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#85: What is Financial Modeling?

#85: What is Financial Modeling?

Do you use a financial model? What is it and how do you build a financial model? Is it serving you well in your business operations? Financial modeling is the task of building an abstract representation of your businesses’ real-world financial situation, and it is something that is crucial to the overall health of your business. Additionally, using KPIs as a measure of value will demonstrate how effective your company is in achieving those key business objectives. We want to share with you how to create this “roadmap” of sorts, so you can make informed decisions about your business, and know where your business is headed, in order to reach your business goals. 


What we cover in this episode: 

  • 02:38 – Why do you need a financial model?
  • 05:06 – Where do you get the information you need?
  • 09:50 – What are the components of a financial model?
  • 22:23 – When should you consider updating your financial model?

Why do you need a financial model?

Why is a financial model important and why does this topic matter for business owners? Financial modeling allows you to look at the financial viability of your business and improve the growth rate. A common belief is that it is similar to a budget and, while it helps with budgeting, it is quite different and plays a crucial role in business planning. 

Your financial model helps you confirm that the business model is viable and will work long-term. This tool allows you to take a step back to look at the basics such as “my company does X, and we pay our employees X, etc…”  Without this tool and the awareness it provides, business owners may be putting their heart and soul into running their business only to discover that it just isn’t financially sustainable. A financial model allows you to analyze all the core parts of the business and, according to Katina, “drives setting up your future goals, setting up your budgets and plans for the year.” These are the things that go into your strategic planning and ultimately what contributes to revenue growth.  

Where do you get the information you need?

This is a common question for many business owners, and for most businesses that have been running for a while, that answer comes from the historical information within your business. Industry information can be another great place to look to for guidance, and can be used whether or not a business has any historical data available. 

In order to build the model, you have to start with the basics. How many people do you think you need? How much should you think you need to pay them in the current market? There are many potential inputs but generally you’re going to design it like a profit and loss statement, using revenues, expenses, and then you’re going to have some inputs coming in from other areas. 

For service-based businesses, which are very team driven, you don’t have any product necessarily going into the model. So the model is built around what our team members can produce. Katina said “When you have those team members, you use those KPIs and the kinds of things we’ve been talking about, such as, what should you be doing per team member? And then we also obviously have their related costs, like how much in payroll and benefits, and whatever else we need to add in, such as our tax burden, et cetera.” Katina continued, “So that all kind of plugs in then to our profit and loss model for the business.” 

There are many different tools you can use to put this all together, but you can start by just writing it all down on paper and thinking through all the components. Perhaps you can export your current QuickBooks P&L (profit and loss) into excel as a starting point. You would then start tackling each item, in a similar way that you would look at each item in your budget, and focus on the specific items for the input side, and look at what your business is going to be doing. If your business goal for instance is to reach $2 million in revenue at a certain point, say 1 year, or maybe 3 years down the road, you have to figure out different inputs to get there, and discuss revenues, staffing, costs of goods sold, overhead, marketing, et cetera.  

We do recommend that business owners engage with someone who is familiar with the financial modeling process to help work through it since there are many components to take into consideration. You will want to avoid making assumptions as that can render your model unreliable. The assistance of an advisor will also ease the tasks of tying in the related KPIs, industry data, and historical data.

What are the components of a financial model?

The financial model starts with the revenue numbers and analyzing what you need to put into place to achieve your revenue goal. How many team members do you need, and how do you figure that out? That goes back to the related KPIs for staffing, and analyzing the numbers and information from historical and/or industry data. Your information should tell you that each person that you employ can make X amount of revenue for you, on average. You can then narrow it down further and add additional information about geographics and areas where variables are different, such as cost of living differences and employee expenses, and account for the higher rates of certain employees. Additionally, you’ll want to consider the types of employees you have (professionals versus administrative, for example) and build those layers into your model. 

Knowing your labor burden and plugging that into your model is the essential first step. From there, it’s time to take a look at the costs of goods sold or costs of sales, and related KPIs for your type of business. Typically, these numbers come from your historical percentages, and what we mean by that is the percentage that it normally costs you out of your revenue to pay for that line item, whatever that percentage may be. If it typically costs you 5% of your revenue to pay for that line item, then that’s the figure you tie into your model. And it can of course be changed due to many different variables. For instance, you may have gotten a market price increase, or have established a deal that you’ve negotiated with vendors to bring costs down. You’ll want to look at each line item and make sure those percentages are in line with expectations.

The other components that need to be taken into consideration next are the items typically posted on the cost of goods side, and things that are considered flat rate items. The more business you do, the higher those costs may be. Items such as administrative costs, office rent, office supplies, equipment, and insurance, etc. Maybe you’ve been operating on a shoestring budget in the past, so you want to put a little more money into software or technology to increase efficiencies. All of these items should be looked at in detail and considered when looking at the cost of goods side of financial modeling.

Modeling for the sales and marketing of your business is also a big piece of the puzzle for your financial model, and you should have a good understanding of the sales KPIs such as knowing how many leads you need to get to convert to a final sale, and what is your average revenue per sale. The traditional seven “P”s related to marketing are also key to financial modeling for your business, whether a service or product based, and can be integrated into your strategy. Product, price, place, people, promotion, processes and physical evidence all interplay with the approach you take with the marketing side of your financial model. You’ll want to make sure everything related to marketing is integrated into your overall plan.

When should you consider updating your financial model?

There are a few things to consider when you circle back to your ultimate revenue goal in your model. You have to consider if that number or goal is actually realistic and something you can reasonably reach and sustain. Your financial model is going to change as time goes on, but it’s really the basic structure of your overall business, and it drives your budget. You have to ask yourself if the model is something that will allow you to reach your goals and be sustainable.  Do you need to make adjustments to create opportunities for additional growth and profitability? As a business owner, you should be thinking about all the pieces it takes to get you to your revenue goals, and using a well-crafted financial model can be key to your success.

When you are following your financial model, and getting the profit percentage you want from your model, you can confirm you are sustainable. But as most business owners know, things don’t always go as planned, and things that you may have assumed when establishing your model could change in the future. Things happen for businesses at different paces, and revenue can take time to build depending on so many variables. Building a financial model means to reflect what you are planning to do for multiple years, and can include your plans to take you to the next level. Once you’ve built a model and you’ve confirmed the accuracy, you can use that for budgeting and strategic planning.

The first time you create a model, you’re doing it based on your best knowledge. There will be things you didn’t consider and could be components that end up different in reality than you thought. The worst thing you can do is stick your head in the sand with your financial model. You want to make sure it still continues to work in relation to what’s actually going on in your business. The goal is that, after a few years or so of using the financial model, you’re going to nail down many of those things that may need to be changed in the model. The bottom line is that you want to be using your model actively and then adjust it, as needed, as major changes occur or after you’ve made a major change in your business. 

Set yourself up for success! Whether you’ve been in business for a long time or not, using a financial model can help you run a profitable business and clarify for you what you really need to do in order to reach your goals and monitor your financial performance. Again, we encourage business owners to speak to an advisor with experience in financial modeling because they can assist with the oversight and even change the perspective for owners to really take a step back and see their businesses from the top down. 

Please reach out to us if you are interested in talking to someone about financial modeling for your business, we would be happy to discuss that with you and assist. Don’t forget that we offer a free discovery call that you can book online or reach out to us at 844.475.7272.


Do you know where your business is going? The creation and use of a financial model for your business can be an invaluable tool for the success of your business. We establish the importance of a financial model, what exactly that is and what it can do for your business. We then tackled where you find the information needed to put this too together, as well as the components of your financial model. Lastly, we established the need for changes and updates and when those need to occur with your financial model. This is a crucial tool to reference before establishing strategies, budgets and goals. This tool helps you gain visibility around the viability of your business so you can make necessary changes and avoid wasted time on a model that isn’t sustainable.


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#84: Budgeting – Putting Your Business Plan into Figures

#84: Budgeting – Putting Your Business Plan into Figures

As we head into the last few months of the year, we thought it would be helpful to discuss budgeting and putting your business plan into figures. You may have completed some planning for the new year during this last quarter and we want to talk about converting your business plan into a meaningful budget. Our co-host to discuss this topic is one of our partners and our firm’s budget expert and cash flow queen, Jaime Staley.

What we cover in this episode: 

  • 01:40 – Strategic planning refresher
  • 03:26 – Budgeting mindset offers awareness
  • 10:18 – Budget = business plan expressed in numbers
  • 17:19 – What can you do with a budget?

Strategic planning refresher

As we head into this last quarter and we are planning our strategy and execution for next year, many folks don’t know or don’t believe in the true impact of budgeting. Most members of your company should understand what the budget is and may understand your goals, but it’s really important to establish a budget on paper and look at that from an annual and monthly perspective, as well as keep track of it throughout the year. So putting pen to paper, creating an actual budget and monitoring it over the course of the year is what we’ll be chatting about more today. 

Budgeting is a very crucial topic when it comes to your overall business plan and strategy, and we covered this topic in Episode #04 of our 10-part Strategic Planning Series. So if you’re interested, you can go back and revisit that episode to learn more about strategic planning and how that relates to your budget. We actually offer a freebie in that episode as well, which is a budgeting template that you can download for free. Today we’re going to be talking about some refreshers, and again, bringing it back to the business plan and what you should be looking at when it comes to annual planning, as well as some good reminders for your budget.

Budgeting mindset offers awareness

Jaime stated, “Budgeting is really important. And I think, a lot of businesses might have the mindset of “I’m too small to create a budget” or “I’m the only one who really needs to know it.” But if you have even a small team, it’s important to get everybody on the same page. It makes them feel included and understand why you may be making decisions regarding spending and expenses. So it’s really important, especially for your leadership team, to be part of discussions and understand why you’re asking them to do certain things or why they can’t spend money in certain areas. Providing a budget on paper allows for the transparency necessary to communicate what is happening company-wide in relation to the goals, strategy and tactics required. Once a budget is released, everybody can begin moving in the same direction for the same goals.

Budgeting does not have to take hours and hours, or months and months, regardless of the size of your company. Having open communications with your managers, and reviewing your goals and your performance over the past year is invaluable. A good place to start is by setting your goals and deciding where you want to be in the upcoming year, referencing your past performance. 

Jamie provides her own anecdote from personal experience about budgeting, “Right out of college, and I graduated with my CPA, right? All this financial background and I’d moved out on my own, and I didn’t really have a lot of history of living life. So when I graduated, I would run to the ATM every time I ran out of cash, get a hundred bucks and keep living my life. I needed the money for the train… lunch, to go shopping, and do all those things. Well, when it came to the end of that next year, I was looking at my savings account, and I was like, wow, my savings account hasn’t really gone up. That’s weird… I have a job. I should be making money and then… when I started to look a little closer, I was like, oh wow. I spend almost all of the money I make every month.” 

A budget gives you the awareness to understand if you are on target or over/underspending. Budgeting for your business is like setting those smaller personal budgets. Jaime stated, “All I did was start to say, hey, I’m going to take a hundred dollars. And I set that as my budget, and some weeks that was fine. That was good for some weeks, but other weeks it was not. By that Wednesday, I thought, oh shoot, I’ve already spent that money. So I learned to spend it differently.” Even if you don’t hit your budget every week or month, it’s giving you a reference point to understand where you are, where you should be, and how close you are to achieving your goals. Having the mindset and awareness of your budget will help you make better business decisions.

Budget = business plan expressed in numbers

As a business owner, what should you discuss when sitting down with your controller or CFO when it comes to budgeting? You may have a fantastic, solid business plan in place, but your CFO should be helping you tie in a budget that helps align your tactical plan for execution to your overall strategy. 

Start by thinking about your revenue targets for next year. Ask yourself, is that a reasonable number? Are you realistically going to achieve that, given your current resources? Your estimated sales, minus your estimated expenses will equal your profit (or loss), and you have to start there. Do you have plans in place that are in line with the proposed budget and goals? You then have to assess if those plans are realistic. If you don’t have any real plans in place to reach those goals, such as bringing in more clients, selling more, or increasing prices, then does the plan really line up with the goals? And the reverse should be discussed as well by asking probing questions such as, “Are you sure the number is high enough?” Your CFO should be challenging you by asking questions about your goals, current operations and assessing if you could be bringing in more revenue by doing certain things like increasing prices, or cutting expenses, etc.

Looking at the historical picture and having these pointed discussions can lead to the development of an estimated budget, which can then be fine-tuned and used to match your business plans. Fine tuning the budget can be done by asking additional questions such as “Are there areas that need to be increased or decreased for different expense buckets?” or “Do we need to spend more or less for marketing, or labor, or any other area in order to reach our goals?” Being able to make the adjustments and pivot to match the budget to the plan is the goal for these discussions. Being flexible and knowing what adjustments may need to be made to reach your goals that you’ve laid out in your business plan is invaluable to your success, and your budget then becomes your business plan translated into numbers. 

What can you do with a budget?

Most of your budgeting is done in the fall, or 4th quarter, for the upcoming year, and it’s important to remember that you should look back a full year to do some predictions and map what could happen for your next 12 months. Budgeting for a whole year in advance can be difficult to get exactly right, because you are making your best estimations for 12 months out, and things change so frequently. 

Once you create the budget, do your best to stick with it rather than changing it from month to month. “I typically ride with that budget for at least the first quarter”, stated Jaime. There are usually quite a few changes in the first few months of the year, and you don’t want to be reassessing constantly, so perhaps you reassess by mid year and see if you’re still on plan. Jaime suggests this tactic because it then allows you to “stop and say, okay, this is what actually happened for this set of months. We know we’re not going to hit this number, or we know we’re going to go well above this number. So we need to adjust and say hey, we’re going to take the next six months and adjust it and create a projection for what we think is going to happen.” What it’s kind of like is having a revised budget, and as we usually call it in the financial world, a projection or reprojection. In certain accounting systems you can also set up a separate projection, and do comparisons to actuals that way to get a good picture of what is happening and is invaluable to helping owners make good business decisions. The ability to be flexible and make changes has never been more important considering the past year during the pandemic. Having a strategy and a budget down on paper has given many of our clients a leg up from someone who doesn’t have anything or anywhere to start from when determining how far off they were from their original business plan in these situations. 

Jaime stated, “So I think sometimes people like to dream big, right? We’ve got many people that are very entrepreneurial. And they say “we’re going to triple our revenue next year.” In these cases, it’s important to look at reality and historical evidence. This isn’t to say that you can’t experience large revenue growth, but you will need an extraordinary plan and ways to really leverage your resources. You don’t want to create disappointments across your team and the company for not meeting a big goal, and have people working tirelessly for something that is unachievable. You want to be reasonable with your goals and be able to celebrate the wins when you do meet that goal you’ve been striving towards. You should always strive for that good balance in your budget and goals to get those wins and create that enthusiasm in your company, and that good balance should include looking at the resources that you’re utilizing to reach your goals, not just increases in the revenue projections. 

As the business owner, you might have all of these ideas, but having those concrete numbers in a budget for your management team, will help them manage everyone and communicate effectively with their teams. Establishing those benchmarks will help everyone reach that similar goal. You’re just communicating further, not only with a business plan, but with a budget, that these are the numbers and your monthly goals, so they know what management is going to be checking on to reach those goals, and this is what we’re measuring. Your budget helps to communicate all of that information full circle, and it gives the whole organization another tool to be able to help the business achieve the goals that everybody is striving toward. 


The importance of having a budget cannot be understated. Knowing where you started, where you want to go, and the awareness of whether you’re meeting your goals from month to month are the cornerstones of your business plan. Your budget brings all the numbers together, so everyone has a clear vision of the goals they are striving for to make the business a success. Your budget is a tool you should be using every month to see where you are trending, and it’s necessary for you as an owner to make smart business decisions. Knowledge is power, and a budget brings you that knowledge. If you are going to have any struggles with your business, your budget can also help you forecast them ahead of time. You’ll want to know as soon as you can so you can make corrections and steer the whole team in the right direction, and collectively reach your goals.

Don’t forget to grab your free budgeting template when you check out episode #04: Strategic Planning – Budgeting. The whole series is a great resource to go back and listen to in order to help with your end of the year and strategic planning. If you are looking for a controller or CFO and you’d like to have some budgeting conversations and figure out what working with a CFO would look like, please feel free to reach out to us. We offer a FREE discovery call and you can sign up online, or reach out to us at 844.475.7272.


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#83: The Construction Series: Industry Metrics

#83: The Construction Series: Industry Metrics

We are wrapping up our construction series today with our third episode in this series, and focusing today on construction industry metrics and KPIs (Key Performance Indicators). Katina Peters, vCFO and Partner at PJS & Co CPAs, has gained extensive experience over 17 years in working with owners in the construction industry and understands the unique challenges for construction business owners. We discuss why they’re important, where to find them and how you can leverage them in your own business. 

What we cover in this episode: 

  • 02:42 – Why do industry metrics matter?
  • 08:16 – How and where do I get the information?
  • 11:36 – Research of industry trends 
  • 18:25 – Educating yourself for strategic analysis
  • 20:48 – Metrics for Non-Residential Building Construction Industry

Why do industry metrics matter in construction?

Construction industry metrics are important for several different reasons. As vCFOs, we talk about more than just your financial statements. Managing your business well from a big picture view is a topic we cover regularly, in addition to making money and profits. One of the ways to know if you are managing your company well is to compare and measure your company to other companies in your industry. For example, you can look at whether you are spending too much money on materials compared to other companies, as well as compare your profitability. Does your profitability measure up to what others are doing within your industry? Reviewing these metrics can give an excellent benchmark for where you stand. 

Another important reason to review metrics is for financing. If you are working with banks and trying to secure loans to buy equipment, etc.., they will be looking at those industry metrics. How does your balance sheet compare? What do your liabilities look like compared to your equity? The banks will be looking at all of these things when making financing decisions. 

While it’s important for bankers to review metrics, it’s also beneficial to review for your own business evaluation and discussions around business value. We’ve spoken previously on the topic of knowing what your business is worth, and using industry metrics will help you know just that. Industry metrics are also valuable for a potential owner to look at when considering whether to buy the business. This type of analysis can give insights like profitability and efficiency relative to others in your industry. There are many different areas where these industry metrics are important as a business owner. These metrics are a great tool to leverage to improve growth, profitability and efficiency, but also important from the outside looking in, for banking, bonding, valuation and potential sale down the road. All of these things make industry metrics absolutely crucial to have awareness of and actively take measures to ensure you’re staying within reasonable parameters.

How and where do I get the information?

When you are looking at industry metrics, you will be comparing those to metrics within your own business, and hopefully setting goals to make strategic decisions and improvements. But what should you be looking at and where do you get the data relevant to your specific business? When we’re talking about industry metrics and industry trends, you can spend quite a bit of time on Google finding each individual percentage or data point that you need. But we’re talking about a single report that you can pull to avoid wasting 30+ hours doing research on your own, and if you’re working with an advisor, they can help get you the relevant and reliable data you need. 

Our firm works with specific software that pools together data from the industry and pulls an industry-wide report with information specific to the NAICS code, a classification within the North American Industry Classification System. These codes get very specific, so depending on the type of construction you’re in, like residential, contract or commercial construction, etc., it will be specific to you, and you will want to compare your company to correct industry metrics. If you end up comparing your business to a much broader construction code, you’re probably not going to get the metrics that make sense for you and your business. So you want to make sure that you’re getting the correct data. Setting that information and those metrics side-by-side with your business information helps make for a truer, and very strong comparative analysis, and helps you see what’s going on and how things are lining up. 

Research of industry trends

Advanced IT 

Along with the numbers and metrics these reports can provide, they also show industry trends. We can look at national trends, regional trends and really get a feel for the competitive landscape of the industry. In looking at the competitive landscape of the construction industry right now, we can see things that are bubbling to the surface a bit, and Advanced IT is one of the trends we are seeing. Construction companies are increasingly looking to technology to increase their productivity, so this trend doesn’t come as a surprise. Companies utilize software for managing processes from design and bidding, to procurement and project management. Technologies such as robotics, the Internet of Things (IoT), 3D printing, and autonomous vehicles are also emerging in the construction sector. In Episode #82: The Construction Series: Technology for Growth with Jason Perez, we talked about their technology and how it is revolutionary in the industry for construction business owners when it comes to equipment and job management. We encourage you to listen to that episode for more information.

Reputation and track record 

It’s important in every business that you have quality controls in place to gain a good reputation and maintain a stellar track record, but especially important in the construction industry. This is an area you need to keep watching and leveraging as much as possible. Although builders typically bear much of the responsibility for cost overruns on a project, limiting risk is still a primary concern for clients investing in major construction. Companies with a record of completing projects on schedule and within budget hold a major competitive advantage when bidding for jobs. We talked about the controls that need to be in place in our first podcast episode in this construction series #81: The Construction Series: Intro and Basics of Construction Accounting. All of the topics we discuss in that episode, like job costing, budgeting, and efficient and cost effective processes, all roll into your reputation and track record as a construction company.

Service diversity 

Another item we see coming to the forefront in construction industry metrics is service diversity. This trend has become especially important as we’ve seen the impact of the pandemic over this past year. The ability to pivot and do things quickly in order to adjust to external changes are going to help a company survive when something unforeseen comes along. The ability to serve customers in a wide range of sectors can be crucial to surviving downturns in volatile markets. You’ll want to have a strategic plan in place to plan for that rainy day in case it ever comes. Service diversity was a big metric in the industry recently because of this recent downturn.

The cyclical nature of the industry

The cyclical nature of nonresidential construction demand, along with the frequency of cost overruns and cash delays, results in uneven cash flow. This means that cash flow management is especially important within the construction industry. When you’re managing cash flow and understand the ebbs and flows within your business, these things don’t come as a surprise and you’re able to plan accordingly. 

Accounts receivable 

Weather, supply issues, and project challenges can cause delays, affecting receivables and the ability to pay for labor and materials. The industry average is currently running at about 60 days, which is a very long time to go without getting paid for something that you’ve done 60 days ago. Again, you’re paying for materials, labor, etc. up front, and if it takes 60 days to get the funds, you want to plan for that and do whatever you can to tighten that up as much as possible. Using these metrics to your advantage, and having a plan for payment delays, can be very helpful. You can focus on whether the invoices are being sent timely, is there a problem in the invoicing system, or find out if the invoices are actually not being paid timely. Sometimes it’s out of your control, like working with a notoriously slow payor from the start, like the government, but leveraging the knowledge you get from reviewing these metrics can make a huge difference in your business. 

Working capital & average revenue per worker

We have a few other interesting metrics that we picked out of this report that we think could be helpful as a benchmark. The average working capital turnover ratio is about 16% in the industry. In addition, in the US industry, the average annual revenue per worker is more than $575,000 per worker. Knowing this information can help you plan your staffing numbers. Keep in mind, this is an average, and it does depend on your geographic region, but it’s something you can account for in your cash flow and strategic planning.

Educating yourself for strategic analysis

The whole purpose of educating yourself with these numbers and metrics is to allow you the ability to strategically analyze what is going on in your own business and potentially set some new goals. Are you meeting your goals? Are you exceeding them? Ultimately, the goal is to use the information to better position your company to grow and succeed. What should you be shooting for in the construction industry?

As we mentioned, the metrics we will be reviewing are from the non-residential building construction industry. We ran the report and are pulling the metrics based on a 5-year average. These metrics are very important to the health of your business, can point out potential cash flow problems, and can highlight areas that outside investors or bankers may be looking at for lending, etc… 

Non-Residential Building Construction Industry

  • Current Ratio = 2.49 This number is your current assets to your current liabilities ratio, and the industry average is 2.49. If you’re interested in learning more about ratios, we do have a few podcast episodes that could be helpful. Episode #57: The Power of Numbers: Liquidity Ratios, and Episode #58: The Power of Numbers: Profitability Ratios are great resources to revisit if you’re interested in learning more.
  • COGS (Cost of Goods Sold) = 81.87% This number is a combination of your direct and indirect costs and, as we discussed in Episode #81, it is an important number to key into, and is a profit and loss percentage that you will want to pay close attention to as it folds into your profitability.
  • Gross Margin = 18.13% Your gross margin is your revenues minus your cost of goods, and like your COGS, is a very important number to review and interplay with one another. 
  • Operating Overhead = 12.13% This number is your overhead for running a business. For example, your administrative costs, legal, accounting, rent, office supplies etc… As a non-revenue generating cost, it goes straight against your profitability, and this number is especially important to make sure you are not overspending in various areas, and you’ll want to keep this number tight.
  • Net Income = 4.5% Everyone wants to look at this number, and rightfully so. This is your profitability number and reflects the money that your business is ultimately making. 
  • Debt to equity ratio = 2.53 This one is definitely important in your banking and financing requirements, and your general health of your business, and you’ll want to keep a very close eye on that number. 
  • Sales growth percentage = 11% This number is your growth from year to year, and your overall growth of your top line. The industry average is 11% but it depends on where you are in your growth cycle of your business, and having a CFO or advisor weigh in on these numbers is critical to determining if you are on the right track for your specific situation.

Just like we mention with the sales growth percentage, you want to make sure that you’re in line with the industry, but don’t dismiss the fact that your business does have unique aspects and may be in a growth stage that could alter the way these metrics impact you and your business. It is wise to work with an advisor who knows you, knows your business, knows where you’re at in your business, and knows what your goals are, etc. Your advisor should be helping you answer questions like, “What makes sense for your business?” or “Should you have a greater goal than that?” Interpreting the data is key to making sure your company measures up to industry metrics, and having a CFO or advisor who can help you understand these metrics can be a game changer for your business.



Understanding your business and how it is performing in relation to other companies in your industry is very important to your business for growth and increased profitability. The metrics and data available to owners can be overwhelming and difficult to understand, but if you can work with a CFO or advisor who will help you weed through the details, and point out the information you really need that is specific for your business, it can be an invaluable tool for you and to the overall success of your business. Please reach out to us if you would like a free discovery call and have a conversation about your business, your goals, and how we can help you grow and prosper. Our mantra for this episode is “Don’t be an Ostrich, build your business better and see how you measure up. Don’t be afraid, it can only help you! Knowledge is power, and take the time to look into these resources to get your business where you want it to be.”


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#82: The Construction Series: Technology for Growth with YARDZ

#82: The Construction Series: Technology for Growth with YARDZ

Today we’re talking about a platform that can help contractors and others in the construction industry save time and money while becoming more productive. In the second installment of our construction series, our expert in the construction industry, Katina Peters, helps us tackle this topic. We are also welcoming back a return guest! You may remember Jason Perez from Episode #49 Being a Visionary. He is an entrepreneur, advisor, CEO, and co-founder of YARDZ. It is fitting we welcome him back on the show for the construction series because of his background in construction and entrepreneurship. 

What we cover in this episode: 

      • 02:31 – The impacts of this technology on the construction industry
      • 05:03 – How did YARDZ develop as a construction technology tool?
      • 09:39 – Automation, efficiencies, and benefits of YARDZ
      • 21:23 – How will the proposed infrastructure bill impact the industry?
      • 24:58 – How construction technology helps the bottom line

The impacts of this technology on the construction industry

As we discussed in Episode #81, which covers the basics of construction accounting, technology designed specifically for the industry can help streamline processes and increase profit. When you eliminate the need for manual processes to record, gather, and track information, you can spend more time analyzing the data to improve your business.

We are excited to talk today about a platform that can help contractors and construction business owners save time, money and become more productive. More specifically, it will help with both rented and owned equipment, which can be a large area for improvement. Before we dig into the specifics, we wanted to highlight one of the benefits in the form of a testimonial that is listed on the YARDZ website that really stood out to us – and may really resonate with our listeners who are in the construction industry. Joe – VP of a National Utility Contractor stated, “I saved 20k in equipment called off in the first month… It’s a game-changer. No more forgotten equipment.” 

$20,000 is pretty significant for using a product for the first month. Especially when I think his account was priced at $199 a month in what he is paying”, stated Jason, and added, “The ROI was pretty instantaneous, but the reality is it wasn’t that we did something remarkably crazy. What we did was just make it easier for our client to see all the things he was renting… And so, just by giving simple visibility of the equipment usage, it was transformational to them as a company. And it was a big deal to their bottom line.”  

How did YARDZ develop as a construction technology tool?

Jason has an extensive background in construction, which led him to develop the idea for the YARDZ platform. Jason stated “I’m not a tech guy. I’ve never had Facebook or any of those things. I’m not the guy that you call to hook up all your speakers in your car or in your home. Like, I’m not that guy. I can frame out some walls. I can dig some holes. You know, I’m a construction guy and my father was an electrical contractor. So I started by crawling in attics when we were doing residential stuff. And then he grew it into a small commercial business, but I grew up in and around the construction industry.” 

Jason added that initially, he resisted getting into the construction industry. He graduated college and thought he would follow a different path, but came back to construction. Jason’s construction career began as a labor superintendent, then a project manager, ultimately to a position running a division of the Southeast for an international company. He then started his own consulting business.

The idea for YARDZ originated from solving a problem in the construction industry with rentals and was hatched during a conversation with Jason’s neighbor who was in the rental industry. Jason stated “We were sitting down just having a chat and my neighbor said, you know, I rent out a lot of equipment, but sometimes we don’t have it. So then I called some of my buddies at other companies and I help my customers find it. Then they call me to call it off… But they’re not even my pieces of equipment.” It’s easy to lose track of equipment and managing it all came down to creating their own devices, which were spreadsheets, whiteboards, and even sticky notes with different colors that represented different companies.

Jason stated, “I can tell you, one of our customers told the story where they lost a piece of equipment on a roof, for 13 years. They did a job and they installed the roof. They left the project and then 13 years later, a storm hit really hard at this building. So there was some damage from a tree and things like that. They went up and they’re like, oh, there’s that generator that we didn’t know what happened to it.” Technology can help avoid situations like this without adding extra manual steps to your team’s list of responsibilities.

Automation, efficiencies, and benefits of YARDZ

Many construction companies have been managing their assets through inefficient methods like whiteboards and spreadsheets. YARDZ brings automation and efficiency to this process, allowing you to focus on other aspects of your business while driving down costs.


Simplicity is at the heart of YARDZ. Jason explained that “That’s been our goal since day one. We’ve got to simplify it first. We’ve got to make it easy for people to use and we got to make their day shorter. We’ve got to give them peace of mind at the end of it. And they’ve gotta be able to simply see the things that matter” Jason continued.

Automation and Prioritization Allow for Increased Efficiency

This is a technology that automatically streamlines and prioritizes work to eliminate many of the manual steps involved in tracking spreadsheets and the like. Jason went on to describe, “When someone logs in, they know exactly what they need to focus on, because there’s an alert that says, here are the four things you need to worry about today. And when the list is sent out, it is sent out to each team member with what’s on their project, but it doesn’t have everything else in the company, just what they need.” There is a similar simplicity that serves as the basis of the maintenance side as well. Jason explained how the interface works, “When I go to my maintenance board to see what I need to get maintained, they’re color-coded. And so I can see red at the top. Orange is next, yellow is next. And if there’s no color, it’s probably not coming up for a while.” 

Flexible Support

The technology streamlines processes but also offers flexibility to give users the ability to use it as they need. The system is able to match the behavior and workflow of the people, allowing business owners to run their construction business without losing control, and to fit the technology to their unique business needs.

Ramifications of Mismanaging Assets (Rented or Owned)

The ramifications of not managing assets efficiently can be devastating in terms of lost time, productivity, and money, as well as missing crucial project deadlines. Jason stated the differences offered by utilizing technology, “You don’t have to do all the work. You don’t have to call everybody. They’re just clicking on an email that takes them five seconds. You have full accountability in one place. And most importantly, you’re changing behavior because if they forgot that piece of equipment or tool in the last week, guess what, now they can remember.” 

How will the proposed infrastructure bill impact the industry?

We want to switch focus just a bit and talk about something that many of us have been seeing in the news recently. We want to bring up the proposed new infrastructure bill being debated in Congress. We’ve all been seeing how it may impact different areas across the country, but we wanted to get Jason’s insights on how he thinks it will be impacting the construction industry. 


Jason shared, “There’s definitely gonna be a surge in the infrastructure side. And we have a lot of utility contractors that use our product because of the logistics management that we have. I think what we’re going to see here is there’s definitely going to be a surge in these heavy equipment-type projects.” says Jason. So there will likely be an increase in overall volume. 

There will also be considerations around buying vs. renting equipment without overextending. When it comes to this topic, Jason adds, “Because I don’t want to overexpose either getting into this boom, by buying a bunch of equipment and then ending up with all these liabilities on my books either. So there’s going to be a dance around what people buy and what they rent and how they make those decisions. And how do you minimize the exposure one way or the other? And how do I take advantage of the opportunity to maybe pay for some of this equipment?  Maybe I need new equipment because I’ve reached the end-of-life cycle on items that I bought previously. So it’s going to be an interesting time, especially within the equipment world. According to Jason, equipment rentals in the construction industry have seen some massive gains in the last four or five years. “I think equipment rental is going to get bigger and bigger for the next three to five years,” says Jason. 

How construction technology helps the bottom line

The points made above about growth are why managing this aspect of your business is so crucial though. If the volume is increasing but you are still managing this in a manual way, the chances of error increase drastically and margins are not very large in construction. Jason continued with the point about savings, “And when we’re saving our customers 10 to 30% in overall rental costs, you’ve got to think about that. We surveyed our customers, and they’ve said, normally we spend X amount of money a year, based on our volume. And what we’re seeing now is we’re spending at least 10% less. If you spend a million dollars and you save a hundred thousand dollars in rentals, it’s not because you’re driving the price down. It’s just because you’re not using it longer than you need it. And nobody should have problems with saying, if I don’t need it, I don’t want to pay for it. I think that should be an easy business decision.” Jason stated.

That leads us to another testimonial from a client of YARDZ that sums up the real savings that can be so impactful for construction business owners. The testimonial from Jesse at DPR construction says, “I have seen the real savings, and can’t imagine ever going back to the old way. I feel in control of my rentals. So simple. So powerful.”

Jason says, “I think a lot of people understand what the platform is, but they don’t understand the benefits until they get on and they see it in the demo. And once they do, they say, wow, I’ve needed this my whole life. And I didn’t even know that I needed it, or, I thought my spreadsheet was really efficient, but it’s not.” Leveraging the technology that is available to construction business owners in a platform like YARDZ allows them to get things done more efficiently, and have a strategic approach to managing their businesses. Visit the YARDZ website to learn more and book a free demo.


The YARDZ platform can help construction businesses save time and money while becoming more productive. As with all companies, the goal should be to be more efficient, drive down costs, and become more profitable. The unique challenges of the construction industry can be overcome with systems that bring together every part of your business, make problems easier to solve, and give a strategic approach to managing the entire business. The name of the game in the industry is to save money on your projects, and in turn, win more bids and projects. The YARDZ technology platform can help you achieve your goals and help your business grow. 

If you are interested in learning more or scheduling a free demo to see what YARDZ can do for you, please visit the YARDZ website, and contact them for more information.


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#81: The Construction Series: Intro & Basics of Construction Accounting

#81: The Construction Series: Intro & Basics of Construction Accounting

We are excited to begin a special, 3-part series focused on the construction industry! Today, our focus is on the basics of construction accounting, as well as construction industry accounting best practices for construction contractors. More specifically, we discuss what you can do to find efficiencies and transparency in your business. We will also talk about what you should discuss with your CFO to get better information and make better decisions to help your business grow. 

Katina Peters, vCFO and Partner at PJS & Co. CPAs, has a wealth of knowledge on this topic and is an expert in working with business owners in the construction industry for over 17 years. If you would like to learn more about her, please visit Our Team page.

What we cover in this episode: 

  • 02:57 – When should you speak with a CFO?
  • 06:04 – Job costing is key in construction accounting
  • 13:04 – Direct vs. indirect costs
  • 19:55 – Work in process (WIP)
  • 22:20 – Profitability and cash flow
  • 25:59 – Specialized software

    When should you speak with a CFO?

    At what point should construction business owners consider partnering with a CFO? If you’re interested in a deep dive into the topic of understanding when you should consider bringing in a CFO or financial expert, check out episode #72 – How to Hire a CFO. Katina stated, “You have to be on top of that a little bit sooner as a construction business, because you can’t just fly by the seat of your pants for maybe as long as you could in another business, because there’s just a lot of structure that has to be in place around the type of accounting and job costing, etc. that you will have to do.” 


    The bottom line is that bringing a CFO onboard may need to happen a bit sooner than in other industries. A CFO with experience in construction accounting can help you establish the structure needed. Proper systems will set you up for future growth and give you the ability to handle business decisions in a more profitable, knowledgeable, and efficient manner. 


    Job costing is key in construction accounting

    In the construction industry, you are typically operating on the basis of percentage of completion. It is crucial that you have the ability to track your accounting on a granular level. You are likely aware that you need to track your costs and what jobs those costs are associated with so you know which jobs are profitable and which jobs may be losing money. That’s the basic idea of job costing. We’ll talk about some of the methodologies used, the direct versus indirect, as well as general administrative costs and how some allocations will help you in your business work in process. This is where the percentage of completion comes into play. 

    So why is it important for construction companies to do job costing? If you are in the industry you probably know this, but there are certain regulatory issues, bonding requirements, and the occasional need for reviewed financials. Establishing proper procedures to ensure proper recording up front for regulatory purposes can seem like a chore for most construction business owners, but why not also look at it as a way to leverage all of that information you are gathering to really build a better business?   

    As you are paying people, using materials, using equipment, etc., you will want to identify and assign those costs to the associated job in your accounting system, and doing that allows for better reporting. So obviously it gives you the answers you need to the questions on whether this job is costing what I thought it was going to cost throughout all the phases of the job. Are you being as efficient as you could be? There may be other trades that are getting in your way, and making things inefficient. The ability to analyze the progress of jobs as you go is very crucial so you can make necessary changes. It’s not helpful for you to get to the end of the job and realize that you just lost a ton of money, so use job costing as a way to keep a pulse on what is happening. 

    Direct vs. indirect costs

    Direct job costs are easy to identify. Direct costs include things like the person who’s on the job, the piece of equipment that’s been rented for the job, the materials that you bought specifically for that job. These costs are very direct and fairly straightforward to determine. 


    There are also indirect costs that you need to be monitoring as well. If you are estimating a job, you have to think of all the costs involved, which may not be as glaring. An example would be if you are using your own equipment on a job, then a portion of the usage, say an allocation of a per hour cost, needs to be assigned to that job since it’s not free equipment. Even though you may own it, you need to account for the maintenance and wear and tear on that equipment. There are insurance requirements that must be included in indirect costs as well, and can be significant for a construction company, as well as general and administrative costs. You’ll want to be collecting those indirect costs and allocating back to the jobs you are doing in order to fully understand how profitable each job truly is for your company. Building in all costs (direct and indirect) ties everything to a job, and allows owners to make better, more informed decisions, which improves efficiency and profitability.


    You will be able to use the information you are gathering to monitor and see very quickly if something doesn’t look right. Things that are off will stick out pretty quickly, and you’ll be able to determine what is happening so you can make adjustments that will prevent you from realizing losses after the fact. You’ll be able to look at the metrics with your CFO and compare the progress of the job, compare the costs to the percentage of completion of that job,  and work on solutions to get back on track if needed. Many owners have to rely on the job superintendent for the status of job completion, and if that superintendent says the job is 25% completed, when you’ve used 50% of your allocated costs, that may be a problem and a disconnect.   


    Work in process (WIP)

    With the assistance of your CFO, and accounting team, owners should be having discussions on a regular basis to ensure costs and billings are being tracked properly for current jobs. Are the billings over or under billed compared to the job status? It’s good to have those meetings, and they can also be used to judge the capacity for what can be done on future jobs. Keeping a pulse on your WIP allows you to plan for the future and keep your business pipeline on track.   


    Profitability and cash flow

    When you are tracking work in process, it’s really like tracking the nitty gritty details of your profitability. Obviously, the bread and butter of profits in the construction industry is the jobs, and the jobs are what drives the company’s profitability. Looking at the details of the costs associated with each job closely will make sure you are staying profitable and allow you to make any needed adjustments as quickly as possible to get back on track. Using the knowledge and feedback you gain on the profitability of the jobs should also be shared with those completing estimates for future jobs. 


    It’s also important to stay on top of cash flow since the construction industry typically has ebbs and flows to workload, and can see seasonal changes as well. Planning for those changes can help level and equalize cash flow as much as possible. You’ll want to make sure you are billing appropriately and timely for everything, as well as collecting appropriately and timely, so that you’ll ride the ups and downs with more ease.  


    Specialized software

    With all this tracking and gathering of information to better run your construction business, it seems that you could easily be overwhelmed if you are completing each of these tasks manually. For a smaller business manual processes are doable to an extent, but you have to be aware of how much time and effort tracking these things manually can cost you in your efficiencies. There are specialized softwares for construction companies that will help you graduate to a higher level of efficiency and are designed to do the kinds of things that will allow for expanded growth and profitability.


    Specifically in the construction industry, where you need timely information and detailed tracking of costs, it is a wise investment to use specialized software to run your business well. Specialized software packages can allow you to integrate all the tasks you need to do to run your business. You can gain efficiencies by performing most tasks, like invoicing, estimating and job costing, paying bills, timekeeping and payroll all in one system. Most also have the ability to utilize mobile technologies, and can allow staff to enter information from the field. The more integrated your systems, the better your information and reporting capabilities will be. 



    We kicked off our 3 part construction series with best practices in construction accounting and discussed questions you should ask your CFO. First, we discuss timing and when a CFO should become a part of your team. Then we get into the topics that you should be discussing regularly with your CFO. Job costing, direct and indirect costs, work in process (WIP) and specialized software should all be a part of your growth strategy and have a high focus in order to push your business to the next level. 


    Helping business owners increase profitability and value in their businesses is always our goal at PJS and Co CPAs. We have professionals with almost 20 years experience in the construction industry who are able to partner with you to help accomplish your goals. The construction business owner has unique challenges compared to other business owners, but we are here to make your life easier, to help put the tools you need in place for your unique situation, and help you to reduce stress levels.  


    If you are interested in more information in our construction series, remember that this is our first in our three-part series, and we welcome you to subscribe to our podcasts so you won’t miss anything. If you are looking for a vCFO you can partner with in your construction business, or any business, please reach out to us at PJS & Co CPAs, or call us at 844-475-7272.

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    #80: What is the ERC and Do I Qualify? Featuring Randy Crabtree of Tri-Merit

    #80: What is the ERC and Do I Qualify? Featuring Randy Crabtree of Tri-Merit

    The Employee Retention Credit, or ERC, saw significant expansion in 2021. But, do you qualify for the ERC? Can you still get the ERC if you got a PPP loan? We have a special guest, Randy Crabtree, of Tri-Merit Specialty Tax Professionals, on this episode to talk about various ways for businesses to qualify for the credit, how much benefit you can receive, and how the credit interplays with other available credits, including the Paycheck Protection Program (PPP) and the Work Opportunity Tax Credit (WOTC). 

    What we cover in this episode: 

    • 03:23 – Who is Randy Crabtree?
    • 06:42 – What is the Employee Retention Credit (ERC)?
    • 09:13 – Is your business eligible for the ERC?
    • 12:34 – ERC for the legal, restaurant and healthcare industries
    • 20:12 – Why is the ERC being refundable important?
    • 22:41 – How the ERC works
    • 33:21 – Special Offer from Tri-Merit

    Who is Randy Crabtree? 

    As the co-founder and partner of Tri-Merit Speciality Tax Professionals, our guest is uniquely qualified to speak about the ERC and help us better understand how it works. A widely followed author, lecturer and podcast host for the accounting profession, we are happy to welcome Randy Crabtree to the show! He holds a CPA license and he has been in public accounting for many years. He has been working on specialty taxes solely for almost 15 years, meaning he is very familiar with the complexities of ERC and other specialty tax situations. Tri-Merit has many resources you can take advantage of to learn more about the ERC. Visit to access on demand webinars, check if you’re eligible for the ERC, and receive a free, no risk, no obligation consultation as well.

    Randy Crabtree

    What is the Employee Retention Credit (ERC)?

    The ERC was defined in the CARES Act in March of 2020, and it created another incentive for businesses to keep employees on their payroll. The ERC is a fully refundable tax credit for a percentage of the qualified wages you pay your employees. It’s applied to your federal payroll tax liability, and any excess credit amount is refundable. 

    This tax credit applies to businesses whose operations have been impacted by government executive orders or are experiencing a remarkable decline in revenue. Also defined in the CARES Act at the same time was the PPP loan program. The CARES Act legislation originally stated that if you took a PPP loan, you could not take an employee retention credit – they were mutually exclusive and you could not take both.

    A big change occurred with the passing of The Consolidated Appropriations Act, 2021 (CCA) in December 2020, by increasing the credit amount and allowing businesses to reap the benefits of both the ERC and the PPP program. This CCA also allows some changes to be retroactive to the passing of the CARES Act in March 2020. Then additional legislation passed in March 2021 – the American Rescue Plan of 2021 – and extends the credit to December 31, 2021. The ERC provides up to $5,000 per employee during 2020 and up to $7,000 per employee per quarter during 2021. That’s up to $33,000 per employee for qualifying businesses.

    Randy stated, “This could be a very big benefit. So if there are any businesses out there that had looked at some of the rules and thought they didn’t qualify or had an advisor say they didn’t qualify, it’s definitely something that you want to go back and make sure of.” We do recommend speaking to an advisor, as the landscape keeps changing, and your situation and ability to take advantage of these changes can be a big benefit. 

    Is your business eligible for the ERC?

    Any business or tax-exempt organization operating in any calendar quarter of 2020 or 2021 can claim this credit, with the exception of governmental employers and self-employed individuals, and there are two ways to qualify for the ERC.

    The first way is a safe harbor rule, and the rules do change from 2020 to 2021, but the bottom line is that you can qualify if you’ve experienced a significant decline in gross receipts during a calendar quarter in 2020 or 2021. You compare the gross receipt for a particular quarter in 2020 or 2021 to the same quarter in 2019. “In the year 2020, if I can show a 50% percent reduction in revenue in any quarter in 2020 compared to 2019, then I meet the safe harbor rule and I qualify for the employee retention credit. Then in 2021, it got even easier. If I show a 20% reduction in revenue in any quarter in 2021, compared again to 2019, I meet the safe harbor rule”, stated Randy.  

    The second way to qualify is a bit more complex, with just a little more interpretation that needs to go into the determination if you qualify. This way per the IRS rule, is that you qualify if you’ve fully or partially suspended business operations for any calendar quarter in 2020 or 2021 due to governmental orders limiting commerce, travel, or group meetings due to COVID-19. This way does seem to cause confusion as it’s a little more vague than the first way. The math is easy to calculate in the first way, but you have to dig deeper and assess your business in this second way to see if you qualify. 

    Many people may say that 100 percent of people were impacted because of the pandemic, but you really need to look at the actual restrictions, and if they really impacted your ability to do business. Randy stated, “There’s definitely more in there. So, I can say I was under restriction because there was a mask mandate, and everybody had to wear masks to come in. That didn’t really affect my business, that there was a mandate out there. There wasn’t a government order. But did that really reduce my ability to conduct my business? Probably not.”

    ERC for the legal, restaurant and healthcare industries

    Now, we asked Randy to provide a few examples for us in some service-based businesses to help illustrate the complexities of the ways to qualify. More specifically, we discuss the restaurant, legal and healthcare industries to give a few examples. Please note that every business is different and there could be a variety of qualifications even within these industries. 

    In the case of the restaurant industry, when the government imposed restrictions stating no indoor dining was allowed, that definitely affected businesses. You couldn’t have indoor dining, but you could still do curbside pickup, and perhaps outdoor dining was still an option for your business, and maybe you could do delivery. The suspension rules or restrictions were never static, and perhaps changed over a period of time  from 25% capacity to 50%, then eventually back to 100% capacity, but you had to have your tables 6 feet apart. In all these cases, the restrictions effectively reduce your ability to have full capacity in your restaurant, and you can claim you were affected. The government restrictions don’t have to have been direct to affect your business though, and if you look at the imposed restrictions from the viewpoint of the supplier for that restaurant business, you can be affected indirectly and may qualify. 

    The IRS has given out a few examples of things that qualify, but we encourage you to reach out to your advisor, or reach out to Tri-Merit so they can get the details of your specific business and really dig into your unique situation and see if you qualify for the ERC. 

    Healthcare is also an industry that is interesting to look at as an example of the second way to qualify for the ERC because healthcare all around the country was affected in some way. A majority of them were affected by not being able to have elective procedures. “That was a number one thing that happened right off the bat”, stated Randy. When the restriction went into effect, many doctors were unable to perform surgeries, which meant, no knee replacements, no ligament replacements, etc…, and thus they were affected. This happened in a lot of cases throughout the medical, and dental industry as well, and a very large percentage of them can qualify and claim the ERC.

    Many service-based businesses were affected as well. Randy stated, “I had an example of a client that is in the legal field, and I know they were impacted. Not necessarily from the gross receipts reduction and meeting that test, but they were definitely impacted by the courts being shut down.” The social distancing restrictions, and the ability to meet clients face to face, or in group settings, affected a lot of service-based businesses. The restriction rule is pretty broad, and the main point is to know that it is available to service-based businesses, and use this knowledge to have discussions with your advisor about your situation, what restrictions your business faced to see if you can qualify for the ERC. 

    The ERC is refundable. Why is that important?

    The fact that this credit is refundable is a big deal because refundable credits are very rare when it comes to taxes. You can use it to offset some taxes, or at least reduce your current tax bill, and “the value of the credit is the value of the check you get sent,” stated Randy. You receive the credit when you file your Form 941, or most likely an amended Form 941-X, for your payroll taxes. There are some stipulations on if you are a large or small employer, and the qualified wage percentages change from 2020 and 2021, but as long as you qualify, the calculation can be significant. Bottom line is you may actually get a refund! 

    How the ERC works

    For 2020, the Employee Retention Credit is 50% of all qualified wages you paid employees between March 12, 2020, and Dec. 31, 2020. It is limited to $10,000 in wages per employee for all quarters. Therefore, you could claim a maximum credit of $5,000 for each employee. 

    For 2021, the credit is 70% of all qualified wages you pay employees from Jan. 1, 2021, through Dec. 31, 2021. It’s limited to $10,000 in wages per employee for any quarter. Therefore, you can claim $7,000 for each employee in every quarter. That means, the maximum credit is $28,000 per employee! Generally, qualified wages are compensation you pay to employees, including qualified health plan expenses. But, the definition also depends on your average number of full-time employees in 2019.  If your business wasn’t in existence in 2019, you’ll use the average number of full-time employees in 2020. 

    One important thing to note is if those wages were used to get a forgivable PPP loan, you can not also use them for the employee retention credit. One of the largest questions we’ve had relates to smaller companies, companies that have a business owner or one or two employees, and if they also can qualify for the ERC. The IRS has put out some recent guidance in early August of 2021, and it comes down to percentage of ownership in the business, and if you have relatives that also are owners of the business. The rule is following the current tax codes, and in reality the majority owner of the business and family members can not be used in the calculation of the credit. There can be a lot of paperwork to do to claim the credit, such as amending payroll tax returns, and we really can’t stress this enough, but it’s best to talk to an advisor to make sure you are calculating the credits properly, and taking the ERC only if you qualify. 

    The IRS does allow for amending payroll tax returns, but there is a statute of limitations on how far you can go back. Typically the limit is 3 years, but the IRS did announce they are extending this to 5 years, so it gives business enough time to go back and make corrections and make sure calculations are done correctly.

    More about Tri-Merit

    There is an abundance of information to absorb, and the bottom line is this ERC is available to help businesses. You just want to make sure that you’re consulting the right professionals to make sure that you’re covering your bases. Tri-Merit has many resources you can take advantage of to learn more. Visit to access on demand webinars, and you’ll actually find a link where you’re able to check if you’re eligible for the ERC and receive a free, no risk, no obligation consultation as well.


    Today, we talked to Randy Crabtree of Tri-Merit Special Tax Professionals. We talked about various ways to qualify, provided industry examples, covered the amounts you may qualify for and why this all matters! There are many resources available to you to better understand the ever-changing landscape of taxes. Please take a moment to look at what may be available to help your business. 

    If you’re working with a CPA or CFO, talk to them, and the bottom line is go look at this program and the ERC because it’s available to help you and your business.  We know business owners may not have the time to keep up to date on this topic, and spend their time running a business, but we want you to know we are here to help. We are spending a lot of time to stay up-to-date on all of this information, so you can come to us with questions and see if you qualify for the ERC. 

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    #79: Navigation Legislation (Section 139, PTE, & Child Tax Credit)

    #79: Navigation Legislation (Section 139, PTE, & Child Tax Credit)

    There have been quite a few changes to tax laws and legislation over the past two years, and in order to help you stay up-to-date, we’re focusing this episode on a few important changes and highlighting the most recent ones that can impact you and your business. More specifically, we want to give you some high-level information on Section 139, PTE (Pass-Through Entity tax), and the child tax credit. We are speaking today with Katina Peters, Partner at PJS & Co. CPAs, and getting her valuable insights on these important legislative changes. Because these changes will impact everyone differently, we highly suggest speaking with your advisors to fully understand the full effects.

    What we cover in this episode: 

    • 03:50 – Section 139
    • 10:31 – PTE (Pass-Through Entity Tax)
    • 14:37 – Child Tax Credit

    Section 139

    When we say Section 139, we are referring to the IRS Code Section 139, which is a section of the tax code that provides tax breaks for “qualified disaster relief payments,” including most recently payments on account of COVID-19, which was declared a federal disaster in the spring of 2020. Section 139 allows for employers to pay employees, including themselves, for reimbursement of reasonable and necessary personal and family expenses with regards to a qualified disaster. So this may differ from what most business owners are used to, where they typically pay only for valid expenses that are related to the business. This section allows for a much more broad definition of a business expense, and you just need to be able to support that it’s related to the qualified disaster. These payments are deductible by the company but do not have to be included in income or compensation to the individual receiving the funds.

    There are some nuances that you should be aware of, but this is a way for the government to help businesses, and help their people without creating an additional tax burden for them. If you are working with a payroll company, you want to make sure the payments are coded correctly so they are not taxable to the recipient. But we actually recommend that you treat these payments like an expense reimbursement check since they are not payroll-related. 

    COVID-19 Examples That Could be Included

    A few quick examples of things that can be included in regards to the COVID-19 pandemic are doctor visit co-pays, nonprescription drugs, or critical care for COVID-19 treatment. Other expenses that can be incurred and are included are the cost of masks, hand sanitizer, disinfectant cleaning products, and grocery delivery services. In addition, if there were to be an employee or family member who passed away due to COVID-19, funeral expenses can be covered. Equipment or services needed to work remotely, such as computers, printers, and internet service can be included in these reimbursements, as well as new or increased expenses for children as a result of virtual learning requirements or school closings. As you can see, this is a pretty expansive list and can cover many different types of expenses. You’ll want to make sure again though, that you have the documentation you need to justify the reimbursements to your payees. The one thing you must not include in these payments are things that would normally be considered compensation, such as sick pay, vacation time, or anything payroll-related, etc… There should be a clear delineation between these types of reimbursements, as they are not included in the covered items for reimbursement under Section 139. 

    Implement Best Practices

    We encourage our clients to utilize some best practices when implementing this process, including implementing this prior to the end of the year and consulting with their tax preparer and/or financial advisor. You should adopt a formal plan, make sure you have a comprehensive way to track any reimbursements you plan to make (including receipts to validate the amounts), and you should also have, and keep on file, the acknowledgments of the person or persons receiving the payments and that they are reimbursements and not compensation.  

    PTE (Pass-Through Entity Tax)

    The next item we want to discuss is the PTE (Pass-Through Entity Tax). This applies to you if you’re in a pass-through entity, for example, a partnership where you collect a K-1 at the end of the year. Let’s go over a bit of background on this topic to make it a bit easier to understand. The Tax Cuts and Jobs Act (TCJA) that was passed in 2017 limits the amount of state and local taxes that individuals can deduct for federal income tax purposes to not more than $10,000 ($5000 in the case of a married individual filing a separate return). This creates quite a problem for individuals with pass-through entities in high taxing jurisdictions because they lost the ability to itemize and deduct large amounts of state taxes on their individual federal returns. People in these high taxation states may have a large state income tax liability. It could have been as high as $40,000 to $50,000 and having this deduction capped at $10,000 with the TCJA makes a big difference in tax liability. Since the passage of the TCJA, states have been working on a way to help their constituencies that have been affected by this, and many have been passing what now is being called the PTE tax.

    What some states are doing is allowing their taxpayers with pass-through entities to elect to pay their tax that is related to their pass-through income at the corporate level rather than the individual level. This shift makes that tax a deductible business expense on the books and lowers the federal income pass-through. This also results in your K-1 having less income flowing through to you personally, so you are paying less personal tax.

    This sounds simple in theory, but in practice, you have to remember that every state is different, and can have different rules surrounding this PTE tax. Some states are simpler than others, and some can be very complicated. For instance, there are situations where some states require all of the partners or all of the other shareholders in a pass-through entity to agree, but each partner has the opportunity to decide what is best for themselves and make their own elections. This can provide an advantageous tax planning tool, but it needs to be carefully considered.

    It’s very important that you speak with your advisor and tax professional to help navigate this PTE tax, because at this time, the PTE tax is not a national tax. The current count is at 18 states that have passed legislation to this effect, but there are more states that have this legislation either drafted or pending. 

    Child Tax Credit

    This last topic we want to discuss today is the new Child Tax Credit payments program that kicked off in July 2020, and it has also had some confusion surrounding it when it was announced. This again will affect everyone differently because it’s not the same for everyone, and not everyone qualifies. We want to reiterate that you should speak to an advisor or your CPA to answer any direct questions on how this program may affect you and your family.

    The IRS began disbursing payments (direct deposits and paper checks) to eligible families on July 15, 2021, under this program, and these are payments to eligible families with children ages 17 or younger. Basically, for every child under the age of 6, families will get up to $3,600 under the expansion, or $300 per month. For every child ages 6-17, the amount is $3,000, or $250 per month. These amounts are increases from your normal annual child tax credit on your tax return of $2,000 per year, and they are basically prepaying you for the child tax credit at this point.

    The expansion boosts the credit from $2,000 to $3,600 for each child under the age of 6, or $3,000 for children from ages 6 – 17. This also makes the child tax credit (CTC) “refundable” – which means people can get it even if they don’t owe federal income tax, which increases the number of low-income households that qualify for the payments. 

    In order to qualify and receive the full enhanced child tax credit, single taxpayers must earn less than $75,000 per year, and joint filers must earn less than $150,000 per year, with payments reduced by $50 for every $1,000 of income above those limits, and are phased out for single taxpayers earning $95,000 per year, and joint filers earning $170,000 per year. Most households that earn above these amounts per year will still qualify for the regular $2,000 per child tax credit. There of course are nuances, and exceptions, but these are the basic qualifications.

    So what does this mean for you and your family? It can be confusing, and we encourage you to reach out to your financial advisor or CPA to get specific details for your situation. The biggest questions – or unknowns – we’ve heard from most people seem to center around how accepting these payments now will affect their year-end taxes. The IRS automatically opts you into this new program based on your prior year’s return, and you do have to opt out if you choose not to receive the prepayments. Depending on how many children you have within these ages, it may mean a sizable difference than what you are expecting as a refund, or as owing at the end of the year on your annual return. We’ve also heard people believing that these child tax credits are the same as the previously disbursed stimulus check, which is incorrect, and definitely not treated the same way at the end of the year.


    Our goal in this episode was to give you some high level of information so you can be prepared to ask the right questions when you meet with your advisor. We want you to have the information for your personal situation and be armed with enough knowledge to avoid surprises come tax time. The latest legislative changes to Section 139, PTE and Child Tax Credits may be hard to navigate on your own, and we encourage you to reach out to your advisor or tax professional to help you with questions and concerns around these new programs and how they affect your personal situation. When legislative changes happen, we keep up to date here at PJS & Co CPAs and want you to feel free to reach out and contact us with your questions. If you found this episode helpful, please subscribe, rate and review.


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    #78: Are You Referring to Me?

    #78: Are You Referring to Me?

    This episode of the Cultivating Business Growth Podcast is about referrals, and how they are one of the most economical ways to grow your business. How do you get referrals that will grow revenue? Why are they so effective in growing your business, and what do you need to do in your business to get the best results with referrals? The co-hosts for our discussion today are Megan Spicer, Marketing and Business Development Manager, and Katina Peters, Partner, at PJS & Co. CPAs. 

    What we cover in this episode: 

        • 01:17 – Why are referrals so effective?
        • 07:35 – What do you do for referrals to work?
        • 14:38 – Make it easy for people to refer your company
        • 17:17 – Act on feedback from customers
        • 19:26 – Create opportunities for customers to advocate for you
        • 21:30 – Reciprocate prudently
        • 25:33 – Reward your referrers

    Why are referrals so effective?

    A business referral is when someone in your network recommends your business to a potential new customer. One of the most important reasons that you should be trying to get referrals is that those prospects are coming to you with more trust than any other lead source. Charlie Cook, a marketing expert, estimates in a 2018 Forbes article that cold calling is successful 2 percent of the time; qualified leads convert 20 percent of the time, he says, while referrals convert 50% of the time. Why are those stats so impactful? The answer is in how much effort and time it takes to convert your leads into paying customers. 

    You may be curious about what the difference is in a “cold” vs. a “qualified” lead. In the sales process, a “cold” lead is someone who hasn’t heard of your company or services, but you may be reaching out to initiate a conversation. This could be through a phone call, email, regular mail, etc. You then have “warm” or “qualified” leads who have come to you and you have done the work to discuss services, began building a relationship, and have gotten them ready to buy. A well-run and established business will also qualify that person or company to be sure they are the right fit for the services offered. Are they the right customer for you? Are they the type of customer you can work with? That qualified lead does take time and effort to convert, and they are more ready to buy at a 20 percent conversion rate than a cold call prospect at just 2 percent. The difference between a qualified lead prospect at 20 percent, vs. a referral prospect at 50 percent conversion rate can be a game-changer for a business.  

    When you are thinking about finding a reliable service or product, you may start with Google or Yelp and read reviews and testimonials. We spoke about the importance of reviews and testimonials in our recent podcast, Episode #76: Tapping into Testimonials. What those reviews and testimonials cannot provide for a prospect is the personal experience that a trusted colleague can provide via a referral. A referral from a source that has worked with you, a trusted past – or present – customer, means they’ve had a relationship with you and have the ability to judge your company in the same capacity that they are looking for as a prospect for your business. 

    Another reason why referrals are so effective is that your circle grows exponentially every time you gain a new client. Referrals do not have to come from just your clients, they can come from anyone in your network. Perhaps an IT company you’ve worked with, or any provider that may service your industry. Your circle is not just your clients, it’s anyone that you’re working with providing related services. You are expanding your opportunities when you expand your circle, and that’s another reason that referrals are so important and can be crucial for the growth of your business.

    What do you do for referrals to work?

    In order for referrals to work for you, you really have to take a step back first and think about the experience that your clients or customers are having when they are working with you. You have to be delivering that high-level extraordinary service that’s worth talking about! You have to go above and beyond to make that experience worthwhile for them to go out on a limb and say “Hey, I have this really great company for you”, because they have to have trust in you that you’re going to take care of their friend or colleague or whomever they are recommending. There is another statistic we want to share with you from that shows 61 percent of millennial consumers are willing to pay more for a guaranteed good experience. If you are really stepping up and putting everything you have into delivering that out of the ballpark experience for your clients, people are willing to pay extra to know that they’ll be taken care of and prioritize good service over pricing. That old adage applies where “you get what you pay for.”

    You also have to invest in building relationships with your client in order for referrals to work for you. It all comes back to trust and building a rapport with your clients and with the partners in your industry who will be going out of their way to refer you. Even if you have a one-time service that you delivered to a client, you should engage with them on an ongoing basis and reach out to follow up and make sure their needs were met. Putting in that extra effort to let your clients know that you care about them goes a long way, like the personal touches of acknowledging big life events such as weddings, having a baby or birthdays, are truly appreciated. If you are hands-off, this process will be more difficult, and you will need to step up your game a bit in order to develop better relationships.

    Make it easy for people to refer your company

    Giving people the experience that’s worth sharing is how you make it easy for people to refer your company. I think we’ve all had experiences on both sides of the spectrum as far as a fantastic experience that we want to tell everybody about, and then a terrible experience that we want to tell everybody about, and we get passionate on both sides of those spectrums. You have to tap into that passion that you felt when you’ve received extraordinary services and deliver something that would make it worth talking about for your clients.

    Another thing that can make it easier and simpler for clients to refer you is to put together a template that busy clients can follow when speaking with potential prospects and referrals. All business owners are busy, and having something in hand that they can refer to can help them explain what your company does and remind them of the many things you may be able to do for a new client. They may be clients of one service you offer, but may not remember that you also have other service offerings that may be of interest to a prospective client. You can provide them with some of your marketing materials, or a brief paragraph that they can send out to colleagues they have in mind that could benefit from your services, and you can also share with them the types of clients that work best with your firm. 

    Act on feedback from customers

    If you have no sense of how your clients feel about your services, and you haven’t asked them in any way, shape or form, it’s probably not a good point to start a conversation and ask for referrals. You want to take care of your clients, and proactively ask them how they’re feeling about your services before you begin the process of asking for referrals. While you may have a sense of their satisfaction levels, do you have an official process to ask? A survey process is a great way to keep tabs on client feedback and address any potential issues as they arise. It’s also a great way to know who is over the moon happy with your services, so you can potentially follow up. Once you have that positive feedback, then you can ask for those valuable referrals.

    Create opportunities for people to advocate for you

    As we spoke about in or previous podcast Episode #76 on Tapping into Testimonials, some business owners don’t get testimonials, or referrals in this case, because they simply do not ask. The request for a referral from a client does not have to be a long drawn out conversation that you might dread or have to work yourself up in order to do, but can be easy and simple if you create the opportunity and simply have a quick conversation. 

    Be careful to always be respectful of your clients if they prefer not to refer your services. You can’t take it personally, and perhaps they just don’t have the time. There are a million reasons that they could be saying, no, it’s not necessarily a reflection on the services that you’re providing. Always be gracious and give them space if you receive a “no” when asking.

    Reciprocate prudently

    When you are building your circle of influence, and building relationships with related businesses, be sure to look for a win-win situation when it comes to referrals.  It’s important to come at this process from a place of service to your client because you don’t want to just build relationships with dollar signs in your eyes. You don’t want to have the mindset of “I’m going to get so many referrals because this person is so connected”, but you have to think, “are they delivering a great service that would benefit my clients too”, because part of building those business relationships for referrals is to reciprocate. It’s got to be a give and take relationship that you’re building with people, and at the heart of it is your client who is ideally helped further by this network of people that you’re bringing together.

    Try to keep a balance between the number of referrals you receive, vs the number you give. Be careful here though! You have to do your homework and find referral partners that offer services at the same level that you provide so you don’t end up with clients who may be disappointed, or potentially blame you for bad service. 

    Reward your referrers

    After you asked for a referral, and you’ve gone through this whole process of perhaps creating the template for them, and they’ve gone through all the work of reaching out to their network, and you finally get a referral from somebody, you don’t want to just ignore it. You want to reach out and thank them for their efforts on your behalf, and make them feel appreciated! The people who refer your business to others are the ones who have that trust with you, and you want to reward them. There are multiple ways to do that, and it should align with the type of business that you have and your shared values. 

    For example, you could send out a card, or a gift, and you could even do cash. Some people choose to institute an official customer referral program where the rewards are very clear. Everything’s detailed, everything’s outlined, but that obviously takes some work to put together. If you don’t want to go that route, you can kind of default back to a simpler incentive such as a gift card. Keep in mind the level of service that you’re offering when rewarding. If your service is a hundred dollars versus $10,000, that gift, and that thank you is going to change depending on that level of service. The main thing is to come from a place of gratitude, and thank them for referring your business.


    When it comes to referrals and growing your business, it comes down to taking action and asking for trust to be placed in your business from clients with whom you’ve built a relationship. When the trust you’ve built with your clients is transferred to you via a referral, it’s critical that you use that trust placed in you wisely and do your best to deliver on your promises to the new client. There’s a great deal of relationship building that has gone into getting you to that point. So don’t waste it. Use that trust wisely. Take action, keep doing the hard things that no one else is willing to do, because that’s going to take your business to the next level.

    If you liked this topic and are interested in more ways you can grow your business, you can get our free webinar that walks you through the 4 Ways to Grow Your Business. We have included a worksheet with that as well so you can walk away with actionable ideas for your own business. 


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    #77: The Power of Extraordinary Customer Service

    #77: The Power of Extraordinary Customer Service

    Today’s episode of Cultivating Business Growth is focused on the power of extraordinary customer service. It’s generally accepted in the business world that retaining current customers is a much more efficient way of growing profitability in your business than gaining new ones. The caveat is that they must be the right kind of customer. We will dive into how you can deliver extraordinary service and positively impact sales and customer retention by working to eliminate risk factors from your offerings.

    What we cover in this episode: 

    • 01:54 – The cost of acquiring and keeping customers
    • 03:43 – How to create raving fans of your business
      • 04:27 – Exceed expectations
      • 08:53 – Know your target market
      • 11:39 – Know when to say “no”
    • 14:50 – Always make things right
    • 19:44 – Customer feedback
    • 25:24 – Can you guarantee that?

      The cost of acquiring and keeping customers

      There have been a variety of studies and research over the years that focus on the costs associated with customer retention vs. gaining new customers. When it comes to retention strategy, it is clear that it has a big impact on growth and profitability. Research from Forbes has shown that the cost can cost five times more to attract a new customer than it does to retain an existing customer. Research also noted that increasing customer retention rates by just 5% can increase profits by 25 to 95%. 

      Beyond the obvious benefits of delivering a service that exceeds expectations, you will see the effects ripple throughout your business. It is the easiest way to make a customer happy, which leads to referrals, repeated business, cross-selling and upselling because once you’ve developed that trust with a customer, the rest falls in place.

      How to create raving fans of your business

      Providing excellent customer service should be a given but, unfortunately, it’s not always the case. Setting proper expectations, following through, and delivering what you promise during the sales process is a big deal for customers. Taking steps to do this intentionally with every transaction builds trust in your company and, ultimately, leads to raving fans.

      Exceed expectations

      You must give your clients something to talk about! In order to reach the status of a “raving fan” you really have to go above and beyond to reach an extraordinary level. But how do you do that? No company is perfect, but doing the best you possibly can at giving excellent service, and integrating that mindset into your culture and training across the organization will help you reach that next level. 

      Stellar communication practices, like answering questions in a timely manner, are really step one in delivering exceptional service. If you don’t have a decent response time or ignore communication best practices, you will struggle to create happy clients, let alone raving fans. People appreciate getting responses quickly, even if you may not have the right answer at the time, or have to let them know you’ll get back to them shortly. That communication is vital, and that communication needs to continue throughout the process in order to build rapport and nurture that trusted relationship with the client.

      Know your target market

      It’s important to define and understand your target market because it allows you to anticipate their needs and take a more proactive role in the service you provide. This proactive approach and intentional communication style can do wonders for your client experience. 

      If you do not make the effort to understand the needs and desires of your target market, it can lead you to bring in clients that you won’t serve well, and you set yourself up for failure. Getting the right clients from the start that fit your niche will allow your business to focus and it makes it easier to provide excellent service. Once you’ve found the right market, you have to lay the groundwork before you begin to provide excellent service. You will need to communicate with the client or customer and set the expectations of the services you are going to provide. 

      Know when to say “no”

      Almost every business owner has been in a situation where you just keep taking on the work and then realize that your service may be declining because you don’t actually have the correct capacity to perform all that work. The customer always seems to suffer in those situations, and in order to provide excellent service, it’s important to shift your focus to giving quality service vs. quantity. 

      One thing that will allow you and your business to have a smooth onboarding for a client or customer is to ensure you actually have the capacity to take on new clients or customers beforehand. It’s not easy to say no to adding clients or new business, but it really needs to be within the capacity of your team to take on, otherwise, your customer service will suffer. You want to be in a position to excel in your customer service and to respond to your clients, and that may mean hiring and training extra staff. Hiring extra staff also means you will need to be sure you are set on the backend of the engagement as well, and that you have the capacity and time to do quality control and be sure that the client is getting what they’ve been promised. 

      As a business owner, you have to be prepared to say “no” to additional clients or customers if adding them will negatively affect your customer service or company performance. Instilling a culture in your business where making sure the client is happy at all times and having that core value resonate with your staff will nurture the qualities that your clients will appreciate and rave about.

      Alway make things right

      Despite how much you plan or prepare, or the quality controls you may have in place, there will be situations that come up where things do not go quite right, and no matter what you do, the client or customer is not going to be happy. It is really important to evaluate the situation and always try to make things right for the customer. In any case, you should always communicate with the client and have that discussion about expectations and how you can make it right for them. Clear and concise communication will allow you to handle those situations, and allow you to make it right, if possible.

      If you’ve made a mistake in the evaluation of a client and discover that the time needed to do the job for them will cost more than expected, you have to have that conversation and be upfront and realistic with them. Having that open communication with the client and being honest as to why the cost may be higher than they expected, will allow you to have integrity behind you, and will show you have the customer or client’s best interests in mind. Some clients may think that you are trying to upsell, do more work or change pricing, but if you communicate with them early, and come from a place of trying to service your clients properly and exceed their expectations, you can help them to understand you are trying to give them the service that they need.

      Doing everything you can to correct a mistake or misunderstanding is key to making a client happy, especially if the error was on your side. Crediting an amount that was overcharged, offering a free month of service, providing extra time over and above what they normally receive, are just some of the ways to go above and beyond to make things right. And of course, if you find mistakes or errors on your end, putting the corrections in place so those errors do not happen in the future is paramount. When you do these things, clients will appreciate you and your business and understand when mistakes happen, and know it was unintentional, and move forward.

      If something does come up, and you have a glitch and an unhappy client, you really want to avoid becoming that “horror” story that it seems everyone has experienced. You don’t want to be the company that people talk about in a negative way, where they spread the word to their friends and say “I’ll never shop there again” or “I’ll never eat there again.” No one is perfect, but being that “horror” story is something you want to avoid at all costs. 

      Customer feedback

      How do you measure your performance? Do you know how your customers truly feel about your services? If you are only basing this off of a gut feeling, your customers’ true sentiments may be unknown. Using a tool to measure customer feedback can help you create a tangible number that you can track and improve upon if needed. Some customers may readily give you feedback directly and let you know exactly how you are doing with praise and kudos, or the opposite if you’ve not met their needs. But many clients need a prompt, like an official survey in order to voice their opinions or concerns. As a business owner, you want to be able to capture the whole picture and grasp where you really stand. Implementing a customer feedback program to track and capture that information will help you have a sense of where you stand, for everyone in your company.

      There are many different ways to get customer feedback, and one of those ways we’ve implemented here at PJS & Co CPAs is to create and send out customer surveys. You want to keep the survey brief. Ask one to three questions at most in order to get a sense of what they are thinking, and give them an opportunity to express themselves. A survey can highlight any red flags that may be occurring, and provide a chance to address any issues before they become bigger problems. Jamie stated, “If you don’t ask, you’ll never know.” No matter if the feedback is positive or negative, opening that door to more communications and discussions with your customers and clients can help you provide that excellent customer service you are striving for. We use Customer Thermometer to embed the survey within monthly emails and make it very easy to provide feedback on a regular basis.

      An owner may have a good sense of how they are doing when they are the only one performing the service, but when their business scales and adds staff, they can lose a little bit of that connection with their clients. An owner should review the results of the feedback and look at it as an opportunity to grow and improve if needed. Surveys should not be used to point fingers or reprimand your team if the feedback is not positive. Rather this should be used as an opportunity for more training or to improve systems to create the raving fan experience you are aiming to provide.

      Can you guarantee that?

      Establishing a guarantee for your clients or customers can easily be done if you are selling a product. If you have a product that isn’t functioning, you can replace that product. That’s a fairly straightforward guarantee. But what if you are in the service industry? It does become a bit more complicated to provide a guarantee. If your customer is unhappy with your services, they may not want the service provided a second time. Companies in the service industry can establish a money-back guarantee to overcome those challenges.  

      Building up the client’s trust in you and your service from the beginning of your engagement is what will set you apart from other service providers. Service providers should always be communicating with their clients, especially in the beginning in order to build that trust. If they feel like they are being heard and that you’ve done everything you said you were going to do, that trust continues to build. Jaime stated, “If you are really looking for long-term relationships, there’s nothing more important than building trust from day one.”

      Building a business is an evolving process, and if your goal is to ultimately continue to build your business, you have to pay attention to providing excellent customer service as you continue to grow. Laying the foundation and putting good processes to take care of clients is the start, but additionally, you should reassess from time to time to be sure that foundation does not develop any cracks or crumbles.


      As a business owner, providing excellent customer service is the key to success, but many companies struggle with going above and beyond and setting themselves apart from their competitors. Finding the right customers, exceeding their expectations, and showing you can deliver on your promises and make things right if things do not go as planned are the proven steps to extraordinary customer service. Making the hard decisions up front to implement the items we discussed today, can really pay off for a business in the long run, and make your business thrive.

      Your goal should be to create amazing experiences so that every customer becomes a raving fan. Exceed their expectations in unexpected ways so they have something to talk about when they are asked about your business.

      Links mentioned in this episode:


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      #76: Tapping into Testimonials

      #76: Tapping into Testimonials

      Did you know that 72% of consumers say positive testimonials and reviews increase their trust in a business? Today we are talking about how to tap into and use testimonials to your benefit. Plus, we are giving you several tips to help you get persuasive testimonials and use them to convert prospects into buyers. We want to show the true impact on your business of getting, and tapping into, testimonials and reviews. We are speaking today with Jami Johnson, Partner at PJS & Co. CPAs, and Megan Spicer, our Marketing and Business Development Manager to discuss the importance of this topic.

      What we cover in this episode: 

      • 01:30 – The importance of testimonials
      • 05:56 – Tip #1: Go after testimonials
      • 11:50 – Tip #2: Don’t stop at one
      • 14:34 – Tip #3: Use testimonials with the right characteristics 
      • 20:06 – Tip #4: Do not “fake it ‘til you make it” 
      • 22:24 – Tip #5: Show them off

      The importance of testimonials

      Let’s start by sharing some of the statistics and research we’ve found that shows the impact for a company by getting testimonials and reviews. Did you know 92% of customers read online reviews before buying? If you think about this first one, it seems pretty standard for consumers to do these days. Most people research a product or company before making a purchase and go straight to the reviews to get a good read.

      Additionally, 72% of consumers say positive testimonials and reviews increase their trust in a business. Think about your own behavior when considering a product or service. When searching on Amazon or Google, and you find what you’re looking for but it doesn’t have any reviews, you’ll keep looking until you find one that does. If researching a service business on Yelp or Google, you’ll look for positive reviews before calling them. It’s that non-biased opinion that is powerful and can spur people to action. 

      Lastly, 70% of people trust reviews and recommendations from strangers. Not everyone writes reviews for products or services, so when you read a review and know that someone took the time to write it, you feel like you are hearing from someone who feels very strongly, either good or bad. Having that honest review or testimonial of their experiences with a product or service can be very helpful for future customers when making their decision to purchase. 

      Tip #1: Go after testimonials

      The first tip is simple – just ask. Think of the old saying “Ask, and you shall receive.” Many business owners don’t have testimonials because they simply don’t ask for them. Business owners may think asking can be kind of awkward, or they feel it’s bragging, but when the request comes from a place of no pressure and authenticity, many customers are happy to help. When a client gives you good feedback over the phone or via email, don’t hesitate to ask them for a review or testimonial. It can be a simple and a no-pressure request such as “it would be really appreciated if you could hop on Goggle when you have a free moment (or wherever you are trying to get a review), and add a review for our product or service.” The timing of the request matters as well because you should be asking for that feedback while it’s fresh in the mind of the buyer. Think of requesting a review within a few days of a single transaction, rather than a few months from the time of service, when they may not remember exact details. There is a reason why Amazon sends those review emails in the next 24 hours after you’ve received your package; they want to have real-time feedback. 

      There are other ways you can encourage testimonials or reviews as well. Some companies perform surveys on a regular basis (monthly or quarterly) and you can use the comments section of those surveys to encourage testimonials. You can also incorporate a link for feedback into your company’s email signature lines. The more ways you can open up for customers to provide you with feedback, the more likely they will be willing to do so, but you have to ask. When a company makes it a priority to request feedback and gain insight on how the experience was for their customer, the customer will know that you are taking the initiative and are making them a priority. 

      Tip #2: Don’t stop at one

      Do not stop once you have one testimonial. Use that as leverage to spur you on to get more, especially if you have multiple lines of service. You will want to go after testimonials for each line and level of service because client experiences are going to differ across each of those service lines. Most businesses have multiple products or services they provide, and customers have different reasons for selecting various offerings. Potential clients will want to see if there is a common thread or something that will resonate with them when they read about your current clients’ experiences. That’s why it’s so beneficial for a company to have multiple testimonials, and get as many as they can to appeal to all different scenarios of your services. If you work with multiple industries, be sure to try and get testimonials from each niche in which you operate. 

      Tip #3: Use testimonials with the right characteristics

      Focus on benefits over features

      Our third tip is to use only testimonials with the right characteristics. And by that we mean the testimonials you receive that focus on the benefits rather than the features of your service or product. For example, a feature is “you handle my bookkeeping every month”, but the benefit is what you would want to use and focus on, such as “I don’t have to worry or stress over doing the bookkeeping every month. I have peace of mind that everything is done correctly and timely.” The benefits you want to highlight in your testimonials should also mirror the things you are promising to deliver for your clients and customers when selling to them. 

      Include hard facts, numbers, and percentages to highlight results 

      Including actual numbers, facts, and figures in your testimonials can be a very powerful tool to highlight the results you have achieved with your current clients. Some clients may not be comfortable sharing specific details about revenue, but perhaps they can share that using your services has saved them x amount of money, or helped increase profits by x percentage. Using some hard numbers or statistics can really beef up your testimonials.

      Make it easy

      Your client may not know what to say when you ask them for a testimonial. If you don’t want to overwhelm your customer, you can always provide them with a few writing prompts for a testimonial. If you give them prompts and questions such as “what have we been able to help you achieve in your business?” or “what stress did we relieve by providing our services?”, you can get them to talk a little more about the benefits rather than the features of your services or product. 

      Get permission

      You will also want to be sure and get your client’s permission before sharing that testimonial with their full name, title, and business name. An anonymous testimonial doesn’t build much trust and won’t be of use, so ask your client if they mind if you share their testimonial (with a name at the very least) on your website or marketing materials. You can even give a finalized version to them beforehand so they can see what it will look like when published. 

      Using headshots and names is always advised if possible because it puts a real person behind the words. Taking it even a step further would be to get a video testimonial or an audio testimonial, so take advantage of these mediums if your client is comfortable. Not all clients feel comfortable providing a video testimonial though, so be sure not to make it a high-pressure situation for your client. It is best to be very clear about when and where and how you would use their testimonial so your clients understand the context and where they may see it in the future. The request has to come from a place of respect, and they need to trust you to use their words appropriately in a way to compliment your business with their testimonial.

      Tip #4: Do not “fake it ‘til you make it”

      The fourth tip is to remember that this is not a “fake it ‘til you make it” area of your business. Your testimonials have to be genuine and unfiltered. You can get something very eloquent and polished if you send it through multiple edits, but then it’s not a true testimonial anymore. You want it to sound real, so don’t ever edit or rewrite your testimonials. Now, if there is a grammatical or spelling error that needs to be corrected, you can send it back to the client and get approval on making those kinds of changes. Bottom line is that if you can’t use the testimonial as the client wrote it, don’t use it. Fake testimonials are easy to spot, and no one wants that. Everyone wants to know the truth, and know that your testimonials are authentic.

      Tip #5: Show them off

      Our fifth and final tip for you today is to show them off! Use them whenever possible! Use them in all your marketing materials, use them on your website, any ads that you may run, use them on your newsletters, brochures, packaging, etc… If you have a physical location with a waiting area, frame them and put them up there. You can even put them on the back of your business cards. Basically, you should be using them anywhere that you have clients who can visibly see them. If the testimonial is too long for a certain placement, for instance, a social media post, you can use a portion of the testimonial and link to the full version on your website. There are many creative ways you can use testimonials, so take advantage of them! After all the hard work of asking and getting testimonials, don’t be timid about showing them off. 

      Many business owners also use them for motivation. To see those testimonials can confirm for them the how, why and what they are doing well in their businesses, and it can give them affirmation they need to keep moving forward and continue excelling. It can be very rewarding to receive positive feedback and testimonials, especially as an owner who may not always feel that their efforts are appreciated. Testimonials can encourage a business owner to build up, tweak, or re-evaluate things in their business. Perhaps they were planning on changing something but now learn from testimonials that what they are currently doing is really helpful. Using the testimonials that you receive to reflect on your business and refine it, can only make your business better. 


      Business owners can tap into testimonials and use them to grow their businesses and convert prospects into buyers. Reviews and testimonials are prevalent in today’s business world, and the statistics show the proof of how important they are for a consumer to make a buying decision. Business owners should ask for reviews and testimonials, get as many as they can, a variety that covers all aspects of the services they offer, and use the ones that show the benefits of your business to their prospective clients. The testimonials should be genuine and unfiltered to show honesty and build trust in your business, as well as show them off and use them everywhere they can.

      If you enjoyed this topic today and found it helpful, please subscribe, rate, and review our Cultivating Business Growth podcast and check out the additional free resources and learning opportunities at your fingertips available on our site! 


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