Getting financially fit for next year’s builds with Carla Merrill

Solid financials keep builders in fighting shape to handle the day-to-day and big picture challenges thrown at the construction industry.

On this episode of “The Building Code,” Zach and Charley pick up financial pro-tips from Carla Merrill, a consultant who helps builders integrate their financials with software like Buildertrend and CoConstruct.

Carla offers practical advice for builders looking to better organize or order their books to protect their profits and reputation.

Plus, listen to the full episode to hear Catie Brown of Buildertrend’s Data and Research team highlight how builders can instill a growth mindset in their team.

WHAT ARE THE KEY PRACTICES OF A FINANCIALLY FIT CONSTRUCTION COMPANY?

Carla: “Statistically, it’s been proven that builders who track their cost on a daily basis usually finish their projects on time and within budget. And so, you do have to have that job costing component set up in order to be able to do that. So, a financially healthy (company) would be one who is regularly, whether that’s daily or at least weekly, tracking their estimated versus actuals, which can be done on a budget page in Buildertrend. (A company) who’s staying on top of their upgrades and additions and price changes by using tools such as change orders and purchase orders, so they don’t fall behind on that, and they don’t end up eroding their profit as the project is progressing, which can easily happen. And then they’re integrating actually with QuickBooks so they can see it.”

WHAT’S ONE TACTIC BUILDERS SHOULD FOCUS ON BEFORE THE END OF THE YEAR TO GET THEIR FINANCIALS IN ORDER?

Carla: “I always tell people the end of the year is a perfect time to figure out what your overhead costs are and make sure that you’re taking that amount and you’re allocating it to your projects.”

LINKS AND MORE

Related content:

Learn more about Carla’s consulting services.

Master Buildertrend’s accounting integrations for free.

Listen to our last episode on how to retain top talent in construction.

“The Better Way” a podcast by Buildertrend:

Ready to optimize how your team plans projects with the world’s No. 1 construction management software? Pick up Buildertrend project planning pro tips on the newest season of “The Better Way, a podcast by Buildertrend.” Subscribe and stream all five bingeable episodes on your favorite listening app now.

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Carla Merrill

Carla Merrill | Builder’s GoTo

Zach Wojtowicz:

It’s “The Building Code.” I’m Zach Wojtowicz.

Charley Burtwistle:

I am Charley Burtwistle.

Zach Wojtowicz:

Good to see you, my friend. We are post-Thanksgiving.

Charley Burtwistle:

Post-Thanksgiving.

Zach Wojtowicz:

Moving into the holiday season. Are you a Thanksgiving guy or are you a Christmas guy?

Charley Burtwistle:

I think normally Christmas guy, but this year we did a prime rib instead of a turkey.

Zach Wojtowicz:

Whoa.

Charley Burtwistle:

And talk about a game changer.

Zach Wojtowicz:

That’s kind of blasphemous.

Charley Burtwistle:

Oh, well, I don’t know about that. As long as it tastes good and you eat too much of it, I think you’re sticking with the…

Zach Wojtowicz:

It’s just about eating.

Charley Burtwistle:

Yeah. That’s the main reason for the season.

Zach Wojtowicz:

I actually historically hated Thanksgiving because my aunt did the cooking. She has a time or two, I would say, really taken some creative liberties with the turkey. I’ll tell you more about it off air. But I have taken this holiday upon myself and since then it is now my favorite holiday because I actually get to control what I consume.

Charley Burtwistle:

Ooh okay.

Zach Wojtowicz:

Yeah, we went all out. I made pumpkin pie, turkey.

Charley Burtwistle:

Wow.

Zach Wojtowicz:

Insane recipes. I was like putting butter under the skin of the turkey, shoving things up.

Charley Burtwistle:

Official. Maybe we need to do a little cooking episode.

Zach Wojtowicz:

Yeah.

Charley Burtwistle:

I would also like to-

Zach Wojtowicz:

A little side YouTube content. Hey, if you want to watch us cook things in the Facebook group, make sure you download the podcast and make a comment on the Facebook group.

Charley Burtwistle:

I would also like to point out for the listeners here that Zach and I do work together outside of the podcast.

Zach Wojtowicz:

We’re actually pretty serious.

Charley Burtwistle:

We’ve had two meetings today and we haven’t once discussed how our Thanksgivings were.

Zach Wojtowicz:

That’s true. This is the first time.

Charley Burtwistle:

Yeah. Thank God we can do it.

Zach Wojtowicz:

What are we even doing? All right. It’s the podcast. We’ve got to focus up here. We’ve got two guests today. I don’t know if we’ve ever done two guests in one episode.

Charley Burtwistle:

No. It’s monumental.

Zach Wojtowicz:

At least there’s two separate topics. We’ve got Builder’s GoTo with Carla Merrill to talk about financial processes and her consulting business. Really excited for that. And then we’ve got returning guest.

Charley Burtwistle:

Catie Brown from the research team.

Zach Wojtowicz:

Talk a little bit about…

Charley Burtwistle:

Growth mindset. I would imagine these two guests are going to go pretty well hand in hand. I know that a lot of what Carla’s going to be talking about will be how do you even set up your financials in Buildertrend and CoConstruct? How do you get off the ground running? And how do you become better?

Charley Burtwistle:

A lot of people have been doing things the same certain way. There is a better way out there, which I think will segue way really nicely into Catie Brown’s growth mindset talk, where she’ll be talking about exactly that. How do you improve on what you currently have and make sure that you’re not in a fixed mindset? So super excited for these two guests. Yeah. Let’s get into it.

Zach Wojtowicz:

Let’s do it. Let’s get them on. Carla, welcome to “The Building Code.” It’s great to have you here.

Carla Merrill:

Thank you. I am excited and honored to be here. So thanks for having me.

Zach Wojtowicz:

Absolutely. No, thank you. The pleasure is really Charley. Trust me. We are always the lucky ones in these scenarios.

Charley Burtwistle:

Absolutely.

Zach Wojtowicz:

We wanted to bring you on “The Building Code” to talk a little bit about a topic that is near and dear to all of our listeners hearts, which is the financial aspects of running a construction company. It’s tough. There’s a lot of ways to do it. Some people just kind of figure it out. Other people reach out for third party consultants.

Zach Wojtowicz:

Recently we’ve had a lot of different people who work in this space in consulting and have hundreds of clients to a few clients like yourselves. Before we kind of dive into our questions here, why don’t you just tell us a little bit about Builder’s GoTo and what you do with your clients and how many people are you working with? Just kind of the overview of what you are setting up there in Idaho.

Carla Merrill:

Yeah. I mean, I do a couple of different things, but mainly what I do is I consult with builders and help them understand job costing, be able to help them to know what they need to do to be able to track their costs, be able to make sure that they’ve got cashflow running in the way that they need it to.

Carla Merrill:

I help a lot with accounting codes, helping them get things set up in QuickBooks so that things are flowing the way that they need to in the project management software that they’re using. I’m also a QuickBooks Pro advisor. So I consult a lot with how to use QuickBooks and some of the issues that people are having with that. I kind of fell into it.

Carla Merrill:

I have a background in accounting. I’ve actually done books for a couple of different builders. I started off doing bookkeeping for a friend who was I guess I would call him maybe a semi-custom spec builder, and he was using CoConstruct. So that was my first sort of introduction to project management software.

Carla Merrill:

And then I worked for a custom builder remodeler who not only needed help with his books, but also just with this business process. So I introduced him at the time to CoConstruct to help with that. So that’s where I really honed in on sort of the advantages of using a software such as Buildertrend or CoConstruct and integrating that with QuickBooks to be able to help with your financials and being able to really see where you’re at.

Charley Burtwistle:

So how long ago did you kind of make the transition from helping a friend kind of on the side to actually forming Builder’s GoTo and kind of doing this full time?

Carla Merrill:

It’s been a few years ago now. I was actually asked by CoConstruct if I would be willing to offer their training, which was called CoCamp. At the time, too, their users in the Western US. I am in Idaho and just to kind of cut down on people having to travel so far to be able to get that training. So I started offering that live in Western larger cities.

Carla Merrill:

And then when COVID hit, I pivoted like a lot of other people did and started offering those classes online. And then I just sort of fell because of my accounting background into a specialization of consulting people one-on-one on construction financials and job costing, QuickBooks integration.

Carla Merrill:

And then going online and doing that more virtually actually opened up just a awesome door for me, where I was able to work with builders all over the US and Canada and even Australia and New Zealand. So I’ve just loved it. It’s been a really good opportunity for me.

Zach Wojtowicz:

That’s amazing.

Carla Merrill:

And I’ve met a lot of amazing people, so super grateful.

Zach Wojtowicz:

That’s always my favorite part about the construction business. You guys know, Charley knows this, how I always kind of think of it as like it’s like a quilt. You have so many different people. They did different things before they ended up in construction. And now it’s kind of this really interesting ecosystem of people that have got different skillsets.

Zach Wojtowicz:

So I’m sure you’ve got amazing stories to talk about, all the cool people you’ve met in your time. I was just going to make a joke. There was a time where you’d come onto “The Building Code” and bring up CoConstruct, we would’ve been like, “Come on.” It’s fun that those days are kind of over like, “Oh, CoConstruct? They’re part of our Buildertrend family.”

Charley Burtwistle:

All part of the family.

Carla Merrill:

Yes, exactly.

Zach Wojtowicz:

So you started with CoConstruct.

Carla Merrill:

I did.

Zach Wojtowicz:

And now you’re into both, Buildertrend and CoConstruct?

Carla Merrill:

I am into both. Yep.

Zach Wojtowicz:

I’m interested for what’s that experience been like? I know it’s not really like one of the topics, but are they more similar than they are different? Has there ever been any learning adjustments you’ve had to do? What’s been your experience?

Carla Merrill:

Yeah. I mean, it’s been a bit of a learning adjustment. But yeah, they’re very similar in the way that the programs integrate with QuickBooks and especially with the ability that you have inside of each one of those programs to be able to track your estimated versus actuals, the budget pages and that type of thing, the ability to use purchase orders, change orders, that type of thing. They’re very similar and great. I mean, it’s a great tool for builders to be able to use, and it gives them more insight into the overall picture of their financials than they would get if they were just using a program such as just QuickBooks.

Zach Wojtowicz:

Yeah. So bottom line, you need to have a project management software.

Carla Merrill:

100%.

Zach Wojtowicz:

Charley and I have no preference as to which one you use, neither does Carla, but it’s good to have.

Carla Merrill:

Nope, I don’t. Absolutely. Yes. That will help you. So that’s amassed in my mind.

Charley Burtwistle:

Well, I think it’s super cool that you were able to, like Zach mentioned like, a non-traditional construction background, you were able to kind of find this need in the market and able to fill it. And that’s definitely a common theme of the past few guests that we’ve had on here. I mean, even most people at Buildertrend don’t come from traditional construction background.

Charley Burtwistle:

But the topics and the applications of the processes across most businesses are all kind of the same. People need to make money, and they need to know where that money’s coming from and they need to be able to forecast some of that stuff out. We actually have a guest coming on after you at the end here to talk about growth mindset and how that could be applicable across a ton of different companies.

Charley Burtwistle:

But I feel like cashflow and accounting and some of that stuff is definitely in that same realm of no matter who you are and where you’re at, it’s something that you need. In the construction space, working with the builders that you’re working with, how does that interaction typically go? So they reach out to you with kind of a blank slate and say like, “I don’t even know where to start,” or is it more so, “What I’m doing right now isn’t working. Fix it, please?”

Carla Merrill:

Yeah. It’s a little bit of both, honestly. I mean, I’ll get builders who are doing relatively fine financially, but they’re just wanting to get more organized or they want more detailed reporting or something along those lines. So I help them customize their accounting codes and get things to be the way that they want them to be. But more often than not, the people that are contacting me, they are struggling.

Carla Merrill:

I mean, they’re struggling to understand, what does job costing mean? Exactly how do I do it? A lot of them don’t know if they’re profitable until the project is finished, which is obviously not ideal. And they know it’s not ideal, but they don’t really know what to do to fix that. And oftentimes builders, their strength is building. It’s not bookkeeping. And job costing is not a common accounting method. And it’s really only specific to construction. So even accounting professionals don’t understand how to do it.

Carla Merrill:

People who contact me need help understanding how job costing works. How do they set it up? How do they implement it? I spend time even meeting with their bookkeepers or their accountants and explaining it to them and showing them how they need to set that up in QuickBooks and how that transfers into Buildertrend and being able to use that to be able to follow their budgets and that type of thing. So it’s a little bit of both, but for the most part, it’s just trying to figure that out and being able to wrap their head around understanding exactly, how does this work?

Zach Wojtowicz:

That’s a great point, Carla. That’s something that I think I don’t think people fully understand is that the way that these systems work together and the way that you run a construction company isn’t necessarily a ubiquitous experience for all of accounting. I’ve had to explain to bookkeepers like, “Hey, this is the way it has to work in order to feed the information.” So I always love talking to people who know how it works and being like, “See, bookkeepers that we’ve talked to, it’s not that it’s wrong. It’s just different. It’s just a little different.”

Carla Merrill:

It is.

Zach Wojtowicz:

But once you understand the way to translate it, it absolutely works.

Carla Merrill:

It does. I mean, people will say, “Well, my accountant says I can’t do it that way. That I can’t use a product and service or an item in QuickBooks. It’s not the way it’s supposed to be.” I’m trying just to explain to them that that’s really what is leveraged. That’s what job costing is. And if they haven’t seen it before or haven’t worked in construction before or something like that, it’s not something that they would normally know.

Zach Wojtowicz:

How much do you have to change people’s processes and behaviors in order to get it to work? I mean, I think that’s the biggest anxiety is like, “Oh, you’re touching my books. You’re messing with my accounting. You’re going to actually cause a bigger issue by tweaking this.” But I don’t think that’s necessarily true. I mean, it’s subtle changes in the way you do things that lead to these outputs, right?

Carla Merrill:

It really is. I mean, its subtle changes. For say in QuickBooks it’s just, where are you allocating these costs? Instead of putting it in what’s called a category detail, you’re putting it in an item detail. You’re just job crossing it to a specific code. And it’s really just a talk through, I mean, mainly just explaining sort of the overall overview process of how things are pushing and pulling between like Buildertrend and QuickBooks.

Carla Merrill:

And once they kind of see that and understand that, then just tweaking things and setting things up so that they understand how they need to be entered in so that all of that information flows and it’s going to give them the reporting that they want. They’re usually actually pretty excited, honestly, once they can understand how that works.

Zach Wojtowicz:

Relieved.

Carla Merrill:

Yeah.

Zach Wojtowicz:

It was like, “Thank you. Thank you so much.”

Carla Merrill:

Yeah. “Thank you so much for having this work for me.” Because they think they kind of know what they want the outcome to be, but they just don’t know how to get there.

Charley Burtwistle:

I guess, what is kind of the end goal of like how to get there? Once you get everything set up, they understand how it’s working, everything’s smooth sailing. What are some of the kind of, I guess, key financial measurements that they should be checking in on and tracking now that they’re able to track it that kind of constitutes a financially healthy company?

Carla Merrill:

I mean, statistically, it’s been proven that builders who track their cost on a daily basis usually finish their projects on time and within budget. And so you do have to have that job costing component set up in order to be able to do that. So a financially healthy one would be one who is regularly, whether that’s daily or at least weekly, tracking their estimated versus actuals, which can be done on a budget page in Buildertrend.

Carla Merrill:

One who’s staying on top of their upgrades and additions and price changes by using tools such as change orders and purchase orders so that they don’t fall behind on that and they don’t end up eroding their profit as the project is progressing, which can easily happen. And then just as we’ve been talking that they’re integrating actually with QuickBooks so that they can see it.

Carla Merrill:

QuickBooks is a great financial tool, but it’s not really until you integrate with software such as Buildertrend where you can really see the overall financial health of your projects. And one of the great things about tools such as Buildertrend is it gives you actually the option, too, to be able to give your client at least some level of visibility into their financials, which you’re not going to do with QuickBooks.

Carla Merrill:

I mean, you’re not going to give your client login access to your QuickBooks account. And being able to have them see that on the project management side can go a long way for creating that level of trust with your client.

Charley Burtwistle:

Yeah. That’s super cool to hear you say that. So I work in the data science department here at Buildertrend. So unlike Zach, I don’t get the pleasure of interacting with customers and hearing actual sentiment about how they’re using the program and things like that.

Charley Burtwistle:

But I do get a look at data all the time, which is a different lens on the same kind of result. And something that we always call it on the data science team is like the Buildertrend Bump, which is like, once you start using Buildertrend, you kind of get this increase in your productivity and we’ve actually shown over time you start getting jobs done quicker, you start getting jobs done under budget.

Charley Burtwistle:

So it’s cool to hear you say that from the qualitative standpoint of like, no, once you start tracking this, there are actual results that go along with it. And it’s cool from my point of view, I’m like, “Oh yeah, the data was right. That is happening.”

Carla Merrill:

Yeah, absolutely.

Zach Wojtowicz:

It’s funny too. Because Charley and I actually work together on a lot of projects. We make a great team because he’s got the information and I have the idea of like here’s what I want to do. Can you prove it for me from a data standpoint? That’s kind of what you’re doing on a construction project too. It’s like you have your bookkeepers who are making sure everything’s in the right place. It’s reportable.

Zach Wojtowicz:

And then the project manager or the owner who’s looking at what you’ve done and make changes or here’s where we can get the insights. But it takes work and that’s something I always tell people. It’s like when I was consulting, it might require you to use the system more. You got to log in more often. You got to update your purchase order. You got to go and make sure your schedule’s up to date.

Zach Wojtowicz:

It’s a tool and it’s only as good as the effort you put into it too. But is it the output of what you’re getting worth it? And I think you would say and I would say the majority of our clients and the Buildertrend bump would prove like it is worth it. It absolutely leads to results.

Carla Merrill:

Yeah, it does. I’ve been in the trenches. I’ve seen it. I’ve seen it with builders that I’ve worked for of how it’s transformed their business to be able to maybe you’ve got a bookkeeper who’s mainly working inside of QuickBooks, but then you’ve got a builder who’s looking at it in Buildertrend or the software and being able to track that is huge and can help all aspects of your business.

Zach Wojtowicz:

So let’s get into some of the mistakes that you see your customers making. Are there things over and over again that people are repeating or they’re overlooking in their processes that maybe you could advise for those listeners out there who are interested to maybe explore what they could be doing better?

Carla Merrill:

Yeah. I would say probably the biggest one is they’re not utilizing tools like change orders and purchase orders. For change orders, I would say jobs can get really hectic and they can move really fast. And then you’ve got these upgrades and these additions and things that take place and you can sometimes it can get overwhelming and maybe like the paperwork, so to speak, sort of gets put on the back burner or sometimes just gets completely forgotten about.

Carla Merrill:

And then you get to the end of the project and you’ve got these overages that you haven’t properly documented or gotten an assigned change order for. And then you’re sort of left with this difficult dilemma of, well, do I change order the client after the fact?

Zach Wojtowicz:

Surprise. Enjoy your new project. Hey, it’s a $80,000 bill. No big.

Carla Merrill:

Which doesn’t go over so great. I mean, I’ve seen that happen before, and especially if the client it wasn’t made clear of whether that upgrade was included in the original price that you gave them or not. So the builder then is faced with, do they absorb that cost? And most of the time they do mainly just out of embarrassment of not wanting to have to say, “Hey, this got out of hand, and I didn’t catch it in time.” That type of thing.

Carla Merrill:

And then purchase orders are going to make your guesstimate a solid estimate. Implementing that with your trade before the work actually takes place is going to be able… Purchase orders are intended to anticipate your actual. So it’s an anticipation of what that bill that you get from your trade is going to be. So if you implement that ahead of time, you’re able to sort of project and see where things are going to land once you get that invoice from them.

Carla Merrill:

I mean, I’ve honestly been in the room before where there were some pretty heated negotiations between a builder and a trade partner when the builder receives this unanticipated bill after the work has been completed, same thing where you’re like, “Okay, well, I’m not going to change order the client after the fact.” You’ve got a trade. You did that work. You need to pay their guys.

Carla Merrill:

And so 9 times out of 10, the builder ends up absorbing at least a portion of that cost. And so keeping up with those two things are really huge and being able to keep up with your estimated versus actuals and your profit and making sure that you’re not eating into your profit by cost that you’re absorbing that you really didn’t have to. And then the last one I would say making sure that you’re properly accounting for overhead.

Carla Merrill:

So in your project, overhead are those costs that aren’t necessarily always allocated to a project like filling your checks up with fuel, paying your business license, insurance, all of buying equipment. But you have to come up with a method or a way to be able to properly account for that in each one of your project, whether it’s a percentage that you’re adding on in addition to your profit or as a flat fee that you’re adding as a cost line in your estimate.

Carla Merrill:

And there’s multiple different ways that you can do that. But that’s one thing that I find a lot that people are not doing or don’t realize that they should be doing. Because at the end of the day, those costs are going to come out of your income and most likely it’s going to be out of your profit. So you have to be accounting for that.

Charley Burtwistle:

I think that’s super cool to hear you talk about these things. I feel like the main pushback people normally give about wanting to track stuff, whether that be project management stuff or financial stuff, anything if you’re Buildertrend or CoConstruct is, “Well, I already know all that. What’s a software going to tell me that I don’t already know up here?”

Charley Burtwistle:

A lot of pushback we get in the data world as well too is like, “Well, I already know those things.” Well, there’s two outcomes that it could come from. It is, one, you’re right. But at least now you have it validated and on paper. You’re able to track the things that over time. And then the other one, which isn’t as fun, is you’re completely wrong, and this is going to be a wake-up call.

Charley Burtwistle:

But it is a win-win either way. So hearing you talk about all the things that they can track to not only look historically, but also plan for the future. I mean, who wouldn’t want to get that set up and run their business that way.

Zach Wojtowicz:

That’s a really great point. I mean, truly, that’s the whole idea behind science itself. We’ll get into that with Catie a little bit later. You have a hypothesis, you need to prove it. Just because you think something doesn’t mean that you do.

Charley Burtwistle:

Yeah. I’ll talk scientific method all day. We’ll just get deep into it.

Zach Wojtowicz:

And just drop listeners left and right. We’ll rebrand the whole podcast. The marketing team’s looking at me shaking their head now. So there’s just something comforting in being able to look at the numbers and be like, “Okay, now I can actually make adjustments. I have shined light in places maybe I didn’t want to look.”

Zach Wojtowicz:

It was like initially when you were talking about that is like, yeah, it can be scary to know that you’re actually eating 3%, 4%, 5% margin on a project. Maybe you’d rather not know. But it’s better to have that knowledge that you can continue to grow and scale and not have those questions and God forbid sleep at night not worrying about your business.

Carla Merrill:

Well, exactly. I mean, that’s exactly it, just being able to know where you’re at really at all times. And it’s possible. The more you do it and the more you get it in the habit of doing it, it can almost become something that you enjoy. I mean, a lot of books and doing financials is not always something that people love to do, even your personal, anything. But the more you do it, I think the more exciting it can be because you can sort of project where you’re going to land, it can help you run your business better in the future. It can help you better estimate all kinds of different things if you’re tracking that better.

Zach Wojtowicz:

And it gets easier too. The more you do it, the more reps you go through, eventually it’s just part of what you do. It doesn’t feel like work. It’s just you’ve built the habit and this is just part of the process, right? I mean, if you’re trying to adopt a process change, you’re trying to be more financially driven as a company and making decisions, it may feel like I’m making these massive process changes, but in two years you’re not going to look back and be like, “Man, remember setting up our accounting codes?” You did it once. You’ve got it right. You don’t have to worry about it again.

Carla Merrill:

That’s exactly. I tell people all the time, accounting codes and kind of setting it up is a one and done usually. I mean, you get it and it might be a little bit difficult, but once you’ve got that set and you know what you’re doing in terms of how you’re allocating, then everything else pretty much flows pretty well and you’re be able to take a look at what you’re at. But just that initial setup can sometimes feel really overwhelming. So that’s what I’m here for.

Charley Burtwistle:

Yeah. Absolutely. Like, why do it yourself?

Zach Wojtowicz:

Saints like Carla.

Charley Burtwistle:

Saints like Carla. That’s a good t-shirt idea. I feel like I haven’t pitched a t-shirt on the pod for a while.

Zach Wojtowicz:

What do you mean? You pitch t-shirts every episode, Charley. This is like a running thing. We’re trying to get merch, we’re trying to get t-shirts.

Charley Burtwistle:

I feel like saints like Carla would be a great one.

Zach Wojtowicz:

That would be one fly off the shelves. I’m not saying they’re bad ideas. I’m just saying like you always do this.

Charley Burtwistle:

I do. Carla, going into… This will air kind of the perfect time, beginning of December. A Lot of people are going to be wrapping things up for the year, looking forward into 2022. Everyone’s got their New Year’s resolutions hot and ready to go. What would be some suggestions that you would provide people that are wanting to kind of get their financials in order of things they can do to wrap up the year on the right note and kind of prep for 2022 the right way?

Carla Merrill:

Yeah. There are several things, especially in QuickBooks, that I would recommend doing. First would be reconcile your bank and credit cards. QuickBooks makes this really easy. For us accounting people, it’s almost kind of like a dopamine hit, to be honest, to reconcile stuff and have it like come out zero and you really…

Zach Wojtowicz:

Another t-shirt.

Carla Merrill:

Yeah. But that’s definitely something. I mean, sometimes people will put that off. They don’t do it on a monthly basis. And if you haven’t, I would definitely do that because you’re going to be able to catch any mistakes that your credit card or bank may have made and you’re going to catch any duplicate transactions.

Carla Merrill:

But you’re definitely going to want to get out of there before you run your financial statements at the end of the year. It also will help you identify maybe any subscriptions or memberships or something that you haven’t been using or that you haven’t used, that you can cancel, that would save you money in the coming year. So things that are like automatically being taken out.

Zach Wojtowicz:

Good personal advice. I need to do that my own…

Carla Merrill:

Right. Yeah, exactly. And then I would run financial statements. The first one would be your balance sheet. And then on the balance sheet, you’re going to want to be able to validate any invoices that are appearing on your AR. So your accounts receivable. You can run like an aging AR detail or summary report and just will help you identify any uncollectable receivables that you either need to try to collect by the end of the year or that you maybe need to write off.

Carla Merrill:

And then also check your AP balances and make sure that you don’t have any unpaid or duplicated vendor bills on there. And then that’s also a really perfect time to go through all of your vendor and client lists and just inactivate any that you’re no longer working with to sort of clean up your books so that you don’t just have them sitting there.

Carla Merrill:

And it’s also really a good time, too, to update any 1099 information for your vendors so that you’re not scrambling at the end of January when those 1099s are due, trying to get all that information from people. So that’s a good thing to do. And then also run that profit and loss.

Carla Merrill:

There’s like a variety of different reports and QuickBooks that you can run, but it can help you do a couple different things. It can help you check for errors or discrepancies in your job costing to make sure that you have allocated cost to the right project or customer or customer project. That you’ve allocated to the correct accounting code and that it looks good there.

Carla Merrill:

This is also a really good time to sort of tweak your accounting codes. If you have a profit and loss where you’ve got a bunch of the accounting codes that have zero balances, they’re just clogging up your system. I mean, that’s pretty much a clear indication that that’s not something that you’re using on a regular basis. My personal philosophy on accounting codes is that less is more.

Carla Merrill:

You really only need what you need for your financial reporting. And so you really need to kind of hone in on what is that list exactly. The NIHB and the CSI have great lists, but you may not use all of those. So you really need to sort of customize what works for you and what you need to know out of your reporting. So that’s a good time to take a look at those.

Carla Merrill:

And then also that profit and loss, that’s a perfect time to check and calculate your overhead. So you would want to go through, check all of those overhead expenses, add them up. And you can either determine what percentage of that is of the sales that you’ve done that year and be able to…

Carla Merrill:

I always tell people the end of the year is a perfect time to figure out what your overhead costs are and make sure that you’re taking that amount and that you’re allocating it to your projects. One of the last things that’s really cool in QuickBooks, if you aren’t using it is the cashflow projector, is something that’s in QuickBooks Online and QuickBooks Desktop.

Carla Merrill:

And it just basically takes the history of your income versus your expenses. And you can see that on like the business overview page too if you’re in QuickBooks Online. But it can help you predict where you’re going to land in the three months. So it would just take a look at what the first quarter of 2022 based on your previous history of how things have gone.

Carla Merrill:

But you can also add things in. If you’re planning on buying a piece of equipment or maybe a new truck, you can add that in, and then it will show how that will affect things for the coming three months. So that’s something I always recommend people do if they have some things that they’re wanting to predict of where their money’s going to be coming up in the first quarter of 2022.

Charley Burtwistle:

That’s an awesome list. I feel like I need to encourage everyone listening right now to pause, rewind, get out a pen and paper, write those down. What an awesome kind of summary of everything that they could set up to be successful in the future here. I would also encourage everyone listening, too, if you are a Buildertrend or CoConstruct user, reach out to your reps. Ton of free service there. And if you think you need something a little extra, reach out to Carla as well. What would be the best way for them to get in contact with you?

Carla Merrill:

They can just go to my website buildersgoto.com and there’s multiple different ways to contact me through there. I’ll get back with you within 24 hours. I offer a consult just to see what help you might need. I have several different options for personal training from hourly to a package. I mean, I’ll just discuss what you’re looking for and can kind of guide you what would be the best option for you.

Zach Wojtowicz:

Love it. Carla, thank you so much for joining “The Building Code.” This was fantastic.

Carla Merrill:

Thank you. Thanks so much for having me. It’s been, it’s been fun.

Charley Burtwistle:

Thanks, Carla.

Zach Wojtowicz:

Charley, we just had Carla Merrill from Builder’s GoTo on the podcast talking about best practices and the construction issue when it comes to financials. I learned a lot, as I always do with our guests.

Charley Burtwistle:

Yeah, I did too. That was one of the first times… I mean, I always learn a lot, but I was actually taking out my pen and writing the notes as she was talking.

Zach Wojtowicz:

I saw that. You were taking notes. I was like, is this guy over here taking notes? About to open a small business and get some foundational accounting practices involved?

Charley Burtwistle:

No, I will be steering clear of that. I’ll let saints like Carla handle that. I mean, cash flow in accounting is definitely not an uncommon problem to have in these businesses. So on the data science team, we’re constantly thinking about how can we help mitigate at this problem and help our customers.

Charley Burtwistle:

So listening to some of the advice that she was giving, I’m like, “Man, I wonder if we’ve ever looked at it from that perspective.” And I may have to give Carla a little follow up call with some additional questions I have getting to the scientific method of it all.

Zach Wojtowicz:

I hope she hears that before you call her and she’s just like, “Oh great.” I had to talk for like three hours with a data scientist.

Charley Burtwistle:

Yeah. We may have to edit that part out if I want Carla to answer my calls. But no, she was great. I mean, all the guests we have are great, but I love the theme that we’re on right now of talking to people that are kind of like building adjacent. So consultants and accountants and people that are in the space, but not kind of traditionally trained.

Charley Burtwistle:

And it just blows my mind every time to hear how similar the construction business is and all the problems that they’re facing aren’t new problems in the world, and there’s people out there that can help.

Zach Wojtowicz:

Yeah. A lot of great people who know what they’re doing. Listen to them, for sure. Speaking of people who know what they’re doing, we’ve got a special guest here today.

Charley Burtwistle:

A recurring guest.

Zach Wojtowicz:

A recurring guest. That’s correct. Catie from data and research.

Charley Burtwistle:

Catie Brown.

Zach Wojtowicz:

Catie Brown. She’s joining us again to talk about some topics that we’ve been covering. Catie, welcome back to “The Building Code.”

Catie Brown:

Thank you. I am very glad that you think I know what I’m doing.

Zach Wojtowicz:

I was going for a smooth transition.

Charley Burtwistle:

So you don’t really mean it? Ouch. Zach, OK, let me jump in here and save that. It is an honor to have you, Catie. I feel like the wall of guests that we have that have come on more than once is slim. We were talking about that the other day. So you’re joining a very special group of people.

Zach Wojtowicz:

We don’t ask everybody back. Let’s put it that way.

Catie Brown:

Well, I am truly honored, either way.

Charley Burtwistle:

And I think this will be a continuing thing. So I think Catie will be joining us more and more. Again, she’s on the research team here at Buildertrend. So she’s constantly talking to customers and kind of on the cutting edge of the construction industry and here today to talk about growth mindset, which is something that we mentioned to that episode. We mentioned it the last episode ago. How do builders kind of frame not just themselves but their company to not be stuck in the past and constantly be evolving and getting better and not just be complacent with good, but how do they continue to shift on to great?

Catie Brown:

Yeah. I am really excited to talk more about this topic because it’s something that comes up a lot, like really organically. Pretty much every business wants to grow. Almost every individual wants to keep growing and become better. And growth mindset is all about how you view your failures and your success and kind of how you structure your whole world around that. I can just keep going, jump right in.

Charley Burtwistle:

Yeah. I mean, obviously this is something that you guys talk about a lot on the research team and talking to companies a lot about. What have been some of your key takeaways in some of the research you’ve been doing on how to evolve into this growth mindset and kind of constantly be pushing for better?

Catie Brown:

Yeah. So I think a little bit of background is helpful. This comes from a psychologist named Carol Dweck, and it’s about a spectrum that you can be on of I have a growth mindset. I believe that I can become a better version of myself. That my success is due to my ability to work hard and find successful strategies to become better.

Catie Brown:

And on the other end of the spectrum you have a fixed mindset, where you are I am the way I am. I was born this way and I’m just the kind of person who does blank or who doesn’t do blank. So we see this when we’re talking to builders a lot when they say, “My subs or my employees, you can’t teach an old dog new tricks.”

Catie Brown:

That would be very much fixed mindset. Whereas growth mindset is, well, if you train the dog well and you spend time practicing with the dog, yeah, the dog can learn new tricks. And what’s even better is that works on humans as well as dogs. So it’s all about…

Zach Wojtowicz:

Is it treats? Is that you got to like feed them?

Catie Brown:

Well, treats work for both. But actually praise is a big part of that. So it’s not so much praising the end result. It’s about praising effort towards that result. And it’s not like everyone gets a trophy, you all did well. It is I see that you’re trying.

Catie Brown:

Another big component is when there are failures, I see that you’re trying and that didn’t work. And what did we learn from it? So you’re learning from your failures. So like we just talked about with Carla, or you just talked about with Carla…

Zach Wojtowicz:

Catie was in. Fun fact.

Catie Brown:

I was in the background.

Zach Wojtowicz:

She was here the whole time.

Catie Brown:

Surprise.

Zach Wojtowicz:

Production magic.

Charley Burtwistle:

There you go.

Catie Brown:

So yeah, when you were talking to Carla, she mentioned you might have a change order. That maybe you’re just embarrassed and so you take on that cost. You might see that as a failure and in a sense things didn’t go the way you wanted to. But instead of kind of getting mad at whomever was responsible for that change order, you’re transforming it into, how can we do better going forward?

Catie Brown:

And that is kind of the crux of growth mindset. That you’re continually going back to the drawing board. You’re continually working hard at it with the belief that yes you can. One of the slogans of this whole topic is the power of yet, Y-E-T. And I even had a teacher in high school. We had a mandatory dance class, which is…

Charley Burtwistle:

Love that.

Catie Brown:

It’s own special trauma.

Zach Wojtowicz:

Got to stay loose,

Catie Brown:

All of us were not maybe born dancers. We maybe had a fixed mindset about our dance abilities and we weren’t allowed to say can’t. We had to say, “I have not yet mastered that skill.”

Charley Burtwistle:

Ooh, I like that.

Catie Brown:

So it’s kind of like, I can’t do this yet. All about the yet.

Charley Burtwistle:

Man, I’ve already pitched one t-shirt so I’m going to hold my tongue on this one. But a yet…

Zach Wojtowicz:

Growth mindset. I will withhold myself from pitching products.

Charley Burtwistle:

Yeah. That would be a growth mindset for me. So is this something, Catie, that if someone wants to shift towards that, they can just like wake up one day and decide, “I’m going to have a growth mindset,” or what are some of some steps that people can take once they kind of recognize that they may be in this fixed mindset to start getting better and evolving?

Catie Brown:

One thing to know is that you’re going to be on different areas of this spectrum in different parts of your life. So no one is… Well, probably someone is. But no one is entirely having a fixed mindset. No one is like all about growth mindset. We were talking about, I don’t know, just something internally on my team. And it was funny.

Catie Brown:

It was in the same meeting that I was talking to my team about growth mindset. And at the end I was like, “Well, I’ll try that, but I don’t think it’ll work.” And it was like, even though I was just talking about it, I fell into that trap of like it’s going to be this way. So if you want to develop a growth mindset, it depends on what your focus is.

Catie Brown:

This can work for yourself, like your personal improvement, but also maybe for your company. If you’re just starting out, one way to look for people with growth mindset, you could ask them, how did you get good at whatever you’re good at? And that’s actually a question that the psychologist who came up with this whole topic, she was working with a baseball team to identify good potential draftees and they asked them this question.

Catie Brown:

And what they were looking for is, are they saying, “Oh, well, I was born good at it. My dad was good at it. It’s genetic?” Or were they like, “I showed up early. I stayed late. I took classes to improve on the things that I was not doing as well?” That’s the kind of answer that indicates a growth mindset.

Catie Brown:

Or you could ask them about their failures, because you’re going to fail. If you are trying to do something new, if you’re trying to get better, there’s going to be setbacks, but what do you learn from it? And do you learn from it? So people who can look back on their failures, that’s going to be really important.

Catie Brown:

And I think even just with your business in general, if you’re trying to have a growth mindset towards your business overall, take advantage of the resources out there like Builder’s GoTo. When you are stuck, that means you need to look for other resources. So this all comes from the fields of education. And so you’re not just going to praise kids no matter what they do just because they’re trying.

Catie Brown:

Because if they’re trying and they’re doing the wrong thing, they’re just going to get frustrated and it’s going to go really bad. So if you’re trying and trying and things just keep going wrong, reach out, come to BTU, talk to other experienced builders, talk to your team here at Buildertrend. It’s a lot about accepting that there’s space to grow.

Charley Burtwistle:

Yeah. That’s immediately where my mind went to is just immerse yourself with very, very successful people in the field that you’re in. So a ton of good opportunities that you mentioned, BTU, Builder’s GoTo, “The Building Code,” which is a really cool podcast I listen to, “The Better Way,” which is a less cool podcast, but also a good one.

Zach Wojtowicz:

There’s an overlap there of someone on “The Building Code” and “The Better Way” there, Charley.

Charley Burtwistle:

Checking both out. We also have The Building Code Crew on Facebook. So that’s something that you can join. We’ll post the new episodes that come out every week and a ton of members on there that you can just start discussions and really just immerse yourself with like-minded people, see what they’re doing that you’re not doing, learn from them, figure out where you’re failing, where they’re failing, how you can both succeed and really just take advantage of all that and transition into having this growth mindset.

Zach Wojtowicz:

I really think it’s the special ingredient when you’re adopting a software is recognizing that you’ve got a lot to learn. We’ve been listening to calls of people who signed up for Buildertrend recently and what their experience was like. And like over and over, I’m hearing the same theme, which is, “We expected this long for it to take place. But what we realized is we’ve got what we want and we still got a long way to go.”

Zach Wojtowicz:

And I’m like, that’s growth mindset. They recognize like, “Oh, there’s a lot here to uncover, to dig into. And it doesn’t mean I’m done.” Because you’re never really done. There’s still more to discover, things that change, new features come out, you got to adopt constantly.

Zach Wojtowicz:

And those are what makes really, really successful companies even more successful is they’re always tweaking. They’re looking to make the formula even better. It’s what keeps us going too, I think. It’s like, that’s the challenge, right? If you’re not looking to grow or change, like how you opened up Catie, what are you even doing?

Catie Brown:

Yeah. You can think about your past success and what led to that as well. Maybe you don’t want to use a takeoff software. You learned to do takeoffs using a pen and a pencil and a ruler on paper.

Zach Wojtowicz:

I trust my eyes.

Catie Brown:

Right. And it can be very daunting to try this whole new way of doing things. But how did you learn to do takeoffs with pen, pencil and a ruler? You had to start somewhere and right now you’re just at that, “I’m starting somewhere.” And also I think another possible pitfall is it doesn’t mean that you are going from building like 30 houses a year to 3,000 in one year.

Zach Wojtowicz:

Man, just one change of framework in my brain and I just increased productivity by 9,000,000%.

Charley Burtwistle:

One podcast episode. That’s all it took.

Catie Brown:

It could be that you’re just going from building 30 houses to building 31. But everybody goes home by 5:00 and has a good night’s sleep and you’re not working overtime around the clock. Growth doesn’t have to mean growing in…

Zach Wojtowicz:

The numbers.

Catie Brown:

Exactly. Yeah. It can be becoming better, a better way, one might say.

Charley Burtwistle:

One might say that. What perfect timing for this episode going into the end of the year. I was just thinking myself like this would be a great New Year’s resolution is like this yet mindset and try to incorporate that a little bit. So perfect timing by our content team and production team to get Catie Brown back on. So really, really appreciate it. I think that about does it for this episode.

Zach Wojtowicz:

I was just going to say thanks to all the people out there and marketing who bring on these wonderful guests to make Charley and I look smarter than we actually are.

Charley Burtwistle:

Yeah. I think we look smarter. Make sure to like, review, subscribe to “The Building Code” everywhere you listen to podcasts. I’m Charley.

Zach Wojtowicz:

Zach Wojtowicz.

Catie Brown:

I’m Catie and I thank both of you because you do a good job too.

Charley Burtwistle:

Oh, fantastic ending.

Zach Wojtowicz:

Wow.

Charley Burtwistle:

Thanks guys.


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