Are you falling into the December 31 trap: making resolutions with no real plan?

In this episode, Wade Carpenter and Stephen Brown break down how to finish Q4 strong so your business starts 2027 ahead. You’ll learn how to identify unprofitable work, streamline your billing, get your books current, and give your cash a job using Profit First.

Stop reacting and start planning. Your most profitable year yet is within reach.

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Topics covered on this episode include:

• 00:00 Escape December 31 Trap
• 00:54 Meet the Hosts
• 01:18 Fourth Quarter Reset
• 03:17 Plan Before January
• 05:12 Find Pain Points
• 07:27 Audit Jobs and WIP
• 09:24 Bill Faster Get Cash
• 12:06 Bookkeeping and Advisors
• 17:15 Bank It Profit First
• 20:30 Q4 Action and Changes
• 21:39 Free Five Day Challenge
• 22:21 Wrap Up and Subscribe

LINKS

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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

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TRANSCRIPT

[00:00:00] 

Wade Carpenter: Ever make a New Year’s resolution for your business, and by the time the hangover wore off, you are back to the same habits?

Ever planned to make more money without [00:00:10] knowing which jobs were actually profitable? Or promised to pay yourself more, then take whatever was left over?

That’s the December 31 trap. [00:00:20] Imagine starting 2027 with your billing caught up, books you can plan from, and a clear path for your cash, so more of what you earn stays [00:00:30] yours.

The time to start is now. Today we’re getting your house in order before January. You build it, you bill it. We’re gonna help you book it so you can bank [00:00:40] it. A better 2027 starts right now.

Quick heads up before we jump in, everything we talk about today, I turned into a free five-day challenge. One step a [00:00:50] day, about fifteen minutes each. Stick around to the end, and I’ll tell you how to get it.

Wade Carpenter: This is the Contractor Success Forum. I’m Wade Carpenter with Carpenter Company CPAs, alongside Stephen Brown with [00:01:00] McDaniel-Whitley Bonding and Insurance.

And Stephen, how many of our listeners out there have told themselves 2026 2026 was going to be their year, but as we start the fourth quarter, [00:01:10] they’re seeing yet another disappointment? 

Stephen Brown: Yeah. I tell you, Wade it’s frustrating, and we don’t want any of our listeners to go through this, first of all.

You know that expression [00:01:20] spring cleaning. Contractors cannot clean their house in the spring. They’re busy building. Here it is winter, fourth quarter, say, your year-end. It is December 31st. This would [00:01:30] be the fourth quarter of your year. This would be the time you really start concentrating on the things you need to do so you can make that [00:01:40] profit and you can plan how you’re gonna use it, how you’re gonna expand your business, what kind of jobs to go after.

Because remember, the whole idea is not just [00:01:50] I’m gonna make a New Year’s resolution to lose weight. The whole idea is for you to say, “I’m gonna make sure my vision going into next year is [00:02:00] straight as far as what kind of projects I want to go after, really, to make it a great year, not just drudgery.”

Okay? What kind of projects do you have to go after, and how do I [00:02:10] measure that, and how do I monitor that? We talk about systems being in place too, Wade, and I think it’s a great topic.

And this is something as a bond agent every [00:02:20] year I’m constantly stressing to my customers.

What’s your year-end gonna look like? It’s time to talk to your CPA and your Board of Directors, which [00:02:30] your financial board of directors, your bonding agent, your insurance agent, your lawyer, your banker, and your CPA. Your construction-oriented CPA.[00:02:40] 

So if you’re not working with all those parties asking questions, telling them what problems you have that you want to get fixed, they’re there to help you get [00:02:50] there.

Wade Carpenter: If they’re not helping you to get there, then maybe you need another one.

It’s the first episode of the fourth quarter, and a lot of times this time of year, we are talking about tax planning and bond planning, [00:03:00] and really you can dress up your financial statements so that they do look better if you plan for it and you don’t just say, “Okay, we’re just trying to pay the minimum tax possible.”

[00:03:10] Sometimes they’re not necessarily competing goals. But it’s the start of fall. Here in Atlanta, the leaves are starting to change and it is a change of season.

And I got to thinking about the December [00:03:20] 31 trap, as I said in the intro, is like a lot of people like, December 29th, they’re like, “Okay, what am I gonna do next year?”

They make a resolution, and it goes out the window [00:03:30] before the second week of January. There’s no planning that went into that.

January 1 is just a day on the calendar. It’s not your business strategy, and just because you flip the calendar [00:03:40] over doesn’t mean that your business magically flips. It does take some preparation and planning.

Stephen Brown: The way we look at it from a bonding standpoint, we’ve gotta have a measuring [00:03:50] point. It’s generally December 31st, June 30th. You have some April year-ends. It just depends. But you look at that as the starting point, and [00:04:00] everything depends on how that looks as of that date to us.

And no I get it. You can’t just make a resolution to go lose weight, I’m gonna eat better right [00:04:10] after you finish gorging yourself through the holidays, and then expect it to last without a real plan behind it.

So I like the fact that we’re not using, just [00:04:20] turn-off words like, budgets and weight loss and exercise.

This can really be something exciting because as you start the year, you’re either depressed over [00:04:30] your current workload because it’s not making the profit you want, or you’re thrilled with it and you want more of it.

Enthusiasm comes from results, and you start [00:04:40] seeing good things happen, and things start going faster and faster for you. How do you suggest to help people get in that mode, that mindset?

Wade Carpenter: Just thinking about a contractor starting off a [00:04:50] job, you don’t show up to a concrete pour without having some planning and measuring stuff out.

Contractors spend a lot of time project managing their jobs and [00:05:00] getting their subs in place and the materials and everything, but they take less time to even think about where they wanna go.

They just have this vague direction, and that’s where I think [00:05:10] a lot of contractors are really missing the point here.

I guess I would start, and like I said, starting right now instead of waiting and just making a snap decision, the first thing I would say is [00:05:20] identify what you don’t want to repeat next year.

Did we have a really bad job that went sour? What went bad about it? Are we doing the wrong types of contracts? Exactly what [00:05:30] you were saying. What caused all this stress this year? Were we short?

Again, we could talk about the cash side of it and the Profit First, but, are you going through seasonality?

And a [00:05:40] lot of times, that is the slower time of the year for a contractor, and they have grand plans and they can’t even start it.

That’s what I would say is a lot of times [00:05:50] contractors are in chaos. It’s almost like the convenience store tax. I would say it’s like, okay, instead of going to the grocery store, you’re gonna go to the convenience store ’cause it’s right around the corner.

You’re gonna pay [00:06:00] twice the price or something like that. That’s what contractors are doing here.

Stephen Brown: Yeah. No, I totally get it. I love how you started that segment of discussion about just pouring [00:06:10] concrete. Think about if you poured concrete with no forms. It just goes everywhere, and it doesn’t accomplish what you want it to accomplish. Making a good slab, making a good [00:06:20] foundation for something.

As we start talking about what it is you want to change, what do you think are the most important things to start targeting for what you ought to change? Your mind [00:06:30] can wander with a lot of things that are bothering you. I would think, first of all, I’d go to pain points. 

Wade Carpenter: Yeah.

Stephen Brown: Maybe the folks you got working for, what do they need? Who do you need to [00:06:40] add? Who do you need to replace? But what’s the problem? And then look further from that and say, “What’s the underlying issue of why things aren’t getting done the way I want them to be [00:06:50] done?”

Wade Carpenter: I’m gonna hit that chaos part a few times today.

But just starting off, looking at this past year, beyond like you were so [00:07:00] busy that you didn’t have time to go really look at the budgets or see that you were going over on a job, or you didn’t even have a have the house in order to know that you were doing [00:07:10] that. That’s where we gotta get out of this chaos.

Having a full schedule on your backlog, that’s great, but a full schedule of bad jobs is a [00:07:20] very disorganized problem. I wanted to start now talking about that so that our contractors are thinking differently.

And like I said, if you’ve already got some work committed for [00:07:30] 2027, look at it. What have you got on the plate, and is it the right work? Is it profitable work? Do you wanna start doing something different? the time to think about that is [00:07:40] right now.

Are you actually got low margins on this? And don’t wait until you start running low on your backlog to start finding the jobs you wanted to [00:07:50] find.

Stephen Brown: Absolutely.

Wade Carpenter: Any thoughts on that? As far as like taking a retrospective, I know the bond agents they’ll go back and look at your WIP and how did these really come out and based on what we said, [00:08:00] from your perspective, what does that look like? 

Stephen Brown: We go back and analyze, if you’ve been in business for over five years, at least five years worth of financial information, and we look for [00:08:10] trends of profit fades. We look at your available cash and receivables versus how much you owe over the next 12 months. We look at the type [00:08:20] of projects you’ve done, which ones are most profitable.

Because remember, we have to convince a bonding company as a bonding agent that you can finish the project. You can not [00:08:30] only do it and finish it, they assume when they bond you, you’re gonna be able to do it and be able to finance it.

How do you handle uncertain things that pop up on certain jobs? [00:08:40] How do you communicate it? How do you deal with it? How quickly do you respond to it? And are those things in place to be able to do that? So that’s the direction I was thinking, Wade. 

Wade Carpenter: Yeah, [00:08:50] I agree. Choosing what to pursue is one thing, but as you were talking about what do we need to stop? Sometimes we need to take some hard looks at maybe we got the wrong people [00:09:00] doing estimating. Maybe we do need to make some hard choices.

I’m gonna hit this again. I’m gonna say this again. It’s like overnight shipping. You needed something tomorrow to be on the job because you didn’t plan [00:09:10] for it.

That poor planning is gonna cost you 50 bucks for an overnight shipping versus 10 bucks if you shipped it regular.

That’s where I want our contractors to think about how [00:09:20] can we get this in place and not make snap decisions?

Stephen Brown: Okay.

Wade Carpenter: I guess beyond that, I would say, we talked about the different steps that when I said before, the bill it [00:09:30] part. We need to finish the jobs out and number one, cash flow is king. We say this all the time, but finding money that you’ve already earned but haven’t [00:09:40] billed, and waiting on that cash.

Too many of our contractors are just, they hate billing. They hate taking the time to do it or they’re too busy. Getting out of that [00:09:50] chaos and making it so that they can easily bill and get the stuff out the door.

We tell so many stories. The one that I’ve told many times about that one contractor that I [00:10:00] had, that was doing about 35 to 40 million, and they were still doing everything with paper, and it took them two and a half days with three people to get their billing out the door. [00:10:10] And when we streamlined it and made it paperless, cut it down to, they had their costs in 10 minutes.

Those kind of things is like getting out of this chaos. That particular [00:10:20] contractor was missing some billings and they’d have to wait till the next month because some of them didn’t go out the door, and that kind of stuff is what really kills the cash flow of a contractor.

So just [00:10:30] creating some kind of billing routine and making sure that it’s streamlined and those kind of things.

Stephen Brown: Today billing is so much faster than it’s ever been in years [00:10:40] past. It’s outrageous how fast bills go out. And I love it, because from my perspective, if we give you a bond we’ve got X [00:10:50] number of days we are obligated to pay the bonding company that premium.

And you may not get your draw for a month or two months or three months, and then we have to wait to get paid, and we [00:11:00] have to go ahead and pay the bonding company.

So it’s the same with contractors and suppliers, the faster you can think of your payables as something that needs to be done [00:11:10] quickly to make sure that your core of dependency, people you depend on, are always there working hard in your best interest to help you be successful.

[00:11:20] It’s the same with the cash flow. I love the dashboards you showed, Wade, in our podcast about just what a day or two does to your cash flow, what it does to your overall [00:11:30] picture. And you think, 30, 60, 90 days, “Ah, yeah, we’ll get paid eventually. Oh, no, we got good profit on it. We just got to collect it, and we’ll get paid. We’ll get paid.” That kind of [00:11:40] mindset shouldn’t be going into 2027, I don’t think. 

Wade Carpenter: Agree. And again, getting out of this chaos, like the system that just like what I was talking [00:11:50] about with the paper chase that, it’s almost like having this messy garage and you can’t find your drill, so you go buy another drill.

It’s like, I don’t wanna call it a stupid tax, but sometimes that’s what [00:12:00] contractors are facing. They’re wasting a lot of time and energy and extra money because they don’t have their house in order. Which sort of leads to the next one, which is the “Book it” part [00:12:10] of what I was talking about.

And I know I preach this, this sounds self-serving, but, get your numbers in order so you can make some really good decisions. That’s my thought on that. From [00:12:20] your perspective, what do you think?

Stephen Brown: That’s everything. Is it in order? And you could say, “oh yeah, it’s fine.” What does your accountant say about it? He says it’s fine [00:12:30] too, but then you’re always having cash flow problems. What’s the problem, you or your accountant? To me, why aren’t you going to your accountant?

At first, if you’re cleaning [00:12:40] house in the fourth quarter, you’re doing winter cleaning of your house, make a list of things that you’re thinking about, and then talk to both your accountant [00:12:50] and your lawyer. You’re going into a new area of operations. How do I tighten that up and make sure that I understand what the risks are? Okay.

Then you go to your bond agent and [00:13:00] you you say, “Hey, I need you to come by the office. I need to talk to you about some things.” Or you want to get together for lunch or something. And you say, “Look, this is what I’m concerned about. This [00:13:10] is what I’m thinking about. What are your concerns? What are you thinking? Let’s see if we’re on the same wavelength and get your thoughts on it.”

Beause see, the best thing is when you can’t see the [00:13:20] forest through the trees, is to get a drone to look down into that forest for you. And that drone could be your accountant or your bond agent, but it’s someone that’s not so [00:13:30] daily invested into your operations that they can’t see know, what the problem is. And you know, that’s tough.

A lot of people don’t like to go see doctors because they don’t wanna hear a bad [00:13:40] diagnosis, and I get that. But remember, your accountant is paid by you to give you good advice, and bad accountants give bad advice, [00:13:50] bad bond agents give bad advice and can’t get your bonds approved.

So there’s a lot to who you’re doing business with. Maybe that ought to be part of your house cleaning. [00:14:00] Are you happy with those situations? And are you getting the kind of answers you need to solve the problems that you know you have?

Wade Carpenter: Yeah. And to piggyback off that, I mean, that’s a great analogy. [00:14:10] I like your drone analogy, seeing the forest for the trees.

But on top of that, whether you’re got it in-house, they’re overwhelmed, or you got a outside [00:14:20] accountant that catches up monthly, that’s where I realize we may be a little more expensive than the guy down the road that could do bookkeeping for half the price or whatever. But getting [00:14:30] your books current enough to know where you really stand at any given point, that is critical, and that’s why we do it the way we do it.

Having always up to [00:14:40] date, as up to date as you can get it from the field, that was the whole point of me showing all that stuff last week with that system was, just, you can’t plan if you don’t know where you [00:14:50] are right now and be able to look and say, “Are we gonna run out of cash in two weeks?”

Stephen Brown: That should be a concept that contractors understand, Wade. They understand blueprints. They [00:15:00] understand that the blueprints help them build something. All the elements that go into building anything take planning, and it’s the same with your [00:15:10] profit.

Wade Carpenter: Again, like I said, I don’t want to spend a whole lot of time on these, but just comparing what you were talking about, like going back and have somebody look at it with you, with a CPA or whoever. [00:15:20] Reviewing what you estimated versus the actual came out. And bond agent probably would love to do that with you.

Those kind of things we were talking about a while ago. If you did that [00:15:30] with Stephen right now you could maybe say, “Okay, this is what we found out. Put that into next year’s business decisions.”

Okay, we guessed wrong. Where were we wrong? We [00:15:40] were off on our labor. Is that labor ’cause we were undercounting it? Did the prices go up on materials? But the idea is, how do we get out of this chaos and [00:15:50] we start taking a proactive look at the whole thing and getting out of this stupidity tax, as I was calling it a while ago.

So again, nobody here is stupid. It’s just the fact that we’re all [00:16:00] overwhelmed, and I’m sorry if I came across the wrong way there. But anyway…

Stephen Brown: Yeah. Everybody’s overwhelmed. And hopefully, just taking the time to listen to this podcast and [00:16:10] hopefully think of some things that you may not have thought about and planning. This is what I’m gonna do about it. Maybe Wade and Stephen had some good ideas.

But remember, listeners, we deal with all different kind of [00:16:20] contractors, you know, all day long. As much as we love you as a client of ours, we have lots of folks we’re dealing with, and we’re trying to help everybody. And so that’s [00:16:30] why we started this podcast so we can tell our listeners, these are what we see over and over again that cause stress and problems to those in the construction [00:16:40] industry.

And we don’t want that. We want you to flourish. We want you to grow. We want you to understand the concepts. For example, Profit First. You [00:16:50] can say, “I don’t care what you say, Wade and Stephen, it’s gonna be two or three years of incredible sacrifice before I can make a living and support my family.”

That mentality type [00:17:00] of thing. Using Profit First to not only keep what you earn, but making sure that you’re allocating your funds that come in to who’s gonna [00:17:10] need it, who’s gonna demand it. I know that’s overly simplified, but it’s really not, Wade, is it?

Wade Carpenter: No, and actually you just led into the next point I wanted to make was the “Bank It” part of the [00:17:20] whole thing. Giving your cash a job.

That bank balance needs some context. Is it earmarked for payroll? Is it set aside for job expenses? Is it trying to [00:17:30] cover your overhead?

And when you do that, that’s where we get some clarity. I used to get so much pushback before I wrote the book, for the bigger [00:17:40] contractors: “We’re too sophisticated to need this.” But those are the ones that sometimes need it more. And the more and more that I’ve installed these in larger [00:17:50] businesses, they’re like, “Yeah, you’re exactly right, because I wasn’t thinking, you have to have the systems, but moving the money to the bucket it goes with, and exactly what you’re [00:18:00] talking about, like we’re gonna bank it because we’re gonna put money aside for profit and for our growth. That’s the whole point.

Stephen Brown: Yeah. What I really like [00:18:10] is that concept of what Carpenter & Company CPAs do for contractors. It’s look, “You build it, and you bill it and…”

Wade Carpenter: you [00:18:20] book it and you bank it. 

Stephen Brown: Yeah, we help you book it so you can bank it. I love that because if you’re building it and you’re not billing it, and you’re not getting paid for it, [00:18:30] and you’re not realizing your profits after your expenses and knowing exactly what that’s gonna be, how can you end this quarter planning for next year? [00:18:40] It’s really hard.

But it’s so much easier if you have that vision in place now and you commit to that, and then you work backwards from that.

Like I [00:18:50] was saying, how do you start this process, Wade? Do you say, “Oh what’s the most stressful thing I’ve got to deal with? What do I not wanna do next year?”

That’s one way, but I would [00:19:00] say another way is definitely, look at the most simple system and understand, like Profit First. It is simply beautiful, because its [00:19:10] concepts are so relevant to how to run a profitable construction company. And also how to enjoy your work, enjoy the construction [00:19:20] industry. And not have any area of your daily operation that’s just painful for you.

And I’ve seen over the years, when you get into the accounting and the billing and the bonding, the [00:19:30] contractor’s like, “Oh, Lord, I got enough problems right now, and now we got more because you’re asking all these questions you need this is…”

Nobody needs that. Nobody needs to [00:19:40] think like that either going into the next year. And they need to start thinking positively and plan for it because it’s definitely something you can do.

We’re here to [00:19:50] help. How many podcasts do we have out that you can go through to get some ideas? I don’t know. But I would certainly recommend reaching out to [00:20:00] Wade. Get his book, Profit First for Commercial Construction. You get it on Amazon, look at Wade’s website, subscribe see what he has to offer.

[00:20:10] And feel free to call me at McDaniel-Whitley if you wanna talk and say, “Here’s where I am. Here’s where we need to be. What do you think we need?” And we’ll get to know each [00:20:20] other and see what it’s gonna take to get you where you want from the bonding standpoint as well. And hopefully, maybe we can all work together and enjoy this ride we’re on.

Wade Carpenter: [00:20:30] Yeah. The reason I wanted to start now was getting out of that chaos. Just like the bank part of it, having that cash flow crunch creates more chaos. And [00:20:40] everything in an emergency always costs more. What I would encourage our listeners, use this fourth quarter to create the plan, refine the plan.

Think about some [00:20:50] changes. Sometimes change is hard. Rip the Band-Aid off. Sometimes you need to do that, and things don’t always stay the same. Maybe you want them to, but if you’re still getting the same thing you’ve [00:21:00] always gotten, maybe it’s time to do something differently.

What are you gonna do to review and adjust before January? That was the whole thought for today. [00:21:10] Getting out of that chaos and not making this snap decision and by the time the hangover is done, I guess that’s, you know, that’s where… how are we gonna get out of this [00:21:20] leaking bucket?

We keep pouring money in or resources. Do you have any final takeaways on that?

Stephen Brown: No, I think I’ve said everything I want to say about it right now.

Wade Carpenter: All right. [00:21:30] As we said before, remember this: I want you to build it, then you bill it, and then we’re gonna help you book it and bank it, and Stephen can help you bond it too. So don’t forget that one.

Join the 5-day Challenge to Build a Better 2027

[00:21:40] So here’s the thing. We cover a lot today, and if you’re like most contractors I talk to, you’re nodding along and thinking, “Yep, I need to do that.” And then Monday hits, and it’s [00:21:50] back to the job site. So I built something to help. It’s a free five-day challenge called “Build a Better 2027”.

One day for each piece we talked about: Build it, Bill [00:22:00] it, Book it, Bank it, and Bond it. Every day you get a short video from me and a few things you can do that day, about fifteen minutes.

You can start the minute [00:22:10] you sign up. Go to ProfitFirstConstruction.com/2027. That’s ProfitFirstConstruction.com/2027. [00:22:20] Link’s in the show notes too.

January’s coming either way. Let’s get your house in order before it gets here.

Wade Carpenter: We appreciate you being here. We do this every single week. We appreciate it if you’d like, [00:22:30] share, subscribe. It really always helps the channel out, and we will see you on the next show.