A good contractor knows how important teamwork is when it comes to completing a project. Part of this teamwork includes having good employees who are skilled and dedicated, subcontractors who are in the same flow and have similar expectations, and material suppliers who deliver on time with competitive prices. Your team may also include office personnel, such as those in sales, estimating, accounting, and management, who work on projects behind the scenes.
When you think of your team, you probably don't immediately think of your banker, accountant, attorney, or insurance agent, but partnering with the right business professionals can help ensure the success of your business. I found that working with these professionals for many years played a big part in my development as a successful contractor. Listed below are a few suggestions for your consideration.
You want to partner with a bank that understands contractors, knows the construction industry, and has several contractors for clients. The bank I worked with for many years was actively involved in a local construction association, which was a great resource for networking.
Construction companies need capital to pay for many expenses, including some before on-site work even starts. Having to wait for the monthly payout can make capital tight.
Your banker can set up a trust or other way for you to easily access capital by draws without having to fill out an application each time. A banker will assess the risk of a contractor to determine the interest rate that will be charged as well as any collateral that may be required.
Working to make sure the bank feels comfortable with you and your company can help. Make it a point to stop into the bank three to four times a year to keep them up to date with what is going on with you and the company (e.g., projects coming up, projects completed, changes in your company, etc.). Have all your paperwork in order and on time at every renewal. This can help your relationship when your banker goes into committee regarding your account.
Your accountant can help in many ways, including the start-up process, putting the best business structure together, assisting with the financial analysis in your business plan, the type of software to use, financial statements, bookkeeping, and closing out your books.
Letting your accountant know your short-term and long-term plans for your company is important in achieving your goals. Forecasting the purchase of equipment, vehicles, and real estate can help determine depreciation and cash flow, and setting up retirement accounts can defer taxable income.
I would always meet with my accountant about two months before year end to make any necessary adjustments to offset tax liability.
The legal team
With so much risk in the construction industry, contractors should never wait until they are facing a legal problem before seeking legal advice. An attorney who specializes in construction can help you identify unknown risks, so you can better protect yourself.
It is important to read and fully understand any contract before signing. It's also helpful to be familiar with legal terms, state laws, and any recent court rulings that can affect contractors and contracts. If you are unsure, you may wish to consult an attorney.
I would set aside money each year to have my attorney review my business practice and update as necessary. As a business owner, this gave me peace of mind that made it worth the investment.
Insurance agent and company
Having an insurance company who specializes in construction is critical as this allows them to properly evaluate your businesss. The cost of insurance premiums can sometimes determine if a contractor is competitive with other contractors, which is why it is important to work with an insurance company that can help with risk management and controlling your insurance premiums.
At Acuity, we insure over 40,000 contractors and have a 96% claims satisfaction rating. Building lasting relationships with our contractors is a high priority. Some of the services we offer free to our contractor customers are loss control services, safety and educational resources, a 24/7 nurse hotline for nonemergency workers' compensation injuries, and our construction expert corner, where my 35 years in the industry and our construction team are here to assist you.