SPRAYFOAM Professional - Summer 2013 - (Page 26)

S SPEAKING S S G SENSIBLY ARE YOU READY TO GROW WITH THE IMPROVING ECONOMY? BY MAC SHELDON, NATIONAL ACCOUNT MANAGER, DEMILEC (USA) LLC Speakers from the highest-attended seminars at the 2013 SPFA Convention & Expo share more insight related to the sprayfoam industry in this new series, Speaking Sensibly. * Out of every 100 small business owners at age 65: • Only 1 will be independently wealthy. • 4 will be financially secure. • 24 will still be working because they have to. • 31 will be dead. • 40 will be dead broke and need social security to make ends meet. *Courtesy of George Hedley - www.hardhatpresentations.com THE TOP FIVE PERCENT of small business owners embrace some basic rules in their operation, which they adamantly abide by in order to grow through the challenges in the market. Here’s what we’ve learned from their success… Most subcontracting companies start out as closely held or family operations with low overhead and a small crew. They’re competitive because of their low cost of doing business and they can make good money doing a couple of jobs a week. The business owner can be quite comfortable at this level but it’s rare for a contractor to purposefully remain in this mode for more than a couple of years. Instead, most companies want to grow their revenue and profit, add a spray rig or two, add to their crew and allow the business owner to concentrate on sales and marketing the company rather than the daily operation of the crews. Along the way the sprayfoam contractor’s cost of operation often escalates and unless carefully managed, the profitability of the company declines, sometimes dramatically. So, what does the SPF business owner need to do to successfully take his company through 26 SPRAYFOAM PROFESSIONAL | Summer 2013 the growth from one to multiple rigs? Here are a couple of ideas for running a sprayfoam company. BASIC TENETS OF THE SPRAYFOAM BUSINESS 1. Billings Out 2. Collections In 3. Take Care of the Customer Billings Out – The first ironclad rule of any subcontracting company is to get your billings out in a timely fashion. There’s nothing wrong with invoicing on partial completion, especially if there’s going to be gap of a couple of days or more between phases of work. Many successful contractors bill their big jobs weekly and all smaller jobs should be billed immediately on completion. Pay very close attention to payment terms in commercial contracts, and those with the contingency of being paid when the general contractor is paid may require special financing provisions to be acceptable. Commercial contracts usually have specific dates for invoicing and missing by even a day can mean waiting another 30 days before payment is due. Collections In – You can’t spend a promise, and the grocery store doesn’t care about your receivables. Collecting all that’s due for work you’ve performed and materials you’ve delivered is imperative to a sprayfoam contractor. Aging receivables diminish rapidly in value so collecting in accordance with the terms of your original agreement is vital to maintaining cash flow. Since you’re not a licensed bank, there’s no reason a general contractor should use your money any longer than your original agreement requires. One of the best ways I know to get paid on time is to include a handwritten note with your invoice thanking the contractor for his business and inviting him to call, text or email if there’s any problem with the job or you can further assist in any way, then regularly follow up by phone and in person. Constant dialogue is the key to maintaining the relationship and those with the best relationships are generally the first to be paid on any given project. So, you’ve got your billings out and you’re maintaining the dialogue but the contractor tells you there’s a problem outside his control delaying payment; what do you do? Your most important recourse is to carefully protect your lien rights. Each state is different, but all have a provision for allowing a contractor and subcontractors to file construction, labor or material liens on the property, but only if specific rules have been followed. Check with your local homebuilders’ association and your state contractors board to find the requirements for notification and for perfecting a lien should you not be paid for the work performed and the materials provided. Filing a lien does not mean you’ll be paid either immediately or entirely, http://www.hardhatpresentations.com http://www.naylornetwork.com/spfa/

Table of Contents for the Digital Edition of SPRAYFOAM Professional - Summer 2013

Executive Director's Corner- The Hose to Nowhere
President's Post - Feast, Famine ...& Friends!
Foam Business News
Safety First - Effect of Ventilation Rates on Applicator Exposure During SPF Application
Checklist - How to Reduce Exposures During SPF Application
Legislative Update - The Immigration Reform and Construction
Behind The Foam - Rob Tollen and George Tollen: Selling a Product They Believe In
Speaking Sensibly
2013 SPFA Contractor Awards
Ask the Expert - Perfecting Your Masking and Trimming
Upcoming Events
Index of Advertisers

SPRAYFOAM Professional - Summer 2013