The Cash Flow Contractor

The two biggest risks that contractors and people in the real estate industry face are the risk of not getting paid, and the risk of getting sued. In this episode, we’re talking with Tulsa attorney Eric Daffern about common mistakes that contractors make and how putting systems in place (and we don’t just mean legal systems!) can save them time, money, and stress.

Show Notes

  • Who is Eric Daffern? Why did he go into law? (1:50)
  • There are two main risks in real estate and contracting: the risk of getting sued, and the risk of not getting paid. (5:30)
  • Story of the Show — The perfect construction contract and project suddenly went wrong because of the pandemic. (12:20)
  • Why are systems so essential for contractors? (14:15)
  • Why don’t more contractors have relationships with an attorney? (17:20) 
  • 99% of the time, everything’s gonna work out. How do you protect against that 1% where the bottom falls out? (20:27)
  • What’s the most important tool you can use to make sure you get paid and stay out of court? (22:00)
  • What’s a contract system? (22:40)
  • What’s a contract addendum, and how does it give subcontractors power in a negotiation? (24:40)
  • How do large GCs react to subs trying to negotiate? Do subcontractors even stand a chance against them? (27:30)
  • Do you need to pay an attorney to review every contract? (30:20)
  • What are some other systems contractors need? (33:15)
  • Can you still do work on a handshake? (35:50)
  • Systems add value ($$$) to your business. (40:00)
  • Mechanic lien systems — Don’t ignore your superpower! (40:45)
  • Why do you need HR systems? (46:30)
  • Your team can work closely together to make sure that your business is protected. (48:10)
  • How can early incident management systems protect you and your employees? (49:10)
  • How can you be a good consumer and choose the right attorney? (55:00)
  • Mount Rushmore — Lawyer Jokes edition (59:40) Listen to see which joke was Eric’s favorite!
  • Quote of the day — “Knowledge is power.” (1:02:40)
  • Something you can actually go do (1:06:10)
  • Closing the story — Remember that this was the PERFECT job. Everything went right, until the last payment. Luckily, we had already worked with the client to create a mechanic lien system. Unfortunately, we had to file a mechanic lien, but my client was able to get paid and still maintain a good relationship with his client. (1:09:50)
  • Intern Insights with Ethan — Can Ethan sum up in 60 seconds or less what it took the other guys over an hour to explain? (1:13:14)

Quotable Moments
  • “The earlier you find a problem, the cheaper the resolution is.” — M
  • “If you will focus on a team around you and invest in your team, then you can have that team help you make money as well. There’s no difference between having a screwdriver, a hammer, or whatever in your craft, and having a lawyer, an accountant, and a banker on the business side of it.” — Eric
  • “The number one reason people leave an employment position is unclear expectations ... Systems define the expectations against which people are measured so you can go and do those things.” — M
  • “You’re not going to be the expert in everything. You have to hire and trust other people. It’s going to make you better.” — K
  • “You have the choice of doing nothing or the choice of doing something.” — Eric

Mount Rushmore
  • Listen to our best lawyer jokes at 59:40!

Resources

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What is The Cash Flow Contractor?

If you’re like most contractors we know, then you started your business because you’re passionate about and great at your craft. You also wanted to be your own boss. Owning a business has a lot of advantages, but also a lot of challenges.

We started this podcast to talk about things that matter to you as an owner, like business fundamentals, sales processes, marketing, leadership, and much more. Armed with knowledge, you’ll be able to reach your goals, whether that’s growth, getting your shop to run without you, or anything in between.