Projects vs. Business: The Truth About Construction Financials

Summary
In this conversation, Ryan Ware and Guest Jessica Krause discuss the critical importance of financial management in the construction industry. They explore the unique challenges faced by construction accountants, including job costing, cash flow management, and the complexities of change orders. The discussion emphasizes the need for effective communication between project teams and accounting, the risks of not tracking financial data, and the broader implications of financial mismanagement on the industry as a whole. Jessica shares strategies for improving financial practices and highlights the importance of having the right people in place to manage financial data effectively.

Takeaways

• Construction accounting requires specialized knowledge due to its complexities.
• Effective communication between project management and accounting is essential.
• Job costing and cash flow management are critical to avoid bankruptcy.
• The cost of not tracking financial data can be detrimental to a business.
• Financial mismanagement can have a ripple effect on the entire construction industry.
• Success in construction relies on the collective success of all parties involved.
• Investing in financial education for staff is vital for better management.
• A growth mindset is essential for contractors to thrive in the industry.

Chapters
00:00 Introduction to Construction Accounting Challenges
03:44 The Unique Complexities of Construction Accounting
06:43 The Importance of Communication in Construction Projects
09:45 The Role of Technology and Systems in Construction Accounting
12:56 Managing Change Orders and Project Budgets
15:47 The Ripple Effect of Poor Financial Management
18:59 Success in Construction: A Collective Effort
21:52 First Steps to Improve Financial Management
24:47 Conclusion and Call to Action

Guest:

Jessica Krause, Founder and Owner of New Lyfe Accounting,  CPA & CCIFP

Jessica’s passion for the construction industry stems from its place in her childhood, growing up in the family sheet metal business. Her career began in public accounting before she eventually became CFO for a Commercial Electrical Contractor based in Kansas City. While in that position, she realized the need for a specialized accounting firm within construction, one that understood the industry’s complexities, processes, and people. From that discovery, Jessica founded her firm, New Lyfe Accounting (NLA), in 2017. Jessica holds a Masters of Science in Accounting from the University of Missouri, Kansas City, and has been a Certified Public Accountant for 15 years. She’s been a member of CFMA since 2013, holds a CCIFP designation, and is an active member of the Specialty Trade Committee of CFMA. 

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Transcript

SPEAKER_00: 0:00

If you don't understand where your financials are, if you aren't good with managing your cash, you'll never have the ability to be able to do that. You're going to constantly be reacting to the industry, to the changes, to what's going on around you, instead of being able to adapt and innovate and be curious.

SPEAKER_02: 0:51

Hey everybody, welcome back to another episode of Activating Curiosity. I am your host, Ryan Ware, and I am looking forward to this conversation that it is really one of the most important conversations I think we can have in the construction industry because it aims about a business, not just a profession. So today I have with me Jessica Krause, who is with New Life Accounting. Hey, Jessica, how are you doing?

SPEAKER_00: 1:16

Hey, Ryan. Good. Good. Glad to be here.

SPEAKER_02: 1:18

Oh, so everyone knows Jessica and I have had an opportunity to work together in the past, so I'm not going to steal the thunder. I want you to tell a little bit about yourself and then we'll kind of dive into activating curiosity.

SPEAKER_00: 1:29

Yeah, I think for having me. I'm excited about your podcast. I'm Jessica Krause, founder and CEO of New Life Accounting. We provide outsourced accounting services specifically to the construction industry. So that is all we do. And yeah, I'm really excited to be here with you and talk more about the industry and the problems that we can solve.

SPEAKER_02: 1:52

All right. All right. Well, thanks for sharing a little bit of information. And I know I forgot the E at the end of Krause. So I apologize for that. That is my bad.

SPEAKER_00: 2:00

Normal. Everyone does. Yeah.

SPEAKER_02: 2:04

All right. So let's talk really about that problem that you and your team and kind of why you got into it, the problem that you're really aiming to solve for the industry.

SPEAKER_00: 2:17

Yeah, so a little more background about how I got into it would be I grew up in the construction industry. My dad is one of seven kids who took over my grandpa's heating and cooling company, expanded into commercial sheet metal. They were a union contractor, so spent a lot of my childhood down there at the shop. Then went into public accounting, had several contractors as clients in public accounting, went on to an electrical contractor, and there We saw even a lot of their subs having issues with their financial house. And so I felt like there was a strong need there. So started New Life Accounting specifically to provide this service to the construction industry. You have contractors that are really great at being a visionary, really great at building relationships and having some business development. They may be even really great at building their teams, both in the field and in the office. But you can be busy winning work and building great projects and still go bankrupt if you're able to manage your cash margins and risk. So as an owner, we don't really want them handling and compiling their financial data. If they're doing that, that's one problem that we see and try to solve, get them doing the most important work. But the other piece is we want to make sure that they have the right people in place that are managing that financial data that specifically have construction accounting expertise so that they can produce reliable and timely financial information so that owner then can make quick strategic business decisions they can manage their cash they can mitigate that risk for the business and then third parties can also rely on that who are also a big player in that industry and for that business we want them to be able to rely on that financial data as they are making decisions as well. So we feel like the industry is really lacking that middle level expertise when it comes specifically to construction accounting.

SPEAKER_02: 4:30

Okay. So you mentioned this really focused on construction accounting, like an expert who understands that uniqueness. And as somebody that's been in construction, I understand it. So what is it about that construction accounting that makes it unique and what is it that tends to be problematic for many of the teams if they don't have that person in place?

SPEAKER_00: 4:56

Yeah, so the You have a bunch of different complexities starting off pretty small or pretty big. The construction industry has to really be able to manage that cash. And so they, especially as you're getting further down the sub tiers, you are putting out a lot of labor and taking on a lot of risk. And if you aren't billing accurately, if you don't know where your job costs are, if you aren't managing that cash, you're having to put up a lot of cash up front. And that can very quickly put you out of business. Just one bad project, one poorly managed project. So that is one instance that we see that's different from other industries and that other accountants that may be really good accountants don't understand the collection and the cash cycle of the construction industry. In our industry, we don't get paid within 20 to 30 days. It's typically 45 plus days 60 days that we are getting paid or longer and being able to manage that we're also dealing with retention on a lot of projects so they are not getting any of their profit sometimes depending on what their profit margins are until the very end of the project so we have to be able to manage that cash throughout the project and we have to be able to close out a project pretty quickly and I understand all the impacts financially that are there job costing all of the costs that go into the projects other industries might have some similarities with that but it can be pretty complex when it comes to payroll and prevailing wage on government contracts union reporting for union for contractors that are a part of a union all the very different things that have to be job costed out and managing those costs correctly and then using that data. I don't know if I went off topic at all in your question.

SPEAKER_02: 7:14

No, it's helpful. I think it's important you just talked about like that job costing, right? So one cash flow, It's one area of tracking because you could be making decisions based off of what you think the cash flow is with inaccurate data. And then you talked about sort of this area of the job costing and how that impacts. So you have overhead in the business, you have overhead things that kind of happen over here on the side within job costing. Humans to rentals to whatever that is that's directed towards that project. So in that uniqueness, is it... And you said some other industries may have this as well, but it seems like there's an interconnectivity that differs in construction between a project team and the accounting team. That those maybe setting the budgets for a project and an estimate from the very first ROM all the way through the budget are actually also the procurement team and the buyout in order to produce something that in a factory or other area may be separate parties kind of in both working together so do you see that a lot of maybe smaller contractors don't because you talked about that right person in the right place is it Is it a uniqueness in how it's almost interconnected to be able to say what the project teams need to see in order to understand that costing to also get the finance team to be able to see and kind of connect? Is that one of the challenges that you see?

SPEAKER_00: 8:58

Yeah, I would agree with that. It's the communication across the entire company, starting from that estimating team. So hopefully they are using the finance team data from previous jobs if it was recorded correctly and tracked correctly to then provide a stronger estimate and then they're handing off then to the project management team that um hopefully is able to take that estimate and turn it more into a budget of costs and then you know that budget then you talked about procurement so purchasing that's involved in the company and anyone that's working in with the subs and getting those sub estimates in and all of that getting into the system and then tracking it accordingly and if everything goes the way it's planned to go, that might not be so complicated to make sure it's tracked correctly, but nothing on a construction project goes the way it's supposed to go. So you're dealing with changes and change orders and changes to the budget and new contracts and all of that has to be updated and tracked as well to make sure that we don't run into a bigger problem.

SPEAKER_02: 10:23

Yeah. Yeah. I think you just kind of made me smile, but this idea of that everything is in this committed cost that nothing ever shifts.

UNKNOWN: 10:33

Yeah.

SPEAKER_02: 10:33

And this, you mentioned two things that I think are of interest. Systems, which could be an area of discussion and kind of understanding. But it sounds like there's systems and process around this that have to be thought through with an open line of communication. Are those what you see as the three fundamentals? Or is there other things that you see? Yeah,

SPEAKER_00: 11:01

pretty much any issue. So So when we're meeting with a prospect and we're talking through their issues, a lot of that can come down to, well, what's your process? And if we're just putting a bandaid on the issue, we can fix the issue. We can clean it up or we can make it look nice. But if we don't go back to what is our process for this data coming through, then we're never going to solve the real problem. So I do think that you have a system and System can kind of mean the same as process unless you mean a physical like accounting system or estimating system. And then you have your process and how it's going to flow. How is the communication going to flow? And if this happens, then this happens kind of situations. And then you actually have your data points.

SPEAKER_02: 11:57

Yeah. No, I think that makes sense. Yes. And I was thinking from a system, I think we see so many times that we think technology is you implement and move on. And I think in this case, it's so intertwined between the parties of the project team all the way through the project in the finance team. Being able to input data, the correct data, getting it changed in a timely manner, as you said, and we can go back to that cost side, where before I think it seemed like, well, that's finance. Finance sits in another part of the building. We don't really get involved in that. We're just managing our projects. But yet the revenue and the cash flow is driven by every single project rolling up into something bigger, right? So what I think you're saying is that the system, yes, can be processed, but that process involves so many different parties that maybe... some people don't think, like smaller contractors may not have, and they may not even have a technology in place, right? Is that the most common way you see? It's like there is no process. There is no system, both technology and process, and there's no other humans that really do it, and it's sort of separated. Is that one of the biggest challenges in getting it adopted? Yeah, I

SPEAKER_00: 13:28

talked to a prospect the other day that they're using Quip which is still a very common platform to use. We see it still a lot with the smaller contractors. Their PMs are not using anything but Excel to manage their projects. So when we're talking about, you know, having a system for them, there is nothing but Excel, which a lot of people still use. But there's no connection between the Excel files that they're using to manage those projects and the accounting system, let's say, QuickBooks in this example. And so there is a disconnect there. And how are the PMs getting their information? And it is very separated. It is, well, the PMs are just running their jobs and accounting is just entering the data that they have. But there does have to be a connection there to make sure that the PMs agree with the data that's been entered by accounting, because accounting is using that data, like you said, I hadn't mentioned this yet, but to recognize revenue, to actually calculate what that revenue number is on the income statement. So there has to be communication and collaboration between the project teams and accounting. I'll add one more thing real quick. When I worked for the electrical contractor, I used to tell my accounting team internally, your customer are the PMs. Your customer is the project team. And to treat it that way. Because we have to work together and we have to get them what they need to do their job well.

SPEAKER_02: 15:18

Yeah, that's a great point because I think we can think in the way business is kind of structured that the accounting team rolls up to the CFO, right? While project management team is going to roll up to the operations, which tend to, if not align, they're running their departments. They're focused on their piece, right? What you're talking about is a partnership, the critical nature of the partnership between that project accounting team, which may roll up, is that the project managers are doing what they're good at, right? Managing projects, going through the buyout, making sure things are taken care of from the paperwork to keep us out of lawsuits and all of those other dangers that come up in construction risks. But by partnering with them as a client rather than, hey, we're just exchange, we're just, our jobs are simply to exchange information. So I, I appreciate you saying that. And I think, you know, from project manager standpoint, like they want to do the right thing, but I think it's some companies it's like, I don't, you, you like you brought up change. So let's maybe let's explore that change. Cause it seems to be a big, a big thing and a big challenge. And you can correct me if I'm wrong, but a change event happens in a project and, and it's, it could extend the schedule so it can impact both variable costs and committed costs. Um, Or it could not impact committed costs, but change the budget for you as one of the sub or someone downstream that you, you got to pay them more, but you're not getting paid more due to something, whatever it is. So how does, how does that, or what should be happening beyond, um, maybe the systems and some of the processes and, and, and training the teams to understand for those things like forecast to complete and getting the estimate of completion more into a constant rhythm of updating and changing, which could become part of the problem for cashflow in the end as you started, right? Is that something that you see routinely being one of like a big challenge to be accepted and kind of adopted by teams?

SPEAKER_00: 17:45

Yeah, and I did a training for ABC recently in job class And one of the guys asked me, okay, this is a lot of work to keep this updated. And for someone at my size, and I don't remember exactly what his business size was, does it make sense to do all this? And so I think there is... There's a risk tolerance that has to be assessed and a risk reward conversation that has to be had with how much you were actually tracking. In a perfect world, best case scenario, you get a change order and you are putting a budget to that change order. You're sending it to accounting so they can update it and you're including that in your estimated cost to complete and your forecast that estimated cost to complete regularly, at least monthly, would be ideal. And if you're a larger, more sophisticated contractor, maybe that has a bigger budget for their software, they have a software that has a forecast piece in their WIP schedule, in their project costing, right? Like they have this option to go into their system and forecasting their system. A lot of contractors don't have access to that and they have to do it through Excel or other means of communication. But we use those numbers, again, to identify what revenue is. And we use those numbers to identify where we are at the project and we compare those to actual costs and are we on track. And we use them to identify red flags and when we need to start asking deeper questions or mitigate some risk on losses. So the more information that you can have, the more data that you can have, the better. But if that data is not accurate, it doesn't do you any good. So I said a lot in there, but again, best case you're tracking it and you have a system for doing so. But if it costs you too much to track it or maybe your risks aren't there on a certain project, then you have to identify that for each individual business.

SPEAKER_02: 20:23

So some contractors are in a risk versus risk. What's the risk of not tracking it versus adding what may seem like additional work? on top. But what's, you know, to me, I get that. And I think any change in new implementation always seems like, oh, it's, it's, it's new and it's being added on to everything I have to do from a daily basis. But like, what are they missing by not doing? Is it cause issue? I mean, even if you're small, a big miss by not tracking, it could mean the difference between being in business and not, or being able to really reinvest into the business or you do invest and then find out like, hey, I don't have that cash. So to me, I think about it like even if you can't afford the software, like what can be done you know, even, even in the tracking of those budgets, you know, in a way that it's, it's seen as I am defending the risk. The risk is we don't exist if we don't do these things in that I want to get better for the next job. If we did have an error in estimate or a buyout or whatever the issue is that you can't see to correct. So, which means not only you're not investing, you may not be scaling. And some people don't want to grow to a certain extent. extent. But like, we're talking about a group, you know, most of our contractors, right? Like they're small contractors, they're, they're small GCs. They're, they're not, I mean, we have a lot of large GCs in this country, but you know, home building and all of that is done by small contractors and we need them to be, you know, making money. We need them to be able to invest. We need them to be able to solve that, you know, getting the housing prices fixed and that short So we need them to be successful. So that's a lot that I just said, but like what, or what we're talking about is it, is there a little bit of mindset in there too? Like maybe overvaluing the pain of, of doing the work versus the reward of, Hey, putting this little extra on actually saves you time and on these things or something. How do you see that? Do you see it? Sometimes it is just, maybe how we're thinking about it and reframing it?

SPEAKER_00: 22:56

Yeah, for sure. And change, like we talked about, is hard for people. But also, if you don't have the people in place, kind of going back to the problem that we're trying to solve, if you don't have the right people that you can rely on to track these things or understand what the process should be or putting your financial data together Mm-hmm. bracket like him as the owner to make sure that this happens on every single job and is updated yeah what it like you know are you finding yourself like are you finding yourself taking losses on projects are you finding yourself struggling in this area it's just you know then yeah that's where you need to make some changes and need to be looking there maybe that's not Yeah, I think. I mean, it's a valid point

SPEAKER_02: 24:44

because I think it is. I mean, it's hard enough to be in construction. And having the accounting be so, in some cases, fundamentally different to where the project team's involvement in being able to update the data and getting it back and forth into systems technology is one thing, but when you don't have that. Yeah. So, you know, there's empathy to this. of like how to solve you know to solve it for the smallest of contractors in a way that doesn't overburden their bottom line from an expense that they have to take into it but it's already burdened by not seeing the data in the first place so I'm wondering you know is it you know, what's the cost of not solving it not only for the business, but like potentially for the whole industry if we have a whole group of small contractors who just you know, aren't there yet? Like, is there potential danger? And I, this is ripple effect of being able to build enough housing because of how difficult it is to be in business or get the infrastructure done and those types of things, right? Like what is the cost in the industry itself by not solving this problem, helping solve this problem?

SPEAKER_00: 26:20

Yeah, so if you have a project that has, you know, the owner of the project, a GC, and then subs and maybe second tier subs, third tier subs. One of those subs isn't able to manage their cash, isn't able to job cost correctly, right? gets out ahead, isn't able to make payroll, has to delay. Okay, you just heard every sub that is below you, every sub that is above you, the GC, the owner. If the whole project stalls or there are delays to the project because one person can't stay on track and can't pay their employees or they can't make payments to suppliers so that supplier is not willing to release any material that needs to be installed that's going to cause that entire project to stall which is an industry problem if a contractor isn't able to complete their project and a surety has to come in and finish up that project now you have sureties and banks they're tightening requirements it's making it harder for healthy contractors to get access to bonding and capital then their rates have to increase if you have have a contractor who doesn't understand where they need to be in a bid and they start under bidding and eroding margins and that then just sets off this spiral of race to the bottom mentality that hurts everyone so this isn't necessarily just about like one company having their books in order and understanding their numbers but an entire industry that is affected when contractors come into the game And they aren't able to manage their cash and understand their job costs and know how to estimate and mitigate risk. It hurts the entire industry.

SPEAKER_02: 28:26

That's such a great way to frame it, because I think like the way you just put it, it's like the sense of clarity around a lot of things and challenges we see, you know, as humans in our life is that we may think that something only is impacting us. Right. And by not... not addressing it internally for yourself or your team or your business actually is end up costing a lot more people, you know, within this industry and it's impacting reputations around the world, but it's also potentially driving into other industries that become, could become problematic. So I think the way you framed it is it's insightful to think that sometimes we can look at a problem that has cost to it. on both sides. So it's not costless to not address. There is a cost to it internally for you, your team, your business, but you're running that, which is why I think contractors are so hard on sub trades in some instances, which is really the heart of how we build in this country on the backs of subcontractors of qualifications, right? And things that you see on big projects. So Exactly. Well, I mean, I think that's really helpful, hopefully for audiences to hear. So I think you mentioned it, like what, we kind of got into the cost of not doing it, right? And we got into this area of what does it mean to the industry, right? If it's solved or not solved. So like in your view, right? What does success look like? Not only for that individual, but for like the industry So, yeah.

SPEAKER_00: 30:45

Again, yeah, we're all related. So the success of one is the success of many and the success of one relies on the success of many. So when this issue is addressed and we have people who are able to be put in positions that understand specifically construction accounting and are able to level up those businesses and their competition, which competition is good when you have good competition across the board. You're going to give the surety partners, the banks, they're going to have better confidence in their credit risk. Contractors are going to make smarter bids. They're going to build with stronger margins. Projects get delivered without delays and unnecessary financial disruptions. You have people getting paid on time. The workforce has greater stability, clients gain a greater trust in the builder that they are using to hire and the entire industry, their foundation of the industry just gets strengthened.

SPEAKER_02: 31:58

Yeah. I think the way you just said it is the whole foundation gets strengthened when, and you've said the word risk a number of times, like it's a very, you know, everyone focuses on risks. So My perception of some of this, like you just said with that success, and this is my personal, is that because we haven't solved some of the financials of being able to operate our businesses as effectively as we can, the industry has struggled with adoption of certain things that might solve other problems. And this gets big, but we know we keep talking about the labor side.

SPEAKER_01: 32:44

and

SPEAKER_02: 32:44

the challenges of the industry. So sometimes we can look at a problem like our own financials and being able to address that if we're not solving it in every sub to small GC all the way up to the larger ones. you know aren't healthy then the innovation can't be inputted or new things tried in order to solve other problems potentially like you're saying is to invest in things which might mean taking on a new methodology of construction or something in that construct you know industrialized construction area prefab where you've got a manufacturer over here or someone else and we could talk all day about modular and how finance teams look at that as far as payment flow through a project everyone gets hesitant because the industry as you I think said it so well a little bit ago is not focusing on their own business and enhancing it it's everyone's paying the price for it potentially not only in innovation not only in their own business but overpaying for things that may not be necessary to overpay for due to what others seem as a risk or not opening up the door to new innovation and adoption of other innovation. So I think the way you just said it about success is like it's a success of all. That you know, for kicking the can, waiting for that optimum time to try it, it could be too late for an individual company.

SPEAKER_00: 34:24

And if you don't know where your cash is or you're very reactive, you don't have a proactive mindset on your financials and your cash and what you want to do with that, you're never going to have the funds that are necessary to try new things. Or, you know if you if you say okay if you're if you are proactive then you can say in 2026 I'm going to try this this and this and we're going to set aside the funds to do so and we're going to plan for that if you don't understand where your financials are if you aren't good with managing your cash you'll never have the ability to be able to do that you're going to constantly be reacting to the industry to the changes to what's going on around you instead of being able to adapt and innovate and be curious and do some of those things proactively

SPEAKER_02: 35:34

That's such a great point. It's gotten me thinking about what we talked about earlier, which is project teams, not, you know, whether it's an individual or project team, not wanting to take on those other things, but what you just described is like a purpose of a company to be innovative. And we know we're struggling with, you know, attracting new, um, you know, younger employees into this industry. And by not doing the financial is you can't offer that these are the innovations and things we're going to try, which is exactly what the next generation of leaders is asking for.

SPEAKER_00: 36:11

Yeah, exactly. To

SPEAKER_02: 36:12

try new things. So we're talking, like, it's a circle of like, hey, we have to take on the extra work. And to be honest, like... is it, is it more about like changing this concept of what the industry is actually supposed to be doing, which is, you know, budget management is actually, it's just part of a more holistic view of how we should be operating anyway. It's not added work. It's just things that we've never, we've never done before. And that's why we've hesitated to scale or hesitate, you know, not hesitate to scale, but have more difficulty in scaling or addressing problems in the industry. What, I mean, how do you, like from that success standpoint to do that circle, like if you were talking to a client again who was saying, hey, I don't know if I could take these things on, like how, and they kept telling you about the purpose and what they wanted to drive, like what questions might you ask now as you've thought through some of this deeper to drive that curiosity for them?

SPEAKER_00: 37:17

Well, I think, you know, during our initial, strategy session. It's like a free intro call that we have with our prospects about 30 to 45 minutes. We're asking a ton of questions. I'm not talking at all about new life accounting or what we do or anything that comes later. During that first call, I'm just diving into what all is going on in their business and what they are wanting out of their business. What are their goals and their ambitions and what are they trying to do in this industry so that then I can kind of pick out some problems that I see or some areas that I think that we could provide value and continue to dig and ask more questions and be curious with that so that It all is driven around how they answer that and what questions I ask. But I do like to know what is their purpose? Why did they get started? What is their story? And what are they hoping to do in the future? And a lot of times when we're looking for clients to work with, we're looking for people that have a growth mindset. And it doesn't necessarily mean that they have to grow in revenue year after year, but they're wanting to be a stronger, better company for the industry as a whole. Yeah, I wanted to add one more thing that I thought of when you were talking. You know, we really have you kind of put it around the industry as a whole again, not just the individual contractors. We hear a lot of times this rift between GCs and subs, right? And how they're sometimes paid or handle some of the payments and things like that. And It's frustrating to hear some of that at times because, again, we're all in the same industry. And if our subs can't survive this project or the next one or the next one, we can't survive the project. We need them. We need them to be strong. We need them to be healthy contractors. And there are some GCs that do a really good job at education and strengthening their subs and working with them on that. But the same goes for the subs. You need the GCs to bring you the work, to hire you on. And I think having that mindset of the industry as a whole and bringing everyone up is key for the entire construction industry.

SPEAKER_02: 40:09

Yeah. Yeah. No, I'm so glad you added that because I think it is, right? I think you're spot on with just how we build in this country. And, and yes, it's, it's a lot to ask for a lot of GCs who don't have, you know, those extra funds either to invest in the sub trades, but there are some that do a really good job and have programs and that are out there from East coast to West coast. And like you said, it is about lifting each other up and we do hear those, those riffs. And I think a lot of times it does end up being Being this, well, we tried this once and it didn't work and there's too much risk, so I'm not going to do this again mentality that ends up making a lot of really good subs slow in growth to being able to get their own investments or these new innovations, like you're saying, that are coming that are going to be needed to address what the new labor force is going to look like, not what it used to look like. The industry can't look like what it used to. So I appreciate you sharing that because I think it is, again, it's not one individual person's job. job to kind of solve it but as a whole if we all looked at it differently as you were describing and understanding the impact of our own business on other businesses and taking ownership in that and actually pride in the fact that there are ways to address this you know the way you're you're addressing it and working with subs to not add additional costs that they you know as they're getting off and running or smaller general contractors not bringing on this huge expenses in order to operate their businesses. So there are people who are, you know, doing good things for the industry. And I don't want to say that, that it's not, but this seems like this is a uniform challenge is, you know, you see it all the time, profitable businesses in construction and being able to last for longer durations than, than a few years. Right. So, What do you think the first thing that someone could be doing if they're listening and they're like, you know what, I have this problem, like I can't see any of the data. What are some first steps and what recommendations that you might make as a CFO, fractional CFO on a team that's, you know, you spent your whole career in construction, as you said, and have a passion for it. So that's not always, you know, out there within the accounting and CFO world. Like, what do you suggest?

SPEAKER_00: 42:56

Yeah. Yeah, I would assess your internal staff. Are they really knowledgeable in construction? Are they giving you what you need from them? Are there any other additional reporting or tools that you need to manage the business better and make sure that they have proper education or you can get that through CFMA? We have a ton of resources on our own website. We We have classes that we offer as well. instruction, that would be the most important pieces that you could start with.

SPEAKER_02: 44:02

All right. Well, great. I think, um, so everyone knows we'll, we'll put your information in. I know that you would definitely have that initial call just so they can kind of understand like where they're at in current state. Um, and I might suggest, um, you know, thinking as teams, you're thinking about this, like what if you asked yourself different questions of, is this really additional work or is this something that we should be partaking in because it's so important not only to, um, our business, but to the industry as a whole, as Jessica has explained, and really thinking, like, how do I become a part of it? How do I help solve this challenge so that we can solve other larger challenges in the industry? So, Jessica, I love the conversation. You and I have known each other for a while. You do tremendous work, you and your team, your passion for this industry. I just want to thank you for participating in this conversation. And I'm really Looking forward to how those listeners really kind of learn from it and start to engage more as a team into the process of project-based accounting.

SPEAKER_00: 45:12

Yeah, it's been such an honor. Thanks, Ryan.

SPEAKER_02: 45:15

Yeah, appreciate it. So that is the episode with Jessica Krause. She is a CPA and accountant who focuses on fractional CFO with new life accounting. And it is such a critical conversation, which is why I really wanted to have it and get it in front of a lot of you, the audience members and the listeners, because focusing on our businesses tends to be put onto the back burner. Whether it's within construction or within architecture, it's just such a big item that we can really zero in on, especially with smaller contractors, smaller firms, that by focusing on your business, you're able to reinvest back into your business, invest into your teams, taking on different views of how you approach projects, which get limited because of how we look at our businesses. And we talked about it Jessica made some great points it can be a lot we get that that's the whole point of the podcast is to begin to open our minds and to rethink some of the things that we see as challenges we reframe them into opportunities by thinking about what we're missing by not investigating it further so that's the end of the show and until next time I hope everyone stays well I hope you continue to thrive Thank you. Thank you. The Activating Curiosity podcast is brought to you by Connective Consulting Group and Connective Coaching, part of the Curiosity Building Experiences. If you enjoyed today's episode, don't forget to subscribe so you'll never miss a conversation. Share the podcast with your network and help us bring more curiosity into the construction industry. Interested in becoming a guest or a sponsor? Visit us at activatingcuriosity.buzzsprout.com for more details. Until next time, keep leading with curiosity. Thank you.