Q & A Episode 2 - Managing Cash Flow in Your Residential Construction Business
Episode #2 | Q&A with Mark D. Williams | Managing Cash Flow in Your Residential Construction Business
Mark D. Williams answers your questions on his new solo podcast.Mark Williams discusses how to effectively manage cash flow during the pre-construction phase of a custom home project. He provides advice on charging for pre-construction work, collecting retainers upfront, and financing options for home builders.
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About The Curious Builder
The host of the Curious Builder Posdast is Mark D. Williams, the founder of Mark D. WIlliams Custom Homes Inc. They are an award-winning Twin Cities-based home builder, creating quality custom homes and remodels — one-of-a-kind dream homes of all styles and scopes. Whether you’re looking to reimagine your current space or start fresh with a new construction, we build homes that reflect how you live your everyday life.
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I run my life off of my schedule. And so one of the things that I found extremely helpful is to time block. So I have a couple of different time blocking, um, segments that are dedicated just to working on the business. For example, every other Friday, I keep a two hour block and I just label it work on business.
And I try not to ever schedule any meeting in that time block.
Welcome to Curious Builder Podcast Q and A. I'm Mark Williams, your host. And we are about to announce our first episode of Q and A. So over the last year and a half, as you know, if you've been listening to the show, uh, every week, we have a weekly podcast where I'm interviewing builders, architects, designers, anyone related to the construction field of building, uh, that's a founder or an owner and has some insight and wants to share.
We've been getting a lot of questions. Through our email, through the website. And I thought I'd take a time to answer some of those in kind of a straight format. And so what I'm going to do is I'm going to answer two questions every other Thursday. Uh, you probably also are aware if you're following our feed that we have launched the curious builder, uh, in Espanol with bell crews.
So. Every other Thursday will be either a Spanish episode or on the opposite biweekly schedule will be a Q and a session. And that's just going to be 20 minutes of me answering two questions that the audience had submitted. And we'll just have a kind of a open format on as questions come in, I'll announce what they are both in the feed, as well as the start of this podcast.
And we'll kind of go from there. If people have any other comments, you can write us review or send us an email. My email is mark at mdwilliamsholmes. com. And you can also go through the website, the curiousbuilderpodcast. com. So today's question is a great one. And I definitely am not an expert on this, but it'd have a few insights.
And the question that was posed was how do you work on the business and not in the business? I think just the fact that you're even thinking about the question or asking the question is really important. The first step into working on your business, you know, like a lot of entrepreneurs, when we start our business, you know, we're chasing down every single lead you can, you know, if somebody calls you obviously respond, somebody emails you, you ask them, when can you meet?
And you know, you're not thinking about bids or design, uh, down payments or any of that. You're just trying to go get as much work as you possibly can. Cause you're just, you're just excited. And it takes a few years, or at least it did for me. Before you start systemizing this and realizing that, you know, it'd be like a dog chasing a ball down the street, you know You can chase one pretty effectively you start chasing five or six and it just doesn't happen very well You're gonna get run over by a car in this analogy for sure And so I think at some point you start looking around and you realize i'm either burning out you find yourself working You know nights and weekends and your spouse or your family is probably making comments about you working too much and It's sometimes it takes somebody to kind of pull you aside and say, you know, if you keep this up, you know, you're going to burn out or you're going to crash and burn, or it's just simply not even a, even if you can sustain it, you know, maybe your family can't sustain it.
And so I'm really thankful personally for those in my life that have sort of helped me take a time out and have given me perspective just to realize that if you work on the business and you structure the business, not only can the business work for you and you're always going to need to put Put obviously your time and energy and effort into it.
It's your baby. It's, it's the thing that you care about. And most people create their business based on passion, which is great. And once you love something, uh, you know, you want to give it everything you've got. In fact, I was just writing graduation cards for the upcoming graduations. And one of my go to lines was, you know, find a career that's That is your passion or that you can find passion in it because then you'll never work a day in your life.
And I really believe that's true. A past client of mine actually had told me one time he was probably in his late sixties, early seventies. And he said people keep, he, he was a serial entrepreneur, had a huge staff, five, 600 employees, and they kept asking him when he was going to retire. And he goes, I hate the R word.
And that was retire. And he goes, if you are constantly thinking about retirement, perhaps you've chosen the wrong career. And. Going back to passion, you know, really find if you have started a business, you're likely passionate about something. So know that you've already taken a good step. So back to working on the business, I think just becoming aware that you need to create systems.
I know I've failed miserably at this for a couple of decades. I'm now 20 years in and really it's only been the last couple of years that I've really been very mindful of trying to dedicate time to work on the business. And for me personally. Uh, I run my life off of my schedule. And so one of the things that I found extremely helpful is to time block.
So I have a couple of different time blocking, um, segments that are dedicated just to working on the business. For example, I think it's every other Friday, I keep a two hour block and I just label it work on business. And I try not to ever schedule any meeting in that time block. And so when that time comes up, I need to take a time out.
And then for those two hours, usually I start it at the beginning of the day. Cause that's when I have the most energy and I'm the most clear minded. And then for those two hours, I'm working on the business. I can tell you that I fail pretty miserably. I'd say half the time I. end up canceling it or I delete it or I'm dealing with the fire.
So even though I've set it in motion and I believe in it, uh, it's still very tempting to cancel it. So hopefully you can do a better job of, I, that I have been able to do and just keeping it really cemented and sacred. I was interviewing, uh, Caleb McDonald, uh, from Kingsridge builders up in Canada, and I've actually just adopted something that he shared in that podcast episode.
And what he does is once a month, he books, I think either a half a day or maybe a full day. And he, he lives in Toronto and he gets, he dresses up a little bit differently. He said he gets on a train and goes into Toronto proper works at a favorite coffee shop for the whole day. He doesn't, he leaves his phone off and he only is not answering emails.
He's simply working on the business, whether it's being creative, thinking about, you know, how to structure things differently. Whether it's talking about, you know, the next year, the next quarter goal setting, all of those things that you need time to do, he's dedicating that full day and kind of a different atmosphere.
I like that a lot. I actually have it coming up in July, my first full day. And I think for me, I'm not going to take a train anywhere, but I'll probably drive to Stillwater or maybe I'll drive to Northfield, which is, you know, there are cities that are pretty close to Minneapolis where I live, maybe half hour, 40 minutes, just to kind of get out away from the office.
And I feel like just a change of scenery is super, super healthy. So I'm really excited personally to do that. Um, I think another thing too, is create little, create little things in your schedule that trigger things that would work on the business. I have one where. You know, because I'm in charge of my own sales, uh, for my clients, I'll have kind of like a hot list and it's every two weeks, it'll pop up on my calendar, you know, call the hot list.
And so I'll go through and it'll just, it brings back to my mind, the things that are the most important. Uh, I have another one where. Um, I've set, uh, basically a retreat where I try to take a day or two and just get outside, be away from things. I find that that really restores my mindset. Uh, we're actually, we've just announced it as well with the Curious Builder podcast retreats.
Um, basically we're going to do a half day sauna camp in January. Um, and we're going to do actually a three day retreat, either in Mexico or Costa Rica, or maybe Colorado or Utah. And the whole concept of that is sort of all this working on the business mindset, which is really actually, I'm going to ask people to check in their phones.
Um, so there's the mental side of it where we're, we're so used to using our phones all the time. I want people to check in their phone, get rid of the phone, and then And, you know, it's going to be a small group setting, maybe 10 to 15 people, other business owners, and it's going to be, we're going to be outside.
We're going to be hiking. We might be running. We're going to, there's going to be some athletic components as well. Cause I feel like, you know, that, that really helps energize not only your body, but also your mind and creativity. And, uh, we'll have some cultural elements. I think if the one that's going to be out in Utah, Colorado, uh, my sister actually.
Uh, as head of Native American affairs. And so we're going to find a Native American storyteller to come do a powwow one night around the fire and just talk about, you know, not only building, but just have a connect to the land. And I feel so much about working on business is sort of working on yourself because most people's businesses.
Are somehow a reflection of their own core values and the clearer that we understand ourself, the more we can reflect that into our business. So anyway, that's how I would answer that question. How do you work on the business instead of in the business? And I think every entrepreneur is constantly struggling with that.
I know I, I definitely struggle with it a lot. And right now, I mean, I would say weekly, even though you set these things in motion, there still is a way that you sort of get drugged back in. I think the other thing that's really helpful is making sure that you empower people on your team, you know, I think, you know, I'd heard once that if you can find someone within 60 percent of your ability, uh, to do a job, then hire them.
And that's really hard for most entrepreneurs. Cause you're like, well, man, if I, you know, if I can do that to a hundred percent and I'm hiring someone that is 40 percent worse at it than I am, um, how can I do that? And I think the real key there is if you don't trust people, if you don't empower people, they can never grow.
And then you, if you make yourself irreplaceable. You're irreplaceable. And so if you don't want to be drug into the nitty gritty, and if you don't want to be dug into every single decision, you're going to have to empower people to make decisions on your behalf. And here's the best part. They'll do a better job than you anyway.
And I have found that time and time again, when you trust the right people, they, and you empower them, they surprise you with how their ideas and their creativity. And, um, I need to do a better job of that in my career, especially in the back 40, as they say, I need to do a better job of empowering my team members and be very mindful that.
They have so much to offer. And I think even through the podcast and through different collectives that we do, you know, the education component, it's, it's, I've heard this saying, uh, there's a three phases of your business life and it's, you learn, earn and return. And I jokingly often say that I've missed the earning part.
I definitely learned, uh, and now it's my turn to return. And I really, I really enjoy. Leading discussions and getting people together, even like this format, just to share, um, that you're not alone and to share that this is difficult. And that by listening to each other, maybe it sparks an idea in your mind and you can apply it to your own business.
The second question is, uh, are you willing to be advised by your subcontractors and trade partners? And if so, how would you like to be approached? I think this is a fantastic question. Um, I can only speak for myself in this sense. I love it. Um, I've often told my clients as well as my trade partners. I'm not a know it all, you know, there's a lot of builders that grew up in the trades that know a lot of the building science and I'm sure I'm pretty dangerous and I know probably more than I think I know, but I really.
rely on the people around me. You know, my cabinet guy is going to know way more about cabinets than I ever could. You know, my electrician, my drywall or my painter, honestly, every single person on the job site knows more than me. And so maybe I've benefited from the fact that I don't feel like I know that much.
And so I'm always asking questions. You know, hence the name, uh, the curious builder podcast. And so I think from an early age, I've always been very curious and I've always asked questions. And so I would tell this subcontractor that you want to align yourself with people that, um, are seeking help. And, you know, I heard a quote recently that I like, and it is, If you want to go fast, go alone.
And if you want to go far, go together. And I think anyone who's building a home or part of it, it's a huge, it's a colossal team effort. I can't think of another endeavor that you constantly are working with hundreds and hundreds of people from purchasing to actually doing the work on the job sites. And a lot of times they're different and their crews are different and their people are different.
And we try to do the best we can to create a system and project manage and schedule, but. There is a lot of unknowns and a lot of variety. And if you don't trust your people, and if you don't trust the recommendations, I mean, there's thousands of decisions that are being made. And I guess no different than how I answered the previous one, that if you're not empowering your trade partners to make some decisions and trust on their end, that means you're going to have to make every decision.
And so I would tell this trade partner who asked this question, if you are going to your builder, your architect, or your designers, and you're being Honestly, that would be a red flag for me. I would not work for a builder if they were not willing to listen to their trade people. And I think there needs to be respectful dialogue, obviously, just because you might, you know, maybe a cabinet maker comes in and says, I want it done this way.
Me personally, I would say, well, tell me more. Like, why is that? Is that a better product? And, you know, if there's a fundamental difference that I understand, you know, part of it is just communication. I might be telling this cabinet guy. Well, the reason that I want it done this way is for this design look.
And I think it always leads to really good conversations. Honestly, I don't know any builder that wouldn't welcome open dialogue. It's a lot. It's no different than if a builder just tells someone what to do, um, that doesn't usually go over very well. And if a, if a. And if a trade partner comes to a builder and says, I'm not doing that, this is how I'm doing it.
That usually doesn't go well either. And so we often have talked on the podcast about what are red flags for. You know, for our clients and I offer my number one every single time is communication, how even the husband and wife communicate with each other and the way that the builder, the project manager, the trade partner and the vendors communicate and the designers is really, really important.
We need to respect each other and we need to understand that maybe there's something that we don't understand. And I feel like. You know, most, I mean, people that are just really confident in their own ability are honestly going to be the best ones to ask questions to, because they're going to want to seek a way to do it better.
And so I think to the person that asked this question, you know, go ask. I'd be shocked if someone wasn't willing to listen, you know, and maybe it's, maybe you wanted, maybe it's a business thing. I've had, I've had trade partners come to me about people on my own team before. That's a little bit different.
That's not about building the house. That's about how I'm running my business. And, um, that's a little bit harder because there's a lot of interpersonal Dynamics, there's people, there is, you know, for me personally, I tend to really like people. Um, I've told, I've said many times that I'm not the greatest at hiring or firing people.
And, you know, Disney made it famous that you hire slow and you fire fast. In my career, I've sort of done the opposite. I hire fast and I fire slow. And, you know, looking back in hindsight, There are times where my gut was said, you've got to let this person go. It doesn't work. It's not going to work out.
And my mistake to my own detriment and to theirs too, was that I didn't listen to my gut and I was too patient. And I think what makes me a very good remodeler, cause I'm an optimist, sometimes makes me a really bad judge of character for people because I'm an optimist. I think they can change. And, you know, ultimately, maybe this is marital advice.
You know, it's like, You know, if famously, if someone, you know, if your, if your spouse marries the other person and thinks that that person is going to change, they're really not, and it's an evolution and things can change over a period of time, but I don't think people just immediately change it. You have to have stepping stones.
And so anyway, I think we, I know that I constantly am asking my trade partners for their feedback. A lot of times in my emails out to, I call them my A team, uh, when I'm sending out a bid and I will even say, you know, if you have recommendations or if there's a way that you can, you know, value engineer this and give me some options, you know, they're going to know their craft better than I can, you know, and maybe the electrician can say, well, you know, I know you expect, you know, two inch cans, um, and there may be 600 bucks a piece, but you know, if we went to four inch cans, they're 300 bucks.
Well, now you can go to your client. And you look smarter by trusting your trade partners. And so I think this is an amazing opportunity for not only the trade partner that you're working with to sort of level up their game, but it's also a huge benefit to the, the contractor. And if you're listening and you are a builder or you are a remodeler, um, and you haven't done this, you can't imagine the feeling of empowerment it will have on the people that you work for if you ask for their And I think, honestly, I think probably the thing that is the most.
Underutilized in our culture is literally the word help, help me. And I say that with very few people, whether it's insecurity or whether they just are embarrassed. I'm not sure what it is, but a lot of people just simply don't ask for help. And I guess I would challenge anyone listening as well as I'm thinking about this myself is if somebody asks you for help, well, how does it make you feel?
What would you do? I'm thinking of a few specifically in my mind where somebody asked me for help and it sort of validated my friendship. This is a personal thing that I'm thinking of. And to this day, it's been 25 years. I still remember what that person asked for and how I felt. And it's kind of odd that sometimes the people that ask for help in a very sincere way, that the person that ends up sort of benefiting the most, Is the person who is asked for help, not even the person asking for help.
It's kind of this beautiful thing that happens between people. And you know, maybe I'm getting a little woo here, but I think because our homes are so relationship driven and because a home is such an emotional, an endeavor as a team, that there's a lot of feelings involved with the home and it's good.
And when people's passion comes out and you build a home or remodel a home, it's pretty incredible. And so the idea. That, you know, this subcontractor who asked this question is either concerned about people, him approaching his builder or his, um, you know, remodeler, um, you know, go to him, ask him, say, how can I be a help?
Or I have a few ideas that I think could make you more money or make your job more efficient. Or this is what I see in the field, because I have found that so helpful in my career, but There's probably been, I'll call them 10 to 15. I can name off the top of my head where year in and year out, they are the ones that will come to me and say, I've noticed this on your job sites.
And these are some things that you could improve upon. I don't always do them and I don't always do them quickly. But I definitely can tell you that I listened to them and I appreciate it. And sometimes it's hard to move the big ship. You know, sometimes there might be a personal thing where someone will come in and say, you know, I don't care for the project manager, or I don't care for an interior designer, or I don't care for another sub and how they say this or say that.
And so you end up being a little bit of a school teacher or, you know, A, uh, patriarch in this example where, you know, kind of your work kids are kind of squabbling and you've got to figure out a way through it to get everyone working on the same page. So, uh, thanks for tuning in to the curious builder podcast for the Q and a, uh, we're going to cap this at 20 minutes.
So it's short to the point and you can join us again, uh, in two weeks for our next Q and a. Thanks for listening. Thanks for listening to the curious builder podcast. If you like what you listened to, please give us a five star rating and write us a review. It really means a lot. It's a great way for us to just understand what you like about the podcast and what we can keep doing.
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