Joel Calkins (00:00)
All right, welcome to Navigating Growth Podcast. I'm your host, Joel Calkins, and today I'm here with Jenny Rost of Construct Bookkeeping. Jenny, thank you so much for joining me today. Would you mind just starting off by telling everybody a little bit about who you are and what it is you do?
Jenny (00:17)
Yeah, thanks for having me, Joel. I really appreciate it. So like you mentioned, Jenny with Construct Bookkeeping, we are a bookkeeping firm here in Washington that supports construction contractors in the Pacific Northwest with their bookkeeping, payroll, department of revenue and compliance. β We do a little bit of back office work for them as well. So.
We've been in business for five years now and I've been doing bookkeeping and accounting in the construction industry for 20 years now, which sounds crazy to say.
Joel Calkins (00:57)
So you've been doing it for a while, but you've had this business for five years. So tell me a little bit about what you were doing before then and how you came about becoming your own business owner and what that's been like for you.
Jenny (01:10)
Okay, of course. So I grew up watching my dad, he owned a painting business. So I got to see firsthand like how overwhelming the financial aspect was for a small business owner. He's trying to juggle payroll taxes and paperwork and then stay on top of the field work as well. So that experience really stuck with me. And β I spent 15 years in corporate construction accounting. So I got to see a lot of small contractors.
struggle with those same issues along with billing, insurance, and it was those things that really pushed me to start my firm. I wanted to bridge that gap between small business owners and being able to afford to have someone in-house full-time and compete with those larger businesses. I always knew that I wanted to own my own business. I just didn't quite know what that was gonna look like. So, β
I started off by getting my own finances in order because I didn't want to be advising people about their finances if I didn't feel comfortable about my own. So I started Dave Ramsey's debt pay payoff plan and I worked on that for probably two years and got my husband and I in a really good position. I started my business with no debt and I've continued to have no debt. I've been blessed to have no debt in my business β over the last five years.
So my husband and I were out to dinner one night and I of course was talking about all my plans and wanting to have my own business and he just told me, he's like, you just need to do it. Like you keep talking about it and you keep talking about it so you need to do it. And I was like, okay, I'm gonna do it. So I came up with a plan β for, this was February of 2020 was gonna be the start of my business and I was very excited. And of course we all know what happened in March of 2020. β
And that actually wasn't COVID wasn't a setback for my business β because I think it forced a lot of construction contractors who weren't used to working with a remote bookkeeper to become comfortable with things like zoom and online portals and just working remotely because we were all forced to during that time. β I was really lucky in that year. β The company that I worked for.
amazing company, let me, well they knew that I was starting my own business. I was very upfront with them about that a couple months in. And so they let me hire and train and work myself out of a position. And I know that not everyone is that blessed when they go to start their own business. So I feel very lucky over the first year that I got to do that. It didn't mean it was an easy year. I did lose my mom during that first year of business. So that made β
Joel Calkins (03:46)
Yeah.
Jenny (03:58)
you know, that first year even more challenging because of that. But I feel very lucky that the company I worked for was so understanding. So that has also like kept me passionate about having my team and how I, β you know, value my team and the type of culture that I'm building. So while I love serving my clients, I would say that one of the things I'm like most passionate or most proud of is how we empower women.
in our firm. So they get to work from home, they get to achieve financial independence, and they get to be present for their families. So their little kids see them, you know, bringing in a paycheck, but also being able to get them off the bus or go to their, you know, soccer match, things like that. So knowing that we're setting an example for the next generation is really like, that's a proud thing for me as a business owner. I never thought I would have employees, let alone a team. So that's been
Joel Calkins (04:49)
you.
Jenny (04:56)
That's been an adjustment.
Joel Calkins (04:58)
that is awesome. So first of all, congratulations on taking care of your own finances. β I know that's very hard to do and it probably gives you a level of empathy when you're working with your clients, right? Because not only are you helping them with the head knowledge that they need to be, you you know, have good finances, but you also understand kind of the, probably the emotions and sometimes maybe the guilt or shame that goes with like, it's not very good. I'm a little bit embarrassed.
But you get that, you can help them through that. So that's fantastic. Yeah.
Jenny (05:31)
Every client that comes to me, that's always something they're hesitant about is like letting me see inside their books. Like it feels like they're opening up something and there's no judgment. We've all been there. Money is funny, so.
Joel Calkins (05:43)
It is, it is as often the thing we don't want to talk about or let people know is not good. β and so if they're probably coming to you, they've really, they've tried everything else. so, β that's awesome that you have that, that level of, of care in what you do. I'm particularly interested in talking more about your leadership style, because I think it's great that, β you have an environment where your employees and it sounds like many of them are moms.
Jenny (05:55)
Exactly.
Joel Calkins (06:12)
are able to do the good work they enjoy doing, but also be able to do that and care for their family and other priorities. So tell me about why that's so important to you and what does that look like for them?
Jenny (06:24)
It's so important to me, I think, because β when I was going through my mom's cancer diagnosis, I worked for a company, like I said, an amazing company, and I had the opportunity to work from home and have a lot of flexibility during such a time that was really hard for our family. And I want to make sure that anyone on my team who is going through, you know, something that
life-changing or even smaller, that they're not worried about who's going to handle this thing while they're out of the office. β I feel like leadership is something that, you know, it's not really, there's not a lot of classes for it unless you're working with a coach. It's something that's, hard to develop. So I'm still working on developing that and β
I think my team appreciates the transparency that I give when I'm working with them. And I like to be open to their input because they're behind the scenes, they're doing so much of the work and I need to be listening to what they're saying isn't working or their ideas, their thoughts. I've worked for bosses in the past who they weren't leaders, they weren't open to that type of β opinion or criticism.
And I take it as hard as it is sometimes. I want to know, like, what can we do better? What are you seeing that I'm not seeing? Because, you know, there are some tasks that they have a very granular view of, and I have a super high level. So I need to know that. Plus, they might know of tools and tips and tricks that I'm not seeing. And I want to know that. I value, I really value my team members. And I just want them to have a culture where they enjoy coming to work.
They have a work-life balance. That's really important to me.
Joel Calkins (08:24)
Yeah, that's awesome. It's so easy as business owners to get caught up in what we want to have happen. And we forget that the people that are helping us get there also have their own dreams and aspirations. And, you know, so to understand that is really important. So it's awesome to hear that that's something that's, you know, top of mind for you. You mentioned earlier on, often when when you work in the construction industry, so when they come to you and they decide, OK, I need a bookkeeper to help me, there's probably a lot of.
unraveling of what's going on within the finances. What are some of the things you see early on when you start to work with a client that β you can immediately help them?
Jenny (09:04)
So usually it is a cleanup that is probably one of the first things that I identify with clients. So we do a diagnostic review of a client's books when a lead first comes to us. So I will not work with clients who I don't get to do a diagnostic review of their books because your balance sheet rolls over a year to year and your profit and losses for the current year. We need to make sure that your books are accurate through the last
file tax return at minimum. If you want to have β good data prior to that, that's an additional cleanup on top of it. β that is probably our first step and our biggest step is to just make sure that those books are clean from the start. One of the biggest struggles that I see when a client comes to me is not putting aside enough for taxes. So that's one of the biggest issues, whether it is
their sales tax or their payroll tax. So I always recommend here in Washington, we have our retail sales tax and our BNO or business and occupancy tax. And if you are doing construction services in Washington for retail, I always recommend opening up a separate savings account and putting aside 10 % of your retail revenue into that account to cover those sales tax that are a pass through.
through tax. A lot of clients, when they first start out with their business, and even if they're a seasoned business owner, if they're not paying attention to their income, you know, really accurately every month, they're not going to have that money set aside for that liability. Same goes with payroll taxes. So we partnered with Gusto when I very first opened my firm, because I liked that Gusto. When you process payroll that day,
they not only, you know, take out the direct deposit for your employees and pay them. They also draft the amount of your payroll taxes and then Gusto holds onto that and then pays it based on your filing schedule. And I really liked that from a cash flow perspective for our clients because construction contractors, they're all moving fast and they're not paying attention to those liability accounts. So it's nice that that money is taken out and they don't have to think about it, you know, that month or that quarter.
QuickBooks Online just made that same change in July and so they're doing that now too, but I do not recommend QuickBooks Online payroll. So I prefer to use Gesso for that.
Joel Calkins (11:45)
Okay. Because you brought
it up. You mentioned, you mentioned QuickBooks, you mentioned Gusto. If I were, let's say starting a new business, presumably in the construction industry, but maybe I've been in business and I haven't really thought about the tools I need to do a good job of managing my finances and even managing my payroll. What do you recommend as a new person starting in the business world? What are those pieces of software or systems I should be looking at as I get started?
Jenny (12:15)
Absolutely. So of course we do use QuickBooks Online. So I know I kind of poo-pooed the QuickBooks payroll, but we do use QuickBooks Online. So I recommend that for all of our clients. It's well, you know, well known app for your phone. Everyone uses it. There's a lot of tutorials out there. So that's a great tool. A couple of programs that integrate with QuickBooks Online really easily.
that add some additional features. β We really love Dext. That is a document management program or a receipt management program. β It's really great. You as the business owner or anyone in your office or field can have an app on their phone or desktop app, and you can easily β scan or upload bills, β receipts, any documents like that. And then we can communicate in that portal.
about job site specific information, bill information for those vendors, and it scans that document so there's not a lot of data entry when it comes to that. Adaptive is a newer tool that's out and it does some similar things to Dext in that it has that document management capability, but they are really changing, β I would say they're changing the market with Adaptive. It's a really powerful tool.
because it incorporates more job costing and budget forecasting capabilities than some of the other software. It's really easy to use, very intuitive. β We're liking that. A lot of our clients really love that. β If you're looking for something a lot more robust that's going to have job costing, scheduling, β vendor portals,
things like that, something like JobTread or BuilderTrend are great tools. We're very familiar with those and use those with a lot of our clients. So I don't stick to one β tech stack. I like to allow my clients to be able to choose what works well for them and have that kind of flexibility, as long as it's one that I've vetted and I know is a good tool and integrates well with QuickBooks Online. So there's a lot out there for the construction industry.
I would just say, you know, make sure you get a good implementation team because that's probably the biggest part is that set up there at the beginning.
Joel Calkins (14:42)
So yeah, I imagine if you're starting a new company or maybe you've been in it for a while, you get into that because you are, let's say you're good on the construction side of it, whether you're, let's say a contractor or a plumber and electrician or a roofer or what have you. β But maybe you're not as aware of all of the business elements out there, the business tools, the finances. And often what I have found is a lot of them,
They want somebody to take care of that and they know it has to be done, but they want to focus on doing the work or growing the business. When I think of growing is like sailing and getting more clients and things like that. So if they were to come to you and they said, okay, Jenny, I understand I need a bookkeeper. It sounds like there's a lot of good tools to help me β manage my finances. β My accounts payable, my accounts receivable. You just mentioned a handful of the tools. How would they go about?
Do they start with you or would they find somebody else like an implementation team? Like how do they get started?
Jenny (15:47)
So we price out β implementation a little bit different. I mean, it would depend on if they came to us and they already had that software or not. β I would refer them over. I have a couple of sales reps at various programs like Adaptive and Job Treads. So I would refer them over to one of the reps that I work with, and they would be given an implementation team with that software. β
If they wanted us to be involved in that implementation, we're happy to do that. I feel like you get the best, you know, best implementation. It's most successful when we're able to work with that implementation team because the implementation team, they're always great, but sometimes they don't know a lot of the specifics with bookkeeping. They're more trained in that sales and how their product works.
Whereas we have a set chart of accounts that we like to work with and we know each industry a little bit better as far as, you know, like you're saying, if they're a roofer, if they're a painter, things like that, that might be a little bit unique to their industry. So we will partner with their implementation team. We don't need to be on all of the calls and fully involved in the implementation, but there are some specifics that we want to look over during that implementation. So.
I would say it is best to find a bookkeeper first because they're going to be honest with you about what products they are comfortable working in and what products can help solve those problems that you're looking to solve. Because I know that there's a couple programs out there I wouldn't work with or I wouldn't recommend. β Or there's some that are better for
you know, maybe a roofer versus someone who does β landscaping, things like that. So β I would pick your bookkeeper first and then have a discussion about the needs and then go from there on solving that issue for what tools to implement.
Joel Calkins (17:56)
And I imagine that would be helpful too, because again, as you're trying to build out your systems as a business, different businesses, depending on maybe their specialty, maybe their level of maturity in terms of business cycle and where they are in their growth curve have different needs. And I would imagine because you have a good understanding of their finances, you can help advise, this is gonna be helpful for you for where you wanna go next, whereas maybe don't invest in this yet because...
you're not going to be able to leverage it like you should. Is that an accurate statement?
Jenny (18:29)
It is and nothing against any of the implementation or sales teams, but they're there to sell you a product. And of course they want you to use their product. And we've all been through implementations that haven't gone well because it didn't fully meet the needs of the client. And so I'm going to give you more of an unbiased, I'm not trying to sell you a product opinion.
Joel Calkins (18:33)
Yeah. Yep.
And you said something in that, I'm gonna call it out because I think that's really important for people to understand. β One of the, probably the services you provide, whether you say this explicitly or not, is understanding what their needs really are and coming up with the right solution versus saying, I have a solution, now I'm gonna figure out how to take your need and make my solution fit. Because I think a lot of people, whether it's in their finances or this happens a lot in even growth, β a lot of like...
know, growing and expanding a business is I want to invest in something, therefore I'm gonna force something into it because it looks cool or shiny or neat. It may not be the right thing for the business. So it's good to hear you say that. So if you didn't say it explicitly, I'm gonna say that. Understand what exactly you're trying to accomplish in your business. Have people like yourself help you figure that out so that you actually solve it in the right way and not just buy something that maybe doesn't do it. So, for you, as you work with different
Jenny (19:42)
So true.
Joel Calkins (19:48)
clients, you probably see the same mistakes again and again and again. What are maybe the top three to five mistakes that you see β business owners do when it comes to their finances and their bookkeeping? And what are maybe some of the things they need to be aware of?
Jenny (20:06)
So ways that I can tell if they're making mistakes or things are not going well for them, β the first thing from just looking at their books, that perspective, is have their books been reconciled? So if you are in your QuickBooks file, you can go on the left-hand toolbar, go to Accounting, Books Review, Account Reconciliation.
And if your books have not been reconciled, whether it's you as the owner that's doing the bookkeeping or you've been outsourcing, that is a great way to see if your books are accurate. Because if you are not taking your QuickBooks file and going back to your one true source, which would be your bank credit card and loan statements, you can't verify that what's in your QuickBooks file is accurate if you haven't reconciled those accounts. So that's probably one of the
most common things that I see when clients come to us that is a red flag for us. β The second thing I would say is kind of when their business might be in trouble. β There's two key reports to look at. So β the profit and loss by month, it's probably my favorite report. I love looking at that report. β And easy to find in QuickBooks, just go to the reports, search profit and loss by month. β
but the net income down at the bottom of that report. If you are seeing a loss month over month, that's a big problem. β Obviously, none of us wanna see a loss in our business unless you have some very specific tax strategy that you're going for there, but β you don't wanna see that reoccurring loss month over month, especially year over year. β Another thing, if you are looking at your balance sheet, if you are continually,
if you continue to see β rising debt or credit card balances or the inability to pay payroll, that's also a red flag. So how we would best help clients to navigate that, β I would always recommend creating a budget. That's gonna be the best way to make sure that you aren't spending more than you earn because a lot of the times, especially in construction,
It's really hard to see unless you're paying very close attention to detail if you are spending more than you earn because you might be getting a large deposit in one month for a project and the materials aren't coming out that month. They're coming out another month, two to three months later. And so it's hard to see, are you actually making money in that month?
β Job costing also really helps to dial that in by project. So those are areas where we're able to help those clients with those red flags or things that might, they might not know are troublesome yet.
Joel Calkins (23:00)
Yeah, absolutely. So you said some scary things like monthly, month over month, β loss in terms of revenue and budget and taxes. β and I know for, for me and business owners, they have, they have a team, whether they realize they have a team or not. And that can consist of yourself. They probably have a CPA, maybe a business attorney, β maybe a financial advisor.
but they've got people that they're working with. They're probably trying to juggle and all of them are there to help in some way with their business. So how would I think about a bookkeeper in terms of playing a role on that team? How do you interact with some of those other, those players? What does that look like?
Jenny (23:48)
love when we have a team that wants to interact. That's my favorite because it's hard to work with a CPA who just wants reports at the end of the year. So you're going to be more successful when we actually operate as a team. So we had a newer client recently β and we got together, all of us, the whole financial team and did a meeting.
And we were able to align on a lot of aspects as far as like their assets, payroll, some tax strategy. But we realized that their legal team actually was where this question and this answer needed to happen. And by all of us getting together in that room, we wouldn't have known that that was actually a legal item that needed to be handled. We could have gone on without that meeting and assumed
that it fell in someone else's lap and it didn't. So we were able to get together and possibly save some costly assumptions there by having that meeting. β I think a lot of us too, we will assume what our clients' goals are based on the role that we play in their business. So a lot of the times I'm focusing on day-to-day and their processes and the tools that they're using and of course,
their transactions and their financial reports. But that's what's important to me. And that might not be what is most important to the client. So β if you can meet once a year with that financial team, I think that's great. That's great. know, beginning of the year, especially to come up with a plan for the upcoming year, if not especially before tax time, you're going to be a little bit more retroactive at that point. β having a team that's willing to get together,
and talk things out. With our clients books, we keep them up to date within a week. So every week we categorize transactions. We're not doing that on a monthly basis. So at any point, our clients can run their financials and they're having pretty up to date accurate information. β If we were to have a meeting coming up with all the players on the team, we would want to have reconciled. β
reports to be able to review. We do a QC review monthly of our clients books and so I'd like to you know if it's middle of August I want to be looking at July books that have been reconciled and and QC'd. β But I think it it it really comes down to communication and having that that meeting and β if your team isn't willing to do that it might be time to have some more conversations with them and open those doors.
Joel Calkins (26:36)
Yeah. And I could imagine that could take a weight off that business owner who's already got enough to worry about because, β if the team is talking, they're all working together in your best interest, making sure that everything is, is where it needs to be. And if they're not all working together, then it's going to be on you as a business owner to keep all of those pieces together and then translate, which is again, more work for you and probably not the work you want to be doing. And so, that's a great.
great call out I think is we as business owners think about how we manage our business, the team that we bring along. It's not just our employees, it's the people that kind of surround us as other stakeholders and so that's a really good word. One of the things that I also think about when it comes to finances and bookkeeping is often when I work with clients, when they think of growing, it means I need to sell more, I need to market more, I need to advertise more and really there's so much
goal to be found in understanding your finances because that's really good data to help you understand what's working and what's not working and where maybe the opportunities are. So how do you as a bookkeeper or how could you as a bookkeeper help business owners think about growing their business?
Jenny (27:53)
So with that, β I mean, there's so many opportunities there. First of all, getting bookkeeping off of your plate. If you are the one who is doing the bookkeeping, getting that off your plate, you know, might be, maybe you're not doing it and you need to be, that's one thing. But if you're spending time every month doing your bookkeeping, running payroll, researching some HR questions,
That's time that you could be using to grow your business. β So I always talk about that in B &I that, β you know, if you're talking to a business owner who says, β I don't really have time to make it to that networking event, well, I could be doing their bookkeeping and freeing up four hours, five hours a month, and then they could be making it to that networking event where they're gonna get those referrals and they're gonna be able to grow their business.
A lot of the times with processes and software as well, I know we talked about software a little bit, but process improvement, that business owner might not realize that they have a really manual process that is limiting someone on their team from doing what they're really good at or even themselves. If they're stuck in this manual process that I could streamline with a tool that I already know I've implemented for other firms or other clients that works well. β
It could free up a lot of their time for that growth. We also help identifying trends and issues in their books on a regular basis so they have potential for growth there. Having accurate financial statements makes you stronger when it goes to applying for a loan or working with any banking institution. So that's another area of growth potential. We also do AR and AP management like you mentioned.
And so that allows you to have stronger vendor relations and client relations if your payables and receivables are more timely.
Joel Calkins (29:54)
Absolutely. It's a great way to help you kind of manage that. I know so many business owners that I've spoken with that save bookkeeping and payroll till 10 p.m. on a Friday night because that's all the time they have to deal with it. So to think about not having to deal with it, deal with it at that time and having somebody else take care of that is a huge benefit. β Jenny, this has been so good. I got one more question before we wrap up here. Now, and you mentioned this in prior conversations.
AI is everywhere. Obviously, it's getting integrated into everything. So what does that look like for the bookkeeping industry? What do you think is going to happen in next five to 10 years? One, what's going to happen in the bookkeeping industry? Two, how does AI play a role in that? Or maybe what are some of the maybe the good things that might come of it? And what are maybe the concerns that we should be aware of?
Jenny (30:27)
Yes.
Okay. So funny story about that. I was on a webinar for a new software that's coming out that's supposedly going to replace QuickBooks Online and some of the transactional and reconciliation level work that like me and my team do. So I asked live during this webinar, you know, what happens if a client wants to leave my firm? What happens to their data? Because this isn't a QuickBooks Online program. And a lot of, you know, bookkeepers and CPAs
we use QuickBooks online so that data is easily transferable. Well, with this software, if a client was to leave me, they would get a CSV file of all of their data. Could you imagine at your end if you brought a CSV file of all of your transactions to your CPA, what would happen? β So when I asked that question, I was told that they think their product is so good that clients will be happy.
and they won't want to leave. So I felt like that was a very short-sighted answer from an AI tech company. β So I'm excited about the opportunities that AI is bringing forward for automation and time-saving. But over the next five to 10 years, I don't think that AI is going to be replacing any bookkeepers. I mean, we can't even get QuickBooks Online rules to work regularly, let alone
them coding transactions or reconciling your books automatically. β I think that the bookkeeper's role is really gonna shift more into an advisory role. β We were planning on adding advisory services in 2026, and I think that the technology is just gonna help with that for automation. We do use AI in our firm right now, but we have very strict guidelines on that. So we're never...
β taking client financial data and uploading that to any AI software. We use it more for brainstorming ideas, meeting formats, things like that. With AI, the data privacy is probably the biggest concern right now. We don't know where that data is going. No one knows yet. It's been so fast moving with AI that no one can answer these questions yet. So I really want to
caution everyone on just uploading your financial information into these AI software because we don't know yet what they're taking that data and what they're learning from it, what they're using it for. And a lot of that, like that's your bank information, that's your employees information. You have to be very cautious with that. β So as much as I'm excited about the new developments, am a little concerned.
But at the end of the day, technology, like we've said, it's just a tool. It's not going to replace that human element. So that knowledge, judgment, ethical standpoint, that's still going to remain irreplaceable. I'm still the person who answers the phone when my clients call. β I haven't replaced that with anyone. And I think that's something they really value about working with us. They have easy access, easy communication to us. And I know that AI can't replace that.
Joel Calkins (34:09)
Yeah. Yeah. And so much of what you do, I imagine, which a lot of, you know, professional service β teams do is they provide a lot of the outsourcing and like you said, the advisory side of things. So it's not just doing the work itself, but actually getting things off of their plate, building new habits, building good systems. So they're actually a more profitable, healthy company because they're actually leveraging people that know.
that area of expertise as opposed to them trying to do it themselves or just relying on a piece of software that they don't understand to do it too. So yeah, the other interesting thing, and I think this is a good call for anytime we use software, which is understand the privacy policies around that software, especially for financial data, for personal information, β because some will sell it, some will use it to train their algorithms β while others don't. And so understanding what you're doing with it and who's holding it is really important.
Jenny (34:43)
Yeah, absolutely.
Joel Calkins (35:07)
Definitely a good call out there. Well, Jenny, this has been awesome. Thank you so much for your time. I do appreciate it. β Again, this is Joel Calkins with the Navigating Growth Podcast. I'm here with Jenny Rost of Construct Bookkeeping. Jenny, thank you so much.
Jenny (35:22)
Thanks for your time, Joel. I appreciate it. It was great.
Joel Calkins (35:24)
course.
