Happy Wednesday everybody! Dan had himself a great Tuesday, and can’t wait to share some of the details of a great conversation with a client. We talk about what is and isn’t overhead, and once again drill down on the importance of taking the time to go over jobs individually as you review your business. Check out the website for more content www.bcbousa.com
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Hello, and welcome to BCBO daily. It is Wednesday, May 19th, and I am your host Dan Murch. Back for another Wednesday. Another quote, unquote hump day. I hate that quote, but that’s kind of what it is right. As we get through our week by the end of today, we’ll be more than halfway through gliding towards another weekend, making good progress, getting things done.
Would anybody like to take a guess on how my day was yesterday? I see a few hands raised. It was another busy freaking day. Just like everyday, lately, it’s just nonstop with emails and the phone calls and the things to do. And I know it sounds like I’m complaining, but I am not because it is really rewarding. Time is flying by and my workday is going by in the blink of an eye. It’s great. I’d rather have this than be staring at the clock all day, wondering when it’s going to be over and I get to go home.
One of the things I got to do yesterday was have a conversation with one of our existing clients and actually it was awesome. Had Gina on the conversation, also got to use her expertise and get some insight from her. We went over overhead, and we went over some billing, really drilled down on some jobs that were going on for this client and made sure that all the expenses were allocated properly, payrolls allocated properly, things like that.
Questions like I bought nine rakes and I’m going to use them on this job, but I’m also going to use them on 10 more jobs after this job is done. So is that something that should be considered cost of goods sold or is that something that should be considered overhead?
Things like that is what I thought we would talk about today. I’m not going to go through every single potential piece of equipment or anything that you can buy, whether or not it should be considered part of the cost of goods sold or whether it should be part of your overhead. But I thought going over some more of the basics again, could be really helpful for people.
A perfect example is what we just talked about. Those rakes, your shovels. I was obviously speaking with somebody that’s in the construction industry and those are the types of materials and tools that they’re buying. Those are things that you bought and yeah, you bought it at the start of a job, but you’re going to use it on jobs, B, C, D, and E unless they break or something along those lines. So that kind of stuff should really be considered part of your overhead. Again, anything that you’re buying, that’s strictly for this job when you’re putting an estimate together for. That’s what you’re going to put under the cost of goods sold when you’re building your estimate. That’s what should go under the cost of goods sold when you itemize the expense in your QuickBooks.
Typically things like your fuel for your trucks, that stuff that’s on overhead. Things like the worker’s comp and liability insurance and payroll taxes. That’s all stuff that’s part of your overhead. You’re paying that regardless. You’re paying that workers’ comp insurance and liability insurance, regardless of whether your employee went to the job on Main street today, or the job down on Hill street. You’re still paying that. So that’s all part of your overhead and you need to include that when you calculate your percentage and add that onto the job when you’re building your estimate.
Now, there are some exceptions to the rule. For example, one of the jobs that we went over specifically yesterday is a job that’s far away. It’s not a job that’s right around the block, a typical normal job. It’s one that they’re going to have to travel a pretty good distance to get to. It requires staying overnight, things of that nature. So as they built the job, they included extra for fuel and tolls. And they included hotel stay. They included food for the employees, things of that nature. Now, a lot of times you would think, Oh, well, that’s part of your overhead like your fuel. You literally just said that Dan, less than a minute ago, but because this is far away, this fuel that they included is being bought specifically for this job. They cannot get to this job and complete it without buying this extra gas that’s required to do so. They cannot do this job and complete it without paying for a hotel for three nights. And obviously if they’re sending employees, they need to feed them so that they keep working and just be a decent human being so food needs to be pulled into it also. So all things like that as. You’re building your job and putting together your estimate and then at the end, when your job costing it to see how you did, it’s really, really important to do.
I’ve got to say, it was an awesome conversation to have yesterday. Just a really enjoyable experience and enlightening for the client. She seemed to be pretty happy. We went through each job that they’ve completed so far in the last six months. And we said, okay, this is how you did on this job. Here’s your percentages. Okay. Let’s look this over. Let’s make sure all of the expenses were allocated properly. Yes they were. Or no, we’re missing something. Let’s adjust it. By the end of our hour-long conversation we got to recap I don’t even know how many jobs we went over. We got to look over a job that they just put an estimate out on and then recap a bunch of jobs that they just completed.
Now they not only know the overall health of their company. They can just not pull their P and L and just be like, Oh, okay, cool. I’m making money. They can look at each individual job and there were a few jobs that were different types of jobs. I’m going to be vague and not give away any details of the client that I was speaking with, because that’s not really fair, but this job was landscaping and this job was painting and this job was bridge-building. None of those things that I just said are actual things, but they can look at each one of those different categories and see, okay, I did good here. This is what my percentage was here. I didn’t do so great here. Why not? Did I make a mistake pricing it? What do I want to do differently next time and make adjustments for the future? Just so much more information, so much more intelligence and knowledge to work off of going forward.
As I say all the time, this is the stuff I absolutely love doing. It was again, energizing, as busy as my day was, It was something I was looking forward to doing all day and then it went great. When I got done, I felt really good and it carried me through the rest of the day. So not only for myself because I love talking about it, but because I know what it did for the client. I know what a difference it’s going to make in her day to day operations and what she’s going to be able to accomplish going forward, having some more of this information, some of this knowledge. So again, I encourage everybody, we talk about it all the time, make sure you are setting time aside to go over the finances for your company.
Make sure you know what your overhead is. Make sure you have a firm understanding of what is overhead and what is cost of goods sold and make sure you’re allocating things properly. It is extremely important. I cannot stress that enough. And like I always say. I love talking about it. So call me, I think I said, I love talking about it 20 times already in this podcast.
Yesterday I brought you guys down by talking about all my craziness and OCD tendencies and trying to be more flexible and not be so stiff. And today I just keep talking about something I love. So you never know what you’re going to get with me from day to day. That’s why you tune in every day. Aren’t you lucky? I’m the one that’s lucky. I really enjoy doing this. I know I don’t say it as often anymore as I did when I first started, but I truly enjoy doing these. It’s kind of one of those things. I get to make a podcast every day, I get to put content out there. I get to get things off of my chest and out of my brain and out into the universe and share them with you. It makes me feel better. It makes me feel like I’m doing something good and I enjoy doing it and I hope everybody listening to it enjoys it.
So that’s it. That’s our Wednesday podcast. Let’s get out there today. Let’s keep grinding forward through the week. Let’s keep getting a lot of things done. Let’s go out and let’s pay the rent on our success. Let’s keep asking ourselves that question – How would the person I want to be handle the thing I’m about to do? Keep pulling ourselves forward towards our goals. Keep putting ourselves in that forward thinking mindset.
It happened yesterday and I know you guys are probably sick of hearing this, but I want to keep saying it because this is how important it is. Things aren’t going to go right today. There’s going to be problems. It’s going to be okay. We’re going to figure it out. We are good people. We are working hard. We deserve good things. We deserve to be happy. We should be seeking out and celebrating our successes. So at the end of the day, let’s make sure we’re doing that. Let’s make sure we’re making adjustments where we need to make, whether it’s in our personal lives or with our business, whatever the case may be, but let’s not focus only on that. Let’s find the good things that happened in the day. Let’s pat ourselves on the back for it and let’s be good to ourselves cause we definitely deserve it. And as always, we here at Blue Collar, we’re here to support you through this entire journey.
Lastly, as always, guess what you should do? Go to the website bcbousa.com. That’s where you can get all the good good. I hope everybody goes out and has a great Wednesday. Keep carrying that momentum through the week. Keep getting stuff done, knocking things off your to-do list, and let’s just keep moving forward people. It’s going to be a good day. I’m really looking forward to it. We get to go to work today. Let’s bring that positive attitude with us throughout the entire day and have yourselves a great day. I will be back tomorrow. Thank you for your time. Bye.