistent with the
process.
It just takes a minute, but butdenial, accountability,
implementation, gainingconfidence in the new ways, man,

(48:06):
that's I think that's probablythe toughest part of it.
You know, we'll go in there andexplain the numbers, you're
like, I never thought aboutthat, and I got that.
So, you know, people are quickto that change, but um, these uh
human behaviors here, it seemsto be the the harder part of it.
And so, you know, I guess I'dflip it back to you a little
bit.
You know, people as we've walkedyou through this process, I

(48:29):
mean, you felt all of thosethings.

SPEAKER_01 (48:31):
Oh my god, dude.
I felt so many differentemotions, especially over the
last 18 months, it's beenbrutal.
I've had key people just up andleave.
Um, because what most of theteam doesn't understand as
you're walking through thisperiod of time, they keep
telling you they're tired of thechaos, they want more structure.

(48:54):
But in order for you toimplement any type of structure
and systems, it gets even morechaotic.
And you're right, the team's inthe field, we've just been
running right along, doing jobsbest we can, you know, old boss,
you know.
And now we're asking them to,hey, we need you to stick to

(49:15):
this number.
Well, I've never got thatbefore.
What do you well that's this iswhat we need you to uphold.
And and the whole tone changes.
It's not that you don't care forthem anymore, because a lot of
people that I've truly, trulyloved and cared for that have
been with me a very long timehave either walked away or

(49:35):
needed to exit because theythey're culture killers and they
don't want to buy in and theywant to tell me one thing to my
face, but then go right out thedoor, not even get out of the
building and start talking aboutcomplete opposite of how dumb or
how this is silly or this is sostupid.

(49:55):
I don't understand, this isn'tgonna help us, and just all of
that.
I learned uh at Dirt WorldSummit, shout out to the
BuildWith team uh last week.
It was um toxins, what toxicityis within your business, and it
is repeatable, unacceptablebehavior or attitude.

(50:18):
And when you say it like that,it's a totally different look.
You start looking at things alittle bit differently.
But during this process, the oneword I would have to say is
uncomfortability for ownership,your project managers, because
it really starts shining lightin different corners of the

(50:39):
business that has never shownlight to.
Because usually you got theowner just like me.
I mean, you saw it.
I had, shoot, dude.
Back then I had six or sevenpeople, maybe eight people in
the office, and everybody waskind of just running their own
way, and nobody really was onthe same page, and there was
definitely no document to keepthem on the same page to bridge
them from the front to the backof the house.

(51:01):
And um, it was just everybodyrunning each way, and here we
go, let's grow some more, youknow.
And you don't know what youdon't know until you start
reaching out, but there gets tobe a point, every single
contractor I have seen.
I talked to people that are inmy shoes straight on the
pathway, 10 times more equipmentthan I had in shorter amounts of

(51:24):
period.
And I'm like, let me just havelunch with you for just a
minute.
Let me please just listen to mehere.
You've got to find structure andsystems.
You keep adding these people,you keep adding and adding, and
it's it's a lot about deleting,not adding.
Um, Tim Grover at the sameconvention last week, he said,

(51:45):
uh, do you know what happenswhen you get your crap together?
And we were all kind of likestunned, you know.
Um being, well, everybody tellsus as entrepreneurs when you get
our shit together, you know,every single day.
Right.
Somebody, somehow, you know,whether it's your spouse or
whether it's your guys.

(52:05):
But at the end of the day, onceyou actually get your crap
together, you have a pile ofcrap.
And it's not necessarily alwaysabout adding.
And sometimes it has to do withdeleting.
And the first thing on any civilproject, any civil project, I

(52:29):
don't not even just civil, I'mtalking about any type of
commercial.
Anytime you're gonna bringsomething out of the ground and
build it, the first friggin'thing we do as civil guys is we
strip and grub.
And then probably gonna cut, youknow, six, six inches to two or
three feet, depending on maybeten feet, depending where you're
at in the country.

(52:50):
But what I'm getting at isyou're going to remove first
always.
Anytime you're gonna havesomething built within a new raw
piece of property, you've got toget the bat out and allow to
have that solid foundationbuilt, right?
But as a smaller entrepreneur,chasing revenue, chasing

(53:13):
revenue, chasing revenue,because that's that's all we
know.
You know, we need these bignumbers.
We won't, we wanna we wanna haveall the things and we want to
have it right freaking now,because if you're like me, you
gotta have it right now.
You can't just slow your wayinto this and strategize your
way into this.
But I thought that was such agreat analogy.
But the one thing that reallystuck out to me is that removal

(53:35):
always causes disruption.
And you have to be prepared forthe disruption.
I wish you'd have prepared me alittle bit more, but I was to
your defense, I was in denial,but I was also so bought in so
quickly.
I hope you would agree there.
Yes, yes.
But it was that starry-eyed, Iwant everything you're saying I

(53:57):
have.
And you gentlemen were sittingthere, saying, You got a lot of
work to do.
And I'm like, really?
No, you know, in a couple years,you know, everything be fine.
And, you know, we're just nowgetting to that point.
And I believe it would havedefinitely helped if the economy
and the market was booming justa little bit better, as you've
served across all contractorsacross the United States.

(54:19):
But at the same time, I dobelieve next year's gonna be a
little bit a better year.
We've spent all of this timeleaning up a little bit and and
removing, and that's where I wasgoing, guys, is those guys that
aren't helping you bring inprofit to the company and their
legs and arms, but it may be anego thing.

(54:43):
Earthwork, commercial earthwork.
And Nick, you could probablyagree with this.
I mean, there is big outfits,there's old-timer outfits, but
they've been doing it a verylong time and they have the
tools and they can get cheapwhen they want to.
And the commercial earthworkspace, there's so many keys to
doing it efficiently in order tomake the money, I think that's

(55:05):
right.
Estimate, uh, you know, theproduction, all of it, right?
And so, you know, I've alwaysbeen a pipe guy, but three or
four years ago here in NorthwestArkansas, and this is kind of to
the denial and accountabilitypiece, and I'm gonna show tell
of myself.
Right.
And, you know, three years ago,basically in our market, if you

(55:26):
weren't handing thesecomfortable GCs, a earthwork,
water sewer storm, storm drain,um, asphalt, curb sidewalk,
irrigation sleep.
Well, I mean, everything theyain't even calling you back.
And so that's why we went sohard off into this.
We were just figuring out thepipe game.
Hadn't figured it out,obviously, or we would have had

(55:47):
these things instilled.
But at the same time, we'relike, oh, I gotta have dirt.
So let's go buy five dumptrucks, let's go buy the most
expensive dozer on the market.
And I know I'm talking to youguys because we're so purchase
happy.
We're ready to just go pull thetrigger.
Because now, especially if ifyou're anything like myself in
the first four, five, six years,you figured out what business

(56:10):
credit was, and you can just gosign your name and you're off to
the friggin' races.
And it's so dangerous.
But at the same time, it'sunbelievable that we can do it
in this country.
But anyhow, getting a little,little off subject there.
Um we come to this day and age,and there's a lot more GCs in
the area, a lot more landdevelopers, and they're getting

(56:32):
a lot more picky nowadays withtheir numbers, and they can
because there's more of them,and they're all fighting over
the same jobs.
And and so I made the toughresounding call by knowing my
cost, by looking at whip reportsover and over again, by
analyzing projects at the end ofthem and going, man, I really

(56:53):
don't make no money doingearthwork.
Earthwork was kind of an egogame.
And once I set my ego aside, Ireally like that dozer.
And I really like him 20 trucksrolling in out of that job, and
everybody calling me around townand going, Hey, Sa, that's that
you guys over there.
You bet, you know, you alwayswant that.
That's what you work for.

(57:14):
You want, you know, but at thesame time, I would much rather
run in there, put two hydrantson, and run a hundred foot of
sewer main and make 40% and getout of there, and nobody even
know I was there.
Now, now, but I have made thetough call of chopping off our

(57:34):
earthwork arm because I havebeen doing exactly what we've
been discussing today andchasing my cost and trying to
figure out what is profitable.
And that's so hard for me tosay.
But heading into winter, as assome of you guys have may have
already seen from the audiencelevel, that I've had my dozer
listed if you follow me onFacebook or uh I think it's on a

(57:57):
few websites, but that's besidesthe point.
Um, man, I can't sit here andpreach it.
And I can't sit here and havepeople that, you know, Nick's
been a part of what I've beendoing for the last two years and
has really truly been by my sideand helped me and been there for
the late-night phone calls ofgoing, dude, I can't land a damn
job.
You screwed everything up thatI'm doing.
No, si, just hang on.

(58:18):
I'm freaking telling you.
Now we can start messing withmargins and doing things now
that we have a good basis ofcost, but don't you dare go
start messing with cost.
Cost is cost.
That's right.
Dollars a dollar, like for thelove of God.
But man, it was tough.
And I held myself accountable.
And I put I put some deadlineson myself, guys, through the

(58:39):
years.
Uh, I'm sorry, through this yeardealing with this said issue
because it wasn't I just woke upthing.
Right.
This was back in June and July.
I'm like, man, you know, Marchwas supposed to be the big, the
ban.
Then it turned into July.
And I was like, all right, allright, by July 15th, we ain't
got something landing.
We had some good little workthere over summer, but nothing

(59:00):
to write home about.
Like, no big meat and potatoes.
Mainly it was going in behindother contractors that misbid
their stuff and doing it hourlyand fixing it up, and that's
that's what we have always beengood at, it seems like.
But I had to basically make adecision by October 15th in my

(59:23):
head was this is D-Day.
And October rolled around, andthere's still pipe guys got some
subdivisions rocking androlling.
We're picking up some small pipestuff through town in the 30 to
100k stuff, you know, justrocking and rolling on this
small little stuff.
And I'm like, wait a minute,we're not stacking a whole lot
of payables here either.

(59:44):
Because there's when you startdoing this on a larger scale,
guys, the invoices and theamount of accounts payable, and
that sucker starts getting to acouple hundred thousand a month,
stuff gets serious very quickly.
And the weight that fromsubcontractors and vendors and

(01:00:04):
every uh all the accountingdepartment or anything else
extra that your guys want thatyou promised bonuses all the
things it's just an absoluteweight that you have to carry
and if you can find a way to dobusiness without holding all of
those payables say you do thework they supply the materials

(01:00:27):
but maybe you have all theequipment and the knowledge and
the know-how that's worth itsweight in gold compared to
anybody can go buy material butline up with the relationships
that I talk about every singleweek on this show relationships
are everything there's always awitty solution to your problem
not a wallet solution that'sbeen been kind of my new thing

(01:00:49):
and I used to as the revenue wasgrowing and just running off the
charts just throw the wallet atit throw the wallet at it throw
the wallet at it and when you'renot tracking any of those
wallets my God it's hard.
So the sorry I'm a little allover the place because that was
that was tough to tell you guyshonestly but I'm just trying to
be open and honest andtransparent and vulnerable um

(01:01:12):
with this show and trying to bejust flat out honest like I'm
trying to also do what doesn'tyou know what works not what
doesn't work.
And black and white through whatNick has been sitting here
teaching us today is exactly howyou know it's it's it's being
honest with yourself.

SPEAKER_02 (01:01:31):
I mean you're I mean you're being honest with your
listeners now and I'm sure theyappreciate that but you know
you're up you got to be honestwith yourself first you know and
that's the the ego break thatyou speak of you know it's a um
it's it's not an easy road youknow it's um it's tough as we
spoke about before you uh butkudos to you for making that
making that choice and uh youknow because I think a lot of

(01:01:54):
times and and uh I'm stealingthis act uh statement actually
from your uh estimator uh Mr.
Cecil shout out yeah man he uhhe called it revenue drop and
I've never heard that put thatway but a lot of contractors are
revenue drop I would have thatis a great term I was at one
point 100% yeah I don't I don'tand I could care less about how

(01:02:17):
much revenue you're doing I wantto know what what's the bottom
line look like let's talk aboutthat you know so to say you're a
five or ten million dollarcontractor woo-hoo but um are
you making 10 or 20 yeah percentlike or what's your uh what's
your what's your net profit onthat yeah now let's now we're
gonna see what everyone's gotwhen we start talking about that
part of the equation nobodyseems to want to talk about that

(01:02:39):
so um but anyway uh revenuedrunk was a great new term for
me and I've I've used itexcessively over the last couple
months so shout out to Cecil forthat but um but uh but yeah man
it's just um you guys just gotto make the decision if this is
what you want to do and and uhfind the right teammates to team
up with and um uh be willing topay the price I think what you

(01:03:03):
said a while ago was so point onuh so on point in that yeah you
were you like what I was puttingout there and you you agreed to
hire us and you know put us towork but I don't know that you
quite realize what you signed upfor.
Not a freaking clue.
And um and a lot of times Idon't tell you that on purpose
because if I told you that youmight not do it.
And um uh I wanted you to do itnot because I was gonna make

(01:03:26):
money off of the of the what Ido as I wanted you to be
successful.
And uh so that's what drives meis uh looking back and seeing
all the people that we'vehelped.
You know that's that's um that'sprobably better than than the
money part.

SPEAKER_01 (01:03:41):
So it is yep and so uh now that I'm doing it through
a little similar to the feelingthat you get is that when I get
an Instagram direct message or Iget a LinkedIn message or I get
an email or I get a a a reachout through the website whether
it's here whether it's onYouTube whether it's wherever it

(01:04:03):
is between the podcast and theand the other champ main
channel.
But anyhow, I'm truly helpingpeople just being by vulnerable
and sitting here talking to youabout things that I sucked at
and being open about it becausethere's so many other prideful
people you know there's peoplecall me stupid for doing this

(01:04:24):
but I truly want to change thisindustry and this and if we
don't we're kind of hooked yeahyou're but the trouble but the
the vulnerability of puttingyourself out there I was where I
was going with that is it's veryshameful.
It's very embarrassing and youput yourself out there on a
naked silver platter foreverybody in the room to look at

(01:04:47):
over and over look right up yourskirt and I'm talking about your
financials obviously but youstart bringing out those
financials and you got to starttalking about those line items
and you're like I have no ideahow that line item has got to be
that and then you start digginginto that line item and you're
like we're spending what onwhat?

(01:05:07):
And you start narrowing down atyour costs but I can sit here
from uh our fractional CFO todayin the last two months we're not
positive and it's take andthat's before I've caught it's
you know finally sold this dozerhere but um it's fixing to be on

(01:05:28):
like donkey call like somebodyfinally told me and I have as
you know in shopping theoverhead tree very hard to do
people are hard that's whatmakes it so hard is that you
love and care about these peopleso much and you're killing their
dreams a lot of times I killedmy dirt operator's dream.
This was his dream and Iprovided a way for him to have a

(01:05:53):
dream but at the same time ifthe dream doesn't help the
company make money it's hard toto afford that dream.
And so you've got to be able todissect every angle and arm of
your business and and this ishow you do it is start out by
good estimates track yourproduction and ensure that you

(01:06:17):
have accurate and timelyaccounting back to everybody
else so they can see but nothat's what I wanted to touch on
man through that denial afterthat denial then you find out
how stupid you looked duringthat denial phase and then
you're even more embarrassed andyou're more shamed to even have

(01:06:37):
then you start shooting peopleout of the room when people show
up and then you're going backopposite so it's tough.
And then there's people thatthey just don't like they can't
stomach what they're hearingthey're gonna walk out the door
and that's okay too.
You don't need them let meassure you guys you don't
friggin' need them I'm sittinghere with two main people in the
office me and my wife in and outof the office obviously I'm

(01:06:59):
there majority of the time buttracking estimates better than
we ever have trackingdocumentation inspections and
and that's a lot to do withsoftware and a little bit of AI
integration and and and makingsystems is what I'm going back
to.
And even on the small thingsthat are reoccurring problems.

(01:07:20):
Yes we're talking about overallprojects here we're using whip
reports but the small thingsabout you could have been
greasing this bearing this wholetime and if you had an
inspection report telling youthat all grease parts got uh
inspected every day and you knowthe last guy that stopped doing
the reports that's been runningthe machine, you know that guy
hadn't greased the machine in 10days.

(01:07:41):
And that's probably why thebearing went out or the pin got
hot or whatever the case may be.
But it's systems ofaccountability not just in the
financial aspect not just in theproduction aspect or accounting
aspect.
It's even in the mud dane tasksthat just come with the industry
and you have to start literallyidentifying the problems it's

(01:08:04):
usually the thing that yourphone rings 25 times about a
week start there and then startworking your way down all right
I'm hearing about five or 10times a week about this.
Okay, let's go back dig in but II know I may be going off on a
little tangent there guys butit's so freaking critically
important to not just yourcompany but to your own mental

(01:08:26):
health.
I've been through the ringerNick has heard me, seen me uh in
some really bad states of mind.
But I want to give you a littlelater light at the end of the
tunnel because I know I justpunched on you pretty hard you
do start to gain confidence.
And that was the last piece thatNick said is that in a testament

(01:08:47):
I just want to share this isthat you start to gain this
unexplainable confidence withinyour numbers within your
estimators within yourproduction teams but you're not
relying on people is what Iwanted to get across is now that
you've got this system,estimator God forbid doesn't

(01:09:09):
show up tomorrow, we've got asystem CRM here's you know the
context here's what we'retalking about here's our file
structure system this is how weget a bid out the door and
hopefully somebody else can beand that's not from a
replacement factor.
I don't want anybody sittingthere thinking that in their
head but you have to have thatsystem if you want to grow that

(01:09:30):
how are you going to repeat itif you don't anyways I made that
mistake where I was just ohlet's grow straight as fast as
hard as I can I had someunderlying issues about running
away from a previous uh businesspartner as you know but I had to
create a revenue monster but ata certain there's a cap to it as
long as there's profit profitpays off then not revenue.

(01:09:55):
That's right.
And that's what it's very hardfor new business owners to
understand.

SPEAKER_02 (01:10:00):
Well and and you you positioned yourself greatly for
the revenue that's to come in2026.
So now you are much more capableof growth in the and before you
were not capable at all.
You had a credit limit that gaveyou some the that gave you a
little bit of rope to hangyourself with that's right and

(01:10:22):
you uh you tried really hard tohang yourself.
So um um so but now you you'reyou've reset and you've you I
loved your analogy about uh theundercut there we've uh got rid
of some stuff and well we'releaning mean and we're ready to
bring on the revenue and we'regonna be able to attack it.
We're gonna be able to track ourcost and know as the projects

(01:10:42):
happen and what's going on.
So you're million miles ahead ofwhere you were when I met you
just now you're ready for therevenue and um and and I think
that you'll do a a much betterjob of it this time than you did
the last time but you know youjust don't know but you don't
know you know and so I wouldanother thing I want to put out

(01:11:03):
there to your listeners is thatyou're in the majority.
You are not in the minority.
You're in the majority so all ofyour listeners out there that
are relating to Sci right nowdon't think that you're by
yourself on an island.
No there's there's not enoughroom on the island to get all
the people out there to likeyou.
It's more like that.
The island that don't have manypeople on it is the one that's

(01:11:25):
got it figured out.

SPEAKER_01 (01:11:27):
Not figured out but trying they're building a bridge
to their own island.

SPEAKER_02 (01:11:30):
Yeah that's right so so don't don't beat yourself up
too bad just uh just take thebull by the horns and and um and
make it happen you know so we'regonna we're gonna test how bad
you really want it and so that'swhat I've witnessed with you Sai
over the last few years is andSy has called me for some uh
counseling but but um you know II could tell how bad he wanted

(01:11:55):
it and and that's usually thenumber one driving motivator for
most business owners is how baddo you want it because it's only
going to crash and burn if youquit you know you throw in the
towel you know it's it can'teven be an option it is in your
head though like every day likethere's some points of this that
I was just like emotionally justshot from people that yeah like

(01:12:22):
people that I loved cared abouttold me to my face oh I'm gonna
be here for life blah blah blahblah blah but can't handle a
little change and transitionthank God I'm doing it you know
you said I remember year five toyear 15 some folks figured out
closer to five some closefigured out to 15 some they've
never figured out and figure outhow to make it and I was in that

(01:12:43):
year seven of throwing my handsup like I need somebody to help
and also to a testament here soI had the wrong help.

SPEAKER_01 (01:12:53):
That's also a really big factor to like I got there
was no guiding rails for me.
It was everybody that I went tohelp with it's like I climbed a
mountain to get to them and theyshoved me off another cliff that
I had to figure out how toclimb.
And it was over and over againand it's nice to gain confidence

(01:13:16):
and actually be standing withina foundational standpoint of if
I wanted to grow, I don't knowif I ever want to grow again in
my life from what I've gonethrough.
I'm now back you know to astandpoint that I get to be out
in the field more.
I get to do more of this mediastuff for the listeners at home

(01:13:39):
and produce more content and andand use this 10 years of
experience as a vehicle to helpthem hopefully skip two or three
years and I can catch them atyear four and five before they
ever crest over that year fivemark and start signing their
name to everything and I've gotall this work for the next 12

(01:14:00):
months but they ain't lookingout past 12 months.
They're just well that customerwhat if that guy moves in takes
over your work what are yougoing to do then with the 17
track goes and all that use I'mI'm exaggerating here, but you
have seen multiple times thesepeople get in oh this guy told
me boom we went straight ballballs deep and I've done it too

(01:14:20):
I mean straight up I havebelieved what a one guy was
saying but if we can catch thoseguys a year four years three
there's so much to be it's youcan't even get into this in year
three in my opinion I mean youcan I would love for you guys to
all start with this if we'restarting tomorrow.

(01:14:41):
But I was just talking aboutthis on Sycon's main channel
today on the way back there isso much coming at that business
owner in the first two years andit's just such a fear.
It's like you're scared to deathof everything.
You're scared to death to hirethem.
You're scared to death you'renot gonna have enough work
you're gonna scared to deathyou're just gonna quit you're
scared to death what youropinion of their company is

(01:15:02):
going to be you're scared todeath of taxes you're scared to
death of actually doing the jobthe guy not going to pay you
like everything is fearful andthen every two to three weeks
there's somebody calling yougoing hey you didn't pay this do
you know what this is hey do youknow what this is so it just
takes some time to get yourfreaking skis on before you're
even skiing down the slope.

(01:15:24):
Once these guys start revenueand some money you get over a
half million dollars you'redoing some here guys start
concentrating on these pieces ofthe puzzle especially anybody
that's diverting from boots onthe ground one to one and a half
crews if you're going two crewsmore than that get a whip report

(01:15:44):
in place not only for yourselfbut for these superintendents
tracking these jobs in yourestimator and that's kind of
that key point but if we cancatch them Nick at year four,
year five, we're gonna haveexceptional plumbers,
exceptional electricians.
We're not gonna get these dingdongs that show up at the house

(01:16:07):
to fix my ceiling fan and ittakes them four hours and charge
me 8500 bucks to replace mywhole breaker panel we're gonna
get actual master electriciansbecause we're gonna produce so
many of them because we're gonnacreate unbelievable companies
for them to go work at to go toschool at and and literally
create the trades and reinventthe trades and if we can equip

(01:16:32):
not just the owners but the guysbelow them with the tools that
they need to go fight the cringeof the normal industry and be
the minority man that's whatI've been waving the flag for a
long time.
While I've been going throughall of this change I've also
been doing YouTube and thispodcast and trying to be daddy

(01:16:54):
and trying to be hubby and it isa lot and it is more than most
people are ready for.

SPEAKER_02 (01:17:00):
But if you are willing for a little bit of
change and you're so ready forit you can't see straight and
you don't know where to turn towhere can where can they reach
out to you Nick um my um umoffice is in Northwark Arkansas
it's uh Sterling C ChrisPritchard is um and so we have a

(01:17:22):
website you know my smiling faceis on there our team members uh
all of my contact data is thereso feel free to reach out there
and uh be glad to visit with youand see um see what we can help.
You know it's one of the thingsyou made me think about
something else there is um soback in high school I was a

(01:17:43):
lifeguard and you know what theywould teach you about a
lifeguard uh one of the mainthings was to don't immediately
go try and save the personbecause their adrenaline is
flowing so heavily that theywill grab a hold of you and
drown you and drown you.
And so you got to let them gounder and let them get some of
that fight out of them and thengo save them.
And a lot of times what I findwith contractors they're kind of

(01:18:04):
that same way.
You know that ego thing thatdeniability their denial so I
really want you to suffer alittle bit bad as that sounds
before I before I roll in therebecause um I need to I need to
get a little bit of that fightout of you from you think you're
doing it right standpoint.
Otherwise you know you're notgoing to listen and buy into

(01:18:26):
what we're talking about.
And this isn't something we readin a book inside this this is a
tried and true method.
So I'm not saying that I won'tlearn something new I'm I'm I'm
not a know it all by any stretchof imagination.
I'm just everybody this is athis is a tried and true um this
is you know model business modeland so it's not a it it it works

(01:18:46):
because we've done it a lot andso um uh with the help of my
good friends Richard Nealand orRick Ferguson Cobb and
associated the man he's the manhe really is to Richard and his
team all of his uh ladies therein the office and guys that you
know Miss Crystal sorry is oursgive you a little shout out
hopefully you watch this and souh so anyway um thanks again man

(01:19:09):
for having on I I really enjoyuh sharing some knowledge here
and hope that it does help someof your listeners out there
because it it's um it's ahundred percent guarantee that
most suffer from this afflictionso um I would say that there's
um most of them uh this ishitting home with blue collar

(01:19:29):
performance marketing's passionis to bring attention to the
honest work done in blue collarindustries through effective
results driven marketing tacticsthey specialize in comprehensive
digital marketing services frompaid advertising on Google and
Facebook to website developmentand content strategy I started
working with Ike and the teamearlier this year and they've
had a huge impact on ourspecific marketing campaign and

(01:19:51):
trajectory of our overallcompany.

SPEAKER_01 (01:19:53):
Their expertise in digital ad management website
development social media andoverall marketing strategy has
been an absolute game changerfor our sales and marketing at
SciCon.
If you're looking to work with amarketing team who does what
they say, does it well and isalways looking for ways to help
your company grow, book adiscovery call with Ike by going
to bcperformancemarketing dotcom backslash BCB podcast or

(01:20:18):
click the link in the show notesslash description below.
Thanks guys.
Well since you've alreadyanswered your first guest I've
never been able to ask thisquestion to because you've
already answered it but I'mgoing to kind of flip the script
here just a little bit on you.
And normally I ask about youknow what's a key takeaway for
that blue collar worker who'ssick and being stuck in the mud

(01:20:39):
but I want to talk about what'sthe key takeaway for that
entrepreneurial contractor who'slistening today that has
absolutely met the end of theirrope yes they can reach out yes
they can get their processstarted but what would you say
to that guy or say the sci Kirbythat you first met denial in his

(01:21:01):
office what can they startworking on other than lowering
their ego and what can what canthey be looking out as or
looking inward is the word I'mtrying to look for as the leader
what can they start working onthemselves to hopefully better
themselves to run their companyI think it all comes back to

(01:21:23):
accountability.

SPEAKER_02 (01:21:24):
I mean that's that's where the rubber meets the road
uh nobody likes to be heldaccountable nobody likes to hold
people accountable so first ofall's got to start out with
himself and hold you got to holdyourself accountable um before
we can start talking aboutothers and so um that's gonna
cause you to do some soulsearching we're gonna get the

(01:21:45):
mirror around in front of youwe're gonna put the mirror right
up in your face and you go lookat yourself for a minute you're
gonna be forced to deal withsome things that you probably
don't want to deal with man.
And um so you gotta you got toreally start there um because um
I think if you're willing tohold yourself accountable um and
you buy in and then when thehard comes along you're much um

(01:22:10):
much more apt to be able tohandle the hard because you're
holding yourself accountablebecause what do people that dog
their accountable selfaccountable do?
They quit they they said screw Iain't doing this no more so
that's easy that's easy manthat's freaking easy so so my
challenge maybe would be um uhdon't don't don't whuss out you

(01:22:33):
know don't don't don't throw inthe towel don't don't be a puss
yeah don't be a puss be be hardman um um that's the difference
between the successfulbusinessmen and the ones that
are not they're they're uhthey're willing to pay the price
and so you gotta you gottarecognize that about yourself
and so looking inward andholding yourself accountable and
uh I think if you do that greatthings will happen.

SPEAKER_01 (01:22:56):
I love your mirror analogy and I'm gonna I'm gonna
hop on your mirror analogy foryou guys.
I know pretty much all of youguys I'd say I can't say all I'd
say a majority of you guyslistening are married or you've
been in a woman's bathroom andthey all have a makeup mirror

(01:23:20):
and that makeup mirror has twosides to it.
I didn't get this this is RandyCorvette uh shout out to him um
went at home out of his book andin that makeup mirror there
those women they love to standin front of the makeup mirrors
and at that 5x side it reallywhat does it do it enlarges the

(01:23:46):
blemishes within their face andsometimes I think that we look
in that side of the mirror so sooften that it's not that big of
a deal we do with it.
A lot of ladies do they throw alittle makeup on rock and roll
but instead of setting thediscipline and I know I'm
relating this to makeup butliterally instead of setting the

(01:24:09):
discipline cleaning the facenormally is what's needed to
clear blemishes which is thehard thing to do right strip
away whatever's needed.
But if you flip that mirror overon that 10x side oh it starts
really glaring you in the faceat these blemishes and you're
like this really is nasty andugly and well if you're looking

(01:24:31):
at it through a 10x lens and Iwould challenge you guys today
throw that 10x mirror on.
It is not fun.
You are not going to like seeingthe other side of that 5x to
that 10x but start working awayat those blemishes get on a
cleaning regimen get lean andfight.
Just fight fight for yourselffight for your family fight for

(01:24:54):
the people that are willing tostand through with you through
this transition and it's gonnabe the ones that you don't even
freaking think it's gonna be theguys that you think well he's
gonna be gone in two months he'dbe still here in two years and I
can tell you I just went throughstill here and I'm like man I
thought you were gone at thefirst smell of this you know and
half the guys that I thoughtwould be here they they they

(01:25:15):
even looked in that 5x one timethey're like psh deuces so I
encourage you guys Mr.
Peters thanks so much.
Yes sir I really hope uh thisthis helped the audience as you
can tell I'm pretty passionateabout helping these guys and uh
you have been such a wonderfulhelp we have got to get Mr.
New Luna here I thought aboutthat when I pulled up in the

(01:25:36):
park you you got to send himthis one we're gonna do it and
we're gonna do it now that we'reon his subject matter oh yeah we
hopefully can get him in hereand you guys be looking out for
that uh if you guys made itthrough the whole episode check
it um check out any otherepisode on any of our podcast
streaming platforms at yourSpotify Apple iHeart Amazon or

(01:26:00):
you can listen directly frombluecollarbusinesspodcast.com
and you don't have to have asubscription you can watch or
listen completely free fromthere go check out Thumbtack if
you're looking for some type oflead generation within a home
service business they are thepeople to hook up with to start
getting some leads back throughyour business.

(01:26:20):
Can't thank Mr Peters enough andguys until the next one you guys
be safe out there.
If you've enjoyed this episodebe sure to give it a like share
it with the fellas check out ourwebsite to send us any questions
and comments about yourexperience in the blue collar
business who do you want to hearfrom send them our way and we'll
do our best to answer anyquestions you may have.

(01:26:42):
Till next time guys

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Ep. 65 - Profit Is Not A Dirty Word

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Ep. 65 - Profit Is Not A Dirty Word