Shutterstock.com | Ironsv
Growing your wood flooring business could be compared to building a home. Just as a poor building foundation can lead to substantial damage and failed infrastructure, a foundation of weak business practices will cause stresses that can topple a company.
These stresses can run the spectrum from small inefficiencies to large-scale financial disaster, or even legal trouble. In the best-case scenario, you could be taking risks that cost you only time and money. In the worst-case scenario, your business is devastated, along with your personal assets and peace of mind.
How can contractors tell if their business bedrock is solid enough to support growth? Here are a few pointers. These topics and more will be discussed in detail at this month's NWFA 2015 Wood Flooring Expo during my "Finance 101 for Contractors" seminar.
Important Regulations & Business Risk
You put in countless hours growing your business, and now you are at a point where your hours are tapped out. You might be thinking about hiring employees to handle the growth. You can write them a check for their work and be done with it, right? Not quite.
United States governmental agencies, including the Internal Revenue Service and Department of Labor, have specific rules that must be followed by employers. The most important of these regulations are summarized here, but you should note that exceptions may apply to some of these requirements. Here's a checklist of things to take care of when hiring employees:
- I-9 employment eligibility verification
- W-4s for federal and state withholding
- Workers' compensation insurance
- Unemployment insurance
- Payroll taxes and related tax filings
- Overtime for nonexempt workers
- Minimum wage laws and labor law posters
- Employee files.
Try not to get intimidated by this list. The Department of Labor's website offers plenty of resources for getting started. Other best practices that would be helpful when hiring are standard new hire forms, job descriptions and an employee handbook. You also will want to visit your state's department of labor website, as many laws are state-specific.
If you are not interested or don't have the time to accomplish this, you could hire a payroll service to do it for you. Most payroll processing providers also offer human resources services for an additional charge. Typically, these charges are a fraction of what you pay for a staff member and are inclusive of your company's hiring and payroll needs. Some of the payroll data will need to be entered each pay period, but the payroll processor will take care of most of the rest of the work, as well as the filing requirements.
All of the regulations mentioned here are important, and the regulatory bodies that mandate them often impose large penalties for noncompliance. For example, to understand just how important the exempt-versus-nonexempt and related overtime laws are, search the internet for "Employees Sue Wal-Mart for Overtime" to see a recent real-world example of the damage it can cause.
Financial Reporting & Analysis
What is the most important metric for your business? This is a metric that you can look at and instantly gauge how your business is doing. Maybe you don't know the answer. Maybe you are struggling to get your workload completed each week and you wonder where all the money goes. Whether or not you have any background in accounting, there are resources available that can help you implement strong financial processes and procedures that make financial analysis much easier.
CPAs can be expensive and are usually worth the investment. But to get a small business started on the right path with an accounting system like QuickBooks, you will likely get more specialized attention from a part-time managerial level accountant that doesn't necessarily hold a CPA certificate. Working as an accountant for public accounting firms or large corporate firms can be very demanding, so skilled accountants often seek part-time or temporary positions to add flexibility to their lives. You could hire them through temporary agencies that specialize in accounting or find them through word of mouth.
Alternatively, you could search for an accountant specifically trained in QuickBooks, a well-known small-business accounting software developed by Intuit. You'll want to find a ProAdvisor, a certification given by Intuit to accountants trained in its software. Search the Internet for "Find a ProAdvisor" and click on the link to Intuit's site where you can search for a ProAdvisor in your area. You can interview a few of them to get an idea of availability and cost. You will want to find someone who not only caters to small businesses, but understands construction-related businesses, as well.
If you like the accountant who sets up your accounting system and you have ongoing needs related to payroll, HR and reporting, you can continue to use him or her. Alternatively, for ongoing bookkeeping, you could hire someone with less managerial experience who can follow the directions set up by the previous accountant, while retaining the higher-level accountant for occasional needs.
Most colleges or higher-level learning institutions have an accounting department. The head of the accounting department in your area will be able to recommend students to work as paid or potentially unpaid interns. These students will be eager, know the latest regulations and be happy to have a part-time position as an accountant to include on their résumé.
The Right Tools
Just as you would never use a dull saw blade in your day-to-day job-site operations, you should never use subpar tools for the financial and administrative side of your business. Both require maintenance and will cost your business extra time, energy and money if left neglected. The goal of this article, and the financial education seminar at Expo, is to provide guidance and motivation for tackling that maintenance. Life is too short. Your hours should be spent more with your family and your core business competencies and less on the worry and hassle related to financial and business management.
