Typically, the first person you hire in your organization that’s not part of your field crew is someone to do the books, the paperwork, payroll, HR, and banking. You know, all that stuff you can’t stand to do because you enjoy building more. Quite frankly, you’re more valuable in your role as a builder than you are doing stuff you can’t stand to do.

However also typically, our first hire is someone we know, perhaps even love, like our significant other. You rationalize that you’d rather pay a loved one than a stranger. That is, if you pay them. Perhaps you can’t afford to pay someone. 

So your significant other steps in as a short term solution. Which becomes a year or two. Maybe you’re lucky in that your loved one is really good at doing books and paperwork and perhaps even enjoys that role. Consider yourself very, very fortunate then.

Or what might be more likely is that they’re doing it out of an obligation rather than enjoying the tasks at hand. And that can lead to all sorts of problems, both in the business and the personal relationship. 

In Giffin & Crane’s case, our wives, Kelley and Kim, helped out for the first year. Then they both said to us, “Good luck, guys. Hope you figure it out.”

And that's when we hired our first office manager, Sheri, who did it all – bookkeeping, payroll, accounts receivable, accounts payables, setting up office procedures, etc. Fortunately, Sheri had grown up in a contracting family so she was quite familiar with many aspects of running a small business.

We grew the business from $250K a year to $5M in annual revenues over the next 9 years. It wasn’t a straight line. Construction is a cyclical business, with lots of highs and lots of lows. 

The recession in the early ‘90s was brutal, especially for young contractors. In a year, we went from having a company with 50 employees to a company of 1 ½ employees... Sheri and a part-time carpenter.

There were NO jobs. We went 9 months without signing a contract. It felt like we couldn’t pay a homeowner to hang a screen door for them.

It was like jumping off a cliff in slow motion in a bad dream. You know it's going to hurt but you can't see the bottom yet.  And you wonder when it's going to be over.

So what did we do? We tapped into our Line of Credit like it was a long term loan until the bank gave us a call and said, “uh, guys, what are you going to do about this $400,000 line of credit that’s maxed out for several months?” So, we swallowed hard and gulped and signed up on 4 year note to pay off the LOC.

The mantra in the construction and real estate industries in ’93 became “Stay alive until ’95.”  It was tough. We wore the bags, bid jobs just for cash flow and hung on tight. We literally ate rice and beans and a lot of peanut butter and jelly sandwiches.

Then once we survived until ’95, the mantra became “It will be heaven in ‘97”. And those became self-fulfilling prophecies. '97 became a good year where we grew our revenues 100%. We still weren't really making much of a profit, but life was on the upswing.

Meanwhile, Sheri kept telling Geoff and me that we needed to be better organized. We needed a better and more accurate accounting system. That we needed to institute more processes and procedures.

We looked back at Sheri as if she were from another planet. We don’t need no stinking processes and procedures. That’s corporate stuff. We’re builders. We work on the fly. We make snap decisions based on spur-of-the-moment, gut sense kind of feelings. We make it up as we go along. We change things constantly.

In short, we drive you crazy.

And in her gentle way, Sheri kept pushing back. We tried out a couple of different accounting software systems which had flaws before adopting one. All of that is time consuming and painful. Yet, once you’re set with a good accounting system, you’re set for a long time. So it’s an investment that you have to make in forming an organization. 

We were making good progress in becoming organized. After 5 long years, the economy had recovered. We had joined the National Association of Home Builders and started attending builder conferences and symposiums. In early '97, we joined one of NAHB’s Builder20 Clubs peer groups. It was literally a life changing moment for us. I heartily recommend that every builder attend conferences, symposiums and join peer group clubs.

And then Sheri announced she was leaving to go on a mission in the Dominican Republic and gave us her notice. Whoa! Now we knew we needed someone like her to keep us on the straight and narrow. We kind of, sort of, knew the skill set we were looking for in that person, but we didn't know how to test for it. 

It’s not like hiring a carpenter or a laborer. That we knew. Having worked for some of the old school contractors as a young man, if you showed up early for work, set up, eager to work, you might make it to mid-morning break. If you had hustled, you got to work up until lunch. If you were still hustling by then, you got to work the afternoon. And afternoon break time? Forget about it. There wasn’t one. If you had hustled the whole day, you got invited back to work tomorrow. If you made it through tomorrow and the day after, there was a pretty good chance that you were on the crew, at least until the job was done. And then you might be starting the process all over again. So we were used to what’s known today as the gig economy. It was a way of life for us.

But hiring an office manager/bookkeeper? We didn’t know how to judge a person’s abilities in that. We might know how they looked and if they spoke well. But as far as deliverables… we had no way to tell. And a lot of people who apply for these kind of positions SAY they know how to keep books and accurate records. And it sounds like they do. Whether they really do or not is a big risk for fledgling entrepreneurs to take.

Fortunately for us, our CPA at the time, said to us, “Guys, tell any of your applicants for this job that you’re going to ask them to take a bookkeeping test at your CPA’s office as part of the job screening process. I’ll give them a simple test that I use every tax season when I hire short term associates.” 

That sounded like a good plan. Geoff and I interviewed 6 candidates for the position. A few sounded like they would be ideal for the job. It seemed like they had the right credentials and experience. We asked them to set the appointment with our CPA to take the bookkeeping test. They said they would. They never did. They just disappeared. Except one. And that was Denise Dyer Petrushkin. 

To say that Denise was a stellar hire would be an understatement. One of our success mantras is “Know your numbers”. Without accurate and up to date financials, you will not have a successful enterprise. Thanks to Denise, we always had those crucial numbers in hand. We may not have liked what we saw sometimes, but we always knew exactly where we were financially. 23 years later, Denise is still keeping the company's numbers in line and up to date. 

So the takeaways are:

Know your own limitations.

Involve your CPA in recruiting for your finance person.

Test for knowledge. 

Check out this link below that describes how Geoff and I did it. By knowing what we did, I imagine that you’ll improve upon it. So here’s to you and your adventures!
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