A listener question episode that ended up covering the three things that sink profitable contractors: money arriving later than it leaves, jobs that grow after the price is set, and subcontractors who were never onboarded properly.
Size the line of credit to your receivables
The rule Brent gives is specific enough to act on. If your accounts receivable sits around two hundred thousand, find a line of credit of at least two hundred thousand, through a traditional bank.
The reason is the structural problem of contracting. You are growing, which means you are constantly laying money out, and you are waiting to get paid. Those two facts together are what make a profitable business run out of cash. The line of credit is not for buying things. It is for covering the gap between the work being done and the money arriving.
Collect in three stages, not two
Take a deposit up front, collect more at the midpoint, and take the balance at completion. The deposit does something beyond cash flow, which is that it confirms you actually have the job. A customer who will not put money down has not really decided.
There is a related point about how contractors price terms. If a bank would charge two or three percent to carry that money, you should be charging two or three percent to carry it. Contractors routinely lend money to their customers for free and call it the going rate in the industry.
The scope of work is the whole job
The instruction is to write a detailed scope of work and remove as much of the unknown as possible, backed by a simple contract that takes out the guesswork.
Then the tactic worth stealing: photograph the site before you start. If you bid a job two months before you break ground and something changed on that site in the meantime, the photos are what let you say so and reprice. Without them it is your word against theirs, and you will eat it.
What to sub out, and what not to
The approach they describe is to sub the niche or specialty work at first and let your own crew become the crew that ties everything together and does the finished work. That keeps the part of the job the customer judges you on in your own hands.
The warning is the one most people learn the hard way. If you use subs, have a contract in place, every time. And onboard a subcontractor the way you would onboard an employee. You would not put a new hire on a site with no orientation and no expectations, and a sub is standing in front of your customer wearing your reputation.
Culture does not travel on its own
The last stretch is about what happens as crews spread out. Brent is candid that they had culture right from him to the leadership and management staff, and that it started to fall apart a little as it moved out into the field.
That is the normal failure. When the team is rarely in the same place, culture stops transmitting by proximity, and the leadership team has to carry it down a level deliberately. If nobody owns that, the field ends up with whatever culture the busiest foreman happens to have.
Nothing here is financial advice for your business. Talk to your own accountant and banker about your numbers.
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