Guys, what’s up. It’s about sick Saturday, a day before Easter. Right here’s my dog, playing a little fetch out here. What I want to talk to everybody today about was having accurate accounting methods. So, you need to know exactly how much money you’re making at any given time. Then that way, you know all your numbers and know if you’ve got a problem you need to be charging more. Or if you know you’re losing money like we had a situation before we actually started keep the real accounting records, we were actually losing money and didn’t realize it for a little while. You know all of a sudden, the bank account about to start a drop. Well, what’s going on and what it was is we had these jobs for some builders where we were charging a per square-foot rate. It happened to be the going rate what we were doing which we were building these 4 by 8 wooden pins out of plywood and we were certain we knew what the competition was charged. We start charging the same thing but what we didn’t account for is we were in an area and the reason we got the business is an area no other builders really wanted to go. We didn’t think it would make too big of a difference on the cost. It turned out that it did as far as it was much more expensive for us to operate in the particular area.
The other thing was the pricing that we’ve gone was on a really large subdivision well the houses we were doing were more spread out. You couldn’t have as much more volume in it. Always have accurate accounting records. We still do those houses now but we went from basically tripling our price per square foot for the house. Then we lost one of the builders but a lot of the other builders we do such a good job. What we told them is we’re going to charge a lot more than what you’re currently paying. It’s still like 1% of the sale price to the house. They pay us like less than 1% in the sell price of the house and I was like you know we’re going to do a great job we’re going to be out there, your pins are not going to get over full though, your friends are going to stay in good shape. You know we’re not going to damage stuff all that sort of deal. But this is what we’re charging and they try to negotiate us down and say guys it’s not worth it to us to do it for less. The reason you’ve gone to us is because you’ve had trouble getting people to do the job correctly because it’s too expensive. Your vendors have to make money, if they can’t make money then they’re not going to do a good job. We’re not going to accept the work if we can do a good job, nobody can do a good job is by charging what we’re charging now. We lost one of the builders, they just came back to us. They tried out another company for about 6 weeks, we did such a good job that they were like we’re willing to pay it you know. We are willing to pay it three times more for all of you to come back.
Where I’m going with this though is on those builders, what we do now is we get paid in 3 phases on that. We get paid post framing, post drywall and then upon the completion of the house. It takes about 3 to 4 months for them to build these houses. What you have to do is the cost of all that needs to be divided over how long you believe that it’s going to take to do the work. Well what we were doing before is we were invoiced and saying everything at the beginning. Just for simplicity reasons, so we really had a great month. That first month when the new houses come online and we get him invoiced but it would be three months of just expenses of no income. It was really masking some issues we were having accurate accounting records. Understand accounting yourself if you want to do basic bookkeeping make sure it’s great on Quickbooks but have another accounting firm looking over your books at least once a month. If you’re brand new maybe once a quarter but I would recommend once a month. You want accurate books and weekly, you need to know how much money you’re making every week. So, every week, I get a financial statement and I know how we’re standing for that particular month.
So far you don’t wait to know how far you’re doing and for the P&L to come out. A lot of people’s P&L, they won’t get their P&L for the previous month until halfway through the next month. Well if you’re making mistakes, the previous month you’ve continued making those mistakes. The first two weeks and say them that’s additional 2 weeks that you’ve incurred expenses. Bad records can really sink a business. We were in bad shape after that it took it several months, probably three months to really recover from that mistake and that was just from poor bookkeeping on our end. Keep your records right and you’re going to be set-up for success for sure.