0:01

Welcome to Contractor Cuts , where we cover

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the good , the bad and the ugly of

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growing a successful contracting company

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.

0:13

Welcome to Contractor Cuts . My name is Clark Turner , I'm

0:15

Jared Fallon . Thank you for joining us again

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. So this podcast is

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all about subcontractors

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, vendors and labor and

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how they secretly and

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silently , and sometimes

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right in front of your face , screw you

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financially . We're

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going to cover what you should do A

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to not allow that

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, and , b , if it does happen , how do we

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react to it , what do we do and , kind

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of , what's the path forward with those

0:43

type of vendors and subs ? So

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, jared , let's start off by covering

0:47

how , exactly , like

0:50

what are the main areas that subs

0:52

are screwing contractors

0:54

? And oftentimes it's passives , oftentimes

0:56

it's you know , I didn't . They're not

0:59

trying to get over on you , but because

1:01

you haven't put things in place , they're

1:03

able to take advantage and you're the one

1:05

that's holding the bag when they mess up .

1:07

That's right . Well , I mean , the first

1:09

place is where

1:12

they're on the front end , dictating to you exactly

1:14

what they want , the amount of money . That's

1:17

okay , but that's putting

1:20

them setting a precedence

1:22

with them , that they're in charge

1:24

of the money , and that's also

1:26

dictating how your company is going to go , how your

1:28

jobs are going to go , what you can charge your client , all

1:30

of that stuff . But the other

1:32

big place is typically in

1:34

the middle or towards the end of the job , where

1:37

they come back to you and say I

1:39

need more money . If you want me to

1:41

finish this , I've got to have extra cash I

1:44

need . You know this is costing

1:46

me more . I've , you know , mismanaged

1:48

my money . They're not going to say that , but they've

1:50

mismanaged their money and for

1:52

them to be able to get the job done , it's going

1:54

to cost extra amount of money . You didn't budget

1:56

for that . You didn't , you know , put

1:59

that into your cost . So you're either coming out

2:01

of your pocket and out of your profit of this

2:03

job or you're

2:05

having to go back and ding your

2:07

client for something that is not really their

2:09

fault , you know . And so

2:12

that's causing you to have reputation

2:14

issues . It's causing your client to feel like

2:16

you're taking advantage of them . You

2:19

know so . There's multiple areas throughout

2:22

a job where crews

2:24

can be a pain

2:26

and cause you

2:29

cause issues within your company because

2:31

they're screwing your cash flow .

2:33

It's the blank check contractor . The

2:36

vendor often has a blank check and

2:38

you're trying to keep them below what you budgeted

2:40

. Right , and they just like . Well , I need more

2:42

for this If you want me to show up . I got any more for

2:44

this , I think .

2:45

I think that happens , they start looking

2:47

at you as a , as a bank . Yeah

2:50

.

2:50

That happens two times , though there's two different ways

2:52

that I've experienced a sub needing

2:54

more money from me . One , they said I

2:56

didn't know I was supposed to do that .

2:58

Right .

2:59

I didn't know that that wasn't part of our . Our scope , that wasn't

3:01

. And there is some you're not

3:03

clear on . The client thinks it's getting done

3:05

. The sub never thought it was getting done

3:07

. Right , they're holding it

3:09

, having to pay for it to get done because I

3:11

can't charge them because they already thought they're paying for it . I can't

3:13

. I can't force this guy to do it because

3:16

he never thought it was part of his scope , right

3:18

, and so I'm stuck .

3:20

And whether whether you think you had or

3:22

know you had the conversation with

3:24

them you don't have anything other than him saying

3:26

, no , I didn't know about that .

3:27

Yeah , that's one . The secondary one

3:29

that often happens is

3:31

hey man , you know , this has taken

3:33

three times as long . I'm going to need more

3:35

cash to get to be able to get back out there on Monday

3:38

.

3:38

Yeah .

3:38

Right , that's

3:40

not scope change , that is simply . Hey

3:43

, man , I mismanaged my time and thought I could

3:45

do it for this and I can't , so I need to

3:47

get it done . So those are kind of the two where

3:49

you're the money

3:52

going out that you were expecting increases

3:54

from it . The other the other ways

3:56

that we've talked about is one

3:59

is having , depending

4:01

on how you do materials and purchasing , a

4:04

lot of like . All of our vendors and our subs

4:06

buy on our , our lines of credit and

4:08

our account . So they'll go to Home Depot and do a phone

4:10

sale with us and when they're doing that , the

4:12

Snickers bar and the Diet Coke and

4:14

all and that and the , I knew that fat

4:17

max and all that sort of . Thing that starts happening

4:19

and gets added in . And now my

4:21

my bill was $30 more

4:23

than what I , what I should have paid . Yeah

4:26

, it's not a big deal , but now I have 10 vendors

4:28

doing that weekly . I'm

4:31

losing $300 a week on that Right . And

4:33

so that's the one where they don't realize that they're spending

4:35

your money and what is it isn't allowed . That's

4:38

kind of another spot that they they they

4:40

treat . Now the other way that they screw

4:42

you is by bailing , ghosting , taking

4:45

your money . That part we're going to set up and

4:47

talk through how to avoid that Right . Once you're

4:49

in that . That's a different story .

4:50

Absolutely .

4:51

We've got other podcasts on how to exit and how to fire

4:53

and how to replace subs , and

4:55

so we're not going to cover that part of it today . But

4:57

what we're going to talk about is what you can put

4:59

into place , how you organize

5:01

pre-discussion

5:03

with that vendor to where we have

5:05

everything understood , and then how do we , throughout

5:08

the job , ensure that there's enough money left

5:10

to pay this guy to get it finished , right

5:12

? So step one the

5:14

very first thing you have to do and I know that

5:16

this is so repetitive from all of our other podcasts

5:19

you have to systemize your processes

5:21

. This is more . We

5:23

yell often about systemizing your processes , and

5:25

this podcast is how you do

5:27

that . So how do I systemize

5:29

the process of vendor management

5:32

? One of the most important

5:34

things in starting out with vendor

5:36

management is I am going to pay

5:38

on a set day for

5:40

the amount of work done during a set time period

5:43

. Yeah , so any work done Monday

5:45

through Friday , I'm going to pay you on Friday

5:47

.

5:47

That's a lot of guys do it .

5:48

Any work done the way we do

5:50

it , any work done this Wednesday through

5:52

next Tuesday gets paid next

5:54

Friday . Right , that way I can inspect . I can

5:56

mail checks to the people that need it . They'll get there by

5:58

Friday . I have a couple of days

6:00

to make sure that everything was done

6:03

right . But they know , whatever

6:05

work is done by end of the day on Tuesday

6:07

they can get paid for on Friday .

6:09

Which it's creating clarity for them

6:11

of what am I getting paid

6:13

for and when am I getting

6:16

paid for that , when will I receive

6:18

that money ? And creating that standard

6:20

, creating that

6:23

where there's probably plenty of guys

6:25

out there that they have people working for

6:27

them and they say , yeah , I'll get you paid on Mondays

6:29

or Tuesdays or Thursday or whatever . And it gets

6:31

to that day and they get busy , they have to be out

6:33

on the job somewhere and they don't get them paid and

6:36

the guy's chasing them down for money . That's

6:39

the type of issues that will

6:41

cause people to be flaky and just

6:43

leave and not stick with you and whatever

6:45

. The dependability of knowing what

6:47

I'm getting paid for and when I'm going to get paid

6:49

for it is something that a

6:52

valued vendor is going to be looking for .

6:54

Yeah , there's a consistency there and

6:56

we're putting they know exactly

6:58

what has to be done by when to get

7:00

paid . So if they don't make enough money that

7:02

week , that's on them because , they knew . What

7:05

did you do Saturday ? What did you do Sunday ? If you had

7:08

to have this money , you could have gone and finished that work

7:10

, so then I could have paid you by .

7:11

Friday yeah .

7:12

Right , and so they can understand

7:14

how to work the system

7:16

to get as much money as they can .

7:17

Well and with my guys . A lot of times I

7:19

would make sure to tell them , even in a front-end

7:22

meeting . If you've got some

7:24

personal expenses or things that you

7:26

need to pay for and you need to have money to

7:28

do that , talk

7:31

to me about it , tell me about it , give me a heads

7:33

up and I can tell you . Great , if

7:35

you can get this done by this time , I

7:38

can get you a check for that amount of money . Yep , yep , right

7:40

, but I tell them , if you come to me on the

7:42

day you need the money , I can't

7:45

cut you a check for work you haven't done

7:47

. Yeah , tell me ahead of time and I'll

7:49

gladly help you get to the place where you get it .

7:51

We'll work together and get you there . That's right . That's right , All

7:53

right . So the systemizing of this

7:55

. First , we have the set

7:57

pay for a set amount of time every

7:59

single week , every other week , once

8:01

a month . However , you run your company .

8:03

Whatever you figure out , you have to make sure that

8:05

you can adhere to that week over week

8:07

, month over month . That's right .

8:08

So then I'm going to sit down with my subcontractor and

8:10

I'm going to go through a subcontractor agreement

8:13

. If you've heard about a CEA , it

8:15

is the CEA for subcontractors

8:17

, that is it and we've covered this before , so we're not going

8:19

to go too deep into it . But on that agreement , I'm

8:21

going to hit a couple of high points that have to be in

8:23

there to really do the next steps . Yeah

8:25

, first thing you got to do is there's

8:28

really three areas that we cover in the sub

8:30

agreement . One is on-site expectations

8:33

, operational requirements and termination

8:35

Kind of the boilerplate

8:38

stuff . This is what I expect when

8:40

you're on site . I want the job site

8:42

clean . I need the thermostat

8:44

set to X To

8:46

work for us . You got to have this level of insurance

8:50

. This is how we pay when we pay . All

8:52

of just the operational on-site

8:54

requirement stuff is obviously in there . We

8:56

go deep into that on a different podcast if

8:59

you rewind a few months . Secondly

9:01

, how that crew

9:03

can and cannot spend my money

9:07

. This is how we do phone sales . This is

9:09

what you can buy . We look at every single

9:11

receipt and we do . We have hundreds

9:13

of receipts a week and we look at every single one

9:15

of them because we look at what was purchased

9:18

on this receipt . We tell

9:20

them you're going to get dinged 75 bucks if you buy

9:22

a Snickers bar on my car . Do

9:24

not buy a Snickers bar .

9:26

Years ago we got to the end of the year and we realized

9:28

there was what $1,500 worth

9:31

of Coca-Cola's and monsters . That's

9:33

literally cash . If we had

9:35

a bucket of company cash , they just came in and

9:38

just grabbed that money out .

9:39

Yeah , what's just a Coke ? It's not a big deal . Yeah

9:41

, try to scale with just a Coke . That's

9:43

the issue on it . Once

9:46

they start sneaking that in , they start sneaking

9:48

the next thing in and all of a sudden you're buying

9:50

them tools and you don't realize it .

9:52

Yeah , that's right .

9:53

We lay out what they can and cannot spend our

9:55

money on . We also lay out what

9:59

they can and cannot say to our clients . We give freedom

10:01

to tell our customers hey , I'm

10:03

not allowed to talk with you . You should call the project manager

10:05

, give him a call and he'll discuss this project with you

10:07

, which helps them with the Giving

10:10

them the tools while they're on site to keep

10:12

their their job going , as well as keeps

10:15

the line of demarcation Very

10:17

separated between who's in charge

10:19

and who's communicating with the client . Who's promising

10:21

what to that client ? Right ?

10:22

well , and by creating this front-end

10:25

expectations , you're

10:28

gonna naturally narrow down

10:30

the guys that are are gonna be

10:33

capable and willing to do this Yep , and

10:35

the guys that you've got on your payroll or that you're

10:37

sending 1099s to , that they're

10:39

really just kind of not . They're not gonna

10:42

tow the line for you , they're not going to help you

10:44

keep your reputation . They're actually

10:46

the ones that , when you ask them to hold them accountable

10:48

of , like , here's what I expect from

10:50

you and you must do this to continue that

10:53

it's gonna weed those guys out and you're

10:55

gonna end up with a better

10:57

team Because you've set this

10:59

into place .

11:00

Yeah . And the third thing that we cover in the sub-agreement

11:02

is how they get paid . Yeah , this is

11:04

so important . So there's three ways that we do this . There's

11:07

we start by showing them what a

11:09

work order is and how the work order system works

11:11

in our software . So , prostruct 360 , when

11:14

you build an estimate , every single

11:16

line item you can invoice or you can send a

11:18

work order for , and you can select all

11:20

of your line items and send them All at once . You can say these three

11:23

are going to this guy , mm-hmm . You select it

11:25

, you hit schedule , you put the person's

11:27

name in , you put the dates you want it started and finished

11:29

. You hit send , pops up an email

11:31

and you're sending them a work order by email . They're

11:33

scheduled to get paid . That's right , market complete

11:36

in the software . So it's all organized for you . All

11:38

you're doing is saying , okay , this part of the the

11:41

job is yours , this part of the job is this other guys

11:43

, and this part it's going to the cleaner .

12:29

Yeah , and so long as you have spent

12:31

the time to build out your estimate in your details , that

12:34

means that the work order that's going to that guy

12:36

has the address , the client

12:38

, what client information that you want them

12:40

to have , who the project manager they're supposed

12:43

to call , every detail of the

12:45

line items , of what needs to be done , what

12:47

area needs to be taken care of , the color

12:49

of paint , all of that different stuff , and

12:52

a thousand dollars , ten thousand dollars , whatever

12:54

it is . Get these done by

12:56

these dates and this is what I'll pay

12:58

you . Then you get to you , you

13:00

avoid the Well , I didn't know

13:02

about that . No , no , no , no , it's right here . What did

13:04

? What ? Did you not understand about that ? Well

13:07

, I thought you were paying me fifteen thousand dollars . No

13:09

, no , it's right here , it's ten thousand dollars , it's no big

13:11

. So you , you avoid some of those

13:13

spots and you have a . You have something

13:15

to point back to , versus the guy

13:17

saying , well , you didn't tell me

13:20

that , yeah , and so I need

13:22

to . If you want me to do it , I'm glad to do it . You need

13:24

to pay me an extra thousand bucks .

13:25

So if you go back one episode

13:28

in our podcast to the , the

13:30

faster estimates Episode

13:33

that we just did last week , if you go

13:35

to that and we talk about your line items

13:37

being detailed and how to do that with

13:39

presets , so where it , every

13:41

single time you click on something , it just spits out all

13:44

the description , right ? This is not only

13:46

important when clarifying to the customer , but

13:48

this clarity , like Jared just said , goes on

13:50

to the work order . So instead of paint

13:53

interior of house that the client

13:55

thinks that they're getting the basement done , yeah for

13:58

the for your vendor , the description

14:00

of I'm painting the full main level , but not

14:02

the basement . This includes this .

14:03

This doesn't include this wall sealant's trim

14:05

what it , whatever it is it doesn't include closets

14:08

, but it does include the trim , that sort

14:10

of thing .

14:10

That's all on the quote . The client understands what they

14:12

are not paying for . But , more importantly , almost

14:15

when it's on the work order , I

14:17

can now say Jared , vendor

14:19

, listen , you just said right . It

14:21

says right here You're gonna do all of this work and

14:23

here's the price I'm paying you . Yeah , what's unclear

14:26

about this ?

14:26

right .

14:27

And so when we talk about the , the

14:29

areas where they screw you and where you lose

14:31

money on vendors , it's they . They

14:33

didn't think that they were when they said , yeah , I can do that for

14:35

two grand . They didn't realize you wanted the trim

14:37

done . They didn't realize you wanted the ceilings paint . They didn't

14:39

realize all this other stuff , and so you're clarifying

14:41

that before you go into a bid

14:44

contract with that vendor ?

14:45

Yeah , well , and I would take that

14:47

. After I've sent it out and the guy says , yes , I'll

14:50

go ahead and get that done . On day one that that guy's

14:52

showing up , I would go to the

14:54

job and walk it with him and say , okay , let's look at

14:56

these line items . Do you have any questions ? Yep , is

14:58

there any problems ? Do you not understand

15:00

something ? You understand that we're not painting

15:02

closets , we're only painting right and

15:04

make sure that that's understood . And

15:07

then we come , and then I could walk away knowing

15:10

that the clarity is there . They understand

15:12

. There was no miscommunication . Now we're good

15:14

to go , that's right .

15:14

So that's . That's why

15:17

, why we do our work order system the way we do and why

15:19

the software is built the way it is , is

15:21

these work orders that you have . I

15:23

print one out and I'm sitting in my sub meeting

15:26

and I'm saying , sitting with my vendor , I slide across

15:28

the table and say , all right , here

15:30

is what the work orders look like , here's

15:32

the date , because every single line item has a start

15:34

and finish date . So that way we can say all of this

15:36

stuff should be done Monday , should

15:39

be finished by Wednesday , or maybe

15:41

different line items have different dates . You can arrange

15:43

it however you want to do it , but that way

15:45

I can say so I'm gonna tell you when , when you're

15:47

agreeing to start and when you're agreeing to finish

15:49

, this is everything you need to do . And at

15:51

the bottom there's a final total amount , right

15:53

, and I say every single vendor . I say

15:56

this work order is

15:58

a contract between you and me , mm-hmm . And

16:00

so when I send this to you , don't

16:02

just start the work , right , look at what I'm

16:04

asking you to do and look at the price . And this is the

16:07

only time that you can say

16:09

, clark , I can't do that work

16:11

for this price . Yeah , you are in charge

16:13

of you , you and you know what you

16:15

can get done and you know how much you have to make . I've

16:18

budgeted this amount of money for this amount of work and

16:20

if I miss something , this

16:22

is the point that you can say Clark , how are you

16:24

expecting all of this work to get done for that price

16:26

? And I can say , oh , I didn't even think about

16:29

it . I missed this one thing . Let

16:31

me go back to the client , because we haven't started

16:33

the work and my client agreement says

16:35

after I start work

16:37

, I'm not gonna change the price on you , unless the scope

16:39

changes . And so I can go back to

16:41

the client and say , hey , I totally missed

16:44

up . I put in 200 square feet

16:46

for painting . I said a 2000 square feet for painting

16:48

. This is an error on my

16:50

side . The actual price is this

16:52

they can approve it . Then I can

16:54

go to my vendor and say , hey , thanks for catching

16:57

that . Yes , I can pay you that amount for this

16:59

amount of work . And now

17:01

we've got a contract between me and my subcontractor

17:03

that says this amount of work , high

17:06

detail , for this price .

17:08

Well , in our pre-written subcontract agreement

17:10

it has that specifically spelled

17:12

out that this is the time

17:14

and opportunity for you when you receive

17:16

a work order for questions , problems

17:19

, issues and even negotiation

17:21

. I can't do this for 10,000

17:23

. I need 15,000 . Okay , I'll do it for 1250

17:26

, whatever it is . But it also says , when

17:28

you start work , the

17:31

work order in front of you is what you're

17:33

agreeing to execute that work during

17:35

. Get all that work done during this period

17:37

of time for this amount of money . So

17:40

that's your signature at the bottom of the page

17:42

you starting the work as you saying . I'm

17:44

cool with this .

17:45

Yeah , and this is the spot where I start

17:47

identifying us as a contractor separate

17:50

than other contractors that this subcontractor has worked

17:52

for . I start saying listen , this

17:54

is how we operate and let me show

17:56

you behind the veil . I am

17:58

agreeing to the customer that once we

18:00

start work , I'm not gonna change the price

18:02

unless the scope changes , and so

18:04

, because I promised that to them , I

18:07

don't have any additional money to give you . So

18:09

if you start painting the house and you're like I

18:11

can't do this for two grand and you're

18:13

halfway through , I don't have

18:15

any weapons to go back to the client and get more money

18:17

out of them . So you have

18:19

to be accountable for what you're agreeing to

18:21

do in this contract . And that

18:24

makes so much sense . Sitting at this table with that

18:26

vendor . Right , they're like , okay , that makes sense , I

18:28

can do that , but spelling that out here

18:30

and saying this is non-negotiable

18:33

once you accept it is the

18:35

key here . Now we also spell out

18:37

what's the difference of a change order and

18:39

negotiating current work right . A

18:42

change order . What I need from you , vendor , is

18:44

if you see something that's not on the scope , pause

18:47

and raise your hand . Don't fix it , Don't

18:49

go do it .

18:50

See something , say something . Yes .

18:52

How many times are they like hey , you know that was , there

18:54

was rod in that wall , but when I'd replaced it , buddy

18:57

, I can't pay you for that because I don't have

18:59

it in writing with the client . And , as I told you in our

19:01

meeting , unless I get it

19:03

in writing from the client before we do the

19:05

work , I'm not going to charge them

19:07

for it . That's right . So we lay all that out with

19:10

them so they understand . If there's a change order

19:12

, I'm not asking you to just eat

19:14

it . Raise your hand , let me know . I

19:16

can go back and do a change order with the customer

19:18

, but I can't do it after the fact . I can't

19:20

go after the job's done and say hey , also

19:22

, you owe me 800 bucks because I paid in one

19:24

additional room . That's not okay

19:27

in our company and you're agreeing , by signing this agreement

19:29

, that you are waiving your right to be able

19:31

to do that .

19:32

Well , and also another piece of this is that you know how many

19:35

times have you had guys come to you and say I

19:37

need a $5,000 check this

19:39

week . Well , you haven't completed

19:42

$5,000 worth of work . Yes , I have

19:44

. Just hey , can you help me out

19:46

this time ? Can you go ahead and get me that $5,000

19:48

check ? This is where , in that

19:50

spot , you have the opportunity to make the

19:52

software the bad guy . This

19:55

is the spot where you can say look , I would

19:57

love to be able to cut you that check Me , and

19:59

you are buddies . I would love to be able to do that

20:01

. The problem is is that the

20:03

client can see what's

20:06

been completed in the software and what's not

20:08

. So I can't pay you

20:10

that extra $5,000 and close a

20:12

line out amount and show it as 100% complete

20:14

, and then the client come in and be like what , I

20:16

can't pay you for this . That's not done .

20:18

Yeah . So a little background on what

20:20

Jared's saying . In our software , if I have a line

20:22

of them , let's we keep using that paint line item . I've

20:25

got a paint line item . My vendor

20:27

is 50% through . I can click

20:29

on that line item and say 50% complete

20:31

. If I was paying them $2,000 , it's

20:33

going to generate a bill for $1,000

20:36

in the software for you to either cut a check or

20:38

say hey , I paid them through this check or do a direct deposit

20:41

. However you pay your vendors , the

20:43

bill for $1,000 is there because

20:45

I said this line item was 50% complete . At

20:47

the same time the customer

20:50

portal says hey , clark believes

20:52

this line item is 50% complete , right ? So

20:55

the customer can see the percentage that I have paid you , right

20:57

? And we explain that to our vendor , to

20:59

our subcontractors and vendors , and saying so , I

21:02

can't cheat because I'm lying to my customer

21:05

and they're going to get angry and mad at me . So

21:07

I'm making the software the

21:09

bad guy and I'm saying listen , I

21:12

will love to pay you all the money I owe you

21:14

, but until you get to 100% , I can't mark

21:16

it as 100% complete , because then I'm going to need to

21:18

invoice the client and I can't . So I

21:20

can only give you 75% because

21:22

there's still work to get done . I

21:25

will cut you that . I'm so sorry . I know you need

21:27

that money . How about this ? If you can get

21:29

it done by Monday , I will go ahead and go

21:31

outside of our normal processes and hand cut

21:33

you a check on Monday for the last 25%

21:35

, but I can't pay 100%

21:37

because the client I'm stuck

21:39

in the middle , I can't help it . And so

21:42

making the software the bad guy . You

21:44

can still be the good guy , you don't have to be the guy that's like

21:46

sorry , you don't . I guess you don't get to pay rent this month

21:48

.

21:49

Yeah , especially if you've got project managers working

21:51

for you and the project managers having that conversation

21:54

with the crew . That's one thing . When the

21:56

crew's having the conversation with the owner of

21:58

the company , they're like come on , bro , you

22:01

know you can make this happen .

22:02

I saw that truck , you pulled up , you got it , you

22:05

gave me an extra and to be able to say no

22:07

, we discussed this .

22:09

I can't pay extra money on this

22:11

job until it actually gets done , because that

22:13

would be me lying to the client , because

22:15

the client can see how much has been

22:17

complete . So I can't , I can't fudge

22:19

it . It has to be done or it's not done

22:21

. You know , and the work around is

22:24

like you said . Look , I'll get you the 2500

22:26

that will be done . Based on this , if

22:29

you can get everything completed by the end of

22:32

day Sunday , I'll cut you as

22:34

the owner . I'll cut you that extra check

22:36

on Monday morning , right ?

22:38

Yeah , so so clarifying that with them

22:40

talking through , that's how we do it . Also

22:43

. One last thing , going back to the sub agreement

22:45

, is we lay out

22:47

how they can exit the job right

22:49

, and so we lay out what they need

22:51

to do , how they do it , how they

22:54

get paid , everything if

22:56

they and what we're doing is setting them

22:58

up to be a support for us , because

23:00

if they know how to exit

23:02

a job and do and handle our

23:04

job site , they will do it that way because they want

23:06

to get paid and not come back , and so what

23:08

we're essentially doing with our best

23:10

subcontractors is we're making them

23:12

better businessmen better businesswomen

23:15

, better companies that are that we're subbing

23:17

to , because we're helping them follow our

23:19

processes , and so all of these

23:21

processes that we're laying out with the work orders

23:23

, with using utilizing

23:25

the software to be the bad guy , this is all helping

23:28

them , if they follow it , be better

23:30

business people in their companies

23:32

, and that makes us a better company

23:34

because our vendors are awesome and

23:37

so it's a really good circle

23:39

of you help me , I help you , and let's

23:42

build our companies together in a partnership

23:44

and growing this way . So

23:47

one of the last things we need to cover too is with

23:50

one of the Biggest ways

23:52

that what you were talking about , the emotional

23:54

. Hey , I need rent

23:56

. It's Friday , I gotta get rent paid

23:58

. It's due today . We

24:01

do not carry checks to the

24:03

job sites . I don't walk around with the checkbook

24:05

. That is an emotional decision . What

24:08

I want to do is I want to pre make the decision

24:10

of how much this guy is getting paid . Before

24:13

he knows right , I'm gonna say we're

24:15

, we're not even , we're about 40% . I'm gonna pay

24:17

him 50% of this . That's very generous

24:19

. I show up with that thousand dollar check

24:21

and say , here you go , jared , here's it . Or I

24:23

mail it to you , or I direct deposit to you and say , hey

24:25

, you're 50% done . You got paid for half

24:28

the half the work order . It's not a

24:30

discussion of how much you're getting paid , I am

24:32

. I am Stating this is

24:34

how much I'm willing to get , willing to pay you . If

24:36

you look at big people like banks

24:39

that finance this stuff , they're

24:41

not walking around saying , well , jared , how much do you want

24:43

? Okay , and you got bills that you got to

24:45

pay ? Okay , I'll go ahead and pay you that . No , they look at the work

24:47

and say I'm not releasing the funds

24:49

on that item a Because

24:52

it's not a hundred percent done . Yeah , right , so we're gonna

24:54

do the same thing . We're gonna act like a big company and

24:56

we're gonna say I am only going

24:58

to release funds on the work completed and

25:01

I don't need your help to

25:03

try and talk me into giving you more money , right

25:05

? So I'm not gonna walk around the job site saying , how much do

25:07

you need out of that 10 grand . You need five Okay

25:09

, six Okay , I'll give you six Mm-hmm . No , are

25:12

they 60% done ? No , so why are

25:14

you giving them 60% of the money ? Yeah

25:16

, yeah , and so that's , that's one of the biggest things . So

25:18

we're shifting to direct deposit , to

25:20

mailing checks , to Having

25:24

it to where it's systemized as a payment

25:26

process off-site , right . Secondly

25:29

and this is kind of a bonus one , with the paying

25:31

, I don't love delivering

25:33

checks to my crews . Now it

25:36

could be a good thing , it could be a touch point

25:38

. It could be Friday afternoon . I showed up with the

25:40

pizza and some pay . That that's always

25:42

fun , but what I dislike about that

25:45

, and when I'm looking at a bigger picture of a company

25:47

, is the efficiency of that . So I

25:49

say , jared , I'm gonna bring your check on Friday , we'll cut

25:51

what will when I come do the walk . I

25:53

got your check with me . Well , something changes

25:56

on Thursday . My walk pushes the Monday

25:58

because the client all the sudden can't meet and

26:00

now I got to drive 45 minutes to a job site to Deliver

26:02

a check at 45 minutes back . So I'll

26:04

waste an hour and a half this week delivering your check

26:06

, when I could have mailed it or you could have , you know

26:09

, a Different . I could have direct deposited

26:11

it to where ? I don't like

26:13

delivering checks because , even though I'm gonna plan , I'm

26:15

not going there . My my schedule shifts all

26:17

the time .

26:17

Yeah , and I'm , and I care about

26:19

efficiency of every minute I spend

26:21

throughout the week on well and really

26:24

for me , the the , the way that I tried

26:26

to do that is if I ever was delivering

26:28

a check on site for crew . Yeah

26:30

, I did that tied to something

26:33

, to an executable Yep , like I

26:35

look , you get all this stuff done

26:37

for me , you get it done by Friday . I'm

26:39

gonna be there at three o'clock and I'll have a check

26:41

for all of this for you .

26:43

But I'm done if it's done .

26:45

I need to get . I need to make sure , because my

26:47

clients got x , y and z happening this

26:49

weekend . If we are to this point

26:51

, you got to be clear about what

26:53

you want them to have done . I'm

26:56

glad to tie that , so bring that check . But

26:58

if I'm just bringing the check to them because

27:00

I want to be nice and I you know , yeah , I'll

27:02

drive it down to you and all this stuff , they

27:05

you're just being nice and you're wasting a lot of

27:07

time and money when you could have just mailed the check on Wednesday

27:09

and it'll get to him .

27:10

That's right , that's right , you know . So , all

27:12

in all , what ? What we are looking to do

27:15

to Again , labor

27:17

isn't screwing you most of the time on purpose . It's because

27:19

of your miscommunication , your

27:21

inability to tell them exactly what's on the scope

27:23

, as well as your Flexibility that you

27:25

try and have with payments and then , all of a sudden , they get

27:27

behind . Right , yeah , if I . If you need more

27:30

money , then I can give you today , and

27:33

so I give you more than what you've earned . Yeah

27:35

, next week I've got to give you less than

27:37

what you weren't . And no , but that's never

27:39

gonna happen . I'm gonna come out of pocket and at least

27:41

pay you how much you weren't , and that's where guys

27:44

start losing the money .

27:44

So well , and that's where you get to

27:46

the last 10% of the job and you're completely out

27:49

of cash .

27:49

Yep , and you're paying a different crew to come finish , because that

27:51

crew is nowhere to be found , because they're all paid .

27:53

Yeah yeah .

27:54

So Ensuring that you are

27:56

, you're holding on to every penny and giving

27:58

people what they're , what's due to them , from

28:01

day one . With new vendors , it's so hard to

28:03

go backwards on this . Oh yeah , once you're walking

28:05

, once you're flexible , once you're giving extra money

28:07

, once you're , once you're the daddy

28:10

figure handing out cash To everybody and not

28:12

seeing what's happening , right , once that's what's happening

28:14

, it's very hard to rein it in .

28:15

So start with every vendor this

28:17

way well , and one of the things that that we do with

28:20

a lot of the companies that come into the alliance

28:22

program is that we will you Know the guys

28:24

that already have an established business , yeah , and

28:26

they've got three , four , ten , twelve , twenty

28:28

different guys that do work for them on a regular

28:31

basis we will encourage them

28:33

to do a vendor meeting . Yeah

28:35

, will you bring all your vendors in and say , hey

28:37

, guys , I'm changing the process so

28:39

that you guys have more dependability

28:41

, so that you're getting checks when I say

28:43

you're getting them , and that we can exit

28:46

jobs Faster and you make it beneficial for them

28:48

. But you bring everybody in

28:50

and change the gear together

28:52

and it it makes

28:54

it a little bit more doable of the

28:56

of making that move . And what we

28:58

found is what we said earlier is a lot , you know , a

29:00

lot of times You're good guys

29:02

will stick around because they they see that

29:05

the , the dependability of that , and

29:07

the guys that have been taken advantage Of you or

29:09

kind of riding tails and just making cash

29:11

and not , those guys are gonna weed out .

29:14

Yeah , right well and you helping

29:16

them understand why these changes are happening

29:18

. So you go in and say in that vendor

29:20

meeting or even a lot of times it's not even

29:22

a full vendor meeting a lot of times it's like I've got three crews

29:25

Jason , paul and Guillermo

29:27

and all three of them I gotta keep happy

29:29

because those are my best guys . You sit down

29:31

with those three crews and say , listen , I

29:34

want to make y'all more money and

29:36

we're ready to grow . And

29:38

I can't grow by visiting every job

29:40

site with a checkbook every week , and so for

29:42

me to get more in your pipeline

29:44

so I can feed you guys more

29:46

jobs , I gotta systemize this and

29:49

there is such buy-in with that open vulnerability

29:51

conversation of this is why we're shifting

29:54

to this way . I can't pay out unless

29:56

it's done , because I'm starting this new software

29:58

Pro Shrug 360 , where the clients

30:01

can see exactly what has

30:04

been completed not been completed but

30:06

instead I'm gonna start using that and

30:08

I need your help that this is how

30:10

we invoice this is how

30:12

I pay my work , and this

30:14

is only way that you can get money . Are you okay

30:16

with that ? And every single time the good guy's like yeah

30:18

, absolutely that's helpful .

30:20

This is what I'm setting up , and I wanna make sure

30:22

that you're taken care of , and to do that

30:25

, I have to have these things set in place

30:27

. This is how I'm gonna operate . I wanna let

30:29

you know so that you know what to expect

30:31

. Are you ready to grow your company ? That's right , we're

30:34

about to go , the next level .

30:34

Everyone wants to be a part of that . If

30:37

you want to use a software

30:39

, we've got a free version of our software for estimates

30:41

, invoices , online

30:44

payments on the free side . If you want to use

30:46

this Work Order system , it starts at our ProStruct

30:48

360 Delight subscription . It's

30:50

$89 a month but you get all

30:53

the communication , all of the check printing

30:55

, all of that Work Order system ? yeah , All in one spot

30:57

in the software , you can do your materials

30:59

. You can do a bunch of different things utilizing

31:02

it at that very low cost . So

31:04

check it out . Prostruct360.com

31:06

. We'd love to walk you through a demo

31:08

. Hop on a call we also do . Twice

31:11

a week we do any sort of demo calls

31:13

and we have a webinar that we

31:15

do . You can pop in there and ask questions even

31:17

if you're not on the software . We go to our

31:20

website . We've got events and different things like that . You

31:22

don't have to be a user . You can be on a free version . Just

31:25

come and ask questions . Let's talk shop . We

31:27

love to talk with you guys and interact with you

31:29

, so reach out to us , let us know , check

31:31

us out prostruct360.com . Thank

31:34

you so much . We'll talk to you next week . See ya , bye

31:36

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