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Transcript 

Dominic (host):
Well, here we go. Welcome to the Profit Tool Belt podcast. It’s just for contractors. Now, if you serve commercial or residential customers and you’re interested in the business of the contracting business, then welcome home. See, we haven’t met yet, but I know there’s something in you that’s looking for information on the business of contracting and construction business, and this is a very unique place in the world where that’s all we talk about. My goal is for you to become a business person who just happens to be a contractor. If that lights a little fire if a little spark inside your head goes off and you’re like, “Hey, I need that.” You’re in the right place. This show’s all about getting to the next level. I want you to move from – how have other people said it to me Dom – this is about going from chaos to clarity. It’s all about simple systems for running the business like a business person. So we don’t talk about tools, we don’t talk about nails, screws and fasteners. We don’t talk about any of those things, none of those. What we talk about are business tools, the tools of time, team, money, growth, marketing, sales, all of those tools that help you run this like a real business, and to help us with that, today’s guest is Kathy Svetina. Now I mispronounce her name during the interview, and I apologize to Kathy for that. Kathy is a fractional CFO. Now you’re shaking your head. You’re like, “What the heck is that? What’s fractional and what’s CFO?” I’ll start with CFO. A CFO is a chief financial officer. So you know, in accounting, the accounting side of our business, we’ve got a bookkeeper. The bookkeeper deals with the day-to-day transactions. Then you’ve got an accountant, right? And the accountant deals with maybe getting you ready for tax preparation. And both of those professionals look towards the past in your financials. Kathy Svetina and CFOs like her, chief financial officers, actually look towards the future with your finances. It’s a very different strategic place. It’s a different kind of accountant, if you will, very much future-focused. And the big companies already have chief financial officers, to which you will say, “Rubino, we can’t afford a chief financial officer. I can’t even get a foreman.” Okay, that’s where the word fractional comes in. Fractional means that experts like Kathy work with a number of companies a little bit at a time, so you get a fraction of her time. Now, there are fractional CFOs all over the country, and definitely in your city or your state or your province or wherever you are in the world, there are fractional CFOs. Kathy is the expert I chose today because I went looking for her, and she has an excellent library of material already out there, and that’s how we found her. So today, what we’re going to be talking about is, what is a WIP report. Now you’re going, “What the heck is a WIP report? Rubino, you’re confusing the heck out of me.” Yes, I am. And the reason for that is, I want to take you back to the reason for this show before I explain WIP report, this show is about the business of the contracting business. I want you to leave this show moving towards being a business person who happens to be a contractor. So now let’s go back to the WIP report. A WIP report stands for Work in Progress Report. You see, if you want to get a good, solid picture of your finances and of your future, you have to understand what’s the work in progress that’s moving through your company look like, and what’s the financial impact of that. Now, if you’re on the smaller side, and you’re like, “Hey, listen, I do my accounting out of my checkbook, you know, whatever’s in savings,” that’s okay. One day, especially by listening to a show like this, you’re going to be in a case where you’ve got bigger jobs with bigger cash flow implications. That’s what a WIP report is. Kathy’s going to show us about that today. So the topic today is, what is a WIP report and how do I use it to get better at managing money and projects? Oh, heck of an intro so far. So why is the episode important? Because for some of you today, you’re going to learn even more new words. They’re the kind of words you only learn about when you’re in growth mode. Now we’ve already talked about words like CFO, which is Chief Financial Officer, but today, Kathy and I are going to talk about the differences between a CFO, who’s very forward-facing, and your accountant or bookkeeper, which I’ve kind of mentioned already. You’re also going to learn about this WIP report if you’ve been curious in searching for ways to understand how to better forecast your business while taking into account jobs that are already in process, whether they’re on paper, before they hit your machinery, before they hit your crew, before they hit your inventory, all the way up to manufacturing or construction or assembly or job site, this episode’s for you. Now, here is the other reason this episode is important, and I’m going to whisper this one. Okay, the odds are slim to none that none of your biggest competitors in your city, in your county, in your state or your province are using a CFO to generate WIP reports. That means you know something they don’t. That’s why this is important, and you might go “Dom, how the heck do you even know that? You’re not where I live. You’ve never seen where I go for coffee. How would you know that?” Because myself and my team, we talk to hundreds of different contractors every single year. I don’t know, do the math. If we just do the math on me – now that doesn’t take into account conversations that Lee or Jake or Ryan have, or anybody else in the company. Just look at me. If I have 10 brand new meetings a week, 50 weeks. So I might talk to 500 contractors, one-on-one a year. That’s just me. That doesn’t take into account the conversations that Lee or Jake or Ryan are having. So think about that. And then we talk to companies that have sales that are 200 million a year, 2 million a year, 20 or $60 million a year in sales. They’re out there, especially in contracting. But I also talked to companies that are doing 200-250,000 a year in sales. Actually, here’s a cool story. Last week, I was in a coaching meeting where a company that I work with was approached by a French bank, okay, who represents a European company, European contractor, who wants to expand into the United States. Think about that. So I’m meeting with a client. They’re up in the northeast, right, northeastern part of the United States, and they were approached by a French bank who represents a European contractor who wants to expand into the United States? If you see your world every day as I get in the truck from my house and I drive to my shop or the job site, it’s bigger than that. Companies want to get to the United States. Companies want to get to Canada. Companies want to move to Australia and New Zealand and the UK. And the way they do that, these big companies, is they want to buy somebody who’s already in place running a great business. And by the way, you get a premium if somebody’s buying you strategically, that’s a completely different topic, another part of Dom’s brain, another set of experts. We’ll do that in the future. I always challenge myself and my team to find us guests and topics that you normally wouldn’t have access to or even think they’re important. Since this show’s all about the business of contracting, we have to look at this from multiple angles. So today, Kathy’s going to show you an angle you probably never considered. If you’re interested in this kind of conversation, if you’ve been dying to have these kinds of conversations, if you want to learn about how we work with business coaching, shoot me a text and all you have to say is, “Dom, let’s talk.” Text message. “Dom, let’s talk” my cell. I mentioned it already, but it’s 315-903-7853. Look, there’s simple systems to help you run the business, make the money you deserve and live the life you want, and those simple systems give you that quiet confidence. This is what quiet confidence looks like, please. Wherever you are right now, sit up a little bit straighter, put your shoulders back, lift up your chin just a quarter of an inch and take a deep breath in and then out. That feeling is the quiet confidence of a leader who runs their business with predictability. They’re not in chaos. They are in clarity. They are running a predictable company. Shoulders back, chin up, deep breath in and out. That’s where I want you to be. Now, this show is all about the mindset of growth and the tools to get there. Now, speaking of mindset, I have a couple of dad jokes for you. Why dad jokes? Why bad jokes? And DOM, why the heck do you do dad jokes? Poorly delivered with poor timing? Because I want to get you laughing. I want to get your mind open to the possibilities. I want you to get a call from a French bank representing a European contracting company who wants to expand into your country, crazy times that we are in, and I want you to have that. So here’s a couple of jokes in honor of Kathy and her financial background, we’re going to do some financially themed jokes, right? You know why the bank – I can’t even do? Okay? Take a sip here. Hold on. Why did the banker switch careers? It’s so dumb. Why? Why did the banker switch careers? Well, she lost interest. Why was the math book unhappy? Well, it had too many financial problems. You know, I’m delivering these right now trying to do it with a straight face. I’m already laughing, which probably doesn’t help, but I got to tell you, the vision in my mind is that you as a dad or a grandpa or a mom or a grandma or, you know, the world’s best aunt or uncle, you’re delivering this to little kids, and they’re just squealing with laughter and running all around. That’s what I see in my head, especially this one. Hey, what do you call a dinosaur that’s good with money? An invest-a-saurus? So,

Dominic (host):
Hey, listen, once upon a time, I’ll tell you a story. Now, once upon a time, there was a wise and clever old farmer. This is for all of you in the agricultural part of or agriculture or ranching. Once upon a time, there was a wise and clever old farmer. He wanted to have a horse on the farm for the kids to ride and play with, right? He’s a good dad, good grandpa. He wanted to have a horse on the farm, so he had one of his neighbors, and he bought that guy’s only horse, and he paid 100 bucks for the horse. Of course, he gave his neighbor the money in advance and said he’d come back to get it the next day. Well, he went back the next day, and the neighbor told him the horse had died, and even worse, he’d already spent the 100 bucks. The old farmer just scratched his head. Thought about it for a second, said, “Well, I’m still going to take the dead horse, okay.” Well, a couple days later, the neighbor sees the old farmer in town. So neighbor says, “Hey, what’d you ever do with that old dead horse?” The farmer says, “Well, I ended up selling that dead horse for 500 bucks.” Of course, the neighbor asked, “Well, how the heck did you do that?” The old farmer said, “Well, I went to a county fair a few towns over, you know, set up a booth and I offered the horse through a lottery. Tickets were five bucks. I ended up selling 102 tickets, and in the end, I gave the horse to the winner.” Of course, the neighbor was shocked. He’s like, “The heck, did you do that? And didn’t the guy complain when he won a dead horse?” The farmer said, “Well, you see, he bought tickets for a horse, and when I told him the horse had died, I apologized, I gave him double his money back.” I know that one. Sink in. That’s actually a good story. It just reminds me I got a – My buddy George. George gets a call from his lawyer, and the lawyer’s like, “Hey, George, you gotta meet me in the office.” And then George is like, “Well, tell me now over the phone,” and lawyer’s like, “No, come into the office. It’s big news.” Then it means George goes over to the lawyer’s firm, gets into the office, and lawyer says, “Listen, George, do you want the bad news first, or you want the terrible news?” Well, George says, “If those are my choices, I guess I’ll take the bad news first.” Lawyer says, “Well, your wife found a picture worth a half a million dollars.” George goes, “Well, that’s the bad news. If you call that bad, I can’t wait to hear the terrible news.” Lawyer says, “Well, the terrible news is that the picture is of you and your secretary.” But, um, all right. Listen, are you – Hey, are you missing the end of the show? Are you hitting fast forward with the speed of a Bruce Lee punch? Listen, you’re missing out on something big, because at the end of the show, there’s another training piece. It’s a very specific training segment where I simplify and solve a common business problem. I’m still thinking of George there. Make sure you stay to the end to catch that. Now, you know, I host this podcast because one day I would be very proud to be your business coach. And I have a team of business coaches that I personally hand-selected and trained. I have high expectations for the people that join my team, and I am proud of every single one of them. Now, some of you are already working with the coaches on our team, with Lee, with Ryan, with Jake. And you know what? I mean, it is hard to get on my team, and I am very proud to say that everybody that’s a business coach on my team is also a contractor. They’re a business person, and they have built and sold their own company before, so it’s a pretty tight filter they have to fit through even to get considered. And the reason for that is we take helping you very seriously. Now, you guys know that over the last year, we’ve changed the name of the top level here to Contractor Wealth Systems. Right? We still have this podcast, which is called Profit Tool Belt. I have another podcast called Cabinet Maker Profit System. And on top of both of those is Contractor Wealth Systems, because we’re here to build a platform for contractors like you to build wealth in their companies. There’s something for everybody here. Look, if your company’s already over a million in revenue, or let’s say, seven employees, we’ve got you covered for business coaching. Now, if your company’s under a million in revenue, we have you covered as well. It all starts with a phone call or a text message. No matter what, you can always shoot me a text message just at 315-903-7853, and just say, “Dom, let’s talk.” Then you know what? We’ll talk. Let’s go into business coach mode right now. Let’s hear what Kathy Svetina has to say, and get wiser by the end of the show. Let’s get to it.

Dominic (host):
Kathy Svetina, how are you?

Kathy (guest):
Dominic, thanks so much for having me on here. I am great.

Dominic (host):
You are great. That’s why we invited you to be here. Awesome. Thank you. Yeah. Well, you’re going to talk to us about the world of money. Who doesn’t love talking about money and managing money?

Kathy (guest):
I sure do. I know you do too.

Dominic (host):
I know. Well, that’s why we went and found you, because you’ve got your own podcast on this. You’re a CFO. You’ve walked people down these paths many times. You know what? Before I give it all away, why don’t I ask you this very abrupt question, are you ready for it?

Kathy (guest):
Sure.

Dominic (host):
Kathy Svetina, who the heck are you? And how is it you come to be speaking to all these forward-facing contractors all over the world? I see that smile on your face already.

Kathy (guest):
Okay, see, I was ready for this. I knew it was coming. Something like that, at least. So I am a fractional CFO for smaller businesses. So it sounds pretty complicated title, but it really isn’t. So when you think about fraction, it’s a part. So when you’re in a smaller business, you do still need someone to do financial strategy for you and give you guidance on how you can actually make money and keep more money in your pocket, which is very important. This is what a fractional CFO does. They’re there for a fraction, for part of the time in your business, versus full-time because full-time CFOs are really expensive, and frankly, you don’t need them when you’re a small business. So that’s where a fractional CFO comes in, and I’ve been doing this for the last five years for small businesses, but I hail from corporate finance, and I’ve been doing this all together for almost 20 years. So I do have a little bit of experience in finances into it.

Dominic (host):
A little bit of experience most of us don’t. I mean, we don’t get into business because we’re finance experts. We get into business because we’re good on the tools, or maybe we took over the business. Maybe a lot of us here have started our own businesses and grown it to the point where we look around and think, “I got to start tracking my money better. I don’t know my numbers,” which is incredibly frustrating. I’m sure you find that as well, right?

Kathy (guest):
Yeah, exactly. And also, the other thing too, is when you’re thinking about your money, there are a couple of people that can help you with that. Obviously, you start with a great bookkeeper, which is going to keep track of where your money is going, making sure that your bills are paid on time, that you’re actually getting paid on time from your clients or customers, that all your transactions are organized the right way. And then you have an accountant that’s keeping all the taxes well managed for you, and then you can have someone like myself that’s going to help you to get to that next level of planning of the financial strategy, which is really important if you’re really trying to grow, yeah, and grow in a healthy and sustainable way.

Dominic (host):
I will say, right. Grow without any surprises. Of the surprises that you and I don’t want to see.

Kathy (guest):
Yep. Exactly.

Dominic (host):
I’m glad you started with that definition of the different types of accountants that we can have, because, you know, for a lot of people, if we’ve never hired a fractional CFO before, we don’t know what you do. And for me, a CFO is a forward-looking accountant, like you guys look forward and you anticipate challenges and bottlenecks, and you think about money very differently than a bookkeeper does. A bookkeeper is very reactive to – I’m looking, by the way, for you to argue with me and say, “No, no, Dominic, you got it all wrong.” And I’m used to hearing that. No, you got it right. Okay, so good, but I want you to correct me because what I want to do is – maybe I should ask you – lay the foundation of the difference between a bookkeeper, an accountant, and a CFO. And then after that, let’s move to the point where what are the signals in your company you’re ready for a fractional CFO? That’s really the question.

Kathy (guest):
Yeah, that’s a great topic. And I will say the main – well, there’s a lot of differences, but the main difference between a fractional CFO, a CFO, someone who is finance-focused, and this is where it gets – we can get into a difference between accounting and finance. Accounting is dealing with the past and the present. Finance is dealing with the future. So you can think about it. F is for future. That is finance. Finance is focused on the future. But obviously, for us to be able to figure out the future better, we need to know about the past. So that’s why finance cannot exist without accounting. Because we cannot do any of the projections. We can’t do any of the forecasting, the budgeting, the cash flow managing well if we don’t know what’s been happening in the business. That’s why we need accountants and bookkeepers. They really go hand in hand. It’s not like anyone is better than the other. For a really well-rounded and healthy and sustainable business, you need all three of them. You need a great bookkeeper. You need a great accountant. And especially if you’re growing, meaning that you’re getting to be a business that’s in multiple millions of dollars, and especially when you’re $5 million and up, you need someone who has finance experience, meaning more strategic, forward-looking experience in your business that’s going to help you propel the business forward.

Dominic (host):
This is good. I – you know, unfortunately, most of us don’t learn this. We know we – we don’t get into these trades again because we want to build wealth for ourselves or a legacy for our family. But this is the conversation that I’m excited to have you walk us through. So I’m going to go back to that question, what are the signals? What should I be looking for in my company that says, “Oh, we’re ready to find a fractional CFO.” Because a lot of, again, a lot of people don’t even know that fractional CFOs are a thing. So how would I know that I’m ready for one?

Kathy (guest):
There are a couple of things. And obviously, you know, it also depends what industry you’re in. So for example, if you’re a startup, if you’re looking for investors, that is going to be a signal. But obviously, we’re not thinking about startups here. We’re thinking about, you know, people who are in construction or remodeling. So the main, the main thing here would be, if you’re growing and you’re starting to ask questions to your accountant and your bookkeeper, and they’re like, “I don’t really know how to answer this.” And there’s a couple of examples. For example, if you’re trying to figure out, what are my – what do my margins need to be like, what type of people do I need to hire? When should I hire? When can I afford them? A big one is, how do I need to structure my commissions, like sales commission, especially if you have salespeople in your business because commissions are pretty financially planning-involved type of topic. And the reason for that is because it’s not just about figuring out what the margins do you need to come up with, like what type of products or services they need to be selling, but it’s also – it goes a lot into the type of behavior. What type of behavior are you rewarding these people? So you need someone who’s not just going to look at the numbers, but it’s also looking at the business holistically and be able to advise you on that. And that’s why finance is really good for those, for that type of advising, because we’re looking at the business holistically, not just about the numbers, but it’s about the type of decisions that we’re making now. How is that going to affect us in the future? And you need to have someone in the business who understands that type of thinking and can actually, you know, have those conversations with you.

Dominic (host):
Yeah, I’m so glad you brought up the sales commission part, because I, you know, I come at this not from a finance angle, and you come at this completely from a finance angle. And yet we both say the same thing, one of the problems. And for everybody listening, please pay, you know, special attention to this if you’ve got a really good sales team. And you know, a lot of us call them designers, or maybe estimators, whatever they are, and they get paid a commission. And what Kathy was talking about is, you want them aligned with our interests. So what I want, and Kathy, please, again, disagree with me, but I want them focused on gross profit margins, because that’s what I care about. As a business owner, I can manage for net profit margins through operations, but if I put the wrong compensation plan in place, and then I go later to try and change the compensation plan, what I’m probably going to do is burn out my entire sales team, because they’re going to look at me and say, unless it’s better for them, they’re all going to quit. If they think it’s worse, you’re going to lose everybody. And you’ve lost all that time, all the resources, all those great people you’ve trained, and it just becomes an enormous suck of time and energy.

Kathy (guest):
It gets really, yeah, it gets really, really hard to change the commissions. And sometimes people because you realize that the commission plan that you’ve had before really doesn’t make financial sense for you, then you change it, and then you have battling with your salespeople, and then a year later, you change it again, because that didn’t make sense. So yeah, like thinking strategically through it, and this is why it’s so great to put everything on a spreadsheet and model a couple of different scenarios. How would it look like if a business goes this way? How would it look like if we price it this way? And the reason why I like doing that is because putting it all on a spreadsheet, it’s a safe space to have those conversations and to really poke holes into a commission plan so that you can figure out potential problems, like all the pros and cons, because let’s be honest here, not whatever commission plan you’re going to come up with, it’s not going to be 100% perfect. It’s just not going to, there’s not such a thing. So you really want to pick something that has more pros than cons, obviously, and that it’s financially sustainable for the business as the business grows, at least for a couple of years, so that you’re not changing that commission every, you know, every year or every two years.

Dominic (host):
I was laughing as you were explaining building the compensation plan on paper so you could poke holes in it. The one thing anybody who’s ever worked with sales teams or people who are on commission is that if there is a flaw or a gap in the compensation plan, they will find it.

Kathy (guest):
Oh, yeah. Will I see, there you go, yep.

Dominic (host):
Right? But it’s their job. I mean, they’re – they’re supposed to do that. We want them to be smart and clever people in the field. The good, the good news is, folks, they’re going to bring that home as well, and they’re going to find opportunities in the compensation plan to maximize what they’re getting.

Kathy (guest):
Yeah, and that’s why it’s so important to think about it like a salesperson. What type of behavior are you rewarding? Because the sales can – whatever commission you have, you’re rewarding a certain type of behavior. So the behavior that you’re rewarding needs to be in line with where you’re taking the business and the strategy of the business, like, for example, if they are getting more rewarded on smaller jobs or because they need to, you know, sell more and more and more at lower margins, but your business is going toward less jobs and larger margins, then you have a disconnect between what the salespeople are actually doing versus what you’re trying to do in the business.

Dominic (host):
Yeah, and huge frustrations. Yeah, yeah. So. Folks, if we stopped right here, if you’re not having this kind of conversation with your bookkeeper or your accountant, then that’s an indication that you might be ready for a fractional CFO like Kathy. And that’s why I invited you here. Actually, today I invited you here to talk about gross profit margins. And somehow, because it’s Dom, we got off topic, but I think we’re still in the right place, because it does, it does lend itself to gross profit margins anyway. So let’s go. Thank you for that. That was actually really good, and we covered off more than just compensation plans. We talked about the difference between a bookkeeper, an accountant and a Chief Financial Officer, right? Or a fractional CFO chief financial officer. But let’s move over now to gross profit margins because that’s a big unknown question for a lot of people, you know, how do you set your gross profit margins? How do you set them? When in the field, every day, people are saying your company’s so expensive, and you’re thinking, “Oh my God, have you seen my books? I’m barely getting by. How can I be called expensive? What am I doing wrong?” That I’m expensive, right? So let me put that in your hands.

Kathy (guest):
So before we go into the margins, the gross profit margin, I want to take a step back a little here and make and explain the distinction between a markup and a margin, because I think a lot of people mix that up. And if you’re mixing margins with markups, I will tell you you’re losing a lot of money. So the easiest way that I can explain this, and it’s actually the clue, is in the name. If you think about a margin, “in” means what needs to stay in the business. And you have two margins, you have a gross margin and a net margin. So a gross margin is if you think about everything that you’re selling and everything that costs to sell that stuff, meaning your cost of goods sold. So when you take sales minus cost of goods sold, you have a gross margin, gross profit margin. So that’s the first time that it stays in the business, that sales stays in the business, and then you have all the other expenses after that, your accountant, you know, if you have a fractional CFO, if a marketing person, all the people, all those other business expenses, rent, or whatever it might be, you take that, yeah, you take that, and then you have a net margin, net profit margin. That is the second time it has stayed in the business. And that it’s really like the bottom line of what all the expenses stay in the business. So margin stays in the business, and the markup is up. What do you need to do cost plus up to actually sell it? So when you think about it, how much do you need to add to your cost to sell something? So that is the difference between a margin and a markup, and also a markup is always going to be higher than a margin, so the same number, even though they’re the same.

Dominic (host):
I see even I’m having trouble explaining it, I know what you mean because I just know what you mean, but it’s hard for me to explain it, right? So, like a 50% margin is not a 50% markup.

Kathy (guest):
No, absolutely not. So a 50% margin, you need to double your cost to get to, so your markup needs to be 100% to get to a 50% margin, right?

Dominic (host):
There you go. Yeah, yeah. That’s how you think caught in that? Yeah, we get caught in that.

Kathy (guest):
Yeah. And so many times, if you’re thinking about in markups, and if you want to get to a 50% margin, people get, “Oh, my God, I have to, like, double, double that price,” whatever it costs me. But you have to think about it in terms of margins and markups, they’re completely not the same. And if you’re mixing those up, and I’ve had some people say, “Well, to get to a certain margin, I’m just gonna mark it up a little bit.” And then when we actually look at the numbers, and I explain that to them, your margins are low because you’re mixing up margins and markups. So be really, really careful with that. And I know at the end, I’m going to tell you, I actually have a video about that that actually shows you on the spreadsheet. And I really encourage you to go to that video and I’ll put the – we’ll talk about, where do you actually get that at the end of the show?

Dominic (host):
Yeah. And you know what? I’ve learned this many, many times, and I still have to slowly go back and review the notes. I just – I walked through this exercise with one of my clients, and they thought they were charging the right amount, which I’m going to do the numbers in rough. I should never do this with a CFO, but I’m going to do it. They thought they were getting about 47% but because of the way they were calculated, they were only getting 23%. Yeah, and it happened on two jobs before we caught it. And thankfully, we caught it because we do something called the job report, which is a little backcheck where you’re going back and review previous work. But if we’d allowed that mistake to keep going, the company would have eventually sold itself to death. You would actually sell yourself out of business.

Kathy (guest):
Yep, because… Because, again, you have to make enough money so that you can cover all of the other costs. And obviously you want to have profit too. But just because you go and you cover the cost that you have with the job, you still have other costs. You have rent, you have marketing, you have, you know, other costs that you need to be covering. So that is really important, that you know the distinction between a margin and markup and how to calculate that, if nothing else, at least that.

Dominic (host):
Yeah, folks, this is a good time to remind you the money’s not in the sawdust anymore. By the time you’re listening to my show and you’ve got Kathy here as a guest, you’re starting to find the opportunities on the office operation side, which is so expandable, there’s just so much opportunity to be had here and again, when you’re in the field and you’re hearing back from customers or potential customers, “You’re too expensive. Everybody else is cheaper.” You’re listening to the wrong people. You’re running this as a business, and as long as you’re doing your due diligence, running it properly, your costs are just your costs, and you have to charge to cover them and make money. So you have to be really careful about looking at the right numbers and believing the right info. Don’t believe customers and don’t believe your competitors’ pricing.

Kathy (guest):
Yeah, and I see that sometimes too, when people think, “Well, but my competitor’s doing this.” The problem is you don’t know the strategy of a competitor. You don’t know what their market is exactly, and you don’t know their financials. So it’s good to see what other people are doing. But don’t get married to that, because you have your own business. Your business is unique in what you’re trying to achieve. And again, you know the question might be, obviously, what is the right margin? And the answer to that is, unfortunately, it depends.

Dominic (host):
Isn’t it the worst answer? Because I see it too. It depends. And then you say it, yeah, and it’s got to be frustrating for people, but it does depend. It depends on a bunch of inputs that are unique to you and your business and your corporate structure and your market and what you’re selling. And is it labor? Is it materials?

Kathy (guest):
Yeah, exactly. And it also depends on how long have you been in business, how… Because that is going to impact how much you have to put towards marketing. Are you going to be heavily marketing, or are you already an established business that people know you and you don’t have to market as much? I mean this, all this all goes into how much you need to put in, into your margin. Because obviously, if you had – you’re spending a lot on marketing, you need to be able to cover that cost. So it really depends on where you are in business, what phase you are, what goals you have, are you growing? Are you maintaining? Also, are you planning on selling your business? That is going to be a different strategy and a different margin that you’re going to be doing like all – it really does depend on a lot of things.

Dominic (host):
Yeah, I won’t even get into that. I do know that when, when you start to think about selling, the books have to get done slightly differently. You have to start to really clean things up and make sure that they look a certain way, so that you’re viable as a company.

Kathy (guest):
Yeah, and the other thing I did, we didn’t talk about this here for this particular topic, but work in progress reporting. It’s a must, especially if you’re trying to sell the business, if you’re a remodeling construction company, work-in-progress reporting and work in progress adjustments on your financials. If your bookkeeper and accountant are not doing that, you need to start doing that.

Dominic (host):
Yeah, so let’s talk about it a little bit. If you don’t mind, work-in-progress reporting, I imagine that is more important when you’ve got jobs that take longer, if you’re doing a roof that you can get done in a day or two. WIP, work in progress isn’t as important as if you’re doing a three-month or six-month renovation or a major contract at the university where you’re doing all the concrete work for a new atrium, right? That’s a longer project you need WIP.

Kathy (guest):
Yep, exactly, yeah. So the best way to think about this is if you’re doing longer projects and longer projects, I mean by this if they are a month or more. So for example, if you’re doing a custom build house that it’s going to take, I don’t know, eight, nine months, probably even more, depending on, you know, when you get the materials and stuff you really do need to have that work in progress report and specifically, and because you will get paid in advance. So if you’re not doing that, and you’re getting a lot of money upfront from your customers, and your costs are going to come in the future, what is going to look like if you look at your profit and loss statement, is that one month you’re going to be, you know, rolling in it, because you’re going to have so much profit, because you bill your customers, the money has come in, but the cost hasn’t come in for that particular sales. So one month you’re going to have, you know, $300,000 in profit, and the next month, because you haven’t done any billing, but the cost has come through, you’re going to be in the loss. So it’s really hard to make heads and tails, and that’s why a lot of people in the construction remodeling industries are really confused by the profit and loss statement because it doesn’t make any sense. If, like, my project is supposed to make me money, why am I in the hole most of the months? And how is that possible? It’s because you don’t have that work-in-progress adjustment in your financial statement so your P&L looks like a roller coaster.

Dominic (host):
Yeah, you’re using – would it be right to say you’re using the wrong report to get the answer?

Kathy (guest):
Your reporting is not done the right way in this very – and this is, this is a problem that is very specific for construction in the remodeling industry. Yeah.

Dominic (host):
What’s – you’ve started off a number of clients, I’m sure, and tell tell us about one of the favorite things you find when you walk into a new contractor as their fractional CFO, and they’re like, “Well, Kathy, I’m not sure if you’re even going to be able to help us.” And then within a month, what do you find that just shocks and amazes people? Oh, the smile on your face again.

Kathy (guest):
Well, one of the things is, if I go into the business and they tell me, “Well, you’re not going to be able to help us,” then I can. I always say I’m not there to convince people, I’m there to help them through it, sure. So by the time they come to me, they’re like, “We really need someone like you. Can you please work with us?” And I will work with them. So I always do the assessment on the finances, and eight out of 10 times when it comes to construction, remodeling businesses, it’s the work in progress report that is the culprit of a lot of issues in their finances. So we have to do that. We have to have the bookkeeper start doing that. And the other things is, again, the margins are not set up the right way, because no one really holistically looked at the business to tell them this is where you need to be, and obviously, then the where you need to be, where you want to be, and how do you get there are different things. So then we have to start figuring out, how do we get to that particular margin? And this is where we have to have a conversation, especially if they have someone in marketing or sales. So all of us get together and start to brainstorm, how do we figure this out? But we obviously need to fix it. And then the other thing that it’s really important to what I see that they don’t have the right systems and the processes in place, because construction is a business, again, it’s so specific to construction remodeling, everything lives and dies by good project management. So you have to make sure that the project management is done right and that you have the right reporting. So for example, the change orders need to be, need to be actually happening. Instead of someone saying, “Well, I’m going to make the staircase and it’s going to be this much,” and then you’re trying to then bill a customer and they say, “Oh, I never signed up for that.” It’s like, no, it didn’t happen. You have a change order. You signed it. So that is the other thing that we looked at into and then making sure that you have the right software in place where you can actually document all of it that’s happening that is super, super important. So it’s, it’s a lot of changes that happen, because it’s not just one thing you know, because everything that you do in your business is eventually going to end up in your finances. That has been my mantra for a long time. So we have to look at these different pieces and figure out where the problems peel the onion and then fix that particular issue, and that is going to fix the finances in the back end.

Dominic (host):
Interesting that you said change order challenges, because how many times have contractors listening to the show, gone and done a change order because they wanted to keep the job moving, but they’ve done it without signed documentation, and then somebody comes back afterwards and says, “We didn’t approve that.” And now suddenly you’re negotiating about work you’ve already done, and you’ve lost any competitive advantage you have, and you’ve done the work so you’re paying to build somebody else’s house, or to renovate that university, or whatever project you’re doing, which is not the business we’re supposed to be in.

Kathy (guest):
Yeah. And also, the other thing is too the documentation, but the pricing, the way, how you’re pricing change orders, the margins on the change orders are not any different than on your regular job. So sometimes people just come up with a number, it’s like, “Oh, it’s going to be $20,000” without really understanding, hey, just because it’s a change order doesn’t mean that the margin is going to be different. So you may have to make sure that when you’re citing pricing for these change orders that they’re the same margin or more than a regular job would be. And then you’re not putting just pricing in on the top of your head, but you’re going back into the office and really understanding the cost that’s going to be with there, not just material, but also labor, and giving yourself some space to understand how much you really need to price it at, because it is, it is essentially a mini contract. So it’s not any worse or better. Shouldn’t be any worse, or hopefully it’s better than the actual – should be, should be at least the same.

Dominic (host):
Yeah, Yeah. And this, this really comes down to something that we talk about here all the time. It’s, we need simple systems in our business. I mean, just this change order example, you know, we need proper systems in estimating. We need good communication between project management and estimating, whoever you know who finds – who finds out about the change order on the shop or on the job site and communicates it back to the office. Then we need to make sure that everybody in the company is communicating on the same thing purchasing understands what they have to buy, where it’s being invoiced to how the job is being done. The foreman or the shop lead, or wherever you’re doing your work, has to understand how they’re going to produce it like there’s a lot of communication systems that go along with it, and that’s as you’re growing in your construction business, the business has to operate on very simple systems so you can make changes easily.

Kathy (guest):
Yeah, exactly.

Dominic (host):
Wow. I feel like we’ve only scratched the surface.

Kathy (guest):
We kind of did. Yes, we can go a lot deeper into these things.

Dominic (host):
Oh, gosh, You know, maybe we’ll end on one final question, which is kind of the Hail Mary question that a lot of people ask is, how much should I mark up my work, or let me do it in the right language? How much gross profit margin should I put into a job?

Kathy (guest):
I know you’re gonna hate this answer, because I do too, but it really does depend. So that’s where you need to sit down with a spreadsheet, figure out what your sales are gonna be, what your cost of goods sold is gonna be. And obviously you said, “Well, but I don’t know,” but you, if you’ve been in business for a couple of months at least, you will know, because you will have that historical information, and you can figure out what your cost is. Then you can say, “Well, I’m going to add another five to 10% just to be safe,” because you could do that, and then put it on the spreadsheet. So figure out your sales. Figure out what your cost of goods sold is going to be that’s going to give you a gross profit margin, gross profit. And then you know what other costs you have in your business. So if you have your bookkeeper, if you have your rent, if you have what your people are making, also if you have any marketing expenses, office expenses, you know, any utilities, whatever it might be, put that on there and that, and then you can play with the numbers and see what makes sense for your business. Do you need to increase your sales because you want to have the margins at a lower because not? I will say this. This really depends on your particular strategy as well. The lower the margin, the higher the volume that you will need to have. So that can happen if you want to be a high-volume business. There’s nothing wrong with that, obviously. I mean, we all want to have higher margins, but just because you want to have higher margins. Keep in mind that doesn’t mean that the market that you are playing in is going to allow for that. So you have to be sensitive to that. So the spreadsheet that modeling is going to give you that space to really think things through and figure out what is the optimal margin that I need to hit and what are the sales goals that I need to hit to get to the goals that I have for the business. I hope that explains it better.

Dominic (host):
Well. It explains it to me. But of course, I host the show, and I get to talk to brilliant people like you. For everybody listening to the show, what Kathy was talking about is something that we call the one hour calculator, or the Go Back report, which you guys have heard me talk about a ton. There’s the end of job calculator, there’s overheads calculator, there’s the overhead contribution calculator, all of these tools that we have help people get to the kind of info that you’re talking about here. So it’s not like people can’t find this information. What I find is difficult, even for me in my own business. By the way, I’m a business owner. Kathy, so are you? Sometimes I just need to be pulled aside by the nose and sat down and said, do this thing now and then. I’ll go do the thing. But otherwise I’m like, I’ll do it later. I’ll get to it later. It’s not my favorite thing to do, so I’m not going to go do it. And before you know it, a day has gone by, and a day is no big deal. But then a week has gone by, then a week is not really a big deal. But then you realize it’s 2024 and the first time I came up with this idea was 1986 right? And you think, “Oh, yeah, I should have gotten to that sooner.” It just happens. It just happens right now. So you need that accountability of, hey, the CFO is asking for this report. We need it by Friday, or your business coach wants this. We need it by Tuesday. Whatever those things are. That’s how you build that momentum and keep going.

Kathy (guest):
Yeah? And that’s why a lot of clients that I work with we have, it obviously depends on when we meet, but I do like to meet at least every two weeks with them instead of a month, because that way we have that accountability, and you have someone to sit down with you at least one hour every two weeks and walk through these type of problems with you. When the business and a lot of the stuff that I do, you would think that I live and breathe spreadsheets, I kind of do but really with the clients, we have conversations like this, like, where do you want to take your business? What do we need to do? What’s happening, what’s happening in your sales, what’s happening with your people, because it’s. It’s almost like business coaching with a lot with focus on the finance. And I would never say that I’m a business coach, but I do sometimes need to act in that capacity, and sometimes I act in a capacity of a psychologist, a lot of stuff too. But I really try to have those conversations about the business because if you don’t have those you can really postpone it, and I will put it on the other way too, that I have those conversations with people that help me in my business. Because usually by the time when you have your business, you kind of, you’re in a little bit of a blind spot. So it’s so better if you have an external party like yourself to help you through these things.

Dominic (host):
Yeah, Yeah. You just need that person who pulls you aside and says, now’s the time to do this thing. Otherwise, we just run off and, you know, we’re in construction. We like to build stuff or demolish things or reassemble things.

Kathy (guest):
Like, heads down and just do what needs to be done. Yeah, which?

Dominic (host):
And, you know, the hard part, and we have to respect this, is that kind of work ethic is what got every single person listening to where they are today. True, right? That incredible self-drive, internal motivation, that’s what got everybody here. But of course, now they’re like, “Well, I want something else. I want a different outcome,” like, “Oh, well, there you might need a different input.” Yeah, yeah. Kathy,

Kathy (guest):
I get you here, will not get you where you want to be. So say that again. What got me – I get you here, will not get you there, meaning that if you want to be in a better space, you need to evolve as yourself and as a business.

Dominic (host):
Right now is probably the time, you know, if somebody’s listening to this show, it’s probably the time they – nobody would opt into listening to the Profit Tool Belt podcast, which is about the business of contracting, unless they were curious about getting to the next level, you just wouldn’t do it. There’s more exciting shows to listen to than this.

Kathy (guest):
I don’t know, that’s pretty exciting.

Dominic (host):
Hey, Kathy, if somebody wants to find you in this big, wide world, how the heck do we find you?

Kathy (guest):
So you can find me on LinkedIn, or you can also go to a website that I have specifically for the show. If you go to newcastle.finance/PTB, the Profit Tool Belt. So PTB, you’re going to have a video of the margin versus markup that’s actually going to walk you through. It’s also going to give you two formulas that you can use to calculate margin to markup, and markup into margin if you want to do that. And yeah, you can have that. It’s going to be there.

Dominic (host):
Wow. I didn’t realize you set that up. I feel so honored. What’s the domain again?

Kathy (guest):
It’s newcastle.finance/PTB.

Dominic (host):
Wow. newcastle.finance/PTB, and that’s where you have the training video on margin versus markup.

Kathy (guest):
And there’s going to be a table, and, yeah, it’s you can use that. Use it.

Dominic (host):
Wow. Okay, you’ve set a new level for how we get information to guests. Thank you. That’s really cool.

Kathy (guest):
You’re welcome. All right, like I said, I hope it helps and it’s there for you to use on your way to have a healthy and sustainable business.

Dominic (host):
Excellent. Well, maybe we’ll have you back again with more questions. Folks, if you have questions from the podcast and you obviously you can ask Kathy, or you can forward them to me as well. If you’ve got other topics you want her to talk on, let us know, and we’ll see if we can bring her back as a guest one day.

Kathy (guest):
Awesome. Thanks so much. Dominic, appreciate it.

Dominic (host):
Thank you. Talk to you soon.

Dominic (host):
Well, well, well, what did you learn from Kathy Svetina? Kathy, sorry, I mispronounced your name there. And what can you put in place? How is it that now you understand what a fractional CFO is, how they work, how your company can use one to grow. And then you also understand this crazy report called a work in progress report. We are now in that place in your brain that thinks about the exit strategy of this company, that thinks about the legacy you’re building if you one day want to sell the company to somebody else on the street, or sell it to a strategic buyer, right, like that company in Europe we were talking about in the intro. Or if you want to sell it to your family, maybe your son wants to take over. Maybe your daughter, maybe your son-in-law, maybe your niece, your nephew, I don’t know who, but somebody you know wants to take it over. Understanding the finances in this business is important. Remember, you’re running a company, but you’re trying to make money. And the reason you want to make money, I’m taking a total stab here, is because you want to have the freedom to be an independent person. You want to create something out of nothing. Your contracting business is something you created from scratch. Now, in some cases, you took it over from somebody else. Maybe you are the son, the daughter, the niece, the nephew, the son-in-law, etc, whatever. But wherever you are today just represents one spot on the map, and you want to get it to another place. Your opportunity is to grow. In order to grow, you need new information, and you need new ways to look at your information. Question. You know, when I go to the most strategic, highest level business meetings, when I’m in the boardroom with a board of directors of a contracting company, when I’m talking to massive software companies that only deal with construction and contracting improvements, we talk about numbers. That’s what we talk about. We might start by talking about people. We might start by talking about legals. We might start by having the chief economist from the bank, come in and give us a report. That’s all fine. But then what we come back to is talking about the numbers in the business. The reason your business is here is not to put roofs on houses or renovate kitchens. That’s all. That’s what we do. But the reason we’re here, and I’m going to go back to the intro, is I want you to be a business person who just happens to be a contractor. In the city I live in, there’s a contractor who just built a new hospital. Hang on a second. I don’t mean he was the contractor that built a new hospital. He donated, I think it was $30 million to the new hospital, and they named it after him. He’s a business person. Oh yeah, by the way, he’s a contractor that can be you. Think about the good you want to do in the world. Think about the legacy you want to leave in the world. That legacy might just be to have just a great family around you, a full table at Thanksgiving, taking people on vacation, like your family on vacation, enjoying life, taking care of your parents as they age, as they age. What does it mean to you to be a wealthy, wise contractor who’s healthy, who’s living proactively in their business and in their life? That’s what the show’s about. You guys know that. So Kathy was here today as a voice for us. She wants to show us there’s a crack in the darkness with a little bit of light. That little bit of light is where Kathy’s going to show you the future of your business, Kathy, or any fractional CFO, right? Fractional Chief Financial Officer, what is the future of my business look like? Now you do that with experts and professionals like myself or with Kathy, but at some point you have to remember the world’s greatest leaders all have strong, wise advisors. Think of the Knights of the Round Table, right? The reason there’s a round table is because the knight – the king, wanted to have advisors sitting around and he could speak to each of them. When you look at the president or the prime minister of your country, or whatever it is, they have advisors standing around them. They don’t know how many fish were caught last year. If they get asked a question about fisheries, no, they turn to their fisheries minister or whatever the person is right when they know how many vehicles were imported or exported, or what the economy is going to do. They don’t have the answer in their own head. They turn to the expert on their staff, and they get that answer, or they get the strategy. It’s the very same thing in business. You turn to a financial fractional CFO, or a CFO if you can afford one, or you turn to your business coach, or you turn to your production manager, or you turn to your engineer, your estimator, you get the wise answers from the people who are in it every day, your job as the leader of the company is this leads company, and I want you to have the tools to do that. Anyways, thanks for listening today. You know we’re going to simplify and solve a common business problem for us in business, and it relates right back to this financial issue. First, I want to pass on a message. It’s actually a text message I got from Steven in Alabama. Now, his name’s not Steven, but he is in Alabama, and Steven, you’ll know who you are as soon as you hear the quote. Just a really nice back and forth text message. Today, there was an accident on the job site, and him and I were going back and forth about some of the things to do there, with regards to team training, strategy, the growth of the business, taking care of people, and like a lot of contractors, he cares first about his people. He’s there to be a guide and a leader to his people. He knows that he’s going to get success through people. He’s a really super nice guy. Anyways, I won’t share all of our text message but here’s how he ended one of his texts to me today. “Even though I’ve never met you face to face, I really look up to you, and I’ve learned a ton from hours of the podcast and from coaching with Lee.” So he works with Lee, Coach Lee, one on one, and of course, with me. There’s a certain coaching program that we have here where you’d get three coaching meetings a month. There’s a strategy meeting with me, and then there’s two tactical meetings with your coach, so you’re very well taken care of. You know what I said in the intro, like we’d be very proud to be your business coach. Imagine that we’re standing there with you, leading the company, but we’re behind you and kind of out of the way, because you’re the leader of the company, and we’re there as that advisor, well as that advisor. There’s three formal meetings a month again, one with me, and two with your coach, whether it’s Lee or Ryan or Jake, etcetera. So in his case, he’s just saying that. So let me read it again. “Even though I’ve never met you, really look up to you, and learned a ton from hours of the podcast and from coaching with Lee. You guys have been a godsend, and I’m thankful,” and I’m thankful too, Steven. We’re going to call you Steven. Do. You. I love you, and I love watching what’s happening. Keep it up, bud. Okay, so the common problem that we’re going to have today goes back to profits, right? How do we get enough profits out of the business? How do we know that we’re running this business so that we’ve got the flexibility to live the life we want? Now look, I have learned that. I learned this many, many, many years ago. I became a business coach in the year 2000 – some of you, geez, some of you listening might have been born in the year 2000 but be a little on the young side, because you’d be 24-25 now, there’s some of you listening out there that are that age, right? But that’s when I became a business coach. And I can remember learning, you know, I because I was a business person already. And the reason I became a business coach, by the way, is because I was not good, I was not profitable. So I did things like this back then. You listened to cassette tapes and you read books and you took courses and you went to conferences and you flew all over the country to see the best speakers and the best authors. That’s what I did to get where I am today. Put in the the time and the money I invested, I probably invested hundreds of thousands of dollars in my own personal development to get right here, and millions of dollars for sure, in revenues and the companies I built. But I had to get that inside track right. So when I became a business coach and I started advising other business owners, I can remember asking coaching questions that sounded dumb, like I would if I looked at the question on paper, I would think this is the dumbest question in the world. Here, I’ll give you an example. I was coaching a landscaper, a guy that did commercial and residential landscaping, mostly commercial stuff. If it was residential, it’d be like a massive home, you know, gazillionaire owner. He did that kind of stuff. He was in a city that only had two seasons, snowing season and melting season. So even though he’s called a landscaper, he did a lot of snow removal, one of the problems that we were dealing with at the time is that he had hired his niece to work in the office, right as you would do. She was there for college, and his brother had called and said, “Hey, can you give her a job over the summer?” So he did. And you guys might already know where this story is going, but she ended up taking money out of petty cash ended up, she ended up stealing from her uncle while she was on the job. So we’re having a very difficult business coaching conversation. And this guy had hands that looked like, imagine an Egg McMuffin was the palm of his hand, and every finger that stuck out of it was a breakfast sausage. He had massive hands. And anyways, back to the story. I remember asking him a question, and I thought this question is so dumb, this guy’s going to punch me across the table, because it’s dumb question. And here was the question, why do you want to make more money?

Dominic (host):
And as I said it, I’m like, Dom, this guy’s going to knock you flat right across the desk. And he stopped for a second, and we had, you know, a good conversation. I don’t remember the details of it, but he didn’t see it as a dumb question. When I asked it the right way. I can tell you this, it wasn’t about having more money, like it’s just zeros in the bank account. What he wanted with the money is what he could do with the money, and that’s what all of us want. What can you do with the money? You know you’ve heard the story about Dan from Dan’s kitchens. Dan just wanted to get braces for his daughter, and the stress that I heard from him about his kitchen table when his older son had needed braces and they had to finance it. And how are they going to do it? The company couldn’t pay for it. But after he was working with us for a bit and his daughter ended up needing braces, he just cut the check, as they say, like he just paid for it. And you’ve just never seen a dad prouder. Remember when I said, shoulders back, chin up in the beginning? That’s how you could see dad on screen. He’s like, we’re on a Zoom call. Uh, he’s just so proud. It’s what you can do with the money. The money itself. Sure. You know, maybe you want to do mission work, really quick story before we get into the profit pack. It’s not about the money, it’s about what you can do with the money. Now, this is not a contracting and construction story, but I have friends like you do, and sometimes friends call me for help as they call you, and when they call me for help, it’s usually around business. It’s definitely not to help them break concrete. You know, I’m a good, hard worker, and I’ll do it, but usually it’s about business stuff, right? So this friend of mine is a dentist, and he’s buying another dental practice, but the problem he’s having is that he’s in competition to buy this other dental practice that’s just down the street, and he wants to make sure that he wins, right? Because he wants to get the database of all the dental patients that’s worth a lot of money, as he and I are talking, it turns out that the really critical component of buying that dental practice is actually getting the associate dentist. So not the owner, not the chief dentist. He’s the one who’s selling because he’s old and wants to retire, but another lady who’s an employee as a dentist, and she’s really critical, because she’s going to bring over the bulk of the patients, which makes sense. Over the years, the owner of that other dental practice has been getting older, so he’s taking fewer patients, and the lady who works for him is taking more. He wants to make sure he gets that lady to come over to him, right? So he’s in a competitive situation buying another dental practice. He thinks he’s going to come in cheaper, like he’s not going to have as much money, but what he needs to get is that lady. And so we start talking about the strategy behind that. And so I had a question, a series of questions for him, and I’m like, what’s really important to her to make her make the decision over who she’s going to go with, because wherever she goes, the other – the dentist who owns the practice wants to sell to wherever she’s going to go. And the reason for that is, when you sell a dental practice, you usually don’t get a big check. You get a series of ongoing checks, and those checks are based on how many times your old patients come back. So it makes sense, she’s going to take the database of patients and wherever she goes, the dentist who’s selling is going to keep getting paid, so he wants to make sure she goes where she’s happy, so he gets paid. I hope that’s making sense. So my buddy and I are talking, and I start to ask him questions, and he’s like, I don’t understand where you’re going with these questions, because I’m asking all about this other dentist. She’s a Filipino lady. I find out she’s a mom. She’s kind of working because she doesn’t want to own her own dental practice. And one of her hobbies is she’s really big in her faith. They happen to be Catholic, right? I said, “Oh, that’s interesting. What do you mean? She’s, you know, really strong in her faith.” She’s like, “Well, she’s Catholic, she’s in the choir. She’s super active in the church.” Okay, well, that’s interesting. So tell me more about that. Now, Filipino culture is very strong in family and faith and those things are all interesting. But how do you make the most of that so that it makes sense to somebody else, especially when we’re trying to buy this dental practice, right? And so we came to the point where we understood it’s not about the money, it’s about what somebody can do with the money. And so here’s what we did, my buddy went to that associate dentist and said, “Look, we would really like to take care of you and take care of the patients. If you’re able to come on to my team, that would make us very happy. And you know, you could park on the same side of the street all this, you know, same coffee shop, all that stuff. But what we’re going to do is, on your behalf, we’re going to send the priest at your church to Rome, and it’s going to be a donation directly through you, so that you’ll be able to go to the priest and tell him that you’re able to send him to Rome.” Oh my gosh, did that change the conversation? First of all, it showed he cared, which was important to this woman. She’s a family woman. She doesn’t want to own her own dental practice. She wants to work at a dental practice, but it gave her the opportunity to give back to her community, to support her faith. So when we talk about profits, I understand it’s not just about the money. It’s something different for all of us. You might be taking care of aging parents. You might be taking care of sick people in your family. You might be taking care of children. Hey, you just might want to buy a jet ski. That’s okay. It doesn’t matter. It doesn’t have to be something highfalutin, right? Maybe you want to buy new machinery, a new skid steer, right? Whatever it is that you want is your right and your privilege. Money gives us choice. The lack of money means a lack of choices. And when we have a lack of choices, we make bad decisions. If you ever want to see an example of that, look at a buddy of yours who stopped trying and ended up with the wrong girl. A lack of choices leads us to the wrong decisions. I’m going to leave that one completely alone. And so the takeaway today is the profit pack. The profit pack is, I’m just looking at another screen here. There are five tools in there, five business tools in the profit pack. You’re going to use those tools to understand your own situation, through your own lenses, through your own filter, through your way of seeing the world, right? I want you to understand how to understand the impact of you in the business, and how you use your time in the business, then we’re going to do the healthy, wealthy, wise planner, which some of you have already done, right? But when you do it all together as a pack, it really helps you. Now you’ve heard of the Go Back calculator, the one hour calculator, if you don’t have it yet, that’s in the profit pack here. I want you to have that because you’re going to need to figure out a very important number that you probably don’t know. If you’re working with an expert like Kathy, she’s going to be living inside that document. So you might as well get yourself started. So that is inside the Go Back calculator. And you have to work the Go Back calculator. You have to work that tool like you work that tool. Okay, so that’s in here. So inside the Go Back calculator is another little, tiny calculation, but you need that to inform everything else you do, and that’s going to make sure you’re profitable on every single job. And if you’re not profitable on every single job, you know where to go and fix things, right? Then there’s a workbook. The workbook is called the ultimate get things under control guide for contractors. What do I want you to do with this? I want you to print it off, and I want you to go to a coffee shop, a nice coffee shop. Go to the coffee shop where, if you’re a commercial contractor, I want you to go, where all of the GCs and builders and developers go. So. What part of town do they go in? I want you to sit there. If you’re a Residential Contractor, I want you to go to a nice coffee shop where your perfect customer goes. I want you to just sit in their environment. Print the thing off, get a coffee. You don’t have to talk to anybody. Just bring your favorite pen, this print out. Grab a cup of coffee and sit down and write out what you want. None of us can get you to your next goal if you’re not clear on what that is. And you might go, “Well, Dom I’m not really clear on what the next level is. I just know I’m trying to get there.” This document will help you get there. It’s a tool to get everything out of your head and onto paper, right? And then there’s an assessment that you do at the end, and it’s the construction blind spots. So you can get all of these documents, we put them together in a package, so it’s easier for you to get. It’s called the profit pack. So the way you get that is you text me, super simple, super easy. We call it no friction, right? There’s just no friction. You just, you guys already know my cell phone number. It’s 315-903-7853, and just text me the word profit pack, and then you’ll get all five of these. Yeah, five of these documents. Okay, it’s been a big episode. Kathy, thank you very much for being our guest today, talking about the work in progress report. I really appreciate it. And folks, today, I want you to really understand that today, the day you’re listening to this, is the day that you change the angle of the growth of your business, and none of your competitors did, none of your competitors, and maybe they did if they listened to the show, but none of your competitors did. They didn’t listen to this. They don’t have this piece of info in their back pocket, and you do, and that’s going to change who you are as a business person going forward. That makes me very happy. Hey, thank you for checking in. I really appreciate you being a guest, a listener on the show. I really appreciate Kathy being a guest, and I look forward to the day when you and I have a glass of wine or a cup of coffee across the table like real humans instead of this crazy podcast thing. Until then, we’ll see you on the next episode, bye-bye, you.