10 Guaranteed Ways to Go BROKE as a Contractor in 2025 (Don't Do This!)

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ℹ ABOUT THIS EPISODE

A satirical look at contractor failure!

Wade and Stephen reveal the 10 most common mistakes that send construction businesses straight to bankruptcy.

From pricing jobs like favors to ignoring cash flow, this reverse-psychology approach shows exactly what NOT to do to protect your profits.

Learn why fancy trucks before profitability, poor bookkeeping, and chasing slow-paying jobs are business killers. Perfect for contractors who want to identify dangerous patterns in their own operations.

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⌚️ Key mistakes we cover in this episode:

• 00:00 Introduction to the Satirical Guide
• 00:49 Pricing Jobs Like Favors
• 02:39 Buying Fancy Trucks Before Profit
• 04:49 Keeping Your Bookkeeper in the Dark
• 06:03 Paying Everyone Else Before Yourself
• 07:18 Treating Tax Time Like a Surprise Party
• 08:08 Chasing Big Jobs with Long Payment Terms
• 08:53 Never Saying No to a Job
• 09:53 Letting the Crew Manage Themselves
• 10:44 Skipping Budgets for Tools
• 11:53 Pretending Profit is a Bonus
• 13:05 Bonus Tip: Ignoring Red Flags

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

Transcript

Wade Carpenter: [00:00:00] You too can be broke as a Contractor in 2025. Just follow the simple 10 step plan. It's fast, it's easy, and best of all, it's wildly popular. Welcome to the Contractor Success Forum. I'm Wade Carpenter with Carpenter and Company CPAs, alongside Stephen Brown with McDaniel Whitley Bonding and Insurance.

 Today we've got a satirical guide to contractor failure because sometimes the best way to win is to show how to fail. Stephen, what are your thoughts on this one? We're gonna have fun with this one.

Stephen Brown: Well, wildly popular, maybe wildly accurate, with so many people. Yeah, this is a great idea, Wade. Let's just talk about what not to do and let's see how many people actually do that. Let's back it up with some stories, huh?

Wade Carpenter: Yeah, some of the things that we talk about are just, you'd be surprised at how many people do that. We're trying to do a little thought experiment.

But the first one just sort of jump into this so let's say you price every job like it's a favor to somebody else.

You figure hey, you're, the nice guy. You're gonna get in with a a [00:01:00] good crowd and we're just gonna do them this favor this one time, but what if we price every single job like that? What would happen?

Stephen Brown: Well, you go out of business, that's for sure, because you know you have to make your profit and you also have to meet your overhead. You know, It sounds like every time we talk about overhead, it's so unsexy. Nobody's willing to talk about it.

Wade Carpenter: I mean, what if we just said we're gonna start every bid with what's the lowest number I could offer without throwing up? Forget profit, forget overhead, just beat the other guy. That's the ultimate goal. We wanna beat that other guy just so we can get that contract.

Stephen Brown: Yeah, it costs money to make money and I gotta make a name for myself. Yeah, I'm gonna price this to get the work. People are gonna know who I am, and next thing you know, I'll be doing millions and millions and millions of dollars in contracts.

Wade Carpenter: That's right. We'll make it up on volume. right?

Stephen Brown: Right. 

Wade Carpenter: Anyway, like I said, I guess part of the thing is those other people, they know their numbers and they price with profit on purpose. What a [00:02:00] concept. 

Stephen Brown: It's an absolutely amazing concept, but, you know, I get it. You build and you wanna start a business. The rest of the stuff's not very glamorous. You know, Why deal with it? how many times do we talk about things that we see all the time that hurt contractors?

You're right, this is a great topic. It makes us laugh because we deal with it every day and so many contractors just don't see it. Look, all of us are that way, right Wade? We do the same things over and over again. Making those same mistakes and we just don't even see it. But amazingly, once you see it, you say, whoa, why didn't I know that before?

Wade Carpenter: Sometimes we don't think about these things.

 You know, that sort of leads into number two. The next one I wanted to go into is we gotta buy that fancy truck before you're profitable. You gotta fake it to make it, and your bank account may be empty, but your ego deserves a lifted F 250 with chrome mirrors and Bluetooth tailpipes.

Stephen Brown: Everybody's got an opinion on what the best truck is. Absolutely everybody. Even in [00:03:00] our office, we have arguments on who has the best truck. But that's right. Why are you going in that direction? Is it just about your ego or do you really think it's gonna help you grow your business? I don't think anyone pays really any attention to what truck you drive. I mean, It's amazing how little other people think about the things that are important to you. And if driving the biggest and the best truck is the most important thing to you then running a company on that mindset is probably not a good idea.

Wade Carpenter: We understand that everybody wants to look good. Everybody has a perception. When you pull up on that job site, having that really nice truck, maybe that shows a perception of you're successful, but do the guys care that sort of working on the job that you have this illusion of success? Is it really actual financial health to have that nice truck when you bought it on December 27th, as I always talk about, and, you expense it all up front, so you didn't have to pay taxes.

Now you're saddled with debt for a hundred thousand dollar [00:04:00] truck that you're gonna have to pay on for seven years.

Stephen Brown: Well, you know, I get that. And I also understand your truck being one of the most important tools. I've had contractors have hip trouble for how many miles they put on their trucks. it's absolutely amazing that most contractors' trucks are in perpetual motion and they're running all the time. You know, It's their office, it's their transportation, it's their everything. We get that, but at the same time, why are you getting that truck? That's the question.

Wade Carpenter: Yeah. do you really have to have that a hundred thousand dollars truck? the idea is, yes, they're a tool that you gotta have. But does it have to be the newest, nicest thing on the block?

Again, just going back to some of the lessons from Profit First and capital expenditures and, maybe just thinking about your cash flow. If that $1,500 a month payment on that truck is worth it, or I've seen a lot more than that.

But to move on to number three, the next one I wanna talk about is keeping your bookkeeper in the dark. If you got a bookkeeper, only give 'em half the receipts. Tell 'em [00:05:00] you get to it later. Then blame them when tax bill comes and you don't have all the deductions you want. It's all their fault, right?

Stephen Brown: Yeah, that's a real good That's a real good tactic for losing we're not trying to reign on anyone's parade here, but think about it if you're it we see it all the as like a bonding company, we ask for some accounting records and they're not 'cause the the bookkeeper doesn't have the information they need or the skills they need to produce the report. know, it's it's not your fault, is it?

Wade Carpenter: Absolutely not. You got receipts in a shoebox that you take to 'em every year, and if you'd got shoebox accounting, I guess, or I actually went, had one time somebody brought me a literal trash can full of-- it was a clean trash can, but they brought me on a trash can of receipts for us to go through.

For people trying to get job costing, they say they want good job costing. They want good records, but they're keeping their bookkeeper in the dark. They don't spend the time, they don't put [00:06:00] it to systems place.

Anyway, let's move on to the next one. Pay everyone else before you pay yourself. You're the owner, that means leaders eat last. All those great management themes I guess out there. You're the first to bleed and never allowed to take a vacation. But it does build character right?

Stephen Brown: Yeah, I don't know what it builds. It builds a lot of frustration. It builds a lot of family problems. It builds a lot of, stress on you, but nevertheless, you know, look, I'm running my construction company and you know, I have to make some sacrifices.

Wade Carpenter: Well, yeah, and we all say it all the time. It's one day this is all gonna pay off. And again, the thought here, the Profit First mindset, learning to pay yourself before you pay everybody else. I know we gotta pay our bills, but finding that profit, if you never figure out how to pay yourself, you're not profitable.

Again, it's a mindset shift, but you know a very important one. You undervalue the owner's compensation. Could you really get somebody out there to [00:07:00] do what you do for what you pay yourself? Just a thought.

Stephen Brown: And how long are you gonna not pay yourself, and why aren't you gonna pay yourself? And what's gonna make things better if you pay yourself? And how much stress are you putting on your family? Great way to go out of business. I think that's a good tactic, Wade. What's another one?

Wade Carpenter: Number five, I would say you should treat your tax time like it's a surprise party. Wait until March to open last year's mail when the IRS come knocking and, be shocked when your CPA tells you, you gonna owe some taxes and we're gonna have to just ask for payment plan. Payment plans are all great, they're just giving us more time to pay. Right?

Stephen Brown: I don't wanna hear it. You know, taxes, it is way too much, so I'm not gonna pay it. And I tell you what, I know a guy, he says he doesn't pay any in taxes. And that's the way I'm gonna design my company.

Wade Carpenter: Yeah April 15th is a myth anyway. Nobody really has to pay taxes.

Stephen Brown: No, they have these extensions, they got all kinds of stuff. Hey, [00:08:00] look, just don't worry about that. You got other things to worry about. If you wanna lose money, really just don't worry about that.

Wade Carpenter: Absolutely. Let's move on to the next one. Number six, I would say we only chase the big jobs that take 120 days to pay. Because cash flow is for cowards. Real contractors live off of retainage and stress and cash flow, it'll show up one day, won't it?

Stephen Brown: Well, you know, again, you got to pay to play, right? You got a big contract. Sure they pay in 120 days. But, you know, that's the way it is and that's what you have to deal with if you're going to play in the big leagues.

Wade Carpenter: These big general contractor jobs, they're big dollars, so we're all gonna make it up again in the end, right? So.

Stephen Brown: Yeah, that's a great tactic, to run your company into bankruptcy. And it's a great tactic to lose money. I think that's a great one, Wade.

Wade Carpenter: That sort of also goes into number seven. If you want to fail in 2025, you never say no to a job, even if it's a [00:09:00] dumpster fire.

Every warm lead is a great lead. Especially if they say things like, we don't usually pay deposits. It's okay. We're just gonna have the job. We're gonna have something to do. 

Stephen Brown: That's right. And you know, seriously, if you do enough volume, things will take care of themselves. And you say, well, how will they take care of themselves? Well, By magic. Literally by magic. Things will take care of themselves with volume. That's another great point for losing money.

Wade Carpenter: I mean, if they're saying we're waiting on funding but can you start tomorrow? That's okay. It's a job. So we need it. 

Stephen Brown: Yeah. Yeah. And and look, you're lucky to get paid, really. 120 days, that's nothing. And anybody can finance a job for 120 days. I mean, I could do 180 easily.

Wade Carpenter: There you go. 

Stephen Brown: Yeah, man. Now we're talking. 

Wade Carpenter: Absolutely. How about number eight? Let's just say, let that crew manage themselves. No schedules, no time sheets. Definitely no job [00:10:00] costing. Just vibes and Snapchats, and we all know how we're doing, how we got a gut feel for it. 

Stephen Brown: You gotta let people go. You know, they gotta be creative and if you rain down on them too much stress, they're gonna leave. Creative people need to be left alone to create, wouldn't you think?

Wade Carpenter: Absolutely. And we want these people to feel like they've got time to take extra long lunches and, I mean, it's not like they wanna have somebody watching the clock. 

Stephen Brown: It's not about just riding herd over them, Wade. But it's making sure that you don't burden them with extra things like extended training and other opportunities that might change of, of what they're doing. It might create something that they don't like, maybe.

Wade Carpenter: Let's change direction a little bit here. The number nine, I would say, if you need a tool and you can get it on credit, skip the budget. You can go ahead and get it today. Because every problem is solvable with a 20% interest rate and a new line of credit, right? If we need it, let's go buy it.

Stephen Brown: Yeah, because I tell [00:11:00] you what, tools are the way that you make money. And if you don't have those tools, you can't make money. The small details of how you get those tools are ridiculous. Now that's a good point. Another thing, buying equipment, other things when you go in there, let the salesman use that iPad. Don't read anything. Just sign in the box where they tell you to, because you really should trust him and you haven't got time to read that crap. You're not an attorney anyway. Right? 

Wade Carpenter: Right. And you know whether you use it once, you know you're gonna have it for the next time. So why go rent it when you could own it? That only makes sense, right? I mean, isn't that--

Stephen Brown: Absolutely. you've got to own it. That's the only measuring point of success. The equipment you've got on your books. That's it. And the debt, you know, that takes care of itself. Everybody has debt on equipment, right?

Wade Carpenter: Yeah, it's part of the business. It's expected.

Number 10. We're gonna pretend profit is a bonus, not a system. So if there's money left at the end of the year, it's [00:12:00] a miracle. But it becomes a tax liability. So again, we're--

Stephen Brown: There you go with those taxes again, man. 

Wade Carpenter: I know.

Stephen Brown: When you have money in your account, that's when you can afford to do the things that you wanna do. Okay?

Wade Carpenter: Absolutely.

Stephen Brown: I think you're being a little too picky about that. And then again, you brought up the T word again, taxes. It's horrible. I I ain't got time for that.

Wade Carpenter: And like I said, we don't need a strategy. We got hope, right? So that's all we really need.

Stephen Brown: Yeah. 

Wade Carpenter: Why would we do something like Profit First and have Profit on purpose? It's just gonna show up anyway. 

Stephen Brown: I would highly recommend to anyone that wants to lose money on a job, don't even read Profit First. because, you know, first of all, who likes reading anyway? I think the most important thing for our listeners to understand from this podcast is we can absolutely tell you how to run your company in the ground. And these are just 10 topics. Wade. We could come up with lots more, couldn't we?

Wade Carpenter: We can, and I actually do [00:13:00] have one bonus one if you wanna go ahead and go there.

Stephen Brown: Oh yeah. 

Wade Carpenter: This one probably is, is great for you as well. And number 11, I would say ignore every red flag until it's a lawsuit. 

If a job feels wrong, you gotta trust your gut. Stay quiet, keep signing, change orders that'll never get paid.

It'll be all right.

Stephen Brown: I think putting too much effort in planning ahead, is really gonna hurt you if you wanna run your company into the ground.

Wade Carpenter: Yep. Stephen, I don't know what you thought about this episode. I hope nobody took this seriously. But anyway, I sorta of had fun doing it. 

Stephen Brown: I'm sure we sounded extra smarmy, didn't we? Fortunately, a lot of our listeners may be doing some of these things or might have that mindset. I might say, you arrogant so-and-so's, you don't know anything about construction. No, you're right. We cannot build, we cannot do what you do.

You're absolutely right about that. We deal with the business end of running a construction company all day. That's all we do. And, we see the same things [00:14:00] over and over again. You don't have to do all 10 plus that bonus. You don't have to do all of those to run your company into the ground. But I tell you what, they're absolutely top tenors, aren't they, Wade?

Wade Carpenter: Absolutely.

Stephen Brown: We didn't disagree at all about your top 10 list, did we?

Wade Carpenter: Not at all. Unfortunately these are several lessons and things we see every single day. And you know what our hope is with this whole channel and our message here is that, we hope you're learning some things and taking them to heart. maybe you're not where you want to be in your business and you're not taking home the money. You're working 70 hours a week and still not taking home a decent paycheck. Maybe it's time to take a step back and, you know, are we doing things the wrong way? Could we do 'em a little better? That's my thought.

Stephen Brown: Because if you start doing things the right way, then everything, all of a sudden it is like magic. Things start taking care of themselves. You know, you really don't worry about [00:15:00] anybody or anything.

First of all, you don't wanna show off 'cause you don't want anyone to know how much money you're making. That's your own private Idaho. That's your business. Your employees are happy, your family are happy, and you're just running business as a business. And you're keeping in perspective, construction is wonderful. It is. It's not the be all and end all of your life. The measuring point of your life is so much more.

Again, Wade, I'm gonna go ahead and plug your book, because I've sent it to so many customers and I'm just getting great feedback and it's helping people. It's helping people understand some key concepts that they might be missing. And there's an action plan to it. And again, it's not difficult, it's not expensive , it's just a plan. So thank you for that, Wade.

Wade Carpenter: Thank you for the plug. And I've gotten some great feedback from people that have read it now and it's, it's sort of rewarding. 'Cause it was told in a different [00:16:00] way from most people. Prescriptive nonfiction, whatever, you know, people call like this is self-help books, but hopefully you don't find it a dry read there 'cause there's a story to it.

Stephen Brown: That's all right.

Wade Carpenter: But anyway. If you hung out with us this far, we really appreciate it. Really low. Some feedback on this approach to it. We've got a couple more thought experiments that plan that we hope you wanna chime in on.

If any of these resonated with you, we'd love to see your comments in the comments below. We thank you for being with us. Please share, subscribe. It always helps our channel out and we do appreciate that we do this every single week, and we will see you on the next show.