Protect your bottom line from the labor shortage

Ways to keep your business a float when you can’t find the right people

Contractors are struggling with growth in labor well into 2022, and this is having a major impact on their bottom line. You can now leverage other areas of your business to combat this shortage and grow your business during this time.

Join this live discussion and Q&A to hear about:

• What is happening in the industry and what’s the latest on the shortage
• How this shortage is affecting your business’ bottom line
• How to take control of the areas you can control, in a world that feels so out of control

Speaker 1 (00:03):
Looks like we’re all good there. Well, welcome everyone. So happy to have you here today. Um, really excited to talk about this topic. It is certainly something that, um, not just the construction industry is currently having to work with. Um, it is, it is a big problem. So excited to talk about it, talk about some reasons why it’s happening. Talk about some solutions to that problem or ways that you can curb it, and certainly ways that you can, um, make sure to avoid the impact on your bottom line. So my name is car Vallejo. I am on our, um, capital team here at set, and I have the amazing job of trying to find ways to help cons help the construction industry, manage their cashflow. Um, and so I love my job. I love what I do. And I’m so happy to be here talking with you guys. Um, we also have the wonderful Alan Francis with us who is our manager of credit operations here at level set. The thanks for being with us a

Speaker 2 (01:03):
Well, thank you so much. That’s such a, you, I love your introductions. They’re so I love the introductions. My name is Alan Francis. I’ve a manager of credit operations for a year now with level set

Speaker 1 (01:12):
A year today,

Speaker 2 (01:13):
A year today. Happy anniversary. No, uh, and it has been such a great ride. I’ve been a credit manager for about 30 years, and I could not be happier being with level set, giving the opportunity to help people and get their money and give them opportunities to expand their business. So, you know, I can talk about that for an hour. So Kara, I’ll turn it back to you.

Speaker 1 (01:33):
Yes, that’s right. I think we both can, um, talk about that at length. So luckily we will be able to touch on it a little bit today. Um, but the three things that are gonna focus on mainly are the causes of this increased labor shortage, um, the impacts on your bottom line and what options you do have. So one thing that I want to start out with is that we know that this is not a new problem. Um, based on historical data, we know that the labor shortage and the construction industry has been going on for years, and it has been exacerbated and put to a detrimental point, um, because of many factors, but mainly because of the recent pandemic. And so much though, that, um, the associated builders and contractors say that the construction industry faces a workforce shortage of 650,000 people. Um, so this is compounded from many different reasons, but I wanted to start with this to show that you are not alone.

Speaker 1 (02:29):
We are not alone. The industry as a whole is dealing with this and you are not doing anything wrong. Um, Alan and I get the pleasure of working with the construction industry day in and day out and helping them find solutions to a myriad of problems. And, but today this is the one that we’ll be focusing on. So I hope that you all walk away with, um, some, some new tools in your toolkit, uh, and ways to combat this. Um, if you have any questions, please feel free to put them into the chat. We’ll be monitoring the chat the whole time, answering your questions. We are here as a resource to you. So please utilize us, um, and ask away.

Speaker 1 (03:09):
So this workforce shortage is the most acute challenge facing the construction industry. Today. We know that, um, with the rise of material costs and the, are there other things that impact the industry, um, they have their place, but this workplace, this workforce shortage is definitely the biggest issue that we’re facing. Um, and so what are the causes of this? Again, we know this isn’t a new issue, but it has certainly been made worse by multiple things. Um, so here the rising costs in labor and with that, um, coming off of a pandemic where construction came to an absolute halt everyone’s business is in a really different place now than it was a few years ago. Uh, we have the rising cost of materials. So when your cost of materials are higher and the cost of your labor is higher, you end up often having to rely on your personal finances. And that creates another burden. And Alan, as our manager of credit operations, what are some of the things that you see when it comes to people having to use their, their personal finances, um, to fund their business,

Speaker 2 (04:13):
It has caused so much added stress to an already stressful industry. Yeah. And part of what you’re up against the reason labor, short labor shortages are even happening is sometimes the good brings about the bad. So now we have infrastructure programs that Congress is so graciously thrown as much money at as possible. Everybody thinks they’re a general contractor now. So you have unlicensed general contractors coming in that repeating for your dollars, and that’s not right, and it’s not fair, but that’s what you’re up against. So that’s driving the cost of all the labor just through the roof. So what you’re going to have to look at is know who know who your enemies are, and that’s one of your enemies. You’ve got competition that you’re going to have to be up against. That’s not licensed, that’s not doing what they’re supposed to do. And rather than meet them at their level, you just have to bring it in, do what you need to do to keep pointing the nose of the boat into the, into the direction of the wind and the waves. And you will get through this. And I’ve noticed with everything that we’re dealing with and the, the material financing that we’re providing. A lot of these people, as Cara said before, are using their personal finances and risking their own household money to try to keep their businesses afloat. And that’s just not fair. And so that, that’s what we’re running into and that’s what we’re trying to solve and help you solve.

Speaker 1 (05:37):
Yeah, that’s absolutely right. And I think, um, you know, as we kind of narrow these down, uh, everything that’s listed above this rising cost of labor and materials to Allen’s point, unlicensed, GCs vying for your jobs, doing these things, um, having to use your, your personal finances, you end up being really spread thin. In which case you are so spread thin that this organiz starts to creep in, and you have this, this moment where you can’t find the help that you need, your materials are too expensive. You have to pay your supplier on day one. You’re not getting paid the day 60, 9100 and, and you’re strapped and you don’t know where to turn, know what to do. Um, so again, these are some of the causes of the increased shortage from which we’ve all experienced in the past. And, um, you know, this whole webinar is about how it impacts your bottom line and how we can help you stop it from impacting your bottom line.

Speaker 1 (06:34):
Um, so moving on, you know, these are the key stress that end up playing a role on your cashflow for your business. Um, if you don’t have the right people working for you, you can’t finish the job on time. If they’re not reliable, if they don’t know your business, they could end up dragging the project out forever, and you’ve already paid for the material and you’re be waiting to get paid for your customer. But if the timeline is way off, you’re gonna end up again, strapped for cash and potentially dipping into your financial funds. Um, Alan, I loved what you said earlier about this fear of technology. I’ll let you take this one. And, and, um, talk through that.

Speaker 2 (07:15):
The fear of technology hits every aspect of your business. Mm-hmm <affirmative>. And because we’re all worried about return of an investment, you always hear everybody use the acronym ROI, but return of an investment. That’s what the number crunchers are worried about. That’s what the banks are worried about, but technology is with us, and there’s not much we can do to, to hold back or stem that tide. So if you’re bringing in technology, utiliz that technology at the job site, utilizing that technology in your front office with your, from perception to account receivable, to accounts payable, using that technology is going to make a bigger impact for you. When you do the things you need to do. If you use some type of automation to get your billing out on time, that way when you’re asking for money and your account receivable, you know, manager or your credit manager makes a phone call, those phone calls are gonna be 10 times more effective because they’re already aware of what you’re talking about.

Speaker 2 (08:08):
You don’t have to do the, Hey. The reason I’m calling is you have this bill due for 120 well, what’s that bill about? I don’t even, I never received that. Automation is not your enemy. Automation is your friend and, and make you have just that much more impact in the way you do business technology at the job site, being able to stay organized and when shipments are coming and when, when you have a specific subcontractor, that’s supposed to be where they’re supposed to be, keeping that organized is going to get it so that you can keep your time, your time crunch under control, where you you’re more organized. You can get with whoever the hiring party is and meet their expectations. It’s also going to be able to help you temper their expectations because with material shortages and labor shortages, sometimes we just can’t help, but trying to make promises, we can’t keep, this is going to give you a realization of what’s true and telling your customer what’s true is probably so you’re always being upfront with them is going to win you loyalty. And that’s, that’s the key. That’s what technology’s all about showing that you’re willing to make the investment

Speaker 1 (09:17):
That’s right. And I, almost everything you just said aligns with so many things here, not being able to finish the job on time, because you didn’t have an automated system that was allowing you to, um, stay on track and communicate with your customer and with your clients and with everyone else that you work with. Right. Um, you can’t take on new jobs if you’re still trying to finish your previous jobs, or if you don’t have the bandwidth because you don’t have the labor, um, unmet expectations, I think is a big one. And Alan, you just touched on this. When you, you, you know, you, you bid on a job, you win the bid. You’re so excited. You get your mature, but then you don’t meet the expectations because of things that are out of your control. Now, there will always be things that are out of your control in every aspect of life, not just in your job, not just the construction industry, but what we want to do are give you tools that are in your control.

Speaker 1 (10:14):
So that, and I have this one are bold bolded and idealized is that all of these things end up creating a poor customer experience. And if you have a poor customer experience, you’ll, you won’t be able to work with that customer again. Or if that’s a really big customer, a really big GC, a really big organization that could hinder you from being able to take on more jobs. I, I word of mouth is such a powerful, powerful tool, um, and, and reviews. And, you know, I, I know for me, even the small things like picking the restaurant, we’re gonna go to, if one has better reviews than the other, that’s where we’re gonna go. And so this unmet customer expectations or, um, frustration from, and the customer can really impact your bottom line when it comes to even future jobs. So I’m a very positive person. And I feel like we’ve talked a lot about some negative things, Alan, so, right,

Speaker 1 (11:12):
Right. And so what I want to, to sum up here is everything that we just talked about has a lot to do with creating stress and tension in your day to day. This is not a new concept. We know that you guys feel it. This is not something that we’re sharing. You know, this novel information. We just want you to understand that we get it. We see it day in and day out, and it is stressful and it is hard. And because of those things, there ends up being a lack of efficiency in your day to day across multiple projects. Um, you know, these things that kind of fly off the handle when you are so spread thin. And because of those things, you are an increased financial risk, AKA your bottom line. So I wanna move away from all of these things that are causing that because you all already know that you’re living it in your day in and day out.

Speaker 1 (12:04):
But what I really wanna focus on for the remainder of this webinar are the things that you do have control over and the things that we can help with, um, or help you find someone that can help you with it. So are there any questions before I move on, I’m gonna check the chat really quickly. Um, I also really love any kind of per part precipitation. Is it gonna rain, any participation? You know, if you have a story that is, is, is, um, relevant it to what we’re dealing with, and you want to share that, please put it in the chat or ask in the Q and a again, myself and Alan are here as a resource to you all to answer any questions or to talk through any situational, um, you know, positions you may be put in. And so I don’t see anything in the chat.

Speaker 1 (12:50):
I’m gonna go ahead and move on. If you are typing, please finish typing. And we, we can go back to that. We’ll also have a Q and a session at the very end. Um, but what are your options? And so, Alan, I’m gonna let you start. Um, if you wanna talk about tightening up that, uh, the, the labor assets that you currently have and what it means to, um, you had a great saying earlier when we were talking about it, shore up your, your business on the front end so that you can have success on the back end. I’d love to hear you talk about that more.

Speaker 2 (13:21):
I appreciate that. I think what we tend to do is we tend to overlook the people we already have. So first you, first thing you need to do is assess what you’ve got in front of you. What, what is your labor force look like? What does it look like in your accounting area? What does it look like out in the field? And just be honest with yourself, you know, we always say the truth will set you free. First, the first person you’ve gotta be truthful with is yourself. And don’t make arbitrary cuts that are only gonna cost. You, cost you a problem. And, and this is one story I will tell you from a company I came from before I got the, that company, they felt that the best thing that they can do is put as much labor out in the field to try to earn as much cash as they possibly could and lay off their accounting department.

Speaker 2 (14:06):
When I got there, they had not billed their customers for 90 days. Obviously that was not a great decision because their cashflow was immediately affected on paper to the bank. They were, they were owed millions of dollars. Actually it was 27 million, but nobody was paying it because they didn’t know what they owed. And you can’t, you know, most people aren’t dumb. If you didn’t get a bill, I ain’t paying it yet. So <laugh>, so once those, once we got there, and once we brought the accounting people back in and they start already sending out a bill, suddenly cash flow was there 27 million back in the hop hopper. Within 90 days,

Speaker 1 (14:42):
You looked like a hero.

Speaker 2 (14:44):
That’s how I did. And it was very little, all it was, was a stamp. So all we had to do is you have to shore up and appreciate what labor you do have be careful understand. Communication is the key to tightening up your LA, what you have existing labor. When people call communication is what keeps your customers from getting nervous. If they call and nobody answers the phone, or it goes to voicemail that makes people uncomfortable. Why people cut their receptionist or whoever their administrative assistant is first is beyond me because you want a live person answering that phone during the day. So somebody feels like they have somebody they can talk to. So be honest with your people, honest about what your thoughts are, keep everybody involved in what decisions you’re gonna be making on which project. Sometimes there’s gonna be projects. You just can’t take spreading yourself way too thin. Mm-hmm <affirmative> you, you’ve gotta, you’ve gotta keep everybody informed. Don’t make promises to customers. You, you know, you can’t possibly keep temper their expectations. And then once you have those expectations set, if, you know, set, if something does go wrong, make sure they’re the first ones to know about it. So just being truthful to yourself about the assets you have is gonna make you much happier.

Speaker 1 (16:01):
That’s right. Absolutely. I mean, in any industry, communication is key. Um, and, and there are also a lot of platforms that help you better communicate with your staff, with your customers, with your clients. And, um, you know, so, so I love, I love that. And I love leaning into and appreciating and supporting who you already got, right? Let let’s hold onto them and keep them and make sure that they feel secure and happy and excited to come to work. Um, also something else that I think is beneficial to look are these mentorships or, you know, finding a mentee, finding a mentor and, and associations, um, U S M C a United States minority contract association is an incredible association with so many, um, assets and, and, and ways, resources to help diff front areas of your construction industry business. And, um, you know, they are an awesome partner of level set and of Procore, and we’ve seen some really incredible things come out of their association.

Speaker 1 (17:05):
So if that’s not something you’ve checked out, definitely give that a listen. Um, all of this rec by the way, this webinar is being recorded and we will send the recording. I’ll also add, um, the ability to get in contact with, um, Reverend Larry Bullock and the rest of the U S M C a team, if that’s something that you’re interested in. Uh, and so that’s a great way to also network networking is huge when you work in an industry that is so, um, reliant onward of mouth. And so having those supports of systems and that ability to reach out to other people is really important, diversifying your workplace. Um, we recently hosted a webinar for, um, women in the week of women in construction, and it was all about really powerful women in construction and how, when they started joining this industry and this business, they have been a force to be reckoned with.

Speaker 1 (17:54):
And there are so many women out there looking for additional jobs and, and amazing GCs that are women. And, um, really just trying to diversify your workplace and looking outside of maybe the typical or the norm that you would think you would need to look for. Um, a project management software is gonna give you a huge leg up when it talk, when we’re talking about the communication amongst your business, um, when we’re talking about tempering, those expectations with your customer, with your employees, people that you work with, um, Procore has an incredible project management solution would love to know of everyone here in the chat who already uses Procore, because I, I have a great story. My son’s little best friend, um, his father works in real estate and, and does a lot with, um, like Highrise, big Highrise buildings, et cetera. And when I was, we went out to dinner recently and I was telling them about my job and what I do, and the types of companies I work with.

Speaker 1 (18:52):
And he said that, well, anytime he talks to an architect or a GC, that every time they’re like, oh, well, it’s in the PROCO oh, just check PROCO. It is such a cool thing to know that it really does speak volumes about, um, how impactful it is and what that communication can look like across all people that are involved in a job, um, financial assistance programs. This is also something to look into. I know mobilization funding is a great, um, option. You can look at as well as over here at level set. Um, both Alan and myself work on our materials financing program. And this is something that gives you, um, a lot more wiggle room when it comes to paying for your materials. So we pay for your materials on day one, we become, you know, that liaison between the, between your supplier, and it really turns you into this cash buyer. So you start to get tons of discounts. And I know Alan, you are so passionate about strengthening vendor relationships. You talk about that for a moment.

Speaker 2 (19:52):
Oh, sure. The, the actual material finance what’s the best part about material finances or financing program is how simplistic it is for it to be able to do so much for you. So true. Yeah, it, this is, I can do this in 30 seconds. Customer brings us an invoice, a contract that they have with their customer. They bring it to us, we score it. Uh, we do just soft pulls on credit. We decide what the lean rights capabilities are on it. And we can get that usually done within hours have, have an approval. And your supplier paid sometimes by that afternoon or the next morning, it frees up your cash. It gives you the ability if you are already have, let’s say you already have a $50,000 line of credit with your supplier. Well now why use that for the things that we can provide for you?

Speaker 2 (20:42):
That’s correct. And now you’ve doubled your credit. I mean, you can do that with one phone call and one submission of, of documents. And we, I think our, you know, I’m probably not supposed to brag about this. Our rejection rate is less than 5%, so we’re, we’re able to get you out there. We’ve had customers, we have Reve mechanical in Las Vegas that was nominated by the Henderson chamber of commerce as the most up and one of the up and coming, uh, contractors for the year 2021. And we have made a difference in a lot of companies lives mesh, uh, which is a, uh, a fabricator that out in Florida that has, they have more jobs than they know what to do with, and we’ve helped them on 25, I believe at this point. So it, it just gives you the opportunity gives you that your hundred 20 day breathing room. Mm-hmm <affirmative> to be able to take that stress out that we talked about. So it’s just another way to deal with that is stress and increase your efficiency.

Speaker 1 (21:37):
It’s true. And I also think we talked a lot earlier about this idea of being really spread thin. Um, but with materials financing, not only does it help cover a financial, but it also helps cover a communication gap between your supplier. Um, and, and you can work with any supplier. It doesn’t have to be a preferred list that we have, you know, if you have a supplier that you love and you wanna strengthen that relationship materials, financing is an awesome way to do that. We work with everyone from mom and pops to home Depot and lows. Um, so it’s a really unique offering in the marketplace that, um, one of my favorite stories is a company that we worked with that started in January of 2020, had a few months in, got really excited about their business and then the world shut and through materials financing over the last year.

Speaker 1 (22:29):
Not only have they been able to increase the size of their business, um, but we just got word recently that they were able to acquire another business because of that free up of cashflow and the number of jobs they were able to take on. Um, so there’s so many great success stories and this idea that our entire jobs are dedicated to, of finding efficiencies and ways to help the construction industry, empowering you to get paid, empowering, to keeping everyone in the construction industry up to date in the loop in communication. Um, it’s a really cool place to be. And then finally connecting with industry partners, whether it be level set or Procore, U S M C a, um, mobilization funding, et cetera, there are so many resources out there, um, that are completely free that you can take advantage of today. Um, we have an awesome credit community.

Speaker 1 (23:20):
You can go on and ask questions, and even someone like all, maybe the one to pop in and answer. Um, we also have a legal community that’s free to you. You can ask legal questions about state specific issues. You have national questions, you may have, um, you know, so this, this webinar is all about helping you guys make sure to stay afloat during this labor shortage and with the unknowns that we have coming up. Um, this is not to sell you anything it’s truly to be a resource and a help. And just to show that you really can, there really are people out there that are willing to help that aren’t in it for anything else. Other than we understand that this industry has a lot of, um, ground to cover and we’re here to help cover. So we’re here almost at time. Um, does anyone have any questions? I’m looking at the chat in Q and a, I don’t see anything. Um, Alan, was there any other, any other tidbits that you wanted to share or things that you wanted to touch on from the credit perspective or materials financing, or do you think we covered it all? How are you feeling?

Speaker 2 (24:23):
I, I think we’ve covered it all, but I, I think once again, a lot of it is about taking a step back and being a little bit introspective and, and get rid of the stress. Stress is never going to help you. It, it’s not, you’re gonna make, it’s gonna make you make decisions quickly without thought it it’s. This is just the opportunity to take a good look at the where you are, understand their are things you can’t possibly compete against when you have unlicensed GCs that are trying to take your employees. All you can do is do value, added things to keep the employees that you have, and then be out there and recruit what you can and just give it the most upfront, truthful, honest, being that honest business, this out in the marketplace that will attract better people. And we want to help you get there. We want to help you with your communication so we can do the hard stuff so you can do what you’re good at.

Speaker 1 (25:18):
That’s right. And that is what it’s all about is, um, alleviating stress and helping you communicate with your team, um, and your clients and giving you the ability to grow your business. So construction is not an industry that’s going away anytime soon should not be a fear of technology. The technology is here to help you. Um, we’re so grateful that all of you joined us today. I had a wonderful time, Alan. It’s always absolutely great it to, to host these with you. Um, you are truly a gift. So here are a couple of resources. Um, for anyone that’s interested, again, a email will go out with this recording. You can share it with anyone on your team or anyone that you think might benefit from these resources. Um, thank you so much again for coming and we’ll see you.