EP142: Save or Spend: When should you hire out?

all

But wait, there's more.

calls to talk about sales,

Let's look at some different areas. Finances, bookkeeping, hire someone. You don't need to do it yourself. Taxes. Hire a professional. You'll screw it up and cost you tens of thousands, hundreds of thousands of dollars. Payroll. I don't care if it's 15 hours a week, hire someone. It's worth it. Marketing. Your websites, you know, any kind of design work. I know guys that are like, hey, I want to wrap my truck. And they go online and they download some free design, you know, software. And then they design their own truck. They spend 20 hours designing their own truck. Again, it looks like crap. And then they eventually, after they waste 20 hours of the time, they hire a professional and then they get a really good looking vehicle. If they would have just started there, they would have saved themselves 20 hours of their life. So design work like that. Look at production. Estimating. Depending on your volume, the volume you're doing, the size of your business, should you hire an estimator. If you're doing all the estimating and you have a larger company, it might make sense to hire an estimator. Project management. Right. If you depend on the size of your company, it might make sense to bring on a project manager. Delivery. Delivery of, you know, services and or equipment. One of my new clients does excavation work and they have lots of pieces of equipment they have to move. And I said, one of the things they do is rock. They have to bring in rock, a lot of rock for foundation work and stuff. And I looked at their, when I was looking at their. Their P &L stuff, they spent a lot of money on rock. And they had a lot of time invested in getting rock and delivering it. And I asked the question, I said, what it makes sense, because the place where they get their rock is like an hour away. I said, what it makes sense to just have your own rock yard. If you know you're going to use 53s or 11 on every job you do, just go straight to the source, buy all that rock wholesale, have it delivered to your site. And then you'd save on time and money. I said, have you ever considered it? And they said, yes, I've actually ran the numbers on it. And financially, it's more expensive for us to do it ourselves. And I was like, perfect answer. Because you did the math. You literally looked at it. You identified this as a problem. And you did the math. And financially, one way was better. I can't argue with that. But most of you have never done the math. You've never actually sat down and done the math to see what it takes to do stuff. The number one thing that small remodeling companies do that absolutely destroys their profit margins is going to the store and getting materials as needed. You're starting a bathroom remodel, you do demo, and then you go, okay, what do I need next? Oh, I need drywall. I need some. cement board. I need this and this and this and this screws and you know, blah, blah, blah. Okay. Let's go to the store and you go and the guys go him and the helper or you and the helper, because there's nothing else the helper can do. So the helper goes with you. You spend three hours going to the store, buying the materials, going back, unloading it. Okay. That's the end of the day. We'll start doing this stuff tomorrow. Right? So three hours wasted and you're going to start the next day. The next day you get in there and you start doing stuff like, oh, crap, we forgot to get two by six. We needed one two by six for this one thing. All right, I'll go back to the store and get a two by six. And you go and you spend another hour. And then at the end of the job, you look at your receipts and there's 25 trips to Lowe's and you wonder why you're not making any money. Ask me if I've ever done that. Yes. That was the time I realized where all my money was going. When I finally looked at it and said, why do I have 25 receipts to Lowe's? It's because we were self-performing a lot of stuff. We were self-performing plumbing, minor electrical stuff. And I mean, very minor stuff, like moving a receptacle three feet, replacing a drain for a plumbing line or whatever, like not major stuff. And so we would do it ourselves. But we don't have all those materials on our vehicle. So we have to go to the store to get a receptacle or we got to go to the store to buy some Romex. So we got to go to the store, buy a two inch pipe or whatever. And then you get there and you get back and you forgot one thing. You go to the store to buy a new stop and you get back and the stop was in the wrong location. It's the wrong kind. You needed a half inch compression fitting, but you got a five eighths, you know, OD, whatever. solder fitting and you're like, crap, that's the wrong one. So you go back to the store again, so on and so on. Right? So what's the alternative? The alternative is you can just go online, order everything ahead of time and have it delivered to the job site. That right there could potentially save you 20 hours on one job. But Brad, I don't have time. I don't know what I need. I got to do. No, those are excuses. Those are just excuses. You can put together a list. You can get it 90% correct. And then the other 10% you got to run to the store and get. So you're telling me it's far better to make 20 trips at an hour each waste 20 hours than it is to get 90% accurate on the first order. Spend zero time delivering it, but you spend an hour putting the material list together. They deliver it. And then you got to make two more trips to the store to get some extra stuff. You're saying it's far better to spend 20 trips because you don't know what you need than it is to spend three trips or three hours. It's better to spend 20 hours than it is to spend three hours because you just don't know what you're going to need. Those are all external bullshit excuses. They are. They're just excuses. You don't want to put in the effort and time to try and make it better because you're not actually analyzing the cost. of what this is, what this is doing. This is the part of, should you do it yourself or should you hire it out? One of my clients who's a building contractor, he recently did the math and they build like agricultural buildings, commercial buildings, and they need, you know, like a, like a skyjack, um, handler or whatever you want to call it. And they need a skid steer and they need lots of different pieces of equipment. And they, you know, they have a low boy that they pull with the truck. And they would truck their own stuff. They would just truck it everywhere. And what he found out was that he only had one or two guys that could drive the vehicles. So those guys had to do it or he would do it as the owner. And there was so much time being spent moving equipment around. He did the math and realized it's actually cheaper to hire out somebody to deliver the equipment to each job site. It actually forced them to be more efficient. with job site planning to know where the equipment's going to be when you have your own equipment your own truck and trailer you can you know you can go to one job site and drop and use a skid steer for three hours and then load it back up and take it back to another job site and use it for the rest of the day and you spend all this time in transit well it forced him to realize like hey we're just gonna have to do better job site planning because that that skid steer is going to be there for three days to get everything done and then we can ship it to the other job site and it's cheaper for him Not only does he not have to deal with trailer maintenance, he doesn't have to deal with the licensing and the insurance, you know, plating and all that stuff, registration. He doesn't have to deal with all that stuff. He doesn't need a bigger yard to store it in, right? He doesn't have to worry about it getting stolen. He just pays. And even if it's $300, $400, $500 every time he moves it, it's still cheaper than doing it himself. and he saves more time. So you have to do the math on this stuff and realize what's important. Like what's going to make the most sense? Now, that doesn't mean either that three years from now, if he grows and he has three or four crews, it doesn't mean that he won't go back and buy equipment and start doing it in-house because if it makes sense financially, if it actually saves him money to bring it in-house, then he may switch that. And when I asked him how, you know, how he came to that decision, he just said, well, I mean, worst case scenario, if I sell all the trailers and stuff and it doesn't work out or I need, I need the trailers, I'll just go buy new trailers. Like I can just reverse that decision. Right. But some of us, myself included, it's like, once you buy a piece of equipment, you don't want to let go of it. You don't want to get rid of it. Especially if it's paid off. Oh my gosh, Brad, it's paid off. I don't want to. I paid $10,000 for that trailer. I don't want to turn around and have to buy another trailer for $10,000. It's that scarcity mindset that's not allowing you to look at this from an objective financial perspective. What makes the most sense long-term? Sometimes these decisions, in one year's time, you're going to lose money. In three years' time, you're going to save money. So sometimes you need to extend your time period of when you're measuring this stuff. You know, subcontractors are another thing. We would self-perform a lot of minor plumbing, a lot of minor electrical, and we were running around getting materials and it would take us longer because we weren't efficient at it. And I finally was like, this is stupid. Let's just hire a plumber to come in and do everything. Even if it's just one simple thing, I'd rather pay. $500 more to a subcontractor that they can do in 30% less time than we can because we don't know what we're doing. And I just charge that to the customer. They're going to get a better service because the plumber is a professional and knows what he's doing. We're going to be okay at it. And we may be able to do it to an acceptable level, but we don't do it every day. So our time is going to be way, way, way slower. It's not efficient. Start hiring out the people that are going to make your life easier. Every time we bring something in-house to do ourselves, it adds one more thing to manage. It adds a layer of complexity. I want you guys to start building simple businesses. Simplicity scales. Complexity doesn't. Complexity stalls. It's very difficult to build a complex business model. It's a lot easier to scale a very simple. business model. And when you guys are doing your own website and then you want to add a picture, you may not think it's a big deal. It's like, Oh, I could just get on there and add a picture. It only takes me 30 minutes. I can upload the picture. It's still 30 minutes of your time. When you could be using 30 minutes of your time to making sales, to following up with referrals, you know, to work on your business. So you have to understand that your time is also super valuable. Your time is not just, I have unlimited time, therefore I can do my own bookkeeping and it saves me 200 bucks a month. Yes, but you're spending three hours a month doing bookkeeping or you're spending five hours a week, you know, or payroll. Like it's still your time that you're spending. If you talk to anybody who's been in business for a long period of time, their ultimate goal is to buy back their time. They're using money. to get more time because the ultimate commodity that we all want is time. We lose time. We can never get it back. We can get money back. We can, you know, we can get new relationships if we need to. We can hire new people, but no matter what we do, we can never get time back. So when you understand that the time you spend is precious, you start to understand that it's not It's a waste of time to do these things, even if it costs you more money. I have somebody that cuts my grass. I think he charges 35 bucks a week, something like that. I can cut my yard in 15 minutes. I mean, literally from start to finish, I can cut it in 15 minutes. I hire someone. Why? Because that's an hour a month that I would waste cutting my own yard. And it's a low value task for me. We have someone that cleans our house. Twice a month, $130 a time, $260. Why? Because it's a waste of my wife's time to clean the house. She's busy as well. It's also points of contention in our relationship. When I had younger kids and we were cleaning, every Saturday we were cleaning and we would spend the whole morning on a Saturday morning cleaning. I hated it because it's a waste of my time. Once we hired a cleaning lady. It completely eliminated that whole entire argument and problem in our house. Right? I have a therapist that I go see. Why? So I can work through issues that are holding me back. I can work through my own mindset problems. I pay her $130 an hour. Why? Because it's worth it. If she can help solve these blockages in my mind, help me work through problems that I have, it's going to free up my mind. It's going to make me more efficient. It's going to allow me to be more successful. I paid for that stuff. I have no problem paying for an Uber to go somewhere. You know, we all, Hey buddy, can you come and give me a ride to the airport? So I want to save $17 on an Uber. So I'm going to, I'm going to put somebody else, you know, want to inconvenience somebody else so I can save $17. No, I'm paying for my time and paying for my experience. I'm paying for my own benefits. I hire a professional website builder. It saves me from doing that. I hire a bookkeeper saves me from doing that and potentially screwing it up. I hire a competent insurance agent who knows construction. So I don't under insure myself or I don't get over insure myself. They know what I need. I hire a professional designer to design my truck because I don't want to waste, you know,20 hours of my time designing it. I hire subcontractors so I don't have to spend time redoing stuff and wasting time there. A lot of you think this, the more I do in-house, the more work I have, the more money I make. It's the wrong way to look at stuff. Do what you're really, really, really good at and sub out or hire out the rest. Some of you can't comprehend this. Well, I'm really good at tile, but if I get the whole job, then I can be on there for, that's three weeks worth of work versus one week worth of work. If I'm really good at tile and I only do tile, I have to do four jobs a month. But if I do a bathroom and I do all of it, that's three weeks. I only got to do, you know, one and a half a month. The problem is you suck at all the other stuff. You suck at the carpentry, you suck at the painting, you suck at the electrical, you suck at the plumbing, you suck at, you know, flooring, you suck at everything except the tile work. So you're really good at the tile. And then you lose a ton of productivity on the other stuff because you suck at it. But in your mind, you think you're saving or making more money. Focus on what you're good at, double down on it, and you'll make way, way, way more money. Simplify the process, scale that. What I want you to take away from this podcast episode is you really need to do the math. Anytime you're considering hiring someone or doing it yourself, you really need to do the math on it. and see if it's a benefit or not. Stop being broke-minded. Stop having a broke mindset, meaning you don't have any money, and start hiring people that are going to make your life significantly better. Just because you're good at estimating your own jobs does not mean that you're the best person to be doing it. When you could hire another estimator who's actually better than you, and it saves you 20 hours a week, You just freed up 20 hours of your time. And the other person may be better at it than you. You've never benchmarked that against anything else. I always do the sales. I always do the marketing. I always do the estimating. I always do the ordering materials. I always do the design. You've always done this stuff and you've never benchmarked it against anything else. You don't know if you're good at it. There may be somebody who's way better at it than you who actually can do it cheaper than what you do it yourself. But you've never actually investigated that. It's just I'm a craftsman and I can figure it out. Brad, if I can build a house, I can do everything else. That voice cracks me up. That's what a lot of you guys do. So stop doing that, guys. Start running the numbers to see if it makes sense to hire someone else. Two questions you should ask somebody when you hire them. How long have you been doing this? Because the second thing that you guys do wrong is, oh, I need to hire a marketing person. I need to hire someone to do my social media. I know you said I need to do social media. I'm going to start doing social media. I want to hire a video editor to edit all this stuff for me because I don't know how to do it. I don't want to spend the time doing it. Good. That's good. That's a good start. So my daughter just graduated from college with a marketing degree and she's going to do all that for me. Wrong decision. We always want to hire the person who's inexperienced because it's going to save us money. This is where the math part comes in. Would you rather hire someone who's never done it before for $12 an hour or would you rather hire a professional who gets results At 25 bucks an hour, I'm hiring the $25 an hour professional every time because the end result is going to be 10 times better than that $12 an hour employee. Even if it's my own daughter or kid or my nephew or my cousin, Oh, my cousin just graduated. She's a CPA. She just got her, um, you know, master's degree. She's a CPA. She's getting ready to go work for an accountant. She's going to do my accounting on the side. Wrong answer. Hire a professional. How long have they been doing it? And what percentage, listen to me, what percentage of your clientele are contractors? Because the second thing that you can do to screw yourself is to hire that CPA who's been doing it for 15 years and has never worked with a contractor before. Because they don't understand the idiosyncrasies and all the things that go on in the construction industry. They don't understand it. If someone has less than 50% of their clients, if less than 50% of their clients are contractors, I wouldn't hire them. I would think very long and hard about that. I'm going to hire a website designer who spends most of their designs on contracting companies. I'm going to hire a bookkeeper who... 60% of their clientele are contractors. I'm going to hire an insurance agent who specifically works with contracting companies to get their insurance. I'm going to hire an attorney who specifically works with contract law for construction businesses. That's the key part a lot of you are missing. You're like, Brad, I hired an accountant and they screwed up my books. Yes, because they've never worked with a contractor before. Well, I can't find any. Keep looking. Expand your horizon. Do the best you can. If you find one that's got 30% of their clients that are contractors and nobody else has contractors, that's still better than hiring the guy who has zero experience with contractors. You're still going to have better odds of doing that. So hire the right people. All right? We went long on this podcast. I was all over the place. I hope you got value out of this. Sometimes that can be long-winded. You know, people tell me you got to land the plane already, Brad. And, you know, to those people, I say, I don't give a crap. You either like my stuff or you don't. I'm not trying to be everything to everyone. I'm trying to be authentic to myself. If you like it, great. If you don't like it, scroll on. Okay. It's that simple because a lot of you are trying to even service everybody in your business. Anybody who calls you, you think it's a client. That's wrong. It's completely wrong. And I don't run my business that way either. So I am being authentic. And if you like it, jump on board, drink the Kool-Aid. Let's have fun. If you don't like my style, if you don't like what I say, then move on and find somebody else. No hard feelings. Guys, if you do want to keep the conversation going and you do want to learn more about services that I offer, you can always follow me on social media, TikTok, Instagram, Facebook, YouTube. Just search for the Hammer and Grind podcast. You'll find me real easy. Until next time, guys, remember profit is not a dirty word.