Grandy

Are You Stealing Time From The Company?

By Tom Grandy, Founder

It is highly unlikely anyone reading this article would physically steal from the company they work for.  The idea of taking something that doesn’t belong to you would never enter your mind.  Besides, taking parts, materials, supplies or equipment would not only be wrong (and potentially land the individual in jail) it would cheat the company.  Every item taken would “cost” the company that much money and, taken to the extreme, might cause the company to lose enough money to force it out of business.  What happens when the company goes out of business?  You got it. YOU are out of a job!

So no, you would never do that.  However, many employees actually do steal from the company every day and never give it a thought.  How much time do you spend on the cell phone each day?  If you are in the office, do you ever look up things on line and/or purchase personal items from Amazon?  Do you exceed the allotted time for breaks and/or lunch each day?  If any of the above are true, you are actually stealing from the company.  How?  The company is paying for something from which they have received no value for.  It would be like paying for a $25 part but never receiving it.  The money is gone but no value was received in return.

Think through your day, each day.  Are you stealing from the company?  If so STOP!  It might just cost you your job one day.

Labor Pricing Software is not an accounting program, it is a modeling tool to determine proper labor pricing and to develop monthly cash-flow projections. This software has been the top computer-modeling software in the trades company for over 15 years! Version 6 has been totally re-written and now will allow you to:

  • Create proper hourly rates, by department, including breakeven rates.
  • Month-by-month, department-by-department cash flow budgets.
  • Cost of non-billable time including projected lost revenue.
  • Total breakdown of your hourly rate

The software is normally $399.95 but this month it is only $299.95. Order today.

The second Website Special features our

Money Matters series covers the monthly review that every business owner should be conducting to make sure your business is staying on track financially. This process will help to identify issues when they come up and allow you to make changes before they become a real problem.  The normal price is $159.00 but this month it is only $139.00. Order today 

Business Tips for New or Relatively New Businesses – Part 3 of 3

By Tom Grandy, Founder

Parts 1 and 2 of this series covered several “tips” for new or relatively new company owners.  Part 1 covered labor pricing, Chart of Account, QuickBooks tips and the use of partners like your CPA.  This past month we talked about joining a mixed group, saving on a weekly basis, creating a 100% customer satisfaction program, utilizing a totally separate payroll checking account, a formal collections policy, and getting deposits on all jobs.  That leads us into the final part of our three-part series that will over several more areas.

  • Collect Payment on the Spot – Cash flow is king. When calling service customers to inform them the tech is one the way, ask a question.  “Mr. or Mrs. Jones, will you be paying by cash, credit card or personal check?  We don’t invoice.”  This preps the customer and helps the tech collect at the completion of the repair. 
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  • Setting Up a Line of Credit – Every company, no matter how good their cash flow may be, needs to have a line of credit in place. When do you set it up?  When you don’t need it!  That’s right, set it up at the bank when things are going great and there is money in the bank.  It’s hard, if not impossible, to set up a line of credit when you need it.  It needs to be setup before the need arises.  Just a few comments on a line of credit.
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  •  Use the line of credit for its “intended” purpose. The intended purpose of a line of credit is for short-term borrowing against receivables.  When the company finds out that $25,000 check that was expected today is not going to arrive for 30 days, that is when the company goes to the line of credit.  The $25,000 is borrowed, bills are paid, payroll is taken care of, etc.  However, when that $25,000 check comes in, the line of credit needs to be paid back.  That is how a line of credit is supposed to be utilized.
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  • Do not borrow money on your line of credit for general operating expenses. If the line of credit is not being used to fund receivables, take that as a red flag.  There is something else going on within the company that is causing the short fall.  Find out what it is!
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  • If the company has a line of credit set up but has not used it in a year or two, do this. Borrow $10,000 or $20,000 on it and put the money in a saving account at a different bank.  Next, pay the money back over the next 30, 60 or 90 days.  If the bank does not see activity on the line of credit, they tend to cut it off without warning.  Show activity, even if you don’t need the money.
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  • Set Up a Liability Account for Credit Cards – Keeping credit cards paid off can be a big deal. Money gets spent (placed on a credit card) and is often forgotten until the statement arrives.  A simple way of handling this situation is to set up a physical liability account at your local bank.  Each time a credit card is used, simply transfer the money online from the business operating account to the liability account.  This ensures all credit card money is set aside and it eliminates the false assumption that the dollars are in the operating account to cover the bill when in fact they may not be.  When the bill comes in, the company simply transfers the money, again online, from the liability account back into the operating account and pays the bill.
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  •  Pay Material Suppliers on Time and Take Discounts – Materials, parts and equipment make up a huge portion of what the company spends money on each month. Many companies, especially those that are not priced properly, find themselves falling behind in timely payments to their suppliers.  On the flip side, companies that pay on time can often earn significant discounts over the course of a year.  Consider the following:
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  • Proper Pricing – Developing “profitable” hourly rates is fundamental to paying suppliers on time. If the company is unable to pay its bills, not just materials suppliers, take it is a red flag that labor rates need to be increased.
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  • Deposits – Fundamental to paying suppliers on time involves getting deposits on jobs. The deposit money when properly handled, will fund the payment of material suppliers…which is the next point!
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  • Properly handing deposit money – Getting a deposit is one thing. Handling it properly is another.  Once the deposit in secured, handle it like credit card purchases.  First, deposit the money in the operating fund so it’s accounted for properly.  The same day, transfer the deposit money into a liability account so it doesn’t show up in the operating account.  Do this on all jobs sold.  When the company is invoiced for materials, parts and equipment purchases simply transfer the dollars from the liability account back into the operating account and pay the bill.  By the way, handling deposits in this way will also allow the company to pay on time, therefore receiving discounts when offered.  One to three percent of a company’s total material purchases can add up to a lot of money on an annual basis.
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Labor Pricing Software is not an accounting program, it is a modeling tool to determine proper labor pricing and to develop monthly cash-flow projections. This software has been the top computer-modeling software in the trades company for over 15 years! Version 6 has been totally re-written and now will allow you to:

  • Create proper hourly rates, by department, including breakeven rates.
  • Month-by-month, department-by-department cash flow budgets.
  • Cost of non-billable time including projected lost revenue.
  • Total breakdown of your hourly rate

The software is normally $399.95 but this month it is only $299.95. Order today.

The second Website Special is our Money Matters series covers the monthly review that every business owner should be conducting to make sure your business is staying on track financially. This process will help to identify issues when they come up and allow you to make changes before they become a real problem.  The normal price is $159.00 but this month it is only $139.00. Order today 

PPP Update – Repeal of EIDL Grant Deduction

By Bill Kinnard, President & CEO

One of the issues of the PPP program that many found surprising is that if you applied for an EILD grant and now applied for forgiveness for you PPP loan, they deducted the amount of the grant from the forgiven amount. The EIDL grant  is the $10,000 grant that you could recieve by applying for an Economic Injury Disaster Relief loan. They said that even if you didn’t take the loan, you could keep the grant, so many contractors applied. Then when they applied for forgiveness, the SBA deducted the grant amount from the forgiven PPP funds resulting in the the same result as having to pay it back.

With the bill signed by President Trump on December 27th, this has changed. Going forward, they will not deduct this grant amount from your  PPP loan amount. If you  have already submitted your application for PPP, they will ignore any amount listed for the grant. Also, if you have not yet submitted for forgiveness, you no longer have to list the grant amount of the PPP Forgiveness Application.

Lastly, if your PPP loan has already been forgiven and the grant amount was deducted from the forgiven amount, the SBA will automatically issue a second payment to your lender for the remaining balance.

To listen to my live stream with the details, check it out here.

Grow Your Contractor Business by Creating a Cash Flow Budget

If you’re going to run a successful contractor business, you need to create a cash flow budget within your company. Unfortunately, the majority of contractors don’t do that.

Here’s what we hear:

“I don’t want to.”

“I don’t know how.”

“It’s going to be too hard.”

“I don’t have enough time.”

When the seasons change, though, or business gets tight, you’re going to wish you’d taken the time to establish a cash flow budget back then.

If you want to protect the future of your business, or grow your business, then you have to create a cash flow budget.

If you’ve ever said any of the excuses above, then you’re in luck. Today, we’re going to teach you how to create a cash flow budget.

Cash Flow: the True Measure of Success

Today, lots of companies look at their profit and loss (P&L) statements to gauge how well their business is doing. If they’re in the green, things are good. Red, meanwhile, means it’s time to drum up some new business.

While profit and loss statements are certainly an essential part of accounting, they don’t tell the whole story. In fact, your P&L can — and will — lie to you and tell you the company is making money, even when you’re not. If you keep going like this, your business is bound to struggle.

So, what’s the answer?

Welcome to the importance of cash flow.

More reliable than those P&L statements, cash flow is the metric that demonstrates how well your company is truly doing, and where your contractor business is (or is not) growing.

What Your P&L Won’t Tell You

The primary issue with P&L statements is what they don’t show you. These things include equipment purchase cost and loan payment numbers.

Equipment purchase cost. Depreciation is an accounting number that relates to how much you pay for a piece of equipment and how much the value of that asset has reduced since you first purchased it. Equipment purchase cost, on the other hand, is a cash flow metric, since your company must spend money to replace said assets. While depreciation doesn’t have a direct impact on your cash flow, equipment purchase cost does.

Loan payment numbers. P&L statements only show you how much interest you’re paying on your business loans — not the principal payment amount. This means you could be under-reporting the expenses associated with running your company.

In addition to giving you a clear picture of your company’s finances, establishing an accurate track record of your flush seasons allows you to predict what next year, and next month, will look like. This is good because it can help you plan ahead.

4 Tips to Develop a Cash Flow Budget

Now that we’ve discussed why creating a cash flow budget is so important, let’s talk about how to make it happen. Here are a few critical steps:

Predict your collections. What do you anticipate bringing in as revenue, and when? Be realistic about this. If a June invoice is September revenue, thanks to your net-60 payment terms, be sure to account for this.

Predict other cash to enter your accounts. Are you anticipating client deposits, proceeds from partnerships, or income from equity-based transactions? Account for these, too.

Detail expenses. The easiest way to do this is to look at your costs from the last year, month, or quarter. Start with standard expenses, like insurance, loan payments, rent, and payroll.

Evaluate accounts payable. Using the same period (month, quarter, or year), evaluate your accounts payable. What are the due dates for each account, and when will you pay those expenses?

We Can Help You Grow Your Contractor Business

Once you’ve got this information gathered, you’re ready to begin compiling a cash flow budget. Don’t go it alone, though. At Grandy & Associates, we know just what it takes to run a profitable contracting business. We provide business training exclusively to the service and trades industry.

Contact us today and find out how we can teach you to grow your contractor business.

How to Prep Your New HVAC Tech for the Job

The HVAC industry is growing faster than ever, with a majority of HVAC business owners expecting to see at least 10% growth in the next year. That means there’s going to be a significant rise in HVAC continued education if dealers are going to keep up. 

Currently, more than 1 million people work in the HVAC industry… and that’s just in the U.S.! If you own an HVAC business, or work in the HVAC industry, then you know it’s not uncommon to feel the effect of labor shortage in our industry.

This is leading local dealers to more frequently hire people with little or no HVAC experience. But let’s be honest — while you desperately need skilled HVAC technicians, you don’t have the time to train them on your own, and yet you still need them to do the job, and do it well! 

Let’s take a look at how you can prep your new HVAC tech for the job.

What Your New HVAC Tech Needs to Know

If your new hire doesn’t know anything about the HVAC industry, then it’s a race against the clock to teach them everything they need to know so they can help your business succeed. To get them up to speed, sign them up for some HVAC company training, where they can learn all the HVAC essentials. 

So what do they really need to know about? We’ve made a list of the top six. 

1. System components

Every heating and cooling system is made up of major and minor components. Your HVAC tech should know the parts and pieces that work together to make a comfort system function. 

2. System design and installation 

While your HVAC tech doesn’t have to know all the details about how system design and installation tie into mechanical engineering, they should understand the importance of system design and installation.

3. Efficiency requirements

The U.S. Department of Energy (DOE) has placed minimum energy efficiency standards on the appliances and equipment we use at home every day. This includes air conditioners, so your HVAC tech should know efficiency requirements and the role they play in the HVAC industry.

4. Indoor air quality (IAQ)

There are three basic strategies to improve indoor air quality, including source control, improved ventilation, and air cleaners. Your HVAC tech should be well-versed in IAQ and understand why it’s such a big part of the HVAC industry. 

5. Comfort controls

Your HVAC tech already knows that comfort controls control the temperature, but that’s not all they do. They also help heating and cooling equipment maintain the optimal temperature setting while being energy-efficient, and your HVAC tech should know all the details about comfort controls. 

6. System options 

There are many types of HVAC systems on the market right now, from split systems to duct-free systems, and your HVAC tech should know all the options currently available, as well as the benefits of the most efficient systems.

Invest Today for Profits Tomorrow!

HVAC company training makes it easy for you to prep your new HVAC tech for the job. Once they complete training, you can confidently send them out into the field knowing that your current investment in their HVAC education will earn you long-term profits. At Grandy & Associates, we’ve developed a class specifically designed to help business owners prepare new personnel for the job. Register today

5 Tips for Profitability

As a business owner, you put a great deal of time and money into your business every day. Your hard work should be apparent in your contractor business’s profitability. But if you aren’t making as much money as you thought you would be, then it may be time to look into business growth strategies so you can grow your business and increase your profit.

To get you started, we wanted to share five tips so you can maximize your profitability.

  1. 1. Know your price — and charge it.

If you’re going to make any money, then you need to get comfortable with knowing your price — and charging it. Once you’ve figured out how much it actually costs to profitably run your business, then you have to set a number and stick to it. When you do, not only will you be able to cover your company’s cost of operation, but also make a profit while doing it. The customers you want will happily pay your price because they know the value of what they’re receiving. 

  1. 2. Develop a cash flow budget.

Running a profitable business means you’re running it thoughtfully. If you have yet to develop a month-by-month cash flow budget for your company, then the time is now. Showing profitability at the end of the year doesn’t matter if you went out of business back in March! And odds are, you’re going to have cycles in your company. That’s why you have to plan ahead if you’re going to make it through the slower months. Put together a cash flow budget today and follow it so you can maintain cash flow through inevitable slow times of the year. 

  1. 3. Recognize the profitability of your pricing. 

Depending on the markup that you use for materials, your pricing can dramatically impact the overall profitability of any job that’s completed. You have a certain amount of overhead in your company, and part of it is going to be covered by materials, while the other part of it is going to be covered by your labor rate. You have to know what the total combined profitability is for the individual jobs you do, and then make sure you’re charging enough to cover your costs and generate profit (but not so much that you price yourself right out of a job!).

  1. 4. Establish a profitable maintenance agreement program. 

If you don’t have a profitable maintenance agreement program in place right now, you need to get one. If you want to get out of it at some point, then you’ll need to have two things. First, your company will have to be able to function without you. And second, you will need to have some type of guaranteed monthly income. In this business, the closest we can come to guaranteed monthly income is a solid maintenance agreement program. Put the program in place, make sure every person in your company knows how to explain the benefits of the program from the customer’s perspective, and implement it.

  1. 5. Perform a monthly financial review. 

In the business world, ignorance is not bliss. You need to know your numbers, and you need to know them well. That’s why you have to perform a monthly financial review of your company. You need to look at your finances every single month and be honest with yourself about them. Most contractors only look at their finances two or three times in a year, and they’re likely outdated. If you want to be profitable, then you need to look at your finances every single month. It only takes about 30 minutes to walk through your finances, understand what they’re telling you, and make course corrections along the way.

Start Planning for More Profit!

At Grandy & Associates, our mission is to teach contractors how to run profitable businesses. That’s why we provide HVAC business help and HVAC business growth strategies, as well as many other contractor business training opportunities. We believe every business deserves to grow. Join us at an upcoming workshop so you can start building a more profitable business! 

 

Carlyle Compressor Teardown Full Course - Self Paced Online Training

Planning for Profit Workshop

Cashflow and Cashflow Budgeting

Service Managers - Learning Path

Carlyle Compressor Teardown Full Course - Self Paced Online Training

Planning for Profit Workshop

Cashflow and Cashflow Budgeting

Service Managers - Learning Path

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