Are you running a building firm or a business? There’s a difference.
Tuesday, May 04th, 2021
I’m going to tell you a story about a business man and a building firm owner… are you sitting comfortably?
An experienced business man gets chatting to a building firm owner who carries out extensions and loft conversions. He offers to take a look at how the owner is running his company. First he asks for the following:
- The turnover value of each of the projects in the last financial year
- The net profit made on each one
- Overheads spreadsheet
- Cashflow analysis
- Quotations for the jobs he’s waiting to hear back on
- His marketing plan
- His business plan
- And for the projects in progress –
- The health and safety documents
- The contracts and covering letters
- The build program
- The materials schedules
And this is what the building firm owner gave him in response:
- The completed accounts showing last year’s combined turnover…
- …And the overall net profit for that year
- Plus print outs of the quotations for the jobs he’s waiting to hear back on.
That was it.
When asked why he had so little information on both his business and his projects, the building firm owner replied:
- Well he’d got this far OK…
- He was really busy so was sure he was doing well anyway
- Yes, the money side was proving a massive learning curve
- Quoting for work takes up a huge amount of time
- Plus the constant trips to the builders merchants
- Not to mention continually fighting fires…
The business man told the building firm owner that according to the government’s Office of National Statistics – 30% of businesses that started in 2017 had failed by 2019. And a massive 58% of businesses that started in 2014 had been wound up by 2019.
He was sure that the builder couldn’t survive going from job to job. He strongly advised him to spend some time putting plans in place that would ultimately save him loads of time and make his bank balance look much healthier. And ultimately make his business secure for years to come.
So what happened next? The experienced businessman set about giving him some advice – and the final revelation is a BIG ONE!
First off he told him to stop using guesswork in his quoting…
- It was evident to the businessman, based on the number of times the owner had clearly dipped into his own pocket, that he didn’t always correctly cost the materials – or properly calculate the time each phase would take.
- He said without quoting the latest materials prices, and including everything down to the last tube of mastic – he risked only breaking even – or worse still, losing money.
- The businessman googled ‘best estimating software uk’, and seeing EstimatorXpress in the number one spot he signed the owner up for a short online demonstration.
- Accurate calculators and regularly updated prices, he said, were a ‘no brainer’. Forget spreadsheets and half-the-job apps…he said.
He then encouraged him to rethink his profit margin
- A proper profit would allow the builder to put money in the bank, pay for marketing, new kit, and compensate for bad debts or losses.
- He looked at last year’s accounts – very few jobs had made the builder a reasonable profit – volume was just about keeping him going.
- Too many jobs were earning him less than 10% profit
- He picked out the few that carried a bigger profit margin and told him to resist the smaller jobs (as hard as it might be) and focus only on work that pays a decent profit. Read more here.
- The businessman also got him to complete a spreadsheet that listed ALL his outgoings and explained that they needed to be covered in every single quote.
- He could see that EstimatorXpress helps you manage this – along with wastage, inflation and wear-and-tear – and provides an automatic profit forecast.
He went on to explain about how much profit to add and at what point in the calculations. This video might help:
He also confessed to being concerned about the builder’s cash position
- The builder couldn’t definitively say when he would need cash for materials and plant, or when the next payment was coming from the customer – or whether they would even coincide.
- It was partly because he wasn’t sure when the next phase of the build was due to start.
- And when he had two jobs on the go – confusion reigned.
- Another look at EstimatorXpress showed that the 80+ reports automatically produced on completion of the estimate, included a Build Program and a cashflow analysis – all aligned.
- And if he used the estimating software’s sister product ProjectXpert he’d be able to merge multiple projects to see who and what needed to be where and when – and if one phase was delayed, the changes would cascade throughout.
..and the business man was really worried about the owner’s legal obligations…
- It was difficult enough that the builder was responsible for the health and safety of everyone on site…
- …but the builder didn’t seem worried about the threat of fees, fines or worse, hanging over the business.
- The businessman acknowledged that there was a huge amount to think about – but the owner’s legal obligations couldn’t be ignored.
- He suggested that rather than a) simply risk it or b) pay out for a consultant, he should let software take the strain.
- It appeared that EstimatorXpress has a sister product, Health & Safety Xpert.
- He read that you only had to describe the job for the software to select which documents applied, and at what point in the job you needed to action them. Job done. Demo booked.
He said the owner should stop getting shafted by the customers
- A bit of digging revealed that many of the builder’s customers had managed to wangle extra work that they thought was ‘included’ in the cost.
- The businessman suggested that the builder should give more information in the quote to avoid confusion. EstimatorXpress he noted did just this.
- And better still the builder should present them with a contract to make it clear what and when the stage payments are, without any wriggle room to avoid the final payment.
- He saw that ContractsXpert, again from the same suite as EstimatorXpress, provides customer contracts (and subbies ones too – another problem area).
…the businessman discovered an ingenious way to save the builder HUNDREDS of hours, make him money AND put him properly in control of his business.
- Clearly time was a real problem for the builder – he was trying to do too much – and not always very well.
- It was affecting his home life and if he wasn’t careful it could become a problem for his health.
- He was also losing grip of the business – the jobs – the crew – the money…
- The solution? X-Connex technology
- EstimatorXpress and all the other HBXL Building Software tools are synced with each other.
- The builder could produce an estimate in EstimatorXpress using one of the hundreds of pre-configured project templates and give the estimate file to Health & Safety Xpert, ContractsXpert and ProjectXpert to automatically produce all the relevant documents for that project.
Which mean’t that in less than an hour for an extension say, he would have:
- an accurate, detailed estimate
- plus a much better chance of winning the job thanks to the professional quotation and speedy turnaround
And on winning the work he would have, almost instantly, using the estimate file and sync function:
- all his health and safety documents
- customer and sub-contractor contracts
- 80+ project reports including the build program, materials schedule and cashflow analysis
- A detailed view of all the projects going through with the ability to instantly see the impact of delays and interruptions
- And using the EstimatorXpress dashboard he could check the live status. Plus the overall cost, profit and price of each project – all at a click of a button.
And as he went to leave, the businessman suggested Design & Build. He said if the builder wanted to save time and money by drawing his own building plans and giving the customer amazing 3D models, HBXL Building Software had PlansXpress for that as well. But if he wanted to just take off, then he could opt for the Take-off & Estimate Kit, and trace an existing plan, sync it to EstimatorXpress – for an automatic estimate.
And that’s the end of the story of our business man and building firm owner.
The builder realised that all this time he’d been running a building firm – not a business. He’d been focused on the building projects themselves, thinking any work was good work, and that his run of luck was sure to continue. OK he didn’t particularly like the idea of taking the admin more seriously, but at least now he had some invaluable help. He had his demos from the HBXL team, took a 14-day trial and decided on a subscription for the Total Building Kit Premium. He could draw, take-off, quote, project manage and nail his legal obligations, almost overnight.
If you’ve been affected by this story, there are people who care at the other end of a phone. Call the HBXL Team on 0117 916 7898 or email email@example.com