Business Tip – October 2013

mapei_sponsorFinancial Operations: running your tile business the right way

In this issue of TileLetter, we move to the Financial Operations section of the NTCA Business Reference Manual, as found on page 31 in that document. Part A familiarizes you with common accounting terms related to your business, and part B explains the labor burden rate. Check upcoming TileLetter issues for more tips and recommendations on running your business efficiently and profitably. To download the entire NTCA Business Reference Manual, visit www.tile-assn.com.

Financial operations

The relationship with an accountant is vital to running your business smoothly and profitably. Your accountant can advise you on the complexities of federal and state taxes and benefit you with good and proper record keeping. Your accountant can help you decide what type of business classification is best for you, and can be a valuable resource for future decision making.

a. Common accounting terms

BOOKKEEPING – the recording of monetary transactions related to your business.

ACCOUNTING – the financial structure of a company. An accountant helps design financial systems, conduct audits, develop forecasts, prepare tax reports, and analyze and interpret financial data for business decisions. Your accounting should be set up on cost accounting, not tax accounting. Tile contracting is a cost-based business.

CHART OF ACCOUNTS – When you set up your accounting program, the chart of accounts shows a specific numbered category which will be associated with each expense and type of income. A basic bookkeeping program will have a sample chart of accounts, or your accounting professional will have an outline for you to use. Setting up the Chart of Accounts correctly will make all your accounting work run more smoothly.

INCOME STATEMENT – Also referred to as the Profit and Loss statement, the Income Statement indicates how a company’s sales and expenses tally for a specific period of time. The difference between revenue (goods and services sold) and expenses (cost of goods and services provided) for a particular time is net income.

BALANCE SHEET – a “snapshot of a company’s financial condition” – a balance sheet shows assets (what you own), liabilities (what you owe), and ownership equity. The net worth of your business equals assets minus liabilities.

CASH FLOW STATEMENT – The flow of cash into and out of the business is reflected in its cash flow statement. This report is useful in determining the short-term viability of a company, particularly its ability to pay bills. It is useful to managers, accountants, potential lenders and investors, as well as the business owners.

PROFIT AND LOSS (P&L) STATEMENT – A regularly-produced report that shows the overall financial health of an organization by documenting income versus expenses. A well set-up P& L allows you to make good daily business decisions. Note: make sure depreciation is not included in this statement. First, you cannot use it; second, you cannot spend it, and if it is under expenses it pushes up your markup.

b. Labor burden rate 

“Burden rate is the total indirect cost, calculated as a percentage of the construction company’s direct labor. In other words, for every dollar of direct labor allocated to a contract, burden is applied as a percentage of the direct labor. But before a contractor can accurately calculate burden rate, all contract costs assumed by the company must be fully accounted for and factored into the final burden rate equation.

“Contract costs are broken into two classifications-direct and indirect. Examples of direct costs include direct labor, materials and supplies, equipment rentals, etc. These costs are obvious inclusions for estimators preparing bids for a potential contract. What may not be as obvious are the indirect contract costs.

“Indirect contract costs that should be part of the final burden rate calculation include:

  • Workers’ compensation
  • General liability and automobile insurances
  • Vehicle and equipment repairs and maintenance
  • Depreciation
  • Field communications expenses
  • Employee benefits such as health, life, disability
  • Payroll taxes

“All costs associated with paying employees, including FICA, unemployment and Social Security, should be calculated as part of labor, as should vacation time, holidays, sick days, warehouse personnel, training, safety, hand tools, and clothing.

“Variable overhead should also be factored into the overall mix. This category includes all costs directly related to employees that cannot be divided accurately between jobs, such as fuel and cell phones.

“All too often, these overhead expenses are overlooked by contractors and therefore not included when calculating a project’s burden rate. Depending on the benefit package involved, employee-related costs will typically account for 24% to 33% for a non-union contractor. For a union contractor, the burden rate for employee-related costs will range from 60% to 70%.”

– From www.constructionbusinessowner.com.

Ask the Experts – October 2013

SponsoredbyLaticreteQUESTION

I have a question about a new home constructed in 2012. We have porcelain tile over cement backer board over LP 3/4 floor decking. The backer board was installed with thinset to the OSB and screwed down. Tile was then thin set to the cement backer.

AtE-OctI have issues with loose tiles in two areas: kitchen and master bath. An engineer has assessed the I-joists and beams and found no movement or deflection. The contractor wants to blame the radiant floor heating, but I have hundreds of square feet of tile unaffected by the radiant heating. Any thoughts? Attached are a couple of interesting pictures.

ANSWER

Thank you for including the pictures. They make this an easy diagnosis. Your tile installer did not include movement accommodation joints (or insufficiently-sized joints) in your tile job.

Tile expands and contracts, and at a different rate from the substrate below. Every method shown in the TCNA Handbook for Ceramic, Glass and Stone Tile Installation requires movement accommodation joints. Interior dry areas need joints no more than 20’-25’ in each direction; exteriors, wet areas and interiors exposed to sunlight (i.e. where south-facing windows occur) 8’-12’ maximum. Glass tile and any radiant-heated tile need reduced distances, and in all areas, perimeter joints (where tile meets walls, cabinets or any dissimilar plane or surface) must be left open or filled with a flexible sealant. Even if the field distances are not exceeded, not including perimeter joints can cause this failure.

Many tile installers do not know the industry standards or have never experienced this failure, because it does not ALWAYS occur, but unfortunately for you, this is part of the learning curve for your installer. It generally does not take but one or two of these failures for an installer to learn the importance of including movement accommodation and spending the time up front to educate his clients (because there is generally an additional fee to perform this step within a tile project).

And please note that the thinset type is not a factor as long as it is suitable to tile and substrate. Even if there was a thinset that was 50 times stronger, the forces exerted by expansion cycling would still overcome it. Typically the thinset itself shears, but if it were stronger thinset, it would likely change the shear point to the substrate surface or the thinset/substrate interface.

The requirement to include movement accommodation joints is included in each installation method within the TCNA Handbook, and the specifics on placement and construction of joints is in section EJ-171. The TCNA Handbook is available on our website at www.tile-assn.com for sale. It is really a standard that every tile installer should own.

Michael K. Whistler, NTCA presenter/
technical consultant

President’s Letter – October 2013

dan welch imageOctober is the time of year that you find out if all of the year’s activities have a chance of paying off. It’s the start of the last quarter – the time to ask, “Do we have the fuel (a.k.a. work) in the company tank to finish with profit?”

This month I want to talk about the effect volume has on a company. Riding the tile roller coaster for the past five years, I have learned a few things. One is that you can recover gross profit on every job but that doesn’t ensure you will make net profit at the end of the year. If you do not forecast and follow a tight budget, the overhead can kill your gross profit and leave you scratching your head.

Net profit is our business goal and needs to be realized if you intend to be in business for very long. Remember, a tile business has many moving parts that can wear just like a car. If you do not change the oil and rotate the tires you end up with a blown engine and a flat tire, standing on the side of the road praying for a ride. 2013 has been a year of recovery for many businesses, and a year that the car needs some attention if you plan on running it another year.

For example:

  • Budget $1,000,000 in sales with$180,000 in overhead costs = 18% overhead
  • Actual sales come in short at $800,000 with the same $180,000 in overhead costs = 22.5 % overhead

This scenario lowers your net income by 4.5%. If you planned for a 3% net income you just lost 1.5% ($15,000) because you didn’t have the work to cover your overhead.

This year the opportunities are out there to put some extra work on the books, if you can get it done. We decided to go outside of our comfort level and take on a project out of state that we would not have been able to do without a partner to offer additional labor.

Focusing on business segments that require a quality, highly-knowledgeable, experienced workforce and teaming with others that share your same mantra, is a key to success. The NTCA has helped me team with this like-minded group of individual companies to help grow our business and help them prosper as well.

We are working with Artcraft Granite Marble & Tile on two projects out west. Artcraft’s James Woelfel and I have learned that this process can be a win/win. It allows us to take on large, complex projects with the support of two teams of industry leaders. This process can pay dividends to both companies. It has increased our volume and allowed Artcraft to fill a hole in its schedule.

Traveling across the country with staff can be very expensive and sometimes leaves employees unhappy. However, everyone is unhappy when the year rolls the other direction and work opportunities dry up, triggering a net loss for the employee and the business. Volume needs to be managed to control cost. Strategic planning and taking risks can pay off.

Dan Welch , Welch Tile & Marble
President NTCA

Editor’s Letter – October 2013

LesleyI am just putting the finishing touches on our October issue as I am getting ready to wing my way over the Atlantic to the CERSAIE expo in Bologna, Italy. It’s been a while since I’ve attended this stunning international showcase of tile trends and products, located near Sassuolo, the heart of the Italian tile manufacturing district. Look for a wrap up of the CERSAIE show in our December issue!

It was my pleasure to write our annual Women In Tile story for this October issue. Each year, the number of female movers and shakers in our industry seems to grow, so it gets more and more difficult to narrow down the selection for our print issue. But that’s a good problem to have. Please take a moment to meet these talented mavericks in our industry.

Many thanks to Tom Meehan, who wrote our Tech Talk feature this month about working with and installing electric floor warming systems. This is a product that brings value and comfort to a range of settings – and not just in cold climates. Here in New Mexico – typically considered the warm and sunny Southwest – we get cold winters and most of our homes are build on concrete slabs. Radiant floor warming systems are perfect additions to home comfort, not to mention the luxury it brings to spas and other settings. Consider if adding this product to your installation repertoire wouldn’t offer your clients value and equate to more money in your pocket at the end of the day.

This issue also includes a story about the coming deadline for converting testing to the new dynamic coefficient of friction DCOF AcuTestsm, which will be upon our industry in early 2014. This test protocol will be the standard, so our story is a gentle nudge to be sure your test methods are up to date, and for those specifying to be sure you are receiving DCOF test values with your specs, not the old static coefficient of friction values.

Finally, enjoy the review of the recent Silver City Clay Festival, held in August in Silver City, N.M. There were murals to marvel over, amazing clay and tile projects and stunning exhibits. Established last year by Lee Gruber of Silver City-based Syzygy Tileworks, the eventual goal for this festival  is to involve different cities and regions of clay-centric New Mexico – and stand in support of the work The Handmade Tile Association is doing to bring exposure to beautiful handmade and decorative tile.

There are a lot of wonderful things going on in our industry – not the least of which is Total Solutions Plus, scheduled for the end of October in Bonita Springs, Fla. There’s still time to plan your trip there – visit www.tile-assn.com for details. I hope to see you in Florida!

Lesley

Fleet pricing for NTCA Members

benefitsbox

The National Tile Contractors Association now provides its members with fleet pricing on vehicles they purchase from authorized Chrysler dealerships via a Fleet Pricing Program the NTCA has set up with Howard Wilson Chrysler Jeep Dodge Ram, located in Flowood, Miss., near NTCA headquarters. With this program, members are eligible to purchase vehicles from the dealership at prices that will compete with pricing received by major corporate fleet customers who purchase hundreds of vehicles annually. For more information about this program, please contact Jim Olson, assistant executive director for the National Tile Contractors Association (NTCA) at 601-939-2071 or by email [email protected]

FordCommercialVehicles

From the Field – September 2013

NTCA continues efforts to promote membership in strategic planning

By Bart Bettiga

The NTCA prides itself on being the “Voice of the Tile Contractor” in our industry. Recently, our executive officers met at the home of current president Dan Welch in Grand Rapids, Mich. As the association continues to grow, with almost 850 members as of August 1, the Executive Committee spent several days reviewing the goals and objectives established by the Board of Directors and developing new initiatives moving into 2014 and beyond.

Saving NTCA members money, and finding them work

One of the most important objectives of the association will be branded in a stronger marketing effort moving forward. Simply stated, the NTCA continues to develop programs that will “Save Our Members Money and Find Them Work.” If we can show our members tangible results in this effort, there will be every reason for them to continue as members of NTCA.

Examples of programs that fit into this objective include the NTCA Partnering For Success Program, where associate members offer FREE product vouchers for products to offset the investment a contractor makes in membership in NTCA. This program has been one of the most successful efforts in the history of the NTCA, and now offers three times the cost of NTCA membership in FREE products for contractors to use on their projects. In fact, as of June 30th, the NTCA had issued over $570,000 in vouchers back to our members! This goes right to your bottom line! More importantly, many of our members have thanked us for this program because it has helped them to source new and innovative products that they continue to purchase for their company. This is truly a win-win program.

NTCA promotes qualified labor

Another key strategic effort our association continues to work on is to promote “qualified labor” to project owners, architects, builders, designers, etc. By working closely with manufacturers, distributors and other labor associations in our trade, we have made giant strides in this effort. Language promoting hiring qualified tile installers has been inserted into tile industry standards, specification programs, and manufacturers’ product recommendations. We continue to develop certification through the CTI (Certified Tile Installer) program offered by the CTEF and the ACT Program (Advanced Certifications for Tile Installers) jointly promoted by the leading tile associations in the industry. The NTCA Five Star Contractor effort is a comprehensive company recognition program that is also part of this effort.

There are many other discounted programs and services the NTCA offers to its members. If you are interested in learning more information about this, you can go to the NTCA website at www.tile-assn.com or contact assistant executive director Jim Olson at [email protected]

Standards development

Perhaps the most important role we play on behalf of labor is in the development of industry standards. The NTCA Technical and Methods and Standards Committees develop the NTCA Reference Manual, which is being printed this year and for the first time ever being offered to the entire industry. In addition, these dedicated individuals develop proposed changes and new methods to the TCNA Handbook for Ceramic, Glass and Stone Tile Installation and ANSI A108 Committees; selected individuals participate in these committees on behalf of the NTCA and labor as well. I can attest to the fact that your “voice” is represented on these national committees thanks to the voluntary efforts of many NTCA contractor members.

I am amazed at the volume of work the NTCA staff does to fulfill our goal as the Voice of the Tile Contractor. Even more amazing are the volunteer efforts taking place all around the country by NTCA Members, State Directors, Regional Directors, and Executive Officers. Not only are we growing in membership at the NTCA, we are growing in the number of “active members” who regularly contact our office for business and technical support, attend our local educational and training programs like the NTCA Workshops, and come to national tradeshows we sponsor and support like Coverings and Total Solutions Plus.

The NTCA is committed to letting you know that one of our strategic missions is to “Save our Members Money and Find Them Work.” Join our growing association now and let us prove it to you.

Total Solutions Plus

tsp-top10

By Bart Bettiga

I must admit, I love watching David Lettermen when he does his Top Ten skits. And as a junkie on the NFL Network, I always watch their Top Ten shows on the history of the National Football League. So -in an effort to have a little fun, but get your attention – I have devised a list of Top Ten Reasons Why YOU Should Attend Total Solutions Plus.

Total Solutions Plus (TSP) is an educational conference jointly managed by the Ceramic Tile Distributors Association, National Tile Contractors Association, Tile Contractors Association of America, and Tile Council of North America. It takes place October 26th-29th in Bonita Springs, Fla. Registration and hotel information and the complete schedule for the conference can be accessed at www.ctdahome.org/tsp.

10. South Florida in late October is a fabulous venue. The hotel is first rate, the weather is wonderful, and it is a perfect opportunity to combine business with pleasure before the holiday season arrives.

9. Technical meetings and sessions are first-rate. This year, TCNA executive director Eric Astrachan will give a presentation on thin tile, and the industry’s progress to develop product and installation standards for the category. Other programs include a session discussing the importance of working closely together in the development of specifications, and a program on barrier-free showers.

8. TCAA joins the show for the first time. With the addition of the Tile Contractors Association of America to TSP, we now cover the entire tile industry with the top associations. It will make the show bigger and better!

7. Awards programs. There is nothing more rewarding than watching the leaders of our industry recognized for their contributions. The Awards lunches are professionally produced and will make you stand up and cheer.

6. Spouse and family participation. Total Solutions Plus is more than a business conference. It is an industry event that everyone enjoys. Tours for spouses and family members are available, and we encourage everyone to attend.

5. Professional speakers provide motivation. Whether you gain insight into improving your business or your personal life, the speakers we engage at Total Solutions Plus are professional, entertaining, and thought-provoking.

4. Golf tournament. You don’t have to be a great golfer to play in our scramble tournament, and it is so much fun. More importantly, it is a great place to renew friendships or form new ones. It has become a fixture at TSP as the event to kick off the entire conference.

3. Networking. There is no better opportunity for contractors, distributors and manufacturers to interact with each other, share ideas, and celebrate our fabulous industry together.

2. Tabletop event. It is only one night and several hours long, but the tabletop reception is an ideal opportunity to make contacts that can lead to incredible business contacts.

And the number one reason to attend Total Solutions Plus? Don’t take my word for it – here is what others have to say about the value of this one-of-a-kind networking conference:

“TSP is THE best way to mix and mingle with the industry players. No other show brings our industry together like it. I appreciate the opportunity to get feedback about what we can do to better serve our customers. I find that people at TSP are ready to engage their partners in business. High concentration equals high impact. And it’s a great time, so how can you go wrong?”

– Ron Nash, vice president of sales and marketing for Titanium Sponsor LATICRETE

“We peeked at this year’s guest speakers and we can’t wait to hear them. When you own your own business it is sometimes hard to motivate yourself. These speakers make us laugh and think about what we do on a daily basis and it gets us excited to go back to work and share what we learn with our team. We also enjoy the amazing locations where TSP is held.”

– Dan and Elizabeth Lambert, Lambert Tile and Stone

“The educational seminars are great but the real benefit to me comes from the real time, in person, one-on-one discussions with other members in the trade. A little give and take conversation from industry peers provides a fresh look into new ideas, products, trends, and business development tools which are essential to stay on top of a competitive industry.”

– Rod Owen, C.C. Owen Tile Company

“Without a doubt TSP is the best networking event for the industry on a more personal basis. I look forward to the show every year for the friendship of industry experts and networking opportunities available.”

– Martin Brookes, Heritage Marble & Tile, Inc.

It’s not too late to make your reservations. Go to www.ctdahome.org/tsp and register NOW!

Five Star Contractor Spotlight – Klaser Tile


Klaser Tile Company, Inc.
5starlogocustom-sponsor

Chula Vista, Calif.

Since: 1974

Specialty: Commercial tile and stone,
adhered veneer, and industrial flooring installations

Employees: 40

Website: www.klasertile.com

klaserlogoKlaser Tile has been family owned and operated for 39 years. Bill and Merrily Klaser started the company in 1974 and still actively manage the business along with their son Kent. Having installed millions of square feet of adhered-veneer stone, tile and brick, Klaser Tile is considered an expert at commercial flooring, exterior veneers, and industrial flooring.

klaserfamilyLearning from the masters

Founder Bill Klaser started the company in 1974 with his wife Merrily after attending the University of Southern California (USC). Bill, being a very quality-minded person, was persistent in learning every aspect of the trade. He became a Ceramic Tile Consultant (CTC), certified by the Ceramic Tile Institute in 1979. Bill did a short apprenticeship with Herman Schock, a CTI Perpetual Trophy-winning industry installer, and learned how to install Venetian glass mosaics in Roman bathtubs. He later traveled to Germany to briefly work with German master installers to learn some European methods of ceramic tile installation. Bill is currently a Technical Committee member of Ceramic Tile Institute of America (CTIOA) and chairs the Exterior Veneer Technical Committee.

Certified Women’s Business Enterprise

Merrily started working right away with the company, even early on as Bill’s helper. As the company grew over the years, Merrily performed all of the administrative and accounting operations. To this day, she still loves her work and actively manages the business full time. Since Merrily retains 51% of the ownership, Klaser Tile is a certified Women’s Business Enterprise (WBE).

The next generation

Bill’s son Kent has followed in his father’s footsteps by becoming a CTC, serving on the NTCA Board of Directors, and now sitting on the NTCA Technical Committee. Kent, vice-president of operations, has a business management degree and actively oversees all operations, project management, and estimating.

History and specialties

klaser-petcoKlaser Tile began by specializing in custom residential installations (1974-1983) which included Roman bathtubs and other complex projects requiring tile expertise. In 1983 the company’s focus shifted to commercial work, which included shopping malls, restaurants, and some thin-brick and ceramic tile exterior veneers. These were the years in which Klaser Tile became known as an expert installer of epoxy thin-set and epoxy grouting systems. In 1993, Klaser Tile started specializing in exterior veneers, including dome-tiled roofs largely done in Venetian glass mosaics. Since the mid-1990s, Klaser Tile has installed over 3 million square feet of exterior veneers, including San Diego’s PETCO Ballpark, where 160,000 square feet of Indian Sandstone was installed.

klaser-holycrossInstalling exterior veneers – and particularly tiled domes – is a very complex job, and it is critical that they are done correctly. There are only a few installers capable of doing this type of work, which is another indication of Klaser Tile’s capabilities and commitment to quality. Klaser Tile has installed many fully-tiled swimming pools – another expertise Klaser Tile possesses.

klaser-biogenKlaser Tile now has an Industrial Division which focuses on Industrial Flooring Installations where corrosion-resistant flooring is critical, such as in the food, dairy, pharmaceutical, and chemical process industries. Klaser Tile recently completed a two-phase project in Colorado where it installed over 250,000 square feet of acid-resistant tile.

Today there are few installation companies that can claim expertise in so many types of stone, tile and brick applications. And, likewise, there are few that stand behind their work with the integrity and commitment of Klaser Tile. It is the mission of Klaser Tile Company to maintain the highest quality standards for the installation of ceramic tile and stone. Maintaining industry standards of the ceramic tile, stone and brick trade is also a top priority of Klaser Tile.

Case Study – Hand made tile

1handmadetileHandmade tile mural invigorates library patio

By Lesley Goddin

The Fallbrook Public Library is part of the San Diego Public Library System – indeed, it was the very first branch in the system, originally established in 1913 by the Saturday Afternoon Club (which later became the Fallbrook Woman’s Club) in Hardy’s Drug Store.

The library has evolved and changed locations over the years, eventually taking up residence as a 4,300-square-foot building at its current location in 1969. In 1987, it rose out of the ashes of a destructive fire as an 8,100-square-foot structure. Now it is among the top 8 of the 32 county libraries in terms of usage.

This library is more than a repository for books – it has grown into a central gathering place for the community – with a meeting room that seats up to 200 – home to the arts, in a building crafted and created by local artists and artisans. It circulates nearly a quarter of a million items per year, serving as a backbone of education, entertainment, information and inspiration for the community.

2handmadeSo when it came time to install a durable floor in the well-trafficked Poet’s Patio at the library, organizers turned to Robin Vojak of CRStudio4 in Temecula, Calif. CRStudio4 creates handcrafted ceramic stoneware and poured bronze medallions that are works of art in themselves.

The objective of The Art of Knowledge mural, according to Vojak, was to create “an environment that is welcoming and relaxing, working to offset the sterile concrete walls and floors.” Rusty brown and golden yellow hues mixed with deep aqua greens and blues along with cast bronze inserts added warmth and drew from the colors of nature, complementing the building and permanent artwork.

A number of challenges had to be addressed in the project, Vojak said. These included:

  • Mural materials had to be durable to withstand high foot traffic and environmental conditions
  • The surface had to withstand harsh cleaners needed to remove gum, graffiti and food spills
  • The design needed to “read” from all angles – and not have a top or bottom
  • The design needed to incorporate colors in nature and have a whimsical, organic shape
  • Handmade tiles had to be completely flat with no raised edges or domed or warped areas
  • The mural had to conform to county building codes

Vojak’s husband, Cyril, did the extensive prep work for the mural. This included removing concrete in the mural area with a jackhammer, cutting the existing concrete on a curve as dictated by the design, and installing rebar for proper support. The thickness of the mural was measured and concrete was poured into the form, leaving just enough height for the Custom ProLite® medium-bed mortar and the tile.

A template was created of the mosaic area and calculations for shrinkage and firing of the durable, dense stoneware pieces was done, so they would fit snugly and perfectly into the cut-out area, like a puzzle. The tile pieces were made in a painstaking process to ensure the accurate ratio of water and clay to minimize shrinkage, and custom-formulated matte and gloss glazes created interest and depth in the design.

Once the tile was set, the bronze inserts were poured, polished, patinated and placed into the mural by Robin, Cy and several of her kids, all of whom are employed in the business. The mural was grouted with Custom grout and a stone enhancer was applied to the entire surface.

The resulting mural is an arresting centerpiece for the Poet’s Patio, that will – like the fine literature it celebrates – endure the test of time.

3handmade

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