The following is a guest post from Seth David, he runs Nerd Enterprises, a small business consulting and training firm based in Burbank, CA. I asked Seth to do a few guest posts on the blog because of his expertise in Quickbooks, which many contractors need help with this time of year. In fact, Seth has a book that could help get you started. It’s called “140 Quickbooks Tips.” I really think you are going to like his posts, so do me a favor and make Seth feel welcome by dropping him a comment below!
A business is a financial creature. Unless you are a non-profit you are in it to make a profit. To date I am not aware of any “non-profit contractors”. Contractors have a bigger job than most in terms of the accounting. It is important for any business owner to pay attention to the accounting and bookkeeping. It is especially important for contractors because you are likely dealing with every possible area an accounting system might need to encompass.
You have to prepare estimates. When approved those estimates become invoices, but that is just the beginning. You have to do progress billings which means you have to invoice your estimates in pieces. Most businesses just post an invoice for a job or project. In terms of that you are billing for both time and materials which means you likely have inventory to keep track of. There is workers comp, liability insurance, licenses and permits, it goes on and on. So if you are a contractor then you have a particularly complex accounting infrastructure that needs a lot of attention. It is SO important to get this part right at the beginning because the cost to clean it up if it is not done properly can put a contractor out of business.
As I said, a business is a financial creature. You want to make a profit. Enough to pay all of your bills and enough to reinvest in the business so you can grow. Profits are financial. In order to make them, you need customers/jobs which means you need a lead generation engine. You need a way to keep the phone ringing so that you can keep your crew on the payroll and keep them moving from one job to the next. The cost of an idle crew is another thing that can put a contractor out of business in a month!
How do we generate leads? Marketing of course. We need marketing to bring in the business so we can make money. A profit, hopefully! We also need money to pay for the marketing. Or do we?
In my experience as a business owner you have one of two resources available which are often mutually exclusive. Time or money. If you have no time it is because you are busy making money. If you have no money then you probably have some free time. I have mentored a number of people and the first thing I tell them whether they are looking for a job or starting a business is that when you don’t have paying work, your full-time job is to find paying work. The good news is that in this day and age marketing doesn’t have to cost much, if anything, but it does take time. Stay tuned for part 2 tomorrow!