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.

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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.

One of my favorite parts of this job is getting to talk with professionals in the industry who work with contractors for a living. No matter if we are discussing something as specific as power tilt attachments or exclusions in general liability policies or even funny stories about workers’ comp fraud (there’s a good one about a worker named Billy who once won a rodeo after being “bedridden” for months), one constant always unites my conversations.

            Every CPA, insurance broker, consultant, and equipment manufacturer eventually make the same observation: Most contractors are amazingly adept at building a structure and running field operations, but when it comes to the running a business—the discipline it takes to crunch every number, the financial savvy, the ability to use insight from reports—many are lacking the information they need.

Most are just too busy chasing new jobs. Then there’s long hours and reams of paperwork and difficult employees to deal with. And, let’s face it: the kind of individual driven to be a general contractor is often not the kind that relishes tedious office work and long hours spent analyzing numbers. These are risk takers, men and women who are driven to hustle and make a profit—not the sitting still type. Sometimes it’s hard to get a contractor to slow down long enough to think about business fundamentals—it’s hard to get them to slow down at all.

            With work still scarce and construction growth frustratingly slow and spotty, many companies are still under-capitalized. Those that find success will be the ones that improve their processes and adapt to capture opportunities. While finding more work may be priority number one, the most successful contractors understand that “the devil is in the details.”

That’s why this September’s issue is CBO’s first-ever “How-To Issue,” chock full of helpful information focused on how to improve specific processes. It’s this kind of business management advice that separates CBO from other construction publications that solely evaluate and discuss equipment. Inside these pages you’ll learn how to better manage the submittal process; make the most of field, logistics and maintenance report; examine if it’s smart to restructure debt, reinforce training so that it sticks, and more.

Here is a sneak peek of the September cover. Hope you enjoy it! Please write in and let us know how we are doing.

I think it is important that business owners never stop learning, so I read a lot of books to further my education on how to make my business the best it can be.  One of my favorite books is Good to Great by Jim Collins, which crystallized our mission to make contractors’ jobs easier, characterized by the quote, “When better is possible, good is not enough.”  The book discusses a 5-year study performed by a Stanford Business School professor and some of his graduate students focusing on eleven Fortune 500 companies that were identified as businesses that had evolved from good companies to great companies over 15 years.

So what were the common characteristics of the great companies?  They go something like this:

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. Leverage technology to enhance what you already do well
7. Generate momentum that accelerates your growth over time

I want to focus on the last point here.  Business owners should consistently look for ways to improve their business, and generating momentum is a huge part of this.  Take Foundation Software, for example.  We have a very strong payroll module in our construction accounting software FOUNDATION for Windows.  For years, I tried to generate momentum with my managers to get them on board with starting a payroll service just for construction.  But no one would buy into it.  “Too risky,” they said.

But I knew that we could do it, and I knew that a payroll service just for construction would be successful.  Finally, I told them, “We’re doing it!” and in 2006, our sister company Payroll4Construction.com was born.  Now, in 2011, I can tell you that it was one of the best decisions we’ve ever made.  We leveraged one of our strengths to create momentum in another area of the construction industry.  Heck, the payroll service is now creating a momentum all its own!

Business owners, I urge you to identify the strengths of your company, and see where they can take you.  You may be surprised at all the opportunities that could help you to grow your company.

As a secondary schoolteacher in the 1970′s, I taught math and business courses to more than 160 students each year. I coached cross country, wrestling and track, attended numerous extra-curricular activities and parent teacher conferences, and just plain interacted with other teachers, counselors and administrators. I had to deal with a wide range of people with different backgrounds, personalities, and communications skills. Since joining the business world in 1981, some things remain the same. From employees and customers to professionals, vendors and competitors – I have met, talked, worked and socialized with literally thousands of people in the business community.

It occurred to me recently, that with the pressures and challenges of growing a company, it is the interaction with people that can be the most difficult. Human beings are a flawed species and at times, I certainly top the list! Hence, when I read the motto:  Always Be Sincere Whether You Mean It or Not – as ironic as it sounds – it made perfect sense to me.

Over the years I have met people who simply speak what is on their mind and the message is far from accommodating. You hear things like: “It’s my way or the highway,” and “That’s just the way I am and if you don’t like it…”

These are the people who claim to be authentic, but in reality, they come across as insensitive…or just plain rude. I have said things that I deeply regret. Last year I upset a client by being a little too blunt, and in more than 26 years as the owner of Foundation Software I have unnecessarily caused some employees to lose sleep over something I said. Heck, I’ve lost plenty of sleep over things I’ve said! Perhaps I delivered the message improperly.

Sure we should show respect to people we come into contact with, but there are plenty of times when the cold, brutal truth is necessary in business. One of the most brutal is when you terminate an employee. Or fire a vendor who also happens to be a friend. The more subtle occasions are when you need to reprimand a subordinate or deliver some bad news to the CEO…

There was a famous football coach who was criticized for treating some players differently than others. His response? “Well, they are different.” Obviously in business, you cannot show bias or prejudice, but the bottom line is: everyone is different and the delivery of your message may need to change with the person and the circumstance. At my company, for example, I know that there are some employees with whom I can just flat out say what is on my mind, while with others I must choose my words more carefully. The point is that the message gets delivered properly.

The most successful and greatest business people walk the perfect tight rope – they get things done, and they are always sincere, whether they mean it or not!

I was never any good at basketball, football, or baseball. In fact, I was never really good at any of those team sports. And while I loved playing them and did so with all my heart, I never had the knack for them.

So when I discovered Cross Country running in high school, it felt good to be able to compete and to actually win. I’d found something I was good at, and I was willing to work to become an even better runner. I was offered scholarships to college for my running, and I held some records. Competition made me strive for success.

If you ask me, competition is what’s missing these days. It’s easy to get preoccupied with trying to level the playing field. Heck, you get trophies for participating in an event—not winning it. This lack of competition—or the societal taboo against it—is making us soft!

Which brings me to my main point: Competition is healthy.

Even if you’re already good at what you do, competition is healthy. Competition is what makes us strive for success, what makes us work harder and what makes us want to be the best.

For those of you contractors doing government work: relish the competition involved with bidding. Show them what you’re made of, how resourceful you are and that you’re the company for the job. And for any business owner: remember that every hardship results in knowledge and the opportunity to grow.

We shouldn’t be afraid of competition, but rather invite it. Without a challenge, we’ll never rise above where we are now. My company’s flagship product continues to evolve, and we constantly have one goal in mind: to be the industry leader in new sales for construction accounting software.

So bring it on. We’ll take anyone up on that challenge.

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!

Okay, so far nothing bad has happened. Probably a matter of time however…

I really did not mean anything bad by my holiday greeting. I just struggle with “Happy Holidays.” Although I do understand and accept the need to be politically correct, I personally choose not to go that route for my business, and certainly not in my personal life. Cripes, I have been celebrating Christmas for 60 years and all of the sudden, I am supposed to deny something that is embedded in our culture? No, not me—not going to do it. Sorry. I am good with anyone wishing me Happy Hanukkah or Happy Anything—I promise not to be offended—really.

Live and let live. Merry Christmas is just not that big of deal…although a “Merry Christmas, Fred. You are a jerk,” may offend me, I admit.

Merry Christmas
Merry Christmas
Merry Christmas

Ok, the earth is still spinning, people are still crabby at the checkout lines and everything seems perfectly normal despite my absolute disrespect to…what? …Not quite sure where my disrespect lies. Perhaps, just perhaps, the vast majority of people are fine with Merry Christmas; it is just a hunch, but I feel pretty confident about this one.

I see this holiday greeting issue as a symbol of risk taking in America. Those of you that started your own construction businesses risked a great deal in the process. Whether successful or not, you lived the American Dream. There are other countries out there where you definitely need to be careful about what you say—and these are places where you cannot pursue your dreams. In America, I can decide tomorrow to move to another state, start another business, quit a job, look for a job, buy a new shirt or have a glass of beer.

America is a free country where we can pursue our dreams and speak our minds. In speaking our minds, we do take a chance that we may offend someone and I try to be careful not to do that. Something tells me wishing someone Merry Christmas is not offensive. However, what is offensive is that we are becoming too careful as a society. We are trying to legislate a perfect society. If something offends someone or something goes wrong, we create a new rule, law or standard such as Happy Holidays instead of Merry Christmas.

Well, for me, no thank you. I choose to live free and pursue my life as the Constitution intended. Free to start a business, free to travel and free to speak. In all of this, I will do my best to treat people with dignity and respect, and I believe Merry Christmas meets that criteria.

So in closing, have a very pleasing December 25th, regardless of your religious or political affiliation.

DISCLAIMER: The following has been taken from the dark recesses of my imagination. Any resemblance to reality is intended, but the events described are completely fictional. The following is a eulogy for my imaginary friend, Duke the Contractor.

Duke was my mentor and my friend. He loved and was loved by many. That is something we all know. It is unfortunate that we have lost him at only 73 years old, when he seemed so young and vibrant. Yet there is something about that age which does cause some to pause and reflect on their legacy. He left a legacy worth talking about. Several months ago, Duke and I were waiting for a group to clear the par three when he told me something I will never forget:

“Fred, understand me: I love my life, I find great joy in everything I do. I am a lucky man and have no regrets. Yet, if I want my life to truly mean something, to leave something of substance behind, then I am better off dying this year.”

Obviously, this caught me off guard. Not only was it disturbing, but also this was completely out of character for Duke, who was not one to philosophize about his existence

“Understand me Fred; I am not despondent or depressed. Earlier this year I received an offer from a British company to purchase my business for 60 million dollars. I turned them down cold. I have no intention of selling it for any price. My son has been active in the business for the last 16 years and my daughter for the last 11. We have a full-time work force of 250 employees. I have people that came to work for me straight out of high school that have built their lives around this business; it has become part of their extended family. We’ve won numerous awards as one of the best places to work in the state of Ohio. However, when a business like mine sells, it is only a matter of time until people are cut, processes are changed and the culture is eliminated.”

I asked him what his problem was, told him to just keep the business in the family name. What was his point?

“My point is that if I die after the end of the year, the Federal Government will want 55% and the state another 7% – 37 million dollars. My children would have no choice but to sell the business. We don’t have that much cash on hand. They could take 10 years with interest to pay off this debt but that would be a huge burden and risk to the business. Better to sell and move on. However, if I die this year, there is no estate tax – the business stays in the family.”

I started to respond, but it was our turn to tee off. We never returned to this conversation, but I wish we had. It is unfortunate that we lost Duke to an untimely heart attack, and only a few weeks later. I can think of no other way that Duke would have wanted to die, though—on the putting green…and before the end of the year.

I’m angry about Duke’s death; maybe it’s more about the circumstances. We can only speculate as to the cause of the heart attack—stress about losing the company? What right does the government have to over half of anyone’s business – or a third or a quarter? Duke’s company was his legacy. I am sure the government feels cheated. But Duke had already paid his taxes and it wasn’t the government’s money in the first place.

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Many of you may think that my eulogy for Duke is out of place. But I knew Duke as well as anyone and he would want to get this message out there. Duke was a capitalist to the core of his being. He loved the challenge and the rewards of building his business. However, toward the end, what he cherished the most were his employees and the home he had built for them. He will be missed, but there is comfort in knowing that in the end, he got what he wanted—his legacy preserved.