Ep. 65 - Profit Is Not A Dirty Word

If you’ve ever stared at your month-end and wondered where the profit went, this conversation is the flashlight you’ve been missing. We talk candidly about the real money leaks in contracting—underbilling, missing labor burden, ignored equipment repairs—and the uncomfortable leadership shift required to fix them. Profit isn’t a dirty word; it’s a discipline, and the Work In Progress (WIP) report is the tool that turns chaos into clarity.

With returning guest Nick Peters of Sterling Seacrest Pritchard, we break down how to compartmentalize your bids: direct costs you swing a shovel at, indirects that quietly drain your margin, and overhead that must be recovered before a single dollar is truly profit. We show how a timely WIP flags trouble fast, how daily production data from the field fuels smarter decisions, and why change orders should be priced with facts, not feelings. You’ll hear tough-love truths about denial, ego, and why growth without systems is just a faster way to lose money.

This is a playbook for owners and leaders who are ready to trade revenue drunk for profit sober. Expect practical tactics: set field production targets, capture quantities daily, align estimating and accounting, and run estimate-to-actual reviews that build accountability. Expect real-world decisions: when to cut a division that feeds pride but not profit, how to bid fewer but better jobs, and how to lead through the pushback that comes with culture change. Most of all, expect to leave with a clearer path: know your costs, watch your WIP, and build habits that repeat good results.

If this helped you see your numbers differently, share it with a contractor who needs it. Subscribe for more real talk on building stronger blue-collar businesses, and leave a review to tell us the biggest money leak you’re fixing next.

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Chapters

• 0:00 Kickoff And Sponsor Message
• 2:40 Why Profit Isn’t A Dirty Word
• 6:40 The Real Money Killer: Not Knowing Costs
• 11:45 WIP Reports Explained Simply
• 17:30 Change Orders And Data-Driven Decisions
• 21:30 Direct, Indirect, And Overhead Costs
• 27:30 Denial, Ego, And The First Hard Truths
• 32:50 Culture Change And Field Buy-In
• 38:30 Accountability Across Estimating And Production
• 44:30 Confidence, Bidding Right, And Patience
• 50:40 Owner Vulnerability And Tough Calls
• 58:10 Cutting Earthwork And Chasing Real Margin
• 1:05:00 Systems Beat Heroes: Documentation Flow
• 1:12:00 Mental Load, Persistence, And Resetting
• 1:18:40 You’re Not Alone: Most Struggle With This
• 1:24:20 Where To Get Help And Lifeguard Analogy

Transcript

SPEAKER_01: 0:09

Hey guys, welcome to the Blue Collar Business Podcast where we discuss the realest, rawest, most relevant stories and strategies behind building every corner of a blue-collar business. I'm your host, Cy Kirby, and I want to help you what it took me, trial and error, and a whole lot of money to learn. The information that no one in this industry is willing to share. Whether you're under that shade tree or have your hard hat on, let's expand your toolbox. Welcome back, guys, to another episode of the Blue Collar Business Podcast, brought to you by and sponsored by Wonderful Partners, Thumbtack. Tired of spending all your time searching through week leads instead of getting work done, Thumbtack brings you work, you're ready to win. You get visibility and automation to run your business without headaches, plus the flexibility to scale across the crews and markets. You'll always know where your money's going and what it can deliver. The success of pros on Thumbtack really says it all. If you want to grow smarter, visit thumbtack.com/slash pro today to book your one-on-one strategy session. Let them know that Cy over at the Blue Collar Business Podcast sent you guys for a little treat there. Guys, I think this is the first time I can say that I've had a returning guest resounding episode that I enjoyed that we didn't really get off into any meat and potatoes. We hit a bunch of high-level overview topics and about a lot of the things that, you know, the systems and processes and procedures that I was literally learning and going through and implementing and finding out about. And it was honestly a fire hose of information that I should have already known, but nobody teaches you. And that's literally the design and purpose of the show. And I I speak very the need you have to have for a lawyer, an accountant, bookkeeper, of course, those, and of course, a great banker, which all three of those equal the best team. But there's another guy, if you're gonna be any type of contractor, especially in the civil space, you're gonna run into something called bonding. And whether you like it or not, you're gonna have to deal with it. And so be prepared. Uh, don't be scared, be prepared. That's a great one. And um, I've learned that the hard way over almost 10 years, and bonding terrifies people. Although we're not going that route today, that's where you can find uh the last episode. We talked a little bit more about bonding. We're gonna be talking about something that all contractors face. And this gentleman has helped me personally within Scicon over the last, oh, two plus years now, and truly stood by my side in terrible times, uh, listening to me vent and complain, but also hooks it up when it comes to insurance and knows everything. I think, I think I'm gonna forget more things than he knows about the uh the bond world. I mean, he takes care of me, makes sure I understand the difference and what the risk connotations are. You gotta have this gentleman. But the really cool part about it is the better business practices that he helps teach along with my aligned construction CPA. It's really such a unique team that I tell you guys you have to go find. And don't stop searching and don't settle until you find these gentlemen to be a part of your team. Uh, furthermore, my man, Nick Peters, um, the partner at Sterling C. Chris Pritchard here in Mom L. Mom L, right? Or Little Rock? It's in North Little Rock. Okay, fair enough. Um, we're gonna be talking about how we lose money as contractors. I mean, that should be an episode worth tuning into, but also some tools to help you not lose money. And it may be a little different than what you've heard before, not the generality, uh, oh, buy this kind of equipment or hire this kind of leadership or do this. It is some standard practices that every single contractor, I don't care if you're an underground contractor, I don't care if you're a concrete guy, I don't care if you're a uh steel guy. You guys can all benefit if you're running cruise, uh, commercial, residential, I don't care. If you're running multiple cruise, multiple projects at the same time, you've got to be able to job cost, make sure your estimate, your estimate is coming in with production and ensure how to build habits to consistently repeat good results. Did I say all that pretty good on a word salad sandwich? Well said, sir.

SPEAKER_00: 4:51

Well said. Welcome back to the show, sir. Thank you, son. I appreciate you having me. Um looking forward to it.

SPEAKER_01: 4:57

I we have been talking several times. I I get this all the time after we do a show. Dude, I wish I would have said this, I wish I would have said that, I wish I would have said this, and we could have talked about that. And I think it's cool that it creates. I don't think you ever thought you'd end up on a podcast. I did not. Exactly. I when I first brought this up, you were like, Meh, and I'm like, look, there is so many guys like me struggling, looking for resources that haven't found people like yourself. Please join me on the show. And guys, go back and watch the first episode with Mr. Peters. It was wonderful. And we touched so many different hot topics, but never really dove off into anything. And that's what you shared with me on the phone call. It was side, dude. The one thing I consistently can help with is how I see these guys lose money. And when you might want to give just a little bit of background for the new listeners, and shout out to you guys. We are growing in some some crazy numbers, and I really appreciate all you active listeners, Spotify, Apple, iHeart, or you guys that are just watching directly from uh blue collar businesspodcast.com, watching or listening totally for free there. But um Mr. Peters, the floor is yours, sir. Give a little background and let's talk, let's talk about how we lose money.

SPEAKER_02: 6:20

Yeah. So um when you admission to me about doing the second podcast, I'm like, okay, where do we go after the first one? And um, so I just reflected on the conversation that I have most often with the contractor or with owners, and uh that's revolves around the word profit. It's not a dirty word. It is not a dirty word. It is not, and so um, and so the the conversation wrapped around that. Peel back another layer to the onion here is you know, there's the obvious ways a contractor can lose money. I'm not gonna spend a lot of time there, but just put them out real quick. You know, bad weather, bad owner, bad design, um, bad superintendent. Um, I mean, we we can we can name bad sight conditions, bad sight conditions, um, you know, so bad contract, bad drawings, yeah. Sorry. No, no, you're you're you're I mean, those are the obvious ones, right? I mean, and I'm not playing those down as though they're they're not important or or happen often because they do. But I don't think that that's gonna be the uh the lead candidate for um for not being profitable. And I think the lead candidate is is uh for in the in the race here, the horse, lead horse in this race is always gonna be you um you just don't you don't know your cost. And you know, this is a little bit of a retread from our first one, but we're gonna dive a little deeper today. But so you got the obvious and you got the not obvious, and the not obvious is the know the internal accounting, the c job costing, you know, and so over my years of doing this, I'll come up with these silly sayings, and one of them is uh estimating reliability, production, accountability. And so um I'll say that often to Cy uh because uh it it takes truth, man. And it is, it is. Now, that is very, very easy to say. It is very, very difficult to achieve. So um, so that's kind of I want to do a little bit of dive on that today and kind of talk about that a little bit. Um, we don't have enough time to go um in all the different directions. Maybe that'll be a good reason for part three, part four, or whatever. But so so today let's let's dive in here a little bit and uh kind of what I want to do first is talk about the tools um that are available to you in the toolbox, and then let's talk about the implementation and your experience with that because uh we would be uh leaving your listeners, I think we'll be leaving them a little a little shy today if we don't address the uh the that's the number one killer. Yeah, the culture change. So, you know, I can come out there and talk to you all day long, I can bring in the accounting teams, I bring all the right players in. We can teach and preach, but you know, it you have to have the buy-in. You've got a you've got a lead in your organization, and you know, and it's up to you to do that. I you know, as the old saying goes, you can lead a horse to water, but you can't make them drink, right? If I can only make them drink. Man, I would love that.

SPEAKER_01: 9:34

I would uh yeah, there's I wish I would have started drinking just a little bit sooner.

SPEAKER_02: 9:39

Right. But hey, you know what? That's normal. Um I can line you up the last three that we've been through with this, and every one of them would say that exact statement that you did.

SPEAKER_01: 9:48

So um, so you want to kind of jump in now to Yeah, the the common practice is like you can even bring up me if you wanted to, you want to, like the consistent money killers that how these guys are losing money, and these are I'm not just talking about you guys like myself in the zero to ten category. I'm talking about these guys, we were talking about one earlier, 30, 40-year-old companies, they've just been doing it the same way. They don't, they think they're making money, but if they actually penciled everything, um are they? And what are consistent hidden, it's not shouldn't be hidden, it should be visible if we're doing the things we're gonna talk about in this in the tools section here in a little bit. But what's the consistent ways that you see from a financial production estimation, whatever it may be, or untimely account accounting was also a big piece, or all three, but maybe some little bits and pieces of what these guys can be looking for on red flags on like oh man, dude, I remember Nick talking about this. Oh, I'm kind of feeling this. Wait a minute. Have we seen a report on this? So talk about a little few ways that we all lose money because I've uh I've figured out how to lose a few dollars over here.

SPEAKER_02: 11:10

So, so one of one of the tools that you know we like to use, you know, because you're you know, when you're a smaller company and you're the same guy does the estimating, the same guy does the production, you know, you uh you're doing a couple of million a year in revenue. You know, you can be on every job every day. You can eyeball everything. We call that boots on site management, you know, and so you bid the job, so you've got a general idea of production rates, you've got a general idea of how you thought it was gonna go, the how you're gonna build it. Um, and so you know, you can eyeball that as the project ticks off and you can kind of we get a good feeling for how it's going. But what we typically see is when the contractors grow that uh that type, that style of management no longer becomes efficient, you know, and you start getting north of five, six, seven million dollars, you can't be on every job every day. And so you start yeah, you start losing control. And so what tools are there to help you? And one of the most fearful um uh job cost accounting uh reports out there is known as your work in progress report. And so this is one of the most important tools in the tool chest, and but man, it takes a ton to get it to get it going, you know, because uh you and I like to say a lot and know your cost. And um I've got a sign up in my uh my uh conference room, and it's uh you know, it's a construction sign and it says know your cost. Uh I that come from a Peter Kiwit project. Uh um and uh so that's kind of where I'm telling that story real quick. Yeah, yeah. So I they were doing a project in downtown Little Rock, they were widening the bridge, they were adding a trolley car, and they had all these orange signs out there you would expect to see slow down, minute work, you know, typical stuff. And then right in the middle of the project was this orange sign that said, know your costs, and it just caught my eye. I'm like, what in the crap is that? Right. So as the luck would have it, you know, Key Wit is uh probably the largest contractor in the world. And so their manager for this part of the United States was next door neighbor to a good friend of mine. And so there was a kid's birthday party, and I uh I got him cornered up. He's a hard man to catch, you know, and as you would imagine. And uh I said, hey man, what's up with your sign out there? And he said, Oh, yeah, you like my sign. And I was like, I don't know, what does it mean? And he said, I'll tell you what it means. He said, We want everyone in our company, from the guy that's in the ditch to the guy running the project, to know what your cost is and what that means. And so the example he gave me that day is we've poured a million manholes in our life. We know how many hours it takes per manho on average. So when I estimate the project and I put Nick and Cy out there, and we got 20 manholes to do, and I've estimated 25 hours per manho, and it's taking Nick and Cy 35 hours per manhole. You know, when did I figure out you rebusted my budget 10 hours per manhole? Manhole number two, number 10, number 15, number 19, week after the job was over, never, you know. And so once he planted that seed of thought with me that day, man, uh my construction accountant friend, who is also your construction accountant, Richard Newland, a shout out to Ferguson Cobb and Associates in Little Rock. Um, Richard is the man and his team. What the man. He's the man. And so he's taught me a lot, obviously. And but anyway, he and I took that, you know, 20-something years ago and started running with know your cost. And so he and I uh uh hand out those uh framed uh posters from time to time that have that on there. But anyway, that that's kind of where we started going with this. And so that tool and the tool chest we're talking about here, the work in progress report, getting back to it. In in a perfect world, think about it this way, Sai, there's there's four things, four data points that feeds this sheet of paper. It's a bunch of columns, it's a bunch of numbers. At first glance, you're like, holy crap, there's no way I'm gonna get anything out of that. I mean, there's too much going on. But you got to understand what it's telling you. What it's telling you in the data points you got to feed it is your your value of the contract that time you bid the job. So what they issue the contract for, uh, what was your cost at the time of bid? So those come from the estimating side of the house, so to speak, from the accounting side of the house, your total cost to date and your total billings to date. That's the four data points you feed it. It produces three or four other columns, of which two of them are under and over billings. And so under billings simply means it's something you can't or you haven't billed for. So if you can't bill for it or you haven't billed for it, you know, it's basically waving this hand at you going, hey, there's a problem going on this job. You might want to go ask some questions, not sure what's going on, but it's a red flag moment, right? And so if you think about it, if we had a chart, you know, and if if we had the beginning of the project on this side of the page and the end of the project on this side of the page, and you had two data points and they were running from the beginning of the job to the end of the job across the page, and one is cost and one is buildings. In a perfect world, cost and buildings would be the same as the project progresses. But often what we see is cost gets ahead of billing, billing lags behind. And so, guess what happens? You're financing the project, right? Uh, you forgot to bill something, you can't bill something. Typically, I can't bill it, it turns into a loss. So, how fast can you know it? So, going back to the manhole scenario, if you figure that out on manhole number one or manhole number two, then you're not gonna let Nick and Cy complete the other 18 manholes going 10 hours over per manhole. We get a chance to explain why. Yeah, but if we don't give them an acceptable answer, then you and I are gonna get replaced in the ditch and somebody else is gonna build the manholes, right? So that's a simple analogy to what we're talking about here. So this is an accounting tool available to you that helps you track billings and cost as they go across the page. You know, if your billings are ahead of your cost, then you know, they're financing the project. They paid you for work you haven't done yet. So that's always a great case. Yeah. So, you know, that's where we want to be. But more times than not, it's the opposite, it's the underbilling. So so in a perfect world, you know, we would the billing and the estimate or our cost would always remain the same, but it doesn't. And so when it does not, that's the alert, that's the red flag, you know, whistling its side, going, hey man, if I were you, I would go talk to the superintendent on this project and I would figure out what's going on. So that's one of the main tools in the tool chest. And there's that one tool, we don't have enough time to discuss all the different ways that it benefits you. But let me let me just put out a common one that I think everybody that can relate to is so if I were to say, hey, Cy, if you take all of your projects, how what percentage of your projects does a change order come up?

SPEAKER_01: 18:07

Right now it seems to be way higher than most, probably. I'd say a 45% of the time. So not half the jobs, almost half there's a change order something going on.

SPEAKER_02: 18:17

Mainly because of engineers. Right. Right, right. Exactly. Lazy engineering. Let's talk about it. Right. So it's out there. That's another show for another day, right? God bless. That's a soapbox. Soap. You know, and I'm it's kind of getting a little deep here on the on the costing part, but my point here to the change order situation is once you perfect the work in progress report and someone gets in there and they help you allocate all of your cost out to the projects, direct cost, indirect cost, all that has to get out to the job, then you have a really true, accurate picture of performance on that project. Because think about it, if I said, okay, Sy, when you're presented with this change order scenario, what what what data point are you using to help you make the decision whether or not you fight for this change order or you give in on it, you eat it. Most times people's answer to that is how much money do I got? Profit do I have in the job? And so if you have good data, you have a good work in progress report that's timely and accurate because we're feeding cost into this report constantly. When we go pull this job cost report on this job, we have a much more accurate picture of what's going on from a profitability standpoint. And so that would be a good thing to know if you're trying to decide as an owner, do I fight for this change order or do I give in? And so that's just one of many, many, many uses that this, this, this tool, this work in progress tool gives you. You know, you've um so not only is it whistling to you, hey, there's a problem on this job because the cost have outpaced the billings, you know, obviously that's a could be a potential private issue. It's also a reference point to where you're dealing with the change order. So I'm just highlighting a few things here to show you the all the uses of this tool. It's a multi-tool, would be a good way of saying it. But but but but it's uh, and we'll get to the implementation of all that here in a minute, but that's just um, you know, uh uh one of the I think the main things out there that contractors miss is the internal accounting. And so contractors are quick to go out there and spend the money on getting the best GPS system put on the dozer. They, you know, we're gonna go, that's me. I mean, I was me. You know, uh, I need another track o, I need another back o, but I can't I can't spend another five grand and get her a better accountant. I can't spend another, you know, uh whatever X amount and get a better account.

SPEAKER_01: 20:58

Hey, you need to slow down this growth, put some foundation underneath us, or yeah.

SPEAKER_02: 21:03

I mean, why why why would you not invest internally in your company like you do externally? And so I think that that's where the contract is it's not fun. I get it, but it's probably the most important thing you would ever do. And so I would just encourage your listeners out there, do not underestimate the power of being informed. And because that's what, at the end of the day, that's what this tool is doing for you, is informing you, you know. And so when we go back to what you and I talked about on this podcast when we first kind of started spitballing about topics, is you know, how many ways can a contractor lose money and how fast can he know it? Well, now we're kind of talking about the how fast can we know it because this is the data point that gives you that information. And you go look and you talk to the production team, you talk to the estimating team, and you try and figure out what went wrong. Because think about it, when a job goes wrong, if we're ruling out weather and a bad employee or a bad design, we've gone through all those bads and those aren't applicable. We've determined it's something we've self-inflicted here, you know. So who are we, who are we trying to go to and say, hey, affirm what they did right and redirect what they did wrong? It's either production or estimating, right? And and so how do we know, did they bid it wrong? Did they build it wrong? You know, uh, how do we know that, right? And so when you perfect construction accounting and the work in progress report, it will give you the knowledge to be able to answer those questions, which eventually gets you to that estimating reliability accounting or production accountability. You know, that's at the end of the day, we've got to hold the guys in the field accountable, right? You know, and so did we bid it wrong or they put it in wrong. And so that that's uh in and how fast can you know that? So we go back to the 20 manholes. If we find out the week after the job's over, there there's no chance to make right on that. If we figure out on manhole number two, the rest of the 18 are going to get done right, presumably. So so that I would say that you know it's not a perfect world out there going back to this cost and the billings as the project progresses. It's just it never progresses at the same rate because there's all these problems that can occur. And then this is uh occur and this is how it shows up or it manifests itself from an accounting tool perspective. Well, thank you.

SPEAKER_01: 23:30

That literally, what a great intro to the WIP report. And I'm gonna let you talk more and more on that because the number one thing I will tell you guys from an owner's perspective, it is the red flag waiver and it is your time utilization tool. Um, once you start getting a couple of crews running a few different projects or running five or 10 projects in a month, and you guys are spread out, you don't know where your time needs to be spent the most. And I I, out of my personal experience, and we're not tu-ty, timely, weekly. We are this close. We're getting it every month, we're getting there, as you heard from Dylan. But it is the red flag waiver for me. It is the, okay, here's this. Any change orders? No. Whoa, why is this going out, you know, going crazy? Is it gravel? Is it go out there, me with my production team? Hey, what are we using for? Okay, this machine, this machine, okay, what bucket on this machine? But for some reason, you guys are just way over on time. Well, dude, there's rock going on. Well, oh, whoa, whoa, whoa, let's go deal with that and and rock clause or or whatever the case may be. But that equals a change order, is where I was going with that. Right, right. But if I'm looking at the job and there's no change order sold, and I show up and they're and they're dealing with rock, what are we doing? That gave us an opportunity, not saying that's what we're looking to do. I personally would rather bid the job from a total turnkey perspective. Here's your hard cost, and I'd love to do it for that every single time. But I'm an underground contractor. We literally don't know what we're gonna expose and find. And so it's pretty hard to uh stick to an uncontingent uh contract. But before we go off a little bit further in the WIP report, and I wanted to mention how big of a red flag waiver it is for not just you ownership guys and you executives, but also to you project managers and you estimators. This is a tool your estimates, your estimator can help your project manager looking at because my estimator is obsessed with it. He wants to know if his project's coming back. Did he set us up for failure? Is he bidding too much, especially in a tighter market right now? And the one of the biggest questions that we're still kind of navigating in an overall grant scheme of things, we know what a direct and indirect cost is. But maybe the audience here, we've gone maybe just a little out ahead of our skis. Give us a little bit of talk and points on direct and indirect because uh costs that are associated with a project, because I have learned so much about what does need to be a direct cost. And as you guys are sitting here listening, you may agree, you may disagree, but from the standpoint of everything that you can job cost, job cost. I've heard you preach it so many times before, and you're right. Now, there is things that are overhead, and uh that's different than indirect. And I kind of want you to navigate that a little bit from a conversation because I think that is we barely know our cost. Okay. Are these guys, you know, you may be talking to a guy in business six months here or maybe five years? They're still just trying to zero out their cost. Don't feel bad, guys. You're ahead of the ballgame if you're doing it in year three and year five. I know companies still don't know truly their cost, but then we start throwing them at them direct, indirect, and we start throwing overhead. And we of course profit, everybody knows that one, but is your profit really your profit if you start throwing indirects in there and overhead and everything that it takes to actually make a job turn? Speak a little bit on that for me.

SPEAKER_02: 27:16

Yeah, that's spot on, man. Uh great question. So so let's compartmentalize your bid. Let's let that's the word I like to use to describe it. So we have direct costs. So let's just throw a few examples out labor, material, amount of pipe, amount of dirt, uh, concrete, asphalt, picketrate, uh, the labor, you know, all that goes into it. Uh now let's talk equipment. You know, this is still part of the hard cost here. You know, you've you've got um um you've got the fuel burn, you've got maintenance and repairs, you got all that. So that's got to be in there somewhere. Um, sorry, I misspoke. That's more the indirect cost. So, you know, Caterpillar, John Deere, Pick a Flavor, they've all been doing this a long time. So if you are like, how much should I charge per hour for my machine? I would encourage your your listening audience to reference the owner's manual of the piece of equipment, and they will gladly tell you what that cost is per man hour, or call up your local rental house and say, what can I rent this machine for? I don't care if you own it or not, bid it at that rate. Um, and that because that rate includes a variable for maintenance and repairs. And because if I went to any dirt or civil contractor at the end of the year and said, hey man, can you give me a good idea how much you spent this year on maintenance and repairs? Uh uh, did you have to put an undercarriage on it with that dozer? That wasn't cheap. You know, so so you you you can't don't lie to yourself and say that's not a big number because that's a big number. So, how do we account for that? So that needs to be in in the um the rate per hour that you bid the machine at. Uh so maintenance and repairs are one major oversight that goes missing in most contractors' estimates, is they leave that variable out. And um, the second variable that's an indirect cost is your labor burden. So think about it this way: when you when you pay a man a$100 bill for labor, what cost did you generate? So you generated all the FICA, the SUTA, the unemployment, the Medicare, all that. You also generated costs for workers' comp, jar liability. What about the insurance on my truck? What about the insurance on my backhoe? What about the insurance on my shop? What about the five million dollar umbrella that I have to carry for this client? Take them insurance, guys. I swear to God. Uh thank you for requiring that five million dollar umbrella aside. And so, you know, the so you know, I think a shout out to the person that uh or to the uh owner you work for that uh made you buy that five million uh umbrella.

SPEAKER_01: 29:51

We appreciate that for those that shout out to him sell the insurance here.

SPEAKER_02: 29:56

But no, seriously, back on your part on the indirect. So So where where are you putting that in your bid at, right? And so we we try to tie that to labor. And so you have a labor burden. And so if you were to, on average, add a most contractor's labor burden when you factor in even health insurance, let's throw that in there. That's a huge SPI. So I would say safe bet is 50% labor burden. So if you figure up a labor on the job and it's 10 grand, you better put another five grand in there for your labor burden. That's your true cost on labor. So, so that's the common mistakes we see missed just right off the bat is the indirect cost for labor burden and the maintenance of repairs on equipment. So if you compartmentalize your bid, you got the direct cost, you've got the indirect cost, and then you got overhead. You know, an overhead is one that can be a little tricky sometimes, but think of overhead as if I didn't have any jobs going, what are my costs to keep the doors open? Well, you got to pay the rent on the building, you got to pay the utility bills, you got to pay the clerical staff. You know, you've you've um, you know, those are typically, you know, if you add that up, that's going to give you some idea of what your overhead is for a year. There's a couple of different ways you can apply overhead. You can do it as a percentage on every project, or you can arrive at overhead number. And if you're if your annual overhead's 100 grand, then you go through each job that you bid and you you establish a contribution for that project to contribute to your overhead bucket for the year. That's a little bit more advanced way of doing it. Um, but um so and then you got profits. And so, so your guys that are listening out there, to your guys that are listening, you know, so think about it. You'll have all my directs, you'll have all my indirects, what's my what's my overhead contribution, and then what's my profitability? Because think about it, until you cover if your overhead side, let's just use you as an example. Uh, if your overhead is a half million bucks a year, until you make a half million dollars, you didn't make any profit. You ain't made nothing. And so how long, how quick did it take you to make that half million? Did you clear that hurdle by the end of May? Was it the end of August? Was it the end of November? Because if it's the end of November, the only profit you're gonna make is what you made in December. That ain't gonna be much. Good luck on that if you're a civil contractor, uh working anywhere in north of the Mason Dixon. So, you know, so um um, so you know, it's um overhead is a thing, so don't don't blow it off. Don't, don't, don't turn away from it. But that that would be a very quick uh synopsis of it for sure.

SPEAKER_01: 32:35

Yeah, the components of the you know, the next the next thing they're gonna throw at you, you know, the the one question I know because I was sitting there and I asked you the question, how the hell am I ever gonna win a job with all that on there? Well, guys, let me tell you, you know your cost. Well, we started with um I understand operating your business the way you're operating it without accounting for everything Nick just talked about, you are losing money. And that's one of those hidden um ways that we all lose money because we aren't applying all of the costs that are actually hitting the business because we don't actually know them, first of all. Second of all, there is folks out there that do know them, spreadsheeted them, and have got them out the wazoo, but don't know how to implement them, you know, say a husband and wife team like me and Sarah. I can straight up, she'd be like, How are we charging for this? And this is back in the early days, you know, started to split off, got some other crews, bills are flying, invoices are flying in the door. Well, what are we charging this to? Was this in the bed? And she was asking all the right questions. And back then, my ego, oh, you know, we'll just make some more on to the next one, you know, we'll figure it out. And I just spit out excuses instead of just building a system to deal with what I've got going on. And I didn't want to face the music of, no, that rental wasn't in there, and we were probably already over on labor before we rented that. And um, ooh, we actually had 10 extra loads of gravel. And those are the hidden ways. Because if you're not analyzing, let's not even talk about in the middle of the project, because I wasn't I wasn't there until in the last 18, 24 months. In the last two years, I'm really starting to dissect in the last year for dang sure, but it takes a long time to get to that point. And that's where we're we're gonna talk about implementing some of these uh work in progress reports, and there's some other tools that we can probably bring out. But the one of the one things that I've got to talk to you owners about just real quick, is your ego and accountability. And I've got to tell on myself because I was terrible at it. God, I was terrible at it, and uh I didn't even realize I was terrible at it. And there's a lot of there's not a whole lot of people that are gonna come into your office and go, yeah, you can sit there and tell me all that, Bub. You suck. I mean, basically, what these numbers are is black and white. And if you get to the end of the project and you're not analyzing what's going on within that project, whether you did great, whether you did bad. How do you fix the bad to make more reoccurring good? Or is it just all bad? And if it's just all good, okay, let's figure out how to repeat all of these good systems, systemize it even more, repeat, repeat, find the bads, of course. But um literally navigating onto the accountability piece is it starts from the freaking top down. And just like Mr. Kiwit wanted the guy on the very bottom to know the trick, the guy just walking on the job. He wants him to have an understanding, may not be as an in-depth understanding as the senior project manager manager, but there is visibility and transparency within, hey, you know, telling your guys' cost is going, hey, I bid 20 days of labor. That's it. 20 freaking days. We got to be tested, we got to be out of there, demobed, gone, no ifs, ands, buts about it. Unless we can sell a change order during this time to extend that time, you have 20 days. That starts into sharing the visibility and transparency from the front of the house. And if you're not sharing your production rates, and this is where I'm also gonna go with the accountability piece, is sharing your production rates before they get on the job. You first have to know your production rates. How do you get those? This also, this is also going off on all on to me because it's all about documentation while you're in the production. It's not about work you can do, it's about work you can document you've done. And especially being an underground contractor, it gets expensive if you need to go out there and prove your ego about, hey, the pipe is right where I said it is, or you can have some uh GPS shots or some you know benchmarked elevations with a laser, whatever it may be, you can topside without uncovering that piece of pipe. I know I'm getting a little far off here, but the accountability within the systems of the production team, once they do have that production rate, is holding them accountable to that production rate. And um, once they're on that job, they have that production rate, recording production data every single day. And if you guys need a tool, hit up Live Switch. I've got, or hit me up on LinkedIn. I've got a really fantastic product on documentation that doesn't even serve as an app out to your guys in the field. Um, but at the same time, the visibility of the production data back to the estimator as quickly as possible. That's one thing that I think we have done really well is we've used a software program, uh, shout out Monday, and basically the guys go in through their daily report, hit a link, and they fill out this fillable, pardon me, fillable form that cycles into Monday where Dylan can show up the next day, click on the Monday, this section of that uh Monday CRM and go, okay, Rusty had 160 foot yesterday. Jesus down here at Heritage had uh 200, and and go and compare it the next day. And so it's all of those pieces that we're fixing to talk about in the work in progress report because it sounds so easy. And it like you said, it is easy uh to talk about it, but to actually stick through it, do it, especially you guys that were hard-headed like me, that ran the other way for so long, and then you tried growing and then you doubled your gross and then you kept doubling, and now you're just sitting there in a whole pile of crap and you don't know what to do. And you don't even know where to freaking start to get back to what we're talking about. I will encourage you. I'm still in the middle of it, but I will tell you there is light at the end of the tunnel. And if you start holding people accountable, estimators, production team, you've got to be clear and visible. That's what our work in progress report does for us, gives us visibility. But talk about you, I mean, you've been doing this for 25, 30 years. You've dealt with all sorts of types of different owners, good ones, and I'd like to tell you reference bad owners earlier because there is just bad owners out there that never get this through their skull. But talk about the accountability and maybe some ways to start setting some accountability up within the estimation and production teams. All right.

SPEAKER_02: 40:17

So um let's talk about um I'll back up one one step here is typically when we go into the um uh contractor's office like you, and uh we present the program and you go, dude, that's what I've been looking for. And it starts off great. But then we do our little deep dive and we come back to you and give us the give you your first report and say, You suck, sir. There's there's a period of denial that happens. I I mean, and I've done this enough to know that I'm I'm just waiting on you to go into denial, and it's gonna happen every time because I'm telling you you're not making money, and you're like, Yes, I am. And I'm like, no, you're not. And you're going, yes, I am not. No, you're not. And so because all the things that we've talked about so far on this podcast, guess what? You didn't have in your bid. You had no indirect. You didn't even know what any of it was. You didn't even know what indirect was. Exactly. You thought I called you a bad word. Um, you know, uh, you dang sure didn't have labor burden. So all of these jobs, there was no, there was no um depreciation cost in there, which that's accounted for, by the way, in the production rates or on the the hourly rate on the equipment. So you and if you look at your income statement out there, uh the biggest number you're gonna see real quick is gonna be depreciation, which should be in the cost of the equipment, not in the overhead. But there's a lot of accounts out there that don't know that. But anyway, that's a big number. So you didn't have any of those variables in your equation. So you're looking at what you thought was a uh utopia of profit when once I applied all these other costs you missed, you were negative, not not even a little positive. So, so it takes a minute for me to convince you that this is what's really happening. And so the ego, as you say, is involved here because you're having to admit, I screwed this up, I didn't know, you know, and that's hard for a lot of people to do. I get it, I totally get it. So, so there's this period of denial. So I I would like for your listening audience to know you you're gonna be in a you're gonna go into some denial. I hadn't had I hadn't had a guy yet that didn't go into denial.

SPEAKER_01: 42:31

I did for I looked at you right square in the face and I said, I got the best damn production team you ever seen this side of Mississippi. Yeah, and um Mr. Newland looked at me and said, Go prove it.

SPEAKER_02: 42:44

Yeah, he um the other thing that Cy said was that all the all the the municipalities around here love me working for them, you know, and the reason they like Sai working for them is because he was doing it too cheap, you know. So, so uh, you know, and Sy thought it was because he was doing such a great job. And um, so you know, so tell the truth today. I know it hurts, it hurts, but it sucks. So, so that's the the the the reason that you go into denial is because you're faced with those realities, right? So the second part of it is, you know, or uh we can kind of mesh these together is the implementation of what we teach and and holding people accountable. And so um so you have you have to buy in as the owner and you have to help push the change because we're trying to change the culture of your company. It's gonna take two to three years to do that. And so if you buy into this program, but you go back to doing it what you're way you're doing it before, and you're looking at your staff and going, y'all do what Nick says, that's really not the level of buy-in I'm looking for. And I'm gonna challenge you too. It's not gonna work, it's not gonna work. Been there, done that. So, so owners out there, I'm talking straight at you, man. This is hard. If it was easy, everybody'd be doing it. It's not, that's why a few do it. So you got to really, really want it, and you got to be prepared for hard. So, how well did you do hard? And uh, there's a great video out there, by the way. It was either a University of North Carolina or North Carolina State, and um, it's the women's basketball coach, and she does a quick snap on how well did you do hard. It's the one of the most motivational speeches I've ever heard in my life. So encourage you guys to go out there and check it out. Wish I can remember names, sorry I don't, but it's it's an awesome three-minute clip. But you know, you gotta you gotta want to do hard, man, because this is hard. It's a grind, but you're gonna want to quit. You're gonna want to quit a lot. So I'm not trying to scare you, I'm just trying to prepare you for what's to come. And so so you've got the implement piece of it. So you got we got they're gonna follow your lead, side. So if they didn't they see that you're kind of halfway bought in, they're not gonna buy in because there's a lot of ripples in this pond of implementing this culture change. So we're even going out into the field and talking to your superintendents who are some blue-collar guys, and we're asking them to look, we're asking them to do some white-collar things in terms of capturing data production rates for the day, et cetera. They've never had to do it before. You're gonna get some pushback there. Why don't we got to do that? Never had to do that before. This is bull crap. So you're probably gonna lose some people. So now you've got to replace them right in the middle of redoing everything. So it's even more hard. So, so there's a lot of ripples in this pond, man. So, so from an implementation standpoint, I encourage buy-in and push, push, push, push. The second or third part is the accountability piece. And so the accountability piece is making sure that when we ask your estimate, estimating team to do certain things the new way, we ask your production team to do certain things uh uh a new way, your accounting team to do things a new way. We've got to get all three of those people in the same room at the same time and talk about estimates, talk about production. You know, what if the job's complete, let's pull them all in, talk about what went right, what went wrong. That's a good that's a good uh best business practice to do there. So, so there's uh so it kind of gets back to that thing I say in the beginning, estimating reliability, production, accountability. We've we've got to hold people accountable. And and I think this is kind of what separates really the most uh my witness of doing this for 30 years is with business owners, is those that are comfortable holding people accountable seem to excel quicker, further, faster. The ones that don't like conflict, that avoid conflict, um, I would say that's a major variable in this equation. So you if you don't like conflict, I don't know if this job is for you, man. Um not trying to hurt your feelings, just saying that's 30 years of experience talking there. And then and then the last part of the this is gaining confidence in what we're trying to get you to change. And so uh si is smiling right now. So uh as any any of my customers that I've taken through this process is because we go in there and we go, hey, in your estimating department, you've been leaving out indirects, you've been leaving out equipment rates, you've been, I mean, uh uh uh labor burdens. I mean, there's rental rates. I mean, you're leaving out all this stuff. So now you're like, man, how how am I ever gonna be low on a job if I'm I'm barely winning the jobs now? So if I bid like you tell me to bid, how's this gonna work? This is gonna be a failure. You know, so so that's also an expectation that I'm anticipating, maybe it's a better word for you, your reaction to this process. And so, you know, it you just gotta stick with it, you gotta keep doing it, you gotta bid more jobs. Uh you probably wouldn't bidding enough work. That's right. You know, you're bid more equals women. Right, right. You know, so you gotta, you gotta bid more. Um, and so it it just takes time. You gotta be patient and you gotta be persistent with the process. It just takes a minute, but but denial, accountability, implementation, gaining confidence in the new ways, man, that's I think that's probably the toughest part of it. You know, we'll go in there and explain the numbers, you're like, I never thought about that, and I got that. So, you know, people are quick to that change, but um, these uh human behaviors here, it seems to be the the harder part of it. And so, you know, I guess I'd flip it back to you a little bit. You know, people as we've walked you through this process, I mean, you felt all of those things.

SPEAKER_01: 48:31

Oh my god, dude. I felt so many different emotions, especially over the last 18 months, it's been brutal. I've had key people just up and leave. Um, because what most of the team doesn't understand as you're walking through this period of time, they keep telling you they're tired of the chaos, they want more structure. But in order for you to implement any type of structure and systems, it gets even more chaotic. And you're right, the team's in the field, we've just been running right along, doing jobs best we can, you know, old boss, you know. And now we're asking them to, hey, we need you to stick to this number. Well, I've never got that before. What do you well that's this is what we need you to uphold. And and the whole tone changes. It's not that you don't care for them anymore, because a lot of people that I've truly, truly loved and cared for that have been with me a very long time have either walked away or needed to exit because they they're culture killers and they don't want to buy in and they want to tell me one thing to my face, but then go right out the door, not even get out of the building and start talking about complete opposite of how dumb or how this is silly or this is so stupid. I don't understand, this isn't gonna help us, and just all of that. I learned uh at Dirt World Summit, shout out to the BuildWith team uh last week. It was um toxins, what toxicity is within your business, and it is repeatable, unacceptable behavior or attitude. And when you say it like that, it's a totally different look. You start looking at things a little bit differently. But during this process, the one word I would have to say is uncomfortability for ownership, your project managers, because it really starts shining light in different corners of the business that has never shown light to. Because usually you got the owner just like me. I mean, you saw it. I had, shoot, dude. Back then I had six or seven people, maybe eight people in the office, and everybody was kind of just running their own way, and nobody really was on the same page, and there was definitely no document to keep them on the same page to bridge them from the front to the back of the house. And um, it was just everybody running each way, and here we go, let's grow some more, you know. And you don't know what you don't know until you start reaching out, but there gets to be a point, every single contractor I have seen. I talked to people that are in my shoes straight on the pathway, 10 times more equipment than I had in shorter amounts of period. And I'm like, let me just have lunch with you for just a minute. Let me please just listen to me here. You've got to find structure and systems. You keep adding these people, you keep adding and adding, and it's it's a lot about deleting, not adding. Um, Tim Grover at the same convention last week, he said, uh, do you know what happens when you get your crap together? And we were all kind of like stunned, you know. Um being, well, everybody tells us as entrepreneurs when you get our shit together, you know, every single day. Right. Somebody, somehow, you know, whether it's your spouse or whether it's your guys. But at the end of the day, once you actually get your crap together, you have a pile of crap. And it's not necessarily always about adding. And sometimes it has to do with deleting. And the first thing on any civil project, any civil project, I don't not even just civil, I'm talking about any type of commercial. Anytime you're gonna bring something out of the ground and build it, the first friggin' thing we do as civil guys is we strip and grub. And then probably gonna cut, you know, six, six inches to two or three feet, depending on maybe ten feet, depending where you're at in the country. But what I'm getting at is you're going to remove first always. Anytime you're gonna have something built within a new raw piece of property, you've got to get the bat out and allow to have that solid foundation built, right? But as a smaller entrepreneur, chasing revenue, chasing revenue, chasing revenue, because that's that's all we know. You know, we need these big numbers. We won't, we wanna we wanna have all the things and we want to have it right freaking now, because if you're like me, you gotta have it right now. You can't just slow your way into this and strategize your way into this. But I thought that was such a great analogy. But the one thing that really stuck out to me is that removal always causes disruption. And you have to be prepared for the disruption. I wish you'd have prepared me a little bit more, but I was to your defense, I was in denial, but I was also so bought in so quickly. I hope you would agree there. Yes, yes. But it was that starry-eyed, I want everything you're saying I have. And you gentlemen were sitting there, saying, You got a lot of work to do. And I'm like, really? No, you know, in a couple years, you know, everything be fine. And, you know, we're just now getting to that point. And I believe it would have definitely helped if the economy and the market was booming just a little bit better, as you've served across all contractors across the United States. But at the same time, I do believe next year's gonna be a little bit a better year. We've spent all of this time leaning up a little bit and and removing, and that's where I was going, guys, is those guys that aren't helping you bring in profit to the company and their legs and arms, but it may be an ego thing. Earthwork, commercial earthwork. And Nick, you could probably agree with this. I mean, there is big outfits, there's old-timer outfits, but they've been doing it a very long time and they have the tools and they can get cheap when they want to. And the commercial earthwork space, there's so many keys to doing it efficiently in order to make the money, I think that's right. Estimate, uh, you know, the production, all of it, right? And so, you know, I've always been a pipe guy, but three or four years ago here in Northwest Arkansas, and this is kind of to the denial and accountability piece, and I'm gonna show tell of myself. Right. And, you know, three years ago, basically in our market, if you weren't handing these comfortable GCs, a earthwork, water sewer storm, storm drain, um, asphalt, curb sidewalk, irrigation sleep. Well, I mean, everything they ain't even calling you back. And so that's why we went so hard off into this. We were just figuring out the pipe game. Hadn't figured it out, obviously, or we would have had these things instilled. But at the same time, we're like, oh, I gotta have dirt. So let's go buy five dump trucks, let's go buy the most expensive dozer on the market. And I know I'm talking to you guys because we're so purchase happy. We're ready to just go pull the trigger. Because now, especially if if you're anything like myself in the first four, five, six years, you figured out what business credit was, and you can just go sign your name and you're off to the friggin' races. And it's so dangerous. But at the same time, it's unbelievable that we can do it in this country. But anyhow, getting a little, little off subject there. Um we come to this day and age, and there's a lot more GCs in the area, a lot more land developers, and they're getting a lot more picky nowadays with their numbers, and they can because there's more of them, and they're all fighting over the same jobs. And and so I made the tough resounding call by knowing my cost, by looking at whip reports over and over again, by analyzing projects at the end of them and going, man, I really don't make no money doing earthwork. Earthwork was kind of an ego game. And once I set my ego aside, I really like that dozer. And I really like him 20 trucks rolling in out of that job, and everybody calling me around town and going, Hey, Sa, that's that you guys over there. You bet, you know, you always want that. That's what you work for. You want, you know, but at the same time, I would much rather run in there, put two hydrants on, and run a hundred foot of sewer main and make 40% and get out of there, and nobody even know I was there. Now, now, but I have made the tough call of chopping off our earthwork arm because I have been doing exactly what we've been discussing today and chasing my cost and trying to figure out what is profitable. And that's so hard for me to say. But heading into winter, as as some of you guys have may have already seen from the audience level, that I've had my dozer listed if you follow me on Facebook or uh I think it's on a few websites, but that's besides the point. Um, man, I can't sit here and preach it. And I can't sit here and have people that, you know, Nick's been a part of what I've been doing for the last two years and has really truly been by my side and helped me and been there for the late-night phone calls of going, dude, I can't land a damn job. You screwed everything up that I'm doing. No, si, just hang on. I'm freaking telling you. Now we can start messing with margins and doing things now that we have a good basis of cost, but don't you dare go start messing with cost. Cost is cost. That's right. Dollars a dollar, like for the love of God. But man, it was tough. And I held myself accountable. And I put I put some deadlines on myself, guys, through the years. Uh, I'm sorry, through this year dealing with this said issue because it wasn't I just woke up thing. Right. This was back in June and July. I'm like, man, you know, March was supposed to be the big, the ban. Then it turned into July. And I was like, all right, all right, by July 15th, we ain't got something landing. We had some good little work there over summer, but nothing to write home about. Like, no big meat and potatoes. Mainly it was going in behind other contractors that misbid their stuff and doing it hourly and fixing it up, and that's that's what we have always been good at, it seems like. But I had to basically make a decision by October 15th in my head was this is D-Day. And October rolled around, and there's still pipe guys got some subdivisions rocking and rolling. We're picking up some small pipe stuff through town in the 30 to 100k stuff, you know, just rocking and rolling on this small little stuff. And I'm like, wait a minute, we're not stacking a whole lot of payables here either. Because there's when you start doing this on a larger scale, guys, the invoices and the amount of accounts payable, and that sucker starts getting to a couple hundred thousand a month, stuff gets serious very quickly. And the weight that from subcontractors and vendors and every uh all the accounting department or anything else extra that your guys want that you promised bonuses all the things it's just an absolute weight that you have to carry and if you can find a way to do business without holding all of those payables say you do the work they supply the materials but maybe you have all the equipment and the knowledge and the know-how that's worth its weight in gold compared to anybody can go buy material but line up with the relationships that I talk about every single week on this show relationships are everything there's always a witty solution to your problem not a wallet solution that's been been kind of my new thing and I used to as the revenue was growing and just running off the charts just throw the wallet at it throw the wallet at it throw the wallet at it and when you're not tracking any of those wallets my God it's hard. So the sorry I'm a little all over the place because that was that was tough to tell you guys honestly but I'm just trying to be open and honest and transparent and vulnerable um with this show and trying to be just flat out honest like I'm trying to also do what doesn't you know what works not what doesn't work. And black and white through what Nick has been sitting here teaching us today is exactly how you know it's it's it's being honest with yourself.

SPEAKER_02: 1:01:31

I mean you're I mean you're being honest with your listeners now and I'm sure they appreciate that but you know you're up you got to be honest with yourself first you know and that's the the ego break that you speak of you know it's a um it's it's not an easy road you know it's um it's tough as we spoke about before you uh but kudos to you for making that making that choice and uh you know because I think a lot of times and and uh I'm stealing this act uh statement actually from your uh estimator uh Mr. Cecil shout out yeah man he uh he called it revenue drop and I've never heard that put that way but a lot of contractors are revenue drop I would have that is a great term I was at one point 100% yeah I don't I don't and I could care less about how much revenue you're doing I want to know what what's the bottom line look like let's talk about that you know so to say you're a five or ten million dollar contractor woo-hoo but um are you making 10 or 20 yeah percent like or what's your uh what's your what's your net profit on that yeah now let's now we're gonna see what everyone's got when we start talking about that part of the equation nobody seems to want to talk about that so um but anyway uh revenue drunk was a great new term for me and I've I've used it excessively over the last couple months so shout out to Cecil for that but um but uh but yeah man it's just um you guys just got to make the decision if this is what you want to do and and uh find the right teammates to team up with and um uh be willing to pay the price I think what you said a while ago was so point on uh so on point in that yeah you were you like what I was putting out there and you you agreed to hire us and you know put us to work but I don't know that you quite realize what you signed up for. Not a freaking clue. And um and a lot of times I don't tell you that on purpose because if I told you that you might not do it. And um uh I wanted you to do it not because I was gonna make money off of the of the what I do as I wanted you to be successful. And uh so that's what drives me is uh looking back and seeing all the people that we've helped. You know that's that's um that's probably better than than the money part.

SPEAKER_01: 1:03:41

So it is yep and so uh now that I'm doing it through a little similar to the feeling that you get is that when I get an Instagram direct message or I get a LinkedIn message or I get an email or I get a a a reach out through the website whether it's here whether it's on YouTube whether it's wherever it is between the podcast and the and the other champ main channel. But anyhow, I'm truly helping people just being by vulnerable and sitting here talking to you about things that I sucked at and being open about it because there's so many other prideful people you know there's people call me stupid for doing this but I truly want to change this industry and this and if we don't we're kind of hooked yeah you're but the trouble but the the vulnerability of putting yourself out there I was where I was going with that is it's very shameful. It's very embarrassing and you put yourself out there on a naked silver platter for everybody in the room to look at over and over look right up your skirt and I'm talking about your financials obviously but you start bringing out those financials and you got to start talking about those line items and you're like I have no idea how that line item has got to be that and then you start digging into that line item and you're like we're spending what on what? And you start narrowing down at your costs but I can sit here from uh our fractional CFO today in the last two months we're not positive and it's take and that's before I've caught it's you know finally sold this dozer here but um it's fixing to be on like donkey call like somebody finally told me and I have as you know in shopping the overhead tree very hard to do people are hard that's what makes it so hard is that you love and care about these people so much and you're killing their dreams a lot of times I killed my dirt operator's dream. This was his dream and I provided a way for him to have a dream but at the same time if the dream doesn't help the company make money it's hard to to afford that dream. And so you've got to be able to dissect every angle and arm of your business and and this is how you do it is start out by good estimates track your production and ensure that you have accurate and timely accounting back to everybody else so they can see but no that's what I wanted to touch on man through that denial after that denial then you find out how stupid you looked during that denial phase and then you're even more embarrassed and you're more shamed to even have then you start shooting people out of the room when people show up and then you're going back opposite so it's tough. And then there's people that they just don't like they can't stomach what they're hearing they're gonna walk out the door and that's okay too. You don't need them let me assure you guys you don't friggin' need them I'm sitting here with two main people in the office me and my wife in and out of the office obviously I'm there majority of the time but tracking estimates better than we ever have tracking documentation inspections and and that's a lot to do with software and a little bit of AI integration and and and making systems is what I'm going back to. And even on the small things that are reoccurring problems. Yes we're talking about overall projects here we're using whip reports but the small things about you could have been greasing this bearing this whole time and if you had an inspection report telling you that all grease parts got uh inspected every day and you know the last guy that stopped doing the reports that's been running the machine, you know that guy hadn't greased the machine in 10 days. And that's probably why the bearing went out or the pin got hot or whatever the case may be. But it's systems of accountability not just in the financial aspect not just in the production aspect or accounting aspect. It's even in the mud dane tasks that just come with the industry and you have to start literally identifying the problems it's usually the thing that your phone rings 25 times about a week start there and then start working your way down all right I'm hearing about five or 10 times a week about this. Okay, let's go back dig in but I I know I may be going off on a little tangent there guys but it's so freaking critically important to not just your company but to your own mental health. I've been through the ringer Nick has heard me, seen me uh in some really bad states of mind. But I want to give you a little later light at the end of the tunnel because I know I just punched on you pretty hard you do start to gain confidence. And that was the last piece that Nick said is that in a testament I just want to share this is that you start to gain this unexplainable confidence within your numbers within your estimators within your production teams but you're not relying on people is what I wanted to get across is now that you've got this system, estimator God forbid doesn't show up tomorrow, we've got a system CRM here's you know the context here's what we're talking about here's our file structure system this is how we get a bid out the door and hopefully somebody else can be and that's not from a replacement factor. I don't want anybody sitting there thinking that in their head but you have to have that system if you want to grow that how are you going to repeat it if you don't anyways I made that mistake where I was just oh let's grow straight as fast as hard as I can I had some underlying issues about running away from a previous uh business partner as you know but I had to create a revenue monster but at a certain there's a cap to it as long as there's profit profit pays off then not revenue. That's right. And that's what it's very hard for new business owners to understand.

SPEAKER_02: 1:10:00

Well and and you you positioned yourself greatly for the revenue that's to come in 2026. So now you are much more capable of growth in the and before you were not capable at all. You had a credit limit that gave you some the that gave you a little bit of rope to hang yourself with that's right and you uh you tried really hard to hang yourself. So um um so but now you you're you've reset and you've you I loved your analogy about uh the undercut there we've uh got rid of some stuff and well we're leaning mean and we're ready to bring on the revenue and we're gonna be able to attack it. We're gonna be able to track our cost and know as the projects happen and what's going on. So you're million miles ahead of where you were when I met you just now you're ready for the revenue and um and and I think that you'll do a a much better job of it this time than you did the last time but you know you just don't know but you don't know you know and so I would another thing I want to put out there to your listeners is that you're in the majority. You are not in the minority. You're in the majority so all of your listeners out there that are relating to Sci right now don't think that you're by yourself on an island. No there's there's not enough room on the island to get all the people out there to like you. It's more like that. The island that don't have many people on it is the one that's got it figured out.

SPEAKER_01: 1:11:27

Not figured out but trying they're building a bridge to their own island.

SPEAKER_02: 1:11:30

Yeah that's right so so don't don't beat yourself up too bad just uh just take the bull by the horns and and um and make it happen you know so we're gonna we're gonna test how bad you really want it and so that's what I've witnessed with you Sai over the last few years is and Sy has called me for some uh counseling but but um you know I I could tell how bad he wanted it and and that's usually the number one driving motivator for most business owners is how bad do you want it because it's only going to crash and burn if you quit you know you throw in the towel you know it's it can't even be an option it is in your head though like every day like there's some points of this that I was just like emotionally just shot from people that yeah like people that I loved cared about told me to my face oh I'm gonna be here for life blah blah blah blah blah but can't handle a little change and transition thank God I'm doing it you know you said I remember year five to year 15 some folks figured out closer to five some close figured out to 15 some they've never figured out and figure out how to make it and I was in that year seven of throwing my hands up like I need somebody to help and also to a testament here so I had the wrong help.

SPEAKER_01: 1:12:53

That's also a really big factor to like I got there was no guiding rails for me. It was everybody that I went to help with it's like I climbed a mountain to get to them and they shoved me off another cliff that I had to figure out how to climb. And it was over and over again and it's nice to gain confidence and actually be standing within a foundational standpoint of if I wanted to grow, I don't know if I ever want to grow again in my life from what I've gone through. I'm now back you know to a standpoint that I get to be out in the field more. I get to do more of this media stuff for the listeners at home and produce more content and and and use this 10 years of experience as a vehicle to help them hopefully skip two or three years and I can catch them at year four and five before they ever crest over that year five mark and start signing their name to everything and I've got all this work for the next 12 months but they ain't looking out past 12 months. They're just well that customer what if that guy moves in takes over your work what are you going to do then with the 17 track goes and all that use I'm I'm exaggerating here, but you have seen multiple times these people get in oh this guy told me boom we went straight ball balls deep and I've done it too I mean straight up I have believed what a one guy was saying but if we can catch those guys a year four years three there's so much to be it's you can't even get into this in year three in my opinion I mean you can I would love for you guys to all start with this if we're starting tomorrow. But I was just talking about this on Sycon's main channel today on the way back there is so much coming at that business owner in the first two years and it's just such a fear. It's like you're scared to death of everything. You're scared to death to hire them. You're scared to death you're not gonna have enough work you're gonna scared to death you're just gonna quit you're scared to death what your opinion of their company is going to be you're scared to death of taxes you're scared to death of actually doing the job the guy not going to pay you like everything is fearful and then every two to three weeks there's somebody calling you going hey you didn't pay this do you know what this is hey do you know what this is so it just takes some time to get your freaking skis on before you're even skiing down the slope. Once these guys start revenue and some money you get over a half million dollars you're doing some here guys start concentrating on these pieces of the puzzle especially anybody that's diverting from boots on the ground one to one and a half crews if you're going two crews more than that get a whip report in place not only for yourself but for these superintendents tracking these jobs in your estimator and that's kind of that key point but if we can catch them Nick at year four, year five, we're gonna have exceptional plumbers, exceptional electricians. We're not gonna get these ding dongs that show up at the house to fix my ceiling fan and it takes them four hours and charge me 8500 bucks to replace my whole breaker panel we're gonna get actual master electricians because we're gonna produce so many of them because we're gonna create unbelievable companies for them to go work at to go to school at and and literally create the trades and reinvent the trades and if we can equip not just the owners but the guys below them with the tools that they need to go fight the cringe of the normal industry and be the minority man that's what I've been waving the flag for a long time. While I've been going through all of this change I've also been doing YouTube and this podcast and trying to be daddy and trying to be hubby and it is a lot and it is more than most people are ready for.

SPEAKER_02: 1:17:00

But if you are willing for a little bit of change and you're so ready for it you can't see straight and you don't know where to turn to where can where can they reach out to you Nick um my um um office is in Northwark Arkansas it's uh Sterling C Chris Pritchard is um and so we have a website you know my smiling face is on there our team members uh all of my contact data is there so feel free to reach out there and uh be glad to visit with you and see um see what we can help. You know it's one of the things you made me think about something else there is um so back in high school I was a lifeguard and you know what they would teach you about a lifeguard uh one of the main things was to don't immediately go try and save the person because their adrenaline is flowing so heavily that they will grab a hold of you and drown you and drown you. And so you got to let them go under and let them get some of that fight out of them and then go save them. And a lot of times what I find with contractors they're kind of that same way. You know that ego thing that deniability their denial so I really want you to suffer a little bit bad as that sounds before I before I roll in there because um I need to I need to get a little bit of that fight out of you from you think you're doing it right standpoint. Otherwise you know you're not going to listen and buy into what we're talking about. And this isn't something we read in a book inside this this is a tried and true method. So I'm not saying that I won't learn something new I'm I'm I'm not a know it all by any stretch of imagination. I'm just everybody this is a this is a tried and true um this is you know model business model and so it's not a it it it works because we've done it a lot and so um uh with the help of my good friends Richard Nealand or Rick Ferguson Cobb and associated the man he's the man he really is to Richard and his team all of his uh ladies there in the office and guys that you know Miss Crystal sorry is ours give you a little shout out hopefully you watch this and so uh so anyway um thanks again man for having on I I really enjoy uh sharing some knowledge here and hope that it does help some of your listeners out there because it it's um it's a hundred percent guarantee that most suffer from this affliction so um I would say that there's um most of them uh this is hitting home with blue collar performance marketing's passion is to bring attention to the honest work done in blue collar industries through effective results driven marketing tactics they specialize in comprehensive digital marketing services from paid advertising on Google and Facebook to website development and content strategy I started working with Ike and the team earlier this year and they've had a huge impact on our specific marketing campaign and trajectory of our overall company.

SPEAKER_01: 1:19:53

Their expertise in digital ad management website development social media and overall marketing strategy has been an absolute game changer for our sales and marketing at SciCon. If you're looking to work with a marketing team who does what they say, does it well and is always looking for ways to help your company grow, book a discovery call with Ike by going to bcperformancemarketing dot com backslash BCB podcast or click the link in the show notes slash description below. Thanks guys. Well since you've already answered your first guest I've never been able to ask this question to because you've already answered it but I'm going to kind of flip the script here just a little bit on you. And normally I ask about you know what's a key takeaway for that blue collar worker who's sick and being stuck in the mud but I want to talk about what's the key takeaway for that entrepreneurial contractor who's listening today that has absolutely met the end of their rope yes they can reach out yes they can get their process started but what would you say to that guy or say the sci Kirby that you first met denial in his office what can they start working on other than lowering their ego and what can what can they be looking out as or looking inward is the word I'm trying to look for as the leader what can they start working on themselves to hopefully better themselves to run their company I think it all comes back to accountability.

SPEAKER_02: 1:21:24

I mean that's that's where the rubber meets the road uh nobody likes to be held accountable nobody likes to hold people accountable so first of all's got to start out with himself and hold you got to hold yourself accountable um before we can start talking about others and so um that's gonna cause you to do some soul searching we're gonna get the mirror around in front of you we're gonna put the mirror right up in your face and you go look at yourself for a minute you're gonna be forced to deal with some things that you probably don't want to deal with man. And um so you gotta you got to really start there um because um I think if you're willing to hold yourself accountable um and you buy in and then when the hard comes along you're much um much more apt to be able to handle the hard because you're holding yourself accountable because what do people that dog their accountable self accountable do? They quit they they said screw I ain't doing this no more so that's easy that's easy man that's freaking easy so so my challenge maybe would be um uh don't don't don't whuss out you know don't don't don't throw in the towel don't don't be a puss yeah don't be a puss be be hard man um um that's the difference between the successful businessmen and the ones that are not they're they're uh they're willing to pay the price and so you gotta you gotta recognize that about yourself and so looking inward and holding yourself accountable and uh I think if you do that great things will happen.

SPEAKER_01: 1:22:56

I love your mirror analogy and I'm gonna I'm gonna hop on your mirror analogy for you guys. I know pretty much all of you guys I'd say I can't say all I'd say a majority of you guys listening are married or you've been in a woman's bathroom and they all have a makeup mirror and that makeup mirror has two sides to it. I didn't get this this is Randy Corvette uh shout out to him um went at home out of his book and in that makeup mirror there those women they love to stand in front of the makeup mirrors and at that 5x side it really what does it do it enlarges the blemishes within their face and sometimes I think that we look in that side of the mirror so so often that it's not that big of a deal we do with it. A lot of ladies do they throw a little makeup on rock and roll but instead of setting the discipline and I know I'm relating this to makeup but literally instead of setting the discipline cleaning the face normally is what's needed to clear blemishes which is the hard thing to do right strip away whatever's needed. But if you flip that mirror over on that 10x side oh it starts really glaring you in the face at these blemishes and you're like this really is nasty and ugly and well if you're looking at it through a 10x lens and I would challenge you guys today throw that 10x mirror on. It is not fun. You are not going to like seeing the other side of that 5x to that 10x but start working away at those blemishes get on a cleaning regimen get lean and fight. Just fight fight for yourself fight for your family fight for the people that are willing to stand through with you through this transition and it's gonna be the ones that you don't even freaking think it's gonna be the guys that you think well he's gonna be gone in two months he'd be still here in two years and I can tell you I just went through still here and I'm like man I thought you were gone at the first smell of this you know and half the guys that I thought would be here they they they even looked in that 5x one time they're like psh deuces so I encourage you guys Mr. Peters thanks so much. Yes sir I really hope uh this this helped the audience as you can tell I'm pretty passionate about helping these guys and uh you have been such a wonderful help we have got to get Mr. New Luna here I thought about that when I pulled up in the park you you got to send him this one we're gonna do it and we're gonna do it now that we're on his subject matter oh yeah we hopefully can get him in here and you guys be looking out for that uh if you guys made it through the whole episode check it um check out any other episode on any of our podcast streaming platforms at your Spotify Apple iHeart Amazon or you can listen directly from bluecollarbusinesspodcast.com and you don't have to have a subscription you can watch or listen completely free from there go check out Thumbtack if you're looking for some type of lead generation within a home service business they are the people to hook up with to start getting some leads back through your business. Can't thank Mr Peters enough and guys until the next one you guys be safe out there. If you've enjoyed this episode be sure to give it a like share it with the fellas check out our website to send us any questions and comments about your experience in the blue collar business who do you want to hear from send them our way and we'll do our best to answer any questions you may have. Till next time guys