My inlaws went out of business because 1 customer didn't pay 300k. You can't carry these people, take action now.

@_DavidC

12 күн бұрын

Sad to say same thing happened to a family member of mine before and I saw it tear him down. The construction industry gets very messy at times if you don’t set your boundaries and stand by them, I 100% agree

Never allow a large company to dictate the terms of your business. Great advice.

@ElectronicsWired

11 күн бұрын

LOL. thats the way real business is. large companies pay slow. They train their employees to pay slow.

@Brian-rs4ug

11 күн бұрын

@@ElectronicsWired You teach others how to treat you. Even large companies. You may lose the contract. But your dignity and peace of mind are more important than living in stress and not being able to pay your employees and make a fair profit.

@ElectronicsWired

10 күн бұрын

@@Brian-rs4ug you don't teach big corporations anything. Step 1 is to realize your a small roach that gets to nibble on their crumbs . Step 2 is to find a way to get more crumbs so that you can stay full as you wait for slower companies to pay. He needs some other kind of excavation work that pays in weeks not months. He needs to use his relationships to add a little more to the bid for slow pay and or offer a discount for faster pay. Going in flexing muscle isn't going to work.

@Brian-rs4ug

10 күн бұрын

@@ElectronicsWired A discount for faster is a good idea.

@Nehner

7 күн бұрын

Wrong​@@ElectronicsWired

The guy aged two years in less than a minute

What I see here is a good young man, who is working his ass off and has a good head on his shoulder but he scaled too quick too large without someone to guide him. Find yourself a nice business tutor/advisor and restructure your business and trim waste. Don't quit because you worked hard to get to this point find yourself in the new direction.

@ElectronicsWired

11 күн бұрын

6 years isnt really scaling to fast in construction. Issue is that he sounds like a nice guy. Nice guys dont get paid on time. Not in the construction industry. He needs to bid more to compensate for slow pay. Then offer discount for fast pay and add percentage to late fees.

As a contractor I always did 50% at signing 50% the day work is completed. Occasionally, if work expected to start more than six months out our terms were 1/3 at signing 1/3 after work started, balance same day work was completed. Trust goes both ways. We were so good and desirable. Most of the time we were 18 months out.

@ElectronicsWired

11 күн бұрын

Hes not getting 50percent down. I can guarantee that... That sounds like residential work to me. If anything he should do draw downs based on percentage of completion.

I am in the same boat and when you feel the need to 'grow, grow, grow' your small company, you never like the idea of of possibly losing topline revenue. But you have to from time to time, every 3-4 years or so, you have to commit to a year of getting rid of the 'bad business partners', because that's what those people are. I work as a contractor for several apartment complex owners and I promise you if one resident misses rent on month they are evicted, yet these same people are behind 2, 3, 4 and more months on paying thier contractors.

As someone who didn’t have anyone to ask advice but came to the same conclusion, if they need you they’ll find a way to pay you. My largest customer, a billion dollar company couldn’t get me paid but I figured didn’t need me. The minute I told them I wasn’t showing up to do a job until everything outstanding was paid and 50% paid up front, 25% at benchmark point and 25% uppin completion. I’m stress free at least I’m owing the job and employees are always paid

I’ve been in this situation with my web dev company. Fortunately no debt. 5 years in and I’m still getting used to it” this is my house and you follow my rules” mindset.

Don't give up man, this is just part of business. Overtime you will build proccess and eventually hire people to handle these things. Keep going and you could turn this into $100 million dollar business one day. I sold my first business for $18 million to a large company. They paid me $4 million and were supposed to pay the rest over the next 5 years. Never saw another dime after the first payment. They pretty much told me we have more lawyers than you, good luck. Never ended up getting the money but I learned and kept moving forward. It's still painful even today but I do think it made a better business person and did go on to build other successful companies.

@heybudstfunow

19 күн бұрын

wow get some lawyers dude that's 14 million

@naomiomi7340

19 күн бұрын

You should have built another business, sold that to a big company and got all money upfront or at least with watertight terms and THEN gone after your 14 mil.

@heybudstfunow

19 күн бұрын

@@naomiomi7340 you must be unemployed

@knighthawk3559

19 күн бұрын

Liar

I worked for a company that got caught holding the bag for a bankrupting developer. Killed the company I was working for. A $500k accounts receivable is too much risk for a small company like this guy’s

The big company probably thinks they can push him around because of his age. Keep up the good work, man, you have a great future ahead.

I am a contractor that is specialized in building residential decks and my company has never started any project without without a signed contract and a minimum of 50% down payment. We work with high end composites and metal railings and sometimes a down payment to cover material cost could be 45k so we’re not putting all that weight on ourselves and our vendors but we let the customer take care of that and I never had an issue with it. I also own a construction company that builds commercial ceilings and I apply the same payment methods and even with the bigger jobs for bigger companies I still get paid the same way.

I just love Dave. He is so wise and good at helping people. Also kind.

@DeepestQuotesAnd

5 күн бұрын

And straight tf forward lol

My dad just charged more to important customers who were slow to pay. My dad also paid every payable FAST. More than once when both he and a competitor were vying for the same equipment from a vendor so he could bid on a job, my dad got the equipment.

You do have to give at least 10% deposit in construction. Of you want 50% ask for the 10%, then 40% progress payment, then 50% balance. You the company dictate your payment terms within perimeters of the law. Start ling a job with out a deposit is insane!😊

@ElectronicsWired

11 күн бұрын

Correct. it sounds like he isnt getting draw downs.

Thanks for the advice! I'm new to financial planning and wasn't sure where to start. Any tips on finding a reliable financial adviser or resource to guide beginners? .

@waynes4369

19 күн бұрын

As a beginner, it's essential for you to have a mentor that is verified by finra and SEC to keep you accountable. I'm guided by a widely known financial consultant Stacey Macken .

@Ricgibs

19 күн бұрын

Truly, investing has changed my perspective on how one can succeed in life; working multiple jobs isn't the optimal way to attain financial freedom and unfortunately, we discover this later in life. Currently earn as much as 12 grand weekly and this has improved my financial life

@raphfelimax2713

19 күн бұрын

YES! that's exactly her name (Stacey Macken) I watched her interview on CNN News and so many people recommended her trading skills, she's an expert and I'm just starting with her....From Brisbane Australia

@inicMich-rc5wo

19 күн бұрын

This Woman has really change the life of many people from different countries and am a testimony of her trading platform .

@Melbn-di6mi

19 күн бұрын

Wow. I'm a bit perplexed seeing her been mentioned here also Didn't know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super

Thank you for sharing your experience.

Don't let your customers control your business. Best advice!

Typically, the seller sets the terms of sale. I get that this line of business is (as I understand it) fraught with slow pay … but, no one makes a business take a job. If the customers payments become an issue, simply explain to them you can no longer contract with them unless they pay 50% upfront. I worked for a company that had terms of 30% on order, 60% on delivery and 10% 30 days after completion. Never received a single complaint about those terms. It is all just upfront agreement at the end of the day.

@vickie_hearne

3 күн бұрын

Every single customer will pay late if they can get away with it. I see soooooo many people fail because they cannot handle these conversations

@patrickdean4853

3 күн бұрын

@@vickie_hearne I worked for a company that did about 4 million a year (10 years ago) And the owner was constantly treating our valuable vendors Like they were his bank credit line. I thought it was pure abuse and ended up resigning.

@vickie_hearne

3 күн бұрын

Me too...a Pespi distributor...he would hold back his invoices to make his P/L look good for bonuses, and hired me, temp !! To take his angry customer calls ! I realized what was going on, processed 4+ month of invoices, and then quit. People are disgusting

Invoices with time gated discounts typically are the first paid by a company/corporation, even if a fraction of a percent. I've used this method to combat slow payers and calculated what the discount cost may be as less than my cost with collection efforts would be. I get paid sooner with less "effort."

Good stories and advice from Dave.

Great advice Dave!!!

William's proactive approach to managing business challenges by addressing debt and customer relationships is commendable. 👏 Streamlining operations and focusing on reliable partnerships can dramatically enhance business sustainability and personal well-being.

Great advice, that 32y experience helps!

I’m a 20+ year contractor with a remodeling business. It is super common to do 50/50 payments. Dave is just entirely wrong on this. I personally require a smaller amount up front along with progress payments, but there is no way I would ever start a job without a deposit. If a contractor doesn’t get a deposit, that means he is literally financing the job (including material purchases) for the homeowner until payment. That’s a super risky and dumb thing for any company to do. It would be a red flag for a company to not want a deposit and a red flag for a homeowner who doesn’t want to pay one. It’s unreasonable to expect a company/person to take that risk. The only real exception is repeat work from someone you know and trust, typically subs doing work for general contractors they already have a good relationship with.

@nathanielwiebe2257

20 күн бұрын

I'm a fence builder and there is NO WAY I would do a job without a 50% deposit. If they don't feel comfortable, I give them a list of materials they they can order themselves from my supplier with my contractor discount. It makes sense if you're a sub since the GC is providing materials, but if you need to front materials, you need that cash.

@anacorreia8058

20 күн бұрын

Very true. I’m in the industry and Reggie Jenkins is correct here

@anacorreia8058

20 күн бұрын

We have our customers pay for paint directly to the paint store (in my company) and they pay us 1/3 down payment for the labor. It’s really just a good way to weed out scammers or non-committed people, and we always do great work so people know they can trust us

@bosstime2010

20 күн бұрын

Maybe I’m confused but how is he wrong? He’s advocating exactly what you said.

@reggiejenkins6458

20 күн бұрын

@@bosstime2010 sort of. He ended up paying the guy 50/50 but only after being forced to by his wife. It’s a mixed message at best.

Aseome advice Dave 🎉

I would do invoice factoring and pass on the interest.

Dave is right, great advice.

Even if the client sets the terms, implement a discount for payment within 10 working days.

William here’s right about getting rid of or getting those companies on track with paying. I’m not going to say sell the equipment though. Keep expanding if you can but retain good relationships. I’m 36 and this is exactly what I went through this year. You’re doing fine dude. Keep going!!!! Cut the fat or make the fat pay first or fees occur.

Love this!!!!

I agree with some things disagree with others. 2.things you should consider. 1..take on an equity partner who can buy a %.of your business for cash. That gives you a float u can use to bridge slow payers. 2. Invest in sales/ lead generation to get your own customers. Part of your issue is you are beholden to these contractors and you need your own customers. That way you can choose to continue to work with the guys or just get your own jobs.

Problem is all major construction contracts are pay when paid. It’s an industry problem. Maybe 10% upfront for a really small contractor and a finance charge on payments over 60 days.

William, breathe and celebrate what you have accomplished! Great advice from Dave and maybe my favorite clip. Would love an update someday. Thanks for sharing!

I always do 20% upfront when signing the quote (to lock them in) and an additional 40% upfront before starting (so my materials, preparation time and everything is at least a bit paid for ) And the last 40% you get when delivering the end product. It's all about your cashflow!

Very well done Dave

I explained that my banker agreed not to go into the paper business and I agreed not to lend money... I gave a 1%10 discount or a 2% cash discount- - those terms with the slow payers really helped with lowering my cumulative recievables back down to under 30 days total.

We do demolition, and we have a customer that decided that we did more work than they told us to do, and they shafted us to the tune of $225,000. We made the mistake of obeying the GC, instead of seeking the actual customer's opinion. We are supposed to be getting a check for $43,000, but months go by and the check is not arriving. We have a diversified business, thank the good Lord, so we survived this.

When you are breaking into a profession you feel like everyone is doing you a favor by hiring you, you can't believe how much they're paying you and you don't want to rock the boat. After a while you're confidence goes up and you look at the amount of money you're making seems normal. The frantic energy slows down and you're able to process everything faster. At that point you don't mind walking away from what would have been an unbelievable offer a few years ago because there is a better offer somewhere else.

@ekevanderzee9538

Күн бұрын

This.

Papa Dave. What does crazier than a bean mean?

My business, my rules!

Im in a similar situation. I am a plumbing contractor in Florida and we do commercial projects. It seems to be the norm that every general contractor “pays their subcontractors when paid”. Usually means that we get paid 50 - 70 days later. I feel that if I took the approach of asking for deposit before the works starts that I would just be kicked to the curb by these GC’s.

My business had to stop selling to a Fortune 100 company because collecting was to time consuming. Their buyers were begging for our product. Unfortunately, the buyers don't write the checks.

In our industry 50/50 is the standard. Normally the last 50 is net 30. Bigger projects are 50 and then balance draws. That is because we have materials and labor building specific products for that client. Excavation I would imagine, 10-20 % once on site, draws through out so you are no more than 10-20% out and net 30.

I’ve been in construction for 25+ years. I never start a job without 40% down at the signing of the contract. Then it’s another 25% at 75% completion. Then remainder to be paid upon completion. Don’t bother me if you don’t like it, I have plenty of work.

Dave, just wondering. What about mechanics lien on the land? When I sold some land , I sold it cashed out to me before a spoonful of dirt moves, before anything lienable to the property is enacted. I know contractors who filed a lien on the property the day the work begins or had the developer name them on a bond for more than the bid.

He’s not burned out because of debt. He’s burned out because he’s building up more mental pressure than the rate of release. I used to own a landscape construction business for 14 years. Construction is a nightmare of a business to be in. And the payoff isn’t high enough relative to all the headaches that you have to deal with.

SWI (Sharon Wants It) Love it. I totally understand!

As business scales, cumulative costs will increase. Business 101. It’s the margins that matter. 8-10% net profit is absolutely the aim and healthy for a scaling business. Once you get to a certain scale, nearing that $5m revenue mark, you are not going to be returning 20-30% net profits like you could when it’s you and one other person. It’s just not feasible without profiteering or some sort of fraud, or ridiculously high inflated gross margins.

Typical of large companies being slow to pay. I retired from a very large, multinational company. They were horrible to subs because their terms were Net 90. Smaller companies couldn't afford to be a supplier for this company because they didn't have the capital to carry this company for 90 days. On the flip side they demanded Net 30 from their customers.

I thought 50/50 was the rule. And if its a bigger jobs then deposit, followed by progress payments and then the balance. That gives you the opportunity to get paid as you go and stop the work if the don’t pay.

Dave should know that big companies (ie Fortune 500 companies) can't cut large cheques from the trailer on the day the job is completed. It doesn't work that way. Hopefully the caller can get paid within 30 days of completion for the final 50%.

Reach out to the clients proactively with your terms.

Pay your subs a percentage when materials are required

You need to offer an escalation on the AR. 30 days late = 10% more, 60 days = 20%.

The bigger the client the worse they treat a subcontractor. The contracts are 100 pages long, insurance liability all shifts you BUT all contracts are negotiable. Get a good construction lawyer and get support through trade associations like Association of Builders and Contractors.

Why doesn't he get a funding company to keep liquid? They'll do all the collection for up to 60-90 days.

The Brazilian wood is probably tiger wood or IPE. I’m not paying for your porch and hoping that you will actually pay for it when we’re done.

She didn't make you Dave, you made the final decision. Thank God you didn't get screwed.

The reason he is getting more work from the guy who doesn't pay is someone else who he didn't pay cut him off. People who don't pay you, don't pay others. Get it up front and make sure that the check clears before starting the work. Take their check to their bank and get a cashiers check made out to your business, if you don't trust the check not to bounce.

I would suggest that this guy diversify, as in: move a few pieces of equipment to Alaska and start a gold mine. Save the southern work for the wintertime. Find a mentor in the mining industry, file the claims, and get to work on the permits, then downsize down south and scale up in the north. Be choosy about the jobs you bid on. Find the ones that fit your timeline, and enjoy life, a lot more.

Do government contracts instead of those cheap home builders. Bid on road and utilities.

@ElectronicsWired

11 күн бұрын

They pay even slower.

@francismarion6400

11 күн бұрын

@@ElectronicsWired Was his problem getting paid slowly or not getting paid enough?

He is a great business coach. Don't take any crap

Large oil companies pay 90-120 days out. People who do business with them charge 100 to 200 percent more than the oil companies who pay fast. They would save lots of money to pay quicker.

As a Homebuilder myself, tell them you will pay the 50% Deposit Day One when all the materials are delivered to your site. But make sure you get a "Waiver" that is notarized saying the materials are Paid for, otherwise the supplier can Lien your property.

Dave controls the "Horizontal and the Vertical".....

I work is construction and I do progress payments 30% deposit, 30 materials onsite, 35 practical completion and 5% final sign off. The bigger companies are the worst payers 😂

Dave has opinions that are 20+ years old. .coms are not riskier than other companies. That’s 2000 mindset. Contractors charge homeowners deposits to start work. Sharon wasnt a GC. He wasn’t a ‘sub’. She was a housewife hiring a company directly to do a job.

Apparently some of you don’t know how GC/subcontractor contract language works. The GC writes the subcontractor a contract with language based on their contract with the Owner/Developer. Now there can be different payment terms but usually 50% deposit is for vendors/purchase orders (depending on the company) and not subcontractors. Subcontractors can request different payment terms if it’s short term work/special occasion, etc. If GC isn’t paying the subcontractor on time per the agreement it’s usually because of slow owner payment, outstanding notice to contractors or something else. If a GC is flat out not paying a subcontractor for no reason after being funded by the owner, subcontractor has rights per the executed agreement. This 50/50 nonsense is totally false. I like William, sounds like a smart guy who is frustrated with lazy developers/general contractors. You can’t “fire” who you are working for but you can take legal action if not getting paid on time. Terrible take.

His type of industry doesn’t work that way. The 50/50 might work for carpenters, but not heavy civil. However, he can make it better, but not exactly the way Dave is suggesting in this particular instance. Thanks

Although Dave gave him great advice he has so much equipment debt he sounds petrified to have those conversations. What good is a million dollar contract with a company that won’t pay you?

Thesexdevelops dont care. They will make promises to guys like this, tell them to make it up on the next job and so on. Bad business. He needs to agree on terms he can live with. He also needs to diversify. Look for smaller projects which will cash flow more quickly and help ease his mind. Finally, he needs to work on his banking. Line of credit for emergencies, learn to keep cash on hand by taking a percentage of each project and sliding it to a money market until end of year or emergency. Generally i agree with dave on this.

homebuilders and developers are notoriously slow payers. especially now because work is too tight

Sounds like he needs to pay $40k salary for an AR analyst

@evanserickson

20 күн бұрын

Yes

@tompuijpeNL

20 күн бұрын

Maybe the best AR analyst will set you back $80K but depends on the area.

This is the funniest one I’ve seen. Absolutely classic

require a smaller amount up front along with progress payments

6:21

If they’re paying late, but always paying, it’s more of an inconvenience than a deal stopper. Just build up a larger business account to be able to float it, don’t complain, and keep making bank. This is completely normal in commercial construction.

@2themaster

20 күн бұрын

Till one of the developers goes out of business and the sub is left holding the bag.

@reggiejenkins6458

20 күн бұрын

@@2themaster yeah it has to be within reason. You can’t let dudes rack up more than you can afford to lose. I know a taper that got screwed on $300k and had to shut down. You can’t let them go crazy.

@DennisHochstetler

20 күн бұрын

Nah, Dave's right. He's basically being their bank and he's not even getting paid interest. Just because it's normal doesn't mean it has to be accepted.

@reggiejenkins6458

19 күн бұрын

@@DennisHochstetler if the dude wants to keep the business, he probably does need to accept it. Net 90 payment schedules is how much of the commercial world functions. It’s not necessarily right, it’s just reality. He should try to set stricter boundaries, like maybe a net 30. But past that, pushing too hard could just drive his business to zero.

Maybe his customers are slow payers, because THEIR customers are slow payers. As long as they end up paying, and you've already put enough aside to cover overhead, it's just a matter of being patient.

@New-bw4kz

20 күн бұрын

Wrong

@Pure_KodiakWILD_Power

20 күн бұрын

@@New-bw4kz Well, it depends on the kind of person you are. Showing slow payers grace has served me well way more often than not. But you go firing clients over timing if you want. That's your prerogative.

@TheJakekeller22

20 күн бұрын

What if he is directly working with the developer? They are the direct payment because they took out the loan for the development.

@MrJimmy3459

20 күн бұрын

Not his Problem if their customers are slow payers, that's on them pay me NOW

Only smart guy Dave has ever talked to.

More likely - 3.2 million equipment really worth 1.5 million. Definitely fire bad customers.

Didn't take too long to figure out why he doesn't profit more

Way too few clarifying questions to be giving this type of advice.

Sounds like the current state of education. 10 percent of the parents are terrible customers. Probably more in different systems.

He needs to be the GC and not the sub.

Dave you're on drugs if you think it's uncommon or unwise to pay 50% deposit for contract work. That's a standard.

Dave for U R porch U maybe could agreed with the "sub" to put the 50% in Escrow or with a Stakeholder