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24 NOVEMBER 2014 COATINGSPROMAG.COM percent labor and material, 20 percent overhead, and 10 percent proft. Did you realize yet that they are holding all of your net proft? You shouldn't expect to have any proft or cushion in your bank account unless you are either collecting retainage on a regular basis or making more than 10 percent net proft. Let's go back for that 10 percent rework, keeping in mind the customer keeps our profts for a few months. In our $10,000 project example, we accounted for the lost 20 percent overhead contribution and the retain- age, so that 10 percent actually cost us $900 out of pocket. W here are you going to get that $900 if you haven't even collected any proft yet? Right! Your cash account, savings account, or credit accounts are going to have to be used to front that $900. And that means that you're in the hole again cash-wise. Is it any wonder you are always feeling pinched? What to Do Many contractors just hope the good jobs outnumber the bad, which is the painting industry's version of "spray and pray." Not a good strategy, since I showed you it will take seven to ten good jobs (of similar size) to outweigh one bad one. Busy owners often miss how much rework is killing their company. I advise my clients to do two things if they want to keep the profts they earn and increase their profts by that 90 percent number. First, track the direct labor and material costs of rework separately from the original work. At least you can see (and show everyone else) how good or bad the company is doing in this area. A lso, it doesn't hurt to make rework cost improvements part of your bonus or pay formula. Second, you must develop a quali- ty-conscious culture. Tat means that everybody thinks about it and knows how important it is to you. How? You personally need to get very excited about quality. Staf will only get excited over whatever the boss gets excited about; it's how they know what's important! Insist things are completed correctly the frst time. Do not accept anything less. Get loud when jobs require rework. Get even louder when they don't require any. Celebrate and hammer home; make it a big deal. We are all in diferent situations, so I understand if those two things seem overwhelming for you. You can also start simple. Give a big sticky note to your receptionist, executive assis- tant, or ofce manager, and tell him or her to quietly write down all the hours and money that are spent on rework for the next month. Te in-ofce staf hears all the stories and knows more about mistakes in the feld than you do anyway. Next, put a reminder in your phone to ask for the sticky note back in 30 days. You will be surprised or delighted by what you fnd, and I guarantee that just paying attention will improve your bottom line. Cut out that 10 percent rework, and you will see your profts jump back up to where they should have been all along. CP Travis LeFever, MBA , ent repreneur, and NACE Inst r uctor, ow ns a const r uct ion /consu lt ing company specia l i zing in concrete rehab, coat ings, and sea lants. LeFever a lso coaches const r uct ion e xecut ives and is a mot ivat iona l key note spea ker. He l ives in Greensboro, N.C. For more infor ma- t ion, contact: Trav is LeFever, (239) 292-3750, t lefever@ir iog roup.com. Give a big sticky note to your receptionist, executive assistant, or ofce manager, and tell him or her to quietly write down all the hours and money that are spent on rework for the next month. Money Matters