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.

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!

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…

MY VIEW FROM SIXTY YEARS HIGH

I just turned sixty, and I am not all that happy about it.  And to make matters worse, I have to listen to my youngest employees pontificate to me about the benefits of blogging to improve our brand, enhance our SEO, and make me young again.  I tried to point out to them that no one really cared about anything I had to say—they said, “no problem.”  I went on to explain that I really wasn’t all that good of a writer—they said, “no problem.”  So, to make a long story short—since I am told blogs need to be relatively brief—I didn’t whine; I acquiesced for the good of my company.  On two conditions:  that I could write what I wanted, and I could have fun with my blog.  Since I own the company, they agreed.

Smart kids.

Since I have already used up many of my allotted words for my blog, I am forced to be brief on my first topic:

If this 60-year-old man can find a bright side, so can you.

To get to the point, I am a HUGE fan of more efficient government—so much money and resources are wasted.  I read the Wall Street Journal and the Cleveland Plain Dealer and sometimes I just want to scream at what is happening in our country.  So what is the bright side?

Our government has a great deal of money to spend on projects such as bridges, roads, schools, libraries, and bike paths.  Just recently, the Federal Highway Administration announced it had met its deadline for providing 27.5 billion dollars for highway and bridge projects.

I have been in this industry on a fulltime basis since 1981.  Over the years I have literally met and talked with thousands of construction company owners.  What still amazes me is the number of good contractors that will not have anything to do with government work because of the rules, regulations and – worst of all – the paperwork.  At the risk of offending a number of you, stop whining and seize this opportunity.  A business that doesn’t adapt is a business that dies.

There is any number of support businesses out there to help you through this process.  Software companies can help you with compliance and mandatory reporting – as an alternative, service providers can do all of this for you.  And please do not forget that there are professionals that specialize in the construction industry: CPA, Legal, Bonding and Insurance to name a few.

Yes, it’s easy to stay in the dark, but if you want to emerge victorious, you’ll find that bright side.  So if you are looking to secure more jobs, and more profitable ones at that, the opportunity is out there and waiting for you to act. Technology has already adapted. It’s time for you to adapt, too.

Now, if you’ll excuse me, it’s almost time for my afternoon nap…

Hold on.  The kids also say people like to talk back to blogs.

So here is my question to you:  Where does your construction business stand with government work?  Do you love it?  Hate it?  Have you even tried it?  What’s holding you back?

General questions are also welcome.  Leave me a comment and I will answer your question, or I will put you in touch with the right contacts.

Note:  Fred Ode is the Founder and CEO of Foundation Software, Inc.

As many of you know, the current economy has created tough competition among contractors. Since construction is expected to rebound more slowly than other industry segments, the biggest challenge for construction business owners is figuring out how to weather the continuing economic storm. Many contractors are bidding jobs at a loss just to keep work coming in the door. But this isn’t the best survival strategy, since building a backlog of low-paying projects will leave you with limited resources when more profitable jobs return. A smarter approach is to cut costs, increase efficiency and downsize your staff to a core group of A-players.

In construction, your A-players are the moneymakers who consistently get the job done – on time and under budget. Keeping these people on your payroll, and giving them the tools they need to optimize productivity, is your best bet for enduring the rest of the recession. Fortunately, the leading construction software technology trends support this endeavor by increasing efficiency in the office and the field. Electronic document management systems and wireless field-to-office solutions are the newest technology tools to hit the construction industry, and they offer the greatest potential for helping contractors accomplish more with fewer staff. But if you’re still using a generic accounting program, replacing it with integrated construction-specific accounting software will also deliver immense productivity gains.

At ComputerEase, we’ve used the less-frenzied pace of the last few years to cultivate stronger relationships with our clients and to better understand their needs. We discovered that better communication between their office staff and field force was a top priority. As a result, we developed FieldEase for the tablet PC, an easy-to-use suite of wireless field and service management solutions that turn paper-based field processes into paperless transactions. While some construction software vendors have scaled back their development plans, ComputerEase has done the opposite. We remain competitive by staying on the forefront of product development, striving to understand how new technology will benefit our users and continually enhancing our existing solutions.

Our most successful clients are using the slowdown to refine their internal business processes and put new technology in place that will help them to capitalize on the inevitable upturn. The earliest adopters of FieldEase, for example, are achieving enhanced cash flow through more accurate job costing and same day billing for service work. Other companies are streamlining invoice routing and approval by implementing our Electronic Document Processing solution.

Although 2010 will likely be another year of financial uncertainty, construction business owners that invest in their company’s future by cutting costs and embracing technology have the greatest opportunity to survive the downturn – and thrive during the recovery.