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Dispute Over Parking Lot Access Lands One Party in Contempt

in Columns

By James R. Keller

After years in court before four different trial judges, owners of adjacent commercial properties will continue their dispute over access to their common parking lots. The Western District of Missouri dismissed an appeal, leaving in place an order of contempt against one of the owners and sending the case back for more trial proceedings.

The case is Relaxation, Inc. v. RIS, Inc., 452 S.W.3d 743 (Mo. App. W.D. 2015).

Relaxation and RIS own adjacent commercial properties. Two common parking lots between the properties were set up for use as common customer parking. This included a requirement that an existing 25-foot wide driveway was to always remain open.

In July 2011, RIS began construction of a new shopping center on its property. The development included several big box stores as future tenants including Menard’s, Kohl’s and CVS. During construction, RIS altered or destroyed portions of the two parking areas, barricaded and restricted access, stored construction vehicles, supplies and other equipment on the areas, and ran power lines and other utilities across the areas without Relaxation’s permission.

Relaxation filed a lawsuit against RIS seeking a temporary restraining order (TRO), a preliminary and permanent injunction and damages. The first judge ordered the parties to agree on a location for the common parking area and ordered RIS to open the driveway of the parking lot and restore the area to its agreed dimensions within 10 days. The court stated that it would issue a TRO if those conditions were not met.

The next day, Relaxation had the area surveyed and stated that if RIS had any disagreement with the boundaries, it should contact Relaxation’s counsel. RIS did not respond and did not restore the common parking area.

A week later, RIS moved in court for a change of judge. The court had noted that construction work was still continuing in the disputed common area in spite of the court’s previous order.  The trial

court concluded that it could “entertain absolutely no reason for defendant’s contemptuous behavior.” The case was then assigned to another judge.

The new trial judge gave RIS 30 days to reach a settlement. The court stated that if there was no settlement, it would enter a TRO. The court also ordered RIS not to perform any additional construction work on the disputed property.

During the next 30 days, RIS continued performing construction work on the disputed property. The trial court then issued a TRO requiring RIS to restore the two parking easement areas within 96 hours and remove any utility poles and construction materials.

That judge then recused himself and the case went to yet another judge.

From March through May 2012, the trial court through its new judge issued additional extended temporary restraining orders at Relaxation’s request.

Relaxation then filed another motion for contempt based on RIS’s failure to comply with the prior court orders. Relaxation requested daily fines and the incarceration of Gary Prewitt, the principal owner of RIS. The trial court issued another TRO and a show cause order on why RIS should not be held in contempt.

At the contempt hearing, Prewitt testified that he did not even read the prior court order and that his company took no steps to comply with it. RIS’s construction manager further testified that additional construction work had occurred in the disputed areas in violation of the court’s orders. RIS also constructed a large commercial sign partially within one of the disputed lots.

In April 2012, the court issued an order of contempt, finding RIS’s conduct constituted a trespass and issued a preliminary injunction.

RIS’s defense to its actions was that there was a potential condemnation action, which might affect the property in question and therefore RIS felt that it did not need to comply with any of the court orders. The City of Lake Ozark did in fact file a condemnation proceeding.

At this point, the trial court ordered RIS to pay $45,892.94 for Relaxation’s attorney fees and surveyor fees. The court then entered an order that Prewitt would be incarcerated if he failed to strictly comply with the orders of the court including payment of the $45,892.94 and if he failed to restore the parking areas.

RIS argued that the condemnation action superseded the parking lot dispute and thus the action should be stayed. The court agreed and stayed the parking lot dispute and then the trial judge recused himself and a fourth judge was assigned to the case.

RIS appealed the contempt order. The Western District dismissed the appeal as being untimely.  This sent the case back to the trial court once again with the order of contempt remaining in place

James R. Keller is a partner at Herzog Crebs LLP where he concentrates his practice on construction law, complex business disputes, real estate and ADR.  He also is an arbitrator and a mediator.

Sales, It’s a People Thing

in Columns

ByTom Woodcock

Selling can be either a simple process or very complex one. In the construction industry, people often make it more complicated than it really is.

The format of competitive bidding can be frustrating, but if you don’t let the pricing mechanism dictate your actions, you can see through the fog. Even very intelligent contractors have to
work not to buy into the conventional wisdom on bidding. It’s extremely easy to get sucked into the “It’s all about low bid” crowd.

The pressure to focus on pricing can be intense. It takes discipline and effort to realize that there are other factors in the construction buying decision. Failing to recognize those factors
can lead to a lack of understanding of why you’re not winning projects. 

Getting on a bid list is a small accomplishment, but getting inside information on the bid process, needs, or results is significant. That is not achievable through a great Facebook page or
social media activity.  Getting the information requires engaging with the customer and establishing a relationship.

Being connected to your customer base is old school, but it is necessary. The impact of social media is beginning to level off, which brings us back to good ol’ fashion customer contact.

I thoroughly enjoy helping a client get connected to the customer base and watch his bid volume increase. They develop strong relationships with their clients that even turn into
friendships. They don’t just entertain their clients, but connect with them socially.

It isn’t a matter of throwing money at them, but of treating them as people. Learn their preferences and likes, and then take advantage of that to secure quality opportunities. Your investment of
time and treasure produces significant returns if you stay with it. The easy thing to do is write off the necessary customer contact as time wasting and expensive. The majority of contractors tend to lean in that direction. Those that persevere get the desired results.

The process of connecting with a wide swath of customers is simple if you don’t complicate it. Getting in front of customers and doing so consistently will pretty much meet the requirement.
Talking about life in general will incorporate business conversation nine times out of ten.

Forcing conversation or pressuring a customer usually backfires. You’ll experience a lot of one appointment and done results. Relax as much as you can and ask reasonable, personal questions. Be genuinely interested in your customers’ opinions and lives. They’ll appreciate it and want to know about you. Stepping out in this fashion will grease the path to success. Just stick with it.

Personal contact is very difficult for some people. For them, it’s a struggle to meet new people and feel comfortable. It can sometimes seem amazing that some other people can connect at the drop of a hat. If you have one of the latter type of individuals, don’t saddle them behind a desk or computer. People with topnotch people skills can be very  difficult to find, but often they need structure and support.

For those who dread connecting with people or working a room, getting in the position to do so is half the battle. Pushing yourself to introduce yourself to a new business contact breaks the
seal. Most people feel exactly as you do so that little step can begin the relationship process. If there’s no other choice but having to connect with the customer base, you have to learn how to make a first move.

It’s easy to hide behind Linkedin or Twitter, send an email, or post on a wall. The problem is it relegates you to virtual invisibility or white noise.

Gaining the separation from competitors that everyone says is necessary requires personal contact. The more you try to structure your approach, the more complex it becomes. Ten-second
elevator speeches and cute ice-breakers are easily spotted. Trying to get out what you do in the first 90 seconds of a conversation is amateurish and flat out cheesy.

The construction consumer is much more astute than in generations past. The ability to secure information and project knowledge is at our fingertips. The more you’re simply yourself, the more
impact you have on the customer. Let’s face it, being yourself should be easier than pretending to be something you’re not.

As I train dozens of construction personnel on selling, I find the greatest impediment is the willingness to get around people as much as possible. It’s much easier to make excuses for why you
can’t get around potential customers than it is to raise the priority of such behavior in your schedule. Paperwork, project visits, and financials are actions with immediate results. Sales is the definition of delayed gratification. Accepting this premise and persevering anyway will separate you from a high percentage of the competition. It’s not enough to think it’s a good idea to connect with customers, you have to put feet to it. Yes, selling can be complex, if you make it so.

Tom Woodcock, president, seal the deal, is a speaker and trainer to the construction industry nationwide. He can be reached at his website: www.tomwoodcocksealthedeal.com or at 314-775-9217.

Reducing Risk in the Internet Age

in Columns

By Joe Balsarotti

Seems every tech article nowadays is about the liabilities of technology. Hacking, lost data, damaged online reputations, and the legal and ethical ramifications of technology and stored data.

So, it seems appropriate to delve into how to, if not minimize, at least mitigate the liabilities that the digital world has created for all businesses large and small.

Does your business host its own website?

Unless you have private components to yours site for vendors or customers to access your database, there is no reason to host your own site. Cutting off that entry point to your network goes a long way in reducing your risk. Besides, except for keeping internal I.T. people busy, there’s not much upside in  hosting your own website. Outsource it to professionals after you’ve done due diligence to make sure there are backups, redundant sites, and uptime guarantees. In short, let specialists deal with it. How about email, why would you host your own?

Forget the security concerns for a moment. Since over 95 percent of all email transmitted gets rejected at the server as spam, that means that 95 percent of the Internet ‘pipe’ you are paying for is wasted on trash. Find a reputable provider whose focus is on providing email.  After all, there are very few individual businesses with access to datacenters across the country for redundancy, battery and generator backup, communication lines from multiple providers, and 24/7 staffing, but quality email providers do.

Granted, going with one of the ‘big guys’ for email or hosted Exchange has its own set of issues as they are larger targets to hackers. If someone breaches your in-house email server, however, you don’t really have recourse, but if a multimillion or billion dollar provider gets breached, they will have far more resources to bring to bear on restoring service and recovering damaged or lost data. Plus, it’s a fair bet that lawyers will be lined up to help you recover compensation for any losses you suffer.

Passwords, remember them?

One of the easiest ways to minimize liability with technology doesn’t cost a penny, but it is essential. ANY notebook, phone, tablet, or home PC that can access your company and/or customer data must always be password protected and should lock if unattended.

When replacing old PCs and servers, businesses generally know to keep the hard drives or get a  certificate of destruction. However, the same precaution goes for those tablets or phones. Getting a couple bucks for trading in an old phone or tablet turns into a really bad deal when the tablet or phone falls into the hands of foreign hackers and organized crime, who buy old electronics by the pallet, looking for data off of hard drives.

Save yourself some headaches and reduce your company’s risk in the digital world by getting a certificate of destruction for every device that you dispose of.

I welcome your questions or comments.

Joe Balsarotti is president of Software To Go and is a 35-year veteran of the computer industry, starting back in the days of the Apple II. He served three terms as chairman of the National Federation of Independent Business’ (NFIB) Missouri Leadership Council. He was chairman of the Clayton, Missouri Merchant Association for a dozen years, chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Dealer Advisory Panel of the ASCII Group, an organization of over 1000 independent computer and technology solution providers in North America.

On-Premise or “The Cloud”, Which is Right for Your Business?

in Columns

By Joe Balsarotti

Talk of “The Cloud” permeates tech advertising nowadays and even though the majority of people can’t explain what it really is, more and more are trusting their businesses to it.

In reality, The Cloud is nothing more than another phrase for using resources across the Internet. Some years ago, someone drew a cloud on a diagram in their presentation to represent the inner workings of Internet connections and bingo! Both, the name and symbol stuck.

Services like Microsoft’s Office 365 or Google Apps are examples of Cloud Services. With a cloud-based service, the data and the program (now generally called an app) no longer reside on your computer. They are off-site, hosted at one or more data centers across the globe. On-Premise programs, such as traditional accounting, client management, inventory and design programs run on servers and PCs  housed within your walls.

To decide which is right for your business is, unfortunately, a long and arduous task in most cases. On-Premise and Cloud versions of even the same program are rarely identical. True prices, not to mention any savings or additional cost, can be difficult to calculate since Cloud services tend to be rented, rather than licensed. And while the initial monthly cost might be easy to see, there are no assurances that costs will not rise substantially in subsequent years when businesses are ‘hooked.’ Conversely, On-Premise programs require substantial capital expenses upfront. Cash flow considerations make monthly payments look attractive for Cloud, but being able to stretch another year, or two out of an On-Premise program might be a lifeline to a business dealing with an industry downturn.

Another wrench in the works when trying to decide Cloud vs. On-Premise is what happens when the

Cloud service is not as advertised, or the vendor goes out of business. Moving from one service to another is not an easy task and can lead to considerable cost. A number of Cloud services have gone under in spectacular fashion, but sometimes clients have less than a month’s notice that they will be without the ability to bill, collaborate, do payroll or have access to their own data. With a traditional server and software program, a vendor’s demise doesn’t mean the program can’t continue to be used while a thoughtful search for a replacement is made.

Then there are legal ramifications to consider. Businesses dealing with compliance issues, Government contracts, or sensitive data, need to be assured that any Cloud service they choose uses only US-based data centers, since data held offshore is subject to the laws of the country the center resides in. This becomes a very sticky situation when a Cloud vendor merges or is bought out by one from another country. If a business has become overly dependent on a single vendor, they could find themselves breaching their confidentiality agreements without even knowing it.

Finally, there are infrastructure considerations to add to the decision mix. If some ‘genius’ with a backhoe cuts the Internet line to your office, your office is completely down for the duration whereas with the traditional client-server programs, you might not be able to send and receive email, or research on the Internet, but staff can still enter invoices, prepare bids and get some work done.

Whether going to The Cloud, using On-Premise software or some combination of the two is the way for

your business to go can be a difficult decision and requires more advance-planning and research than many businesses may be accustomed to do, but that research and planning are essential to keeping a business running smoothly.

You can reach me at: businesstech@software-to-go.com

Joe Balsarotti is President of Software To Go and is a 35 year veteran of the computer industry and member of the Computer Industry Hall of Fame. He served three terms as Chairman of the National Federation of Independent Business’ (NFIB) Missouri Leadership Council, was Chairman of the Clayton, Missouri Merchant Association for a dozen years, Chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Dealer Advisory Panel of the ASCII Group, an organization of over 1000 independent computer and technology solution providers in North America.

Digital Vandalism

in Columns

By Joe Balsarotti

The digital world, more and more, reflects the real world. In the world we live and breathe in, what we call it vandalism and theft we call hacking in the digital world.

It seems as if each month we hear about another major company, organization or government getting hacked. What we don’t hear about, but is even more prevalent, are all the individuals, and privately-held small and mid-size businesses whose websites are hacked, vandalized, or seized and remotely control seized. Even the websites of the smallest businesses are being stolen or vandalized.

It’s obvious when hackers deface a site, but many times the vandalism is hidden. Subtle programming changes made behind the scenes of even the most basic of websites can wreak havoc. Someone just visiting a compromised web page can become infected, easily causing tens of thousands of dollars in damage, ruining your company’s reputation, and creating a PR nightmare. After all, if a client’s infection is traced to your web site how likely are they to trust you with their next project ?

A compromised website can look normal at first glance, but when a client or prospect simply visits the site, a hidden program moves to their machine. That infection could do anything from stealing account numbers to logging every keystroke to taking over that machine and using it in cyber crime. In less dire, but still costly instances, the graphics and text of the site could be changed to say your company give bad service, or convey vulgarities or hate messages. Or, in other instances, it may simply reroute visitors trying to visit your site to other websites, be it for a competitor, or for some totally unrelated and possibly embarrassing or illegal product or service.

Every website is a unique computer program, rarely written ‘from scratch’ but designed with the computer version of Legos, a bunch of standardized blocks or “routines,” which have almost infinite combinations. Examples of blocks are a ‘ticker’, ‘sign up for newsletter’, a video window, or even the current time and temperature. Since these routines are commonly available, those with less than virtuous motives pick them apart, find flaws and develop ways to exploit them – and your web site is full of them. Even the basic template for your site probably came off of a list of standard templates. To not use these common tools would put the cost of developing a website well out of the reach of most businesses.

As computer programs, websites require constant updates too, even more so than your PC, since they are available to every single person on the planet with Internet access. When is the last time your web designer updated your site’s security? How strong is the password to edit your website and how many people know it? Do you have levels of security to keep those who make updates from changing other aspects of the site? In how many cases do you even have an ongoing relationship with your web designer? Did they hand you the keys, take your check and walk away? If so, you have a serious issue to deal with and the sooner the better.

Of course, ecommerce sites (those that facilitate purchases of products and services) have unique challenges. Credit card processors, however, now require ongoing testing for PCI Compliance, thereby forcing that at least basic security be in place and up to date. Unfortunately, this basic testing does nothing to assure the non-shopping aspects of a site are secure.

Since websites are your company’s billboard to the world, they can be very powerful tools to promote your company, provide customer service and act as your 24/7 sales force. As with a billboard, to keep your message clear, fresh and understandable your web designers need to not just put together ‘the look’ you want to convey, but must understand that the site is a complex program and needs regular, scheduled updates to the security of underlying programming elements and checks for ‘injected code’ that may alter what the site is doing. This is especially problematic when a company uses a do-it-yourself site creator, with no access to the underlying security.

As with your company’s physical plant and network security, there is no single fix. Maintaining websites require the same level of vigilance that you use in the physical world. Just as you install locks and change the keys when staff turns over, use surveillance cameras, or replace blown bulbs on your premise lighting, you need to have security in place and regularly maintain your website. After all, what good is all the time, effort, and expense that you put into getting your website launched in the first place, if it ends up a detriment to your sales and support efforts or a liability when it damages the property of others.

You can reach me at businesstech@software-to-go.com

Joe Balsarotti is President of Software To Go and is a 35 year veteran of the computer industry, reaching back to the days of the Apple II. He served three terms as chairman of the National Federation of Independent Business’ (NFIB) Missouri Leadership Council. He was chairman of the Clayton, Missouri Merchant Association for a dozen years, chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Dealer Advisory Panel of the ASCII Group, an organization of over 1000 independent computer and technology solution providers in North America.  

So You Have a Backlog?

in Columns

By Mark J. O’Donnell

It has been a very long time since the Saint Louis region’s construction market has been this strong. Backlogs for a wide range of general contractors and subcontractors are significant. Many contractors have already booked contracts exceeding revenue for all of 2014!

Be careful what you wish for. All of that good news can be overwhelming. It can overwhelm job site supervision, company management, and the financial capacity
of your company. Let’s take a look at the financial stress points that will or are already occurring.

Accounts receivable

The heart of your business is cash flow. Poor timing of cash receipts versus cash disbursements for otherwise profitable contracts can wreck havoc on overall
financial performance.
  With a sudden surge of business, billings exceed collections and receivables swell quickly. At the same time cash, used to fund payroll and operations, quickly dissipates.  Two critical aspects must be carefully and regularly managed; billing and collection. These seemingly obvious issues frequently are overlooked with a heavy load of contacts in progress.

The process of billing for contracts is frequently defined by the contract so that the timing of the billing within contract terms may be the only task within the contractor’s control. Accordingly, all contract billings should go out as soon as allowed. In addition, time and material billings should be processed and mailed immediately.

Collection efforts are not fun for anyone, but they are necessary. The timing of payment
is not only subject to the contract but to the habits of the ‘upstream’ parties as well. Nevertheless, it is true that the squeaky wheel does get attention.
  When needed, the threat of a lien can be effective and accordingly tracking lien deadlines is key. Don’t let
this important leverage slip thru your fingers.

Line of credit

It is difficult for most contractors to fund the front loaded outflows of cash with existing cash balances during a significant upsurge. Virtually all use their line of credit to fund cash flow shortfalls until late in the contract when collections finally exceed  disbursements. Three things to consider are

  1. borrowing base
  2. maximum borrowing amount and
  3. amount of availability left on the line.

The borrowing base varies by loan agreement, but frequently is defined as a percentage of ‘qualified receivables,’ which are receivables under 90 days old, that are not related to a bonded job, and of course excludes retainage. At any point in time, or with unexpected bad timing, excluded receivables may be so significant that the available line of credit is tapped out. Many companies track the borrowing base and rated available borrowing (borrowing base less actual borrowings) weekly for that very reason.

It is not unusual for a surge of business to create the need for a line of credit greater than the amount of the current borrowing agreement.  Make sure you have more line than you “need,” because you may unexpectedly need it.  The banking industry has become heavily regulated handshake deals are virtually gone. Give your banker a chance. Talk to him early. 

Finally, both banks and sureties watch you closely. They rely on a number of reports
including your monthly financials. If possible, manage your line of credit to be as low as possible at any month end. The amount of borrowing available on your line of credit will help your financial positioning.

Accounting and job costing

After many years of relatively lean times most accounting departments are staffed at
minimum levels. They will be pressed as the new volume of contracts get underway. Busy accountants produce reports later than normal. That can be a disaster on many levels, but in particular in billing, job in progress reporting, and monthly financial statements. In addition, when things get hectic, forward looking responsibilities, like cash flow projections and future line of credit needs get put to the side; don’t let them.

Change order processes and controls

Change orders are the bane or icing of all contracts, depending on your point of view.
How often when we get busy do we verbally commit to do the work, agreeing the paper work will come along? Predictably the owner objects to the change order and/or the project runs over budget. Suddenly the poorly documented change order is worthless. Contract profits dwindle or disappear and opportunity for a great year is wasted. Contractors have leverage before the extra work is performed to get the paperwork IF they take the time to focus on it. It may not seem to on site personnel to be an issue at the time, but it will be later, and it will cost the company money and relations with other contractors.

In closing

Our economy is such that we cannot count on three to five more years of prosperity.
The larger projects and pent up demand we are currently experiencing do not mean we have returned to the ’80s. Accordingly, it is important that 2015 be a very profitable year, and that contractors improve their financial position. Careful utilization of your company’s precious financial resources is required and the reporting systems that provide financial feedback during this welcome surge in revenue are critical to convert this opportunity to a bright financial result.
 

Mark J. O’Donnell, CPA, is a partner at Schmersahl Treloar & Co.

Fraudulent Lien Waivers Cost Owners of Contracting Company

in Columns

By James R. Keller

After a bench trial in Jackson County, MO, the circuit court awarded a defrauded owner $124,299.23 to reimburse for all payments to its contractor plus $13,051.42 in prejudgment interest, $150,000.00 in punitive damages, and court costs.

The Western District Court of Appeals recently affirmed the court judgment. The Missouri Supreme Court declined further review, making the judgment final.

The case is John Knox Village v. Fortis Construction Co., 449 S.W.3d 68 (Mo. App. W.D. 2014).

John Knox Village (“JKV”), as the owner, entered into a contract with Fortis Construction Company as the general contractor for a project known as the PACU Project. Fortis represented and warranted that with each application for payment, all work to that point would be free and clear of all liens and claims and all subcontractors would be paid.

JKV also contracted with Triad Construction Company, Inc., as a general contractor, on a project known as the Hospice Project. Triad made the same representations as Fortis regarding payments and liens.

Fortis was a limited liability company owned and controlled by Armando Diaz, Tom Nadler, Don Nadler and Gary Rodenberg. The two Nadlers and Rodenberg also were owners of Triad. Triad and Fortis frequently subcontracted work to each other.  Both companies had offices in the same building.

JKV entered into a joint check agreement with Triad and Fortis on both projects. Fortis was the subcontractor to Triad on the Hospice Project.

The appeal involved the Hospice Project. JKV paid Triad and Fortis pursuant to the joint check agreement a total of $124,299.23 for the Hospice Project. JKV received lien waivers per applications for payment and a final waiver of lien. Triad had certified that all subcontractors had been paid or would be paid.

JKV’s architect discovered after final payment that none of the subcontractors on the Hospice Project had been paid and that $127,121.14 was owed to them.

Several of the subcontractors provided notice of their intent to file liens on the Hospice Project property. JKV negotiated payments in lieu of the filing of mechanic’s liens at 70 percent of what was owed for some, 90 percent for one and 100 percent for another. In total, JKV paid an additional $70,373.78 directly to the subcontractors.

Triad filed a petition for Chapter 7 bankruptcy in federal court. JKV then filed a lawsuit against the individuals who owned Triad.

The issue on appeal was JKV’s claim against the individuals (not Triad) for  fraudulent representation, fraudulent conveyance, and civil conspiracy, all of which the trial court found in favor of JKV.

The appellate court agreed that there was sufficient evidence that Triad falsely represented that it would timely pay any subcontractors for work performed on the Hospice Project after receiving JKV’s payments. The court also found that the individual defendants had entered into a civil conspiracy to unlawfully benefit themselves by “absconding with the money JKV paid.”

The individual defendants argued that the bankruptcy court had exclusive jurisdiction and thus the circuit court could not enter judgment against them. The appellate court determined that the bankruptcy trustee was aware of the JKV lawsuit and never asserted that this claim belonged in the bankruptcy proceeding.

The appellate court found there was sufficient evidence to pierce the corporate veil from Triad to its owners so that the owners were personally liable. The court affirmed that when a corporation is used for an improper purpose to perpetuate an injustice, the usual protections of the corporate veil no longer exist and the individuals behind the corporation can be personally liable.

In essence, piercing the corporate veil requires a finding that the owners of the corporation had sufficient control over the finances and the policies of the company, used such control to commit fraud or other wrongful actions and that  such control was the proximate cause of the damage claimed, in this case by JKV.

The Western District also affirmed as damages the money JKV paid to the contractor even though this exceeded the money JKV ultimately paid to the subcontractors and defendants had completed the construction project. The court decided that JKV received nothing of value in return for its payment because in reality the owner was subject to mechanic’s liens in excess of what it had paid.

The appellate court also determined there was clear and convincing evidence of outrageous conduct by the defendants to infer an evil motive and justify punitive damages.

The appellate court noted that it was the knowingly false representations by defendants that elevated this case and allowed the piercing of the corporate veil. This is a distinction from what the court described as a “garden-variety breach of contract action involving the non-payment of subcontractors.”

James R. Keller is a partner at Herzog Crebs LLP where he concentrates his practice on construction law, complex business disputes, real estate and ADR.  He also is an arbitrator and a mediator.

There Are No Small Parts, Just Bad Marketing

in Columns

By Scott Tripp

In the last issue we talked about harmonized marketing and the importance of taking a holistic approach to marketing in today’s environment. Sounds easy, right? Well, not quite.

To continue on our chorus analogy, each part can learn their notes. Technically speaking, it should all work perfectly. And then they open their mouths — tenors are practically screaming their notes, while the sopranos are trying to outdo them. Oh, and the baritones don’t even know their notes so they are singing someone else’s part. Ugh.

The same holds true for a harmonized marketing program. Yes, you need to have all the parts, but they also need to be able to work harmoniously together in order to create something your audience wants to hear from you.

What to do first? Research. Yep, as boring as that sounds, research comes before assembling your pieces. Define your key performance indicators (KPIs). Look at them in relation to your new program as a whole, but also apply them to each piece of your program. How will you know your program is a success unless you have KPIs to measure? Oh, and increased sales is rarely the KPI of a marketing program. Marketing doesn’t sell, it sets up the environment for a sale. 

That brings me to the next point… harmonization doesn’t just refer to harmonizing your marketing strategies and tactics, it means harmonizing your sales efforts with marketing as well. Studies have shown that it takes eight to ten contacts using both sales and marketing to move the prospect through the sales funnel. That is why it’s important that you develop a process that combines both sales and marketing. Remember, it’s all about balance. If they are different departments, those departments must talk and communicate in order to be most effective. Don’t expect to sell a 10-million dollar construction project with just a new website. But, including that website in a series of touch points that warms the lead up for the sales call from your business development person may just be the way to go.

Okay, you have your KPIs in place. You’ve researched target audiences and defined personas (You haven’t? Oh… do that first).  You know what your brand message is and what your company’s personality
is so that you can perfect the messaging you are sending out (if not, you may want to get that down on paper).

Now its time to evaluate your options. There are many. You may not need each one, but could find many useful in order to meet your KPIs and get your marketing plan to sing.

We have found it easier to divide options into ten main buckets. We can then further subdivide individual tactics within the buckets. This helps to quickly sort through options and eliminate those large categories that don’t necessarily meet our goals. The ten buckets we use are:

1)    Marketing materials – The workhorses of your chorus of tactics. These are those staples every company needs to have: corporate identity, brochures, proposal templates, and a mobile friendly website. The
last no longer is an option, it’s a necessity. 

2)    SEO/Content Marketing –Search Engine Optimization content is king. We no longer refer to SEO as a standalone bucket. Keywords, meta tags, etc. are all quickly becoming dinosaurs. Instead we encourage compelling, keyword rich content that is searchable and relevant to your personas.

3)    SEM – Search Engine Marketing (SEM or ‘pay-per-click’) could be a good piece to add to your arsenal if it helps you appear for more keywords or you are in a competitive market and you want to show up on the “first page”.

4)    Online/Mobile ads – We all know them – online display ads. Your strategy and goals will determine if this is a good fit for your organization.

5)    Social Media Marketing – No, we aren’t just talking Facebook (although they are the giant in the room right now). Ask yourself if utilizing social media would help develop a contact point that will keep your brand top-of-mind. If so, then include this bucket in your “choir”. 

6)    Public Relations – Times have changed in the PR realm. As the world has gone digital, so has PR. Define the publics you are trying to reach, and then develop strategies to start building relationships.

7)    Print Advertising – Print is not dead. Despite all the fear mongering and attempts at producing 100 percent digital magazines out of once printed publications (all failures by the way), print ads are still a very
viable investment. Did you know Google spent over a million dollars on print ads last year?

8)    Event marketing – You are probably already doing this one. You love them and know them as “tradeshows.” But, that’s not all there is to event marketing. Don’t just show up. Look for other ways to create a memorable event. Happy hour anyone? Brown bag lunch and learn? The possibilities are there.

9)    Email marketing – We separate this one out on purpose, email marketing takes equal parts strategy and skill. What should be the balance of articles vs news? What is the subject line? Are we trying to get leads or just raise brand awareness? All questions you should be asking when crafting your email marketing bucket.

10) Direct marketing – Direct marketing (direct mail) is and will continue to be a great way to reach clients (especially the over 50 demographics). Now, don’t go throwing money away on
postcards just to have them. Craft a plan in order to create memorable pieces that warm up the recipients for the next touch point.

Each of these buckets is a pretty big grouping. In the next issue I’ll start tackling each bucket individually. I’ll explain the benefits and challenges of each, which will help you to decide whether or not that bucket belongs in your harmonized marketing plan.

Scott Tripp is the president and creative director of Trippco Creative, a marketing and branding firm headquartered in St. Louis, MO. With over 20 AEC clients on our roster, we work to align brand and marketing strategy with business goals— creating stories and experiences to engage, influence, rally, inspire, and build communities.

When Will My Marketing Produce Sales?

in Columns

By Tom Woodcock

The question many companies ask when they’ve spent significant money on their marketing is; “When will my marketing produce sales?” The fundamental premise of that question is flawed.

Having been responsible for sales numbers for the largest portion of my professional
career, I have marveled at the unrealistic expectations for marketing campaigns and marketing pieces. Marketing plays a critical role in business and must be done effectively, but sales are simply that, sales. People often don’t understand that sales performance is related to interaction with the customer base and not a read/buy proposition.

Because marketing is far more tangible than sales work, it tends to draw greater attention from management. It’s more immediately rewarding to create a new logo, refresh a website or dig into a social media campaign than do the hard
sales work necessary.

Hours are spent reviewing artwork, copy, and design to try and get the customer to bite. Even if they bite, who’s gonna reel them in? It’s extremely important to have a top notch brand and an active marketing strategy, but it is more important to strengthen your sales effort. What is the difference? The fact that the question is even asked makes my point.

Sales in the construction industry is often veiled by some old school mentalities. The mistaken belief that all work is awarded either via performance or low bid is still very prevalent. Such a belief removes the need to invest in an effective marketing campaign and drive a sales effort.

There’s no way to expect a sales effort to be effective when it isn’t worked diligently. Throwing out some marketing dollars and sitting back waiting for the deluge of business is amateurish. For marketing efforts to be successful they have to be tethered to an aggressive sales plan. Even if the overall construction market improves you won’t reach your desired results if those two areas are not on the same page.

The problem is that most creative marketers cannot help engage the sales team, so management or ownership pours more money into the marketing and waits for results. Usually they end up very disappointed.

Often a company is having success, but management cannot tie point A to point B in
regards to their sales and marketing efforts. Truth be told, both have probably been worked to some degree and the business is following. Wondering how can drive you crazy. I have clients that are having great success, but they fail to recognize that they’ve invested years in their sales and marketing work and are reaping the rewards.

Consistently seeing and entertaining customers, engaging closely with clients through the bidding process and keeping your company brand in front of the marketplace all contribute greatly to sales success, even to increasing numbers with existing customers.
After all, even your regulars can forget about you or the level of your capabilities if you don’t stay in front of them.

I’ve often said, if you want better sales as well as profitability, what are you going to do instead of investing in your sales and marketing efforts? I haven’t found the magic wand you need to wave to change your current situation. 

Applying dated, ineffective techniques to try and spark some interest can be a waste of
effort. The construction industry is not immune to marketing and traditional sales dynamics. Well, you have a customer, a product – the work you perform, a distribution network, and a price. Sounds like a traditional sales dynamic to me. The contractors that not only realize this, but embrace it, will prosper.

Acknowledging you have to invest in sales and marketing efforts will start the process of
improving. Effective marketing will increase your brand awareness and keep the company consistently in front of the customer base. Effective selling will engage the customer base and influence the decision-making process. It also will begin to affect the profitability of projects on the front end during the bidding process. These are undeniable truths.

Simply not believing in the need for these business basics is not a recipe for success.  Honestly, if I hear one more contractor say spending on sales and marketing is a waste of money I’ll, I’ll…okay, I’ll probably do nothing, but it still drives me crazy!

Hoping your marketing will sell for you is extremely shortsighted. Contractors often
are very good at what they do in the field, but weak in these business disciplines. There’s never been a project performed that was not sold first. To assume your company is exempt from marketing AND sales work is a simplistic perception that probably is hurting your company’s performance. Wondering when your marketing will produce business displays a lack of understanding of its role and the need for sales work. Getting a hold of both can light a fire under your financial performance.

Tom Woodcock, president, seal the deal, is a speaker and trainer to the construction industry nationwide. He can be reached at his website:  www.tomwoodcocksealthedeal.com or at 314-775-9217.

Strategy Deployment for World Class Performance and High Growth

in Columns

Would your employees say work is chaotic and hard for them to discern the priority tasks?  Do most associates seem disorganized and maybe even frazzled from day to day? Is focus and progress on the top initiatives lacking? Are company strategies unknown, disjointed, and becoming a low priority throughout the organization?

If you answered ‘yes’ to those four questions, you do not have the attributes you need to become the highest performing organization you can be. A vast majority of companies struggle every day and cannot get the results they truly want year after year. Organizations are so busy fighting fires and reacting to problems that they can’t seem to find their way out of daily crises to work proactively.  Neither can they consistently work strategically on business-critical tasks to get to the performance and growth level they desire.

The solution lies in a very simple and quick process of strategic planning and deployment.  My favorite response to companies struggling in the above way is: “let’s stop the insanity for one day and develop your strategic roadmap for faster results.”  That will add resource organization, clarity, and efficiency to your daily routine, and it also will drive performance excellence, delight your customers, grow the business, and produce the highest level of margins.

What is this strategic planning method?  It’s a planning method that has been used for over 60 years by Japanese companies.  It is called Hoshin Kanri, and its cornerstone tool is the X-matrix, shown below.  This is a one-page strategy tool that aligns your vision to your long-term objectives, short-term objectives, initiatives, metrics, and high-level resources. It will chart your course for aligning company resources to the critical projects, put key measures in place to ensure the objectives are met, and facilitate rapid achievement of your goals and vision.

Companies such as Toyota that have used this methodology for half a century have realized such significant performance that they are household names today. People recognize them for their quality, long-term planning, and huge growth. American companies that are starting to adopt this method are seeing the highest level of results in their history and are out-performing every competitor.  Danaher, for example, a science and technology leader that designs, manufactures, and markets innovative products and services to professional, medical, industrial, and commercial customers, has shown incredible gains. They doubled their growth in just four years.   Once a company starts using this strategy tool, they continue to use it every year because of these types of dramatic gains.

Companies today must get more strategic if they want to continue to be competitive, grow the business, and get the results they want. It is imperative to have this strategic roadmap in place to achieve business optimization with far fewer resources.  Without it, your company faces business as usual at best, lack-luster performance and most likely, loss of margins and declining sales.

What is your ten year plan?  Or, even five year plan?  If you’re like most American companies, you have a 1-2 year plan at the most.  Japanese companies are known to develop up to 100 year plans. In America, we are more very short-sided and not long-term thinkers or planners.  This can have a major effect on our success or lack of it. We have to start learning to think longer term and plan for greatness. Business success and productivity will not just happen without proper planning  and being more intentional about your strategic activity. The business case for developing your strategy is clear cut.

The process starts by developing a vision. Define where you want to be in five years. Next, build your strategy with the subsequent resources, projects, and accountability plans. This tells us why you are in business, where you want to go, what you need to achieve, how it will be measured, and who’s responsible for each project.

With this clear roadmap to your future, your company will have the focus to work the “right projects” at the “right time” with the “right metrics” and with the “right resources.” Once the plan is communicated company-wide, employees at all levels of the company will be on the same page, working on the priority initiatives, and getting results at a much more rapid pace.

 The following steps outline the process for this method: 

1)    Plan: Set mission, vision, and Strategy for the company.

2)    Develop high level process maps, identify and prioritize projects, and execute.

3)    Monitor performance.

4)    Adjust regularly to ensure success.

5)    Repeat.

Your company will thrive with:

• Higher levels of performance from top to bottom

• Self-governed employees focused on priority work

• Improved communications

• Accelerated growth.

Kim Rochetti is chief excellence and disruptive officer at Strategic Operating Systems. She can be reached at 314/838-4659 or

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