Mid-January is a time of reflection for many contractors.  They’re starting a fresh new year, and wrapping up their year-end which is a task in itself:

• Preparing W2s & 1099s
• Creating year-end financial reports
• Closing your general ledger
• Rushing to get that last payroll out in December because you are unable to work between two fiscal years
• Looking at Over/Under Billing and posting the adjustment to the year-end financials
• Preparing Sales & Use tax reports for sales tax authorities
• Querying different type of jobs in job costing to look at profitability by type

If you have had trouble with any of these items in past year-ends, ask yourself, “Am I willing to go through that again next year?”

If the answer is no, then now may be the time to start looking into new tools and software programs that can make your job—and your life—easier.  There are plenty of construction-specific accounting packages that work the way construction does and can efficiently prepare W2s and 1099s and year-end financial reports.  Some systems are even date-sensitive and allow you process payroll over different periods, and even years, so you don’t have to rush to get that last payroll done.

What I’m getting at is this—year-end doesn’t have to be this painful.  Do some research and check out some of the resources, tools, and software programs available to you.  It can make your next year-end, your job, and your life easier.

Happy New Year!

As you know, I’ve been reading Steve Jobs’ biography.  I think there are some pretty good lessons in there, particularly for the start of a new year.  While I was reading, I came across Jobs’ explanation for why he wore a black mock turtleneck and a pair of blue jeans almost every single day:  because it was one less decision that he had to make.

Photo via Farhad Manjoo on www.fastcompany.com: Clay McLachlan/Reuters ('98); Getty Images ('99); Gabe Palacio/Getty Images ('01); Justin Sullivan/Getty Images ('04, '05); Peer Grimm/dpa/Landov ('07); Paul Sakuma/AP Images ('08); Robert Galbraith/Reuters/Corbis ('09); AFP/Getty Images ('10)

Now I’m not telling you that you should wear the exact same thing every day for the rest of your life, but why not make your life easier by minimizing the amount of decisions you have to make?  As a construction business owner, you put a lot of time and effort into making critical decisions.  Additionally you sometimes get drawn into trivial matters that should really be handled by others in the company.  To get to the point, you have to simplify by getting two things in place:  people and processes.

First, get the right people in place.  This is easier said than done, and comes in two parts.  Invest the time in finding people with the aptitude to do the job, and the right attitude to fit into your company.  The second part means getting rid of people who do not fit these requirements.  As hard as that may be, having the right people in place will increase simplification.

Second, get your processes in order.  Create a plan that makes sense.  In the mid 1990’s when my company was growing, I hired a president.  As fortune would have it, this person was an incredibly good manager and truly organized our daily processes.  This created new opportunities for the business and for our vision because I was able to focus on the big picture.

Getting people and processes in place is like Jobs’ wearing the same basic outfit—it eliminates minor decisions and troubleshooting so that you can focus on bigger decisions, ideas, and growing your business.

There’s a lot I could say here, but mostly, I just want to wish everyone a very Merry Christmas and a Happy New Year from everyone at Foundation Software.

See you in 2012!

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Steve Jobs was no doubt a great businessman with many valuable lessons to teach.  In his commencement speech to Stanford University graduates in 2005, he references The Whole Earth Catalog from the mid-1970’s:

On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: “‘Stay Hungry. Stay Foolish.’  It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.

Stay Hungry.  Stay Foolish.  My take on this idea is very simple:

Stay Hungry. As a business owner, you can never be satisfied. Even if sales are booming and you’re doing better than you ever have before, you can never be satisfied.  You must maintain a hunger to be better, to keep moving forward, and to grow your business.  In order for your business to survive and thrive, you must maintain that hunger.  Because as soon as you’re satisfied, you become too comfortable and stop evolving.

Stay Foolish. This leads right into what it means to stay foolish.  In running a business, there must always be a certain amount of risk that you’re willing to take.  Risk is healthy; it keeps things fresh and gives you the opportunity to evolve.  Take marketing for example.  I  took a risk in 2005 and dressed up as Superman for a marketing campaign.  It could have been a horrible flop, but almost seven years later, people still remember it and bring it up at conferences and tradeshows.  Or you could take a risk in offering a new product.  In 2006, we started our sister company Payroll4Construction.com as one of the few, if not the only, national payroll services just for construction.  At the time, we weren’t sure what was going to happen, but it ended up being a great risk to take, and the company is growing every day.

Never settle and take some measured risks.  You’ll be surprised what it does for your business.  Stay Hungry.  Stay Foolish.

Last week, I talked about Jim Collins’ book Good to Great, and the common characteristics of great companies.  I’ve listed them below so you can have them in front of you again:

1. “Level 5” leadership at the top
2. First people, then processes
3. Confronting the brutal facts of your business and industry
4. Do only what you can be the best at doing
5. Maintain a culture of discipline
6. 6. Leverage technology to enhance what you already do well
7. Generate momentum that accelerates your growth over time

Last week, I focused on what it means to do only what you can be the best at doing.  Today, I want to talk about #6—“Leveraging technology to enhance what you already do well.”

We live in a technological world, so much so that if business owners don’t embrace technology, they may be doing themselves a disservice.  Many contractors go into business because they’re great at what they do.

I know a successful excavating contractor that took over his father’s grave digging business when he was younger.  This is a true story—his father refused to use anything but shovels and picks to dig the graves, but once the son took over, he purchased a backhoe.  Sure, there was a learning curve, but taking the time to learn how to use the backhoe (the current technology) made him substantially more productive.  In fact, he turned his father’s small grave-digging business into a large union excavation business.

This young man took the time to think about what would ensure the long-term success of his business.  Leveraging technology is not limited to heavy equipment, though.  There is wonderful technology available for the field and for back office operations.  Take some time and look at what you could be doing better, then see if there are any technologies that could help you enhance what you already do well.

When I moved into my new home, I made all the calls to ensure that my utilities were on prior to my move-in date.  When I tried to get my internet service working, it took me days and lots of phone calls, automated loops, etc. to get it running.  It was absolutely frustrating!

The point is that when dealing with a service or purchasing software, it’s important to have a Support department you can rely on.  Usually the first department you talk to when dealing with a new company is Sales.  Evaluate their competency and knowledge level. Do they know the software inside and out?  Have they ever worked in support? Do they understand your industry and how you will use the software?  You can also talk to existing customers about their experiences and trade groups or associations that the company is connected with.  Here are a few other things to consider:

• When calling, are you greeted by a live receptionist, or funneled into a voicemail loop?  (While not absolutely necessary, it sure is a nice touch to deal with a real person.)
• Where is the support department located?  Are they direct employees of the company?
• How are the company’s support reps trained?
• What is the average tenure of the group?  A longer time in a support position equals knowledge and indicates that the company knows how to treat its employees.
• Are there resources like eletters, tips, fax solutions, etc. that clients have access to?
• Does the company have an area dedicated exclusively for clients on their website?
• Are there multiple methods to contact Support, like phone, fax, email, and web?

The best Support offers multiple means of communication, timely responses, and thorough information.  You deserve a great support system, so make sure you do your research when looking into new construction accounting software, or any software for that matter!

Using spreadsheets in construction is a lot like a gravedigger using a shovel. It gets the job done, and it’s a useful tool, but it takes a lot of time. Especially if your company grows, and there’s a lot more, well, digging to do. Chances are that a shovel is just not going to cut it, and you may need to invest in a backhoe.

I know a lot of construction business owners (especially contractors who have grown their small businesses into medium-sized companies) who were once “digging graves with a shovel.” Their reliance on spreadsheets for financial data and reporting morphed into a complex, inefficient mess.

Despite the wonder and awe that spreadsheet users feel about their worksheet creations, these applications (gasp) might not be (horror) the best tool for up-to-date, accurate information, or flexible reporting capabilities.

Sure. We all love how quickly spreadsheets perform calculations. And how great they are for ad hoc queries, and what-if scenarios. But should you rely on spreadsheets for accounting and jobs analysis?
“Dig out” that data with software alternatives.

Today, new software applications – in job cost accounting, project management, estimating, etc. – give you the horsepower needed to handle large amounts of data. They do it faster and with greater security than spreadsheets. And costs for construction-specific systems are relatively inexpensive (especially when you factor in improved productivity and efficiency).

Most importantly, construction-specific technologies provide what spreadsheets can’t. They offer unlimited reporting capabilities, better analysis and quick consolidation/integration of data.

In general, the larger the size of your data (i.e. your increasing payroll, jobs, inventory, equipment, etc.), the more likely it is that you have outgrown what spreadsheets can provide. More likely your needs will be better met by mid-level construction-specific software.

How do you spot spreadsheet trouble?

Here are a few signs of overdependence on spreadsheets:
· Staffers spend more time on the manual process of building and maintaining spreadsheets than they do analyzing the actual figures.
· It’s impossible to get specific real-time information on the fly.
· There is no centralized source of data.
· Accuracy of the data is always in question.

Once you’ve identified your spreading spreadsheets, it’s time to do what all smart gravediggers do: Rev up that backhoe! In construction, your construction-specific accounting software is often the most efficient tool you can use.

26 years old. Well on our way to 27! It seems like just yesterday that Foundation Software was newly incorporated. Since then, I have turned over the daily operations to a younger generation lead by Mike Ode, that can keep up with the demands of a burgeoning company. Which means that I’ve accomplished my one of my many goals: I am no longer needed on a day-to-day basis. Foundation gained its own identity, and we have the right people in place for the right jobs. It’s like finally being able to sit back and watch your child learn to navigate the world.

Once in awhile, I’ll close my office door, sit back with a cup of coffee and compare the Foundation Software of today with a snapshot of the company several years prior. Financial statements, marketing literature, people, management, processes, clients, partnership, and the software itself are all pictures of what my “child” looked like when it was younger.

I do this exercise because I am a proud “parent,” and because I can casually view our progress from a long-term perspective. It has always been a primary goal of mine to create a business that will continue to improve and stand the test of time when I am no longer here to guide it, and I’ve succeeded. Without exception, my periodic paging through the FSI scrapbook verifies that we are on track.

My favorite time period for comparison purposes is 3 years, but this is a “soft” number, and depending on the nature of your company, philosophy, and the economy, it may change. However long, it should allow you to look at long and short-term trends. The last two years have been very rough on the construction industry, so it helps to give yourself enough time to look at how you weathered the storm. Did you successfully set the stage for the future?

I encourage all construction business owners to do the same. Look back on where you were a few years prior, and really give yourself a chance to look at how far you’ve come and where you’re going.

Sure, mistakes have been made along the way. It’s naïve to think that growth can be achieved without hitting a few obstacles. But Foundation’s mission is clear: “When better is possible, good is not enough.” The challenge ahead is to make that leap from “Good-To-Great.”

Parents always dream of what their children will do, and I am no different. I dream about Foundation, and I make plans for its future. That’s not to say that they always turn out the way I plan. But based on our obsession for continuous improvement, I am optimistic that the snapshot in 2011 will show an even stronger, more powerful, and dominant force in our industry.

I can’t wait to see what a 30-year-old Foundation Software will do!

I admit that when I read, “The quick brown fox jumps over the lazy dog,” I was intrigued and wanted to work it into my blog. I thought it was “cute” and that it might get you to read at least this far.  If you do not already know, take a minute and see if you can guess what makes this sentence different from almost all sentences in the English language.

Tick, tick, tick…ok, time is up.  If you guessed that it is a pangram and contains every letter of the alphabet, you win the grand prize of a round trip ticket, accommodations, food, beverage and entertainment at your own expense to any destination in the world.  Congratulations!

Now please bear with me; I’m going somewhere with this.  Writing a grammatically correct sentence using every letter in the alphabet can be challenging. (Give it a try and send me your results – I would be curious to see what you come up with). Ok, I digress – back to my point.

The same goes for business.  Using as many tools, if not all, of those available can be a challenge.  If you are a company that uses the “letters of the alphabet” that apply only to field operations, but ignores the “letters” available to run your office, BEWARE.  It’s like this:  if you are a trenching contractor, you know it would be foolish to use a shovel.  Although it’s easier to teach a new employee to dig a ditch using a shovel, the trenching machine or backhoe is clearly the way to go.  All contractors get this concept.  What many do not get is that in addition to working more efficiently in the field, you also have a business to run.  This is where many of the “letters of the alphabet” never get used, which is “sentencing” your business to death – pun intended.

You must have the right tools to do the job efficiently.  You have government reports to submit, estimates to get out, taxes to pay, job costing, and so very much more to deal with as a construction business owner.   Some consider these “necessary evils” of running a business, while I prefer to look at all of this as an opportunity to bypass your competition.

If you’re using spreadsheets for job costing or estimating, long hours preparing Certified Payrolls, AIAs, WIP reports, there may be a tool to put you ahead of the curve.  There are construction-specific applications for accounting, job costing, and estimating and project management, PLUS professionals for accounting, insurance and legal that specialize in construction.  “Joe” may be your friend, but is he the right tool for the job?

I have been involved in this industry since 1981, when IBM introduced its first PC with DOS.  The last 29 years have been epic in nature.  However, what has not changed is the resistance of business owners to embrace the change that comes with business growth.  Those construction companies that stand the test of time embrace both the field and the office as critical aspects of running a successful construction business.  They continue to improve all aspects of their business, utilizing as many tools as possible.

Or, to put it in terms of a pangram: Profitable construction companies have zero tolerance for the status quo, get excited about technology, embrace change at each juncture in the road and keep finding new ways to improve.

I admit that my pangram is somewhat wordy, but in business, some tools have multiple uses and benefits.  You just need to embrace the concept and keep moving forward.  That is how you will win the game as a construction business owner.

When I was a high school teacher in the early 1970s, it was all “gloom and doom” on the state of our educational system. We were falling behind all of the other nations. Our children were spoiled.  We needed to get back to the three R’s. Our test scores were an embarrassment when compared to the rest of the world, including many Third World countries. Not much has changed from my view here at 60 years high. I still hear the same refrains: “Our kids are spoiled,” “They’re lazy,” “We’re falling behind the rest of the world.”

I beg to differ, but I am an optimist by nature. So let me share my thought process with you.

The United States is the greatest country in the world, despite our test scores.  Just look who designed the drill rig that reached the Chilean miners weeks ahead of schedule – a US engineering firm. Where did the personal computer originate? The first successful operating system? The iPod, iPhone and iPad?  What country do all the really smart foreigners want to immigrate to?  The United States. Our best and brightest pretty much stay put. They have little desire to leave the good, old USA. And I don’t blame them.

Blog Intermission:  My two new employees that I respectively refer to as “the children” tried to warn me about writing this blog. ”Too political,” they said – “this is a business blog, and you do not want to offend anyone”  (I think they learned that in a marketing course in college). I reminded them that they were just little, fresh-faced kids out of college and, although they were very, very bright, they were still very wet behind the ears. I said, “Certainly everyone will agree with me!”

Speaking of the best and brightest, get a load of these statistics on the Nobel prizes. We – and I am very proud of the word “we” when I refer to the United States – have had 62 individual Nobel prizes in chemistry, 47 in economics, 11 in literature, 20 in peace, 84 in physics (so much for our poor math skills!) and 93 in psychology/medicine. 

Furthermore, from 2000 through 2010, we have won Nobel Prizes in chemistry in every year except in 2007.  We did slightly better in economics, winning the prize every year in the 21st century.    In psychology/medicine, we came through seven out of the 11 years. Physics? Nine years (by the way, what country did Albert Einstein immigrate to?)

We are one country among just under 200 countries in the world. We have the best, the brightest, and the most creative population.  We are great because we are free – we are allowed to pursue our dreams. Anyone can become President, and, much more realistically, anyone can start and grow a successful business (or even travel the country living out of their car).

Ok, so what does all this have to do with a blog for a construction trade publication?  If you think about it, it has everything to do with a magazine called Construction Business Owner. The last few years have been difficult for our economy, with construction being no exception.  However, let’s not panic and change who we are as a nation. Let’s stay the course, promote freedom and economic enterprise, combined with a very heavy dose of empathy and compassion for the less fortunate. Our kids aren’t dumb or lazy; they are simply kids.  But someday, they will be our future construction owners, estimators and architects. They will come to do great things just like those before them.

And to be quite honest with you, I just had to get this off my chest!

I feel much better now.  I don’t think I need my afternoon nap after all…