Episode 22 - Chris Anderson of Monthend

Bookkeeping for Builders - Understanding construction accounting and utilizing technology to stay on top of your financial gain!

Chris Anderson advises people in the construction field to better understand the accounting and financial aspect of their business. Few business owners have the knowledge or time in this industry to bookkeep, however, it is extremely important to keep track of your finances and accounting information, so tune in to hear how you make the most of your financial decisions.

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About Chris Anderson

Originating from a distinguished background in a major regional builder in Minnesota, he gained invaluable hands-on experience in the intricacies of scaling Accounts Receivable (AR) and Accounts Payable (AP) operations while overseeing numerous subcontractors. This background motivated him to establish MonthEnd, a pioneering solution designed to modernize accounting support and bookkeeping for builders, with a specific focus on maintaining up-to-the-minute accuracy as each month draws to a close.

Guiding MonthEnd is a cohesive team, typically comprised of 2-3 proficient experts per company. This collaborative unit works harmoniously to harmonize your financial records, ensuring a seamless cash flow and nurturing contentment among clients and subcontractors alike. By upholding regular weekly consultations with company personnel and delivering monthly Work-in-Progress (WIP) reports to controllers or proprietors, he empowers businesses to proactively strategize using up-to-the-minute insights.

MonthEnd has fostered an intimate connection and deep proficiency with industry-standard software, including BuilderTrend and QuickBooks. Furthermore, they have readily embraced cutting-edge AI software such as "Adaptive" (as featured in episode #15), demonstrating their flexibility and unwavering commitment to staying ahead of technological advancements.

On a personal front, Chris and his team encompass a blend of semi-professional and professional cyclists from diverse corners of the nation. When he isn't meticulously managing financial data or representing MonthEnd at trade exhibitions, Chris is a devoted golfer who can often be spotted meticulously scouring the woods in search of his ball, underscoring his dedication and passion for the sport.

Resources

• Visit Monthend’s Website

• The Monthend Instagram

• Transcript

  Mark 00:00

  All right. Welcome to the curious builder Podcast. I'm Mark Williams, your host today, we're joined with Chris Anderson from month end. Welcome, Chris.

  Chris Anderson 00:12

  Yeah, thanks. Thanks for having me on the podcast. I've heard a lot of good things about it. Oh, it's

  Mark 00:16

  been, it's been a wild ride here in the last five, six months. And we met just recently through a friend of ours who they were just on the podcast, Rick Kendall, and why don't you tell us a little bit about what you do, and how it pertains to building and then we'll kind of dive into that.

  Chris Anderson 00:30

  But that is bookkeeping. For builders. There's not a lot of people out there that understand construction. There's not a lot of people that understand construction, accounting, two different things, one, building house ones building financial statements. And there's not a lot of folks in either of those communities that understand software. So our company is sort of in the middle of those three things. And we've played in all of those spaces, and allows us to be able to provide good services and advice to builders.

  Mark 00:59

  Yeah, I mean, we're right now in the onboarding process of switching over and we can talk about that a little bit later. I've been really impressed at kind of your breadth of knowledge. And what I want to go back is kind of the origin story of month end, how long has it been around? And we'll kind of dive into the specifics. I think a lot of people listening, obviously, are, as this is a builder centric show, and we're interviewing mostly Minnesota builders and architects and, you know, people listening are in the trades. I think this pertains to them. We've grown up, understanding and seeing all these different invoices, I'd love to hear from your point of view is like, accounting and building seems to be sort of a nightmare hot mess. Is it just because it's that hard? Or is it because builders in general are just not good at it? How can you relate building finances and accounting versus let's say, other businesses and other industries? Yeah, I

  Chris Anderson 01:47

  think it's a little bit of both builders. And accountants are both really late to adopt technology. Both industries are really slow to adopting things. Accounting is a very standardized industry. homebuilding, there's no standards, right? You have building codes that dictate how should be built, but business practices, best practices, you don't really have standards, Dan, he has tried to provide some things. But a lot of builders, you know, they come from trades, and they become builders. And running a business is secondary, to building a home to them. So you get a big variety of skills and education, and no, how about business? And all of that collides and becomes an environment that's challenging for people trying to keep dragging things.

  Mark 02:33

  Interesting. I think that's Wow, that's very succinct. I think you've had practicing that before. If someone wants wise told me that, when I was starting building, they said, You could be a good builder, and bad at business, and you won't make it. You could be good at business and a bad builder. And you could make it obviously hope to be a good business and a good builder. But I think his point was, under my urge just pointed out with what you just said that ultimately, running a good business is a kind of a separate skill. You just happen to be a business that is also a builder.

  Chris Anderson 03:02

  Yeah, yeah, definitely. And we see that with some of our clients, some of our best builders, who have the most success financially, come from non traditional building backgrounds. So we have people who have studied, like theater at NYU, who sadly said, I want to be a builder, for whatever reason, they were inspired to be a builder, they have great homebuilding companies, and we have people who grew up being framers, trim carpenters, and their home building companies are terrible.

  Mark 03:29

  That's very honest. And very, I can see that interesting. I love the theater thing. That's the thing. That's a wild ride. Yeah, yeah.

  Chris Anderson 03:36

  Then you know, there's people that come from finance, there's a fair amount of builders that come from finance. And there's, I think, some reasons for that.

  Mark 03:43

  From what I understand that stupid, then they don't know much about finance, because as I've talked to other business owners, the margins that we make, and building like is nothing compared to what it feels like for the risk tolerances that we take. And we were on the hook in Minnesota for 10 years. Even talking to other builders around the country, our percentage margins are way less than they are in other parts of the country. And for sure, if you consider you know, making a widget or making other things or services, our percentages are very low. And we would you I mean, you get to see all the inside financials, what is your what's your take on that compared to, let's say other industries?

  Chris Anderson 04:15

  Yeah, so homebuilding in general, it's hard to make money. And the reason the margins suffer in a place like the Twin Cities, we can get into the politics behind that a lot of it is because of the challenging building codes we have here. It's a challenging environment. We have a lot of money here in the Twin Cities, there's a lot of people that want to spend money on stuff, right. They want to build beautiful houses, but we also have a more conservative culture, where having a beautiful house or a beautiful car isn't as important to them. So you know, that kind of squeezes the margins. There's plenty of competition here, lands not cheap. So it's a little tougher to squeeze it out. Although there's there's some builders who do really well. Usually it's builders who either have the ability to build at scale. Look at the top 25 builder list in Minnesota. Don't you take the top 10 of them, they're building at scale. And that's really what's contributing to their ability to make margin. And then you have people like Rick and Amy hen handle, who undoubtedly do a great job making margin because they have a differentiated product. They have a product that's special and unique. And not anybody can do it. So if you're playing in reckon AMI space, or you're playing in, you know, when our space, you have the best chance of making the best of your financial situation and homebuilding

  Mark 05:28

  interesting. So it's the upper and the lower, it's a little bit like buying a truck, don't they say, like, he did buy the most expensive truck, or the least expensive truck trucks in the middle and you got to resell it that you get hammered on.

  Chris Anderson 05:36

  I don't know anything about that. But generally, in business, and I think when you're selling a service or a product, if you can be the low cost provider. So the scale the Linamar, or you have something special where you can charge a premium for it, compared to how much you paid or how much cost is associated with that thing. You're gonna do well,

  Mark 05:54

  have you ever heard of that company? Mark D. Williams, custom homes?

  Chris Anderson 05:57

  They sound familiar. Yeah,

  Mark 05:58

  I think they're on the lower end. I think they're more like l&r building. Not everyone likes to make fun of themselves. Going back. Actually, that's since you are a unique perspective to answer this, because you could give me some broad percentages for those listening. You know, usually, if a builder comes on the show, I'm not going to ask to ask them directly, you know, what they make, you know, for a GC markup? Or how much do they charge for the PM? Because obviously, most of the builders I'm interviewing are Minnesota, so they might run into their competition. But because you basically work for people all over the country, I think you might be in unique position to answer some of these questions. And it's not specific to anybody. Let's, let's call it the average GC markup for a cost plus home. What do you in that? Let's call it a 2 million and a half to 2 billion above. So let's call it a high end home. What are you seeing for new construction percentage markups in a cost plus setting? It's really country? Yeah, it's

  Chris Anderson 06:51

  really tricky. There's a lot of things that go into it. And there's a lot of ways that builders represent markup, sometimes their markup is small. And they have a lot of additional fees. And it's a marketing optics, just like the airlines, right? Delta, you just pay one price. And that's what it is. Especially if you have a SkyMiles card. It's your luggage, it's whatever it is, if you fly on JetBlue, I would know.

  Mark 07:16

  Because you flew out to Vegas on JetBlue. And

  Chris Anderson 07:18

  I didn't I went a couple days early, so I could make sure I didn't but you know, I mean, if you love JetBlue, sorry, whatever I've never flown on, but JetBlue I'm sure it's perfectly fine. The point is, from what I understand your price isn't your price, you pay 200 for the flight, baggage fees, whatever else you're paying 350. So some builders incorporate that same sort of, let's call it marketing approach, yes, because it really is a marketing approach. You can say I'm a cost plus builder, and I charge 15%. And that's all in all right? Well, your margins are gonna be a little bit thin. At the end of the day, when you take everything off the bottom line, some builders charge 10%, but they charge a supervision fee, they charge a technology fee, they charge a software fee, they charge for fuel, they charge for everything. So at the end of the day, their gross margin, which is what really matters, is fantastic. It's very lucrative way to do it for them. So

  Mark 08:13

  I might interrupt you there. The one thing I would say about that, having talked to a few builders that do it that way, those are real costs in the media. So you're on the accounting side. So I'm preaching the choir thing. I mean, those are real costs that if you are not building that house, you would not need that truck, you would not to fill it you would not need, excuse me, you would not need the fuel to drive to that job site, I think sometimes explain that to a client, you know, as you're walking down, say, Well, this is why you're doing I think a lot of it comes explaining on the front end. To your point, I think marketing, I think each person is just gonna receive it differently. Or some people, you might include all of that. But then obviously, you're gonna have to mark it up higher on the front end, right?

  Chris Anderson 08:46

  Yeah, you definitely will. And that's why we like to think about margin instead of markup. Because at the end of the day, you can, you can mark things up, you can add fees, whatever, whatever numbers you need to add to get to that gross profit number that allows you to be profitable and have a lifestyle or whatever it is, whatever reason you're in business for. If we talk about margin it, it normalizes for all of that. So margin is just sort of the flip side of markup. Right? You have cost you mark it up, that's your price margin is just the price minus the cost. It's kind of the same thing. But we like to talk in margin because it makes it more apples to apples.

  Mark 09:22

  Can we use an example? That's something that's, you know, an 18 years of building? It's something only recently, I mean, I've heard the terms before, but now I'm really diving into it, because, you know, let's just use 10% as an example, for easy numbers. So you have $100,000 And you have explained to the audience that is between 10% markup and 10% margin on let's say, $100,000 widget that yourself

  Chris Anderson 09:43

  yeah, you have $100,000 widget let's say it cost you $80 to build it $80,000 To build it and you sell it for $100,000 your margin is $20,000 on $100,000 20%. If you want to make a margin of two 20% on an $80,000 cost item, you have to mark it up more than 20% 23 25%,

  Mark 10:06

  something like that. Yeah.

  Chris Anderson 10:09

  So if you mark it up 25% on 80,000. I don't know what that number that gets you to, but that's going to be closer to your margin. So yeah, that's exactly what it is. It's 25% 25% of 80 is, is 2080 plus 20 is 100. So a 25% markup is a 20%. Margin.

  Mark 10:29

  I mean, just the difference between charging markup to margin, you just made yourself 5% more to your, to your bottom line,

  Chris Anderson 10:36

  you just have to know what you're looking at. And it's easy. If you take out a napkin, and you scribble the numbers out. And you say, margin versus markup, it matters and why do we care about it. So when you're looking at, at your overhead expenses, you have to be able to cover those with your margin, and whatever's left. That's what you get at the end of the day. And so if we're talking about average numbers, which is what people really care about, what are they interested in? How do I compare to what I'm seeing for averages around the country? Let's talk about margin. Yeah. So for something that's, you're getting $100,000 for a house, you know, it's more like a million dollars. We're seeing the good builders, their margins are 20%. Or better, really. So if there's if they're selling a million dollar house, it costs them $800,000. Yeah, that's a good builder, great builders are doing better than that. Wow, that's impressive. So somebody who's building something that's differentiated. They're getting 25%, or better, oftentimes, somebody who's building at scale, which gives them the ability to purchase cheaper, right? So they can get the same furnace that you're buying for a little bit less than you're buying it for, because they have national contracts or whatever. There's other things that they can scale. They're getting 25%. So that's what their margins are. So their markup, they don't really have a markup necessarily, because they're not like cost plus builders

  Mark 11:53

  all the time, because they're doing a flat fee button. They're building their margin into it, right.

  Chris Anderson 11:57

  So their markup is something you know, north of 30%. That's what the good builders and even the great builders, some builders are doing better than that. And it's it's crazy to think about that the builders

  Mark 12:07

  that are doing new home because I know what remodels at a totally separate structure at new home. Wow.

  Chris Anderson 12:10

  So the builders that are doing better than that are rare. And it's probably only 5% of all builders. And they have something except that's unique. And yep, it could be the market that they're in. So builders in Napa, they're able to make really high profit margins, because they're selling to people with deeper pockets who want something special. And so there's a few other parts of the country where you're seeing really high margins. In certain parts of the countries, you're seeing depressed margins for a lot of reasons, economic reasons, competitive pressures, cost of building, I met

  Mark 12:41

  a builder at the contractor coalition, some which I've talked to a little bit on the show, and he was from Canada, and he works in like a five mile radius. And he was telling me he, you know, he's north of 40 50%, he only does remodels. But even so like that remodel margin on that, and they're huge. I mean, they're big, big stuff. And he's like, we have an In fact, he goes, we turned down a job that's beyond four miles, we won't take it, which is pretty crazy. But the his area to your point is so hyper specific, and they do such quality work as a differentiator that they can command a higher margin, and people wait years to work with this couple, or this this company, which is a pretty amazing story.

  Chris Anderson 13:17

  Yeah. And really, that's a function of marketing, right. And so when we think about marketing, we're a great marketer, right? Mark

  Mark 13:22

  tried to be Yep, half of my name is in it.

  Chris Anderson 13:25

  So it's his brand. He's got this great reputation and a great brand. And it's built, his brand was built on his product. So he lets his product or his service, lead his business. And so the fact that he has a great reputation gives him that ability to charge more. So you need to find that thing and Luminar they don't have a brand that is exceptional, like nobody aspires to be in a Linaro home necessarily. So they don't rely on that. Right. They rely on buying stuff really cheap Value Engineering. Some people call it cutting corners, but they call it trying to make money.

  Mark 14:01

  Right? So business, they're to your earlier point, they're much they're much more on the ball and running a business that happens to be building.

  Chris Anderson 14:09

  That's exactly right. So think about 20% as a decent target, gross margin to make. So the money that you make from your clients minus the costs that it takes to get there have direct costs. So this is subcontractor labor, and materials and maybe your own internal labor that's directly attributable to a property right. 20% You're starting to play ball. Now you have to pay all your people you got to pay for your office, you gotta keep the lights on, think about that is 10% is really good. Right? 10% of that. 20 Yeah, so let's say it's a million. Let's say you only build one house this year, and you get a million bucks for it costs you 800,000 to build it, you have $200,000 of that. 200 to run your business. If you're running the business for 100,000 or less, that's good. So 10% And that leaves 10% To put back in your pocket. So if you think about those numbers as basic, simple numbers to represent, I'm doing a pretty good job 2010 and 10. That's a really good rule of thumb.

  Mark 15:11

  writing that down, yeah, like, I have to relook at our books lately. I know the guy who can help me run the some of that. Walk me through, you know, I meant to go there in the beginning. But let's go there now that people have kind of understood a little bit your I think your perspective, your broad broadband perspective, if you will, is just really unique. And you're the first person on the show that has kind of that national reach that can talk in specific numbers, which is going to be really helpful for our audience. Actually, before we go that let's go into remodeling of the companies you work with, what percentage would be new home versus remodel roughly,

  Chris Anderson 15:40

  we have. And we have this data, but I'll shoot off shooting from the hip 40% of our companies are exclusively new home builders. Okay. Another 40 are a mixture of new home and remodel or like major additions and renovations. And then the remaining 20 is a mixed bag of commercial contractors, trade contractors, people who are involved in like institutional building, you know, renovating a nursing home or something like that. So we have a pretty wide variety, and then we maybe have just this very small handful of legacy clients that are just tangentially related to real estate. So we do have some property developers, some property managers, but for the most part, we're dealing with builders and remodelers.

  Mark 16:26

  And if you do like a commercial construction, let's say I was to build like an apartment building. Would you work with companies that do that as well? Yeah, absolutely. Yeah. Okay, interesting. And we'll dive in a little bit later about, you know, what you do on a daily, weekly, monthly level more specifically, but going back on this on this high level, remodeling percentage across the country, like you did for new homes? What are you seeing farm remodel percentages across the country?

  Chris Anderson 16:48

  It's actually not that much better than new home construction, really? And I think it might be because this is very general. So if you're a remodeler, and I'm saying this don't feel offended, Remodeling Contractors tend to be earlier in their journey. And some are a little bit less sophisticated from a business perspective. And so I think that is one of the reasons that the margins aren't more than what you would expect,

  Mark 17:12

  because the average is bringing it down.

  Chris Anderson 17:14

  Yeah, maybe. Also, I think remodelers have a tougher time Estimating costs, so they have a lot more unexpected costs that they're not able to pass through. And, and, you know, remodeling is a really, really challenging business. Oh, man, it sure is very competitive.

  Mark 17:31

  I like it. But I like a mix. I mean, I couldn't do only remodeling. And I there is something very rewarding about going into home. We're working on a beautiful one right now by Lake Harriet. And, you know, when we're done, it's just going to be incredible. There is a different reward in repurposing an existing house and then building new, but it's it's definitely harder.

  Chris Anderson 17:50

  Yeah, yeah. So, you know, their margins are generally a little bit better, but not, not as much as you would think. Okay. And I think it has to do with competitive pressures and just the building homes is tough. Remodeling is a little bit tougher in almost every way. So that shows in the financials. Okay,

  Mark 18:09

  interesting. Appreciate the perspective. Let's go back a little bit about your journey. where you started. Tell us a little bit about about Chris, how far back with the day you were born.

  Chris Anderson 18:19

  Let's talk about a hot day in August, say in August, August 1882. And

  Mark 18:24

  1982. All right, I like it. We have a birthday here. Okay, maybe we should say this podcast, we'll put it on your birthday. That's too late. Okay. Yeah. Give me Give us your background. So I know you were in you were working with some national builders at one time and but maybe even before that, were you accounting major, like how did you know why? Why? Why construction finance?

  Chris Anderson 18:45

  Yeah, let's go back. I studied finance, locally here at the University Minnesota at the Carlson School. And I was attracted to finance because I really liked investments in the markets. So I was really interested in the markets and and as I went through my academic journey, I started to realize I really liked planning. And I took a job that was really involved in planning and helping big businesses plan and it was at Intel, the computer chip company, which at the time, in 2005, when I graduated, so sexy company to be a part of. So I did that. And then I didn't like it anymore. I wanted to come back to Minnesota wasn't for a girl or anything, you know,

  Mark 19:23

  across the school, Amanda Yeah. So

  Chris Anderson 19:25

  I took I took that job. And then I came back because that was out west and I came back to Minnesota and I got involved in management consulting. So I was doing post merger integration for a big net, a big consulting firm management consulting firm. So company, big company A wants to buy big company B and these are like fortune 500 style companies. They do it, they make the purchase, and then somebody has to come in and clean it up. Right. And I was part of a team that did that. While I was doing that I had a friend who was making a bunch of money in real estate. Yeah. And this guy can barely read but he's

  Mark 19:58

  sorry, but that's all later.

  Chris Anderson 20:00

  There's gonna be a few people who know who I'm talking about. So I won't get too detailed in it. And hey, if you're listening, buddy, it's a good joke. All right? You can barely read, but he's the best poker player you've ever met in your life. And he's a very, very business savvy, and he's just a, he's a great business person. And he was making it for himself. And he started developing land. And they needed help getting a bank loan, and they knew that I was a finance guy, even though it had nothing to do with real estate, and say, Hey, can you help me put together some package we call it a deck in the finance world put together a deck to help get this money. And so

  Mark 20:36

  go what pitch private capital that venture pitch to a community bank,

  Chris Anderson 20:39

  okay? Because it's the cheapest money. Okay, here's another tip for you guys looking to build spec homes, or finance any sort of construction project community banks almost always going to be the cheapest money. You know, there's easier money out there for sure. But it's usually more expensive. So the first idea was to pitch Community Bank and this the the first banks were pitching were more like small regional banks. And actually, we we put the deck together, pitched it to them, and they gave us the money and this was in 4 million bucks in the fall of 2008. Wow. It was I think we closed the loan in August. Oh, two days later, the world would have expired. I think the guy got fired actually, for doing the loan. It ended up being an incredible loan, it performed wonderfully. It was a development out in Plymouth was out of schools, it was just the right time right place, actually.

  Mark 21:29

  So it worked out. How does that work out? Because, I mean, obviously, the stock market dropped What 710 1000 points within a few weeks of that period of time, how could that loan have worked out? Well,

  Chris Anderson 21:37

  a little bit of luck, I guess. But the homework was done. And you know, it a little bit of luck, a little bit of skill. So it was a 54 lot development. And it was at the end of the line. So there's, this is in 2008. This was the only new construction development in Plymouth, essentially. Oh, wow. And the builders had a great idea and a great plan to just build spec houses, which sounded really dangerous, and they were able to get the financing to build the spec houses. But people were still relocating for work. And when you relocate, you don't have time to build a custom house. And the companies that were relocating them targets in General Mills and Cargill and UnitedHealth Group. They're like, people wanted to live out west they wanted to live where do Where do relocation people look to live? Where are the best schools? Exactly. Money Magazine had an article come out right when we close the deal on this land. Plymouth, Minnesota, number one city in America, best school districts in Minnesota. Why is that as always up there? The only place you could buy a new house? Our neighborhood? Yeah, so it was a little bit of luck. But the deck we put together to get the bank financing had all of this stuff here. So this is, you know, this is a nice, perfect storm of things. So at that point, I was to

  Mark 22:47

  hear a success story during that. I actually bought a home very similar. Why is that a schools, I bought my first major remodel in 2008. I closed on it. And September, August, I did it too nice. And I was I was stuck with a home. You know, for two years. I had to rent it out. I finally got out from under it. But it was a obviously, someone once told me that I got my master's degree in business and half the time and quadrupled the expense.

  Chris Anderson 23:12

  I have a master's degree in business. It's very expensive. And it took me 11 years no big deal. Okay.

  Mark 23:17

  Well, I got it done in two years, but I spent a lot of money losing money on that thing,

  Chris Anderson 23:21

  actually, only seven, but it costs you a lot more money, I'm sure. Yeah. So yeah, we we, I helped out with the development, one of the builders that was in the development, there was two builders. He said, Hey, I need some help getting financing. I need some help with finance stuff. What do you think about helping me? And I said, I don't know I have a pretty cool deal helping these big companies. And he just was a person that I really admired at the time. And I took the job. So I helped him with his homebuilding company. And we grew to a fairly small but very reputable builder in the Twin Cities, he had a company that everybody admired he built really, really solid homes, not necessarily like designed for like Rick and Amy handle. But certainly like a really solid home really good craftsmanship, really good functional layouts for families. And we took that from being a fairly small company to one of the biggest actually the biggest privately held builder in the Twin Cities. That's amazing. And that, in that was I worked there, roughly from Oh, nine to 18. And 18 is when month end started. So that's the origin story.

  Mark 24:28

  That is well that's it. Well, you had a lot of time in the trenches to figure it all out. Yeah. And so I assume during that time, basically took all your finance knowledge, obviously now you have all this building knowledge and you're like, I want to help other builders. So month end, right. You describe a little bit about what month is I'll just read it here for a second because I mean, I was on your web page a little bit this morning. I love your motto. It just says accounting for construction pros partner with a professional bookkeepers and controllers who know construction and work exclusively with construction professionals month end, the most important tool in your tool belt I especially like that last part, like the marketing of that Yeah, walk us through, you know, what you do for builders out there that are listening. And I just think it's a really unique service, I think it's deserves the time to understand like how you can help people because to your point, financial literacy, as well as understanding the business, I feel like you if you don't have good data, if you don't have the information, the lifeblood of your industry, which has cash flow, and understanding it, it really puts it really handcuffs, what you can do as a company. So anyway, I'd love to hear a little bit more about, you know, basically your literally your list of services and what you do and how you actually help these builders do some of the success stories that you that you're talking about.

  Chris Anderson 25:33

  Yeah, there's not enough. There's not a lot of service providers, there's not enough for sure. And there's not enough really high quality software providers that are really looking at this industry. I think there's plenty of people who have tried with the industry is complicated. There's no standardization, like we said earlier. And it's really just an underserved group. It's it's one of the largest parts of our GDP, it's one of the largest parts of our economy. Yet there's not a lot of month ends out there that are servicing these folks. So first of all, there's an opportunity. Not a lot of people doing it not a lot of people that have the knowledge or expertise and not a lot of people that want to do it. It's tough business, accounting to crappy business. homebuilding is a pretty tough and generally sight of sort of a crappy business. It can be glamorous at times you get to you get to stand and look at this thing that you built. And it's going to be there for 100 years or more. And there's there's a certain romance in that there's zero romance and accounting, which is great, because there's zero competition as well, but so builders are underserved. And so month end serves builders. And we're basically taking all of this data that's out there, and organizing it in such a way that's meaningful for the builder and then interpreting it. So financial statements, they don't really speak to a lot of people, and even accountants that have been doing this forever. When it comes to construction, financial statements, it's a little bit of a different language. So our company essentially, does the books, it's as simple as that. So we take, we take all the data, we assemble it into financial statements and information, we try to provide insights to the builders. And the part that makes this more complicated than it should be, is that more and more builders are using construction management software, like build a trend like CO construct, and that adds a little bit of a wrinkle where the old school accountants they're just not interested in. In dealing with that they don't understand it. They don't want to deal with it. They don't want their cheese move. You don't have Yeah, yeah. And in building and accounting are notorious industries for not wanting to change. And so we just fill this need of providing insights to builders, and it all starts with first getting the data, right, composing it into information, explaining what this stuff means. And then helping builders sleep better at night.

  Mark 27:42

  You know, somebody like us, we're obviously in the onboarding phase. So you know, as it for those listening, you know, we've been building for about 1819 years. And, you know, we use QuickBooks, we had an account, obviously, due to journal entries, things like that, I suppose last five, six years, we've used build build tools originally. And now we use buildertrend. And it's much more robust software. And now we're, as we've grown, and we have complexity that we want to have help managing and just have better financial tools, we obviously approached you. And I'm really excited to get to the point where we can do some of this forecasting and do some of this, you know, called post op, because right now feels like we're definitely having open heart surgery. But walk me through. I mean, you've told me even before we started, hey, here's our onboarding process. We're, you know, every week we're meeting for an hour to our, you know, your Mossberg or there's a first time we've actually met you in person, everything else has been on Zoom. And, and essentially, we we, we work through this, we were basically correct anything that's incorrect, or just basically change how we're viewing it. And then at some point, there's a handoff baton, and then you will have, you know, obviously, I assume monthly or bi weekly walk us through a little bit of this onboarding phase, if someone out there is, you know, considering, you know, working with month end,

  Chris Anderson 28:53

  yeah, working with month end, or really working with anybody who you're bringing on board as an outsourced accountant. There's other people who do what we do. But when you do bring someone on board and how we particularly do it, it's really split into two, two sections. When we're onboarding somebody, first, we're cleaning up their old stuff. We're making sure that books are right. We've never I've never seen books that are right. So I talked to probably between five and 10 builders a week who want to use our services. And I take between 15 and 60 minutes in these their sales calls, really, they're reaching out to us, Hey, are we a good fit for each other? And I look at their books. And I either do it live in front of them when they're on the call, or they give me access and I login. And I've never seen books that were accurate.

  Mark 29:37

  Well pause right there. What does that mean? I mean, these other firms have accounts. We've had accounts. What do you mean, their books aren't right? What does that mean?

  Chris Anderson 29:44

  So let me give you an example. You have assets, right? One of your assets might be a truck. On your financial statements, that truck has a positive number. One example of a book that's incorrect is the truck which is 60,000 bucks, it's listed as negative $60,000. Alright, So that's an example of something that's wrong. So when I'm going through these books, and I probably have seen 12 or 1300, builders books, I've not seen one single set of books at all that were right. And I think it's, it's just, it's because it's a lot, there's a lot of reasons why it's not right. So what was the original question? Well

  Mark 30:20

  know, you kind of answered basically, how do you do the cleanup? And you're walking us through the process? Oh, yes. And basically, the first thing is to see if it's a good fit, if it is a good fit.

  Chris Anderson 30:28

  So we clean up the books, clean up the books, they're there, they're messy. Sometimes it's very minor thing, how

  Mark 30:32

  often do they push back and say, No, Chris, you're new to the scene? Yeah, of course, you're gonna say that.

  Chris Anderson 30:36

  The problem is like, that's, that's the interesting thing about accounting. So I was a find my degrees in finance. I got Finance, Accounting Education later in life, I got my see my CPA in 2018. So I got that education later in life, because I saw how important was, and I wanted to fill in some gaps in my knowledge. And I realized you really have to have this fundamental fundamental academic accounting, knowledge to be able to understand this stuff. So very few of these books are prepared by anybody with that expertise. They're prepared by their wife, their husband, their sister in LA, there, brother. And those

  Mark 31:14

  are nobody, or there's people out there that don't have any idea where they're at. Right? Right. So the books when you're like, This is not a good fit. We're going to end this call, this would be a 50 minute call,

  Chris Anderson 31:23

  ya know, like, the people. The people who say they have really clean books are the people who always have the messiest books, and the people who think their stuff is a disaster. They're usually in decent shape. Oh, interesting. Yeah, I think it's because they care more about it. And they're more tuned into it. And they're like, Yeah, this is a disaster. And there's like three transactions out of place. Sure. It'd be like, my books are perfect. You're not gonna have any problems, like, burn these things down. Let's start over from scratch. Because these I mean, this is worthless. The stuff is, anyways,

  Mark 31:50

  yeah, no, that's a very interesting perspective. So we got

  Chris Anderson 31:53

  to clean them up. Yep. And it gives you a good foundation for for knowing what to do next. And then so we do this whole cleanup. And then on the other side of it, we're doing process reorganization and reengineering. The process are related to the financial processes, like what do you do when you get a bill? What happens next? Do you log it? Do you not log it? Do you pay it? Do you not pay it?

  Mark 32:13

  What's going on the drawers are being paid cash, all those things go into the

  Chris Anderson 32:17

  title company. So we figure out what the processes are. And then we try to get the technology tends

  Mark 32:21

  to be super frustrating, as you'd mentioned earlier that every single builder does does it differently.

  Chris Anderson 32:26

  Everyone does it differently. And most of them have to do it differently. You live in a different state, you're in an remodeler versus a builder, you're building an apartment complex that's finance versus one that's built on cash. They're all completely different. You're using buildertrend versus Procore. Different. So our onboarding is fairly standardized, maybe 70% of it standardized, but 30% of it is custom. And because everybody's different, and they have to be different, because the business of construction, there's nothing standard about it.

  Mark 32:54

  Let me just for those listening, this is kind of mind blowing. In Minnesota, we have to have lien waivers, which everyone who builds in Minnesota knows about lien waivers, essentially, if I paid 10,000 to a subcontractor let's say it's my plumber, he you know, says he verifies that he's received 10,000 he releases his lien rights. We give it the title company on and on it goes. I had heard that like when I was asking about these different software companies like why don't they do this and like Well, hey, in Florida, you just type a zero or a one like I think zero means it's still open a one means it's closed. I'm like, what? That's crazy. You don't have to put the dollar amount in in Texas that I'm in Needham. I'm like Oh, my word. My joke there was like you just have to put a 45 caliber bullet you know, as a receipt and you're good to go. And like and even across the country because you work all over the country forget builder to builder, but now we're talking state to state different rules. Different compliances? Yeah,

  Chris Anderson 33:40

  Tennessee, they're very strict about retainage even for small residential builders. Yep. So there's a lot of nuances all over the country. In Washington State,

  Mark 33:50

  just one second because a lot of listeners in commercial or sorry, in residential won't understand rich pretend. Okay, explain just what retainage is on a let's say you're building a million dollar. I'll give you an easy number, a million dollar home. Walk us through what retainage is? Yeah.

  Chris Anderson 34:03

  So retainage is basically security that people are going to do what they say they're going to do. So a subcontractor from the buyers point of view both. So a subcontractor like a framing subcontractor does $10,000 worth of work and sends you a $10,000 bill, you pay them $9,900 or $9,000, depending on what retainage percentage you're using. And then you pay them the rest later.

  Mark 34:27

  How much later? Is that negotiable? Yeah,

  Chris Anderson 34:29

  it's It depends. Really, it depends. Usually you pay it. It's like a punch a punch list item. And then when you're invoicing your customer. So let's say you're invoicing the customer for that framing bill, and you're invoicing the customer. You're making at least a 25% markup right mark?

  Mark 34:45

  Well now I mean, wow, after I'd have to really admire anyone who's built the house with Marty looms Custom Homes, you guys have got an incredible deal unbelievable deal free just wire me or Venmo me any sort of funds. You want cash you can we can avoid taxes that way Okay,

  Chris Anderson 35:00

  now we'll go straight to send some of that my way over to Chris. So you send the customer an invoice for 12,000. They only pay you 11,000 Or whatever the, you know, the retainage amount is so it's retainage makes it, you know, you hit him in the paycheck. Yeah, you,

  Mark 35:16

  you're holding money back. How does that get verified? Is it like escrow? Like, we often do escrow at the end of the job, How's it different than escrow?

  Chris Anderson 35:23

  It's sort of like escrow, but it's not a third party that's holding the money, who's holding it the client, the clients holding the money that they owe you and you're holding the money that you owe the subcontractor. So

  Mark 35:33

  ultimately, the subcontractor is the last one, then would that will get paid?

  Chris Anderson 35:37

  It depends just like, sometimes you'll pay a framer before

  Mark 35:42

  because he needs to get paid. I mean, they're exactly like, hey, I need to get paid, you know, now in their finite resource, you're like, Hey, I've got to make some business decisions here. I need to pay him in full if I want to keep him happy, right? So let me let's use that as an example, let's say, because I've heard before, like architects, sometimes will, will require a retainage on behalf of the client, even here in Minnesota. And let's just say your retainage is 10% on this,

  Chris Anderson 36:02

  that's a retainer. It's a little different than retainage. So retainers happen on the front end. Okay? Right. So an architect says, Alright, you're gonna work with me, give me a retainer. Give me 10 grand, and then I'm gonna start billing my time against that 10 grand. And if you end up not working with me, I'll give you the difference back or I've seen

  Mark 36:16

  that. Okay, I'm think I'm glad you brought that up, that seems to happen more with a client that they work against. Yeah, I've never seen I've not worked with an architect that requires retainer or retainage. To me as the general contractor. Maybe that happens, I guess I've not run across that. But I do know, I've heard it before, where they use the retainage. So let's say I owe let's say the architect is out saying retainage, for me that they're not there, they're going to debt, all the finances for on behalf of their client, to make sure it's all done the way they want it drawn. And then before the title company releases this $10,000, check that the architect will sign off on it. So let's say my framer on, you know, let's say two months into the project and wants to get paid the 10,000. If I say, hey, I need to keep him happy. I'm gonna pay him the full amount. So then I that just means that I'm taking the risk, essentially, does that happen? Or is that against you can't do that

  Chris Anderson 37:04

  happens all the time. You know, like in Tennessee, where retainage is very common for all kinds of projects. It happens all the time. So the builder might just never enforced the retainage. And they'll always just pay this up, get a contractor and give it all to themselves. Yeah, they'll just pay the subcontractor because they know they need it. And they know that that person always does their job. So they're not worried is

  Mark 37:24

  you have a relationship? Yep. It's you mentioned before that it can help protect the I thought it was only there to protect the buyer. How can I protect the let's say, in our case, the builder

  Chris Anderson 37:34

  don't just think about a painter, you have your painter come out, they send you a bill for 30 grand, you pay the bill for 30 grand, you come out to the house, and there's well, okay,

  Mark 37:42

  it doesn't terrify me. I wouldn't do that. Number one. I guess. So we have redacted without really okay, that's right, we will do progress payments. And then before we do a final payment, we'll go do a site check. Okay, so it's, we don't necessarily have a call that it's insurance. We do it. Yeah, it's insurance. Okay. Okay, back to the whatever question we were on before, but basically walk us through. So you're done. You've done the cleanup, you've got us on board? How long does that process take eight weeks, eight weeks, very specific? Well,

  Chris Anderson 38:08

  we need to get it done in eight weeks. So a lot of what we do at month end, and what we try to help our clients do is we set a goal, and then we design the processes to work toward the goal. So we say it takes eight weeks. Sometimes it takes longer, right? Sometimes we can get it done shorter, but we're going to do it in eight weeks. And we have a process to

  Mark 38:25

  get there. What happens after that. After that,

  Chris Anderson 38:29

  you've transitioned to your accounting team, who's also part of your onboarding. So there's, I think that's

  Mark 38:33

  really smart, by the way, because you build this incredible relationship is like, you know, you're training for a marathon, it's all your hardest training is with that person. And now, you know, you're after the post marathon, if you will, but you're still kind of in this running group analogy.

  Chris Anderson 38:45

  They need to know what happens, right? So you get four people, when you hire month, then you get the onboarding manager, you get the onboarding coordinator, you get the controller, and you get the bookkeeper. In those first eight weeks, they're all working together. The onboarding manager and the onboarding coordinator, they disappear after eight weeks, because their jobs done, the controller and the bookkeeper, they've been a part of it. So they've been part of the process design, they've documented the new processes, because some of those processes will be ours, some will be yours. And that controller and that bookkeeper, obviously, were part of that design, they have to be a part of it for the next five years, or 20 years or three years, or however long we're going to work together. So after eight weeks, they're just running your business financials for you. And hopefully onboarding is done. Sometimes there's some outstanding items, excuse me. Sometimes there's some outstanding items still, but generally, we can get most of them done in those eight weeks.

  Mark 39:41

  That's amazing. How did you come up with that idea? I mean, it's genius when you say it like that, but I'm assuming from day one, you didn't have that idea that evolved from just evolution of your business.

  Chris Anderson 39:52

  Exactly. And we have a real Kaizen culture at our company. And for those of you who aren't familiar with that term, it's continuous improvement. So no matter what we're doing, we're trying to get better every day. And is that a philosophy? How do you spell that? K AI Zen. It's just a Japanese term for essentially how a lot of Japanese folks live their life. It's part of the Japanese culture in general. And this is a term they use it, it's really was popularized in America with Toyota, you know, it's a Japanese company, but they did a lot of like American manufacturing here. And so Toyota embodies this idea of kaizen continuous improvement, and that's why they have really solid vehicles that have, you know, high quality low defects. So, continuous improvement like have you seen each row gyms have Dreams of Sushi, Sushi?

  Mark 40:41

  Sushi? Yeah, it's not each row Dreams of Sushi. It's he has a he has a sushi place flexed, and like the subway of it's like, some of the most exclusive sushi in the world the best one? Yeah.

  Chris Anderson 40:51

  And he's been doing it for 70 years. And he's up. He's 150 years old or something. Right? Yeah. And he, he's just trying to make his sushi better the next day than he made it the day before. Right? Yeah,

  Mark 41:03

  I did not make some out ago, I watched it like six, seven years ago. It's funny. I was actually gonna go to Japan, we've changed our plans here. But I, I actually thought about going there other than it would be ridiculously expensive, I believe. But they talked about a lot of dignitaries have eaten there. I mean, Bill Clinton, I think at the time that the book was written or the movie was Dale, you know, they had him over there. And a number of other celebrities had gone over there. And it's been very well publicized. But I like that that's he definitely commitment to his craft.

  Chris Anderson 41:27

  Yeah. And you see that my wife and I went to Tokyo, it was amazing. You see that with everybody. If somebody is in charge of Did you eat there? Oh, I 17 meals a day, it's the best place

  Mark 41:37

  I'll add each row no 17 times I eat. Like that's it.

  Chris Anderson 41:45

  But it's its commitment to getting better. And so with onboarding especially, that's where we can focus a lot of time and getting better, because we're still not that good at it. We're still just scratching the surface of how good we can be at onboarding and we have a long ways to go. And we've on boarded 150 builders at this point, and I think there's still a ton of room for improvement there. This idea of handling bookkeeping cleanup, separate from process is a newer idea that came from this Kaizen, how can we make this better? And, and that's what we're trying to do in with our clients. We're also trying to make them better every day. So I just saw something on on the plane was like Tiger Woods, and Dwayne Wade. Tiger Woods was like teaching Dwayne Wade how to play golf, Dwayne Wade is a terrible, terrible golfer. But Dwayne Wade is a cool dude. And he was talking about, he wants to get better at golfing, he wants to get better 1% a day, and he's willing to put in the hard work to do it. And they don't That's why Dwayne Wade is a champion. Right? Because he's always trying to get better. And part of his philosophy isn't just go out and play basketball, it's like, I'm gonna go get better today. And I think that's super important in business. I think that's super important for the managers in the business and the leaders to instill that philosophy. And they're people, right, because it comes from the top down. So if you have a project manager, and the project managers job is really tough, right. And they have to babysit subcontractors. And they have to manage budgets, and they have to keep things on time. And a lot of times they're negotiating prices, they're dealing with homeowners, they don't have time to think about how can I be better at my job. But I think it's important to instill this culture in any business, where you give them the opportunity to get better, and give them the tools to get better and give them the time to get better. And so in terms of creating a, an onboarding process that works, we're, we're we're not even that good at it yet. But we're trying to get better every day.

  Mark 43:42

  It's funny, just yesterday, I read a book about the 1%. And I know you're a big biker, I was gonna say that for later. But now's a good time to bring it up. My team and I are reading atomic habits. I've read it before, but I'm reading again. And it was right before. So at the London Olympics, where was what 2008 or 12, somewhere around there. Anyway, the reason I'm bringing up as the British Cycling Team does not have a long history of excellence in cycling, and they got this coach to come over. And he basically said, we're going to be better at 1%. So they tried it all different kinds of neoprene for, you know, their shoe covers, they tried on different spandex that was better and cold versus you know, indoor tracks and outdoor tracks. They tried, you know, different PSAs on their tires. They tried different lubricants for actually rubbing down their wheels, all kinds of stuff. Chris is nodding his head because he's an extreme roadbike letter. So he's farmers farmer, you're still awesome. And but anyway, long story short, is they started winning in the 1%. They started out up almost 1%. And they made huge inroads. They ended up I think, when the Olympics were in London, it was basically they won like 30 or 40% of all the road medals available. And then since then, like Chris Froome a number of Tour de France cyclists have come out of that training group all because of this two decade long dedication to the one percents and from sleeping to nutrition and you know, there wasn't like A 20% increase in any single one, right. But man, obviously add up a lot a little half quarter percents, and it adds up.

  Chris Anderson 45:06

  And that's a great analogy to homebuilding because great builders are able to make a 10% operating profit margin. So, you know, they build a bunch of houses, and they can put 10% of the salesperson house in their pocket. At the end of the day, pretty good builders are putting 5% in their pocket. So when we're talking about in depth philosophy, I think the British team they're calling it marginal gains. That philosophy is a great translation to homebuilding because the margins are thin. Like if you think about a pretty good builder making 5%. And let's say you get 1% better, if you get 1% better on your top line, that's 20%, better, and 5%. So your five percents now 6%. So if you were making 500 grand, which is fantastic for most builders, now you're making 600. That's a big deal. $100,000 is a big deal. So that marginal gains concept is great for builders, because in cycling, unlike a lot of sports, like football, there isn't this marginal game philosophy, right? It's a game of inches, but it's not like, if I lift weights just a little bit better today, our team's gonna be that much better. But cycling is is like that Cyclades. Like if I have a better night's sleep by just a little bit, we're going to be a better team. And we're going to be able just because your body is so stretched, that last little ounce you can get out of it. And and homebuilding the same way. If you can find a way to get your cabinets in your building 10 houses a year, and you can get those cabinets for three grand cheaper, that's 30 grand 30 grand on your bottom line is massive. It's just absolutely massive.

  Mark 46:36

  I think and I would say for myself, I think per job versus thinking holistic. Now, granted, I'm in a different realm of building, you know, since I think the builder you worked with built, what 3050 80 homes a year, hundreds, hundreds, I mean, I built for right or so cost on each one is so different that it's in some ways, I can't do that. But that being said, that doesn't mean I can't try to think in terms of like a bigger, bigger perspective, well, you

  Chris Anderson 47:00

  can systematize your business. So certain things that take a long time, don't take a long time anymore or for you. And more important approach would be to systematize your marketing, which I think you're really working on. So how do you make sure you're reaching the right people and doing a B tests with your social ads to make sure you're maximizing your marketing spend to get the most amount of eyeballs that are most likely to buy a house from you? Like how do you dial that in? And cycling like homebuilding? Very similar?

  Mark 47:28

  That is interesting. Talking a little bit about your team, how big is your team?

  Chris Anderson 47:33

  I love my team. The team has 25 w two employees, and then six contractors. And almost every single one of those person, people are servicing clients. We want to get our systems so dialed in. So when we're talking about marginal gains, we onboard new employees today, today's their first day. And I overheard Peter, who's our practice director, Peter, if you're listening, you're the greatest. You're the greatest thing that's ever happened to anybody anywhere. Except for except for my wife to me. So I heard Peter talking to these new employees, Peter is running this whole company about the best way to create bookmarks in your Chrome browser, because we want to systematize it as a company. So we're all doing it the exact same way in the same order. In How much is that going to save you? Well, it's going to save them four minutes a day. I don't know what Peter's actually probably done the math on this. Four minutes a day. And you work how many days a year 200? That's 800 minutes.

  Mark 48:30

  Wow, that's that's a cool, that's a great analogy.

  Chris Anderson 48:33

  800 minutes, how many hours? That's

  Mark 48:35

  a great sample.

  Chris Anderson 48:36

  Yeah, that's like 15 hours or something. Right. So if we add up all of those little things, like

  Mark 48:42

  if you have 25 people saving a day and a half each per year, that's a lot of time. It's huge. So it's that's one thing that's just organizing your web browser.

  Chris Anderson 48:50

  That's it. So our onboarding, our our, our new employee onboarding has come a long way. We formed this onboarding and training committee. And it's come a long way really quickly. And in those little things really add up again, I know we were talking about marginal gains. So we have 25 people on our team, we have some contractors, we tried to get them all do do the things that we can systematize and create consistency and do everything the same way for everybody. That way also, if, if your mark, you have a bookkeeper and a controller, and they're servicing you and a year from now, they might get so sick of you that they don't want to service you anymore. Well, if we have the systems in place, there's no reason we can't transition that to another controller and another bookkeeper with zero pain, because the systems have everything perfectly the document

  Mark 49:35

  I love I mean, that's one of the reasons why I was attracted to you from day one is understanding that we're taking a very even at baseline building is very complicated. From the standpoint there's just a lot going on. It's a very impervious art. I often explained to our clientele that you know, this isn't science. There is a lot of art that goes into it. Now there's both obviously, but I love the fact that a builder's in general or hot messes as industry by the sounds of it were have been late to adopt technology and at think the more systematic and the more dialed in our approach is the better obviously product we can give our clients in a journey. But knowing that on the backend that you have such detailed processes can help bring some organization to a much needed area for builders, which is the blood, it's the lifeblood, money is the lifeblood of any business. And so knowing that you guys have that level of detail is very encouraging. I mean, that's really cool how you've done that you had mentioned before that you tried to hire and correct me if I'm wrong, because I've heard this in passing to people a quarter, eight a year, like you have this very systematic approach, even in how you're staffing up, you're like, I think you told me when you interviewed me, you think we interviewed with you back in September, October, and you're like, aren't, we have one spot left in November, so we can take you on, but we really limit the number of people that we can. So I read a book called oversubscribed, that your oversubscribed, more people want to work with you, then you can service which also lets you be pick your clientele a little bit, walk me through a little bit of how you came up with that. And you know how that has benefited your business and your clients. Now we learned

  Chris Anderson 51:00

  the hard way. We've had we had a relationship with buildertrend. Since day one, that's really what gave me the confidence to start this business because I knew there would be a constant referral source. The partnership got really, really tight. tooth out 1021. We could talk more about that maybe. But basically, our our feeder system is built to trend. That's our marketing, powerhouse. That's our engine, they're sending people to us, because they know we're gonna get the job done for their clients. And so when we really turned on that feeder, we had basically as many clients as we wanted, and we took on a lot of them all at once. And it was it was really hard for the employees. And we were working really hard and we're providing Okay, quality, but I think we could have done a better job. And we had a conversation with it was essentially me and Peter. And we said how do we want? Do we want this to be a long term play or short term play? Right short term play, you take as many as you can you build up that revenue you sell the company, or do we want this to be a lifestyle company, something that we're going to nurture and grow for a long time, if we want it to be that we got to do a better job managing our growth, because they're growing too fast quality suffered, we couldn't hire fast enough and train fast enough. The knowledge required to get this work done, takes a long time to acquire, we can train we can provide really good resources for our team. But nothing replaces experience. And we can make that process go faster. But you got to get the experience. And you can only get that experience through time. And you can't just hire 20 people at once because there's not enough exposure to clients if you have 20 people all hired on the same day to get the experience. So we said alright, let's just make this Henry Ford. Right. Let's let's make this like widgets. Let's make this an assembly line. Black trucks. Yeah, you can you can get one color. Yep. I love that story. Yeah, any color you want.

  Mark 53:01

  So made a sales line of all.

  Chris Anderson 53:03

  So we just, we made an assembly line. So we hire two new employees a quarter, we hire them and they start on the same day. So we can spread our training time. You know, one one training session two eyeballs, well, for eyeballs right to the accountant doesn't know how many. So so we mapped it all out, well, how many? How many new clients how many new month and team members do we need for how many new clients that we get. And we found the perfect ratio. And so far, what we think is perfect, we're going to continuously evolve that. And as our systems get better, we might be able to onboard three clients a month. But right now we do two clients a month, and two new associates a quarter. And we have a process for onboarding new associates. And we have a process for onboarding new clients. And the whole idea is to control the quality of the client experience and control the quality of the employee experience. Because this is knowledge work. And the employees are everything like they're there everything in every organization, but they're especially critical here because we can't replace them with anything. Right? They're doing the work. They are the engine. So So where do

  Mark 54:12

  you where do your people come from? I mean, where are you finding them? Other than your cycling team? Because it seems like 90% of your LinkedIn profiles that I clicked on this morning, one of them wasn't working to tell you which one it was but it was funny because as I was going through and looking at their LinkedIn profiles, as like every one of their I liked how you had a picture like their headshot, you hit sideways and it'd be like a personal photo. And 80 90% of them had like a bike or racing uniform and that's good. Yeah, it was I liked that

  Chris Anderson 54:37

  that's something you can help with our website and our marketing is generally non existent because we I think it's important to market even if you have a lot of demand because then you can garner a better price credible

  Mark 54:47

  business. I mean, like I mentioned before, I'm gonna send you this book and when we're done here oversubscribed, which essentially is what it is, and we'll we'll chat offline a little bit about that because the website is trashed. So thank you for all the website is not tracking it better. cuz Trust me, I just went through a complete rebrand. And you know, it's expensive, rebranding new new everything, but ultimately it represents you. And, you know, it can it can sell without you even being there. And so obviously when people meet you instantly, I mean, I don't know that much about finance from the standpoint of accounting, but I know people and ultimately, I make most of my decisions based on people and, you know, obviously a referral, and but I've met someone else that knew you as well. And as soon as I met you within, you know, 10 seconds, I was like, okay, this person is impressive, you present yourself extremely well, you clearly know way more than I do, which is a given about anybody in any room. No more than me. And so it's like, I have to make quick value decisions and like, Okay, I don't know all the details, but I trust this person, and they're gonna get me there. Plus, you have a referral? I mean, I don't even look at the website. I don't even check referrals because I didn't need one. I knew somebody that's still why for all mark, and myself included, this is it my own advice that ultimately your referrals and the people that your best source of future growth and future income and future clients is really from your past in to your appointment, your commitment to your clientele, and to your people. Like I think we're we celebrate lifestyle, and we celebrate the people that we work with better than I think that we haven't at any other point in our I mean, my history is tell for sure. Right? For sure. I feel like we talk a lot about the mental health, which is really good. We talk about like, is this an enjoyable place to work. And there's a lot of, you know, pop culture that makes fun of, you know, the millennials or whoever, you know, whatever people they want to make fun of, but at the end of the day, like by valuing your people, you have a better product. And what's wrong with having your people rested and well read didn't come ready to come in and crush it for you. I mean, that we all could take a lesson from that.

  Chris Anderson 56:40

  Yeah. And our people are not rested there. They are nuts. They're insane in there. They have a really hard job, and I could not do it. So thanks to those folks who are just warriors. But some people are a person and their personalities are predisposed to being able to do this work and they love the work. Tasha, somebody on my team. I don't know how she does it. Because it seems like if you're on Have you been on Zoom calls with Tasha, if I don't think I have she's in it, like it always seems like she's in a dark room. I just picture her in this dark room just grinding and just like a filter on or what I don't I don't I think she just likes to keep the shades drawn.

  Mark 57:15

  That's hilarious. It'd be really funny to like fun. April Fool's. If you got like her background that looked like it was in a cave. Like, you know, something released? It's

  Chris Anderson 57:22

  already there. Right? She is. I think she might actually be in a case she bats. Have you ever met her in person? Oh, of course. Yeah. We do get together. Oh, so my team, how do I find my team? We put it's a combination of us saying, hey, we want your friends to come work with us. And it's a combination of putting an ad out, like indeed.com. We have hired experienced accounts before we've hired CPAs and experienced accountants. And we fired every single one of them. No way. They don't work, why they don't work with our system. I think it's because they're not willing to go through the beginning. You know, the beginning part of the process where they learn where they listen to us, like, Hey, here's how we want you to arrange your bookmarks on your Chrome tab. And they're like, Yo, I've been doing this for 10 years. Don't tell me how to arrange my

  Mark 58:04

  money. The moment I would hear that I'm like, Oh, that is I would call over that. That sounds so cool. Like you're gonna do right now you're hired i Well, I'm looking, I'm thinking like this morning, because I have like my buildertrend. I have like espn.com, I have a few other ones. It's like, I bet there's 90% of them that don't even use, I just need to get rid of them, and then organize them. Like, that's funny. What I'm getting out of this is I'm going to reorganize my web browser. Yeah, there you go. I'm not sure why I'm going to reorganize everyone else's on my team. Everybody's everybody lock it down, lock it down. So that I go over well.

  Chris Anderson 58:32

  So we just we we actually we don't interview for accounting skill. Some people that have it, that's fantastic. That's a bonus. If they're like super experienced accountants like senior accountants, they're not going to be a fit. We don't even interview them anymore. If they have some accounting experience, that's great. But it's not the most important thing we care about. Are you smart, and we can figure that out in the interview? And do you care, which we also can figure out in the interview? And it's combination of asking good questions and not just accepting, like generic answers. So we drill into it. And we want real examples, real experiences. And then whatever somebody's major is, so if somebody majored in philosophy, I'll take whatever knowledge I have about philosophy, which is very limited, but I'll ask them about it. And if they can't provide me an answer, they either weren't paying attention in school, or they didn't really they don't really have passion for the thing that they chose to spend four years doing, which is an indicator to me that they're probably not the right person for a month then

  Mark 59:25

  I have an epic fail story for you on that one. My family ribs me out I can't believe I'm putting this out on the worldwide knowledge base. But so I took Spanish in college but I was very bad at it. It was a you know, liberal arts degree and I was great at a lot of you know, I guess what I'm doing now speech calm, which is odd enough. But anyway, long story short, Spanish, so it came to bolstering your resume, and I didn't say I spoke Spanish fluently. I just put in there at the bottom of your resume just had Spanish just a word Spanish, that's all I'd say. But yes, it did imply that I probably spoke Spanish so I will not say the name of the company. It was a very high A fortune 100 company here in Minnesota. I went to work with them as but 22 And I went target No. Best by 3am. And there adhesive division can me. So anyway, I've gone through the interviews, you know, I think I was doing really good on all of them. And I got to this one. That guy was a former Spanish high school teacher did the entire interview in Spanish. I'll tell you what I was in. I was in a suit, which that was immediate know for me. I sweated. I sweat through that suit in about 10 seconds. So you know, when your perspiration just goes through the roof. And I just went K. Needless to say, that was not a not a good. My cousin who's like my brother. Oh, there doesn't there's not a month that goes by that they don't read me about that story anyway.

  Chris Anderson 1:00:46

  That's perfect. He should have done that. Yeah, I mean, that's 100 No, I

  Mark 1:00:48

  don't fault him at all. That's wonderful. That was my bad for not just saying that I like Spanish food, or I like Spanish bread. Now, I should never have had that on the resume. Clearly I was using my excitement for enthusiastically overselling my capabilities in my resume as a 21 year old to get a job. I'm sure I'm not the only one. But there it is. Well, we're getting close on time. But I did want to talk to you about obviously they're, you know, they're a at one of our sponsors, as well. And I've had Matt camallo on the podcast, adaptive a walk us a little bit through they've come onto the radar here in the last year, how have they been a fit with month end and what you're doing, it's,

  Chris Anderson 1:01:25

  it's cool how we met. So we have this month, anything going on. And they wanted to build like software. And they got in touch with one of my people. And they put and he put them in touch with me. But at the same time, they were building the software product, which is supposed to help builders, I'm building the same thing. I haven't spent too much money on it yet. I'm fine. I'm trying to find the right developer. Their ideas were a little bit different than mine. But these people were really good at finding capital. They have a background in it. These are three Stanford guys. And you know, what a Stanford it's technology and its capital. Right? So they're really good at that. They don't know, the first thing about homebuilding. I do. They don't know the first thing about accounting, and the software is an important accounting tool for builders. I do. It was a perfect match. And it was at the perfect time because I was about to spend a lot of money developing software, sometimes I wish I would have, because then it'd be 100% Mine. Yeah. But they're doing it better than what I would have done it. Yeah, they have a different point of view on it than what I have, when it

  Mark 1:02:23

  goes back just a minute to have a how you hired people, you're hiring people not that are CPAs, but that are right fit for your culture. You know, the more I've interviewed people, and I needed something I need to do better at for my own company, but I worked with someone that they do disc analysis, you know, like your, your red, green, there's all these personality tests. And like, I think it's enjoyable to do. But at the end of day, it's really important that you're bouncing at your team, but from what you prioritize the ability to learn, you know, the ability to take instruction and a passion and in what they're doing. But it seems like even this, you weren't scared away that they didn't know anything about building, you had that knowledge base covered. You were you were basically saying, Hey, this is a gap that I don't have, but you guys have it in spades. And you're able to basically have some sort of a partnership that you're able to develop this and I know because I'm been part of, I guess some of the beta and just seeing some of the some of the behind the scenes and amazing people, again, just knowing that you get to meet a lot of business owners and get a sense of who they are and what they do. I've been blown away by yourself as well as the adaptive team in the fact that how often can you reach out to the owner of a company and say, Hey, here's my XYZ problem for my bill pay or accounting or whatever I'm dealing with. And they're like, actually tell you what, check back with us in 45 days, we'll work on it. And guess what, 45 days later, they actually are building the system around your company. I think that's an incredible story. Now that they get it right every time obviously, no, but the fact that they're willing to basically augment their, you know, their, their software around us as they're growing as well, to me is extremely valuable and really just cool to be a part of

  Chris Anderson 1:03:52

  Yeah, it's really, the team is outstanding. They're all really good. Guys, when we were figuring out if we were going to, you know, get together. I had a zoom call with him. I'm like, What are you guys doing tomorrow? What do you mean? I'm like, I'm gonna come to New York. I'm gonna see what kind of people you are. I didn't say it like that. Yeah, I'm gonna come to New York tomorrow. And let's let's hang out

  Mark 1:04:12

  ask you about philosophy and you better know more than me. Exactly. actually talk to

  Chris Anderson 1:04:16

  they all have really interesting backgrounds. Henry had like the number one Kickstarter campaign in 2014. Really, like he's he's a genius. He worked for SpaceX. He's fantastic.

  Mark 1:04:26

  He told us on the podcast that he goes it's easier for him to predict rock rocket science than it is to do coding for builders for their software development

  Chris Anderson 1:04:36

  100% That's why there's no that's why there's no perfect homebuilding software out there. Because people have a hard time like translating construction it's complicated least I guess

  Mark 1:04:45

  I get it. So math is a standardized industry. So they're saying hey, math to project you know, for physics to Yeah, I guess that's physics

  Chris Anderson 1:04:52

  or physics that it is like what runs the world right? And so okay, but homebuilding, there's no standard. So Henry's like what am I supposed to do here? I'm like Henry, you're the smartest person on the planet. What are you talking about? Don't ask me like I'm a rocket. These builders confused me, right? And then Matt's got a great, great background in real estate and capital. And then Frank's Frank's really smart in his own way. He's got a background in public policy and and he actually has a degree is undergraduate degrees, I think in like, neuroscience or something like that.

  Mark 1:05:22

  I thought he has the best mustache, the side of Tom Selleck. He looks like Tom Selleck. He's got a killer mustache so good. And he just had his first kid. And being a dad of three, I sent him. My two best things that I've ever had as a dad, I mailed it to him, I thought he was in San Francisco, Prince of San Francisco, must have been his name, because His full name is Francisco and he's in Brooklyn. He's in Brooklyn, New York. And I was going to fill out I was asked him for his address, and I thought for sure I'd be sending to San Francisco. And it's like, Brooklyn. I'm like what I thought for sure. Anyway, word association. But so I actually here's my go to for anyone. You don't know your baby care on this channel. But it's the free to know sucker. Oh, yeah. Yeah. I mean, I remember getting one from somebody like, why would I ever use this? And I was like, the most useful thing I've ever had. And then I probably sent up some coffee or I don't actually remember what the second gift was. I was so obsessed with the nose free that so anyway, he said to use it on on like, day two. Nice, like, so there you go.

  Chris Anderson 1:06:14

  Any other aspiring fathers? I sent him a Baby Bjorn? Like a Yeah, hold him to this. He said, That's the kid's favorite place to be and he can work with the baby. Just those things,

  Mark 1:06:23

  right? Other than the fact that you get hotter than Hades wearing one of those things is that little baby actually have a lot of heat. He's hairy. He's tall. Okay, good to know. It's Tom Selleck. Francisco. When you hear this, I apologize. But you do have a killer mustache, dude. Okay, rapid fire as we close up a favorite business book.

  Chris Anderson 1:06:40

  Most recently, and I guess it's been a year since I read it. I read Shoe Dog. And it's not necessarily a business book. But there's a lot of business. If you're a business owner, or even if you're a career fortune 500 person working your way up the corporate ladder. It's just exciting. You feel feel Knight Phil Knight's grit, and determination and kind of fu attitude. Like I'm going to get this done. I think this is the best way to do it. He makes a lot of mistakes. He almost blows himself up. Spoiler alert. I think they're making a movie.

  Mark 1:07:09

  It's called the air comes out in like a couple of weeks. And you know, Michael Jordan's not even in it. And there is a bunch because the whole thing is based around as Sonny Vaccaro when he basically signed Jordan, in college or high school to the first big they're the they're the first ones to say, hey, we're gonna take a lot of money. Take a stars athlete. Now all marketing brands basically take you know, you know, make them celebrities that based on these brands, but he was the first really to kind of launch it of course, Michael Jordan, Michael Jordan. Yeah. But the movie got a little flack because Michael Jordan's actually not in it. And he's not in anything Space Jam, Space Jam,

  Chris Anderson 1:07:41

  which was phenomenal. But Shoe Dog, just his grit, his determination, his like, I know what's best. And yeah, I'm gonna fail a couple times. And you don't know, but I'm gonna figure it out. A love that and just absolutely love that because I think there's not enough and nobody

  Mark 1:07:56

  was hustling shoes out of his garage and running them this way and running them that way. It's a great book, great book.

  Chris Anderson 1:08:01

  And he's an innovator, right? And he didn't I mean, he didn't really innovate shoes necessarily. He had people do that for him. But he's a marketing innovator. The idea of paying athletes a ton of money to get them to endorse your product. Like you probably love Phil Knight, right? Yeah. All right. Hey, you are a marketing innovator, too.

  Mark 1:08:17

  I like it. Well, I'm trying to get everyone to be on the podcast because I just love celebrating stories. So yeah, I guess I'm not a Shoe Dog. I'm a pod dog. House dog. Yeah, house dog. That sounds very tame. I don't think I'm a house dog. I'll be more of a wild animal. Okay, we have we got off script. There's no script here, people. Okay. What are you listening to now? Do you listen to podcasts? What do you sell? Oh,

  Chris Anderson 1:08:37

  man, this is sad. Nerd alert. Right now I am doing continuing education to learn how taxes work. So I'm a CPA, I have a CPA. So you have to learn a lot about taxes. But you don't really get down into the details, you learn the fundamental foundations about how they work. So I'm not doing anything exciting right now, except taking courses on how income tax works and how tax preparation works. Really, the idea is, tax is a great complement to the rest of the stuff we do. And tax preparation and tax advice is something that goes hand in hand with preparing the books and it's something that every who likes their tax accountant, maybe one person listening to this podcast, everybody hates their tax accountant because they are generally not interesting people and they never get back to you and they they're slow and they don't get it done and they don't whatever

  Mark 1:09:30

  it's a shout out to Jeff I actually love My Tax Account. He's very good he gets back to you. But we need to figure some stuff out I think get that

  Chris Anderson 1:09:36

  guy some business. And so I'm always looking to work with the Jeff's of the world because they're rare. So I'm learning about tax one to help our clients a little bit better and then to potentially add that as a an important service right now. We do have tax service, we outsource it. Yeah. But we outsource it in the services. Okay. I want people's service to be fantastic. I want them to be excited if

  Mark 1:09:58

  it's part of month end especially Yeah, And I can see how that dovetail and you're trying to self educate. So you know enough so that whoever you hire, you can also make sure like, Hey, what's going on? You're speaking the same language. Well, do you want to be speaking Spanish at a Spanish interview? Right?

  Chris Anderson 1:10:11

  Do you want to be led and managed by somebody who has no idea what they're talking about? Right? You don't. So I'm gonna hire somebody to run it who's smarter than me. But I also want to be able to give them some feedback. Yeah,

  Mark 1:10:23

  I love that. That's amazing. Do you have a favorite quote?

  Chris Anderson 1:10:26

  I think I do. Churchill, never ever, ever, ever give up. So some of the themes have come through here grit determination, Phil Knight. And I tell my team this like, there's no you can't there's no such thing as not getting the right answer. You either continue to do it until you get the right answer, or you die. Like one of those things is going to come first. And if you give up, there's just it's not a it's not. It's not ABC, keep trying die or give up. There's no see, you don't give up in certain times, you have to maybe take an alternative approach because there's this thing called time and you have to get stuff done. But giving up is not cool. And

  Mark 1:11:06

  he had some amazing quotes. In Churchill, that's probably one of his one his more well known ones. I like that one. The one I'm thinking of is not appropriate for air. What's your superpower?

  Chris Anderson 1:11:17

  I don't have one man. Okay, I don't have a superpower. There's a couple things that I think I can do better than most. So this is really boring. If you send me your financials, I can tell you immediately the health of your company, I love that and and I actually enjoy it. And I never I always thought accounting was the nerdiest thing ever, like college finance folks. Although it sounds kind of like accounting, finance folks are like offense and defense if you play high school football, like and you know, you're on offense, you think the defense guys are you know, your buddies, but at the same time, you know, you give each other a little bit of crap. Finance and Accounting are like that. So if you go to a university, and you have finance majors in accounting majors, you ask them what they think about each other, they're gonna give you a nasty answer. So I never thought this would be something that'd be interesting to me. But actually, if you really want to understand what's going on with a business, and it doesn't have to be a homebuilding business, any business, if you have a really good solid foundation, and fundamental understanding of financial statements, the balance sheet, which is the health of the company, and the p&l, which is the performance of the company, you can interpret in any industry, what's going on. And you can give some, at least general advice. Now if you're a specialist in the industry, like we are with homebuilding, you can give very specific tactical advice like, Hey, I see your accounts receivable is continuing to go up month over month. What are you doing for collection? You're obviously not collecting from your clients fast enough, assuming sales are flat? Why don't you use a tool like builder trend and use we pay so you can get digital payments? People love paying online, that's going to help speed up your collections. Right? So those very specific tactical pieces of advice come from interpreting numbers on the financial statements, and those just come out to me and, and like you are this phenomenal Spanish speaker, right? So for most of us, for most people reading Spanish, they have, you know, like it's just letters on a page. But for you who is this, you know, you could do a whole interview in Spanish, it means something to you. So when I look at a financial statement, immediately just interpret it, right? And that's probably almost any like, good accountant. So it's not necessarily a superpower, I can also hit a golf ball really far.

  Mark 1:13:27

  But does it straight? Rarely. Last question, what if you could start over what would be some advice that you would tell yourself?

  Chris Anderson 1:13:38

  I think the most important thing is to not be afraid to grow slow. When we first started out, we grew really fast. And we managed it pretty well. But there were some, you know, fires, like there were sacrifices that had to be made. And a lot of it was, you know, like health and stress and employees being stressed. And now we have a long time. Like we have plenty of time to get this done. So manage growth a little bit more carefully. We've managed to figure that out now. And so far, starting over again, that's that's what I would do. I did a couple things, right, because it was sort of my second act. Right? I had this corporate job, which is like, you know, the moves boosh, this is my mouth getting ready for business. And then I had the real estate gig, which is really the first act in my career. So this first act I was able to learn from and so the second act, I was able to make fewer mistakes, but you're always gonna make mistakes, right? So don't be afraid to grow slow. And that's great for builders, to builders that grow really fast, never have any cash and they don't understand it and they look at their profitability. And they say I'm super profitable. I'm growing fast. I have great jobs. My customers love me. I don't have any cash. I have zero cash. That's part of growth. You don't have cash when you're growing. When you're shrinking or staying flat. I don't have cash that means I'm growing. That maybe isn't necessarily what it means. Not having cash sometimes is the result of growth. Yeah, but there could be other reasons for Mark. We'll talk about that

  Mark 1:15:03

  that's offline. We'll dive into that I'd have to pay for those services. Well, thank you very much for coming on. We're out of time. I think the things that we discussed is actually really, really helpful. I hope that people listening will find it equally helpful if people want to find you reach out to what are some of your social handles and where can they find you?

  Chris Anderson 1:15:20

  month end HQ, Instagram, and Facebook, and www.monton.com.

  Mark 1:15:29

  All right, we'll have everything in the show notes as well. Thanks again for coming on, Chris. I really appreciate it. And for those listening, please give us a five star rating and review. And if you enjoyed this episode, please share it with your friends and family and it really helps us grow and get our message out there. If you have any questions for Chris, you know where to find them. Thanks again for listening into the curious builder podcast.

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