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No. 2: Hire Expert
Construction Advisers
Editor’s Note: This is the second article in an eight part series called “Better Next Year,”
by Fred Ode, CEO, chairman and founder of Foundation Software.
It’s a common scenario among
the small but growing, family-owned
construction firm: In
an effort to save money and
closely monitor the business,
an owner recruits relatives and
friends to help with professional services
such as accounting, tax and legal
advice. Things run smoothly for a
while. But as the business grows, the
company soon requires more specialized
skills than some of these advisers
can provide. Somewhere along
the way, the business outgrew their
expertise.
Every business owner eventually
learns this important lesson: You
can’t do everything yourself, nor can
you rely on your spouse (or brother-in-law
or friend) to handle the jobs that
have outgrown them. There comes a
time when you need to hire people
with the education and experience
to help your business grow (even if it
means letting go of Cousin Joe).
No one knows your business better
than you. But hiring someone to do
what you and your staff cannot, well,
that’s just about one of the smartest
business decisions you will ever make.
Not only can these experts handle
certain duties much faster and more
effectively, but they can allow you to
focus on what you do best.
Construction-Focused
Experts
When it comes to technical or highly-specialized
areas such as accounting
and law, these matters are best
handled by outside experts. And when
it comes to construction, contractors
should focus on hiring professionals
who know and understand this highly
complex industry.
One of the most important consulting
hires for any contractor is
an outside construction CPA. Why?
Because just as fast as the construction
industry changes, so does construction
accounting and financial management. A construction-focused
CPA is likely to know the current tax
laws and complex reporting requirements
that affect contractors. With a
solid understanding of project-based,
job-cost accounting, they are also
able to offer sound financial advice
to construction companies and help
with such growth-related issues as
depreciating equipment, adding city
or state tax entities and succession
planning.
In addition, your CPA is one of the
key players, along with your banker
and surety broker, to help with
securing or increasing your surety
bonding. Depending on your needs,
some construction accountants also
offer other business consulting services,
such as job costing setup, software
selection and implementation
and human resource advice.
Likewise, contractors need the
help of a good construction-specific
attorney if they hope to grow. Because
construction is primarily a contractual-based business, the typical contractor
is exposed to more disputes,
claims and lawsuits than the average
business owner. Selecting the right
attorney—perhaps one that can help
implement policies to reduce risks
and uncertainty—is therefore a very
wise investment.
Upgrading Your Professional
Partners
Are you still working with the same
lawyer, accountant or even insurance
agent that you hired when your business
began? If so, it may be time to
evaluate these key positions. The
needs of a growing business are different
from those of a startup, and
your current advisers may no longer
measure up.
Let’s say you hired your neighbor,
Joe (an attorney), for help
with the documents and contracts
needed to launch your new company
several years back, and your wife has
been handling all bookkeeping and
accounting tasks. Now, Joe’s been
a good and loyal friend and having
your wife on the payroll certainly has
its advantages, so you don’t relish the
thought of replacing either one.
But it’s time to ask some tough
questions. Is Joe the best person to
give advice in matters of construction
claims, dispute resolutions,
contracts or any other legal issues
unique to construction? Does your
wife have the expertise or the time
to fully manage and control not only
accounts payables and receivables,
but also payroll, job costing, bonding
and cash flow projections? Does she
understand the reporting methods,
job costing systems and technology
available to help you make good decisions
and hold people accountable?
Meanwhile, maybe it’s time to
reconsider your commercial insurance
agent. If you are her only construction
client, chances are she
may not be knowledgeable of all the
risks involved in construction. For
instance, does she recommend safety
programs or specific solutions that
will keep your liability insurance or
workers’ comp rates low?
Important financial and legal
matters in the hands of the wrong
people can be just as detrimental to
your business as having no expert
help at all. The key is to determine
exactly what kind of help you need,
and balance what you can afford with
outsourcing those duties best left in
the hands of professionals.
Choosing the Right Fit
Having access to construction-specific legal, accounting and other
professional service expertise is
essential to your business’ long-term
health. But it can also be expensive.
So how do you know if you really are
hiring an expert?
Referrals are the best way to find
a professional service provider that’s
right for your company; other contractors
are your best source. Talk
to peers at association meetings,
tradeshows or other industry events.
Professionals are also good sources.
Your banker might know of good construction-specific CPAs, or your CPA
might have a lead on a good construction
attorney.
Once you’ve identified potential
professional advisers, interview
your best prospects. Ask for lists of
their construction clients, and be
sure to shop around for quotes from
several providers. Just as you would
interview a potential employee, you
should take note of the rapport,
communication and other signs that
this person will mesh well with the
company culture and will understand
your business goals.
If you truly want your construction
company to become better next
year, you must acknowledge that you
can’t do it all yourself. You also can’t
cut corners when it comes to hiring
a team of professional advisers.
Whether you need to let some people
go or locate just the right partners,
the process is sure to involve some
tough decisions. But hey, no one ever
said business is easy.
Fred Ode is the CEO/chairman of
Foundation Software, developer of construction
job cost accounting software
called FOUNDATION for Windows. For
further information on FOUNDATION
for Windows, visit www.foundationsoft.com. Fred Ode can be reached directly
by phone at 800.246.0800 or e-mail
fred@foundationsoft.com.
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