The Contracting Lie: Everything Is Going to Be Okay
The Contracting Lie: Everything Is Going to Be Okay.
What losing control of a growing construction company taught me about cash flow, systems, responsibility—and telling people the truth before the truth tells itself.
There was a point in my life when I had more construction work than I knew what the fuck to do with.
And if you'd looked at the company from the outside, you probably would have thought I had made it.
I had trained some sales guys about a week before a tornado came through.
Then they went out and sold their asses off.
In what felt like no time, I had around a million dollars in work sold.
I had something like 60 contracts in the pipeline. At least 20 or 22 roofs. Flood houses. Painting jobs. Commercial work. Restoration. Remodeling. Demolition. Little jobs. Big jobs.
There were periods when we'd put on two roofs in a day.
Other days I might have guys at 10 different properties.
Sometimes it felt like 20.
One guy here. Two guys there. Three somewhere else. Roofers on another house. Somebody doing demo. Somebody painting. Somebody waiting on materials.
I had around 11 hourly employees at one point, plus subcontractors, salespeople and estimators.
There were months when roughly $100,000 was moving through the bank account.
Checks were coming in.
Checks were going out.
We were producing a tremendous amount of work.
And underneath all of it, the business was getting away from me.
I thought I had made it.
I'm not going to bullshit you.
When those sales first came in, I was fucking ecstatic.
A million dollars worth of work?
Hell yeah.
That's what you're supposed to want.
Every contractor hears the same shit:
Sell. Grow. Hire. Scale.
More leads. More contracts. More crews. More revenue.
And there's nothing inherently wrong with any of that.
The problem is that selling a million dollars worth of construction and successfully producing a million dollars worth of construction are two completely different things.
I knew construction.
I knew how to sell.
I knew how to get work done.
But suddenly I wasn't just running construction projects anymore.
I was trying to run an organization.
And I hadn't built the organization underneath the sales.
The sales grew faster than the company.
At that point I was involved in damn near everything.
Homeowners. Crews. Subcontractors. Checks. Collections. Insurance companies. Estimates. Schedules. Materials. Problems. Salespeople. Job sites. Billing.
I didn't have a real administrative structure underneath me.
I didn't have somebody sitting there every day whose entire responsibility was telling me:
I had money moving.
I knew I had bills.
I knew $50,000 sitting in an account didn't mean I personally had $50,000. Subcontractors needed to be paid. Employees needed to be paid. Suppliers needed money. Jobs needed materials.
But I didn't have the financial controls I would insist on today.
There is a massive difference between knowing that you owe people money and having a system that tells you exactly which project every dollar belongs to and exactly when every dollar becomes available.
I learned that difference the expensive way.
CASH IS NOT PROFIT.
AND PROFIT ON PAPER DOESN'T PAY SOMEBODY FRIDAY.
That sounds obvious now.
It wasn't obvious enough then.
You can have $100,000 in receivables.
That's not $100,000 in your checking account.
You can deposit a check.
That doesn't necessarily mean the bank makes those funds immediately available.
You can have an insurance company that owes money.
That doesn't mean they're paying you tomorrow.
You can have a signed contract with a beautiful margin.
That doesn't mean the project has generated that profit yet.
Meanwhile, the carpenter wants to get paid.
The roofer wants to get paid.
The concrete guys want to get paid.
Your employees want their checks.
The supplier wants its money.
Fuel doesn't become free because an insurance adjuster hasn't answered the phone.
The job keeps consuming cash while you're waiting to collect cash.
Multiply that across 10 jobs.
Then 20.
Then 30.
Now you've got a completely different business.
Growth can hide a lot of problems.
Here's where construction gets dangerous.
As long as money keeps coming in, everything can look okay.
You collect on one roof.
You finish another job.
A deposit comes in.
Insurance releases another payment.
Another project starts.
Another check clears.
And you're producing real work, so it doesn't necessarily feel like anything is fundamentally broken.
You're busy as hell.
Everybody's working.
Trucks are moving.
Materials are showing up.
Roofs are going on.
Homes are being demolished and rebuilt.
Checks are being written.
From the outside, that looks like success.
Internally, though, you can be losing control.
Get this job finished and collect.
Get that roof done.
Get this draw.
Get the insurance company to release that payment.
Get another cash job.
Catch up.
Then straighten everything out.
And sometimes you actually can.
Until you can't.
One job taught me exactly how bad that can get.
There was one project in particular where I already knew I was in trouble.
I didn't have everything signed that should have been signed.
That's the first mistake.
I had already put guys on the project.
We had done substantial work.
We removed brick from the house.
We did plumbing.
Electrical.
HVAC.
Opened walls.
There was additional work beyond the original scope.
And some of it had been agreed to verbally.
I didn't get signed change orders.
That's on me.
At the time, I was overwhelmed and trying to keep everything moving.
And when you're already behind, your brain starts telling you:
That is a terrible way to run construction.
Because eventually somebody stops remembering the conversation the same way you remember it.
And the only thing that matters is what's written down.
If the wall opens and the plumbing is fucked, stop.
If the electrical is different from what was expected, stop.
If the homeowner asks for additional work, stop.
Explain it.
Price it.
Write it down.
Get the approval.
Then do the work.
That's not being difficult.
That's protecting everybody.
It protects the homeowner from getting an unexpected bill.
It protects the contractor from doing thousands of dollars worth of work nobody wants to pay for.
And it forces everybody to acknowledge that the project has changed.
Construction changes. Contracts should change with it.
Sometimes the wall doesn't care about your contract.
This happens all the time in remodeling.
You might price changing an angle stop under a sink.
Simple enough.
Then you touch old CPVC and the fucking thing crumbles.
Now you're not replacing an angle stop anymore.
You've got a plumbing repair.
You can plan for contingencies.
You can inspect.
You can communicate possibilities beforehand.
But until you start opening buildings up, there are things you simply cannot see.
That's why demolition is often investigation.
And that's also why pretending every project goes exactly according to the original plan is ridiculous.
The contract is written based on what everyone reasonably knows at the beginning.
The building may have other ideas.
The important part is what happens when you discover them.
Demolition is another place money disappears fast.
I've seen guys tear something out because somebody casually told them it was being replaced.
Take a door.
Somebody says:
Next thing you know, the existing door is sitting in the dumpster.
Okay.
There's $400.
Except it isn't just $400.
There's the new door.
There's the labor to remove the old one.
There's the labor to install the new one.
Trim.
Paint.
Hardware.
Potential drywall work.
Maybe the opening needs adjustment.
Maybe the homeowner wasn't actually authorizing that work through the contractor at all.
A guy with a Sawzall can create a change order faster than somebody in the office can type one.
That's why project management matters.
SOMETIMES IT'S FAILING TO STOP IT.
There are moments on a construction project when somebody responsible needs to physically be there.
Concrete is one.
Structural work is another.
Waterproofing.
Closing walls.
Opening a roof.
Critical demolition.
Anything that's about to become inaccessible.
I've learned to pay attention to those moments.
If we're opening a building and rain is possible, I want the fucking thing covered.
Not: “We'll tarp it tomorrow.”
Not: “It probably won't rain.”
Cover it.
Because water is one of those things that can turn a manageable construction problem into an absolute disaster incredibly quickly.
A little prevention is cheap.
Water inside somebody's house isn't.
Materials matter too.
Another thing I would do differently at scale:
Get the material there before the crew.
Running back and forth to stores burns money.
If five guys are standing around waiting because the material isn't there, you're still paying five guys.
The clock doesn't stop because somebody forgot fasteners.
If I were running that volume again, I'd want procurement handled ahead of production.
You will never eliminate every supply run.
That's construction.
But there's a difference between needing one unexpected fitting and using skilled tradesmen as delivery drivers all day.
Labor changed how I look at all of this.
I've spent time on both sides.
I've managed crews.
I've also put the tool belt back on and worked right beside them.
And I have a lot of respect for the people actually doing the work.
Because labor isn't an abstract number on an estimate.
These guys have families.
They have trucks.
Tools.
Fuel.
Food.
Rent.
Insurance.
Some of them are driving an hour to get to your project.
They expect to get paid because they worked.
And they should.
That's one reason cash-flow problems become so serious so quickly.
When a homeowner delays a payment, the subcontractor doesn't suddenly stop needing his money.
When an insurance company drags its feet, the carpenter's grocery bill doesn't get postponed.
When a bank holds a check, the roofer still completed the roof.
The contractor sits in the middle of all of it.
That's part of the job.
Sales can cure a lot.
At one point when things were getting bad, I hired business coaching to help me figure out how to survive it.
We were going through the numbers constantly.
What was coming in?
What was going out?
What could be collected?
What could be produced quickly?
I remember basically saying:
And the answer was essentially:
“Okay. How do you get money?”
You sell work.
So what kind of work turns quickly?
Roofing.
Fencing.
Painting.
Jobs you can sell, produce and collect relatively quickly.
And that's true.
Sales cures a lot.
A healthy pipeline matters.
Cash-generating work matters.
But I learned something else:
A BLEEDING BUSINESS.
If every new job exists primarily to repair the cash-flow problem created by the previous jobs, you haven't fixed the underlying problem.
You've bought time.
Eventually the bleeding has to stop.
The job that finally didn't have any more room.
On that project I mentioned earlier, I was trying to catch everything up.
I knew we'd done a tremendous amount of work.
I also knew I needed enough completed work to justify collecting the next payment.
I used available money to pay subcontractors.
I kept pushing.
But eventually the homeowners weren't willing to continue funding the project.
And I understand their side of that now too.
They knew how much they'd already paid.
I knew how much work we'd actually performed and how much additional work had been done.
Both things could be true simultaneously.
Neither one created the cash required to finish the project.
And without signed change orders documenting additional scope, I had put myself in a terrible position.
I didn't collect something on the order of $50,000 that I believed was tied to work and changes.
By that point, though, it was bigger than one receivable.
The company was already too far behind.
Eventually I had to shut it down.
That cost more than money.
I can't really give you a dollar amount for what that period cost me.
It cost business relationships.
Friendships.
Employees lost their jobs.
I had to let people go.
There were people I couldn't continue working with.
There were things I'd built that disappeared.
And there was the personal experience of watching something I'd worked incredibly hard to build come apart.
That's not something I'm particularly proud of.
But pretending it didn't happen wouldn't make me a better contractor today.
If you handed me that company today.
I would run it very differently.
The first hire wouldn't be another salesperson.
It would probably be administration/accounting.
Somebody owns the numbers.
Every day.
Then I want experienced project management.
Not somebody whose only qualification is that he's been around construction.
Somebody who can read plans.
Think ahead.
Schedule trades.
Understand sequence.
Catch problems.
Communicate with homeowners.
And tell me before something becomes an emergency.
Then job costing.
Every project gets tracked individually.
Labor. Materials. Subcontractors. Equipment. Changes. Revenue. Remaining cost to complete.
Then change-order control.
No more “we'll figure it out later.”
Then procurement.
Get materials ordered.
Get them delivered.
Verify them.
Then send the crew.
And underneath all of it:
Working capital.
Because running one or two construction projects is one thing.
Running 10, 20 or 30 projects simultaneously is a completely different financial animal.
THE FUCKING TRUTH.
I learned accounting.
I learned cash flow.
I learned job costing.
I learned why written change orders matter.
I learned why you need administration.
I learned why experienced project managers matter.
I learned why materials need to be coordinated before crews arrive.
I learned that revenue isn't profit.
I learned that sales can make a company grow faster than the company is capable of growing.
All of those lessons were expensive.
But they weren't the biggest lesson.
The biggest lesson was much simpler.
Tell them early.
Not after you've figured out the perfect explanation.
Not after you've solved it.
Not Friday afternoon when you knew Tuesday.
When you know, tell them.
If the project is behind, tell them it's behind.
If something unexpected was uncovered, show them.
If it's going to cost more, explain why.
If the schedule changed, say so.
If you made a mistake, own it.
If you don't know the answer:
That's an answer.
And sometimes it's the most honest answer available.
“Everything is going to be okay” can become a dangerous sentence.
I used to believe I could fix damn near anything if I just worked hard enough.
Another job.
Another check.
Another crew.
Another week.
Another collection.
Another roof.
Just keep moving.
And when you're genuinely trying to solve the problem, telling somebody everything is going to be okay doesn't necessarily feel dishonest.
You believe you're going to make it okay.
That's the trap.
People deserve to know the second one.
Maybe they'll be pissed off.
Maybe they'll disagree with you.
Maybe they'll tell you to go fuck yourself.
That's their right.
But now everybody is making decisions based on reality.
Bad news doesn't get better with age.
That's probably the simplest way I know to explain it.
Contractors sometimes avoid difficult conversations because we're trying to solve the problem before the homeowner ever has to know there was one.
Sometimes that's fine.
Sometimes it's part of doing your job.
But when something materially affects their money, their property, their schedule or the work you've agreed to perform, they need to know.
Early.
Because once you start hiding from the truth, you're not managing one problem anymore.
You're managing the original problem and the story you're telling about the problem.
Then you've got to remember what you said.
Then you've got to buy more time.
Then somebody discovers something you should have told them three weeks ago.
Now the construction problem might actually be fixable.
The trust problem is much harder.
You can tell somebody the truth and still lose the job.
You can admit the mistake and they can still be angry.
You can explain the money and they can still refuse to pay.
You can tell somebody you're behind and they can still fire you.
Honesty isn't some magic business strategy where everybody suddenly likes you.
Sometimes the truth has consequences.
But I'd rather deal with the consequences of what actually happened than the consequences of hiding it.
Because at least I can fucking breathe.
What I would tell a young contractor now.
Learn the trade.
Absolutely.
Learn how to estimate.
Learn sales.
Learn how to read plans.
Learn materials.
Learn how long things actually take.
Learn how to manage subcontractors.
But if you want to build a construction company, learn something else too.
Because you can be one hell of a builder and still build a terrible business.
I know.
I've done it.
I DIDN'T KNOW HOW TO KEEP IT.
And eventually I learned that keeping money isn't just about saving it.
It's about knowing what belongs to the company.
What belongs to the project.
What belongs to the supplier.
What belongs to your crew.
What's profit.
What's overhead.
What's actually collected.
What's still sitting on an invoice.
And what it will really cost to fulfill every promise you've already sold.
A million dollars in signed work means very little if you don't have control of the promises attached to that million dollars.
That's what I didn't understand well enough then.
I understand it now.
The real contracting lie.
So maybe the contracting lie isn't really:
“Every job goes perfectly.”
Nobody who's been doing this very long actually believes that.
The bigger lie is:
TO BE OKAY.”
Sometimes it isn't.
Sometimes the job is fucked up.
Sometimes the schedule is wrong.
Sometimes you underbid something.
Sometimes somebody doesn't pay.
Sometimes you did work without documenting it.
Sometimes you've taken on more than your company can handle.
Sometimes you have to stop.
Sometimes you have to admit:
And then deal with what's actually in front of you.
I've learned a lot about construction since those days.
But more than anything, I've learned this:
Tell people the truth.
Tell them while there's still time to do something about it.
Tell them even when you're embarrassed.
Tell them when it costs you money.
Tell them when you think they're going to hate hearing it.
Because they're either going to hear the truth from you—
or eventually the situation is going to tell it for you.
And the situation is usually a much bigger asshole about it.
The truth might not always set you free.
LETS YOU BREATHE AGAIN.
Why I'm telling this story.
It's easy to build a construction website full of perfect finished photographs.
And we're going to show those too.
But that's not the whole business.
The Contractor Journal exists because I think the rest of it is worth talking about.
The jobs.
The problems.
The mistakes.
The systems.
The money.
The crews.
The decisions.
And the lessons that usually only get learned after something costs you.
That's part of construction too.
Show us what you're working with.
Send Master Builder Construction TX photos of the project, the property location, and a short description of what you want done. Real photos tell us a lot more than “How much would something like this cost?”
📸 TEXT PROJECT PHOTOS CALL 409-543-3216 VIEW MASTER BUILDER →
Comments
Post a Comment