Raising the Bottom Line

How to Use Job Costing and Class Tracking in QuickBooks to Increase Profitability

Posted by Taylor Dean on Mon, Jul 24, 2017 @ 02:29 PM

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There’s nothing quite like the sinking feeling you get when you complete a job you thought was profitable, only to discover that you barely broke even or, even worse, you lost money. These situations inevitably raise a lot of questions, specifically where you went wrong and how to avoid the same situation in the future.

One way a business using QuickBooks can keep an eye on exactly where money is coming and going is by utilizing job costing and class tracking in order to better track and manage job-to-job and overall profitability.

Job costing

Job costing allows you to determine profitability for a specific component of a job, client or set of common clients or types of jobs. This can help you keep tabs on where you are making and losing money.

Some benefits of job costing include:

1. You can determine if you made a gross profit or incurred a loss at the job, client or set of clients level.

For example, let’s pretend you work for an HVAC repair and maintenance company that services residential customers and commercial properties, and performs HVAC installations in large commercial remodeling and construction projects.

You may not want to track the profit for every individual residential project, so you might classify all residential projects as one “client,” with specific jobs set up as contracts. Under this system, you can still issue an invoice for each individual residential job, but you can also evaluate how well you are doing on residential work at an overall level.

On the other hand, you will likely want to track each of your large construction projects by themselves because the work is likely to take place over months or even years and will involve significant oversight of purchases and billings, as well as a need to track change orders.

With job costing, you have the flexibility to choose how and what you track depending upon your needs.  

 2.You can use the information for future bids and proposals to achieve a profit goal or to ensure that you do not incur unexpected losses.

 3.You can determine the profitability of certain types of work, work for certain clients, or groups of clients.

This will provide you the opportunity to either focus on more profitable jobs and clients or allow you to pinpoint jobs and clients that need to better managed or eliminated.

Direct vs. indirect costs

Direct costs

Job costing requires that all direct costs are recorded against a specific job, client or set of clients, depending upon your job costing setup. Direct costs are those costs that are only incurred as a result of a particular job, client or set of clients. Direct costs can include:

  • Direct labor hours
  • Direct materials
  • Direct supplies
  • Direct travel

In particular, in order to track direct labor, you will need to utilize a timekeeping system and ask all of your employees to allocate their time spent day-to-day to specific jobs, clients or set of clients. Also, if applicable, you will need to have employees who submit expense reports to note the specific job, client or sets of clients the expense relates to.

Indirect costs

In order to calculate the total cost of a project, you will need to apply the indirect costs. Indirect costs are expenses that do not relate to one specific contract but support the projects or business as a whole. Indirect costs need to be allocated against all contracts on a consistent and logical basis. Allocations can be tailored to your specific industry and the type of job.

Final net incomeDownload our work in progress (WIP) calculator for construction contractors!

When looking at direct costs alone, the numbers may suggest you are turning a gross profit. However, when you add in indirect costs, your original number will most likely decrease, affecting your bottom line.

Once the direct costs and indirect costs have been allocated to a job, you can run a report showing the final net income of those jobs or sets of jobs. This shows you how much gross profit you need to be making in order for a job to be profitable.

Class tracking

Class tracking allows you to track costs across broad classes or categories, such as individual rental properties, office locations, departments or producers/partners. This allows you to track all expenses associated with a particular class.

Rental properties

For rental properties, class tracking allows you to determine which properties are the most (and least) profitable. Also, by tracking all assets related to a specific property over time, you can easily calculate a net book value of the property. This data will be critical when it comes to preparing not only your yearly tax returns, but also if you ever choose to sell the property.

Office locations

Class tracking allows you to review the income and operating costs of each office location, providing you with vital information about each location’s profitability.

Department tracking

Similar to office location class tracking, you will be able to determine which departments are generating the most (and least) revenue.

Producer/partner tracking

Class tracking can help professional service firms, like law offices and accounting firms, track the productivity and costs associated with particular producers or partners. This allows decision makers to evaluate the performance of professionals and determine if compensation levels are adequate to meet the company’s financial goals.

How class tracking works

Class tracking, like job costing, requires that you allocate costs to different classes. You can allocate staff salaries and wages through the use of timekeeping systems or, if specific work allocation is not necessary, you can assign certain employees and the cost of their wages and benefits to one class.

The class tracking system setup can be tailored to meet a variety of management reporting needs. If you have an employee who works for two departments, you can split their costs based on the projected percentage of time that employee works for each department. You can allocate rent and occupancy expenses to departments by looking at the number of employees within the department or the square footage used by that department.

Need help?

Once you have set up either job costing and/or class tracking within QuickBooks, it is easy to set up customized automated reports that can be run at any time by management. To learn how you can leverage your current QuickBooks accounting system to make smarter management decisions, talk to our Smart Accounting Solutions Support team by calling 800.899.4623 or contact us online.

Tags: accounting, business owners, Taylor Dean, outsourced accounting, Smart Accounting Support Solutions, outsourced CFO

5 Smart Strategies to Grow Your Manufacturing Business

Posted by Edward Thompson on Thu, Jul 13, 2017 @ 11:02 AM

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The manufacturing industry isn’t what it was ten years ago. Not only has changing and increasingly advanced technology made finding and recruiting qualified employees more difficult than ever, but uncertainty about the future of tax law and governmental regulations can make planning for the future difficult.

Despite this, there are key ways manufacturers can grow their business and thrive.

1. Be visible

Some manufacturers argue that they don’t need an online presence, like with a website or social media pages, because they can maintain their revenue through their existing customers and referral sources. However, this mindset can create a dangerous false sense of security, which can become all the more apparent when you start losing old accounts and have no good leads in the pipeline to replace lost income.

Just as technology has undoubtedly changed the way you manufacture your products, the internet has changed the way people find and interact with businesses. Cultivating and maintaining an online presence is an important and necessary part of growing your business.

Companies with small marketing budgets can use a website building tool like Wix to develop their website for free, but if you have the funds, it is worth investing in the services of a qualified web developer to create a website that best represents your business.

2. Invest in your employees

Attracting and retaining qualified, educated employees has become one of the largest challenges facing manufacturers today. Simply put, employees with the technological knowledge needed to operate in today’s manufacturing space are in high demand throughout the country, and not just in the manufacturing sector. This means your company must be more cognizant than ever about holding on to your best employees.

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This can be done by offering competitive salaries, flexible work schedules, better benefits or morale builders, like periodic happy hours or free meals. You may also want to consider extending education benefits to good employees who lack the education needed to move to the next level or keep up with current operations.

Remember, while there are costs associated with offering these perks, it is worth noting that the price of losing a highly trained and educated employee can easily reach the tens of thousands of dollars per employee in turnover costs.

3. Listen to your customers

Customers are the bread and butter of a business, so why aren’t more manufacturers listening to what the people purchasing their products have to say? The feedback you receive and solicit from your clients can be the most important information you ever receive about your business.

For example, if in a customer survey, you receive multiple comments on the decreased quality of one of your products, you are then able to address those concerns and possibly adjust your operations to solve those issues. This shows commitment to customer satisfaction, which, in an increasingly competitive market, can be the differentiator between you and your competition.

4. Keep current with technology

If you’ve been in this business long enough, you have undoubtedly witnessed the changing technology being utilized in not only your own company, but in the manufacturing sector as a whole. It is vital that manufacturers keep up to date on new technologies in the industry and, if possible, upgrade your systems as technology evolves.

Investing in technology often means leaner operations, which can contribute to increases in efficiency and decreases in waste.

For small Maryland manufacturers looking to upgrade their manufacturing operations, the Maryland Economic Adjustment Fund (MEAF) provides funding assistance for working capital machinery and equipment, building renovations, real estate acquisitions and site improvements. To learn more about MEAF, visit the fund’s website.

5. Keep an eye out for acquisition and merger opportunities

When you’re locked in an increasingly competitive market, acquisitions and mergers can provide manufacturers with opportunities to grow their business and get a leg up on the competition. By combining forces with another manufacturer, you gain access to not only a larger customer and prospect base but also opportunities to further develop your operations.

Need Help?

If you have any questions on your manufacturing business, feel free to contact us online or call 800.899.4623.

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Tags: Manufacturing & Distribution, Ed Thompson, manufacturing

3 Smart Strategies for Managing Your Construction Company’s Online Reviews

Posted by Steve Ball on Tue, Jul 11, 2017 @ 03:11 PM

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If you’ve ever had a teenager sullenly ask “what is this?” when presented with a now rare copy of the Yellow Pages, you know that the way customers find businesses has fundamentally changed in the past decade. Consumers are more informed and empowered than ever to make better buying decisions, which puts the onus on businesses to own up to promises and provide good customer experiences.

The freedom of today’s online environment allows customers to do their research and decision making all from the comfort of their homes or offices. In fact, many prospective customers who contact you most likely have already made up their mind based on your company’s website, social media accounts and any online reviews.

Online reviews matter

One increasing way consumers are making decisions is by reading online reviews of a company or product. Chances are, if you’ve ever made a purchase online, you’ve probably seen a rating or review section on a product page; and maybe you’ve even changed your decision based on what reviewers had to say.

The same thing goes for businesses, and especially construction businesses. Websites like Angie’s List and Yelp exist for one big reason, for users to post about their experience with a business to help others make informed decisions.

Learn what nearly 200 Maryland construction contractors said about their company’s outlook, marketing strategy and more.

Let’s take, for example, homeowner John. John hired ABC Construction Company to renovate his kitchen, but after a few months of work, he decides to terminate his agreement with ABC. Shortly after, he creates a Yelp page for the company and submits its first and only review.

“I hired ABC Construction Company for my kitchen remodel, and let me tell you -- what a major mistake on my part! Not only was the project two months behind schedule by the time I kicked them off the job, but they had the audacity to try and charge me more than our agreed upon price for my kitchen counters! The foreman who started the work was great, but then he got pulled from the job with no notice, and his replacement was less than ideal. I had to pay to get my carpets steamed because some of the guys tracked their muddy boots through my living room one day when I wasn’t home. Awful experience. DON’T DO BUSINESS WITH THESE PEOPLE!”

This is a bad situation for ABC. Not only do they have a terrible review about their business sitting online for anyone to read, but they don’t have any positive reviews or online presence to counter the negativity in John’s review.

Maryland contractors remain skeptical about the power of online reviews

A startling 43% of Maryland construction contractors say they don’t think reviews posted about a construction company online impact whether a customer will do business with that company. But put yourself in the shoes of a customer. If you read John’s review about any other company, would you want to do business with them?

The problem is, many business owners either don’t give online reviews the attention they should or know reviews are important, but just don’t know how to interact with the comments they receive. To get you started, here are a few smart strategies for dealing with online reviews:

1. Respond to bad reviews 

The only thing worse than a scathing online review is a scathing online review with no response from the business or, even worse, the business does reply, but with an angry tirade against the reviewer (hint – your online persona should be just as professional as your in-person persona).

Think back to John’s review of ABC Construction Company. It’s going to look bad if ABC remains silent on John’s claims because, just like the defendant who pleads the 5th, silence can insinuate guilt. But what if ABC isn’t guilty? How do you think public perception of John’s review would change if ABC responded with the following?

“John, I apologize you had such a negative experience with ABC. Unfortunately, the completion date of your remodel was pushed back due to the major changes in layout you requested midway through the work. We make it a priority to keep customers up-to-date on any change in work schedules, and that’s why we had you sign off on an updated calendar, documenting the extra work needed as a result of the new changes, so you’d be aware of the schedule modifications beforehand.

The increase in price you mentioned for the counters was due to the unforeseeable shortage in stock of the granite you requested. We never want customers to feel blindsided by increases in price, which is why we had you sign off on the additional cost needed to have your preferred granite shipped from a vendor across the country instead of our usual local supplier before we placed the order…”

Suddenly, John’s story is cast in a whole new light, and you start to question his legitimacy as a reviewer. Seeing both sides of the story at least allows your business a fighting chance when being read by a potential customer online.

2. Ask satisfied customers to write reviews

Anger or upset over a bad business experience is often motivation alone to give someone the drive to log on and take the time to write a review, but happy customers are less likely to be as motivated. One easy way to increase your company’s number of positive reviews is to ask satisfied customers to write a review describing their experience with your business. The best time to ask for a few is immediately after you finish the job.

For example, if a customer thanks you for your hard work and expresses how pleased they are, you might say, “Thank you so much. We really enjoyed working with you. If you get a chance, would you mind writing us a review on Yelp?” (Hint: better yet, send them the link to your Yelp page.)

For some people, a verbal ask will be enough to motivate their review. However, for others, you may want to consider a follow-up reminder either by including a line like “Please review us on Yelp” on your final invoice, email signature or as part of any post-job materials sent to your customers.

And when someone does take the time to write a review about your business, remember to acknowledge them with a quick thank you comment.

3. Utilize reviews as the valuable tools they are

Getting the truth stings sometimes, but refusing to listen to legitimate complaints about your business will only hurt you in the long run. It’s inevitable you’re going to get a few accusatory (and untrue) reviews from people like John, but many of the reviews your business receives will contain invaluable feedback from your customers.

For example, if three reviewers comment that the same employee has a poor attitude, maybe it’s time to pull that person aside and have a chat. Use reviews for the tool that they are. Your customers see your business with a perspective you can’t, so utilize their observations to help better your company.

Other marketing and business development tactics

To learn what other Maryland construction contractors are saying about their company’s marketing and business development tactics, download a free copy of the executive summary of the results of the 2017 Maryland Construction Industry Report.

2017-maryland-construction-survey-executive-summary 

Tags: construction, Maryland, 2017 Maryland Construction Industry Survey

6 Reasons To Use An Outsourced CFO To Help Grow Your Business (And Stop Juggling)

Posted by Scott Handwerger on Thu, Jul 06, 2017 @ 08:42 AM

Outsourced CFO

As a small business owner, you know what it’s like to perform a juggling act. From sales and accounting to technology and human resources, you keep dozens of balls up in the air every day.

It goes without saying that all this juggling can make it hard to focus on the long term growth of your business. Instead, you spend your time just maintaining the status quo, while sales and profits plateau.

More times than not, if the financial reporting task were given to someone who could also provide strategic financial guidance, your business would have an edge and be able to get a step ahead of the competition.

This is where a chief financial officer comes in to play.

How Do You Know It’s Time To Bring In A CFO?

Let’s start by looking at some of the indicators that you should consider a CFO for your business. You might be ready for a CFO if:

  • You do not have the right financial information to make timely and important decisions
  • Your business is stagnate and not growing
  • You do not have the financial information that is required by customers, suppliers, banks and insurance carriers
  • Your business is experiencing rapid growth or is preparing for a merger or acquisition that requires increasing financial reporting and expertise

Although you might already know the benefits of having a CFO involved in your business, you might be thinking that hiring a full-time CFO sounds expensive.

There is a simple answer to this problem: outsource the CFO function. In other words, bring in someone (not an employee) on a part-time or as needed basis. An outsourced CFO can help you grow your business without the high price tag of a full-time salary, stock options and employee benefits that come with a full-time CFO employed by your business.

Many CPA firms offer outsourced CFO services to their growing small business clients. Let’s look at a few benefits of utilizing an outsourced CFO.

  1. New Skill Sets

    CFOs have a higher level of analytical skill than bookkeepers or accountants. With the ability to interpret a business’s data and earnings, CFOs can think long term about what’s best for your business based on economic conditions, industry trends, the tax environment and government regulations.

  2. Expert Financial Reporting

    A CFO can produce the financial reports required by outside financial institutions, investors and customers. This saves you time and energy that you can now put into implementing creative ideas to grow your business.

  3. Marry Accounting and Technology for Better Reporting

    CFOs understand that accounting and reporting systems are important. Whether you use QuickBooks, Microsoft Dynamics GP or Sage 300, a good CFO can work with you to get meaningful information out of your system.

  4. Protection From Fraud

    These days, stories of fraud and embezzlement are everywhere. Fraud can hurt your organization’s future growth. A CFO can help protect your business by ensuring that there are sufficient internal controls to safeguard against fraud.

  5. Strategic Growth Expertise

    A CFO is knowledgeable about how businesses grow. He or she should be able to provide and analyze strategic growth plans that help ensure your business is on track for growth.

  6. Accurate Cash Flow Projections

    It’s important to know where your business is headed. CFOs have the ability to provide accurate cash flow projections that are necessary for growing a business.

Outsourcing your CFO function to a CPA firm can be a huge step towards more growth for your business due to their analytical skill set, accurate projections and strategic recommendations. Outsourcing the accounting function makes sense for a lot of small businesses. It's a cost effective way to reduce your workload as a business owner so you can get back to concentrating on growing your business.

Need Help? 

Give Gross Mendelsohn’s Smart Accounting Support Solutions team a shout to discuss whether outsourcing your CFO function makes sense for your business. Contact us online or call 800.899.4623.

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Tags: Scott Handwerger, accounting, business owners, outsourced accounting, Smart Accounting Support Solutions, outsourced CFO

A Tale Of Two Valuation Reports With Two Different Values: What's An Attorney To Do?

Posted by Richard Wolf on Thu, Jun 29, 2017 @ 08:13 AM

valuation reports with different values

In a recent case, Gross Mendelsohn was asked to value a franchisee with three separate locations, including an unused license for a fourth location.

During early 2010, there was a disagreement between the four franchise owners regarding the expansion of one of the locations. Since two of the owners (our clients) wanted to move forward with the expansion and two of the owners did not, the state statute required the determination of a buyout price as of the date of dissociation, which was set as March 10, 2010.

Two Valuation Reports With Wildly Different Findings

After completing our analysis, we determined that the overall value of the company was approximately $1.9 million. Upon our receipt of the opposing business valuator’s report, our clients’ attorneys were shocked to see that the same business had been valued at approximately $4 million.

What’s An Attorney To Do?

While many people will argue that business valuation is an inexact science, what was the attorney to do when presented with two widely different reports? Obviously, our clients’ attorneys were happy with our lower number as it meant a smaller potential payout for their client, but how could they go about explaining in court the differences in value offered by two experts?

How Different Financial Records Yielded Different Values

In this case, one of the main differences between the two reports was the financial data that was used in the valuation. Clients frequently have a variety of different records, which can tell very different stories. These records could be internal financial statements, tax returns and financial statements prepared by an external CPA, including audited, review or compiled financial statements. So what is the best choice in a business valuation? The answer, of course, is ... it depends.

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Based on our conversations with our clients and their attorneys, we determined that the franchisee did not have any financial statements prepared by an external independent CPA. Audited financial statements typically are the best source of financial data to use in a business valuation, as the auditor has expressed an opinion that the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States. Absent financial statements prepared by an external CPA, we then requested the annual tax returns, as well as any internal financial statements prepared by the client.

While tax returns can be prepared using different accounting methods, including cash and accrual, they are signed by a corporate officer and include the following language in the signature box:

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

As a result of this language, and the fact that corporate tax returns are frequently prepared by an external accounting firm (although with no type of assurance as in an audit or review), tax returns can be a reasonable alternative if no external financial statements are available. Our client provided us with corporate tax returns for the years ended December 31, 2009 and 2010.

Our client also provided us with a copy of their internal financial statements, by month, for the years ended December 31, 2009 and 2010. We noted upon review of these internal financial statements that they tied directly to the corporate tax returns filed by the client.

In this case, the client had also prepared various internal financial documents that were submitted to the franchisor. These documents included yearly profit and loss statements for each of the three locations, completed using the franchisor’s template. The client was able to provide profit and loss statements for each of the three locations for the years ended December 31, 2009 and 2010. We tried to tie the franchisor reports to the corporate tax returns and were unable to do so. We noted that the corporate accountants had made numerous adjusting journal entries to correct depreciation expense, officer loans, interest and other accounts that were not properly reflected on the franchisor reports. As a result, we decided that we could not rely on these statements. In addition, in an actual sale of the business, a buyer would probably place more reliance on the corporate tax returns over internal financial statements or those prepared solely for the franchisor.

Our Approach To The Valuation

So, we had the choice of using the corporate tax returns, including the internal financial statements that were the source for the balances, or the internal financial documents that were submitted to the franchisor. For some of the reasons discussed above, we elected to rely on the corporate tax returns and used them as the starting point for our analysis. After examining the opposing valuator’s report, we noted that they had used the internal financial documents that were submitted to the franchisor as a starting point for their analysis.

Our Approach At Trial

During our testimony at trial, we showed the court that had the opposing valuator used the same financial data that we used in our analysis, their value would have been within $50,000 of the value we determined. This comparison analysis allowed our client’s attorneys the opportunity to highlight the key difference to the court, the starting financial data. By boiling down the difference in values to the starting financial data used by each valuator, the attorneys were able to avoid complex discussions of variables such as discount rates, specific company risk premium, anticipated long-term growth rate, and weighted average cost of capital. In fact, these variables were almost identical between the two reports.

We explained to the court why we selected the corporate tax returns as a starting point and also pointed out the reasons why we felt the franchisor reports were unreliable. 

While the court has not yet ruled on this case, it highlights the need for attorneys to understand the differences between two different valuation reports so they can tailor their strategy accordingly.

Need Help?

Our Forensics & Litigation Support Group can help. Richard Wolf, CPA, CGMA, CFE, CVA, specializes in business valuation and forensic accounting. Contact him online or call 800.899.4623.

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Tags: business valuation, litigation support, attorneys, Richard Wolf

9 Benefits of Outsourcing Your Business’s Accounting Function

Posted by Steve Rostek on Mon, Jun 26, 2017 @ 05:59 AM

outsource accounting

If you’ve wrestled with the idea of outsourcing your organization’s accounting function, you’re in good company.

Many small- and medium-sized business owners have grown weary of maintaining an internal bookkeeping staff due to frustrations with employee turnover and the high cost of hiring and training people. Some business owners have turned to outsourcing their accounting function to a CPA firm. If you’re thinking, “I can’t afford that,” think again.

The Benefits

Let’s look at nine benefits of outsourcing your organization’s accounting function. And it’s most likely a cost-effective alternative to maintaining an internal accounting staff.

  1. You’ll have more time to concentrate on running and growing your business knowing that you have experienced professionals taking care of your business’s accounting function.

  2. When you have questions about your organization’s financial data, you’ll have easy access to experienced accounting pros who are intimately familiar with your situation.

  3. You’ll save money. In-house bookkeeping is expensive. When you outsource, you won’t incur the cost of salaries, payroll taxes and benefits associated with employees.

  4. Outsourced accounting services are scalable. If you have a seasonal business, for example, you will be able to adjust the level of service you receive from month to month. Accounting fees can be cut back during your slow season. With a full-time bookkeeper on your payroll, you lose that flexibility because you are committed to paying that person’s salary even during downtimes.

  5. With ongoing outsourced accounting services, you can rest easy knowing your general ledger and subsidiary schedules are being kept current. This means year-end reporting and tax returns will be easier and cleaner, saving you money in accounting fees.

  6. At the risk of sounding cliche, accounting is an investment for your business. Bringing in a professional outside accountant to provide (and analyze) accurate accounting reports and records for your business will save you money in the long run. When your organization’s accounting is kept current throughout the year – and regularly reviewed – you’ll see when sales are up and down, and why. This will help you determine when to adjust expenses. It will also tell you when you need to work on boosting sales. Having a good handle of your accounting will also help you better manage your inventory.

  7. When you outsource your accounting function, your outside CPA firm essentially becomes part of your staff. A good accountant will notice changes and discrepancies as he or she reviews your organization’s monthly and quarterly statements. This allows you to address issues before they become out-of-control problems. My experience is that while most bookkeepers are good at the daily record keeping, many are not always thinking outside the box. With an outside accountant keeping an eye on your business, you boost your chances of getting fresh ideas to improve your finances.

  8. With stealing and embezzlement in the daily news, it’s wise to have someone looking out for your business. Professional accountants are trained to make sure money isn’t walking out the back door. The practice of reconciling your cash, accounts receivable and accounts payable helps ensure that your organization’s financial coffers are in good shape.

  9. Even if you already have a small bookkeeping department, an outside accountant can act as your CFO. Your “outsourced CFO” will manage and coach your bookkeeping staff on how to produce accurate reporting.

    The outsourced CFO approach works extremely well for some of our clients. Their internal bookkeeping staff takes care of the daily deposits, posting sales activity, payroll, etc. I visit the client’s office quarterly to review the general ledger and make corrections as needed. Normally, they compile a list of questions and abnormalities for me before I arrive, and we review the list together. This helps keep everything current and accurate while training the internal bookkeeping staff along the way.

    As the outsourced CFO I also meet with owners and department managers to review increases and decreases in revenue and provide recommendations for dealing with business challenges.

Need Help?

Outsourcing your accounting function will almost always save your business money – and headaches. The key lies in selecting the right experienced accountant to handle your organization’s accounting function.

Contact Gross Mendelsohn’s Smart Accounting Support Solutions team to discuss whether outsourcing your accounting function makes sense. Contact us online or call 800.899.4623.

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Tags: accounting, business owners, outsourced accounting, Smart Accounting Support Solutions, Steve Rostek, outsourced CFO

8 Employee Retention Hacks For Construction Companies

Posted by Steve Ball on Thu, Jun 22, 2017 @ 10:24 AM

construction tools

Be honest. How many times have you heard someone say “our people are our greatest asset” and rolled your eyes?

It’s cliché, but there is a good bit of truth to the statement. The truth lies in the simple fact that human and intellectual capital are expensive to replace. When you watch a good employee walk out the door, it’s like throwing $100 bills into a big summer bonfire. Losing a valuable employee can be a big hit, financial and otherwise, to your business.Our 2017 Maryland Construction Industry Survey revealed that 62% of contractors say finding and retaining good employees is their #1 concern, up from 54% in 2016.

Tackling that concern can be daunting when you already have so many things going on in your business, but you have to start somewhere.

To help, we’ve put together eight employee retention hacks that you can start putting into place this year.

1. Pay your best employees a competitive salary.

Let’s get money out of the way. It’s the number one reason why construction company owners believe good employees leave their company. While you don’t need to break the bank to pay more than every other contractor in town, at least be aware of what the going rate is for the types of employees you hire, whether it’s foremen, accountants, bricklayers or estimators. Pay them fairly and competitively.

2. Say more than “welcome aboard” to your employees.

Your retention efforts should begin at the time you decide to hire a particular employee. When they accept your offer, make them feel like they absolutely made the right decision by joining your company. On their first day, show your new employee around and introduce them to the rest of your crew. Pair your new employee with a friendly peer who already knows the ropes.

3. Offer employer-sponsored job training.

In the survey, more construction companies reported offering technical and soft skills training to employees in 2017 compared to 2016.

Learn what nearly 200 Maryland construction contractors said about their company’s outlook, marketing strategy and more. 

Having the opportunity to learn new skills will be viewed by your employees – especially those who care about their jobs and want to do well – as a nice benefit, which in turn will most likely increase their loyalty to you. But just as important, you will be developing a pool of more skilled and efficient employees for your business. It’s a win-win.

4. Offer a leadership development program.

Only 16% of Maryland construction companies ranked their leadership development programs as “great.” A staggering 20% of contactors reported having no leadership program at all for employees, with the rest falling somewhere in between.

Your best workers should be trained and groomed to take on more responsibility, whether it’s mentoring young employees or managing the finance department.

Who knows, maybe that employee you’re grooming now will turn out to be the person who takes over your business down the road. Leadership development programs can keep good people engaged and increase their loyalty to your business.

When you give your managers leadership training, you’re more likely to retain your up and comers. Why? Because today’s managers will be leading tomorrow’s managers by example.

So ask yourself, what are you doing today to keep your star project manager on track to stay – and succeed – at your company?

5. Give your employees frequent and actionable feedback.

Nearly one-third of contractors said in our 2017 Maryland Construction Industry Survey that they do not give feedback to employees on a regular basis.

If you’re part of that one-third, it’s time to make some changes. Feedback can be given in both informal and formal settings. The important thing is that you do it regularly, ideally after every completed job or project.

Your feedback will help ensure your employees know how they can improve and what they’re doing well. Make your feedback specific, transparent and actionable. For example:

  • “You did ABC very well.”
  • “I liked how you …”
  • “Next time, try XYZ instead.”
  • “The way you handled ABC allowed us to get the job done faster than expected.”

The vast majority of employees WANT to improve. But they rely on your feedback to know how to do that.

6. Make your business a fun place to work.

This hack is so easy to implement but sometimes falls by the wayside. Get to know your employees as people. Show them that you care, and be ready to share a laugh here and there.

Celebrate birthdays, put their name in the company newsletter, or give your employee of the month a prime parking spot or a Friday afternoon off. Institute Taco Tuesday. Play a game of cornhole over lunch. Do you have a team that exceeded a goal? Treat that team to a catered lunch or an evening at the ballpark.

7. Get rid of the bad apples.

Nothing frustrates a high-performing employee more than a bad apple whose incompetency or bad attitude goes unaddressed by the boss. Equally as grating is the nasty customer who, time and time again, puts undue burden on your company and your team with her constant criticism, last-minute requests and poor communication.

When is the last time you fired a bad apple employee or customer? If you’ve done it, did it make your employees happy?

8. Be flexible.

For some employees, a flexible work schedule ranks right up there with compensation and a good medical plan on the list of desirable benefits.

Although it might be difficult to institute a high degree of flexibility for your workers in the field, it might be possible to give your in-office staff a work-from-home perk, or every other Friday off in the summer.

While this might not work for every business or every employee, extending some degree of flexibility to your best employees doesn’t cost your company a dime and could go a long way toward keeping them happy and loyal to you.

Need a Hand?

Make no bones about it: managing people can be flat out difficult. Sometimes it’s helpful to have a sounding board to figure out how to keep your best employees happy, engaged and on your payroll for the long haul. Contact Steve Ball, CPA, online or call 410.685.5512 to talk about how boost your company’s employee retention rate.

2017-maryland-construction-survey-executive-summary

Tags: Steve Ball, construction, employee retention, 2017 Maryland Construction Industry Survey

Why Donor Retention Matters: 3 Ways to Increase Your Fundraising Dollars and Keep Donors from Leaving

Posted by Tricia Thomas on Mon, Jun 19, 2017 @ 03:13 PM

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Nonprofits spend a lot of time and effort looking for donors. However, for all the effort put into attracting and getting gifts from new benefactors, many organizations drop the ball when it comes to retaining those who have given in the past. While it is important to continually attract new donors to your nonprofit, your organization must be cognizant of whether new donors are giving past their initial contribution.

Long-term relationships with donors can have major benefits for a nonprofit. For one, when it comes to large gifts and asks, you are going to have a much easier time soliciting big donations from people who have a history with your organization rather than someone who is just getting to know you. In addition, donors who are invested in your nonprofit may be more likely to volunteer or share your organization’s cause with those in their network.

So, how can your organization improve your donor retention rate?

1. Thank those who donate

Have you ever made a donation and failed to receive any type of thank you? At first, you might have wondered whether the nonprofit even received your donation, and once you confirm receipt, you might dejectedly wonder if it even made an impact if the organization did not bother to acknowledge the gift. One of the easiest ways to improve donor retention rates is by timely thanking every single donor, regardless of the size of their donation.

To build a long-term relationship with your donors, you need to have regular contact. In addition, you certainly will not be starting the relationship out well if the first communication a donor receives from you is a solicitation for another gift rather than an acknowledgement for their initial donation.

Unlock the secrets to making this year your most successful fundraising year to date in this free on-demand webinar.

A thank you for a smaller gift can be as simple as a preprinted postcard you drop in the mail or an email to thank the donor. Larger gifts warrant a more personal thank you like a phone call or handwritten note.

Remember, your donors are offering their own money to support your cause and are helping pay for the work you do. Thanking benefactors for giving is not only beneficial for donor retention rates, but it is the right thing to do.

2. Solicit feedback from loyal donors

The best way to improve is to ask for feedback from your current donor base. Your organization should make a habit of soliciting the advice and observations of a few loyal donors on a regular basis or, if you are more advanced in your fundraising, a larger pool of donors through a survey. This will help your nonprofit discover:

  • What donors think about your solicitation strategies
  • Why donors choose to give and not give to certain campaigns
  • What kind of updates and information your donors want and don’t want to receive

This candid feedback will allow you to tailor your communication and relationship with your donors. You are never going to please everyone, but if several donors tell you they would like to receive more about X and stop getting so much of Y; it would be prudent to take their comments under advisement when formulating your fundraising plans.

The important thing is to show your donors you are interested in their feedback and are willing to make changes based on the comments you receive.

3. Communicate with donors regularly – and not just to ask for money!

Many of us have a person in our professional or personal life who only reach out when they need something. Whether it is asking for money, a favor, a referral, etc., you might find yourself dodging this person’s calls, emails and texts, rather than hear another one of their requests. None of us want to be this person, so why do nonprofit fundraisers operate this way?

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When a donor sees your number pop up on their phone, if their first thought is – not again! – There is a problem. You should be reaching out to your donors on a regular basis and, here is the important part, not just to ask for money.

Nonprofits typically employ a busy staff, and you might be wondering – when am I going to have time to call donors and shoot the breeze instead of asking for money we really need? The first mistake nonprofits make in donor relations is putting efficiency over relationship building.

Let us say you have a donor who has given $1,000 each year for the past ten years. The only communication you have with this person is the call you make each year, asking him to renew his gift. If you had started making quarterly calls to this person ten years ago, half of which were donor update calls about big things happening at your nonprofit and the rest of which were fundraising calls, do you think his annual gift amount would have increased from year to year?

By making more of an effort to communicate with this donor and keep him up to date, he may agree to contribute to your nonprofit’s current capital campaign, increase his annual give amount by 20% or be more inclined to talk to his friends, colleagues and families about what a great organization you have and how to get involved.

Relationship building means taking the effort to go beyond just soliciting money. People give to those organizations that they feel personally connected to, and making the effort to truly make a connection with donors will only help your fundraising efforts.

Get more answers

To learn more about how your organization can be successful in its fundraising efforts and techniques to get you there, check out our free on-demand webinar, “Secrets of Successful Nonprofit Fundraising,” presented by fundraising expert Vince Connelly. To start watching the webinar now, click here.

Tags: Tricia Thomas, nonprofit, fundraising

Nonprofit Fundraising: 4 Things Your Organization Needs to Get More Donations

Posted by Vince Connelly on Tue, Jun 06, 2017 @ 08:59 AM

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For many nonprofits, there is often no greater challenge than fundraising. Despite the great work your organization does every day, the truth is, fundraising is often one of the most vital components of a nonprofit’s operations. After all, the funds you raise are most likely used to pay the bills, your staff and support the programs you implement. Whether you have a full-time fundraising team or rely on volunteers to solicit donations, there are a several elements you need to be successful in your fundraising efforts.

1. A compelling case for support

As a nonprofit organization, there is a good chance you already have a compelling case to make for soliciting financial support. However, remember that while you work every day to advance your organization towards its mission, the public has a much more limited knowledge of your nonprofit’s activity. You have to communicate the work your organization is doing both in your day to day conversations and as part of your nonprofit’s larger media and marketing strategy.

One free and easy way nonprofits can show the public what’s really going at their organization is by regularly posting photos, videos and updates to their social media pages and website. Boosting your online presence will make an impact not only in getting the word out there, but will also provide documented proof of the work you are doing.  

Remember, while you and the other people working at your organization may know the facts and numbers behind what your nonprofit has accomplished and wants to accomplish, the public needs frequent updates in order to get to know your organization as well as you do.

2. Strong and effective leadership

A well-known and effective leader can be a major differentiator as to whether a donor contributes to your nonprofit. Look at the success of business owners like Bill Gates and Steve Jobs. Their presence in the public’s eye allowed them to build successful and profitable companies, which succeed even to this day because of the legacy and persona they created.

Unlock the secrets to making this year your most successful fundraising year to date in this free on-demand webinar.

If a potential donor feels they can trust and respect your organization’s leadership – whether that be your executive director, a program manager or volunteer – you have that much of a better chance of getting that person to contribute.

The secret here is, you need to make sure your all-star leaders are visible. They need to be out at community events, giving speeches, networking, etc. on behalf of your organization on a regular basis.

3. Sufficient viable financial prospectswatch-nonprofit-fundraising-webinar

There is no bigger roadblock in fundraising than having no one to donate to your cause. Your organization must have a list of viable financial prospects, whether that’s a list of students’ parents at your school, people who visit your art museum, etc. Growing and maintaining this list isn’t always easy, and the unfair reality is, the nature of your organization may make it that much harder (or easier) to build your list of contacts.

Once you have a list, evaluating your financial prospects requires you to take a hard look at your organization and ask – do these people really have a reason to give to us? This means you must be realistic as to whether your financial prospects have a personal connection to your organization. Remember, for your ask to stand out among the dozens of solicitations a donor receives each year, your nonprofit must be memorable and forefront in their mind.

4. Fundraising plan

Trying to fundraise without a fundraising plan is like trying to find your keys in the dark – time consuming and unproductive. You need a strategy to be effective in meeting your fundraising goals. This can be accomplished through a written plan, which should drive every action you take in your fundraising efforts.

This plan could be a calendar, a checklist or a detailed outline. Whatever it is, make sure your plan outlines what you want to accomplish in your fundraising and, better yet, assign dates as to when you will achieve those goals.

More on fundraising

To learn more about how your organization can be successful in its fundraising efforts and techniques to get you there, check out my free on-demand webinar, “Secrets of Successful Nonprofit Fundraising.” To start watching the webinar now, click here.

About Vince Connelly

Vince ConnellyVince Connelly is the president of Connelly & Assoc. Fundraising, LLC, a consulting firm specializing in feasibility studies, and major gift and capital campaign coordination. Vince has over 30 years of experience working with nonprofit organizations in Baltimore and throughout the Mid-Atlantic region.

Tags: nonprofit, fundraising

Finding Good Employees for Your Construction Company: Are You Looking in the Right Place?

Posted by Steve Ball on Tue, May 30, 2017 @ 03:25 PM

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It’s no secret that your company is only as good as the people you hire. With competition for good construction employees at an all-time high, it’s more important than ever to position your company to attract the right job candidates.

Regardless of whether you’re looking to hire skilled laborers, project managers or estimators for your construction business, knowing where to find the best employees can give you an edge over the competition.

According to our 2017 Maryland Construction Industry Survey, an overwhelming 62% of respondents said their top concern is finding and retaining good employees. Contractors recognize the need to hire good people, but are they looking in the right place?

Learn what nearly 200 Maryland construction contractors said about their company’s outlook, marketing strategy and more.

Nearly half of contractors said they find new employees by word of mouth, while 34% said they have success with online job boards like Monster and Indeed. Particularly surprising to us was that only 11% of contractors said they use their own website to post job openings.

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There’s no doubt that the value of “word of mouth” will always be high. Consider the last time you needed a job. You probably asked your friends and family if they knew anyone who was hiring.

But word of mouth only goes so far. And while younger workers might ask their friends and family for job leads, they’re definitely turning to their default resource for, well, pretty much everything: the internet. The internet casts a much wider net for job hunters than word of mouth ever will.

The Internet Is Where It’s At

Construction company owners are missing a huge opportunity by not looking for job candidates online. In fact, 90% of Americans who searched for a job between 2013 and 2015 said they used the internet to look for jobs online, according to a study by the Pew Research Center.

Consider this likely scenario of a job hunter: 32-year-old Ryan wants to leave his current employer, a small HVAC contractor in Baltimore, to work as a project manager with a larger company.

Without thinking twice, Ryan immediately hops online to conduct an exhaustive search of construction-related job openings in a 25-mile radius of his home. Ryan peruses online job boards like Indeed and Monster, and within a few minutes identifies a dozen local construction companies that are hiring project managers. He can easily tell from the job listings that four opportunities are with HVAC companies, an area of the construction sector he knows especially well. Three of those companies are within 25 miles of his home. Boom! Ryan applies for those three positions online without ever printing a resume or licking a stamp.

Ryan also asks his family and friends if they know anyone who is hiring. He just thought to check the internet first.

But Ryan’s not finished. Still excited about the opportunities he found online with the three nearby companies, Ryan grabs his mobile phone and googles the names of the three potential employers he’s interested in. He checks their websites to learn more about their history and management team. Then he looks to see whether he can find a Facebook page for those companies. He also looks at Yelp and Angie’s List for reviews of those companies, because it’s important to dedicated employees like Ryan to work with a business that has a solid reputation.

You get the idea. Many employees, particularly those age 40 and under, go straight to the internet to conduct their job search.

When you need to find quality employees, you need to make it easy for them to find YOU. Make sure you are set up to have the right people find you online.

Need a Hand?

Finding qualified employees is no walk in the park. If you’d like to have a sounding board to figure out how to find good employees, retain your best team members for the long haul, or improve your online presence, we can help. Contact Steve Ball, CPA, online or call 410.685.5512.

2017-maryland-construction-survey-executive-summary

Tags: Steve Ball, construction, 2017 Maryland Construction Industry Survey