Your struggling new salesperson comes in with a contract for roofing, siding, and windows. Great news! And this job is in a county you haven't worked in before, which opens up whole new opportunities.
Of course, that also means there are building code and permit issues you haven't encountered previously. In addition, it turns out the architectural covenants of this neighborhood force you to use a slightly different product than you're used to. Fast forward a month: Now there are change orders, possibly some undocumented ones. The job's taking longer than expected. So, at the end of it all, did you make any money?
Expert Advice Understanding issues like these, and enabling you to understand them, is what a great accountant can do for your business. “The difference between an average accountant and a great one is that a great one understands the [residential contracting] industry,” says Steve Maltzman, president of SMA Consulting, in Colton, Calif. “In addition, he or she is a business adviser. That means they don't just do your tax returns and your year-end stuff. They help you understand what your numbers mean and how to interpret the financial information.”
Most contractors find themselves in need of exactly those skills. “You jump in with both feet at the beginning,” says Dave Palmer, president of South Coast Home Solutions of Irvine, Calif. “Then you discover there's more to running the company than sales.” Palmer found that locating a great accountant and using that accountant to guide him added up to “a lot more profit.”
That's not surprising, since residential construction costs are often hidden, compounded, or overlooked. Great accountants can stop hemorrhaging costs and restore money to the bottom line. Sue McDowell's company, McDowell Inc., in St. Charles, Ill., which specializes in exteriors, once struggled with issues of hidden costs, unknown expenses, and dwindling profits. “When we started working with [our accountant], we were very open-book,” she says. “He came in and looked at our systems and helped us realize how little we made on a given job and why. Once we understood it, we put the challenge to ourselves and began to anticipate his questions.”
Finding One A great accountant, contractors say, either knows the industry or will take the time to get inside your business and learn it. So where do you find one? “The best way is to look at the local trade association,” Maltzman says. “Talk to fellow contractors. Find out who they're using.” Hiring a great accountant might cost you more, but the bottom-line difference will be worth it.