Using Business Systems, Part 2 by ProQuest


Although most databases will automatically update local costs with some sort of service, it occurred to me, here is a guy who doesn't use a budget, has no idea what mark-up he should use, has no idea what he should be charging for labor inside his estimates, but he's worried that the cost of a 2x4 could change by a nickel or a quarter," explains [Shawn McCadden]. "The message to me is that they can wrap their hands around counting sticks and bricks in an estimate, but they can't understand...

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       Using Business Systems, Part 2
       Interviews conducted by Jon Minnick on behalf of NAR I

                 Part of using business                       in some states it can be based on        verify if your rent is going to stay     Mistakes

         P       systems is collecting data
                 and validating that the
                                                              sales volume and in other cases,
                                                              if a contractor is small, say below
                                                                                                       the same. Do you have an agree-
                                                                                                       ment with your landlord? If you
                                                                                                                                                    A common mistake that
                                                                                                                                                McCadden sees remodelers make is
       information you have is correct.                       $400,000 to $500,000, then               want to make sure it stays the           allowing a workers’ compensation
       This month, remodeling industry                        its just a flat rate that they’re        same, now would be the time to           auditor to come into a company
       consultant Shawn McCadden, CR,                         charged,” explains McCadden.             negotiate or even get it lowered.        without the business owner under-
       CLC, CAPS, offers the second of                             The advice would be for             You’ve got to do the due diligence.”     standing how the audit works and
       a three-part NARI recertification                      remodelers to check with their                At a recent seminar,                then just accept that they owe
       series on using business systems to                    insurance agents on how these            McCadden discussed using soft-           more money.
       control cost and grow profits.                         things work and find out what            ware to manage a business, includ-           “When I was in business, my
           McCadden says that remodel-                        the numbers are that they need to        ing estimating software that when        auditor told me nine out of 10
       ers should be collecting infor-                        have in their budgeting process.         done estimating, with a click of         contractors don’t question their
       mation on all of their business                        These include workers’ compensa-         a button, would write a proposal         audit and don’t have the know-
       expenses, including information                        tion rates, liability rates, the rates   based on the things picked during        how to question their audit,” adds
       on how costs are determined. For                       for subcontractors and the rates         the estimate. Someone, who has           McCadden. “That would be a big
       McCadden’s example, he focuses                         on subcontractors that already           shied away from using business           mistake.”
       on workers’ compensation costs.                        have their own liability insurance.      systems because of their perceived           Employee raises are another
       A remodeler might shop different                            “These are all factors that         complexity, brought up the ques-         area of mistakes in a company.
       insurance companies to see where                       need to be considered to deter-          tion of what to do if the pricing        McCadden says raises should be
       the best value is, but it’s a pointless                mine your costs and then                 changes. How would one update            based on productivity at not based
       comparison unless they know how                        you need to control it,” adds            the database?                            on how long a person has been with
       they determine the costs.                              McCadden. “If
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