Knowing your worth: Why a 25% markup isn’t going to cut it

Zach Wojtowicz:

What’s up everybody? Zach Wojtowicz here, and it’s “The Building Code” with …

Courtney Mattern:

Courtney Mattern.

Zach Wojtowicz:

Hey Courtney. How are you doing?

Courtney Mattern:

I’m doing great.

Zach Wojtowicz:

It’s so good to see you.

Courtney Mattern:

Thank you. This is one of my favorite places to be.

Zach Wojtowicz:

That’s right.

Courtney Mattern:

Filling in for Charley.

Zach Wojtowicz:

It’s always a good feeling when I’ve got a new fresh set of eyes here on the interview.

Courtney Mattern:

Yeah.

Zach Wojtowicz:

Thanks for joining.

Courtney Mattern:

Yeah, of course. I’m really excited about today’s guest.

Zach Wojtowicz:

Me too. Yeah, that’s right. Whenever it’s like a guest that it’s like, oh, it’s like, “All right, Charley, get out.”

Courtney Mattern:

Yeah, that’s how it really happens. I’m just like, “I want to be on this interview, so goodbye Charley.”

Zach Wojtowicz:

It’s like that cartoon where they yank you offstage, it’s like, “One of you’s got to go.” Well, why don’t we tell the guests or our listeners about our guest.

Courtney Mattern:

Yeah. So, we’re going to be joined by Danielle and Michael Gutelli, they’re from Clark + Aldine out in Michigan, sort of the Detroit area. We work with them a lot in the marketing side, they’re a couple of our brand ambassadors, and they have a really interesting and compelling story around their financials.

Zach Wojtowicz:

That’s right. I’m really excited to get to chat with them, meet them, I’ve heard a lot about them, so let’s not waste any more time and let’s welcome them in. Hey Danielle, Michael, welcome to “The Building Code,” it’s great to have you both. How are we doing today?

Danielle Gutelli:

We’re great.

Michael Gutelli:

We’re doing great. Thank you for having us. We’re excited to talk with you guys.

Zach Wojtowicz:

Love it, love it. Well, a little bit, before we dive deep into the topic of talking a little bit about how your Buildertrend story and running your finances, we always like to set the context around your journey in construction. So, will you just give us a quick little overview of how you guys started your company? And I know there’s a little bit of a romance in the name, so I really want to get into some of that and then we can talk about your business.

Michael Gutelli:

All right, cool. I actually started in construction when I was young, working around my uncles, helping them with what was back then flip properties in the mid-90s. So, I was very familiar with construction. I actually started as a laborer when I was 14, laborer for a custom home builder near my home. And then when I was in high school, that was still when trade programs were in existence, so I was able to go to school part-time and then go work in the trade program, but I got paid for it. By the time I graduated high school, I was making so much money I didn’t want to go to college right away. So, I got all my partying out of my system early and got that experience early and then went into a different field. But Danielle can pick up how this actually came about.

Danielle Gutelli:

Yeah, so when we moved to Michigan, we moved back here from Chicago, I actually left 10 years of teaching, I taught second grade, and I started a blog because I couldn’t just be a stay at home mom at that time. So, I started a blog and this blog basically turned into Clark + Aldine.

Zach Wojtowicz:

Wow.

Danielle Gutelli:

I was just blogging about our day-to-day life and things that we were doing. And then we bought our first home and started renovating it. And we realized really quickly that people were coming to our site purely to see what we were doing at our own home. Then clients, people locally, started asking if we would ever consider doing that on their house. And Michael and I had dabbled a lot with wanting to work with each other and wanting to build a brand and a business together.

Michael Gutelli:

We just didn’t know what it was.

Danielle Gutelli:

Hadn’t figured it out. I mean, when I say we dabbled a lot, I mean, we did photography and we built websites and we ran restaurants, social media, we did all these different things and nothing really stuck. And then, yeah, construction and design really hit home. And I think it hit home so much to both of us because home just has such an essence in what we want to create as a family, and being able to share that with our clients, and I guess the world now is really profound. So, here we are.

Zach Wojtowicz:

That’s amazing.

Michael Gutelli:

Yeah, six years later.

Zach Wojtowicz:

Courtney, does that warm your heart that she started a blog and turned it into a construction company? Courtney is our director of brand and content, so that’s like …

Courtney Mattern:

Yeah, blogs, content marketing is powerful, like I always say.

Danielle Gutelli:

And that’s when we were talking about, I mean, we didn’t even share the love story of our name, Clark + Aldine, and where that came from.

Michael Gutelli:

S,o with my background in marketing and advertising for 12 years, when we set up this strategy session in our home office, Danielle said, “I want a powerful name that is something and something like a Crate & Barrel, but has meaning to it that is a good story point for us to warm up a conversation with clients or potential clients and new partners.”

And it took a couple of hours to figure it out, but we landed on Clark & Aldine. And where that name comes from is when we met in Chicago, I lived on South Clark Street, she lived on Aldine Street. Well, if you know anything about Chicago, Clark Street runs diagonal from the south side to the north side, and where it meets Aldine, it’s Aldine Street on the east side and it’s School on the west side. So, those streets don’t intersect, but that’s where our paths intersected.

So, our newer logo, we have our OG logo, which is very simple, and then our new logo really represents two street signs to pull that story in a little bit more together. Which goes back to the strength of branding.

Danielle Gutelli:

And it really help the …

Courtney Mattern:

Adorable.

Danielle Gutelli:

It really helps the story tell.

Zach Wojtowicz:

That’s amazing.

Courtney Mattern:

For all the hopeless romantics, this is the design builder.

Danielle Gutelli:

And then all our client jobs are named after street names as well.

Zach Wojtowicz:

No way.

Danielle Gutelli:

Yeah.

Zach Wojtowicz:

I love it.

Danielle Gutelli:

It’s always a street either close to where they live on or that they live on, and then a street that is sentimental to the homeowner.

Zach Wojtowicz:

That’s fantastic. That definitely takes the award on “The Building Code” for most adorable origin story. I don’t think there’s been a better one.

Courtney Mattern:

Yeah. We’ll send you a trophy.

Zach Wojtowicz:

Yeah, yeah, we send out t-shirts, it’ll be like most … like superlatives.

Danielle Gutelli:

We’ll put it over here.

Zach Wojtowicz:

That’s right, that’s right. Well, that’s amazing. And as you guys have grown your business and your brand and all the things that go with it, the small little details obviously add up. But we were talking before we jumped on the recording about how you came to Buildertrend and as you were evolving your business strategy. So, we brought up the Contractor Coalition, you guys were attendees, that’s created by Nick Schiffer and Brad Leavitt and Morgan Molitor. So, you’re alumni, and you weren’t Buildertrend …

Michael Gutelli:

Two time alumni.

Zach Wojtowicz:

Two time. Oh, whoa, whoa. That’s huge. I don’t know if I’ve met …

Courtney Mattern:

That’s a flex.

Zach Wojtowicz:

Yeah, big flex. You guys were not Buildertrend users before Contractor Coalition, is that true?

Michael Gutelli:

That is true.

Danielle Gutelli:

That is true.

Zach Wojtowicz:

Okay. All right. Let’s talk about that. Why?

Courtney Mattern:

What are you using? Tell us more.

Zach Wojtowicz:

Yeah, let’s talk about your business evolution.

Michael Gutelli:

Yeah. So, we’ve been really good friends with Morgan and Jamie at Construction2style for, I don’t know, six, seven years now.

Danielle Gutelli:

Years.

Michael Gutelli:

They were really some of the first colleagues in this industry. I guess we could say that we met in person and met digitally and built a strong bond with. So, when the Coalition Summit was being … the first one was announced, it was like, all right, that’s a heavy investment for us, we’re not sure. And about two months before, maybe even less, maybe a month before it hit, we were traveling in Florida. And Morgan hit us up and was like, “Hey, you need to come here. I promise it’ll be worth it.” So, we talked about it, bought the tickets, got our flights, and we went down.

I’ve been a big fan of both Nick and Brad’s work since going to Coalition the first time. We’ve built really strong friendships and relationships with both of them. And I think that’s the thing about the Coalition Summit and also about our industry right now, that you can meet a lot of these individuals in the game, that they may feel intimidating because of the level of work that they do, but these are all people that give you the shirt off their back. I mean, you need advice, you need a document, you need a template, they’ll give it to you. And I think that’s, I don’t want to say Coalition is just great for, oh, you get all these templates and documents. It’s the relationship building, it’s the learning. I mean, it is a, it is like a, what do I want to say? A college term course crammed into three days.

Danielle Gutelli:

And what’s beautiful about it, it’s so collaborative and it really takes the competition out of our industry. And I think for so long this industry has looked at everything and everybody as competition to them and that we can’t share things or we can’t tell you how we’re doing or what our markup is or how we’re doing this because you might go steal our clients or you might have a better price. That really eliminated all of that. And it’s something that I think because the two of us come from different industries initially, we’re really collaborative and we really want to have a community. And Coalition really helped that. And so, when we left there, we realized we had a whole lot of work to do. And the way that our brand was structured was great, but the way that the internal portion of how we were running as an actual business was no good.

Michael Gutelli:

So, Buildertrend came to the light in just the conversations with all the attendees because you break out into sessions, there’s breaks, you’re doing dinners, lunches, and we just kept hearing Buildertrend on repeat. And the reality is this, anything worth doing is going to cost, anything worth doing is going to be an investment. And at the time it was like, man, this is a significant number to hit every single month for a subscription to a project management software. But we did it. And then we stopped. And then we went back.

And what I say and preach to everyone that’s, I have multiple remodeler groups that I’m in on Instagram and different platforms, what I tell them, and I can’t stress enough is, you can’t just sign up and have it do all the work for you in a week. It is a six-month investment without breaking a sweat to get the software powered up to work for you and your company.

So, the first time around, we were just lazy. We felt like we needed something instant to hit. It didn’t hit. So, we just didn’t do it. The second time around when we said, “Okay, we’ve tried other things, Buildertrend is the only one that truly works for us and for all these other builders that are doing incredible, incredible work in building first class businesses.”

Actually, for us, it took us five months before we rolled out a test project with a client, and we onboarded the client and let them know this is our first project that we’re rolling out, there’s going to be some hiccups, but roll with us, it’s going to be good. And we hit the ground running since then.

Danielle Gutelli:

And what I think was really interesting is when we first launched Buildertrend, we were so excited about the project management software and how we were going to have timelines and we were going to be able to showcase these things to clients. But really what was a big game changer for us was that back end. That how we were running our finances, how we were coding things, that we were actually coding things, that everything had a cost code and they were related to them, and we were able to see where our markup was or what we missed and where there wasn’t a change order. And so, where it really shined for us was that inner workings that the clients didn’t see, but we internally saw. And then we could fix where the holes were. And some of those holes were really gaping, massive holes that we hadn’t realized that we were missing until we were on the platform.

Courtney Mattern:

When you talk about getting on Buildertrend, you mentioned it’s an investment for your business, and obviously, the first investment you made was going to the summit, like you said, that you wanted to meet other builders. What was the pain point in your company or what was the, I guess, the spark for deciding to go to the summit, was there a problem you were facing? Was there a growth goal you wanted to hit? What was it?

Michael Gutelli:

All the above. This is a long one. But for us, we started our business, I left corporate and we started our first day of business full-time was November 2nd, 2018, not that we’re counting.

Courtney Mattern:

Michael’s counting.

Michael Gutelli:

So, we had a great year 2018 rolling into 2019, going into Q1, 2020, was just the two of us, we had a couple of people that we hired for just carpentry help. But then the pandemic hit. Then we were like, “Okay, what’s …” In Michigan, we were shut down for seven weeks. What are we going to do?

Well, during those seven weeks, we were getting hammered with new inquiries for work because people were working from home, they wanted to update their houses. So, from 2020 till I want to say January, 2023, it was do everything we can to survive, hire people, get an office, get a workshop, get a warehouse, get another trailer, get another truck, it was we were just investing, investing, investing. And seven days a week, it just seemed like we’re constantly wheels in motion just doing everything we can to keep things moving.

And then we hit a point where we realized, thinking, wow, we hit our first year, not our first year in business, but I’m thinking 2022 was our first million dollar plus year, as just that we were still a small team. And then we realized, well, where’s all this money gone? And we were in debt like big, big time debt, like over half a million dollars in debt as a company. Which for us adds a huge layer of stress.

So, that was the biggest pain point that we realized we needed to, again, which is crazy to say, we need to reinvest in the right places, not more tools, not more equipment, not more bodies. We need to invest in the education and the relationship building and the access to individuals that had been through this before.

Danielle Gutelli:

Well, and it was that pain point of we know how to create beautiful homes, we know how to manage clients, we know how to do all of that stuff. But where we were really struggling, again, is that back end of being business owners and how do you run a business that is so large and the cash flow is crazy how it’s in and out of your company. We needed to know how to do that, what tools to use, and the best way to educate ourselves as both of us are creative people. And so spreadsheets are not my favorite thing.

Zach Wojtowicz:

You can make some beautiful spreadsheets with enough practice.

Courtney Mattern:

Just like beautiful kitchens.

Zach Wojtowicz:

I’m pulling myself back. It’s really interesting. So, we talked a little bit about this before we got on. But I get the privilege of hearing a lot of these stories from a lot of builders. So, if it’s any consolation to a lot of people out there listening, not an uncommon story. Started in these small businesses, you’re trying to just keep the lights on, you start running fast, you’re working in the business, you’re not working on the business. And then at some point you hit this opportunity to say, “Okay, I know there’s got to be a better way to make sure that I’m not missing things.” And that’s what these tools do.

So ideally the return on that investment is you have control, which lets you make better decisions long-term, which then that debt ideally is gone, and now, you’re cash flow positive, and you’re growing. And I love taking shortcuts, learning from the best businesses, entrepreneurs, business owners, whatever. That’s the smart thing to do. People have figured it out. Copy, copy, copy.

Courtney Mattern:

And it’s even as simple as being willing to ask for help from someone.

Zach Wojtowicz:

Right. You got to swallow your pride.

Courtney Mattern:

And being willing to open up your books and talk about the issues. So, what were some of your early takeaways from the summit or even getting started on Buildertrend? Was there an aha moment of this is going to help turn things around?

Danielle Gutelli:

Yeah, I think one of the biggest aha moments for us was our cost codes and really getting in the nitty-gritty with those and making sure that we are cost coding appropriately. And then we were able to, at the end of the day when we’re doing our work in progress, we were able to really look back and see, okay, where did these align? Where they not align? Where are we making money? Where are we not making money? Where do we think that we’re bringing money i, but we’re actually losing or slipping on this? That was like a holy moly.

Courtney Mattern:

And it’s not very glamorous either, sometimes people think the answer to all of your issues is …

Michael Gutelli:

No, it’s not.

Zach Wojtowicz:

You know how hard is to tell people what I do at Christmas time when it’s like, “What do you do for a living?” Talk about cost code bliss. They’re like, “What is that?” “Yeah, my contractors love it.”

Michael Gutelli:

Right. It’s the important part of the business that nobody really talks about because it’s not glamorous, it’s not sexy, it’s not flashy. But paying attention to these details, that’s what’s going to create your longevity, you’re going to survive or you’re going to die riding on the backbone of your processes, procedures and truly knowing your numbers. So, that was a big thing for us.

I mean, one of the things, Courtney, at the Coalition summit was hearing Nick talk about burden rate. I was like, “What the hell’s a burden rate? What are you talking about?” So, I had a sidebar with him, and of course when you go to Coalition, you do get access to these templates that these guys have paid thousands and hundreds of thousands of dollars for contracts and templates, which we already had, but we were able to then duplicate and take things from their contracts and import them into ours and rewrite ours.

And that burden rate piece was huge because it really came down to, are we charging appropriately for our internal hours? And what we realized is, no, we’re losing money. So, in essence, we are paying to do a client’s job for them. Which is no good, that’s not how business survives, that’s not how you make money. So, that was huge for us.

And the other piece was our markups. And we could spend hours on that. I won’t go into it because everyone’s markups are different. But we also realized that we were not marking up nearly enough. I’ll just give one example. If you think you’re marking something up at 25%, and you’re going to make money in construction, you’re going to lose. You’re going to lose big time.

Zach Wojtowicz:

Totally. It was really interesting, when I went to the Contractor Coalition, and I’ve obviously spent a lot of time with contractors hearing their pain points from a business standpoint, there’s that fear is what in the back of your head, “If I raise my prices, I’m not going to be able to get customers, and then I’m not going to have any business.”

And one thing I think an advantage for construction is there just aren’t in your market that many people that are doing great work because the rate of a construction’s life is two years average that they’re going to survive. Because they’re undercharging, because they’re not taking advantage of the demand for good contractor work. Whenever I go try to find a contractor, I have anxiety. I’m like … It’s like how do you position yourself in your market to charge a rate that’s worth the quality of the work, while also being proud of the fact that you’re in your community, you’re actually bringing value to longstanding construction. So, it’s just really interesting because I think contractors that I’ve observed are afraid to do that. But to stay in business, you have to be willing to put yourself out there.

Michael Gutelli:

It is intimidating. And something that has worked for us that maybe somebody listening can think about this is, yes, we’re active in our community, we live in our community that we serve primarily. I mean, 70% of our work is within a five-mile radius of where we live. We are extremely transparent people. If you reach out and want a project and you say, “I want a full kitchen remodel, my budget’s 50,000.” We’re just going to be flat out honest, we’re not going to be rude, but we’re going to be honest, be like, “Listen, completely get it, you’re going to hit 150 to 200 without breaking a sweat. So, we can deliver an option for a refresh that you’re going to have to change your scope in order to achieve. However, there’s no chance that we can take on this project.” Or if somebody says they have a $200,000 budget, we’re just open and very transparent with the realities of what construction and design costs are today. And our clients appreciate it.

Danielle Gutelli:

I think a lot of it comes to, what Michael’s saying, is that that upfront conversation that we’re having with clients. And we’re really truly educating them on the process without being insulting.

Michael Gutelli:

A hundred percent.

Danielle Gutelli:

Because I do think that our industry also has that tendency of, we have all these acronyms and all these different things of what we call things, and so, you can make somebody feel very inadequate in what they’re doing or what they want quickly. And so, that authenticity of we’re here to support you and help you along the way. And that’s from the initial like, “Hey, I get that you don’t know how much a bathroom really costs because when was the last time you did that?” And so, more …

Courtney Mattern:

25 years ago.

Zach Wojtowicz:

I googled it, I don’t know.

Danielle Gutelli:

Oh, that’s my favorite.

Courtney Mattern:

Pinterest said.

Michael Gutelli:

Yeah. Well, that’s the big thing that our industry is up against is we have, I call it click bait media. You have these click bait headlines that … The one that’s famously gone around recently is Dwell. And this company in Indiana did this whole house for $160,000. Little does anybody know that they’re not admitting that this company actually owns a furnishings company. And that’s how they were able to achieve a lot of this. Or whatever they own, it doesn’t matter.

But our industry’s going up against publications that need clicks in order to drive their advertising revenue. We’re going up against the HDTVs of the world where it’s all about driving eyeballs in viewership and whatever you got to do to sell the story in. I’m sorry, but a med school student and an Uber driver do not have a million and a half dollar budget to buy a home. But that’s what we’re up against. We all laugh about it, but that’s what we watch and see.

So, as Danielle said, a lot of our job is just education, but not dumbing it down, but just having an open dialogue and conversation as normal people. It’s not necessarily an expert with acronyms going against somebody that needs to be scolded. It’s just have open dialogue and conversations, make it smooth, make it easy. It makes our job more fun. You know what I mean?

Courtney Mattern:

From the outside looking in, your projects, they’re beautiful, the kitchens, the bedrooms.

Michael Gutelli:

Thank you.

Courtney Mattern:

At what point did you learn that you had to be confident about charging more and confident in what you bring to the table, that you were setting yourself apart in your quality and that you deserved to charge an applicable price?

Danielle Gutelli:

Well, the design portion came pretty quickly because we started with … we’re very unique in the sense that, we’ve realized this after going to all these different events and things like that, as we have both construction and design, but we also have a full interior design team in-house, not just design build. And so those interior design hours, that was easy. It was like we first started charging this and we’re like, “Oh, people will pay that.”

So, then we’re like, “Well, now there’s two of us, we’re going to charge this.” All right, now there’s three of us. And so, that rate just kept going. And I think we’ve hit a comfortable point with that.

It was, with construction, we actually joined a group last year called Remodelers Advantage. And when we went to that roundtable, basically, we were like hit in the face. We actually met Heather and Steve Tankersley at Coalition Summit. So, let me just bring this closer.

Courtney Mattern:

Name drop. Yeah, they’re going to be here in town next week, they’re going to be on the podcast soon too.

Danielle Gutelli:

I know. I talked to Heather yesterday.

Zach Wojtowicz:

I’m doing a webinar with Steve next week too.

Michael Gutelli:

We’ll be on it.

Zach Wojtowicz:

Oh, all right. I’ll give you a little shout out.

Danielle Gutelli:

We met Heather and Steve at Coalition. And we were like, “Holy moly, what is happening with our business right now? I think that we’re going to have to close down. I don’t know.” I called Steve, and I was like, “I need your help and I don’t know what to do. And I’ve heard you guys are in remodeling like us. You know what you’re doing, you’re making a profit.” And Steve was like, “Here’s what you need to do. You need to join Remodelers Advantage.” And so, we were like, “Okay.”

Michael Gutelli:

Which again, going back to the investment piece, when you think everything has hit the fan, you have nothing to spend, you have to have that level of confidence and do some really deep, deep work, inner workings with your soul to say, “Okay, I’ve already rolled the dice this far, I’m going to roll them one more time, and I’m going to invest even more money to help me go get the money.”

Danielle Gutelli:

So, we joined Remodelers Advantage, and then we were fortunate enough to be in a group with Heather and Steve. And we got to our first roundtable, which actually was in Sacramento at Heather and Steve’s location. And we got absolutely hammered for our books. But they were like, “You guys, what are you doing? You got to charge way more than what you’re charging. What are you doing?” So, then I just came home and I was like, “All right, we’re going to charge this.”

Michael Gutelli:

Yeah. But another point I want to hit on that, as Danielle said, design was never the problem, it was always construction. One of the things that we did, I mean, we are fixed bid, and we don’t bid against any competitors and we’re upfront about that. If you’re looking for multiple bids, we’re not your people. We’re not going to bid to get the work. We deliver a certain level of excellence and experience, and it does come at a premium. There’s no one around us that does what we do, the way that we do it.

But prior to that first roundtable, we were doing line item for everything. And that’s where we were getting hammered. Like, “Wow, paint is 20,000, that seems really high. We need to bring that down. Oh, I know a painter I’m going to call …” And this would be speaking for the clients. They know a painter, they know somebody that can do demo, and then they start cherry picking what they felt was too expensive.

Courtney Mattern:

The costs.

Michael Gutelli:

But it was never design, it was only construction. So, we restructured our estimates into three buckets, and it is our internal hours, so it’s our Clark + Aldine admin fees, which is interior design hours, general contracting, project management. Then we have our labor and materials. It breaks down everything that’s included, but there’s only one line item price. It’s not broken down by trade and by material. And then we have our fixtures, furnishings …

Danielle Gutelli:

And finishes.

Michael Gutelli:

And finishes line item.

Danielle Gutelli:

Which we call design allowances. And that is the one area that we really focus on with clients. That that can help adjust the scope of work because we say all the time that design is what carries the project, and it’s what’s going to determine the price of their project.

Michael Gutelli:

That change alone was like a light switch in our business where we no longer were having these two or three hour meetings scraping through line items that clients felt were too much. And for us it’s like then we … We’re pleasers, so it’s like, “Okay, well, sure we’ll call your painter, sure, we’ll call your electrician. Every time we did that, there was a multitude of problems, and we were the ones that ate the fees.

Courtney Mattern:

You end up with someone you haven’t worked with before, they slow down the schedule.

Michael Gutelli:

Mess up a job.

Danielle Gutelli:

You’re babysitting.

Courtney Mattern:

You have dead days on your job site.

Michael Gutelli:

That’s a big piece of advice I would leave is to restructure your proposals and estimates. And less is more.

Courtney Mattern:

So, maybe compare a project that you are in today with an earlier one. Is there a notable difference in how you’re running the project?

Michael Gutelli:

Yes.

Courtney Mattern:

Maybe just talk about the differences between … maybe some mistakes you made in an early one and now today it looks like this.

Michael Gutelli:

Change orders. I’ll just say that. In the early days, if something needed to be done, I’d run to the lumber yard, run to Home Depot, run to Lowe’s, run wherever, get the stuff, do the work and just get it done. There wasn’t a change order, we just did it because, okay, it has to be done, so we just did it. Now, if change order comes up, we put it in Buildertrend, here’s the cost. We call our clients first on the phone, say, “Hey, want to walk you through these changes. Here’s the cost. We’re going to send it over to you right now for approval. We cannot move forward until you approve it and submit payment.”

Danielle Gutelli:

But I think that that part’s really important, what Michael just said, is that we never send numbers to clients without calling. We always do that call first because nobody likes to get slapped with a number on email. And that, again, it goes back to that expectations and how we’re managing expectations with clients. And you already know you’re on this emotional rollercoaster with them. So, having that really personal time with them on the phone, especially when it comes to finances.

Michael Gutelli:

We’ve actually had, it’s less now, but there are still instances that come up where we request a change order from one of our trades and say, “Hey, we need this number before you do it.” And they end up just doing the work.

Danielle Gutelli:

You said that happened this morning.

Michael Gutelli:

And then comes the change order. And our clients are like, “I was hoping it was going to be lower than that or else we wouldn’t have done it.”

Courtney Mattern:

And it’s like it’s already done.

Michael Gutelli:

It’s in our process, it’s in our contracts with them. It’s like, “Hey, before you do the work, you got to send over a change order because if you don’t, we can’t guarantee we’re going to get paid for that work.” So, that’s, again, just keeping everything in writing, communication is key, strong documentation. Truly use Buildertrend for what it’s built for. It’s all in one. Just use it.

Danielle Gutelli:

And then the other major component is that we have, especially since we’re talking so much about finances right now, is we have a whole payment schedule. We use Buildertrend for payments. And so, I send clients their full list of here’s your payments schedule for the whole entire project. This is when we’re going to expect these payments. And then at the beginning of the month, because I like to keep my books clean, I release all of April payments, so they could see all of April payments in Buildertrend, even though I’ve already scheduled them all. I just try to keep my books clean and not have everybody not like me.

Courtney Mattern:

It’s so nice that transparency, too. It goes both ways for the homeowner and the contractor. You want to know when you’re getting paid, they want to know when they owe you. And if you just have a schedule on the upfront, it’s like a clear expectation going in.

Danielle Gutelli:

Yeah.

Michael Gutelli:

Exactly. And I think there is a negative stigma still in this industry where it’s like clients don’t want to pay. But it really comes down to just set the expectation, set the table right in the upfront. It’s like, “Hey, we’re kicking off your project in two weeks, we’ve uploaded the payment schedule to Buildertrend, you’re only going to see your payments due month by month, but we’ve included in this email a full breakdown for the next five months of your project, what’s due, the total amount and what date. And again, you will see those payments for May, you’ll get alerts on May 1st. June, you’ll get alerts on June 1st, but you can always reference this email for it.”

Courtney Mattern:

And what … Sorry.

Danielle Gutelli:

Then we just associate those with progress. So, clients can see where the progress is, just for builders on the back end so that they know how that looks for us.

Courtney Mattern:

These types of conversations about financials, whether it’s with your client or other builders that you’re asking for advice, they can be sometimes awkward. And what would be your advice to builders who have trouble having these conversations or being transparent or talking openly? What have been the lessons you’ve learned?

Danielle Gutelli:

I think when it comes to dealing with clients, I’ll let you … because you’ve done a lot of talking with builders, when it comes to dealing with clients is that just is part of our business. So, that’s something that you’re going to just have to bite the bullet and get comfortable being uncomfortable. When you dilly-dally around it or don’t want to be a part of that conversation, people can sense that and people can … It’s almost like you’re not worth your value. Like, “Oh, I hate having these type of conversations.” Sorry, this is life, you’re paying a service.

Michael Gutelli:

But I think that also could result in if you’re dancing around numbers and not really sure, it’s almost like a client could feel like, okay, are you hiding something from me right now?

Courtney Mattern:

It hurts your trust.

Michael Gutelli:

Or what’s going on? It has a true negative effect.

Danielle Gutelli:

And then also getting over, for a long time I felt like we really struggled with like, “Oh, the client really wants this.” And now I’m like, “Sorry, if you don’t want to pay for it, then you’re not getting it.”

Michael Gutelli:

You don’t get it.

Zach Wojtowicz:

Your teacher heart. “But they want to learn.”

Michael Gutelli:

We will do surprise and delight for our clients. We’re not going to necessarily put a massive piece of furniture in there that you refuse to pay for. But we do surprise and delight our clients in different ways.

But going back to the finance piece, for me, from working with trades because I’m a general contractor and handle most of our project management on jobs as well, in our industry it’s typical to see, if a trade is done at the end of the day Tuesday they expect a check end of day Tuesday. But we do not hand out any wet checks. Wet meaning a signature was actually written on it by us. We don’t hand deliver cash. Everything is digital.

So, when we bring in a new subcontractor or trade person, vendor, whoever on work, we get them set up on Buildertrend. They have to put all their information in there. We need their W9. We need their certificate of insurance with us, Clark + Aldine, labeled as an additional holder. Which is also another piece of advice for people to make sure that they have all their documentation straight. And then once the work is complete and we are actually on site and verify and see it, that’s another piece of our process, we actually have to go and see it, then we can set up to release payment.

Payments are invoices, final invoices or progress payments are due Thursday end of day, so we pay on Friday. If somebody gives us an invoice on Friday morning, they’re not getting paid till the following week. And it hurts sometimes because we really do love our trades that we work with. We’re like family. But there’s a process, and we’re not going to step outside of our process just because somebody decided to get something to us late.

Courtney Mattern:

I was going to say, I can hear it now, like, “Oh man, I don’t want to have to get into Buildertrend, I want my check when I want it.” Has it maybe weeded out some of the trades that you work with? Have you run into issues there?

Michael Gutelli:

Most people we’ve found, we actually haven’t really had any pushback or issues with it. People don’t want to deal with checks. Mobile deposit is great. But when they get a check, then that’s an extra step, they have to go to a bank. Now, we have some trades that have their bank account set up. Others are getting digital checks, which they can then print out, sign and do a mobile deposit. But the fact that they don’t have to drive to our office and pick up a check, they’re not waiting on us to find time because our days are busy. I’m not just waiting around to just, “Okay, it’s four o’clock, I’m going to go deliver checks to three different job sites now.” It’s automatically published, it’s in their email, they can deposit it.

Danielle Gutelli:

I think, too, we just have built this mentality around the trades that we’re working with of if you don’t want to do it our way, then you don’t have to work with us. Which is okay. But we’re literally feeding you work, you don’t have to go out and look for it, we’re just handing it to you. So, personally, we haven’t run into that problem.

Michael Gutelli:

No. And a lot of what we do, too, with our teams, we’re trying to help them build their businesses too. We’re not hiring them on just to, “Well, I need this plumbing done, I’m going to hire you on and then we’re done.” We want to be an asset to everyone to help them build stronger businesses and help them get to the next step and next level of their work. Obviously, we still want them to work with us. But if we’re not helping our trades, if we’re not helping our vendors like we help our clients get their project done, it’s like what are we here for? That’s part of our job.

Our industry has taken a huge hit in talent. We’ve left industries and strong careers to go do this. It is our jobs to do everything that we can to help this industry thrive. And part of that is the education and the brand building and just the recommendations. Anything that we can do for our team that we work with.

Courtney Mattern:

And being efficient with those resources, the human resources, and your budgets. If we put a nice bow on this episode, one thing that I’m really curious about is, at the beginning you said you were in deep debt. How long have you been with Buildertrend, has it even been a year yet?

Michael Gutelli:

It has. We’ve been about a year and a half.

Danielle Gutelli:

Yeah.

Courtney Mattern:

It has. A year and a half. So, where are you now? And what does your financial health of your business look like? What is your outlook for the future look like?

Michael Gutelli:

We closed the year 2023 with less debt than we had at the end of Q1, 2023. So, we hammered that down. And coming into at the end of Q1, we’ve knocked out an even more significant portion of it. It’s not something that we talk about openly on social. We talked about before we hit the record button. There is a level of impersonation to this business. I hate the term, fake it till you make it, but that’s what everybody knows.

If you’re delivering a luxury product, you’re delivering top tier, top class brand and business, there’s a little massaging that needs to happen to the realities of the business. I’m not saying travel the world and fly private and have a Mercedes and a Lambo sitting there. But you also can’t scrounge the pennies together to try to make something happen. The reality is we had to get comfortable with the uncomfortability of being in debt and understand that business is tough. And 90% of businesses in the world experience debt at some level all the time.

So, we’re still climbing out of it. We’re in a much better spot. Our stress level that was here is now here. Because we’ve attacked it head on. And we also have a really strong team around us of business professionals that we hire and employ to help us get to the next step. And we also know that we can’t go out to dinners all the time when we want to. We can’t buy new laptops and get all the new tools. We have to buckle down a little bit. And that was tough in the beginning, but now it’s just a lifestyle.

Danielle Gutelli:

Well, and I think that a lot of this comes down to just the two of us wrapping our head around what that’s going to look like. And that it’s not an immediate fix. It’s something that is going to take time for us to get there. But I mean, when we were at the lowest of our low, we were talking to bankruptcy lawyers and getting all of the information of is that the route that we need to go? Are we that far down into it?

And a lot of it just comes down to your grit and motivation of … So often I think people get in that hard spot and then what do they do? They give up. Because that’s the easy way out of things. So, by no means has this been an easy ride for us. We went from a team of nine to a team of three. We’ve changed locations. We’re selling our house. We’ve done a lot of crazy things to get us here. But in the end, we both feel that this is the right direction for us as a brand and a company and a husband and wife team.

Michael Gutelli:

Yeah. We have two young boys, and we have an example to set for them. And we’ve had to gamify this whole experience of being on budget and bringing them to the farmer’s market every Saturday, so we can get our produce and fresh proteins and that we can go to a new coffee shop. It’s our little experience of we’re going to go do something fun and then hit up the parks.

So, I think it’s important to, if you do have kids, or you just have younger talent that’s in your company, set that example and be open and honest. I think that’s the big thing we’ve done with our company is everyone knows the situation. And we’re good, we’re strong, we’re better than ever. Our projects are even better. And we’re only going up from here. We’ve already hit the low, now we’re going up.

Zach Wojtowicz:

Amazing. Amazing stuff. We got to cut it here. You guys have covered a lot of topics today. We talked about the sales pipeline, how to manage your finances, building a community. We just ran the rogues gallery of topics here in construction. It was great having you both on. You’re always welcome back here on “The Building Code.” Thanks for coming on today.

Danielle Gutelli:

Thanks guys.

Michael Gutelli:

We can’t wait to have you guys in Detroit.

Zach Wojtowicz:

That’s right, Motor City.

Courtney Mattern:

Yeah. We can’t wait either. Bye, Danielle, bye, Michael.

Zach Wojtowicz:

We just had Danielle and Michael from Clark + Aldine. It was an amazing interview. We covered a lot of ground, we got into finances, we got into customer experience. Courtney, give us that fresh perspective, what did you think?

Courtney Mattern:

Well, I love this episode because I think Danielle and Michael, they were in a dire spot with their business. And then rather than throwing in the towel, they took a bold step to invest in their business. They went to the Contractor Coalition Summit. They were also bold enough to be transparent and vulnerable and share their experience with other builders. Which in turn meant they got the help that they needed. They got the advice that they needed. So, sometimes you just have to make a bold move and ask for help.

Zach Wojtowicz:

I love it. And that’s I think a really interesting way to talk about their story is that you’re up against these challenges, and we see this all the time where you get so caught up in the day-to-day, it’s really hard to keep track of the quarterly outlook, the yearly outlook. And come tax time, you’re like, wow.

And you also, it’s very easy to create informal processes naturally that until you actually step into the situation and you say, “We’re going to move information in this way or through these steps.” That people just fill in the gaps. I always say that with my own team. It’s like if we don’t define what should be happening, people will just do it. And then you’re picking up the pieces. So, having that ability to say, “You know what? I’m going to look in the mirror. I’m going to challenge myself to grow, and I’m going to try and take these lessons to improve.” And it sounds like things are really getting to a point of they’re starting to blossom and really get to a place that maybe they didn’t even know they could get to, which is really great to hear.

And I think it’s inspiring for others who probably have had similar stories. And that’s how great growth happens in an industry is that when others can look at those that have done it and say, “I can do it, too.” And that’s what I think they’re really indicative of, which was great to hear.

Courtney Mattern:

Yeah. And Buildertrend is just one small part of that story. But there’s also, you’ll hear in the episode, heard all the different connections that they have, and the Buildertrend community that they’re part of. They’re leaning on their reps, but also other builders they’ve met by being part of our software platform.

Zach Wojtowicz:

Yeah. And I just love their adorable story and name and their brand.

Courtney Mattern:

I know, it’s so sweet.

Zach Wojtowicz:

It’s just so fun to watch when we have couples on and they’re in the Zoom interview, and it was so much fun. So, thank you both for joining here on “The Building Code” today. Like I said, you’re always welcome back. And to our listeners out there, we really appreciate you. And thank you so much for tuning in. Don’t forget to tell all your friends about “The Building Code.” Every time we have a BTU, it’s starting to happen more and more people are like, “Oh, are you Courtney? Are you Zach? Where’s Charley?”

Courtney Mattern:

We’re becoming celebrities.

Zach Wojtowicz:

Come to Omaha, come meet us in person. But thank you so much for listening. Remember to like, comment, subscribe where all podcasts are available.

Courtney Mattern:

Yeah. And join the Facebook group, The Building Code Crew. If you have an even cuter name story than Clark + Aldine, drop it in there, love to hear it.

Zach Wojtowicz:

Drop in the comments.

Courtney Mattern:

See you next time.

Zach Wojtowicz:

Thank you so much. I’m Zach Wojtowicz.

Courtney Mattern:

I’m Courtney Mattern.

Zach Wojtowicz:

And we’ll see you again.