Working capital can be a struggle. If you need to borrow, make smart choices.
Nothing beats solid planning
Ideally, we can handle our finances organically
Control growth / save where you can / plan properly
Liquidate under-utilized assets
Doesn’t always work out that way and we get into situations where we need some capital
When this happens, sometime we need to turn to debt
Common solutions to working capital loans (from good to bad)
Traditional bank loans and lines of credit
Credit cards
Invoice factoring
Merchant loans
Use debt wisely
Try to go with the best route first
Create a solid plan for your debt
How much / how long / how to pay / don’t get trapped
Best way – figure a percentage of future income to pay the debt and take that percentage off of every payment – even if that means making payments several times a month
Specific concerns based on lending type
LOC / Banks
Not paying the loan back within the year
Factoring
Making up for the lost future revenue
Merchant loans
Keeping cash flow going when money comes out of the account each day and giving up the % of revenues
When hiring new employees, look at how they fit in your organization more than their skills.
Q: We are getting ready to hire some key employees. Can you give us some advice on how to find and hire goodpeople?
A: Search everywhere then hire for fit first, skills second.
What is a good employee?
Someone that knows everything they need to know? Will they accept your ways?
Someone that will do whatever you ask? Are they going to wait for instruction for every move?
Someone that argues with others?
A good employee is someone that fits in with your organization and will do things congruently with your mission/vision.
Finding potential hires
Start with your employees – they have networks and will know who might fit well
Your network – ask around, tell people in your network that you are looking for some new people
Advertise – post it everywhere you can – there are thousands of people looking for new opportunities – make sure you give people the opportunity to know you are hiring.
Wich one fits best
Remember to hire slow and fire fast
Spend some time preparing for and reviewing potential hires
Ask questions that give you insight to their values and your core values – do they match?
Example: You received a final invoice and sign off from a subcontractor (who has been a rela pain in the a**) and realize they missed a $5K change order. Do you let them know or process as is and hope they don’t catch it? Why?
A client gave us a change order several months ago and we have completed the work and submitted the invoice already. While going through some paperwork, you realize you transposed some numbers and the change order was actually $8K more than it should be. What do you do? Why?
Let other employees spend some time with you potential hires and get their feedback
Consider micro-tasks for short-listed candidates
Take the top 3 and hire each one to prepare a Project Execution plan for an upcoming project. Pay them by the hour for their work. Let them work closely with one of your current PMs for asking questions and getting information. The resulting work effort can help point you in the right direction.
Creating great employ benefits extends far beyond the paycheck.
As Elite Contractors we want to
Have the best employees in our niche
Build a great culture that thrives
Have people excited to come to work
Compensation is a major part and it’s not just the pay
Rate of pay plays a large part but not the only thing – after a certain level other things become more important
Health and welfare is an area that plays into the over package as well
Quality of life is a large part – it’s the icing on the cake and the things that make people love working for your organization
Tips on building a great compensation package
Keep your base pay at a decent, above-average level
Add performance bonuses to get peak performance
Have a decent health care plan
Doesn’t need to be the best and employees will be willing to pay if you explain properly
Consider a wellness program
I got one that saves the employee money, gives them great added benefits like 24/7 on-call doctors and saves the company money (let me know if you are interested)
Quality of life
This is where you can really knock it out of the park without breaking the bank
Create a nice work environment – upgrade the vehicles some
Be flexible with people so they can tend to family events