Financial Power! Archives - The 7-Power Contractor

Count Loaves of Bread, NOT the Slices

By Al Levi | May 1, 2023April 25, 2023

Hey, I’m not in the bakery business or a supermarket owner, so what’s with the loaves of bread and slices reference?

Ah… we, as owners, are far and away perfectionists so we like to get it down to every little detail, but after a while we can’t see the forest for the trees… oh sorry… there’s another analogy.

The point is… when it comes to running your contracting business, you need to know the numbers you need to know if you want to be successful. The question is, what numbers do you really need to know?

Tax accounting is designed to help you avoid or at least delay paying taxes (a good thing). The problem is tax accounting is not very helpful when it comes to helping you steer your company where you want it to go. To do that effectively, you need real-world accounting.

5 Signs Your Business is Growing Too Fast

By Al Levi | December 7, 2021December 21, 2021

Can a contracting business really grow too fast? You bet it can.

I remember waking up at 6 a.m. for the second day in a row after working until 2 a.m. the night before at my family’s 70-person plumbing, heating, cooling and now electrical company only to face another day of massive stress and thinking, “At this growth pace, something’s got to change, or I’ll be a rich dead guy.”

That was not my goal and I bet it’s not yours either!

You were handling it—somehow—until you one day you just couldn’t and that’s when the wheels started to fall off or at the very least began to wobble. It’s like you’re in a batting cage and the pitches you used to be able to hit are now coming so fast you can’t even get the bat off your shoulder. That’s how it feels when you’re growing out of control and can’t keep up anymore. Sound familiar?

Here are five clear signs your business is growing too fast and you need to act—now.

Two Roles You Can Never Leave as an Owner

By Al Levi | November 2, 2021October 29, 2021

“I fired all of them,” said the Canada-based condominium developer I was helping to optimize his business. “Wow,” I said. “What happened?”

The developer continued. “You said you wouldn’t work through a bunch of layers, and so I fired all my vice presidents. And you know what I found out? They were keeping things from me. If I hadn’t done that, my business would have been out of working capital within six months. Now you just have to help me navigate out of this.”

I told him in a nice but direct way, “I blame you… not them. It was your job to know for yourself what was and wasn’t happening at your company, and we’re going to fix that starting with getting you to a much better designed Box Org Chart.”

And we went on to do just that.

Unfortunately, this is a story I’ve heard all too many times over nearly 20 years of 1-to-1 consulting with contracting clients. The owner would delegate responsibility for their financial position to someone only to discover all kinds of impropriety once that person went on vacation, departed — or the bank or creditors started calling!

The Financial Manager role is one of two roles you can never give up. The other is Marketing Manager.

Where Did the Money Go? | Fight Club 4 Business

By Al Levi | June 22, 2022

Let’s tackle the question… Where did the money go?

Money is hard. Thankfully, Al Levi is here! On Episode 105 of Fight Club 4 Business, he shares with hosts Tay, Meaghan, Michelle, and Martha his advice on how to steward your money well.

Listen in!

5 Reasons You Can’t Run Your Business from the Beach Forever

By Al Levi | June 2, 2020May 27, 2020

A few years back I worked with a phenomenal contractor, Mark Paup of Golden Rule Plumbing, Heating & Cooling, in Des Moines Iowa.

Mark had grown his business into a systematic and money making company. And as I like to do with former clients, I called him up just to see how things were going.

He asked me a question, “Al, do you ever just get to sit on the beach, and it all runs without you forever?”

I replied with the answer he knew I would, and that was, “No…”

And after the briefest of pauses, I continued with, “You absolutely don’t have to be so heavily involved in the day-to-day running of the business like you were when we first started. And you are actually encouraged to take time away from the business because you deserve it based on all the hard work you’ve done with me. It’s actually good for your team for you to let them run things without you.

“That said, you’re the face of this business, and you must keep a finger on the pulse of it to keep it headed in the leadership direction we created during Leadership Power! if you’re to reach the near-term goals set and the long-term goals still ahead.”

The Right Way To Cut Business Costs (Part 2)

By Al Levi | February 4, 2020January 31, 2020

As promised at the end of Part 1 of The Right Way to Cut Business Costs, I’m going to share here in Part 2 the rest of the 5 most common areas to look to cut expenses the right way.

The remaining three are:

3) Inventory is in overload and out of control. The vast majority of shops I visit when I first do my 1-to-1 consulting are way overloaded with dead inventory that is costing them money. To me, it costs money because they could be trading this excess inventory off for credits with a supplier or sold off at a discount to generate money. It’s easy to think, “I should have those items on my shelf because if I buy in bulk it’ll be a good deal,” or “I want a lot of it in my warehouse because I don’t want to run out.” It’s all flawed thinking.

The best thing to do is what I call “Exit the Warehouse” business process, and that means finding a great partner with a great vendor or even two great vendors if need be. They can help take control of what you keep in stock, and they can help you arrive at the correct minimums and maximums for each item. It requires restricting access to the warehouse itself to a very limited amount of…

The Right Way To Cut Business Costs (Part 1)

By Al Levi | January 14, 2020January 31, 2020

Are all the expenses you’re “used to” carrying still pulling their weight?

Probably not!

Getting a better handle on this means you need to dedicate yourself to getting Financial Power in place.

Where should you start when it comes to cutting the right expenses in the right way?

Start by looking at all your expenses from the prior year listed in your Profit and Loss Statement (aka P&L). Take out a yellow legal pad if you want a manual moment or open up a Word document and list them all. Then, sort that list into must expenses and nice-to-have expenses.

It’ll be tough to do this because everything you now spend money on seemed like a good idea at the time. But a sinister thing about some expenses is they may be small expenses, but if they’re occurring every month, for instance, there is a compounding effect, and not in a good way. The reality is all these “small” recurring expenses add up.

Here are two of the five most common areas to look at when it comes to cutting expenses:

Holiday Bonus Blues Getting You Down?

By Al Levi | December 5, 2016September 7, 2022

The holiday season should be a wonderful time for friends and family to gather. It should also be a time for everyone at your company to come together and celebrate another year wrapping up as a team.

But, the holiday season can be very stressful at work.

One of the reasons is the ugly thing that can happen at companies and that is the tug of war over giving staff holiday bonuses. It’s not that you’re cheap. But, a lot of contractors I’ve worked with have had to take the money out of their own bank account or even worse from their own holiday fund to pay these bonuses. That’s just not right, let alone sustainable.

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