📨 Contractor’s Digest – Daily Rundown
📅 Monday, March 24, 2025
🛠 Helping Contractors Win More Jobs, Increase Profits & Avoid Costly Mistakes
🚧 Today’s Rundown
🔹 Why Every Contractor Needs a Rainy Day Fund
🔹 Business Tip: Eliminate Scope Creep with This One Contract Clause
🔹 Tool Spotlight: Best Compact Drill for Tight Spaces
🏗️ Feature Story: Why Every Contractor Needs a Rainy Day Fund
📉 What’s Happening?
In construction, unpredictability isn’t the exception—it’s the rule. One week, you’re flush with work; the next, a project gets delayed, a client disappears, or you’re hit with a surprise expense. And it doesn’t take a massive disaster to do severe damage—just a few slow-paying clients, a weather delay, or a blown compressor can turn a good month into a financial nightmare.
Too many contractors are running razor-thin margins with no backup plan. When something goes wrong (and it will), they scramble to cover payroll, dip into personal savings, or take on high-interest loans to stay afloat.
Without a financial cushion, your business becomes fragile—vulnerable to every minor hiccup.
📌 The Risks of No Safety Net:
✔️ Delayed Projects = No Income
If a project stalls or gets pushed back, you still have bills to pay—but no cash coming in.
✔️ Upfront Material Costs = Out-of-Pocket Risk
If you cover materials before receiving payment or deposit, you’re fronting thousands—often with no guarantee of quick reimbursement.
✔️ Equipment Breakdowns = Unexpected Expenses
When tools break or trucks need repairs, you can’t afford downtime. But without emergency cash, you either delay the job—or swipe a credit card.
✔️ Payroll Pressure = Team Trouble
Missing a payroll deadline damages your crew's trust. If you can’t pay your team, you’ll lose good labor fast.
📌 How to Build Your Contractor Rainy Day Fund
✅ 1. Know Your Number: 3 Months of Overhead
Your overhead includes rent, insurance, utilities, loan payments, and any salaries or recurring expenses. Multiply that by three, and you’ve got your baseline rainy day goal. For many contractors, that’s between $15,000–$50,000 depending on the business size.
✅ 2. Start Small & Be Consistent
Saving 5–10% of net profit from each job adds up quickly. It might take 6–12 months, but the peace of mind is worth it. You wouldn’t run a job without tools—don’t run a business without a safety net.
✅ 3. Keep It Liquid
This isn’t money you invest in stocks, equipment, or new vans. It’s cash you can access immediately. Use a dedicated high-yield savings account to earn a little interest while keeping the funds separate from your primary operating account.
✅ 4. Treat It Like It’s Nonexistent (Until It Isn’t)
Avoid dipping into your rainy day fund unless it’s a true emergency—like covering payroll during a slow season or replacing a key piece of equipment. Think of it like a fire extinguisher. You hope you never need it. But when you do, it’s a lifesaver.
🚀 Pro Tip:
Think of your emergency fund as the ultimate form of risk management. It's not optional. It's your safety harness, the difference between shutting down a project and pushing through, between laying off a crew—or keeping everyone paid and working.
🔐 Bottom Line: A contractor with a rainy day fund is a contractor with options, confidence, and long-term staying power. Build yours now—before you wish you had.
Want a step-by-step savings worksheet to calculate your 3-month runway? 📩 Reply to this email, and I’ll send you one for free.
📌 Business Tip: Eliminate Scope Creep with This One Contract Clause
Scope creep is one of the fastest ways to bleed profit on a job. It starts small—“Can you just add this real quick?”—and snowballs into unpaid hours, unplanned materials, and blown schedules. If you’re not controlling the scope, you’re not controlling your margins.
The good news? One clever clause in your contract can stop the creep cold.
📉 The Problem: Where Contractors Lose Control
🚩 Vague Project Scopes
If your contract says “remodel kitchen” but doesn’t spell out exactly what that includes (and doesn’t include), you’re setting yourself up for misunderstandings—and expensive extras.
🚩 No Written Change Process
Without a formal process, clients will assume changes are included. Your team might make changes just to keep the client happy without adjusting the price.
🚩 Pressure to Be the “Nice Guy”
Many contractors say yes to change requests for fear of losing the client or upsetting the relationship. However, being too flexible with scope can turn a profitable job into a money pit.
📌 The Fix: Add a ‘Change Order Clause’ in Every Contract
A change order clause doesn’t make you rigid—it makes you professional. It protects both you and your client by creating clarity and accountability.
1️⃣ Define the Original Scope in Detail
Be as specific as possible in the contract:
✔️ List precisely what’s included (e.g., “Install 200 sq. ft. of ¾” oak hardwood, stain: Golden Oak”)
✔️ Call out what’s not included (e.g., “Excludes trim replacement, subfloor repair, or paint touch-ups”)
✔️ Include a “scope sheet”, if needed,d with visual references or product selections
🔒 Why it matters: If the scope is clear from Day 1, there’s no confusion about where the job ends—and where extras begin.
2️⃣ Require Written Approval for Any Changes
No verbal approvals. No, “we’ll settle it later.” If it’s not in writing, it doesn’t exist.
✔️ Create a simple, fill-in-the-blank change order form
✔️ Include description, price, added time (if any), and client signature
✔️ Do not begin change order work until the form is signed
🔒 Why it matters: This keeps you in control of labor and costs and avoids client disputes down the road.
3️⃣ Include a Change Order Pricing Structure in the Contract
Let clients know upfront how changes will be priced.
📄 Example Clause:
“Any work requested by the client outside the original scope will require a written and signed change order. Additional labor will be billed at $95/hour plus materials. No changes will be performed without prior approval.”
🔒 Why it matters: This sets the tone early—changes are possible but not free. Clients respect clear terms when you explain them early.
🚀 Pro Tip: Want to deliver outstanding service and protect your margins? Communicate like a professional. Straightforward contracts with firm change processes don’t make you difficult—they make you reliable.
Clients may push boundaries, but a contractor who stands by their contract earns respect and keeps the job profitable.
📢 Bottom Line:
The difference between a profitable and frustrating job often comes down to how well you manage changes. A well-written change order clause is your first line of defense.
Want a sample change order form to plug into your next contract? 📩 Reply to this email and we’ll send you a free template.
⚡ Tool Spotlight: Best Compact Drill for Tight Spaces
🔹 Milwaukee M12 Fuel 2" Hex Right Angle Impact Driver
Perfect for cabinets, tight corners, or anywhere a standard drill won’t fit. Small, powerful, and built to take a beating.
😂 Contractor Humor:
"Why did the contractor get kicked out of the poker game? Too many outstanding decks!"
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👷♂️ Stay sharp, keep building smarter!
— Benjamin Patton