How To Setup Your Construction Company Board Of Advisors

If you have been in your construction business for a year or more and are making enough money to survive and pay your bills then you have know the basics and this information may be relevant to you.

Large profitable contractors create a Board of Directors to develop and manage the Strategic Objectives of the firm. They provide insights from a theoretical 30,000 foot view to show where the firm is heading and to provide input for course corrections as needed. Part of their job is to protect and grow shareholder value.

Smaller contractors can be like cowboys and cowgirls who get up in the morning, grab the tool of their trade in one hand and a cell phone in the other, jump on their horse, grab the reins between their teeth and start riding fast and furious across the plains to the most Urgent Important crises. When that's handled they do it again and again and again until they retire; which means they got tired of doing it or their customer got tired of them.

Smaller contractors do not have time to develop a formal Business Plan with Strategic Objectives and feedback systems to help them to protect and grow shareholder value because they need to fight that next fire or get some marketing done. Or just do something even it is wrong because they are working in Quadrant 1; the Proverbial Urgent and Important square.

This one thing implemented can change your life and raise you from working IN your business to working ON your business.

Setup you Board of Advisors as outlined below:

#1 Your Commercial Banker

Go to your bank and ask the branch manager to introduce you to a commercial banker. Your commercial banker can be one of your greatest allies and mentors and they usually are paid by the bank not you.

During your initial meeting let them know you are working with an external accountant that is doing all or part of the bookkeeping and accounting, plus you have a C.P.A. in another firm that prepares your Federal Tax Return. Bankers like to know you are using “Trust But Verify” to help limit fraud and errors because the same firm that does your bookkeeping is not connected to the firm that does you Federal Tax Return.

Next set regular appointments to meet with them on a monthly, quarterly, semi-annual basis whatever works for and have two printed copies of your Profit & Loss and Balance Sheet to show them.

Ask them these three questions:

1. Is there anything on these reports that I should be aware of?
2. How can you and your bank help me run my business better?
3. Who is your target customer and how can I refer you business?

No matter what business you are in, whether you need to borrow money or not, money lending is only a fraction of the services that banks offer. Banks have access to lots of people who need all kinds of construction services and they frequently ask their banker for referrals.

We serve contractors who sometimes catch "Yellow Fever”. This Randalism occurs when Caterpillar, the world's leading manufacturer of construction equipment unveils their new backhoe or grader or heavy equipment with all the latest gadgets.

Our advice is "Wait for it…Wait for it...wait for it" and keep meeting with your commercial banker, keep developing the relationship and whamo! You could get THE CALL…

”Hi Bob….how are things? Hey we haven’t met in a while and I was wondering if we could meet again soon because we are about to REPOSSES a piece of heavy equipment that a contractor recently purchased and I was wondering if you would be interested in it? I shared your last Profit & Loss and Balance Sheet with some people at the bank and they thought we may be able to work something out if you are interested...”

The bank is not interested in storing equipment, they perfer it would go from the repo man to you in one continuous motion and often times the price and terms are very fair. The key is to remember this Randalism “The Pig Gets Fed, The Hog Gets Slaughtered!” Negotiate a deal that allows the bank to get something and you get something, win-win.

#2 Your Outsourced Accountant

Find someone that you can outsource the mundane tasks of bookkeeping, accounting, monthly and quarterly reports and keep it in an orderly fashion for whoever prepares your Federal Tax Return.

Choose someone that specializes in your industry because the days of the one-size-fits-all accounting practice has gone the way of the other dinosaurs and will put you at a competitive disadvantage.

They must be using current technology which means having their own private server housed in a secured server farm that allows you to access your QuickBooks via virtual desktop over the internet. You need to see, use and work with the same QuickBooks software that you see on your desktop now, not something new and hard to learn.

Your outsourced accountant needs to provide you an easy way to get the paperwork to them using faxes, scans, emails, and in person. Being in an office building, not their home is a must and the building needs to have a secure lock box that allows you to drop paperwork off 24/7/365 when it is convenient for you, not just during business hours.

They must have the ability to scan all your paperwork into a paperless secured server and link source documents to the transactions in QuickBooks for easy retrieval later in case you want to see it, print it or email it without having to dig through a file cabinet or pile of papers.

Finally they need to be someone you can meet with and discuss how your business is doing and they will explain your Financial Statements, Profit & Loss and Balance Sheet. And they have to be able to generate reports showing how your business is doing compared to other business.

#3 Your Federal Tax Return Preparer

If you own and operate a business you absolutely positively need a C.P.A. to review your QuickBooks file or whatever method you use to keep records and file your taxes. Sharie, my wife, and I have used C.P.A.’s to prepare our Federal Income Tax forms since the early 1970’s. It is one of the best decisions we ever made because we do what we do best and outsource the rest.

There are other ways such as doing it yourself with or without a myriad of tax preparation software or taking it to one of the chain gang stores that pop up around tax time; however, before doing this refer back to #1 and ask yourself “Am I jumping over $5.00 bills to pick up a $.05 nickel?” Randalism “You can cut costs only so far; however, finding new ways to add value to your clients is the fastest way to grow your cash balance and increase profits”

#4 Your Commercial Attorney

If you own and operate a business you absolutely positively need a commercial attorney to:

1. Setup your business entity, LLC, Inc. or whatever is best
2. Review contracts you will ask your customers to sign
3. Review contracts you will be asked to sign
4. Keep you out of trouble wherever possible
5. Keep you out of litigation if at all possible
6. Setup your partnership agreements

We have used the same law firm for since the early 1970’s. They are expensive in the short run and have been the worth their weight in gold in the long run.

If you are a contractor for any length of time you will be paying legal fees. The question is will it be to defend you and your contracting business or will it be to pay for somebody else’s attorney that is coming after you and your construction business.

#5 Your Financial Planner

Eventually you will want to leave your business and pursue other interests so plan ahead now. Get a copy of Quicken load it up on your home computer and play around with it. You can learn a lot about investing, dollar cost averaging, present value of the future dollar. You can run some scenarios using your budgets and your numbers to show you how much income you will need to retire and develop an action plan.

Once you have some basic knowledge get a Certified Financial Planner. If you do not have a lot of money to ask your commercial banker to recommend someone at the bank and eventually when your reserves build up get a Certified Financial Planner.

One of the keys to investing is the old adage “If it seems too good to be true it probably is”. One of the best books on investing ever written is “The Richest Man In Babylon”.

That’s all I have for now and if you have read this far please do me the honor of commenting and rating this article. Tell me what you liked, didn’t like, tell it like you see it because your feedback is crucial and I thank you in advance.